MPAC – Well financed, debt free and orders expanding

Mpac is well positioned to take advantage of opportunities when the market returns to normal levels of activity, writes Mark Watson-Mitchell. 

Having fallen away to 206p at one time last week, I noted the shares of this high-speed packaging equipment group had been creeping back up again prior to today’s trading update announcement.

Now at 246p they are still way below their 377p highest of earlier this year, but could they now be on the climb back upwards again?

Mpac was able to keep all of its sites open and it continued to provide essential support for its customers in the critical Pharmaceutical, Healthcare, Food and Beverage sectors.

A fast recovery plan has been developed to ensure the group has a competitive advantage based on its innovative packaging and automation solutions.

The company has continued to win original equipment and service orders with noticeable resilience in the Healthcare sector and in the Americas region.

In addition, as global travel restrictions ease, it anticipates customer visits and levels of qualified opportunities will increase during the second half of the year.

The group order book going into the second half of 2020 of £45.4m remains very strong, especially when compared with the end-June 2019 book of £39.9m. Importantly, no orders have been cancelled due to COVID-19.

Mpac has a strong balance sheet, is well financed with its cash up from £18.9m to £23m as at the end of June, it remains bank debt free and has access to a £10m secured committed revolving facility which remains undrawn.

Appropriate measures have been put in place to reduce operating costs and a ‘Fast Recovery’ plan has been implemented to ensure that Mpac is well positioned to take advantage of opportunities when the market returns to normal levels of activity.

The group will be announcing its interim results on 3 September.