Ms Share Discussion Threads

[rivaldo] 07/12/2005 07:53

Nurdin, thx for the summary of your conversation with the FD. I feel the management of this company have their heads screwed on, know where they're going and are doing it at their own pace in a controlled manner.

If the skewing of profits to H2 continues then we might expect at least 18p EPS this year. That sort of growth makes the current P/E look ever so slightly ridiculous :o))

[cockneyrebel] 06/12/2005 13:44

You certainly can - and if I had any ISA cash left I would be putting more in.

If these do 50% appreciation over 1 year in your ISA you need 90%+ from an AIM stock if you are a 40% tax payer to match that.

CR

[keane16] 06/12/2005 13:41

you can also put them in your ISA, can't you?

[cockneyrebel] 06/12/2005 13:05

I would imagine the FT who covered MSI a month or two back have gleaned the same Nurdin, as will the shres mags.

One tip and the punters are going to be gagging to buy imo.

IC should at least cover the results on Friday.

CR

[xdavid] 06/12/2005 12:59

Oh you tease, CR! ;-)

EDIT - Thanks, nurdin.

[nurdin] 06/12/2005 12:59

-Clearly the company wouldnt say anything which is not in public domain
-profits are skewed towards H2 but he saw no reason for that apart from the fact that the MoD settle in advance of the year end
-jokingly asked him if we can expect £3m in H2,Said its possiblle but no guarantees or guidance on that
-trading is going fine as per H1 RNS
-rise in steel prices is not a worry to them as their customers are happy to pay for the additional costs
-asked him which are their growth areas...said all three :o)

Overall I came away reassured and a feeling that the business is in good hands

[cockneyrebel] 06/12/2005 12:42

It's good Rivaldo :-)

I'll let Nurdin post it tho.

CR

[rivaldo] 06/12/2005 12:39

Good to hear nurdin.

What did they say? It took me half a dozen goes to get hold of the FD last time I tried as I think they're a bit shy, so anytime someone actually talks to them it's worth knowing about :o))

[nurdin] 06/12/2005 12:25

Well I have bought after talking to the company :o)
Must say they look cheap

[cockneyrebel] 06/12/2005 10:14

always profit taking on results tho - if results are bad they are out at the open, if results are good they wait to see a bit more added then jump, probably planning to buy back before the next results. Trouble is, in an illiquid one like this, it takes one tip or one article to see them open up 7-10p hiher and the price being marked up on 1k buys - not worth trading that type imo.

Anyway - who gives a monkeys - I'll be taking a bit of profit at £2+, probably in a few months, and hold the rest.

CR

[njp] 06/12/2005 10:08

Agreed, CR. Buy low and sell high, but you need to have done some solid research and made your own mind up what the share's worth and where it will ultimately head. Too many do little or no research and let others make the decisions for them, so it's know wonder they buy on the up and get nervous and sell on the way down. Perhaps a little harsh as most of us do it from time to time - spot a worthwhile stock, wait for a pullback and dither just a little too long. In the case of SMC it was that RNS that pulled them in, as they saw the last chance of bagging some under 100p about to disappear.

With MSI, we've just had results, so perhaps less chance of imminent price sensitive news and more chance of the price drifting a little. We shall see. Stoploss-wise, I feel this one needs a bit of room.

[cockneyrebel] 06/12/2005 09:55

It always surpises me how punters make money. When a stock falls they sell, when it rises they buy.

Look at SMC on Friday - nobody interested in grabbing the dip at 91p to buy - mark it up 13p and the punters are queuing at the door to buy. If they did it the other way round they would make money but they see a dip and suspect something bad, they see a stock rocket and they think there's good news coming. Fact is small caps are illiquid - it takes few buys or sells to move the stock a fair way fast - as will be seen when the buyers start buying here.

CR

[njp] 06/12/2005 08:11

Wasn't watching so wondered why the mark down today, until I saw those two sells at 144p yesterday. Trouble is, a mark down to 145p offer will probably spark some more lemmings to depart, so not likely to have the result intended - resell at a profit. Could be another buying opportunity on its way.

[cockneyrebel] 06/12/2005 08:00

I wonder how many will miss the chance, looks like two 6K sells yesterday hit it - ver illiquid.

Sleep and weep as they say.

CR

[cockneyrebel] 05/12/2005 14:55

No broker forecasts I'm afraid - that's why these keep surprising imo.

CR

[tarrin] 05/12/2005 14:46

Are there any broker forecasts around for '06 or '07 for these? Can't seem to find them if there are and REFS doesn't list any. In fact, REFS doesn't even list who the broker is!

[cockneyrebel] 05/12/2005 12:22

yep, ELM director buying looks interesting

CR

[fozzie] 05/12/2005 11:44

CR - bought into these last week (only 5k worth) but agree with all you say on them. It was a tough call though having 'missed the boat' over the last 18 months despite you bringing it onto my radar. Just pinched another few this morning as well. Great news on SMC, i dithered on Friday and should have bought more but have 10k at 75p so well happy. I took some compensation on a mis sold endowment and am expecting it to be credited to my bank account sometime this week, i can feel an ELM top up coming! Foz.

[cockneyrebel] 05/12/2005 09:37

This will be the next one the boys are all chasing like SMC today - £15m contract the first of a number imo and the market sleeps.

CR

[xdavid] 05/12/2005 01:34

I must be getting old. This is the third new thread in the last few weeks I have had to change for old ones ! I didn't realise I held onto shares for that long - just shows how good MSI is!

[cockneyrebel] 04/12/2005 14:05

Okay, as promised a few weeks ago - a new thread with a new titles as the old one had got a bit too long and out of date.

CR

[cockneyrebel] 04/12/2005 14:03

A new thread to build on the olds one is now due with a lot of the old data out of date and so here we are. The old thread I started was entitled "MS International - Double your money in 6 months?" The answer turned out to be 10 months to double - just means I think these are still well undervalued.

MSI has been a cracking performer over the last 18 months and many would ask 'haven't I missed the boat?'.

Well you'd be forgiven for thinking so because the share price has risen 200% in 18 months. But even after a rise like that directors have been buying at pretty recent levels:

Michael Bell added 5K @ 122p on Oct 3rd and Roger Lane-Smith bought 35K @ 125p on Oct 7th to increase his holding by 60%.

Since these buys the company has announce very good interim results:

H1 Sales up 22%

H1 pre tax profit up 30%

H1 diluted earnings per share up 55%

H1 dividend up 16%.

With the interims MSI announced a £15m MOD contract win over several years - quite a decent win for a company with £32m turnover, one that should add 15% or more to earnings for several years and underpin their growth - and the growth has been pretty magical. Over the last 3 years the eps has grown half year on half year as follows:

2003 H1 = 1.1p
2003H2 = 3.1p
2004 H1 = 4.8p
2004 H2 = 6p
2005 H1= 7.7p

With the MOD gun contract underpinning the H2 results I see every expectation they can do 9p+ eps for H2 and around 18p for the year or around 60%-70 earnings growth for the year - placing MSI on a miserly PE of just over 8 for the current year and somewhere around a PE of something like 6.5-7 maximum forward PE 2006 based on a growth rate of 30% for the year ahead, just half that achieved this year.

By this time next year it would be reasonable to expect MSI had just announced 10-11p eps in H1 and be looking for 13p in H2 - that's nothing like ambitious compared to past growth. 23p eps for and a PE of just 9 that current year would be a share price of 207p. Personally I think it's possible that they do better than this as far as eps goes, more like 24p+ and it is also reasonable to expect that after consistent earnings growth and reliability they could trade on a PE of 10 or more for the current year making 250p a share quite possible in a year's time. This would be a forward PE for 2007 of around 8 then - easily within the PE range many engineering companies trade on while MSI being one of the best performers in the sectors with a growth rate more like a software company.

They are fully listed and can go into an ISA, another attraction.

They are also diversified and all the divisions are trading well.

Forecourt Canopies and associated services:

Castings:

Defence Systems:

I would highlight this part of the Forecourt Canopies site:
Look at the 'gallery' I would also say take a close look at the defence web site. They state on there that "An MSI 30mm naval gun of which over 100 have been supplied or ordered." The Royal Navy just ordered 24 of these - so they should have some other orders we are not aware of, for instance the New Zealand navy has ordered a number of the 25mm guns but the company hasn't mentioned it.

The company is very understated - they say they are 'cautiously optimistic' at the interims as they were 'cautiously optimistic' at the year end and produced excellent interims. They are also prone to buying shares back in the market, boosting eps.

For a company with this strong consistent growth, little or no debt, trading on a forward PE for 2006 of 6-7 and paying a dividend of around 2% and directors buying shares even after a 200% rise in the stock price the stock seems way too cheap to me, compared to anything else I can see. I think they can easily achieve 50% price appreciation over 12 months and on this PE any short term downside from profit taking has to be limited imo.

Good luck.

Please do your own research to verify anything I may have said.

[leopold555] 04/12/2005 13:28

Okay I can't find the article where it said 6 years and it might have said 5 years actually. It was the article rivaldo got on his google alerts which got me into MSI in the first place. My memory is a bit hazy these days so I could be mistaken and I can't find the article now so lets say that it will be a number of years then. I don't think 6 will be far off it. The point I was making that the whole contract is not 1 year so does not boost their turnover for a year only and thats why they did not need to issue an RNS. If it is under 10% of the business annual turnover it does not have to be reported through an RNS. Or is it 15%? memory is going.

Leo

[cockneyrebel] 04/12/2005 11:38

Yes, but it secures that extra revenue - forward visibility.

Where did you see 6 years Leopold? The results say over 'a number of years'. Even if it was over 6 years that would be around 10% of revenue pa for the next 6 years from a higher margin side of the business and reasonable to expect it to add 15% to earnings pa in future years. It's the higher margin side of the business compared to folk lift forks and as everyone seems to have passed by.

"UK Ministry of Defence (MoD) announced that it had awarded the Company a £15m contract to up-grade a first batch of twenty-four of our in-service MSI-DS 30mm naval gun systems. "

"A first batch" - that means more to come as far as I can see - 24 navy gun systems only fits out about 8 ships I would imagine - The Royal Navy is a lot larger than that.

They also never even metioned the MSI-DS25 guns they are supplying to the New Zealand Navy that Rivaldo mentioned higher up the thread.

I think a 15% boost to next years earnings is worth more than a 6p drop in the share price when the stock is alread on a forward PE of something like 6-7 imo.

CR