We identified instant service equipment maker ME Group International (MEGP) on 29 February 2024 as a compelling investment opportunity based on the company’s dominant market position and strong growth prospects from the roll-out of its Wash.ME branded automated laundry machines.
The group’s unique business model and strong relationships with site concession holders allow the company to generate high returns on capital and cash flow.
WHAT HAS HAPPENED SINCE WE SAID TO BUY?
On 18 June, the company announced it is evaluating strategic options to ‘enhance shareholder value’ including seeking offers for the group, although the company emphasised no proposals have been made.
The shares rallied by more than 10% on the day and sit close to all-time highs. The news was a complete surprise, although some investors may have caught wind of the strategic move, given the strong move in the shares.
It is worth reviewing how the fundamentals of the company have evolved over the last year to provide some context for what may happen next.
ME Group delivered its fourth straight year of double-digit growth in pre-tax profit in the year to October 2024, driven by 21% sales growth in the Wash.ME division as it rolled out a record 1,111 machines across the UK and France.
Momentum across the group continued into the first half of 2025, with the company posting a 17% increase in pre-tax profit, and the board expressing confidence in delivering full year profit in the range of £76 million to £80 million.
The price to earnings ratio has increased from around 11 times in February 2024, based on consensus earnings per share forecasts, to 13.5 times reflecting increasing investor confidence in the business.
That means the shares trade on a similar multiple and dividend yield to the FTSE 250 index, despite the prospect of higher growth than the average company in the mid-cap index.
WHAT SHOULD INVESTORS DO NOW?
ME Group is a high quality, cash generative business with strong growth coming from the roll-out of its automated laundry machines. Any potential buyer would need to pay a decent ‘control premium’ to the undisturbed stock price to get the approval of shareholders.
It is interesting that private equity backer Montefiore Capital placed 26.5 million shares at 200p (a 9% discount) on 27 February. Montefiore continued to reduce its stake after the 18 June announcement.
Founder and largest shareholder Serge Crasnianski owns 36.5% of the shares, which means the family will have a big say on any offers that land on the table. While a 42% return is not to be sniffed at, we would hold out for a higher price.
These articles are provided by Shares magazine which is published by AJ Bell Media, a part of AJ Bell. Shares is not written by AJ Bell.
Shares is provided for your general information and use and is not a personal recommendation to invest. It is not intended to be relied upon by you in making or not making any investment decisions. The investments referred to in these articles will not be suitable for all investors. If in doubt please seek appropriate independent financial advice.
Investors acting on the information in these articles do so at their own risk and AJ Bell Media and its staff do not accept liability for losses suffered by investors as a result of their investment decisions.
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