MND –11.96%: capped off an excellent two-year growth period with FY26 revenue and earnings broadly in line with expectations, but the shares fell sharply as management confirmed FY27 will be about consolidation rather than another leg higher. After revenue increased around 50% over the past two years, expectations had caught up with the story, and the prospect of broadly flat earnings in FY27 was enough to take some heat out of the stock.
Key results:
- Total revenue including JVs of A$2.98bn, up 32% and slightly ahead of A$2.95bn expected.
- Earnings (EBITDA) of A$226.0m, up 43% and in line with A$225.6m expected.
- Net Profit (NPAT) of A$127.3m, up 52% and slightly ahead of A$125.8m expected.
- Services revenue of A$1.62bn, up 20% versus A$1.63bn expected.
- Engineering Construction revenue of A$1.37bn, up 48%.
- Final dividend of 59cps, up from 39cps.
There’s nothing particularly wrong with the FY26 numbers, however MND has enjoyed a powerful expansion across resources, energy and infrastructure work, and now management is deliberately becoming more selective following that growth – which is both prudent but restrictive. Encouragingly, demand remains healthy, with more than A$680m of new contracts secured since FY27 began, while Australia’s investment in energy generation, storage and transmission provides a substantial longer-term opportunity.
MM’s view: MND has executed exceptionally well, but after two years of rapid expansion the market wanted another upgrade rather than a year of consolidation. That’s a tough ask. We actually like management’s willingness to prioritise margins, execution and risk over chasing revenue for revenue’s sake – particularly in contracting, where poorly priced work can quickly destroy value. Today’s reaction looks more like expectations being reset than anything fundamentally going wrong.
MM is now neutral toward MND ~$28.50
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