Given speculation NRW (code NWH) may bid for BGC Contracting, I thought I should take a look at NRW.
It is a very interesting comparison to MAH.
For FY19, NRW had revenue 1126m, EBITDA 144m and underlying EBIT around 64m. Net debt was 36m, work in hand 2.5b and a declared tender pipeline of 8b.
MAH for same period had revenue 1103m, EBITDA 181.4m and underlying EBIT around 75m. Net debt was 53m, work in hand 4.7b and a declared tender pipeline of 7b.
So, glossing over the complexity in underlying business strengths, and client contracts, the two major contracting businesses seem worthy of some comparison.
The big difference lies in how the market is today valuing each business.
NRW is trading at 95% of trailing revenue, 7.4 times EBITDA and 16.6 times underlying EBIT.
MAH is trading at 48% of trailing revenue, 2.9 times EBITDA and 7 times underlying EBIT.
That is one hell of a discount for past Macmahon difficulties. If, as can now strongly be argued, MAH is back on track under MF leadership, one would expect MAH to now enjoy the massive re-rating enjoyed over last few years by NRW.
Alternatively, maybe NRW should be bidding for MAH instead on BGC Consulting!
Favre
MAH Price at posting:
22.5¢ Sentiment: Buy Disclosure: Held
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