MS International – an attractive profits history

PUBLISHED: 16 Oct 2019 @ 09:56 | Comments (0) |

MS International (LSE:MSI) has been profitable in each of the last fourteen years. But there are two unattractive features of the profits history that seem to put off Mr Market from buying its shares. First, profits are no higher today than they were over a decade ago – and that is before we account for the September profit warning which indicated that the next few months are going to be ugly.

Second, Group profits move around, ranging from around about £2.5m – £3.9m before 2011 to over £6m in 2012, before falling back to around £1.5m for three years. 2018 and 2019 were average years, with profits of £3.39m and £3.81m. There is certainly not a smooth upward progression.

So, the question is: if we are faced with the same pattern over the next 14 years would we be content to buy shares at 172p (MCap £28.4m)? Here are some numbers to start our thinking:

	Earnings per share	Dividend	Profit after tax £m	Number of shares, m
2006	15p	2.78p	2.50
2007	18.2p	3.6p	3.02
2008	22p	4.5p	3.93	18.45
2009	19.5p	4.5p	3.52	18.4
2010	13.3p	4.5p	2.39	18.4
2011	30.6p	6.5p	5.50	18.4
2012	34.8p	8p	6.31	18.2
2013	22.5p	8p	4.08	18.2
2014	14.6p	8p	2.57	17.6
2015	8.2p	8p	1.35	16.75
2016	9.6p	8p	1.58	16.5
2017	9.1p	8p	1.50	16.5
2018	20.5p	8.25p	3.39	16.5
2019	23.1p	8.25p	3.81	16.5

With average EPS of 18.6p over fourteen years and the share price at 172p the company stands on a cyclically adjusted price-earnings ratio of 9.2, significantly below the UK average at around 15-16.

It’s better than that though

The balance sheet is interesting in relation to earnings: Inventories, receivables and other current asset (excluding cash) amount to £21m. Against which there are £25m of payables and £1m of ta

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