Ann: 1HFY23 Investor Presentation, page-7

That occurred to me as well and the way I reconciled it in my mind is twofold:

1.) While they both ostensibly operate in the engineering construction space, LYL is more of a "neck-up" business (i.e., conducting of studies, assessments, designs, feasibility evaluations, process optimisation... that sort of consultancy type activities) than MND (MND is more of a "bicep business", i.e., skewed more to the actual physical "doing" (be in in construction or maintenance) compared to LYL.

2.) The Africa Arbitrage: Clearly LYL does a lot of work in Africa whereas MND is effectively all-Australian. And in the African context there is not the same acute shortage of labour as there is in Australia, which is the nub disappointment of MND result announcement. Also, doing business in Africa is not easy, so I sense the landscape is less competitive, meaning that pricing terms are more favourable.

I think those two factors go a long way to informing the large differences in the operating margins in the two companies (LYL's EBIT margin >15%, vs MND's <5%)

I personally think that LYL is the better quality business and if I was offered a choice of one company over the other (say, as a birthday present), I'd pick LYL.

(As an asides, the market has never agreed with me, and has always applied a far higher valuation multiple to MND compared (twice as high on average, and sometimes almost three times higher!) That's obviously a reflection of the relative sizes of the two companies and the difference in the liquidity in the trade of their respective stock.

But the events of the past 24 hours demonstrate what happens when steep multiple stocks disappoint and low multiple stocks surprise on the upside.)

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