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Nice contract win and given the m/c is a paltry £15.8 m this stock is clearly undervalued. Perhaps they will include it in a long overdue trading update.
Bear in mind in the last trading update on 2 May 2023 the CEO ( and substantial shareholder of 28.53% ) stated that ' Group's clients have moved the start date of work packages, which had previously been scheduled for April and May 2023, into FY24.' and in the Full year audited resuots released on 13 Sep.'23 they staed 'Contracted Backlog growth of 44% to £67.9m (FY22: £38.2M) and Sales Bookings up 37% to £69.9m (FY22: £51.1m) '.
Therefore the next trading update is eagerly awaited. A lot of stocks are at all time lows and this is one that has a lot of potenial.
https://investors.madetech.com/share-information/
Ryno
Much appreciated, yes a few more like that and punters might wake up as to the potential in this company.
Https://www.tenderlake.com/home/tender/2252a33f-0af5-43ed-823b-6b35436a9949/bichard-7-support-2023-for-ministry-of-justice
This is the contract win
Ryno
I can not see it with this link, who gave Made the contract ?
Wondering why there hasn't been an RNS for this new contract win.
https://bidstats.uk/tenders/?ntype=tender#810024959-809500969-25
Worth £6.5m?
Ryno
I fear it is a Diana Ross "I'm still waiting"....
Whens the rerate coming Bright? Please
Brighty 1
I have to agree with you, they do seem derious value down here
15p a share hugely under values MTEC based on the FY numbers announced: Revenue up 37% to £40.2m, cash of £8.5m (as at 31st May), contracted backlog growth of 44%, EBITDA of £1.5m and sales bookings up nearly 40% at £69.9m.
A reminder, MTEC's share price was over 40p in February of this year and just 2 years ago it was 140p a share. A significant share price re-rate is on the cards here.....
Good luck, Brighty
CEO Rory MacDonald and CFO Debbie Lovegrove, present full year 2023 results for the 12 months ended 31st May 2023.
Watch the video here: https://www.piworld.co.uk/company-videos/made-tech-mtec-full-year-2023-results-presentation-september-2023/
Or listen to the podcast here: https://piworld.podbean.com/e/made-tech-mtec-full-year-2023-results-presentation-september-2023/
Yes, MTEC is as you say undoubtedly 'cheap' as sales and profitability are clearly improving, as per the RNS yesterday. MTEC is guiding the market of "An improved adjusted EBITDA in the first three months of the new financial year". i.e. It's clear the bottom line is being materially enhanced in the current financial year. This equates to a undervalued share price moving forward. That's why a re-rate is likely to happen....
Good luck, Brighty
Yes, thankyou sparkler23, it was the end of a long day, and I was a bit too eager to post my reply. Cheers.
I don't disagree with what you say, Dartron, but you have gone the wrong way in calculating enterprise value. It is now trading on an EV of £13.6m taking the mkt cap of £21.6m and deducting net cash of £8m. It probably deserves to be so, but this is undoubtedly 'cheap' if sales and profitability improve from here.
Brighty,
MTEC's share price was over 40p in February of this year - yes it was, and it should not have been. One of the last Hurrahs of over valued AIM companies being run up by traders. I cant speak for 2 years ago, but it is likely a raise/Dilution has occurred to lower the price that much?
15p a share seriously under values this company based on the numbers announced today. - No it doesn't, the market cap is now £22M for a company that lost £1.5M this year. Ok, it has no debt, and £8M cash, so we are talking about an EV of about £30M for a loss making company, with no financial moat, that mainly relies on people to generate the earnings - once they can get a contract. See very good post by gusrezo.
I have been invested here, I sold at 33p as it was clearly over valued by that point. Bought the dip recently, but fortunately needed funds and sold close to b/e at 17p. I would say this might be worth buying or holding for when the economy picks up, but I think around £20M mcap is about right currently. If you bought it for £20M and liquidated it tomorrow, you would be out of pocket. I also followed TPX impact closely, and Totally health care, both have had similar woes. This sector is an avoid for the time being to savvy investors. As the the CEO purchasing, I have said it before, he is buying back stock for a fraction of what he sold it for when this floated. It obviously is worth more to him than anyone else (as he has control).
I would also keep an eye on the share count of these 'people' business. It has increased by 10% this year. I think these companies have a trick of part paying employees with shares. This keeps wage bill low, increases earnings, impresses the market, but few people realise the effect of the dilution. Great if you can accelerate earnings above the level of dilution. It also suppresses the share price, as stock is constantly being sold. - currently scratching my head about with Begbie Traynors.
For example
https://www.lse.co.uk/rns/MTEC/ltip-update-and-pdmr-dealing-y3mxqj601lhoiv5.html
Following the waiver and cancellation of the CEO and COO LTIP Awards, and the grant of the above new awards under the LTIP, the Company has options outstanding over 4,688,268 Ordinary Shares, equivalent to 3.14 per cent. of the Company's current issued share capital.
These kind of companies have a relatively easy model: they bill the customers 100, pay around 80 in wages to staff directly involved in projects (engineers,programmers ,software architects,etc), 10 in other expenses and 10 operating profit -so a single digit net profit. However, Made Tech keeps on burning cash, look at the cash flow estament, P&L is rubbish. Formerly they blame the expenses on external recruiting companies -they use to charge 1 month or salary- as they couldn't cope with the hiring spree with its internal HR staff. Now they say occupation is just 70% due to delays with customers... that means the customers pays for example 12 months of project and the company pays 16 months of salaries. This is a recipe for disaster. Unless they start generating real cash flow, the share price will go down and down, since with the current model, the more contracts they get, the higher the cash burnt.
The key fact to bear in mind here is that MTEC's share price was over 40p in February of this year and just 2 years ago it was 140p a share. i.e. 15p a share seriously under values this company based on the numbers announced today. It's clear the bottom line is being materially enhanced in fiscal year 2024 and this is already kicking in. See the post period guidance. This is a business with revenue up 37% to £40.2m, cash of £8.5m (as at 31st May), contracted backlog growth of 44%, EBITDA of £1.5m and sales bookings up 37% at £69.9m. This is impressive.
Plus, just look at what MTEC is saying about the contract sizes too. They've secured two contracts of over £10m, seven over £5m and 10 over £2m during FY23 and they are one of only 11 suppliers to win a place on Lot 2b of DALAS, which is expecting to spend £700m-800m until September 2027.
That's why a re-rate is likely to happen soon...
Good luck, Brighty
Having traded in and out of this one over the last 12 months or so - it is a classic business in transformation.
About this time last year they had a staffing crisis having to employ expensive contractors, so I take heart that they have reduced headcount by 11% being their biggest cost and within that a 20% reduction in contractors since H1.
Next year turnover may be flat but with higher margin business in the mx and lower cost structure this should reflect in bottom line.
@shearclass
I agree with your thoughts, the one positive though is they appear to still have plenty of cash, and something we all know but is worth repeating, management do have serious skin in the game.
Being generous one could say that this delayed contracts issue is an unavoidable factor of working entirely for the government or government agencies, just thinking out loud...
"There's fantastic growth happening at MTEC"
Guess you didn't read that the outlook is for revenue to be flat YoY...
"Post year end highlights and outlook
Revenue for FY24 expected to be in line with FY23"
This is a downgrade vs the previous forecast of £43m
Very strong numbers from MTEC today.
* Revenue up 37% to £40.2m (FY22: £29.3m) and CAGR of over 80% over the last 5 years = Very Good
* Cash at 31 May 2023 at £8.5m = Very Good
* Contracted backlog growth of 44% to £67.9m (FY22: £38.2M) = Fantastic
* EBITDA at £1.5m = Encouraging
* Sales Bookings up 37% to £69.9m (FY22: £51.1m) = Brilliant
* Trend of increased contract sizes continued during FY23, with two contracts won over £10m, seven over £5m and 10 over £2m during FY23, reflecting the Group's growing stature in the market. = Very good.
Post period:
*An improved adjusted EBITDA in the first three months of the new financial year and trading in line with expectations for FY24 = Excellent
* One of only 11 suppliers to win a place on Lot 2b of the new Digital and Legacy Application Services framework ("DALAS"), which is expecting to spend £700m-800m until September 2027 = WOW / scope for more significant contract wins.
Basically, what's not to like about these results? There's fantastic growth happening at MTEC which is already having a positive material impact on EBITDA this fiscal year. A reminder that MTEC's share price was over 40p in February of this year and just 2 years ago it was 140p a share. i.e. This could have a very big re-rate over the next few months, starting from today....
Good luck, Brighty
Yes, 14th September could be interesting. MTEC was 140p 2 years ago (x 8 of where the share price currently sits). In February it was over 40p a share. The slide in the share price looks way overdone. If the update next week is good will we see a re-rate? The noise coming from the company is encouraging...
* Fast expanding client base, including DVLA, HMRC, MoJ
* Half the 6 highest spending govt organisations are clients
* Govt increasing digitisation spend while favouring smaller agile providers
* Rapid revenue growth of 89% CAGR over last three years
* Repeatable revenues with significant client value which grows over contract life
* Entry into defence and police & law enforcement government sectors planned for near term
* Expanding UK regional coverage in line with government’s levelling-up agenda
* Launch of cyber security capabilities planned for near term
Good luck, Brighty
Thursday, 14 September, 12:30pm
Rory MacDonald, CEO & Deborah Lovegrove, CFO will present full year results followed by Q&A.
Register here: https://bit.ly/MTEC_FY23_results_presentation
And a fourth just now at 16.09
This morning.
100k x3……
Huge Buys going through:
15-Aug-23 10:07:30 17.00 430,000 Unknown* 16.50 17.50 73.10k O
15-Aug-23 10:07:23 17.00 530,000 Unknown* 16.50 17.50 90.10k O
Follow the money....
Good luck, Brighty