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(Sharecast News) - Specialist engineering company MPAC was on track to "grow substantially" over the next few years, according to the Mail on Sunday's Joanne Hart, who called the group "an example of British manufacturing at its best" in her Midas Share Tips column on Sunday.
The Coventry-based firm, whose clients include the likes of Nestle, Diageo, GlaxoSmithKline, AstraZeneca and Unilever make complex, sophisticated and often tailor-made machines used to pack products from Glenfiddich whisky to ice cream and from Gillette razors to blister strips for asthma inhalers.
"The market is huge," said Hart. "Companies spend more than £30bn a year on packaging equipment - and Mpac is a small player, with revenues of £58m in 2018 and profits of £1.4m."
However, Hart felt that under "ambitious" chief executive Tony Steels, MPAC was on track to grow substantially over the next few years, stating that its shares, currently at £2.03 each, should rise in sync.
"For Steels, however, this highlights the scale of the opportunity. He hopes to increase sales by more than 10% annually over the next five years, creating a far bigger business along the way, through both organic growth and acquisitions," she wrote.
Since having joined the company in 2016, Hart said Steels' progress so far had been "impressive", highlighting his decision to sell MPAC's tobacco division and focus the group on packing kit for consumer goods and healthcare products - with brokers now expecting full-year revenues of £85m and an almost quadrupling of profits to £5.5m.
Hart noted MPAC, which has two British factories, in Coventry and Tadcaster, as well as sites in Canada, Holland and Australia should mean the group will be less affected by UK economic conditions than many firms its size.
All in all, Hart said: "MPAC has done well under Steels' stewardship but there is plenty more growth to come. At £2.03, the shares look attractive, especially on a three to five-year time horizon."
Much like the patients it seeks to help, ConvaTec was in need of "a little time in recovery", said the Sunday Times' Sabah Meddings in her Inside the City column.
Meddings stated that ConvaTec, which broke into the FTSE 100 back in 2016 following eight years of private equity ownership, had suffered "a bruising run" so far.
"First, there were two profit warnings in 12 months," she said. "Then the chief executive made a swift exit when the company slashed sales forecasts and said a big customer had trimmed orders. Also, moving a manufacturing plant from America to the Dominican Republic disrupted its supply chain."
Meddings pointed out that all of this activity wiped 57% from the group's share price and knocked it right back out of the blue-chip index.
However, Meddings stated that ConvaTec was now showing signs that a turnaround plan announced last February was "beginning to work".
"ConvaTec is cutting costs and doing more of its own manufacturing. A supply contract with British firm Scapa was terminated, although that prompted a £65.7m legal claim."
But despite the shadow of litigation, Meddings said ConvaTec was "well placed to benefit from a growing market".
"Until now, ConvaTec's problems have been largely of its own making, which is reflected in its valuation. At 14.2 times forward earnings, it trades well below larger rival Smith & Nephew's 22.1 times."
Meddings said focus was now on new chief executive, Karim Bitar, who will join at the end of September, who was expected to take a fresh look at ConvaTec's three-year transformation plan.
"His biggest challenge will be to reverse three years of disappointment," wrote Meddings.
"ConvaTec is due to report first-half results on Thursday. Analysts are forecasting sales of $894m (£722m), down from $921.3m last year. Some analysts are sceptical - Bank of America Merrill Lynch has a 145p target on the stock - but there could be rewards ahead, provided ConvaTec's convalescence pays off," concluded Meddings, who rated the firm a 'buy'.
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