Who said the mining boom was dead?

Monadelphous goes from strength to strength

Mike King

Mike King is a Fool.com.au Investment Analyst and Writer. He caught the investing bug more than a decade ago, at a time when the U.S. had invaded Iraq and fear reigned in the markets. His initial success as the markets took off encouraged his passion and thirst for knowledge. With 13 years behind him at one of Australia's largest domestic banks, Mike's passion for stocks led him to join a boutique funds management firm, where he stayed for four years. A seven-year stint in equity research at one of the largest investment banks in the world followed that, giving Mike a thirst to pursue his passion further. Mike holds a Diploma in Applied Finance and Investment and a Graduate Certificate in Financial Planning. His passion is to help retail investors invest better, and that passion was one of his primary reasons for joining The Motley Fool Australia in late 2011. Mike has written thousands of articles since joining, including for Fairfax Media, Yahoo!7, Ninemsn and has also appeared on ABC's The Business. You can see all of Mikes' holdings here

Published August 21, 2012 10:02 am AEST

Monadelphous Group (ASX: MND) has today reported a full year net profit of $137.3 million, an astonishing rise of 44.5% over last year and its 11^th consecutive yearly rise. Revenues were up 31% to $1.9 billion. Who said the resources boom was over?

The company also declared a fully franked final dividend of 75 cents, taking the total for the year to $1.25. Return on average equity rose to 62%, net profit margin rose to 7.1% and the company has net cash of over $150 million at the end of June 2012.

Monadelphous is an engineering contractor with three main divisions. Engineering construction, Maintenance and Industrial Services, and Infrastructure. During the 2012 year it worked on projects as diverse as Woodside Petroleum's (ASX: WPL) Pluto LNG project, Rio Tinto Limited (ASX: RIO) and BHP Billiton Limited's (ASX: BHP) iron ore projects, the coal export terminal at Gladstone and installing pipelines for Chevron's Gorgon LNG Project, as well as water and sewerage projects for various utilities and councils.

The company's outlook was very optimistic. Resources and energy projects provide a high level of visibility for the 2013 financial year and beyond. Further growth in sales revenue is expected. The currently approved LNG projects will provide strong demand for Monadelphous' services for the next few years.

The company also suggested that delays or deferrals of projects will allow more productive and sustainable outcomes, and provide welcome relief to an overheated market. The company's diversification strategy should lend itself to sustainable growth, and it sees further opportunities in the water and power markets, new services and overseas expansion.

The Foolish bottom line

Monadelphous looks well placed to grow its sales and profits in the 2013 financial year, given its exposure to LNG projects as well as infrastructure, which should offset any slowdown in the resources sector. Currently trading on a trailing P/E of 14.0 and paying a fully franked dividend yield of over 6%, it could be one to add to the watchlist.

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Motley Fool writer/analyst Mike King owns shares in Woodside Petroleum and BHP. The Motley Fool's purpose is to help the world invest, better. Take Stock is The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it's still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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