Manroy Share Discussion Threads

[bookbroker] 21/1/2013 09:14

Spread getting a bit wide!

[battlebus2] 21/1/2013 09:02

Great to see your vote of confidence GHF. Can't see any downside and if they finalise the new contracts it's the icing on the cake.

[glasshalfull] 21/1/2013 08:55

I've bought a few having poured over it during the weekend. Think it a great risk/reward play at current price.

Regards
GHF

[cheshire man] 21/1/2013 08:43

Some interest here this morning I see,,,,,:-)

[battlebus2] 21/1/2013 08:18

Looks like a tick up coming, next buy at full price.

[jimmy12345] 20/1/2013 17:11

great rundown of the company guys, there is certainly prospects here.

its why im holding and not selling even though way down, this is going to come good in the near future.

[glasshalfull] 20/1/2013 16:21

Simon - Pinged you mail. It's new email address so check junk mail if nothing pops through.

GHF

[simon gordon] 20/1/2013 15:53

Came across this which gives more detail on the HMG biggie:

Placing Document - 25/7/11

In 2010, the US Army commenced a new M2 HMG procurement programme which the directors of Manroy USA believe will result in the existing 40,000 US Army M2 HMGs being converted to a QCB build standard, which is the standard that Manroy manufactures in the UK, and a further 35,000 M2 HMGs being ordered over the next 10 years. The Directors believe that, initially, these will be sourced by the US DoD through General Dynamics, the quoted US aerospace and systems manufacturer, until the US DoD puts the programme out to competitive tender, which the Directors expect to be in 2013. Manroy has an existing manufacturing agreement with General Dynamics which the Directors intend to enhance through Manroy USA and so place the Enlarged Group in a stronger position to be able to supply General Dynamics in its supplies to the US Government. When the US DoD invites tenders for the subsequent phase of the programme, Manroy USA will be in a strong position to compete for a proportion of the programme.

[simon gordon] 20/1/2013 13:29

Battle,

Just read your post, 145, do you know the HMG procurement timeline?

Thanks

[simon gordon] 20/1/2013 13:26

GHF,

It looks like a big portion of Sabre's business was making M2 barrels:

RNS - 17/4/12

"The Directors believe the DoD has an annual requirement for approximately 10,000 M2 HMG barrels, of which approximately half were supplied by Sabre prior to its cessation of trade in 2010. Now the above contracts have been successfully novated, MUSA plans to bid for, and be involved with, this major DoD requirement. MUSA's extensive barrel manufacturing capability can be used for both the Group's US and UK businesses and so secure continuity of supply and quality for customers without reliance on external contractors."

-----

Where did you find this snippet:?

A Pre-Solicitation notice was published by the DoD in January 2013 allowing any company to respond who feel they have the capability to fulfil the DoD requirement. The notice states that 50,000 QCB kits are to be delivered between 2014 and 2018

---

With the new factory and HUBZone status, and the M2 and HMG contracts to go for, the size of the business could be transformed over night, especially if they get a substantial cut of the HMG order.

In the coming week I will contact the company to find out the expected procurement timeline for the HMG order.

Thanks for flagging it up the other day on Twitter, I have followed the share from a distance as a friend of the family is keen on it and held since the IPO.

[battlebus2] 20/1/2013 13:16

Yep that's the story GHF, aside from an ethical stand point it's a decent punt. For me the fact we stick to U.K. regulations over arms is enough. Atleast they are being used in the right direction and as someone who has family connections to the military and who benefit from their products i personally have no issues.
As with all my investments i like to keep in touch with the company and expect to see announcements very soon given some are at the final stages.
MUSA continues to make progress in the FAA testing and approvals process on the novated contracts. Whilst this has taken a long time, initial approvals have begun to come through. Most recently we have received approvals for deliveries of M16s with a value of $0.5m (£0.3m), providing confidence that, although this is a longer process than anticipated, we are achieving the desired results. These products had been previously built by Sabre, whose business had been acquired by MUSA in 2011. To accept delivery MUSA and the US DoD agreed a test plan and acceptance procedure that was completed in December 2012. While this was not a full FAA procedure for production of M16s it was an encouraging sign that the US DoD is working with MUSA to complete the delivery process and FAA with these contracts.
In August 2012 we announced that MUSA had been granted HUBZone status. This is extremely important as it gives MUSA a significant tendering advantage over non-HUBZone companies in winning future contracts from the US DoD. The value of this status in the US should not be underestimated

[glasshalfull] 20/1/2013 12:40

Yes, the shares would go "ballistic" if these contracts materialised Simon.

A Pre-Solicitation notice was published by the DoD in January 2013 allowing any company to respond who feel they have the capability to fulfil the DoD requirement. The notice states that 50,000 QCB kits are to be delivered between 2014 and 2018

Few snippets.

Current Market Cap

£7.8m (at 41p)

Allenby have initiated coverage with Buy recommendation but sensible earnings forecasts given the various timing difficulties that have impacted during the last 12 months, with room for upgrades should certain contracts materialise.

Allenby Capital Limited
17-01-13 BUY

2013

PBT £1.86M
EPS 7.70P
D/V 1.00p (2.4% yield)
PER 5.3

2014

PBT £3.18M
EPS 13.57P
D/V 2.00p (4.9% yield)
PER 3

---

On the issue of contracts & delays,

Results for the year to September 2012 were frustrating for management and investors alike, being impacted by events that were largely out of the group's control. Once First Article Acceptance in the US is confirmed, the way will be clear for delivery against a strong order book worth £8m from its 49% owned US associate, MUSA. The record UK order book of £9m gives management the confidence that group revenues for the year to September 2013 will be in line with market expectations of c.£14m. In addition, Manroy is negotiating on a significant number of contract opportunities which, if awarded, would result in a very substantial increase in the order book.

---

On question of ethics is one that each potential investor will have to reconcile with their belief/view.

Manroy plc is the holding company for a group specialising in the provision of solutions for weapon design, production and mounting requirements for Infantry, Armoured Fighting Vehicles (AVF) and Naval platforms.

In the UK these services are delivered by Manroy Engineering Ltd and in the USA by Manroy USA LLC (MUSA), a 49% owned associate. Specifically, Manroy is best known as the UK's only manufacturer of Heavy Machine Guns (HMGs) and has recently designed and introduced a General Purpose Machine Gun (GPMG) and, following the acquisition of the trading assets of AEI Land Systems Ltd, the product range has been further expanded to include the design and manufacture of ancillary products including weapon tripods, towbars, turrets and weapon mounting solutions.

Manroy adheres strictly to UK legislation regarding the export of weapons
Clearly, the exporting of armaments is politically sensitive and it is worth stating at the outset that Manroy adheres strictly to UK legislation concerning the sale of armaments and weapons to foreign countries and governments. The group has never undertaken arms sales to any embargoed countries and in circumstances where the group sells its products overseas, such sales are undertaken in strict adherence to UK Government export regulations and approvals and are only undertaken after all appropriate UK Government licenses have been granted.

---

Manroy USA

The US arm, MUSA is only 49% owned by Manroy & it appears that this ownership structure was implemented to allow for the application and subsequent award of HUBZone status where a business must be at least 51% owned and controlled by citizens of the United States and 35% of the firm's total workforce must reside in the HUBZone.

Benefits appear threefold,

*US federal government agencies are required by the HUBZone Empowerment Act to contract with HUBZone-certified small businesses for more than 3% of their budget in the form of prime contracts to HUBZone firms.
*Having HUBZone status allows MUSA to tender for certain DoD contracts on a sole supplier basis rather than competing against major Defence contractors.
*Provides MUSA with a 10% price evaluation preference in full and open contract competitions as well as further sub- contracting opportunities. In other words it results in MUSA's quoted price being automatically discounted by 10% against those from businesses without such status.

---

MUSAs acquisition of Sabre

In March 2011, MUSA completed the acquisition of the business and assets of Sabre Defense Industries (Sabre) for $6m in cash for assets that had been independently valued at $10.7m. Sabre was established in 2002 and was a direct competitor of MUSA. The purchase of Sabre was secured in auction against strong competition from three major international competitors providing some indication of the commercial and strategic value of this business.

The kicker here is that Sabre previously had turnover c.$17m per annum & due to bankruptcy has not supplied the Dod since 2010.

---

Shareholding

Caledonian Heritable Limited 23%
Glyn Bottomley 11%
Cazenove 9.6%
Investec 4.8%
Standard Life 3.9%
Amati 3.6%
Strindberg Rajput 3.5%
Downing LLP 3.5%

Total 62.9%
(As at 30/09/12)

---

My conclusion is it that MAN appears substantially undervalued & I would anticipate from commentary of RNS announcements & Allenby research that there are a few decent contract award announcements round the corner, while current order book & profitability in 2013 looks pretty much nailed on, with PERs of 5.3 for the current year falling to 3.

The company have been reiterating delivery of the order book, notwithstanding the delayed £8m order which would be the icing on the cake.

Placing aside ones ethical stance for a moment, there appears to be a strong possibility for capital growth at the current distressed share price which is also augmented by a decent d/v yield if business goes to plan, with 4.9% yield for 2014 pencilled in at the current price.

Regards,
GHF

[simon gordon] 19/1/2013 18:24

If they landed the biggie in America, as mentioned in 2011 at GCI, then the share would rocket. Does anyone know if it's still a potential goer?

GCI - 25/07/11

Manroy fires into USA

by Robert Tyerman

Machine gun maker Manroy (MAN) has raised £3 million after taking 49 per cent of American gun manufacturer Manroy USA in a £4 million share deal. Manroy has secured the money at 95p in a placing handled by broker Arbuthnot Securities following its decision to exercise its option to buy the Manroy USA stake from Caledonian Heritable, a diverse group owned by property developer Kevin Doyle.

Steered by chief executive officer Glyn Bottomley, the British Manroy company already has close management ties to the US company, which earlier this year borrowed $2.7 million (£1.7 million) from Caledonian Heritable to help fund its $6 million purchase of a fellow US concern Sabre, a supplier of heavy machine guns and parts to the US department of Defense, from Chapter 11 bankruptcy. The British Manroy, which came to AIM in December by reversing into shell group Hurlingham and raising £6 million at 75p, has supplied the British military for more than 25 years and currently makes heavy machine guns to the standard to which the US army last year converted its present procurement programme.

For that reason, Bottomley, Doyle and US defence industry stalwart John Buckner, who owns 51 per cent of Manroy USA, hope the enlarged Manroy will be well placed to pitch for a share of the US government's new heavy machine gun programme, when it invites tenders in 2013. Manroy already has a manufacturing agreement with US defence and aerospace giant General Dynamics, through which the Department of Defense is sourcing the programme. Manroy suggests the parts of the programme that could then come its way might be worth $160 million (£100 million).

Under its deal with Doyle's Caledonian Heritable, the British Manroy is issuing new shares to Caledonian for 49 per cent of Manroy USA and a half interest in the property it occupies, as well as lending Manroy USA the money to repay its Caledonian loan. The aim of the placing is to replace the money lent and to augment the British Manroy's cash.

Highlighted by Growth Company Investor in December at 76.5p, Manroy's shares hit 123p at one point and now trade at 97.5p, up 3p this morning, valuing the company at £12.7 million. Despite the somewhat incestuous aspects of parts of the deal, it could pave the way to worthwhile business for the company. Hold on.

Tags: AIM market, General Dynamics, Glyn Bottomley, Heavy machine guns, John Buckner, US department of Defense

Sector: Aerospace & Defence

Companies: Manroy

[kinkell] 19/1/2013 14:04

In calculating the free float at roughly 45%, have you taken into consideration the effect of EIS under which the original shares were issued?

[battlebus2] 19/1/2013 12:20

Yep i thought the same but went for it anyhow, there has been a seller for months which has also held back the share price. Regulation may also feature but clearly given all that this is still very undervalued imv. I have bought 60k at an average of 44p. Appreciate your final thoughts GHF.

[woodcutter] 19/1/2013 11:46

GHF/b2

The dilemma here is that no matter how good a value play it looks many investors will be torn from an ethical/moral standpoint. I think this may limit the possible trades, by how much that's difficult to predict but the impact on the share price is all too clear, it just might not rise at the anticipated rate.

It's a hard one and i pass no judgement on those who make that investment it clearly has to be down to the individual. However considering the value, it doesn't appear to have had much significant buying over the last few sessions and for a company with only 19m shares i would have expected some movement from the small numbers traded, particularly with over 55% of the shares tied up, and the free float at roughly 45%.

As i said it's a toughie but good luck with it, if you take the plunge.

Will look at notes over the weekend GHF, thanks.

mrs woodcutter send her regards, neatly wrapped in in an IED.:0))

Woody

[glasshalfull] 19/1/2013 09:42

Battlebus - Reassuring to see you here.

I've not time at present but basically looking to see how the investment stacks up ethically for me & also my understanding of the product cycle, US partnership including the Sabre deal, cashflow, order delivery & recognition, etc, etc.

It looks fantastically good value at a glance, but I wish to dig a lot further.

Kind regards,
GHF

[glasshalfull] 18/1/2013 18:46

Of course I jest Woodcutter. I'm sure she is both patient & understanding to put up with you.

2 x emails should now be with you. Remember, new email address, so check your junk mail if it doesn't arrive into your inbox.

Enjoy!

Regards,
GHF

[woodcutter] 18/1/2013 18:37

She has a soft side too, but very principaled.

I don't think she'd take too kindly if i suggested i could make a few bob hiring her out GHF, perhaps if i gave you her email address you might like to venture to suggest such an idea;-)))))

look forward to mail coming

been busy all day today so no market activity untill after close, just catching up.

Frustrating we didn't get he BRY update.

WC

[glasshalfull] 18/1/2013 18:30

Remind me never to get on the wrong side of Mrs Woodcutter.

Infact, do you hire her out? There's a few folk that have maligned me over the years & I think she'd be just the ticket to sort them out....

LOL ;-)

Email coming your way...from new email address.


Regards,
GHF

[battlebus2] 18/1/2013 14:42

Thanks for that GHF. I'd appreciate your thoughts on what ever you decide to do.

[glasshalfull] 18/1/2013 14:34

I'd bet that Mrs Woodcutter is blissfully unaware of the exchange on this thread ;-)

FYI...Allenby have produced a comprehensive buy note with 60p initial target. Still reviewing the business & whether it's an investment for me.

Regards,
GHF

[woodcutter] 17/1/2013 21:21

you haven't met her!