"Mayfield supplies electrical products and services for critical...

"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