Member Info for Pharmhall

Shield's interims are released tomorrow at 7am. Hardman has published what to expect in its September Monthly (page 24) based on STX's recent trading statement. The interesting point is that the expected EBITDA (-$14.5m) and EBIT (-$15.0m) for 1H'24 are close to the current forecasts for the full year, so if the full year forecasts are maintained, the implication is that Shield will be near EBITDA breakeven in 2H'24, which would be good news. Meanwhile all eyes still on an update for gross cash ($8.1m on 30 June excluding recent China milestone monetisation($5.7m) and Canada approval milestone ($0.25m)).

Link to report:

https://hardmanandco.com/research/corporate-research/the-monthly-september-2024/

Your post is incorrect. The RNS will be out at 7am on the 4th September.

The market seems to have forgotten about the +ve trading statement in July. Confirmation of its strong growth and balance sheet expected tomorrow in interims. But key will be the outlook statement which should be really good, especially with much of 2025 already in the order book. Also, with current geopolitical events, HTG is perfectly placed to get more orders.

Very happy holder of HTG and CHRT.

Yes, AI is a potential game changer, and yes, the CEO is strong in this area...but would you contract with a company offering IT services that did not move its own IT from Windows 7 operating system until it was no longer supported by Microsoft when everybody else was using Microsoft 365. Knowing that, is it surprising that its own IT systems were then hacked. Really does not inspire confidence.

Hardman & Co published updated SCE research on SCE yesterday. The report does discuss the well-known issues and highlights some ongoing risks. Numbers slightly reduced because of delays in 2Q'24. Chairman's comments today suggest that SCE will issue regular updates on the production issues in order to regain investor confidence.

https://hardmanandco.com/research/corporate-research/sce-pre-close-trading-agm-and-prospects/

I concur with many of the comment about downside risk – management shortfall, scrappage, yield etc. etc. – but you only have to glance at any expensive car in the street, and there are many of them, to see that they are all fitted with SCE brakes. In the same way that all of us are looking at the operational performance of SCE, so are all the major global brake manufacturers. Bosch must be rubbing its hands in glee – what an easy and cheap way to access the best product on the market, access to contracts with all the luxury car manufacturers, new manufacturing/foundry capex and the know how and financial clout to overcome SCE's problems. Limits downside IMHO.

HarChris - stop publishing old numbers which were lowered after all the problems in $Q'23 and 1Q'24. Hardman published forecast for 2Q'24 of 34,550 and the actual result is better than that at 36.500 (+27% vs 1Q'24), also at much better price per Rx ($171). If anything, Hardman more likely to raise full year forecasts when these are confirmed and updated in interim results statement,

EBITDA +ve and EBIT +ve are different, the former reflecting cashflows . TRX has been cash generative for past 18 months.

The statement does not say 'fund the company "until" expansion. It says: "The Group's cash position remains sufficient to support the current business expansion plans", i.e. enough to fund the Phase 2 programme.

So I totally disagree with both your comments.

Don't get blind-sided by the small GBM-V business in Germany which biases the headline numbers. I think BioRinse growth was a very satisfactory +18%, dCELL growth +21%, with tissue supply issues (continuing from 2H'23) impacting the GBM-V retina business (-2%), giving overall growth of 16% to $16.4m. BioRinse and dCELL are the drivers towards profitability.

Implicit in the statement about expansion of growth in EBITDA profitability is that TRX is cash generative, hence the comment that it has gross cash and is generating sufficient cash to fund Phase 2 of the capacity expansion programme.

JL, I, too, am unable to attend in person. Two days ago I sent request to Shelley for remote access (Zoom/Teams/webcast or phone link). So far she has not replied...my fingers are crossed.

To make it easy:

The AGM will be held at 1 Paternoster Square, London, EC4M 7DX on 23 July 2024 at 11.00 a.m

JL79...I agree with your comment that MSI is not on many radars (no pun intended). I have been looking at the Shore Capital Research Portal every day since results to get any comments and forecast updates...absolutely nothing at all. Seems even its own broker cannot be bothered to highlight this little gem.

Having said that, I did take the opportunity to lock in a wee bit at 1100p this week on the basis that, other than the AGM and our comments, there is unlikely to be any update until December...but I still have a pretty good holding. For example, even the new German Navy customer did not warrant an announcement from company.

There is nothing untoward in the cashflow statement. I think that it has received some upfront payments for contracts still to be delivered as trade creditors and contract liabilities have both ramped up (so have trade debtors). Included in contract liabilities is £7m for unpaid invoices. Also, it expects to recognise sales of £42.6m in 2025 out of the total of £52.6m of current contract liabilities. The rest is mainly in 2026.

$23.5m for the MSI-DS30 mounts will have been included, as delivery was to be no later than 18 Dec 2023. Nothing from the other contracts totalling $65.6m.

On the lower than , admittedly back-of-the-envelope, expected results, sales in 2H'24 were £5m lower than in 1H'24 and at a lower gross margin. 2H'24 EPS (35.1p) marginally lower than 1H'24 (35.9p).

Management clearly expecting good progression in 2025.

Interesting your comment about break-up.

Great set of results, albeit they were below what I was expecting. On first read, I am unclear whether there was any contribution from the more recent US naval contracts...I do not think there was any, which would explain the difference.

Also, I do not understand why H2 results were lower than H1 figures, given the expansion in sales. I will do some work on this and revert later.

Should really focus on positive outlook comments.

JL79...I hope that we don't go back to my last purchase level !!!! LoL

JL79, don't misread me. I really like MSI and have been following the company for 20 years. I traded in and out of the stock quite well in the early years. Then had a long period out when things were tough 2012-2020. I bought in again in my ISA in November 2020 10k (fortunately!) @113.75p and added again in my SIPP in 2023 6K @505p when I saw the directors were buying. So you can guess that I am a very happy shareholder !! But I also see so much more to come with all these new defence orders and am eagerly awaiting the FY results. The main risk that I see with the company is the age 4/5 of the BoD, hence my comment on succession.

True, and almost certainly Michael Bell's son. But apart from Nicholas Bell (age 50) the other four Board members are aged between 75 and 79, so, in addition to Nicholas, planning for future should already have started.

In 2023, MSI won two significant orders. Neither of these contributed to 1H'24 results. The first was a 'first order ever' for its new anti-drone device...its a shame that we have not seen a follow-on order so far in 2024. The second was a £54m order for the US Navy. Both of these are expected to make a contribution in the second-half, and also into fiscal 2025.

If you look back over the last five years, MSI puts out very few announcements, so company is simply doing what it always does. Outside Stonehenge Fleming (9.95%), there are no institutional shareholders to speak of. Key is the Board and former board member hold 55.2% of the stock and have only been adding/protecting from tax in the last two years. Not much stock for anyone else.

On the upcoming results (ca.21st June), admittedly only back of the envelope (not enough information to do more!), in H1'24 MSI had EPS of 40p when there was zero contribution from the US contracts. Just repeating this in 2H'24 would give 80p, then add in a part contribution from the US and you get 100p. So trading on just over 10x for a growth story. Can't wait for the actual results.

Only issue for me is succession planning...the board members are not young!