M&A transactions drive Midwich Group’s (LSE: MIDW) earnings growth in FY23

3 min read | April 26, 2024 03:39 AM AEST | By Team Kalkine Media

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M&A transactions drive Midwich Group’s (LSE: MIDW) earnings growth in FY23 — Image source: Pexels

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Highlights

In FY23, Midwich’s gross profit and profit after tax surged by 17.9% and 71%, respectively on a year-on-year basis.

Midwich achieved industry-leading asset turnover of 2.12x and an ROE of 18.2% in FY23, surpassing industry medians of 0.80x and 15%, respectively.

The company’s board recommended a final dividend of GBX 11 per share, slated for payment on June 14, 2024, if approved.

Midwich Group PLC (LSE:MIDW) is an FTSE AIM UK 50-listed, specialist audio-visual distributor to the trade market. The company has global operations covering Europe, North America and Asia Pacific. It has a market cap of GBP 451.58 mn.

In FY23, the company’s revenue grew by 7.1% YoY backed by seven M&A transactions during the year, representing organic business performance. Similarly, an increase in sales for technical products uplifted the gross profit of the company by 17.9% and profit after tax surged by 71%.

The company also had industry-beating margins in FY23 in terms of asset turnover and return on equity (ROE). Its asset turnover ratio stood at 2.12x in FY23 versus industry median of 0.80x, while its ROE was 18.2% in FY23 versus industry median of 15%.

Recent business update

The company’s board recommended a final dividend of GBX 11 per share. If approved, it will be paid on 14th June 2024. The audio market for the company got specialized in line with the company's strategy, underpinning strong performance of the group.

Company outlook

MIDW aims to expant its operation to new geographies while expanding its product portfolio. The group expects to expand its exposure in the global AV market over a prolonged period.

The company plans to enhance its business value through potential acquisitions and attaining organic growth.

Top 10 Shareholders

The top 10 shareholders of MIDW together form ~73.36% of the total shareholding in the company. Fenby (Stephen Barry) holds the maximum number of shares with ~16.70% shareholding, followed by Liontrust Investment Partners LLP Ltd. with ~14.90% shareholding, as depicted in the chart below:

Stock performance

The share price of MIDW has surged by around 2.37% in the last one month and over the last 6 months, it has increased by around 16.76%. The stock has a 52-week low and 52-week high of GBX 335.00 & GBX 500.00, respectively. It is currently trading above the average of 52-week high-low.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference data for all price data, currency, technical indicators, support, and resistance levels is 25 April 2024. The reference data in this report has been partly sourced from EODHD/Others.

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