Mti Wireless Edge Share Discussion Threads

[janeann] 14/5/2015 09:34

what is wrong with this company..... share price falls below 10p and yet ..Shareholder's equity of US$17.9m (at December 31 2014: US$17.9m), equivalent to 22.4 pence per share

[cjohn] 13/5/2015 11:51

Hi GB 904150,

Thank you for your thoughts.

I hope what you say will be the case. More often than not, acquistiions destroy value, but on turnover grounds, it looks like they didn't over-pay.

[21trader] 07/5/2015 23:10

Bought in last week around 10.25p and tipped it on my twitter agree with your points the money was going nowhere so good they used it for a good acquisition.
If the merge works with usual costs savings and then growing profits
the shares will finally re-rate.

[gb904150] 07/5/2015 22:45

CJohn,

I visited the MWE AGM with sladdjo. My own feelings on the Mottech acquisition are that it's really positive.

MWE's big problem these last years has been costs that have crept up and lack of growth in revenues. Military and RFID are stable but not exciting and so the most likely area for any increase seems to be 80Ghz.

The jump from $1m to $2m revenues in the last year is pretty positive. I'd hope that to reach $3m in FY 2015. That range would then account for 20% of revenues.

I expect Mottech will take them to having $25m annualised revenues ($15m MWE + $10m Mottech) and $9m GP ($5m MWE + $4m Mottech).

All they then have to sort out is their expenses which are currently too high, but given that the 2 companies are so close it should be a straightforward exercise.

For years MWE investors have complained that cash on the balance sheet is a waste and isn't being put to work. This acquisition appears good value and looks to add to revenue and gross profits immediately. I think it will make MWE look very cheap.

MWE has needed to be reinvigorated, as these past several years they've been treading water. I think this acquisition does that and puts them in an exciting area (high tech irrigation) with a strong brand name (Motorola) and an existing, successful business.

Water conservation/optimisation is a huge investment area and products that are proven in Israel will have plenty of scope for use in other countries.

[cjohn] 07/5/2015 11:40

Ok, thanks for the detail.

[sladdjo] 05/5/2015 10:32

My pleasure, CJohn.

IIRC, didn't talk about potential in #'s for small flat street antennas, but more as you say along the lines of lower frequencies are full and as the demand for data keeps growing this is the only available space and seems to be the best solution currently available to deal with the problem. They currently have 1 competitor in this area, but they feel that their product is at least as good as the competitor, and the fact that they offer dish antennas to their suppliers as well (& lower frequency if required), gives them a better chance to tailor their order to the customers needs. However, as always, the numbers should soon bear this out if so.

[cjohn] 02/5/2015 11:19

Thanks for the update, Sladdjo. Always appreciated.

My feeling is that the Mottech acqusition is prudent though unexciting, as we might expect from MWE.

I can't see how the company will make that much headway on turnover in the antennae business, however, given that their main growth áreas- antennae for the back haul market and RFID - are currently such a small part of their overall turnover. At other antennae frequencies, the market looks too crowded for turnover or margin improvement.

Did they talk about the potential for sales for the small flat street antennae you mention? Is this another niche where there is scant competition?

RFID and the Internet of Things looks like the next big thing, but then it has done for the last ten years, I think.

[sladdjo] 30/4/2015 14:40

My Notes from AGM - GB, pls add in where I've missed out.

Two main expected growth areas are still high frequency antennas and RFID.

Starting to develop and issue patents for small flat antennas on street level. Will start with 60GHz, then move onto 80GHz. Small cell backhaul is a main growth market going forwards so will focus on that. USP is that none of comps do dish and flat antennas, so they can offer betetr package. Also offer high and low frequency to customers, depending on their wants.

RFID still not growing as should in retail as customers dont yet "feel the pain" When they look to optimize further they will use, similarly for conveyor belts in airports. Dov sure that will happen, but not sure when. Most money is this area spent on marketing and sales.

On the recent acqn: Mottech is sole distributor worldwide of specific Motoral products - doesnt have exclusive license but nobody else does at the mo, as such Motorola also spends on sales on marketing. Mottech name comes from Motorla Technology. Mottech have developed software to run products and connect them. Mottech has people who work for the municipalities, who monitor the systems and report when there's a leak/etc, so that provides recurring revs.

Mottech went bankrupt as prev owner went into construction activities that didnt work out. Bought from administration very cheaply but knife taken to all costs (esp things like marketing) so unsustainable in long run. Main focus for MWE is increasing marketing in Mottech in current areas and inc sales there. Will look to further develop strategy as learn more about comp. CEO and team have run Mottech for ~20 yrs and they will remain in place. MWE will take over control of finance, but leave rest of business to CEO as they've been succesful in past. Not much R&D needed, just updating software. Hopefully can help Mottech to develop new products and bring to market as at present they are mainly distributors, but that will only happen in time. An example of Mottech's service is that one client now waters an area 3 times the size of the area watered 20 years ago, and uses 3% less water.

1/4ly res should be out in next 3 weeks.

[sladdjo] 30/4/2015 14:25

Waterloo, I think its attractively priced vs potential return and at least well supported by TBV - altho as in SPL that doesnt always seem to matter :)

[cjohn] 30/4/2015 11:48

Without more detail - particularly of goodwill - it's difficult to know if this was a good deal. (It looks like at least a few million dollars of goodwill can be assumed, given the forward TBV prediction provided by Allenby.)

Compared to the turnover of Mottech, it looks an OK deal. I'm guessing the fact Mottech acquired their assets from the Israeli court means that MTI in turn has payed a lowish Price.

Personally, I'm always doubtful of the high hopes placed in acqusitions. Far more often than not these prove to be illusory. However, given that the cash wasn't going to be returned to shareholders in any event and wasn't being valued by the market, the acqusition has to be a positive development.

[sailing john] 29/4/2015 15:54

Well I have added again today!

SJ

[waterloo01] 29/4/2015 11:33

Cheers sladdjo. Been keeping a watch on this. Worth an entry around here?

[sladdjo] 29/4/2015 11:27

Good Allenby note on the acquisition, est pbt for '15 now up to $710k, while next is $1.5m. TBV comes down to ~ $13.5m. Not bad considering that our curr mrkt cap is only £5m or ~$7.5m

hxxp://allenbycapital.com/research/research-mti_10_3056518518.pdf

[russman] 28/4/2015 22:33

Seems a good fit to me.

[gb904150] 28/4/2015 21:58

The Mottech Water Management Company brochure is a nice summary. Especially page 2 where it discusses the different applications.

hxxp://www.mottech.com/index.php?option=com_k2&view=item&task=download&id=20&Itemid=21

I see that MWE and Mottech are not far from each other. 30mins drive from Rosh Haayin to Yakum. Should help with the practicalities of integration and development.

Irrigation technology should be a great sector to be involved in. Annualised, Mottech's revenues would be ITRO $10-11m with GP of $4.0-$4.5m.

All starting to look a lot more interesting here.

[mmelody] 28/4/2015 12:42

I'm now interested as invested in TCM where annuity revenues from IOT is driving their business forward. Need to research this acquisition...

[gb904150] 28/4/2015 12:18

Hi sladdjo,

I will be travelling to London for the AGM tomorrow. Any other MWE investors going?

Any questions that anybody would like put to the Directors?

Finally, looks as though the core business is returning to growth although remains completely unvalued by the market. If they do continue that they will eventually be revalued as a tech company, with strong R&D and what appears to be a successful product range.

I like the look of the new acquisition. Particularly the movement into 'The Internet of Things' as a growth area, given their wireless capabilities. I also like the idea of 'build a recurring revenue stream from service fees and royalties.'

Looks as though MWE are finally putting their cash into proper use and going pro-growth again after several years of treading water. Some of which I admit was necessary due to re-shuffling away from existing customers that were in decline.

[spaceparallax] 28/4/2015 10:47

seems to complement the existing business.

[sailing john] 28/4/2015 08:35

Summary of "what they do" for anyone new to MTI Wireless

[sladdjo] 28/4/2015 08:15

Well done, SJ - very good timing as usual

[sladdjo] 28/4/2015 08:12

Looks like a good acquisition at 1st glance - revs of ~ $10m with gross margin of 40%. Will be interesting to hear more about the potential drop through of earnings to bottom line. In meanwhile, IOT seems very hot at the moment and hopefully will open some new doors for current technology.

Anyone going to AGM? Otherwise any questions for directors?

[sailing john] 28/4/2015 08:11

Transformational acquisition!

And finally! puts their sleeping cash pile to good use

Added on the bell - more than once! - appears to be a seller about as not difficult to add

As usual - market disinterested .... for now!

SJ

[russman] 24/3/2015 22:21

I apply a large valuation discount as MTI is a small Israeli company.