Monadelphous Shares Add 15% To Lead ASX 200 Today

Monadelphous shares (MND: ASX) led the ASX 200 today, adding 15.3% to close at $32.63, for what is the highest closing price on record. Whilst the MND share price did not trouble the ATH intraday level of A$36.88, the latest move pushes the stock firmly into outperformer territory on the year, up 30.52% over the past 12 months against the ASX 200’s gain of 3.32%.

Guidance beat drives move at MND

The move came as Monadelphous guided for first-half revenue of $1.7 billion, up 11% from $1.53 billion in the prior corresponding period, and forecast net profit after tax of between $80 million and $85 million. The company also disclosed $830 million in new contracts and extensions secured since 1 July, a figure that gives investors a concrete anchor for revenue continuity heading into the second half. That combination of a stronger revenue run-rate, a profit range and a substantial new-work figure appears to have been enough to shift the market’s view.

The revenue line came in 8% above what analysts were expecting, whilst the NPAT figure was a beat of more than 20% above estimates, giving bulls the boost needed to break $32 once more. This is the third time this year that the stock price has made a run above this range, with a glance at the 1 year chart above also highlighting the pullbacks that followed. Could this one be the start of a breakout, or will bears try to form a wall of resistance up here?

Management cited a full six-month contribution from Kerman Contracting, operating leverage across the business and an elevated share of revenue from engineering construction, which typically carries stronger margins than maintenance work. Those factors help explain how revenue growth of around 11% year-on-year can translate into a profit result that comfortably beat expectations.

The contract pipeline supports the move, with Monadelphous securing approximately $150 million in resources work, including a four-year marine-infrastructure contract with Rio Tinto and project work linked to BHP at Ministers North. Those awards, announced in late October, reinforce the view that major Pilbara miners are continuing to outsource capital and maintenance work to specialist contractors. The $830 million in total new contracts and extensions since the start of the financial year suggests that dynamic is not slowing. For a company whose earnings are closely tied to the resources investment cycle, that kind of backlog visibility matters considerably.

The setup

From a technical perspective, Monadelphous had been trading in a range that kept it below key moving-average levels for much of the recent period, and today’s jump has pushed it well above both its 50-day and 200-day averages. The 50-day average sits at $29.50 and the 200-day at $29.56, with MND now trading above both by a comfortable margin. Trend strength indicators suggest the move has momentum behind it, though the stock is also trading above the upper boundary of its recent price range, which historically raises the risk of near-term consolidation once the initial reaction fades.

Volume of 704,000 shares on the day, or 3.65x the average level is a strong indication of the support behind the move higher, with the RSI at 66.5 not yet stretched into overbought range. An index leading day of 15.3%, alongside a new ATH close under it’s belt is clearly a very strong day for Monadelphous bulls, but will the breakout hold?

Bull Case: