ASX industrials stock Mayfield Group Investments Pty Ltd (ASX: MYG) has had less than 6 months on the ASX.
When companies are this young on the market, it can be difficult for investors to assess a fair stock price.
However, the team at Bell Potter have initiated coverage on this company with a buy recommendation and an attractive price target.
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Mayfield Group Investments
Mayfield Group Investments Pty Ltd (ASX: MYG) participates in the electrical and telecommunications infrastructure industry, providing products and services.
It is a national supplier of electrical equipment, including switchboards, control modules, kiosk substations, and transportable switchrooms.
In a report issued on Friday by Bell Potter, the broker said the company provides investors with leveraged exposure to favourable structural thematics in booming renewable energy generation, storage and transmission asset construction, the proliferation of data centres and growing spend for Defence and East Coast infrastructure (including utilities).
The broker also noted Mayfield Group's current net cash position and expected FCF growth over the short-term gives the company flexibility to address inorganic opportunities as they arise while increasing shareholder returns through increased dividend payments.
Plenty of green flags
Bell Potter has initiated coverage on this ASX industrials stock with a buy recommendation and $2.00 price target.
This indicates approximately 15% upside from last week's closing price of $1.74.
There are a few key drivers to this positive valuation.
The broker said it estimates MYG will deliver 19.8% EPS CAGR over FY25-28 underpinned by:
- The acquisition of BE Switchcraft (BPe FY26 pro-forma EBIT accretion of $1.8m – assuming no growth in FY26)
- A growing work-in-hand (WIH; currently $115m), providing good visibility on near-term revenue delivery, with strong conversion of current prospect opportunities (totalling $850m) to drive upgrades to revenue forecasts.
- Further EBITDA margin expansion due to operating leverage from 9.7% delivered in FY25 to 10.6% by FY28 (BPe).
We see upside to our EBITDA margin forecasts depending on MYG's ability to maintain elevated utilisation of upgraded facility capacity and deliver cost synergies from the BE Switchcraft acquisition and integration.
Growth oriented stock
Bell Potter also highlighted this ASX industrials stock's growth potential. It is optimistic on Mayfield Group's strategic shift towards supplying higher-value control and communications equipment for data centres.
It sees this expansion beyond traditional power distribution products as a positive.
Furthermore, strong free cash flow and a net cash position are expected to support M&A opportunities.
Although liquidity remains modest, continued earnings growth and larger contract wins should enhance investor interest, with forecast dividend yields of 2.9-4%,
