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18 January 2021 | Update

MCS Services Limited (ASX:MSG) | One to watch


Securing future success


Market cap $7.2m = Enterprise value circa $5m

• Cash flow positive
• Net cash
• Well capitalised with 10% CAGR

MSG listed on the ASX in 2015 and is one of the largest fully-integrated security providers in Western Australia, employing over 500 operational staff and supervisors.

The company provides security services at major commercial property sites and retail shopping centres throughout Western Australia, and has licences to operate across Australia.

Security services include mobile patrols and response vehicle services. In addition, MSG provides electronic security services including the design, supply, installation, and commissioning of security alarms, CCTV, biometric, and access control systems to commercial, industrial and domestic sectors.

Despite the challenges COVID-19 presented to MGS clients and the community at large, the company has fared comparatively well during 2020. Despite government restrictions imposed as a result of the pandemic, MGS did not need to access any significant federal or state government support. The company also maintained operational staffing levels despite a temporary dip in retail and event security. Retail and commercial security divisions are now back to normal levels of trading, and the events division is increasing its activity; notwithstanding ongoing venue and crowd-number limitations. In addition, the company has a specialist security team dedicated to servicing part of the hotel quarantine program in Western Australia, resulting in increased revenue and improved profitability.

The recent quarter’s good trading conditions enabled MGS to successfully dispose of a legacy issue remaining from the original ASX listing, and repay the last tranche of vendor finance, leaving the company debt-free. Looking forward, the company recently signed a Joint Venture Agreement (JV) with the Karlayura Group, a major Aboriginal-owned business operating in the Pilbara region of Western Australia, enabling joint tendering for opportunities in the Pilbara mining sector. This is an exciting development that augurs well for future development.

The recent quarter saw MGS continue to perform well despite difficult broader market conditions.

Quality management systems

The company’s environmental management processes were subject to an independent audit in September 2020. Subsequent to the period MGS was advised it had been successful and can now apply for international environmental standard 14001.

Uniformed security

MGS successfully won a tender for security work at two shopping centres in Perth. Both centres were already serviced by the company, and are managed by CBRE. The contract period is for two years to 2022, for a total value over the initial term of in excess of $3 million. There is an option of two 12 month extensions.

Alarm and CCTV

Engaged additional staff and continued to expand its market for the installation, maintenance and monitoring of CCTV and alarm systems at shopping centres, aged-care facilities, and hotel chains in WA and the Northern Territory.

Events and stadiums

Successfully retained its sports/music events security contract with a large WA state government venue operator. Work levels from the contract will, in part, be subject to COVID-19 related limitations on crowd attendance levels at sport and music events. MGS continues to provide 24/7 asset-management security, including gatehouse and precinct security, at the recently constructed major stadium in Perth.

Growth opportunities

MGS begins 2021 with a suite of long-standing blue chip client contracts, a continuing robust tender stream, increased opportunities arising from the above developments, a healthy cash balance, and is well-positioned to take on any expansion opportunities that may present.

The company has security operating licences for Western Australia, South Australia, Victoria, New South Wales, and ACT, and continues to seek further organic growth opportunities in its specialist security segments, including, but not limited to, leveraging its reputation with existing clients to obtain work at additional locations. The company is also assessing the addition of new verticals to its business.


MGS clients include:



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