As plastic traders invest in capital equipment to expand production capacity, replace old equipment or take advantage of new technologies, Milacron says its revenue has 'recovered'.
Simpson said in the analysis on June 22: 'In the entire machinery field, Milacron has better performance and higher P/E ratio. From my latest data in May 2016, it performed well. Despite the recent The stock price has fallen by about 10%, but in the past year, despite the rising cost of input, offsetting the company's many advances in operating expenses, they still achieved double-digit returns. I think Milac The price-earnings ratio of the dragon should have room for improvement, but I am more cautious about the near-term prospects of machinery investment, especially in the case of trade protectionism.
Milacron’s quarterly results continued to be better than expected, with revenue exceeding sales expectations for five consecutive quarters. Revenue growth increased from 1% in the second quarter of 2017 to 6% in the third quarter and 9% in the fourth quarter, and then The first quarter of 2018 slowed to 3%. The latter was at least partly due to the company's decision to abandon some of the capital equipment business in the automotive industry; the company's largest end market continued to perform well.
However, industry insiders pointed out that Milacron's efforts to increase profit margins have mixed results. The input cost is high and the gross margin is under pressure. Milacron's cost reduction plan has been completed by about 75% and has already paid off because the EBITDA margin remains relatively stable, and Slightly rising tendency.
However, in the long run, Milacron has the opportunity to grow, especially in the automotive market, which accounts for a quarter of the Milacron business (and one-third of the more profitable MDCS and mobile technology businesses). Continue to use plastics. The trend to replace metal parts to reduce weight and cost will also benefit Milacron, as 18% of cars are expected to be made of plastic by 2020. Milacron has the opportunity to grow through mergers and acquisitions. The company's balance sheet There is still too much debt, but we believe that the company may start thinking about meaningful mergers and acquisitions within a year or two. Although plastic molding equipment is a very fragmented market, I don't want to see Milacron as an integration. And, prefer to see the company buy more consumables, aftermarket parts and technology-driven products.