Mti Wireless Edge Share Discussion Threads

[russman] 04/11/2013 17:12

A niche business, a value play. Any hint of decent top line growth and this would fly.

[philo124] 04/11/2013 12:20

I feel positive about progress; something I haven't felt for a long time.

[spaceparallax] 04/11/2013 12:04

Continuation is the key to share price recovery to reflect not only asset value but also earnings potential.

[sladdjo] 04/11/2013 09:57

Continuation of good work by MWE. Very strong results in Military, hopefully commercial will soon follow.

[spaceparallax] 04/11/2013 09:08

Good solid results today.

[cjohn] 01/11/2013 10:23

A sound report from Sladdjo.

After attending the meeting, I bought some more.


Let me add a few notes.

1 A well-run company.

For example, in response to my question, Mr Borovitz told us that their production facilities in India have as few quality issues as the Israeli plant. Their defect return rate is only 1/2 %. Really, very low.

I have contacts in a couple of médium-sized European engineering firms with plant in India producing pieces of a lower complexity than MWE's antennae. They have had horrendous quality issues with their Indian plant.

But this is mixed news for us, as it's unlikely much more margin can be squeezed from already very efficient production.


2. A very competitive field. They have but 10% of fixed wireless broadband production. This implies a large number of competitiors. Margins are thin. But is the field saturated? There may be no more significant entrants.

3. So all depends on increasing turnover.

- Wimax-ready antennae are just one technology for dealing with increased broadband data demand. Increased demand for data doesn't necessarily imply increased purchase of wimax-ready fixed antennae.

- In the 80 GHz back-haul antennae, MWE does have a moat. Mr Borovits confirmed they have higher gross margin in this section. Let's say 40% then. They now have 6 clients for 80GHz as compared to 2 last year. The original two OEMs are testing and ironing out glitches with their equipment, in which they incorpórate MWE's antennas. So we might expect turnover to be flat this year and rise next. Current turnover in this section is $1m. With 40% gross margins, a doubling in turnover would produce about a quarter of a million sterling extra in gross profit from this section alone. I think that's plausible. Moat to persist for 5-10 years? Hmmm, I'm doubtful.

- RFID: this could take off big-time in retail and toll-roads. It's a long-shot, but if it does.....


- Military: lumpy and unpredictable turnover.

4. Research costs are subsidized through R and D tax credits and through being
incorporated in the payment for military projects.



Conclusión: Little visibility as to future turnover, but it can be seen that success in any of the above mentioned áreas could produce a marked increase in business.


Does the current Price of about 1/3 tangible assets make sense given the above? Absolutely not. These remain ridiculously under-valued and I continue to be a buyer.


PS I had a good impression of the FD, Moni Borovitz. He was knowledgeable and spoke well and dealt with some fierce and partly unfair criticism from the third PI in attendance with good humour. And seems wholly committed to keeping MWE public.

[spaceparallax] 25/10/2013 09:32

Cheers Sladjo, a comprehensive set of notes much appreciated. Overall, it sounds as if we have more to be positive about.

[gb904150] 25/10/2013 07:47

sladdjo - great update. Thanks for taking the time to do that.

[philo124] 24/10/2013 16:32

Thanks a lot CJ.

[sladdjo] 24/10/2013 09:45

Update from yesterday's EGM, CJohn please add in where I've missed out.

Votes were 4.8m in favour, 1.2m against and 700k with-held.

Due to there being a third shareholder in attendance, who criticized MWE's communications policy and said he hadn't seen an annual report since MWE listed, Moni ran thru MWE's divisions which provided some interesting updates on his view of the business. Split as follows:

Military - no change here. Contract based and lumpy, but provides MWE the chance to improve their technology as Military orders often require R&D.

Commercial - 2 areas. As mentioned previously, MWE sells to other businesses who use MWE's antennas as part of their product offering.
1) Fixed wireless (called fixed to differentiate with mobile), which provides internet to homes and offices. MWE thinks that they have 10% of market (down from 25% due to competition and the insolvency of their previously largest client.) This area is ripe for potential significant growth due to growth in cloud WiFi (which covers parks, stations, etc.) At present this is done by Mobile providers, but the amount of data that they can provide is limited and as data demands increase, new infrastructure will be provided which is where MWE comes in.
2) Wireless backhaul market. This is where MWE supplies their 80Ghz antenna, and they still believe that they are one of only a few companies with a product in this range that meets required standards. Moni mentioned that there aren't many competitors as significant capital is required to develop and test this technology. He thinks that MWE's technology will be protected for 5 -10 years as not only will competitors take a while to develop, but MWE's customers, once they have MWE's antennas in place, are unlikely to change the antenna as then they'd have to re-test and configure their whole systems.
MWE focus on providing good service and product on try to not compete on price. Due to these reasons and those mentioned above, MWE can sometimes charge a 10% premium on their products.
A final point that may or may not be of interest is that MWE are unlikely to supply Ericsson/Huawei as they'd require MWE to build a plant specifically for them and offer wafer thin margins.

The next area of business is RFID. MWE provides the antennas that scan RFID chips and currently is used in toll roads. The company that they supply the antennas to has recently been purchased by one of the largest industrial companies in the world and MWE is now seeing increased orders (which was alluded to in their 1/2 yearly report.) Another potential area of growth is retail. Moni says that supermarkets would like to be able to use the antennas to scan all of the items in a trolley, rather than having to take them out of the trolly and manually scan 1 by 1. MWE is currently in testing stage with an international supermarket for this idea. Finally, Airports are looking at RFID to scan bags and check where they are, but this is moving slowly as there are lots of security issues.

Other points that were mentioned were that MWE isn't expecting much growth in Wireless antenna's this year, but they've signed some additional customers and now rely on several customers rather than the 2 they had last year.

In terms of marketable securities on the balance, they are invested in "fund guarantee" products. CJohn mentioned that he thought that these were money market funds but that fund guarantee is Moni directly translating into English.

Also, MWE only needs $1m cash for working capital, so the rest is "spare." MWE have been on the lookout for an acquisition for a while but have yet to find one that meets their criteria (the fact that they are very selective must be seen as a big positive for investors.) They are looking outside Israel and upstream/downstream in the supply chain.

Would like to have asked further questions such as the possibility of MWE tendering for some of its shares at a significant premium to the current price and whether this would be compared against any acquisitions, but Moni had to leave as he was meeting some brokers to try and promote the company.

All in all, Moni is making an effort to increase the market's awareness of MWE and the company does have some exciting prospects. I came away from the meeting feeling that Moni was more bullish than in the previous few times that I've seen him. Ultimately though, although the market is severely undervaluing MWE, the best way for MWE to prove the market wrong would be to produce some decent profits.

[spaceparallax] 21/10/2013 10:10

Slad/CJ,

Can't be there but would be grateful for your feedback.

[philo124] 21/10/2013 10:09

Sorry I'm in Spain; Good luck.

[cjohn] 21/10/2013 09:56

Yes, I'm on for that, Sladdjo. I'll be at Chapters Deli at 2.30. Regards

[sladdjo] 21/10/2013 09:49

CJohn - quick check that we are still on to meet at 2:30?

Anyone else available to join, or any comments for the meeting?

[spaceparallax] 09/10/2013 09:12

The divi codicil is more acceptable, although it would not be acceptable if the issuing of such a divi created cashflow issues.

[sladdjo] 08/10/2013 17:37

well done to shr-holdrs for coming together to get better terms and thanks to the company for listening

[cjohn] 08/10/2013 11:56

I think this new codicil to the Guaranty Agreement indicates that the Company and its advisers at Allenby Capital have taken note of the points made on here and by a couple of us by phone. This is an advance - and a creative one - and shows a desire to listen (and protect) minority shareholders at MWE, something I don't see that often at some of the smaller companies in which I hold stakes.

The loan guarantee does not now imply that in the worst case scenario MWE will have to cover the loan to MTI. Instead, that worse case scenario will now trigger a major special dividend payout.


I agree with Joan that there needs to be more thinking about the cash on the balance sheet and in general ways of realising shareholder value. We all have an interest in that.

MWE produces fine technology in a difficult market and is woefully undervalued. My feeling is that more effort could be put in publicising the company to small shareholders - a point I've made before and was taken up by Sladdjo and mentioned to the company at the last AGM.

I'm attending the EGM and hope we can have some wider discussion on these themes.

[joan of arc] 08/10/2013 10:30

Re the RNS today why are they so desperate to keep the cash in MWE and not pay the divi? They have been sat on it for years to no good use!

[cjohn] 07/10/2013 08:45

Hi Sladdjo, Ok, that sounds fine. I'll be there at 2.30.


If the deli doesn't exist, I'll see you outside Allenby at the same time.


Regards


CJohn

[sladdjo] 02/10/2013 09:00

Great - according to google maps there's a deli outside the square where Allenby is based, Chapters Deli, ~ 50 Bishopsgate. Lets aim to meet there.

[cjohn] 01/10/2013 14:52

Hi Sladjjo,

I'm going and would be happy to meet up beforehand. Name the place. Or in a subsequent message, I'll give you a contact e-mail.

If Herald don't want to attend, they should set up a proxy - assuming they'll vote against.

[sladdjo] 01/10/2013 08:51

sorry for late response, been away from internet for a while.

Similar position size to CJohn so we should get at least 2% voting against, but MWE only needs either 50% of votes or less than 2% voting against, so will still be close.

I'll be there - anyone attending interested in catching up for a coffee 15 mins before the EGM?

Will ask Herald if they'd be prepared to join, but in advance the position is less than 0.1% of their portfolio so I'm not sure how much time they have to allocate on it (tho of course they don't want to lose additional funds.)

[spaceparallax] 24/9/2013 11:57

I wont be going but would appreciate feedback

[cjohn] 23/9/2013 12:06

Hi,

This can be blocked if 2% of total shareholders vote against. I hold something like 0.8% of the company, so not many more have to vote against.

If this was a secured loan guarantee, I WOULDN'T be against - for example, secured agaisnt a million sterling's worth of MWE shares. These, held in escrow, could be cancelled in the unlikely event of a default. But this still wouldn't be the best option, in my view, for either MTI Computer or MWE:


Sladdjo, thank you very much for contacting Herald. i was about to do that this morning. Would you be prepared to encourage them to attend the EGM?


This discussion has arisen becasue the bank making the loan to MTI Computer has become worried about the security provided - a million sterling's worth of MWE shares, becasue of their illiquidity and poor performance. But obviously, that por performance will only be worsened, if a deal like this goes through. It is not in anybody's interest. Having Herald present would encourage the discussion of other possibilites.


Will you be going to the meeting?