I hope they initiate a buyback or some (safe) bolt-on acquisition (not too big) to get the cashpile working. I am not too happy with using the cash to invest in the stock market, that is not their job, but ours.
I saw some concerns about more private contracting work in the mix, but that does not bother me too much. The government can also be a pain and the local Walloon government is very unstable in terms of debt and deficits. Not saying that they will not pay the bills, but they may reduce investment and real estate projects. The private business can pick up the slack.
High quality name in any event with an ironclad reputation in the market.
A: We're conservative. Construction is a cyclical, we have survived previous dips with our strategy
The cash is "put to work". Up to 25% is invested in the stock market: ETFs & stocks, 50% of that in commodities (one is named: Barrick Gold). Also holds some reserves in physical gold.
The cash buffer gives customers confidence.
Q: Recent (small) acquisition was partially financed with issued shares. Why?
A: The sellers wanted to receive part of the price in shares.
Q: Why not use the shares on your balance sheet?
A: Wasn't really answered. MOUR holds 4584 shares or 1.14% shares, almost €3m
Q: What's the plan with the shares you bought back?
A: No plans yet, they will stay on the balance sheet.
Q: Why not pay more cash as dividend?
A: Dividend has been growing, and we'd like 10% yearly growth... but will stay prudent. Depends on yearly results.
Q: Why are you so much better (4x better ROIC) than comps like CFEB.BR? Cyclical peak?
A: Lower overhead, high quality work => no litigation, stability & loyalty from employees.
- On the latest acquisition, they have been working with the company for generations, so I think part of the appeal of being sold was to form part of the Moury group.
- They are always going to keep a lot of cash on the balance. This is a 4th generation construction company so just their survival in the sector this far is a statement of their prudence.
- A 10% dividend increase per year guidance is very attractive as you would think that they are expecting a similar increase in the top or bottom line. At the current valuation, any growth on top of the FCF yield (even if you take FCF/Market Cap instead of FCF/EV given that they will keep a big cash balance), gets you at around the 20% IRR for the foreseeable future.
Thanks again for sharing and happy you liked the article.
Thanks for the article! I read that an increasing fraction of Moury's business is private-sector rather than public. Does that mean they increasingly won't be paid in advance, and won't be able to have negative working capital? Or that they'll be at risk of losing money in the event of cost overruns?
Apologies for the late answer. Somehow I missed this.
I have two insights regarding future projects. The majority of them are related to renovation efforts. Most of these projects are being financed by EU funds and payments are in advanced and not subjected to any level of sales.
The other is that most of their future projects, especially the ones they are referring to that will come in September will be public ones, imo. This has not been confirmed by the company but the only way they would know specific dates is because there will be some type of licitation. More renovation projects will keep the negative working capital as well.
I hope they initiate a buyback or some (safe) bolt-on acquisition (not too big) to get the cashpile working. I am not too happy with using the cash to invest in the stock market, that is not their job, but ours.
I saw some concerns about more private contracting work in the mix, but that does not bother me too much. The government can also be a pain and the local Walloon government is very unstable in terms of debt and deficits. Not saying that they will not pay the bills, but they may reduce investment and real estate projects. The private business can pick up the slack.
High quality name in any event with an ironclad reputation in the market.
on second thought: considering the very low liquidity, a buyback is probably out of the question. Too bad a dividend will be taxed to heavily
Thanks for highlighting this company. I also immediately dismissed it in the past after 3-5 mins.
After your post here, I stumbled on this report from the AGM (in dutch): https://www.vfb.be/artikel/verslag-van-de-av-bij-moury-construct
Here are some highlights (my own translation):
Q: Will you put the net cash to work?
A: We're conservative. Construction is a cyclical, we have survived previous dips with our strategy
The cash is "put to work". Up to 25% is invested in the stock market: ETFs & stocks, 50% of that in commodities (one is named: Barrick Gold). Also holds some reserves in physical gold.
The cash buffer gives customers confidence.
Q: Recent (small) acquisition was partially financed with issued shares. Why?
A: The sellers wanted to receive part of the price in shares.
Q: Why not use the shares on your balance sheet?
A: Wasn't really answered. MOUR holds 4584 shares or 1.14% shares, almost €3m
Q: What's the plan with the shares you bought back?
A: No plans yet, they will stay on the balance sheet.
Q: Why not pay more cash as dividend?
A: Dividend has been growing, and we'd like 10% yearly growth... but will stay prudent. Depends on yearly results.
Q: Why are you so much better (4x better ROIC) than comps like CFEB.BR? Cyclical peak?
A: Lower overhead, high quality work => no litigation, stability & loyalty from employees.
Great find Jefke, thanks for sharing.
- On the latest acquisition, they have been working with the company for generations, so I think part of the appeal of being sold was to form part of the Moury group.
- They are always going to keep a lot of cash on the balance. This is a 4th generation construction company so just their survival in the sector this far is a statement of their prudence.
- A 10% dividend increase per year guidance is very attractive as you would think that they are expecting a similar increase in the top or bottom line. At the current valuation, any growth on top of the FCF yield (even if you take FCF/Market Cap instead of FCF/EV given that they will keep a big cash balance), gets you at around the 20% IRR for the foreseeable future.
Thanks again for sharing and happy you liked the article.
Best,
Jaime
Thanks for the extra info!
Do you have any thoughts about the increase in profit & margins from 2021 compared to before?
Thanks for the article! I read that an increasing fraction of Moury's business is private-sector rather than public. Does that mean they increasingly won't be paid in advance, and won't be able to have negative working capital? Or that they'll be at risk of losing money in the event of cost overruns?
Apologies for the late answer. Somehow I missed this.
I have two insights regarding future projects. The majority of them are related to renovation efforts. Most of these projects are being financed by EU funds and payments are in advanced and not subjected to any level of sales.
The other is that most of their future projects, especially the ones they are referring to that will come in September will be public ones, imo. This has not been confirmed by the company but the only way they would know specific dates is because there will be some type of licitation. More renovation projects will keep the negative working capital as well.