Founded in 1909, Marshall of Cambridge (Holdings) Ltd is a private, family owned company, employing 5,786 staff. In 2018, the business generated >£80m of EBITDA on revenues of £2.5bn, and has significant organic opportunities ahead. Not only, accelerating expansion at its leading aerospace/defence (MADG) and motor retail businesses (MMH - 64.46% owned).
First step in creating long-term value
Published: May 22 2019
The backbone of success for Marshall of Cambridge (MCH) has been the Group’s desire to adapt and stay ahead of its rivals by being prepared to move decisively where strategic opportunities present themselves. As evidenced last week, when MCH announced that by 2030 it was intending to relocate its division MADG from its 900 acres site at Cambridge Airport to new, state-of-the-art facilities at one of 3 possible venues: Cranfield, Duxford airfield or RAF Wyton.
This move would allow MADG to more easily service its widening international client base, whilst freeing up vital capital to further invest in its cutting edge aerospace/defence capabilities, along with MCH’s other interests. This could also lead to perhaps hundreds of new highly skilled jobs being created.
Equally, the plan should provide the local community with an urgently required source of quality residential houses (up to 12,000), commercial property (5m sq ft) and transport solutions. A ‘win-win’ for the shared benefit of all stakeholders.
One must be aware that there are still many hurdles to climb before this can become reality, such as obtaining full planning permission, choosing MADG’s next home, relocating employees/equipment, and finally redeveloping the Cambridge site.
This is why at this stage, we conservatively retain our 533p/share valuation and financial forecasts. Albeit, we certainly recognise the significant potential of the announcement to create additional long-term value.
Undervalued Aerospace and Defence stock
Published: May 10 2019
Marshall of Cambridge (Holdings) Ltd is a private, family owned company that was founded in 1909 and is now of significant size, employing 5,786 staff.
In 2018, the business generated over £80m of EBITDA on revenues of £2.5bn, and has significant organic opportunities ahead. We expect accelerating expansion at its leading aerospace/defence (MADG) and motor retail businesses (Marshall Motors which is AIM listed, but owning a 64.46% shareholding).
Additionally there is scope to address its loss making Fleet Solutions arm, and to be more active in high-tech venture capital investments. And in terms of assets the Group might be able to unlock significant value over time from its 900 acres estate at Cambridge.
The non-voting priority ordinary shares (NVPOs) can be traded freely via a special off-exchange matching facility administered by stockbroker James Sharp. The NVPOs currently attract business property relief, and so can fall outside a person’s estate for inheritance tax purposes.
The most recent traded price for a NVPO was 285p, yet our analysis (using sum-of-the-parts methodology) indicates a current fair value for the Group of 532p. We would note that this excludes any further upside arising from additional land being made available for redevelopment.