The shares of Maintel Holdings (LON:MAI) are up 5% this morning, in response to the £36m capitalised telecoms and data services group informing investors of its Trading Update for the first half year to end-June.
Despite the provider of cloud, network and security managed communications services, reporting a 1.8% fall in its revenues to £46.6m (£47.5m), it showed an impressive 28.2% growth in its EBITDA to £4.8m (£3.7m).
The company stated that the rise was driven largely by significant new wins within its focus pillars and target growth markets, as well as the benefit of a new streamlined business structure and price increases.
Strategically the company declared that it had continued to successfully execute its strategic pivot away from a communications generalist to a specialist, focused across three key strategic pillars: Unified Communications & Collaboration, Customer Experience and Security & Connectivity.
It has also deleveraged its balance sheet, with its net cash debt now down to £15.6m (£21.4m).
In the second quarter of its year the group secured three new significant multi-year contracts, worth some £17.8m in total, with a leading housing and care provider, another with one of Europe’s leading credit management companies, and the third with the Leeds Teaching Hospital, one of the largest and busiest acute hospital trusts.
Maintel serves the whole market, with particular focus on its key verticals of Financial Services, Retail, Public Healthcare, Local Government, Higher Education, Social Housing and Utilities.
Its core market constitutes organisations with between 250 and 10,000 employees in the private, public and not-for-profit sectors with headquarters in the UK.
The sales pipeline remains buoyant and while cost control and working capital management are being kept in clear focus.
The company remains focused on delivering higher-margin new business opportunities in its high-growth segments moving forward and meeting expectations for the current financial year.
The group expects that its performance will be second half weighted as the benefit of those new multi-year contracts are realised from H2 2024.
Analysts View
At Cavendish Capital Markets, Andrew Darley and Kimberley Carstens have a 400p a share Price Objective, compared to this morning’s 250p.
They have estimates out for the current year to end-December for £103.0m (£101.3m) revenues, with adjusted pre-tax profits improving to £5.8m (£3.9m), lifting earnings up to 26.6p (23.5p) per share.
The analysts anticipate far better margins in 2025, with revenues of £108.0m gently better, while they see £8.3m in profits, which is a significant improvement, worth 41.7p per share in earnings.
They state that:
“With headroom to our 12-month target price of 400p equivalent to 8x FY25E adj EBIT, there is plenty of opportunity for TP upgrades en route to 700p at market multiple of 13x EV/EBIT as investors gain confidence in management, forecasts and strategy.”
In My View
If this strategy continues to kick into play, then I would agree with the Cavendish Capital opinions.
The Interim Results, which will be announced on Thursday 19th September, could well outline even further progress, giving the shares a strong upside from its currently conservatively rated base.