Management Resource Solu... Share Discussion Threads

[burtond1] 13/12/2018 09:26

https://total-market-solutions.com/2018/12/13/management-resource-solutions/Decent article with videos and pics and audio with PB

[smoggyg] 13/12/2018 09:16

arry,I have said several times that if Cerp decide to drill a deep well in the SWP then I might buy in for a gamble but that isn't going to happen this side of 2020 imo. Do you have a selective memory? As you are a self confessed revenge poster,isn't it you who is the nasty bad one,I have posted on Cerp/lgo for many years,long before you bought in?

[arrynillson] 13/12/2018 08:35

SmoggyG - most people buy a share because they believe it is undervalued and sell when they believe it is overvalued - not many boast they call it spot on but most make their decision and move on - very few, having sold a particular share, continually comment on that share and feel the need to set up new threads just to deramp the share, gloat when it is down less than 1% and boast about being unresearched WHILST CLAIMING NO FINANCIAL INTEREST!

Someone doing what you do is either a nutter or a liar - you seem to think you're entitled to post because you claim to have held LGO before me - what planet are you on - these boards are free to anyone so entitlement to post is a non issue but if you do post others can and will comment on your views and my view of you is ' mad or bad? ' !

[sm0ggyg] 13/12/2018 08:27

trying to find some more victims to luff in smogola? you naughty little ramper.

[smoggyg] 13/12/2018 08:17

Worth reading again,my thanks to the author.//////Management Resource Solutions (MRS) Dig a single digit PE that is growing
Michael TaylorNovember 5, 2018 8:42 am 0
Management Resource Solutions (MRS) is a UK listed company operating in the Hunter Valley in Australia, offering maintenance support, mining services, and labour hire. It has seen many a drama, including a long suspension, several board bust-ups, board changes, a deeply discounted placing, and a revolving door of sellers. Despite this I believe, should its debt be refinanced, that there is significant scope for a re-rate.

Opportunity

MRS consists of Bachmann Plant Hire and MRS Services Group (formally Subzero). The company is on track for 2p earnings per share and this is set to grow. With a share price of 6.5p this gives the company a current year PE of just above 3, which is either priced to fail or screamingly cheap!

MRS will never achieve a PE like the FANGs, but could easily trade at 10x earnings given other support services group ratings. A revolving door of sellers has created an artificially depressed price and therefore there is (in my opinion) scope for a re-rate through the earnings cycle, but also as the market re-rates it on a more traditional PE for the sector and earnings prospects.

MRS Service Group (MRSSG)

MRSSG predominantly provides coal industry support services in the Hunter valley in New South Wales (Australia). No contract with MRSSG is bigger than 25% of revenues, which means the company is not dependent on any single customer. The contracts are not just single contracts but they are a multitude of contracts within a client contract. The pricing framework is agreed upon upfront, and once it starts work is often added as and when needed due to the nature of the industry. Some work may be mine work, some work might be vehicle repair, equipment repair etc, all different sectors within the industry. This is why we do not see huge contracts announced with their clients BHP, Rio, Yancoal, Glencore, because a framework is agreed rather than a specific contract. We did see recently an additional contract with Glencore for rehabilitation works.

As long as MRS is on the PSL (Preferred Supplier List) and the company produces good quality work and delivers, it will continue to receive more work. Work is initially agreed upon, and then more work is piled on top additionally. Plenty of client machinery that has been mothballed is now being refurbished due to the miners working flat out, and so there are plenty of large one-off contracts for this. Though these are, of course, not sustainable, this then translates into recurring maintenance revenue. More equipment online simply means more work.

An example of a new business stream is buying pre-cut patented buckets (these buckets are huge, big enough to fit a small house into!) and MRS welding them together. This is a completely new revenue stream that did not exist a year ago. Plenty of low margin business has been discontinued but only if it doesn't add value to the bigger picture. MRS will literally replace windshields for Glencore (GLEN), which means they are doing the same work that Autoglass do in the UK. This is very low margin but if Glencore want something doing it makes sense to respond “ they are a large customer and a FTSE 100 company. A good working relationship is necessary.

Bachmann Plant Hire (BPH)

Bachmann Plant Hire works within the civil construction industry as bulk earthworks specialists. They are the providers of wet plant hire solutions and have over fifty years of service in the civil construction industry. BPH has room for growth in a new strategy of securing opportunities in remote and challenging locations; this means less competition and higher bargaining power on pricing. Currently BPH is operating with a 17% net profit margin and is likely to continue to grow. This is because of the Ipswich Economic Development Plan 2016 to 2031, an initiative driven by the local government, which will require 500 new residential homes every month in order to achieve this plan, meaning there will be no shortage of work should the government keep pressing on.

Recent accelerated bookbuild and turnaround

One of the warning signs that I previously highlighted was that management did not own any shares. They were not incentivised to act as owners and this was shown in the recent placing which was done at the very bottom of the range (6.5p) to allow management and the board in at a lower price than in the previous months trading range. One of the advantages was that this did provide some cash for the company, and finally aligned the board with shareholders. The full 14 million shares (£910,000) were taken up by the board, employees, and contractors which is a strong show of confidence in the company.

The swing in MRSs fortunes are there to be seen in the HY results. From an AUD$4 million loss the company delivered a half year profit of AUD$ 2.5 million net profit after tax, equating to £1.4 million. This is ~0.7p EPS and the company released a trading update recently stating that 2p EPS was on target. The £3.4m expected NPAT versus the companys £12.8 million market cap at 6.5p puts the company trading on a PE of slightly above 3. I am not aware of a company that is trading on such a low earnings multiple and growing such PE ratios are usually value traps, where the share price is falling faster than profits!

Competition

There are several slightly smaller companies that are competition but the competitive advantage is that MRS has a big shed, which means a lot of work can be done indoors as opposed to outdoors. This makes a difference in the quality of the welding; doing it inside is better than in a dusty environment. A tent can be used but inside is much more practical given the huge size of some of the trucks, diggers, etc. being repaired. Local competitor Austin Engineering closed its Muswellbrook Upper Hunter facility and also provided an influx of labour; one of the challenges of recruiting more employees is the remoteness of the location and so with the competitor closing this had two positive effects.

The shed

The shed was bought by MRS for $3.0m which was satisfied in cash on completion. Further finance was arranged in order to complete outstanding work in order to bring the shed to its full potential. MRS had bid for the shed and winning was the best possible outcome there was a lot of work that needed doing on the shed and so they were able to submit a competitive bid. As owners, they are now able to complete necessary work at a lower cost and the money pocketed can be spent elsewhere. Owning the shed provides the company with an asset, lower costs, and no future worries over tenancy agreements.

With regards to the shed, a quarter of the space has been cleared and the rest used more efficiently and this has enabled 50% more work to be done in the same shed.

Debt and cost savings

One of the reasons for MRSs lowly rating is likely to be its debt. The Hermes facility is 18-20% interest including charges they are the lenders of last resort, so this is very expensive as at the time the company did not have much of a choice (source: previous NED, confirmed at AGM by Chairman). A review of the debt is on the agenda and would significantly de-risk the company and free up a lot of cash.

Another concern was that maintenance capex was being delayed and so a cash call would come in the future the company invested $AUD2.4m in existing and additional plant and equipment from June to December 2017 of which all was funded through free cash flow. Trade receivables are likely to stay high as the blue chips tend to pay between 45-60 days and so also not of a concern.

The majority of cost savings have been done and which will continue to show benefits each year; for example rentals have been replaced with leases this is cheaper and saves on future expenditure too. The fat has been trimmed resulting in a much leaner and streamlined business.

Conclusion

MRS is not without risk if the company is unable to pay off its debts then clearly it could have serious problems. However, with several operational updates showing good progress, a new and invested board, and a growing macroeconomic environment, I believe MRS offers substantial upside with much of the downside priced in.

[smoggyg] 13/12/2018 08:14

08:11:01 4.8400 82,459 O 4.6000 5.2000 Sell 0 83,290
08:05:26 4.6100 831 O 4.6000 5.2000///////The 4.84p trade is a buy not a sell. Pictureframe,MRS has expanded its business and is a recovery share,sometimes when a company is expanding it needs more cash to fund the growth.

[pictureframe] 13/12/2018 08:08

Hmm why are profits are up , costs down but bank loans and other interest bearing libilities up....something not right here imo

[thehitman1] 13/12/2018 07:43

I am actually a holder here now.

[sm0ggyg] 13/12/2018 07:29

Its nothing personnal smorgster, its just that I hate you.

[sm0ggyg] 13/12/2018 00:48

I did warn people that smoggster was a conman that cant be trusted, and that every share he buys goes down. If it put one person off buying in here, it was worth it.

[arrynillson] 12/12/2018 22:14

InTheMix - in your penultimate post you made valid points about mocking other posters - that has been SmoggyG/12bn MO for years - if you look at CERP he has been posting against the company for years whilst claiming no financial interest - is that the sort of nutter you want to support - tis that sort of conduct that creates the ' fan ' base that makes Jonah look like a good luck charm!

[inthemix] 12/12/2018 18:43

Can't we stick to talking about MRS? If not go on an internet chatline an type ASL if you have nothing better to do with your time.

[thehitman1] 12/12/2018 16:19

Surprised, there is no trades commentary from SmoggyG, has he sold already?.

[smoggyg] 12/12/2018 09:31

Sm0ggyG12 Dec '18 - 08:08 - 649 of 652 (Filtered)

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thehitman112 Dec '18 - 08:30 - 650 of 652 (Filtered)

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thehitman112 Dec '18 - 08:31 - 651 of 652 (Filtered)

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thehitman112 Dec '18 - 08:37 - 652 of 652 (Filtered) ///// Much better thread now,it looks like a turnaround here is due.

[zeberdie] 12/12/2018 08:42

My dad used to say that. Along with if you had brains you would be dangerous.

[thehitman1] 12/12/2018 08:37

Sm0ggyG has a lot of nicknames for SmoggyG?, sounds like they know each other from before.

[thehitman1] 12/12/2018 08:31

And filter both smokkies, bad for your health.

[thehitman1] 12/12/2018 08:30

Good buying opportunity at these levels.

[sm0ggyg] 12/12/2018 08:08

I think you should all issue a class action lawsuit against smorgola. He's clearly a conman and a fraud.

[smoggyg] 12/12/2018 07:38

You have learned a cheap lesson then truffle1,DYOR eos!

[truffle1] 12/12/2018 07:15

I am down almost 300 pounds, all thanks to SmoggyG and his tips.

[thehitman1] 12/12/2018 06:47

SmoggyG is not a normal person, he is a bellend with no life.

[sm0ggyg] 12/12/2018 02:15

What a naughty little peaker you are, smoggbog.

Do you have any other multibagging hot tips?