Mpac Share Discussion Threads

[leoinvestoruk] 21/1/2023 02:16

To correct a matter of fact, it is false to say that their debt facility is currently unused.

Net debt debt of £4.2m (excluding lease liabilities) has been guided for 31st December 2022 which corresponds to something like £7m drawn to leave a cash float. OK, so CFT said "currently", but they would surely have said if debt had been repaid by the time of the announcement. Also guidance is that the cash has gone into inventory and contract assets and so hadn't even been invoiced on the 31st - therefore it will be a while yet before cash is received even if supply issues are immediately resolved.

Yes it is true that the revolving credit facility was extended to £20m and July 2025 giving good headroom currently. However the cash outflow in the last 6 months was £13m, so you can see what happens in the event this repeats - in my opinion this is unlikely to happen, but there was an updated cash forecast in mid September 2022 taking into account supply chain difficulties which turned out to be around £14.5m too high so things can apparently move very quickly. Likewise you can see what happens to the interest cover covenants if they can't fully recognise the guided revenue and profits on machinery that is incomplete and (in case of the QCP) subject to changing specification.

The pension fund is more a matter of opinion. My opinion in October/November was that the badly delayed triennial review would imminently conclude that recovery payments could be reduced significantly or potentially eliminated, that the PPF part of the admin costs would reduce, and, if we were really lucky the whole thing could be passed to an insurance company. Unfortunately since then interest rates have fallen back and there has been no update so at the very least it now looks like shareholders will be suffering the £1.1m and growing annual pension admin costs (which are NOT included in the widely reported EPS and P/E figure) for many years to come. And at least until they come to an agreement I believe recovery payments of around £1.9m pa will be made. Deduct both for current profit forecasts and they barely break even.

The £17.4m net of tax accounting pension surplus as at 30th June has probably increased since, but I have never before heard even the most bullish investor look at a situation like this and claim a £17.4m IFRS 19 pension surplus is "worth much more" than £17m. The reality is that the pension fund trustees make the decisions and they will protect their members by offloading to an insurance company at the earliest opportunity and insurance company valuations are far far less generous than IAS 19.

I'm being negative to balance others' positivity, but to be clear, Mpac is a pretty good business (good or very good for a bespoke capital goods supplier) and, with the exception of timely disclosure to investors, is well managed.

[castleford tiger] 20/1/2023 16:09

market cap down to 47m

Lamberts is worth in excess of 20 million ( we paid 15m )
Once the high inventory unwinds we have cash of circa £10m

That leaves the rest valued at £17m and we have a pension surplus worth much more.

Anyway todays final prices paid were 236p and 240p

tiger

[castleford tiger] 20/1/2023 15:47

MRF

No I think the stock situation will unwind rapidly and net cash will be once again a growing feature on the balance sheet.

The company has a 20m credit line in place till 2025 as well. Currently unused.

They said................

These supply chain challenges resulted in longer Mpac project build time frames during the year, leading to higher levels of working capital in H2 than previously anticipated and accordingly impacting year end net debt. The Group's balance sheet continues to be strong, and these increased levels of working capital are anticipated to largely unwind during H1 23.

Now speaking as a ceo let me tell you that the timeframes on project builds goes out of the window is you are just a single component missing.

We had a brand new van off the road for 6 months waiting for a part.

The garage dealing with it told me they had 2 million £ of unfinished work to invoice if they could get the odd missing parts.

I have met these guys and they are on the ball.

Things will recover and the current price will be a blip.

tiger

[disc0dave45] 20/1/2023 14:14

Hi NPPHave posted my views previously, in a nutshell I don't think they will hit forecasts, even if they do it's still a meaty PE rating for a business whose earnings have crashed nearly 60%.

[npp62] 20/1/2023 13:55

Why is this massively overpriced?

[disc0dave45] 20/1/2023 11:13

Even if it makes a new 52 week low it’s still massively overpriced IMO.

[my retirement fund] 20/1/2023 10:59

Do you not feel working capital could be a constraint going forwards CT, leading to an enivatable fund raising?

[castleford tiger] 20/1/2023 10:29

Bought 2 more lots at 238 and 239

[my retirement fund] 19/1/2023 16:05

I took profits. I think unless news comes along or some director buying or the price gets too cheap but right now, there are better opportunities. Working capital could be a worry I guess.

[disc0dave45] 19/1/2023 15:23

MRFCT has been calling DOCS down to £1 based on nothing and boasting he was right even though it's not fallen that low today, with little regard for those losing their money.I post on here I believe they won't hit forecasts and he can't take it, even when I try to support why. Doesn't like having the Doc Marten on the other foot IMO.Anyway, when is your £2 call coming here? or have you flipped again now you hold!.

[my retirement fund] 19/1/2023 15:15

Can't really see why you're so possed disco, strange. Life is too short to bring your arguments along from other threads like Dr. Martins

[castleford tiger] 19/1/2023 15:09

Looks like you got out of the wrong side this morning.

I never love a share but I try to understand it.

time will tell.

[disc0dave45] 19/1/2023 13:44

Think you are too much in love with MPAC.
You do seem to take things personally when someone disagrees with you, chill out, you won’t always be right and neither will I, it’s not a competition.
You call DOCS £1 based on nothing but that’s okay, yet when I support my view that this is overvalued and unlikely to hit forecasts you strongly object but again don’t support it just say they will recover margins, will they!.
Forecasts are just that, simply forecasts / educated guesses.
Good luck

[castleford tiger] 19/1/2023 13:08

I will take a double on MPAC actually hitting their forecasts

tiger

[shaker45] 19/1/2023 12:22

It's harsh. The wisdom of hindsight

[disc0dave45] 19/1/2023 11:37

CTNot harsh at all, it's within their remit to mitigate such business risks which they clearly didn't / haven't.To quote "Forecasts are exactly that, forecasts - in my opinion they won't be met."DOCS nasty profit warning so will tap you on the back for that but the fall wasn't down to what you thought, hence the tap and not a pint :)

[castleford tiger] 17/1/2023 08:13

Hence the recovery in margin............agree with that

[my retirement fund] 17/1/2023 07:47

Procurement was a headache last year. This year, it should be normal supplies, albeit more expensive. Hopefully they are passing on input costs now.

[castleford tiger] 17/1/2023 05:47

Ok using EBIT forecast 3.9 last year
7.4 current year and 10.9 in 24

What damaged last year was margin
They got caught behind the inflation curve in my opinion.
Full 22 revenue is slightly up on 21 but margins were trashed.
Tiger

[my retirement fund] 17/1/2023 03:34

You have to remember that this line build out is just the qualification line! Clearly, FREYR is happy with progress, hence September's framework agreement. The qualification line is likely to be small beer in comparison to the full-scale factory fit out, right?

[disc0dave45] 17/1/2023 01:04

The Group continues to make good progress in the development and build of the clean energy casting and unit cell assembly line for FREYR Battery. Completion dates have been updated to accommodate customer specification changes and we are on track to complete the contract in Q2 2023.

[leoinvestoruk] 16/1/2023 22:32

MRF,

Just a note that saying FREYR is on track for Q2 does not mean it is on track with where it was in the previous update. The last known position (possibly from FREYR) was that Mpac were due to deliver to the QCP in December.

[leoinvestoruk] 16/1/2023 22:29

CT, DD45,

H1 Revenue reported £50.6m
FY Revenue guided £95.0m (in line, but with £15.4m cash AWOL)
H2 Revenue guided £44.4m
So, H2 guided revenue is certainly down on H1 and FY guidance is essentially flat on 2021's £94.3m.

Most quoted EPS figures are meaningless due to the accounting pension "surplus" movements, adjusting out ongoing pension running costs, cash recovery payments, share based payments, FX translation and/or frequent accounting adjustments, so I wouldn't say 10.4 H2 EPS is impossible just because H1 was 3.6p on higher revenue.

BUT surely the point here is that most of the £15.4m year end cash miss guided today relative to the forecast issued less than 3 months earlier (albeit based on the September update) is guided in the Shore note to end up in contract assets. These were already high and now look to approximately double. This is a massive revenue recognition red flag and studying IFRS 15 plus Mpac's revenue recognition policy I personally cannot see how they will successfully recognise that big an increase in contract assets. I expect FY reported revenue to end up closer to £85m.

(I use Shore numbers throughout, but Equity Development have similar)