Big (positive) reaction to ASX notice today confirming expectations of 1H earnings up 60% vs pcp ($64m-$66m vs $40m pcp). Also reconfirming full year earnings guidance (150m-180m): https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02629547-2A1429815?access_token=83ff96335c2d45a094df02a206a39ff4

SP up 10% at open. Disc. held here and IRL.

Summary of Capital Raise/ Buyback’s

·      December 2022 – Approved an on-market share buy-back of up to 10% of MGH issued ordinary share capital within the next 12 months.

·      July 2022 Capital Raise $105m at $4.00 per share

·      July 2021 Capital Raise $79m at $5.50 per share

·      Listing Dec 2020 Raising $82.0 at $2.00 per share

Summary of Maas Acquisitions since Listing

Not Stated – acquisition is not material with purchase consideration of less than $5m

·      November 2022 – Dandy Premix $85.0m ($76.5m Cash and $8.5m of shares in MGH) – is an integrated construction materials business in south-east Melbourne operating five concrete plants, a sand quarry and a hard rock quarry.

·      August 2022 – Acquire four hard rock quarries and two sand quarries in the Isaac Region of Central Queensland $12.75m plus an amount of stock of up to $2.2m

·      July 2022 – Schwarz Excavations $32.4m and issue of 913,194 shares in MGH – Provider of Plant Hire, Rail Maintenance, Civil Construction and Haulage Services in Central Queensland

·      June 2022 – Yatala Quarry and Industrial Land, South East Queensland (No amount stated) 

·      May 2022 – Garde $29.7m and 731,974 shares in MGH – Specialist Provider of underground Electrical Cable installation and maintenance services

·      March 2022 – Blackwater Quarries $25.75m and issue of 193,798 shares in MGH.

·      March 2022 – Residential development site Rockhampton 279ha and +2300 allotments (No amount stated)

·      December 2021 – two additional quarries in Central Queensland (No amount stated)

·      December 2021 – Brett Harvey Construction Pty Ltd – a residential home building company based in Dubbo, NSW (1,136842 ordinary shares in MGH)

·      September 2021 – 103 Prince Street, Orange (Less than $5m)

·      September 2021 – Earth Commodities hard rock quarry, Gladstone (No amount stated)

·      August 2021 – Mixed use development site central Dubbo, WWII RAAF Stores Depot Site (No amount stated)

·      August 2021 – Residential Project Aquation’s in Orange and Griffith (No amount stated)

·      June 2021 - A number of transactions/ acquisitions total $123.7m refer to asx announcement https://www.asx.com.au/asxpdf/20210628/pdf/44xr63nthj7027.pdf

Commercial & Industrial Real Estate additions – Total $47.2m

Quest Apartments - $16.0m

Spacey Self Storage - $16.2m

Childcare Centre Dubbo – N.A

Badgerys Creek (45%) - $8.0m – future development site in the Western Sydney Airport Precinct.

Liberal Stage 1 and Stage 2 - $6.95m

Residential Real Estate acquisitions - $31.0m

Sheraton View (Dubbo) – $2.1m

Arcadia Estate (Tamworth) - $7.7m

Eagleview – Browns Lane (Tamworth) - $3.2m

Bunglegumbie Road (Dubbo) - $1.15m

Magnolia (Dubbo) - $2.0m

Kelso (Bathurst) - $2.95m

Magpie Hollow(Lithgow) – 11.9m

Strategic Business Acquisitions - $45.5m

David Payne Construction $10.4 - Stanaway Pty Limited trading as David Payne Construction (DPC). DPC specialises in residential, commercial and industrial construction in Central West NSW and has been operating since 1991. 

Maas Construction $9.4m - Maas Construction Group comprising Maas Construction (Dubbo) Pty Limited, Maas Building Pty Limited and Regional Demolition Pty Limited. Maas Construction Group is based in Western NSW and specialises in commercial building projects, demolition work and performing contract work for insurers and underwriters. Maas Construction Group has been operating since 2005 and is owned by entities controlled by Shawn and Ryan Maas who are brothers of Wes Maas, the Company’s founder and CEO. 

Maas Plumbing $3.9m - Maas Plumbing Pty Limited which provides residential and commercial plumbing services across Central West NSW. Maas Plumbing was founded in 2005 and is owned by entities controlled by Shawn Maas who is the brother of Wes Maas, the Company’s founder and CEO. 

Inverell Aggregates & Concrete (Inverell, NSW)- $3.9m

Redimix Concrete (Tamworth, NSW) – $1.2m

A1 Earthworx (Mudgee)- $12.0m

·      Apr 2021 – Amcor Quarries and Amcor Excavations $12.715m - Amcor Quarries operates a leasehold quarry and fixed and mobile concrete batching plants near Rockhampton in Central Queensland 

·      Apr 2021 – Willow Tree Gravels $10m - Willow Tree Gravels is a leading quarry in the New England region, providing a range of materials and servicing local councils, state authorities and commercial road and rail contractors. 

·      Dec 2020 - Macquarie Geotech $6.28m - diversified service provider in the construction materials and civil construction – Announce Prospectus

MAAS Group is a leading independent Australian construction materials, equipment and services provider with diversified exposures across the civil, infrastructure, mining and real estate end markets. 

It Operating Segments are 

·      Construction Materials

·      Civil Construction & Hire

·      Manufacturing

·      Residential Real Estate

·      Commercial Real Estate

Headquartered in Dubbo, New South Wales, it was founded by Wes Maas who started the company in 2002 with a single bob cat and tipper truck. You can listen to Wes Maas story on the AFR series “How I Made it” https://omny.fm/shows/himi/episode-6-wes-maas . Maas Group went public in December 2020 with an initial public offering of $2.00 per share. Wes Maas is the current CEO & Managing Director with a significant ownership in Maas Group, currently 63.73% shares on issue.

Maas consists today of

·      roughly 1,500 staff

·      34 Quarries (20 Quarries when listed in Dec 2020)

·      12 Concrete Plants

·      ~450 assets for Hire

·      8095 Residential lots

·      ~$545m Commercial Property GDV

·      3 Manufacturing Facilities

Bull Cases

The founder Wes Maas is strongly aligned with shareholders with his majority ownership in the group. With the decrease of share price, the company has announced a buyback up to 10% of all MGH ordinary share on issue for next 12 months. Maas group customer base is made up of a diversified, high quality blue chip base. It has a strong, stable, experienced and passionate management team with a strong history of growth and success. Maas Group is a profitable company earning $61.6 NPAT in FY22. The company dividend policy is topay out approximately 20%‐40% of MAAS Group’s annual cash NPAT attributable to shareholders.

Bear Cases/Risks

Contractual/Acquisitions risk – Maas Group since listing has undergone a huge number of acquisitions in a short time (refer acquisitions straw). It has raised capital twice listing on the asx in December 2020 to fund these acquisitions. While researching the Maas group on glassdoor I have come across one negative review saying they hadn’t paid a contractor on time, maybe suggesting they are taking too much on in a short time or maybe getting distracted with huge number of acquisition or growth of company?

Environmental Risks - The group’s activities, particularly with respect to its quarrying, real estate development and civil construction activities, are expected to have an impact on the environment. Environmental issues may potentially delay contract performance or result in a shutdown of a project, brand damage etc. While research Maas group I have come across an article accusing Maas group of dumping tonnes of asbestos-contaminated building waste at a site it was developing in Dubbo. The article does state the Maas group did have the material tested and was confirmed by the EPA not to contain any traces of asbestos. 

https://www.theguardian.com/australia-news/2020/sep/23/nsw-developer-maas-group-properties-accused-dumping-tonnes-asbestos-contaminated-waste-southlakes-housing-estate

Currently don’t hold or plan to hold MGH shares. Love the story/narrative of the stock but the huge number of acquisition has put me off for now. Be watching from the sidelines for now.

Missed this news yesterday, but Maas is doing a buy back, up to 10%. From the ASX announcement:

3D.1 Any other information the entity wishes to notify to ASX about the buy-back

MGH intends to buyback up to 10% of ordinary MGH shares on market. Please refer to MGH ASX announcement titled 'Capital Management Update - Proposed Share Buyback' released on 20 December 2022.

http://www.aspecthuntley.com.au/docserver/02614750.pdf?fileid=02614750&datedir=20221220&edt=MjAyMi0xMi0yMSsxMzo0NjoxMCs0ODArNDgwNTU2K2FuZHJld3dlc3QrcmVkaXJlY3QraHR0cDovL3d3dy5hc3BlY3RodW50bGV5LmNvbS5hdS9pbWFnZXNpZ25hbC9lcnJvcnBhZ2VzL3BkZnRpbWVvdXQuaHRtbCtodHRwOi8vd3d3LmFzcGVjdGh1bnRsZXkuY29tLmF1L2ltYWdlc2lnbmFsL2Vycm9ycGFnZXMvcGRmZGVsYXllZC5qc3A=

I took a small position in Maas a few months ago IRL at what I thought was a fair price, and have just waded in further now that share price is down 40% over the last 2 months despite no public announcements. Not much love on Strawman, of the current 3 holders @PoohBear was the first in about a year ago. I'd love to hear any negative views from Strawman members who have researched Maas but decided to stay away.

Mass is a rapidly growing, vertically integrated construction and materials company. Over 60% of share are owned by the CEO (Wes Maas) and his wife, and he has been consistently buying shares in the last year.

FY22 revenue was $539m, showing growth of 90% and $62m NPAT (statutory!). FY23 forecast around $770m and company has given guidance of $90m NPAT.

Current market cap is around $750m, which puts it on a forward PE of 8, for a company that almost doubled last year and is forecast to grow 40%+ this year.

Wilson Asset Management publicly stated a couple of months ago that Maas is their single largest holding. And they noted that the company owns $200m+ in property that Wilson believes is substantially undervalued.

In total the company has over $800m in tangible assets, over $300m net tangible assets. Net debt to EBITDA is an acceptable 2.1x. $50m in cash and another $200m in undrawn banking facilities.

Consensus valuation across 5 analysts is share price of $5.23. I personally estimate a valuation of $4.94. I'll submit a separate valuation showing my calculations.

A podcast interview with the founder of Maas Group, Wes Maas.

https://omny.fm/shows/himi/episode-6-wes-maas

I've tried to invite Wes to one of our meetings, and will try again. He seems like a very impressive in individual.

H/t to @PoohBear for bringing it to my attention.