The latest Investing Matters Podcast episode featuring financial educator and author Jared Dillian has been released. Listen here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
Allenby Capital's new note reiterates their 90p share price target.
They forecast 4.28c EPS this year, with a $9.39m closing cash pile, i.e around 8.4p per share. The ex-cash P/E is therefore only 10.6 for this year.
They summarise:
"– Operational highlights:
Antennas saw new orders in military for existing product lines and requests for new solutions, across new and existing customers. MTI’s innovative ABS antenna for 5G backhaul is being evaluated by three tier one radio manufacturers and two
tier two customers. The opening of the Indian market for E-Band 5G backhaul has created a substantial multi-year opportunity, although orders remain sporadic, and MTI recently established a new local subsidiary. The Mottech division secured two longer contracts in April with an existing customer, a large Israeli municipality, worth $2.2m over five years, and fountain control also offers growth opportunities in an adjacent market.
– Outlook: MTI’s three divisions all enjoy strong medium term growth drivers – increased defence spending (Antennas and MTI Summit), water scarcity (Mottech) and the ongoing 5G roll out (Antennas). The outlook for defence is particularly strong (representing c. 44% of group H1 revenue (FY22: c. 37%)) and MTI’s design wins typically result in multi-year revenue opportunities. Forecasts remain unchanged with H2 growth expected at the top and bottom lines and the current share price fails to reflect MTI’s growth potential."
Https://wp-allenby-2020.s3.eu-west-2.amazonaws.com/media/2023/08/20230815-MTI-Wireless-Edge-Ltd-MWE.L-Allenby-Capital-Interims.pdf?c3797=on
Part 2:
"Earnings guidance maintained
Importantly, the directors are maintaining full-year guidance of 11 per cent growth in pre-tax profit to $4.8mn, which points to second-half pre-tax profit rising 18 per cent to $2.7mn on 13 per cent higher revenue of $26.7mn. On this basis, expect annual earnings per share (EPS) of 4.28p and a hike in the payout from 3¢ to 3.2¢ (2.5p). The dividend is rock solid, too. Net cash increased by 20 per cent to $6.25mn in the first half, and analysts at Allenby Capital expect a further rise to $9.4mn (8.35p) by the year-end, buoyed by strong cash generation.
So, with earnings guidance maintained, and the shares rated on a cash-adjusted forward price/earnings (PE) ratio of 7.5 and offering a 6.2 per cent prospective dividend yield, the share price drift since the 2022 annual results (‘A lowly rated technology group offering a prospective 5.5% yield’, 13 March 2023) is worth exploiting. Buy."
Here's Simon's Thompson's tip (note the currency error for the EPS...fine apart from that) - part 1:
"MTI boosted by defence spending and offers 6% yield
The technology group is set for another year of growth, but is only priced on a cash-adjusted PE ratio of 7.5 and pays a chunky dividend, too
August 15, 2023
By Simon Thompson
First-half pre-tax profit up 3 per cent to $2.1mn on slightly lower revenue of $22.4mn
Strong performance from defence sector-related activities
Second-half pipeline supports 11 per cent annual pre-tax profit growth
First-half results from Israel-based technology group MTI Wireless Edge (MWE:41p) highlight the benefits of diversification. For example, the group is benefiting from the increase in government defence budgets across the world following Russia’s invasion of Ukraine. Its antenna division trebled its operating profit to $0.28mn (£0.22mn) on revenue of $5.8mn in the six-month period, buoyed by new orders from the military sector. Chief executive Moni Borovitz expects the momentum to be maintained in the second half.
The antenna business also provides 5G network backhaul antenna systems. Although this market was relatively soft in the first half, MTI has materially increased its sales prospects by developing an automatic beam steering antenna solution that adapts to any small movements caused by different climate conditions. It is now working with three tier-one radio manufacturers and two tier-two customers to prove out the system.
The group offers investors exposure to the themes of climate change and water scarcity, too. MTI’s wireless water management systems division reported 11 per cent higher first-half operating profit of $0.96mn on slightly lower revenue of $8.7mn, the improved level of profitability reflecting price increases and the benefit of costs being in shekels in a strong dollar environment. This year’s heatwave across continental Europe, and the need for countries to use water resources more efficiently, can only be positive for sales prospects. The business has started the third quarter well.
The strength in both divisions offset weakness in MTI’s Summit electronics division, which represents 40 international suppliers of radio frequency/microwave components. Divisional operating profit declined a third to $0.78mn on 5 per cent lower revenue of $8mn, mainly due to delays with two projects. However, one has since been completed and the other is well under way, so expect a much improved second-half performance. Also, defence-related activities represent the majority of the unit’s revenue base, so increased government military spending is underpinning a strong pipeline of orders and design wins."
Excellent - though unfortunately subscriber-only except for the intro:
Https://www.investorschronicle.co.uk/ideas/2023/08/15/mti-boosted-by-defence-spending-and-offers-6-yield/
On a bad day...
Looks like a few bored short-term traders exiting this morning, with the price down 2p on extremely small volumes given we know MWE isn't the most liquid stock.
Shore Capiral have retained their 90p price target and current forecasts as follows (extracts):
"Conservative forecasts: We have consistently highlighted since we initiated coverage on MTI in May 2022 that MTI has a very strong financial platform, which it uses to grow sales both organically and through acquisitions. Any new business is expected to be incremental to margins and profits in the first year. In our view, the group has demonstrated this over the last 15 months with the organic growth in Summit in 2022 boosted by the PSK acquisition, while the H1 results for FY23F have shown good adj. EBIT progress for Mottech and Antennas. At the time of the FY22A results in March, we maintained our group forecasts for FY23F and FY24F and introduced numbers for FY25F. We continue to forecast sales and profit progress in each forecast year. Obviously, we have not assumed any further acquisitions in our forecasts, so given the company’s record of earnings enhancing deals, we would view any M&A as likely to boost forecasts and shareholder value."
""Outlook and valuation:
In the March 2022 note we also highlighted that each of the divisions has growth drivers with, in our view, Mottech particularly well placed to potentially see stronger demand than we forecast for its water management and control software. Today’s result statement highlighted the strong prospects for Mottech in Italy and France. Typically, the software improves the efficiency of irrigation systems, while reducing the cost of operating them. The Antenna division is likely to benefit from the rollout of 5G across the world, as and when it happens, as MTI already supplies seven of the top ten operators with its technologies. We would also expect to see continued good demand for Summit/PSK with its defence-related products and services as demonstrated by the news that two key PSK projects have already made significant progress in Q3 FY23F.
Along with many stocks on AIM, the share price has drifted lower during 2023. We maintain a 90p fair value on the basis of a DCF analysis, which is corroborated by MTI achieving an FY23F EV/EBITDA multiple of 11.2x (the average of our peer group). We note also that the prospective 5.9% dividend yield for FY23F should also provide strong support."
A steady and solid H1 in the current climate, with EPS increasing 9% to 1.99c and confidence in not only meeting expectations for the year but also going forward.
With the usual H2 weighting, plus delayed PSK contracts benefitting H2, there's a possibility that results will beat expectations of 4.2c EPS.
The cash pile has increased nicely to $6.25m, which is almost 6p per share in itself.
On an ex-cash P/E for this year of just 11 MWE are good value, but need to show in H2 that all the obvious opportunities in 5G, water and defence are coming to fruition given that each division seems incredibly well placed to thrive.
I think you have picked a good time to buy... Time will tell.
You can count me in spindok. Just bought some as a newbie to MWE. I notice Rivaldo is here too which Is good to see. He tends to provide quality content to the boards.
I am fairly confident the results will be ok. I continue to hold and just wish a few more people would see the potential.
Today's RNS notes H1 results will be next Tuesday 15th August, with an Investor Meet.
Above all, no mention of any problems, so we should be able to assume that everything's nicely in line following the Q1 outlook which was "confident" about the outlook for the year ahead.
Ye, 30-35p would give this a p/e of c10
the market's weak and getting weaker...nothing's immune
With approaching 8.3p per share in cash, and around 3.3p EPS forecast this year, MWE are on a miserly ex-cash P/E of only just over 10.
Shore Capital updated after the Indian subsidiary news - FYI here's their conclusion, retaining their 90p valuation:
"Outlook and valuation:
In the March note we also highlighted that each of the divisions has growth drivers with, in our view, Mottech particularly well placed to potentially see stronger demand than we forecast for its water management and control software. Typically, the software improves the efficiency of irrigation systems, while reducing the cost of operating them. The Antenna division is likely to benefit from the rollout of 5G across the world as it already supplies seven of the top ten operators with its technologies. Today’s news of the establishment of its Indian subsidiary positions it particularly well in the Indian market, in our view. Summit/PSK had a strong FY22A and we would also expect to see continued good demand for its defence-related products and services as demonstrated by the recent contract win.
The share price has drifted lower since the release of the Q1 results in May. Ahead of Q2/H1 FY23F results in mid-August, we maintain a 90p fair value on the basis of a DCF analysis, which is corroborated by MTI achieving an FY23F EV/EBITDA multiple of 11.2x (the average of our peer group)."
It would be nice to know what the Indian branch will comprise. Is it just a salesman and a phone, a design studio, a manufacturing facility, a combination of these things or what? If we knew what it comprised and more detail of what is expected by Mti Wireless from it, investors might become much more interested.
Good to see MWE buying back another 50,000 shares at these levels - they now hold 275,000 in treasury:
Https://uk.advfn.com/stock-market/london/mti-wireless-edge-MWE/share-news/MTI-Wireless-Edge-Limited-Transaction-in-own-share/91570805
With approaching 8.3p per share in cash, and around 3.3p EPS forecast this year, MWE are now on a miserly P/E of only just over 10.
I suppose the pound's rise is causing the P/E to rise in pure translation terms only, though I'd have thought this will be a short-term movement with the pound coming back to earth at some point.
And MWE benefit from when the dollar is strong against the shekel - as it has been this year, with the shekel falling to the current 0.28 against 0.32 at the start of the year.
35-37p "base"?
While such broker vauations are clearly a positive factor, unfortunately I have found that the actual share price almost invariably lags well behind the vauations at best, or is totally impervious to them on most occasions. Hopefully the share price will finally start to climb toward the Allenby valuation but I won't hold my breath.
Allenby Capital have also now updated - they too have a 90p valuation:
"MTI Wireless Edge* (MWE.L, 44.5p/£39.4m)
Contract win: Repeat military antenna order (03.07.23)
• Repeat order from a European customer, worth $1.4m, for the manufacture of military antennas. The principal part of the contract relates to the manufacture of an existing product line, with the balance relating to upgrades to the antenna solution.
• The contract is expected to be delivered within 14 months.
• MTI also continues to purchase shares to be held in treasury with 225,000 currently held.
• No change to forecasts or 90p/share fair value.
Allenby Capital comment: Good contract win with an existing European customer for military antennas that covers both the existing product line but also upgrades. The win indicates that the customer is happy with both MTI's products and services. MTI reports increasing demand for military antennas with high levels of new enquiries and new contract negotiations. No change to forecasts or 90p/share fair value."
I bought in here ages ago. Have taken the dividends and remain relaxed about the companies prospects. Would like to experience though a steady erection of the sp...
Shore Capital retain their 90p valuation here after today's contract win.
They forecast 4.2c EPS this year and a 3.2c dividend, with $9.2m cash at the year end.
That's 8.3p per share of cash, giving rise to an ex-cash P/E of only 11.2 for this year.
They conclude:
"Outlook and valuation:
In the March note we also highlighted that each of the divisions has growth drivers with, in our view, Mottech particularly well placed to potentially see stronger demand than we forecast for its water management and control software. Typically, the software improves the efficiency of irrigation systems, while reducing the cost of operating them. Summit/PSK had a strong FY22A and we would also expect to see continued good demand for its defence-related products and services as demonstrated by today’s contract win. Finally, the Antenna division is likely to benefit from the rollout of 5G across the world as it already supplies seven of the top ten operators with its technologies. The share price has drifted lower since the release of the Q1 results in May.
Ahead of Q2/H1 FY23F results in mid-August, we maintain a 90p fair value on the basis of a DCF analysis, which is corroborated by MTI achieving an FY23F EV/EBITDA multiple of 11.2x (the average of our peer group)."
Excellent $1.4m contract win announced today for the manufacturing of military antennas.
Plus an encouraging comment that this "is also part of the increasing demand that we are currently experiencing in new enquiry levels and new contract negotiations for defence related solutions from throughout Europe as well as other regions":
Https://uk.advfn.com/stock-market/london/mti-wireless-edge-MWE/share-news/MTI-Wireless-Edge-Limited-Contract-win/91482444
Looks like a fund is selling a few here. Market makers walking share price down slowly, despite MWE Company buying back shares every few days. Today I can buy 40,000 shares at 44.25p....
Seems really cheap, but in today's market where small cap shares are out of favour, who knows??
Here's a link to Allenby's latest note FYI:
Https://wp-allenby-2020.s3.eu-west-2.amazonaws.com/media/2023/05/20230517-MTI-Wireless-Edge-Ltd-MWE.L-Allenby-Capital-Q1-update-1.pdf?c3638=on
Extracts:
"Q1: Solid start to FY23, growth drivers in all divisions
Solid Q1 performance from MTI Wireless Edge Ltd (MWE.L), the technology group
focused on comprehensive communication and radio frequency solutions across
multiple sectors. Revenue increased 1% to $11.3m and PBT by 15% to $1.1m, reflecting an improvement in gross margin, FX tailwinds and higher interest received. Net cash strong at $8.5m (Q1 FY22: $6.5m) but this did benefit from the FY dividend ($2.5m) being paid in April and March in FY22. On a divisional basis, all were profitable and there was revenue growth in Antennas and Water Solutions (Mottech) while Distribution (MTI Summit) was relatively quiet. The outlook for FY23 remains positive here as design wins move through to production. Medium term demand drivers for each division remain intact and we anticipate further growth at the top and bottom line. P&L forecasts and 90p/share fair value, equivalent to an FY24 EV/EBITDA of 13.0x and a yield of 4.1%, remain unchanged."
"Outlook: Demand for MTI’s comprehensive communication and radio frequency solutions across each division remains good with the ongoing challenge of water scarcity, the embrace of 5G and increased military spending given the global political situation. We expect continued profitable growth and our 90p/share fair value is unchanged."
I was just re-reading April's issue of Techinvest and noted that MWE's 2022 results were well reviewed and Techinvest's review hadn't been noted here, so here's the conclusion (the share price was then 51.5p):
"MTI is a well-balanced business, with its three divisions all performing well and delivering on their respective growth strategies in fiscal 2022. The company grew in terms of both sales and profits and it is noteworthy that this was delivered despite the ongoing impact of the global chip shortage, which affected key components required in nearly all of the products and solutions sold by MTI.
Management reported that the business is seeing compelling opportunities in all operating segments, with the opening of the Indian market for E-Band 5G backhaul in particular representing a substantial opportunity for MTI over the medium term. The conflict in Ukraine has led directly to a significant increase in defence budgets and that too is likely to have a positive impact on the company's financial performance in the current year and beyond. Around 37% of MTI's sales are defence-related. Continue to buy."
So excellent, that the sp is sliding lol
testing 40p seems the obv play