"Mayfield supplies electrical products and services for critical infrastructure and facilities throughout Australia" (source : prospectus in Nov 20). This company is not very well known as it is a microcap, recently listed and it is not communicating much. In order to have an updated presentation, you can have a look at the recent presentation they did with Share cafe (available on Youtube). Other interesting point : there has been almost no dilution since their back door listing (number of shares of 90.5 m vs 87.8 m diluted in Nov 20).
The company recovered from a loss in FY 22, due to a cost overrun for one of their subsidiaries (STE Solution). Since then, the company has shown a substantial level of earnings/cash flow/free cash flow. The earning improvement has been totally driven by a large margin increase, while the sales has been going down since FY 23. It has quite high margins (EBITDA margin of 10 %* for H1 24) due to the fact that they have their own IP, while they are also a licensee for some products.
Quite surprising that, in this sector, we can find a company which had a free cash flow of 6.6 m$ in 23 and a similar level just for 6 months in FY 24 (6.1 m$) while Mayfield has an enterprise value of 62 m$. To be honest, H1 24 benefited from large one offs : working capital decrease of 3.1 m$ and no tax paid, due to unused tax losses.
I had a look before at this company, but did not invest due in particular to its low liquidity. 2 changes recently there : - the company has announced a substantial share buyback program** (up to 10 % of existing shares), - the liquidity has also significantly improved recently, maybe due to their presentation at the end of March 24.
Last interesting element, they got a new CEO in Sept 23 (A.Rowe). Work in hand has shown a significant improvement from 30 m $ in Oct 23 to 85 m $ in March 24. So, I guess the company could now show some sales improvement going forward.
The 2 main shareholders : - Nightingale Partners (private equity) which owns 44.22 % of the capital, - Amreal which owns 14.56 % of the capital. These 2 major shareholders have been together since 2012, when there was a management buy-out of Mayfield.
* comparable to the level reached by Mayfield in FY 19 and FY 20 (EBITDA margin between 9 % and 10 %) ** last shares bought back was in Nov 23
MYG Price at posting:
77.5¢ Sentiment: None Disclosure: Held
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