Member Info for RogerMellie50

Morning John,

Just geographical isolation, bit out on a limb over there, low population density. Most people would have to re-locate to work there as not really commutable. Not like being based in the South East or Cambridge, say, where you could recruit heavily from people who already live in the region. I notcied that MSi work compressed hours, with a half day on Friday. I assume that's to accommodate contractors who spend the week in Norwich, and then go back to their homes for the weekend.

I'm planing a trip to Norwich this year, as it happens. Would like to visit Norwich Castle, that's just been restored.

Morning John,

I managed to sell some around the results spike from my dealing account, and then buy back a quid or so cheaper in to my ISA, but it's luck of the draw. Could end up getting in cheaper next week or pay more.

Someone at the AGM asked if they ever ran the rule over other companies, and various board members said yes together very quickly. Was one of those responses that made me feel they'd just recently been doing just that perhaps. If things go well and they expand production facilities at their site in Carolina, then that will need a fair bit of capex. However, Trump's capex expensing perks should be a bonus.

One question I wanted to ask was about how successful their recruitment drive over the past year had been. Lots of jobs advertised, but not sure how many had been filled. Someone mentioned that being based in Norwich was a challenge for recruitment, which I can imagine (nothing against the place, but you can understand why).

I think the divi's a bit skinny given the cash pile, but considering that Bell (with his wife) owns a third of the company's shares, you could make a case that it shows more commitment to the company's security and development. He could take a lot more out of the business to his own pockets if he increased payouts, but choses not to. He repeated the 'cash, cash, cash' mantra a few times at the AGM, I think in reference to the days when MSi didn't have any!

Hi Pharmall,

Yes, I'm looking at Cohort too. Think it could be a good entry at current price and orderbook covering 80% of f/y 26 revenues is very re-assuring.

John - I wouldn't put too much importance on the MOU with EOS down in Aus. All very fluid, and they might well team up with someone else, or not at all. I doubt MSi would have even mentioned it, had EOS not declared it in their Q2 report.

Will be on the Investor Meet this coming Tuesday after H/Y numbers. See what we gain from that. Don't have any personal experience of management, EGM just a formality for new BoD approval, but maybe they'd take some questions.

Morning John,

Was looking at Rolls and other sector stocks. RR's forward P/E mid 30s, looks priced in already to me. Similar with Cohort and Chemring, although forecasts less reliable. Can't do forward P/Es with MSi, and all depends on revenue recognition, but if some land-based sales come in, then Msi could be trading on 10 to 12 forward earnings, possibly less.

Catalysts up until H/Y numbers are a favourable disposal of non-defence businesses and a land-based systems contract (whether that's RNSd or left until interims, who knows). Alternatively, offers for other divisions might go cold, no news on further sales and revenue down in interims and vague statements about 'robust interest' etc and the share price drifts down.

It will take patience here, though, that's for sure.

Given I'm an insomniac, I've decided to hold my nose and get a Sky subscription for the Ashes.

Afternoon John,

No such thing a bad profit, as they say! Enjoy the dividend tomorrow.

Are you still in RR, out of interest?

Crikey, that must have been a baptism of fire for your first week! Reminds me of Wolf of Wall St, although I trust you didn't lose your job and end up on the phones in some bucket shop?

Yes, seems shambolic by Octopus. Hope it works out for you, I don't think it would take many contracts there for things to get back on track, and I expect their margins should be good. MTi have their results next week, unless there's anything horrendous in the interims, I intend to average down if the market finds in underwhelming.

You mention timing, which I have had a large amount of luck with. Firstly, I was a few years out of university and working hard in London with plenty of O/T when the 2008 financial crisis happened. I found myself with a decent amount of cash saved and started investing with what would turn out to be a substantial historical discount. Secondly, having lived abroad for a decade, I was back in the UK to help with my parents late 2019 and was about 70% cash as I was looking to buy a house. Then Covid happened, and I was provided with another massive discount, through no particular foresight of my own. I decided to cash in some of my good fortune and bought my house mortgage-free.

I'm too young to have bought shares in certificate form, but I remember my dad saying he sometimes got ones for his namesake! Glad you were rescued by BP, John. I've never done any leveraged trading whatsoever. Only short term un-leveraged things I do is the occassional punt day before results, to mixed success! I seem to pick Smith and Nephew quite reliably, did a nice overnight 15% there on H/Y numbers last week.

Divi next week for 18 p a share, don't spend it all in the pub John!

On the cusp of the proverbial '10 bagger' here then, Pharmall! Well done. My main holding is a tad more, but still comfortably under 2 quid. Hoping this will become my third ever 1000%-er in time, behind Fevertree and just recently Renold, as I bought a few there in the post-covid doldrums.

Did you sell out of RCFornax? I (regrettably) think I originally asked here if you were aware of it. I bought some for around 38p, but fortunately decided to take a quick 25% profit just before that disastrous trading update. Seems a bit dubious that they got the IPO away with what turned out to be such shakey first-year revenue forecasts. Think I'm right in saying one of the original IPO subscribers have just bailed at a loss?

Boring is best. Compounds every year.

Evening Pharmall,

Yes, and that would tally with there being nothing on the main US Defence Contract awards database, most recent one still being the one from December last year.

The main 'takeaway' from the AGM was that the land-based CUAS market is very fast moving and still very much in its infancy, and there's both a large market need for systems as well as a sense of reserve around committing to a particular system in large numbers only for it to become obsolete, or at least be replaced quicky by a superior system. The MOU with that ASX company is a case in point: two companies looking to team up to gain a mutual advantage, but also the posibility that they might well end up bidding against each other as someone at the AGM pointed out. The Polish company APS that was involved in the initial land-based sales would appear to no longer be working with MSi, for example.

The board were confident that they will land some contracts soon. There aren't currently any 'market leaders' with the land based stuff, so it's a bit of a race to get some firm contracts and a foothold. Fingers crossed (wether they release contract news to the market is another matter, they said it would depend on the size).

I agree with your previous post. Will take some patience here, but there's a lot of 'upside potential' over the next 3 years or so. I also think the BoD will look to sell the whole business at some stage, but that's a question for another day.

Morning John,

From what I can work out, they have a statuatory obligation to put out that tender, but it is in fact a fait accompli award to MSi:

"THIS IS NOT AN INVITATION FOR COMPETITIVE PROPOSALS. This acquisition is being pursued on a sole source basis under the statutory authority of 10 USC 2304(C)(1), as implemented in FAR 6.302-1, only one responsible source and no other supplies or services will satisfy agency requirements. This notice of intent is not a request for competitive proposals".

It's 'IDIQ' (indefinite duration, indefinite quantity), so the amount of systems they will end us ordering is not yet determined. Just don't know how this fits in with previously announced US Navy orders.

You wrote this morning: "Many analysts think Wall St is heading for a reality check as many large cap stocks are trading at nosebleed valuations". I agree! Wouldn't be surprised if we see a repeat August wobble like last year.

Interims tomorrow. Hils usually gets sold off on results unless it actually beats guidance. Wait and see. Hoping for another 10% on interim divi at 18.5p. Wouldn't be surprised if he we hear of some more acquisitions.

Someone with more knowledge will have to explain this, trying to work out if it's a follow up order, and hence additional group revenue. Someone asked about US Navy orders at the AGM, and I didn't quite understand what they were referring to exactly.

https://sam.gov/workspace/contract/opp/796a355840ff4b969ac33bb3cd472148/view

...cont.

I'm hoping an AGM statement and mention of possibly going on an IC podcast are indications of better investor communication and company promotion to come, but we'll wait and see. 

Think that's all I can say. Quite a few technical questions that went over my head. Some other Q&As which I'm not sure if I got the gist of properly, so won't mention. Will have a think if I've missed anything. Conference rooms at the Holiday Inn need a lick of paint, refreshments were Spartan at best. Gone are the days of AGM buffet lunches, I'm afraid.

A few notes from AGM yesterday. My 'rank amateur' interpretation only, remember!

As mentioned in full-year report, delays in placing of orders and order book slightly down. Say this is solely down to broader global situation with defence reviews, wait-and-see tarrif approach. Signs in some countries that things are getting in to motion again. BoD stressed multiple times that they haven't lost any orders whatsoever, either due to cancellations or competitors taking business. Michael Bell stressing the point about investors being aware of possibiity of fluctuating revenue recognition (anyone who's taking a medium to longterm position here will obviously understand that). Shelley Ashcroft making the point about different 'trigger points' in taking in to account revenue recognition, which can vary accross contracts and be booked partially within single orders as well.

Capacity issues - capacity at Norwich has increased 4 fold (not sure in what timeframe) in order to meet current orderbook. However, they are looking at their site in Carolina as the main location to increase defence capacity, and said they have 'planning permission' there for expansion. Michael Bell also mentioned the possibility of looking at basing production at an additional foreign site, but no specifics.

Tariff concerns for US orders - currently have a waiver with UK government for defence equipment, and the US Navy has indicated they're happy to have products coming from the UK (I might have mis-understood this comment, as I don't see how foreign procurement is a Navy-specific decision, as I though it woulld have been a federal decision).

Sale and proceeds of non-defence divisions - re-iterated that they're in no rush to sell, and were initially testing the waters in April. Only if the price is right, encouraged by their recent performance etc. Michael O'Connell said the first priority for using the proceeds would be to support the defence division's expansion, but would also consider buybacks and/or a special divi.

BoD wouldn't really bite on questions about plans for a future sale of defence business, but not ruling it out if an exceptional offer came along (usual stuff). O'Connell stressing the expansion potential ahead for defence, particularly with the land-based systems, so that's their current focus to strengthen their position.

With the land-based systems, they said the reason why they haven't RNS'd any contracts is because there was nothing to RNS, so we can assume that the initial order supplied to Ukraine and then the (assumed) one to the Jordanian Airforce are the only two to date. However, they said they believed they were very close to securing orders and are ahead of the market in that respect. Wouldn't be pushed on timeframes, but I think John Meldrun said 'it wouldn't be weeks' time. Asked if they would RNS orders to the market, they said it would depend on the size of the contract, so at least that's not an outright 'no'...cont

Evening Pharmall,

Exactly the same boat with me, was about to bail on going as my mum was about to be discharged from hospital, but it got put back a few days so I decided to make a dash over. I was scanning the room for a 'Pharmall' candidate though (based on no criteria other that the name!).

Just out to dinner, but I'll jot a things down tomorrow morning. Really not much else that I can pass on from the AGM outside the statement, but I'll do my best.

Just got back from it Pharmall. Not a huge amount to add that's not in the AGM statement, but will post a few notes I made later on. Well attended, Q&A went on for close to 2 hours (although there were some serial question hoggers).

Morning John,

I'm sure questions about the off-loading of the defence divisions will be put to the board. I'll ask myself if no-one else does! I'm heading over to Doncaster on Wednesday, and will do my best to take some notes and report anything of interest here later.