# MCE - Matrix Composites & Engineering



## System

Matrix Composites & Engineering (MCE) is an Australian based engineering company providing engineered product solutions for the offshore, subsea, mineral processing, military and manufacturing industries. MCE designs and manufactures products through its oil & gas, mineral & industrial and advanced materials divisions.

http://www.matrixap.com.au


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## todster

System said:


> Matrix Composites & Engineering (MCE) is an Australian based engineering company providing engineered product solutions for the offshore, subsea, mineral processing, military and manufacturing industries. MCE designs and manufactures products through its oil & gas, mineral & industrial and advanced materials divisions.
> 
> http://www.matrixap.com.au




I did some work accross the road from there Malaga workshop last week,very busy but sorta looked they have out grown there premises.
The place i was at was making more moulds for there floats,with all this oil&gas work around i would imagine there will be demand.
Anyone any thoughts on the tech side?


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## tahpot

See the latest report. Look like a great company. PE is around 11 with > 400% revenue growth expected next FY.


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## robusta

tahpot said:


> See the latest report. Look like a great company. PE is around 11 with > 400% revenue growth expected next FY.




Yes what a great company. I now own a nice part of it (20% of my portfolio).
Expected to double profits again next year, 49% ROE low pay out ratio, not much debt, great cash flow, excellent growth prospects - a real compounding machine. 
Wish I could find more companies like this one. I also lucked out in timing sp up 8.3% in 2 weeks I have owned it - I know wont make much difference when planning to hold long term but very happy.


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## drlog

I also hold this one - looks like a great company no matter which way you look at it.

Interestingly, the share price has gone down today. I am guessing it is because of the 2nd oil rig in the US exploding? Or could it just be some profit taking since it has gone up a lot recently?

Either way, it's still a bargain even at yesterday's price!


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## robusta

drlog said:


> I also hold this one - looks like a great company no matter which way you look at it.
> 
> Interestingly, the share price has gone down today. I am guessing it is because of the 2nd oil rig in the US exploding? Or could it just be some profit taking since it has gone up a lot recently?
> 
> Either way, it's still a bargain even at yesterday's price!




Time is your friend if you own a great company. It is great to feel so relaxed about short term sp fluctuations.


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## robusta

drlog said:


> I also hold this one - looks like a great company no matter which way you look at it.
> 
> Interestingly, the share price has gone down today. I am guessing it is because of the 2nd oil rig in the US exploding? Or could it just be some profit taking since it has gone up a lot recently?
> 
> Either way, it's still a bargain even at yesterday's price!




Time is your friend when you own a company like MCE. It is great to be relaxed about short term sp fluctuations.


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## The Trooper

Found the attached valuation of MCE among other stocks from Roger Montgomery's valueline portfolio. Bought the stock on this basis. Does anyone know much about the future prospects of MCE?


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## robusta

The Trooper said:


> Found the attached valuation of MCE among other stocks from Roger Montgomery's valueline portfolio. Bought the stock on this basis. Does anyone know much about the future prospects of MCE?




Manufacture of subsea flotation devices give this company exposure to the oil and gas sector. As the oil price goes up it makes it more economical to deploy more oil and gas platforms into deeper water. MCE is building a new state of the art facility in Henderson WA with direct access to docks. MCE also has very little competition (only 3 other companies worldwide).


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## The Trooper

Thanks, will stick with it and see what happens. The low debt and expansion prospects are definitely appealing.


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## pjsh

in montgomery's valueline portfolio above, why would he buy cochlear at $74 if he thought it was worth somewhere in the low-mid $50s?


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## drlog

That column is just the market price at the start of the financial year, not what he paid.

I think he did originally "pay more than what they are worth" but the difference wasnt that much.


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## robusta

Great to find MCE getting cheaper in todays market. Picked up a few more. 
Happy days


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## drlog

> Great to find MCE getting cheaper in todays market. Picked up a few more.
> Happy days




So did I - There was no announcement and the oil price didn't plummet so it was just Mr Market being in a bad mood  Still trading well below IV so there is a nice margin of safety. Awesome


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## MEGALADON

I cant wait till the next quarterly report to see how big the order book is. Industry is starting to become highly aware of their reliance on Matrix product and the long lead time in the current order book. Placing an order with matrix is very high in the list of things to do if you plan any new commisioning in the next 2 years.


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## Tightwad

I had a giggle at this:

Current Broker Consensus Recommendation	
Recommendation :	Sell 
Recommendation Date :	26th Oct 2010
12 Month Target Price (average) :	$3.73
Brokers Surveyed :	1


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## robusta

Tightwad said:


> I had a giggle at this:
> 
> Current Broker Consensus Recommendation
> Recommendation :	Sell
> Recommendation Date :	26th Oct 2010
> 12 Month Target Price (average) :	$3.73
> Brokers Surveyed :	1




Yes have got to love the Consensus of one.
I think UBS broker based this on no new orders for MCE. Do you think he looked hard enough to see MCE is currently at full capacity and building a new facility to significantly increase capacity?



robusta said:


> Great to find MCE getting cheaper in todays market. Picked up a few more.
> Happy days




I was wondering why sp dropped in such a positive week for the market in general. Anyway, filled my existing holding up @ $4.68 on the 25th and 26th October sp now $5.15, I should buy that broker a beer.


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## ubtheboss

It's been following market sentiment in the last few days after a good run but that just gave us all a chance to buy more at a cheaper price.  Picked up some more at 5.25 last night.  My own valuation of MCE for 2011 is $7.08 with a 14% required return.


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## magicmoment

ubtheboss said:


> It's been following market sentiment in the last few days after a good run but that just gave us all a chance to buy more at a cheaper price.  Picked up some more at 5.25 last night.  My own valuation of MCE for 2011 is $7.08 with a 14% required return.




I get $8.35 using a 14% threshold. I bought in at $2.71, $$5.09 and $5.16

Good luck Ubtheboss - MCE is my biggest holding!


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## ubtheboss

Thanks Magic!  Don't think we need luck with MCE though.  Luck is for speck stocks.  MCE is value all the way   The only luck we need is for the nervous Nelly's to sell in the short term so we can keep picking them up.

I think the macro-market situation may hold some choppy times ahead with unemployment in the US ticking up and sovereign risk still a worry in Europe.  Just means more dip buying for MCE holders though


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## Intrinsic Value

Hi Everyone

I like Matrix too and have bought in a few times at 4.00 initially and then again at 5.00.

There is also an article about oil prices going up a fair bit in the new future that shouldn't hurt its prospects.

I also like Forge FGE boought in at 2.32, 3.00 and 3.80. I was wondering what you guys get as next years valuation for FGE as I was thinking of having another go at it.


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## magicmoment

Hi IV

Better off asking about Intrinsic Value on the FGE board, i don't know enough about the company and having a quick squiz at their board, they have done a few calculations themselves.


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## robusta

Another top day for MCE, sp up 3.66%, can't wait for Henderson to be finished and the orders to flow in.


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## drlog

Does anyone know why MCE went up yesterday (14th Dec)? Did a broker change their forecasts? Either way, I'm a happy holder!

robusta - at their current revenue for the previous quarter, they should double revenue for 2011 without Henderson (impressive). With Henderson, I don't know but I would expect it to be more than double! I was just thinking yesterday "this is one hot stock".

Funnily enough I was giving some advice to a friend on the 16/11/2010 saying "Buy MCE, I would suggest you put an order in for $5.00". The next day, that order would have gone through. His return would have been 18.8% in one month. Of course, he didn't take my advice


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## Intrinsic Value

I had my second go at Matrix at 5 dollars and 4 dollars for the first go.

I checked Roger Montgomery's valuation for Matrix and he has it around 6 dollars which is just about where it is now.

I suppose the question is should we buy more at the current prices or wait for a pullback if there is one?


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## drlog

Intrinsic Value said:


> I had my second go at Matrix at 5 dollars and 4 dollars for the first go.
> 
> I checked Roger Montgomery's valuation for Matrix and he has it around 6 dollars which is just about where it is now.
> 
> I suppose the question is should we buy more at the current prices or wait for a pullback if there is one?




Heh, the answer to that question (in hindsight) was to buy more at $6. They are now at $6.50! I think it is now too expensive to buy but that doesn't mean I will sell either.

Holding on happy and tight!


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## fanger

drlog said:


> Heh, the answer to that question (in hindsight) was to buy more at $6. They are now at $6.50! I think it is now too expensive to buy but that doesn't mean I will sell either.
> 
> Holding on happy and tight!




You should get your chance buy after its pull back over the last couple of days.


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## Tightwad

big drop yesterday - assuming a lot of ppl are taking their profits.  

I'm set to pick up a few more if it drops about 30c, that may be a little optimistic but i'm not too desperate, almost got enough and not much cash that isnt tied up.


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## Intrinsic Value

Tightwad said:


> big drop yesterday - assuming a lot of ppl are taking their profits.
> 
> I'm set to pick up a few more if it drops about 30c, that may be a little optimistic but i'm not too desperate, almost got enough and not much cash that isnt tied up.




Hope you did pick up some more as they have bounced back to 6.90 today.


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## drlog

It has hit a high of $7.18 today. As far as I can tell, there are two stories that may cause this:

- BP and a bunch of other companies will be drilling for oil in Australia (Matrix is the obvious supplier for them).

- OPEC has announced that they expect increased demand for oil this year.

Any other thoughts?


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## VSntchr

drlog said:


> It has hit a high of $7.18 today. As far as I can tell, there are two stories that may cause this:
> 
> - BP and a bunch of other companies will be drilling for oil in Australia (Matrix is the obvious supplier for them).
> 
> - OPEC has announced that they expect increased demand for oil this year.
> 
> Any other thoughts?




To be honest, it could be a result of these things...but we can't ever really know.

In order to know why it went up you would need to ask every person why they bought their shares today.
For every person that bought shares, there was someone disagreeing by providing their shares for sale.

In my honest opinion, a stock like matrix can move up and down so quickly for 2 reasons. 
The first is because for a long time it has been largely undervalued which means that sudden upswings have been quite common.
The second being sharp short term corrections which seem to be caused by the 'herds' taking profits when they think the stock has risen too high too fast.

This stock is finally beginning to approach its IV, but with such bright prospects in the short and long term future (henderson facility & oil price) the IV should be inclined to rise quite quickly.

Note: I own MCE.


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## robusta

Up a bit over 5% today with latest investor update.

http://www.asx.com.au/asx/research/companyInfo.do?by=asxCode&asxCode=MCE#headlines

As my second largest holding (29.5%) of portfolo happy days


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## fanger

I got out around the $6.90 mark and took my profits, I was up 40%. I had hoped it was going to pull back to the $6.20 - $6.40 so I could get back in. Unfortunately for me Matrix just keeps powering ahead.


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## tinhat

fanger said:


> I got out around the $6.90 mark and took my profits, I was up 40%. I had hoped it was going to pull back to the $6.20 - $6.40 so I could get back in. Unfortunately for me Matrix just keeps powering ahead.




Mate do yourself a favour and read the H1 2011 report. I took profit in December. I got cold feet and wanted to take some money out of the market before Christmas as I am in the middle of a building project. Then I got spooked mid January and sold the remainder. I then had a think about the fact that I had just sold my most profitable stock of 2010 and went back over the balance sheet, MCEs market announcements and crunched some numbers and decided I was mad not to be in this stock. I bought back into MCE and paid 6% more than what I had sold for.

H1 2011 NPBT is about the same as for 2010 full year result with H1 2011 sales at $92M compared to full year 2010 revenue of $102M. Order book is at $180M.

I'll probably buy some more MCE. I'll crunch the latest numbers and recalculate my intrinsic value for this little gem.


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## fanger

I know MCE is a great stock but I needed the money for other things so I took my profit.


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## notabclearning

Are there any competitors listed on the asx in the buoyancy business.


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## fanger

notabclearning said:


> Are there any competitors listed on the asx in the buoyancy business.




I think there are only 3 companies in the world that do what Matrix does.I don't think the other 2 are listed on the ASX.


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## drlog

Does anyone know when MCE's half year report is due to come out? I can't find a calendar on their website.

The share price currently has a rocket under it (or perhaps I should use a buoyancy analogy? )

Anyway, I keep looking at the price and wonder if there has been an announcement - nope, not yet.

It's up 7% today! Surely they deserve an ASX speeding ticket?


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## VSntchr

drlog said:


> Does anyone know when MCE's half year report is due to come out? I can't find a calendar on their website.
> 
> The share price currently has a rocket under it (or perhaps I should use a buoyancy analogy? )
> 
> Anyway, I keep looking at the price and wonder if there has been an announcement - nope, not yet.
> 
> It's up 7% today! Surely they deserve an ASX speeding ticket?




Not sure either on the reporting date..i tried morningstar but cudnt find it their either.

The price rise is simply due to me topping up with copious amounts 

Jokes aside, a massive gain on no news is a little wierd - but as holders who can complain!?


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## Intrinsic Value

VSntchr said:


> Not sure either on the reporting date..i tried morningstar but cudnt find it their either.
> 
> The price rise is simply due to me topping up with copious amounts
> 
> Jokes aside, a massive gain on no news is a little wierd - but as holders who can complain!?




Yeah not sure what is going on with MCE but everytime I check the price it is going up.


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## tinhat

They only just had a shareholder general meeting to appoint the new auditors. I don't know if this will delay their reporting?


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## drlog

tinhat said:


> They only just had a shareholder general meeting to appoint the new auditors. I don't know if this will delay their reporting?




It's out now...Profit up 159%! NTA of $1.05! Dividend of 3c fully franked (I like that they are keeping it low).

An example of an excellent company - let's see where the share price goes today...


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## VSntchr

Whats up with the cash flow though...revenue is stated at 90mil yet receipts from customers 70 mil...

Good profit result but unless im missing something obvious this is a little concerning to me.

They have also increased debt levels quite substantially too..Henderson facility almost ready to start operating though so hopefully they will reduce debt quickly...


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## robusta

drlog said:


> It's out now...Profit up 159%! NTA of $1.05! Dividend of 3c fully franked (I like that they are keeping it low).
> 
> An example of an excellent company - let's see where the share price goes today...




Sp went the wrong way after results released (-4.28%). Looks like the market wanted incredible and was disappointed with bloody amazing results.

I am confident the sp will go up in the medium to long term.


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## Intrinsic Value

robusta said:


> Sp went the wrong way after results released (-4.28%). Looks like the market wanted incredible and was disappointed with bloody amazing results.
> 
> I am confident the sp will go up in the medium to long term.




Share price nose dived today which is good for value investors.

Long term prospects very good for this company so a drop now is an opportunity to buy more.


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## ROE

Bring on these kick ass smaller brother, shame BHP delivered record profit yet their stock gone no where in a year 

Kick ass strong fundamental small cap are the way to go...

Learn to love small cap volatility, the bigger they fall the harder they rally hahaha once Mr market see the earnings.

Look at CCV recently all the sudden in one day it fall from 76c to like 70c  then Kaboom off it goes 
again to 85c


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## fanger

I'm hoping MCE pulls back below $8 so I can get back in!


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## Ajax

Valuesnatcher in an earlier post hit the nail on the head.

31 December
2010
Continuing operations
Revenue  92,369,848 Cost of Sales (61,822,853) 
Gross Profit 30,546,995 and net profit after tax of $19,251,095

yet cashflow statement shows Net cash (used in)/from operating activities (6,200,932)

CASH FLOWS FROM
OPERATING ACTIVITIES
Receipts from customers 70,577,134 Payments to suppliers and employees (74,689,018) Interest received 65,176 Interest and other costs of finance (424,320) Payment of income tax (1,729,904) Net cash (used in)/from operating activities (6,200,932)


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## VSntchr

After further analysis I beleive the discrepancy in the cashflow statement is due to cash being received in advance for a service/product. The cash was recognized in the previous period, while the revenue was only earnt, and as such, recognized in this period.
Im only basic in my accounting knowledge - but this was the best reason I could come up with..

If this is the case, which im pretty sure it is, it is not really an issue for MCE as selling large expensive products will sometimes cause the cashflow to be lumpy in comparison to revenue....the problem in my eyes...is why management can't be a little more straightforward and just tell us these things in the report commentary. Maybe they are planning to in the upcoming conference call...


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## drlog

I cant find information about this conference. Where and when is it?


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## tinhat

drlog said:


> I cant find information about this conference. Where and when is it?




Generally conference calls are with broker analysts to provide an update.

I got stopped out at 8.00 the other day and bought back in at 50% of my previous holding straight away. Now I got to decide when to put the rest of the $$$ back in. Share price been going up up up since I got shaken out - typical.


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## drlog

tinhat said:


> Generally conference calls are with broker analysts to provide an update.
> 
> I got stopped out at 8.00 the other day and bought back in at 50% of my previous holding straight away. Now I got to decide when to put the rest of the $$$ back in. Share price been going up up up since I got shaken out - typical.




Yeah, seems like it's not available to normal holders but they did release the slides I see (no new info).

MCE is a company that is worth holding for a long time. I bought at $5 and plan on holding for years to come. Once Henderson is up and running, this should be a cash cow!


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## Intrinsic Value

drlog said:


> Yeah, seems like it's not available to normal holders but they did release the slides I see (no new info).
> 
> MCE is a company that is worth holding for a long time. I bought at $5 and plan on holding for years to come. Once Henderson is up and running, this should be a cash cow!




With the price of oil going up its prospects can only get better.

I am long term holding as well bought in at 4 dollars and 5 dollars.


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## robusta

tinhat said:


> I got stopped out at 8.00 the other day and bought back in at 50% of my previous holding straight away. Now I got to decide when to put the rest of the $$$ back in. Share price been going up up up since I got shaken out - typical.




Not for everyone but this is exactly the reason I do not use stop losses. 

With a long term view in mind if a company passes as investment grade for me, a reduction in sp often leads me to consider buying more instead of selling.


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## drlog

robusta said:


> Not for everyone but this is exactly the reason I do not use stop losses.
> 
> With a long term view in mind if a company passes as investment grade for me, a reduction in sp often leads me to consider buying more instead of selling.




Very true - with a company like, say, CSS, a stop loss makes sense but MCE is high quality.

They are currently trading around their intrinsic value now but I expect the IV to increase in the next few years as Henderson comes online. So no matter what the SP does, it is worth holding!


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## Intrinsic Value

This company just keeps going up.

Hit 9.70 today.

This one could go anywhere in the next few years especially when the new facility is operational.


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## robusta

Intrinsic Value said:


> This company just keeps going up.
> 
> Hit 9.70 today.
> 
> This one could go anywhere in the next few years especially when the new facility is operational.




Heve to agree with you there, MCE has overtaken FGE as my largest holding in the last month all by itself. I have not bought or sold either.


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## Magic Man

Can i ask a question. Obviously a great stock but would it have run as hard if Roger Montgomery wasnt going on about it on television 24/7?


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## robusta

Magic Man said:


> Can i ask a question. Obviously a great stock but would it have run as hard if Roger Montgomery wasnt going on about it on television 24/7?




Yes, sooner or later - probably later


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## Magic Man

LOL just curious, maybe i can get him to talk about some stocks i like more hehe. 

Matrix has been trending nicely for a while now but has had only 3 market sensitive announcements in the last 6 months. Hopefully he keeps talking about it lol.


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## Intrinsic Value

Magic Man said:


> Can i ask a question. Obviously a great stock but would it have run as hard if Roger Montgomery wasnt going on about it on television 24/7?




I think you overestimate RMs influence.

The vast majority of people with investments would never have heard of RM.


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## BrightGreenGlow

Intrinsic Value said:


> I think you overestimate RMs influence.
> 
> The vast majority of people with investments would never have heard of RM.




I beg to differ. RM = self-fulfilling prophecies...

If I went on about my stocks on national tv and was popular enough I bet a decent percentage of the stock SP would be relevant to the TV appearances at least in the short term.

Kinda reminds me of a version Mr Rivkin....


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## Intrinsic Value

BrightGreenGlow said:


> I beg to differ. RM = self-fulfilling prophecies...
> 
> If I went on about my stocks on national tv and was popular enough I bet a decent percentage of the stock SP would be relevant to the TV appearances at least in the short term.
> 
> Kinda reminds me of a version Mr Rivkin....




I have only ever seen him on the business channel which most people don't have.

Additionally there are plenty of other commentators spruiking lots of other shares, financial services etc

I suppose judging by your logic then all the companies that RM tells people to avoid then those share prices should be dropping sharply. Sorry I don't see that happening.

Results in the long term are what counts and I have to say hats off to RM because the three companies that he recommended the most over the last year have rocketed in value eg Forge, Matrix and Macca. If you had invested in these companies when he recommended them you would have almost tripled your investment.

Show me another commentator with the same track record. 

It seems to me that there is a bit of sour grapes by certain posters on this forum about someone who has given very good investment advice to the general population. 

Finally comparing RM to Rivkin is extremely insulting and really shows you know little about his investment philosophy.


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## BrightGreenGlow

Intrinsic Value said:


> I have only ever seen him on the business channel which most people don't have.
> 
> Additionally there are plenty of other commentators spruiking lots of other shares, financial services etc
> 
> I suppose judging by your logic then all the companies that RM tells people to avoid then those share prices should be dropping sharply. Sorry I don't see that happening.
> 
> Results in the long term are what counts and I have to say hats off to RM because the three companies that he recommended the most over the last year have rocketed in value eg Forge, Matrix and Macca. If you had invested in these companies when he recommended them you would have almost tripled your investment.
> 
> Show me another commentator with the same track record.
> 
> It seems to me that there is a bit of sour grapes by certain posters on this forum about someone who has given very good investment advice to the general population.
> 
> Finally comparing RM to Rivkin is extremely insulting and really shows you know little about his investment philosophy.




Why would I want to know.. I don't know where you start and he finishes... does he make money off his books? Stocks are about results and popularity.. im sure all the people who follow RM will do what he says down to a tee thus influencing the market of his small caps. Im not saying he is wrong but his popularity influences these small stocks. PS: Loving your name Intrinsic Value!


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## Intrinsic Value

BrightGreenGlow said:


> Why would I want to know.. I don't know where you start and he finishes... does he make money off his books? Stocks are about results and popularity.. im sure all the people who follow RM will do what he says down to a tee thus influencing the market of his small caps. Im not saying he is wrong but his popularity influences these small stocks. PS: Loving your name Intrinsic Value!




If you knew what he was on about you wouldn't make the comments that you are making now, simple as that.


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## tothemax6

BrightGreenGlow said:


> Why would I want to know.. I don't know where you start and he finishes... does he make money off his books? Stocks are about results and popularity.. im sure all the people who follow RM will do what he says down to a tee thus influencing the market of his small caps. Im not saying he is wrong but his popularity influences these small stocks. PS: Loving your name Intrinsic Value!



If you lookup Roger Montgomery on youtube, the hit rates for videos involving him are very low. Maybe he had _some_ effect on MCEs price action, we can't be sure, but it is doubtful substantial. After all, this is a successful up-and-coming company, which is also a manufacture of oil drilling floats, post-peak-oil, which is getting so much demand for their products they are having to expand into a whole new factory. MCE doesn't need Rogers mutterings for its stock price to head upwards.


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## zac

Im new to investing as such and have no real experience in it. Having said that ive been reading alot and like the looks of this company as well as FGE.
However I do have a concern also.
The Intrinsic Value ive worked out for MCE is as follows (W/10% RR):-
2010  $5.86
2011  $19.22
2012  $13.06

Im guessing its to do with calculating a huge increase in equity yet profits arent raising in proportion.
So wondering if its a concern at all or im overlooking something.


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## Wysiwyg

zac said:


> Im new to investing as such and have no real experience in it. Having said that ive been reading alot and like the looks of this company as well as FGE.



Yes Roger Mont. also mentioned along with Forge Group & Matrix Comp., Codan and Think Smart on Switzer the other night.


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## robusta

zac said:


> Im new to investing as such and have no real experience in it. Having said that ive been reading alot and like the looks of this company as well as FGE.
> However I do have a concern also.
> The Intrinsic Value ive worked out for MCE is as follows (W/10% RR):-
> 2010  $5.86
> 2011  $19.22
> 2012  $13.06
> 
> Im guessing its to do with calculating a huge increase in equity yet profits arent raising in proportion.
> So wondering if its a concern at all or im overlooking something.




Hi zac it may also pay to look at the payout ratios. They can not continue to retain profits and earn such high returns on them forever.


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## robusta

Wow this one came out of left field for me.

Trading halt due to share placement.

http://www.asx.com.au/asxpdf/20110331/pdf/41xs7f6g1gqm18.pdf

Thought MCE had cash starting to flow in 

Maybe Henderson is costing more than originally thought.


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## zac

robusta said:


> Wow this one came out of left field for me.
> 
> Trading halt due to share placement.




Wow, I broke my stockmarket virginity yesterday by purchasing shares in MCE.
What does this mean?
Now it  has me worried, I did research on the company and saw it as real promising.


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## robusta

zac said:


> Wow, I broke my stockmarket virginity yesterday by purchasing shares in MCE.
> What does this mean?
> Now it  has me worried, I did research on the company and saw it as real promising.




I still think they are good zac. It just means MCE are going to issue more shares to raise capital. We will have to wait to see the reason for this. Who knows you may get to buy more at a discount to the current share price.


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## nicarena

Hi Zac,

Don't worry about the capital raising in regards to MCE. They are growing quickly and need extra cash. This stock needs to be viewed long term. Henderson will double (even more) their output over the next few years. I have a value of $12.23 (after half yearly report) so it is still under valued.


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## zac

Hey guys,
Cheers for the response. I spoke with someone at work and they mentioned that trading halts arent that uncommon and arent necessarily a bad sign.
I was just concerned.
My calculations have the intrinsic value of MCE for 2011 at just above $19 and for next year around $13 (RR of 10%).
So im expecting good things from the company.
I saw an interview with the CEO of MCE and their future looked promising.
Its good for MCE also they are only 1 of 3 companies in the world that do what they do.


----------



## VSntchr

SPP offered at $8.50. Will be over subsribed no doubt as they are only raising $6m thru the SPP.
Will be interesting to see how it pans out. No clear indication of what the money is exactly going to be used for although they did mention Henderson stage 2 among other things..


----------



## jimmyizgod

Just of interest to those stockjolders out there - many of you plan on buying more shares at this price?  If not why?


----------



## Tightwad

I'll be taking the opportunity to top up, I can't see it getting any cheaper.


----------



## zac

Tightwad said:


> I'll be taking the opportunity to top up, I can't see it getting any cheaper.




How does it work, we get a letter sent to us?
I only bought into them a a couple days before the trading halt.


----------



## jimmyizgod

zac said:


> How does it work, we get a letter sent to us?
> I only bought into them a a couple days before the trading halt.




dont know if they are all similar, but ive done it before with TAH, and the choice was check, bank transfer or bpay. Basically you just put in whatever reference number is sent to you and transfer the dollars and a week or so later they appear in your holdings


----------



## titus

zac, details of the SPP will be contained in documentation which will be mailed to eligible Shareholders shortly.

The timetable for the SPP is:
SPP Record Date Friday, 1 April 2011
Settlement for Institutional Placement Thursday, 7 April 2011
Allotment and ASX quotation of shares issued under Institutional Placement Friday, 8 April 2011
SPP offer opens Monday, 11 April 2011
SPP offer closes Thursday, 5 May 2011
Allotment of shares issued under SPP Tuesday, 10 May 2011
ASX quotation of shares issued under SPP Friday, 13 May 2011

Cheers


----------



## zac

Ok cool, By that time table then, we should receive something in the post tomorrow.
I hope its not on Thurs as I dont get a chance to receive my post mail until after business hours.


----------



## abcxyz

http://asx.com.au/asxpdf/20110405/pdf/41xvjh1s0bz45n.pdf

"Given the strong demand from investors for the Institutional Placement and in an effort to increase liquidity in the secondary market of Matrix shares, Mr Aaron Begley has sold down 350,000 shares in the Company."

The original proposal was to raise $6.0M from the SPP.


----------



## zac

abcxyz said:


> http://asx.com.au/asxpdf/20110405/pdf/41xvjh1s0bz45n.pdf
> 
> "Given the strong demand from investors for the Institutional Placement and in an effort to increase liquidityin the secondary market of Matrix shares, Mr Aaron Begley has sold down 350,000 shares in the Company."




What does it actually mean?


----------



## abcxyz

zac said:


> What does it actually mean?




I think it means that the $6.0M capital raising at $8.50 per share granted SPP participants a pool of 700,000+ shares.

That pool has now been increased to 1,050,000+ shares.

At least, that's my take on it.


----------



## zac

http://www.matrixap.com.au/files/MCE%20310311.pdf

Heres some extra info on MCE. MCE seem to think their shares are undervalued if I read correctly.
Overall its a good report, covers some concerning aspects but also addresses the promising prospects of the company.


----------



## titus

zac said:


> http://www.matrixap.com.au/files/MCE%20310311.pdf
> 
> Heres some extra info on MCE. MCE seem to think their shares are undervalued if I read correctly.
> Overall its a good report, covers some concerning aspects but also addresses the promising prospects of the company.




Has anyone attempted to update their IVs based on the forecast metrics in this report?


----------



## zac

titus said:


> Has anyone attempted to update their IVs based on the forecast metrics in this report?




i was about to but couldnt make sense too well of the data.
However it did seem worse case the IV would still be well under, as it is now.


Has anyone received their SPP letter today?
Tomorrow is the cut off isnt it?


----------



## VSntchr

No. Tomorrow is not any cut off. The SPP only opens next week...so you probably won't receive anything till late this week or early next week. You then have a few weeks to submit the acceptance..so there is no rush!


----------



## Intrinsic Value

I am not sure if I should buy more at 8.50 or not. I originally got in at 4 and 5 dollars but now the IV will be going down and by my estimates the share price is around IV at the moment anyway.

I have a wad for new investments but not sure at the moment of anything in the market as nothing jumps out at being significantly below IV.

Are the future prospects of MCE good enough to warrant ploughing more money in?


----------



## zac

Intrinsic Value said:


> I am not sure if I should buy more at 8.50 or not. I originally got in at 4 and 5 dollars but now the IV will be going down and by my estimates the share price is around IV at the moment anyway.




What figures have you used for that?
Ive IV as around double the current share price.
Having said that, those calcs arent with any recent data.


----------



## drlog

zac said:


> What figures have you used for that?
> Ive IV as around double the current share price.
> Having said that, those calcs arent with any recent data.




Interesting, the share price is moving toward $8.50 - soon it may not even be worth participating in the SPP!

Having said that, I think MCE is currently undervalued and once they release this year's results it will be even more undervalued. Happy holding.


----------



## zac

drlog said:


> Interesting, the share price is moving toward $8.50 - soon it may not even be worth participating in the SPP!
> 
> Having said that, I think MCE is currently undervalued and once they release this year's results it will be even more undervalued. Happy holding.




I was thinking today, wouldnt it be funny if it dropped a little further to under 8.50. Im thinking it was just a bad day in general for the market.
As I also have MCE valued at more than it currently is, so unless something occured im yet to be aware of its still all good.


----------



## PinguPingu

Got my SPP offer today, not sure if I want to increase my holdings yet. I only bought in at about $9 but, who knows, in the next few days it may drift at/below $8.50...


----------



## zac

PinguPingu said:


> Got my SPP offer today, not sure if I want to increase my holdings yet. I only bought in at about $9 but, who knows, in the next few days it may drift at/below $8.50...




I was wondering the same thing,
Any reason why its gone down lately?
I know its the ASX in general but I just was curious as to why the large drop.


----------



## Tightwad

zac said:


> I was wondering the same thing,
> Any reason why its gone down lately?
> I know its the ASX in general but I just was curious as to why the large drop.




OIl and some commodities are down today I think... then theres the japan instability etc.


----------



## jimmyizgod

$8.5 - wow. didn't expect it to get down to the SPP price.


----------



## drlog

jimmyizgod said:


> $8.5 - wow. didn't expect it to get down to the SPP price.




Yes, very interesting - I guess the SPP won't be oversubscribed now!

With other SPPs, they generally have a weighted average percentage discount for this situation. Right now though, you are probably better off buying on market instead of through the SPP.


----------



## fanger

I'm looking to get back in to MCE do you guys think its bottomed yet or is there still more too go?


----------



## zac

fanger said:


> I'm looking to get back in to MCE do you guys think its bottomed yet or is there still more too go?




I dont think its bottomed as such but thats just speculation on my part. Its been consistently going down for the last few days.
Im wondering when to get more shares. I bought mine when they were under $9.

Today  saw they were $8.47 at one point (not sure if it was less)
So thats under the SPP and doesnt make the SPP appealing to me anymore.


----------



## merriman

i am looking to buy share in mce at the moment? are they available to buy and what is the best way of going about this?


----------



## zac

merriman said:


> i am looking to buy share in mce at the moment? are they available to buy and what is the best way of going about this?




Find a broker, either online or through other means


----------



## merriman

zac said:


> Find a broker, either online or through other means




ok, once i do that can i buy shares straight away in mce or can i only buy them when they become available?


----------



## jimmyizgod

merriman said:


> ok, once i do that can i buy shares straight away in mce or can i only buy them when they become available?




http://www.asx.com.au/documents/resources/getting_started_in_shares.pdf

Start with the basics. Read the above to get an idea how shares work


----------



## merriman

jimmyizgod said:


> http://www.asx.com.au/documents/resources/getting_started_in_shares.pdf
> 
> Start with the basics. Read the above to get an idea how shares work




im pretty familiar with shareholding, i am a trader in Ireland. I have a broker site i can buy through from here. i was just wondering what the situation was with first time buyers of shares in mce at the moment. what are the options with mce to invest right now or in the coming months?


----------



## jimmyizgod

merriman said:


> im pretty familiar with shareholding, i am a trader in Ireland. I have a broker site i can buy through from here. i was just wondering what the situation was with first time buyers of shares in mce at the moment. what are the options with mce to invest right now or in the coming months?




Sorry i dont understand.... To invest in mce is the same as any other company on the asx - you either put in an order for a packet of shares at a set price or you buy on the market at whatever price they are being sold for.....?


----------



## Risk Chaser

hmm, given now that the share price is now trading below the SPP offer of $8.5, there is really no benefit in participating other then to save brokerage right?

I'm keen to top up my holdings, but only if it's at a discount.


----------



## fanger

Jumped back onto MCE today near the low. I'm hoping that its close the end of its pull back from $10 and starts heading north again.


----------



## robusta

I will not be participating in the SPP, I added 10% to my MCE holdings today @ $8.39 (should have been a little more patient)

This will make five times I have bought MCE first @ $3.96, $3.86, $4.73, $4.64 and now $8.39.  

Have not found a reason to sell yet


----------



## Tightwad

I topped up last week at $8.39, previously bought at $8.35 and $5.02.  Can't believe it was going cheaper today.


----------



## drlog

Tightwad said:


> I topped up last week at $8.39, previously bought at $8.35 and $5.02.  Can't believe it was going cheaper today.




Yes, I am surprised as well - if I didn't already have 20% of my portfolio in MCE, I would be buying more at today's price - what a bargain! You got a good bargain at $8.39 as well so don't feel too bad 

I don't think many people will be participating in the SPP now - I certainly wont be.


----------



## ROE

drlog said:


> Yes, I am surprised as well - if I didn't already have 20% of my portfolio in MCE, I would be buying more at today's price - what a bargain! You got a good bargain at $8.39 as well so don't feel too bad
> 
> I don't think many people will be participating in the SPP now - I certainly wont be.




I'm just curious why people buy MCE at this price?
their fundamental is weakening a fair bit ..

this business is capital intensive and high fix cost
you buying for perfection from here on....

things can go very wrong very fast for this sort of business

and the capital raising was time to perfection .... market sentimental and market darling status....

Just curious that is all ....


----------



## VSntchr

The new plant is almost complete ROE...so once this is out of the way, perhaps there will not be any major capital requirements for a while.

Production is expected to ramp up, I think brokers forecasts are relatively conservative (in comparison to usually over-optimistic for many companies).

Can't see the oil price dropping below $60 anytime soon (I think it was this level that Matrix said was important to stay above).

Cycle of the industry shows that alot of working rigs need replacing so demand is set to stay strong.

MCE said to have the best quality gear and are working to expand their name and relations by setting up offices in places where the rigs are being built. This has the potential to lift market share which is currently only around 30ish% i believe.
They are also working on new products which is clearly as much of a risk as it is an opportunity.

Anyway, hope that answers your questions ROE.
I dont think MCE is at bargain price...but I do think that the current price offers a slight margin of safety...


----------



## drlog

VSntchr said:


> I dont think MCE is at bargain price...but I do think that the current price offers a slight margin of safety...




Yes, I think I was being a bit optimistic there - not a bargain but still cheap!

Clearly, the SPP will be under-subscribed - I wonder if they needed the money for expansion? Clearly, they didnt since they would have put a market price on it if they did.


----------



## zac

Why has the SP gone down so much of late?
I know its not the only company, Im just curious however having said that, the downturn is creating some bargains.


----------



## fanger

topped up my holding the other day at $7.66  very happy buying it at these prices


----------



## zac

fanger said:


> topped up my holding the other day at $7.66  very happy buying it at these prices




I topped up also, not quite as low as 7.66 but thats damn good.


----------



## Intrinsic Value

I got in at 7.50 yesterday but considering I bought my first lot at 4.00 and then 5.00 I dont consider it a huge bargain.

I also bought Forge again yesterday at 5.85 which i think is a real good price


----------



## fanger

Intrinsic Value said:


> I got in at 7.50 yesterday but considering I bought my first lot at 4.00 and then 5.00 I dont consider it a huge bargain.
> 
> I also bought Forge again yesterday at 5.85 which i think is a real good price




I topped up on FGE after japan happened and FGE went down in the mid $5, I didn't get it at the bottom but not far off.


----------



## skc

ROE said:


> I'm just curious why people buy MCE at this price?
> their fundamental is weakening a fair bit ..
> 
> this business is capital intensive and high fix cost
> you buying for perfection from here on....
> 
> things can go very wrong very fast for this sort of business
> 
> and the capital raising was time to perfection .... market sentimental and market darling status....
> 
> Just curious that is all ....




Just spent a good 2 hours reading up on MCE. I am with you on this one ROE. 

They are in a pretty niche market where they already have 1/3 of the business and they are 1 of 3 suppliers. It would be difficult for them to wrestle away their competitors market share, and all the growth needs to come from the overall market increasing in size. Looking at the projections I am not sure they have that much more room to grow the top line. Having said that I know little about these heavy engineering production market so I could be quite wrong.

Take Austock's forecast FY13 EPS of 77c (which is high if revenue growth isn't realised), apply a PE 14 and discount it back to today at 15% and today's price is probably slightly cheap but not by much.

Who on earth listed them at a $1 btw...


----------



## InvisbleInvestor

Share price at $7.50 following a -3% drop in the last trading day and -8.3% drop in the past week with a slight increase is volume. Are people out there seeing a bargain now that it has been trending down? 

As of 11 May $11.13 is the IV that RM has posted on his blog for MCE. That gives the company a MOS of 67%. Surely that's thick enough to cower behind. Its fundamentals haven't changed and is this weekend attending a Tradeshow in Kuala Lumpur.

Anyone seeing an upcoming bargain price? Is it already at one?


----------



## VSntchr

InvisbleInvestor said:


> Share price at $7.50 following a -3% drop in the last trading day and -8.3% drop in the past week with a slight increase is volume. Are people out there seeing a bargain now that it has been trending down?
> 
> As of 11 May $11.13 is the IV that RM has posted on his blog for MCE. That gives the company a MOS of 67%. Surely that's thick enough to cower behind. Its fundamentals haven't changed and is this weekend attending a Tradeshow in Kuala Lumpur.
> 
> Anyone seeing an upcoming bargain price? Is it already at one?




MOS is not 67%.
(IV - SP)/IV 
= (11 - 7.50) / 11
= 32%

I however do not agree with an IV of $11. I think it is worth around $9. But hey, what do I kno!


----------



## InvisbleInvestor

At work atm, but the IV I got was actually higher than $11. Bought 135 shares.


----------



## InvisbleInvestor

Beg you pardon, revised calculation has come up as $8.27. Anyone?


----------



## VSntchr

InvisbleInvestor said:


> Beg you pardon, revised calculation has come up as $8.27. Anyone?




sounds like a pretty reasonable valuation of MCE to me.


----------



## zac

VSntchr said:


> sounds like a pretty reasonable valuation of MCE to me.




What fundamentals have changed to lower the IV? also is that with a 12% RR


----------



## InvisbleInvestor

Nothing has changed but my personal error. That's using 10% IRR. And thanks for confirming Snatcher.


----------



## zac

Whats changed in the last few months to lower IV?
Ive just gone through some forecast results for 2011-2013 and nothing has changed since I last worked out the IV of MCE,
I have it a fair bit above $10.


----------



## InvisbleInvestor

If you are using the value.able method, are you making sure to average the return on equity over the past two years before putting it into the formula? It's possible you are using a ROE that is too high leading you to use a multiplier that is too high. Also what IRR are you using?


----------



## Tyler

What is the competitive advantage if MCE?
Is it sustainable?
Why cant competitors copy them?

Quantitatively the ROE is very good
Valuation is around $8.50 to $11 for me


----------



## Intrinsic Value

Tyler said:


> What is the competitive advantage if MCE?
> Is it sustainable?
> Why cant competitors copy them?
> 
> Quantitatively the ROE is very good
> Valuation is around $8.50 to $11 for me




I suggest you go and read RMs blog if you want the details on MCE. It is well covered on his blog.

He also has his valutations for a lot of his A1s posted the other day.


----------



## Tyler

He doesnt really cover the competitive advantage


----------



## fanger

Wow hasn't matix been smashed of late, I guess so has everything else 
Its starting to get nasty now with no end in sight, if i had some spare cash I'd buy some more.


----------



## McCoy Pauley

Tyler said:


> He doesnt really cover the competitive advantage




Try to find some of Roger's commentary before MCE floated. I'm almost sure that he did write about MCE's competitive advantage around that time.

MCE's share price is being smashed primarily due to the falling oil price, given that its main customers are in the oil and gas industry. Starting to look very tasty to me.


----------



## kermit345

I grabbed some yesterday for $5.75, have a valuation in the $8-9 range and if this mark turns around or uncle Ben turns on the QE3 tap and markets go higher, i'll probably look to get out at $8-9 if it makes it back to that stage.


----------



## Intrinsic Value

MCE has to be a good long term play.

The price of oil is going up in the medium to long term.

Anywhere under 6 dollars is a bargain.

MCE must be due to report very soon as well. 

Additionally I think a lower Aussie dollar should help MCE with contracts in US dollars mainly.


----------



## robusta

Intrinsic Value said:


> MCE has to be a good long term play.
> 
> The price of oil is going up in the medium to long term.
> 
> Anywhere under 6 dollars is a bargain.
> 
> MCE must be due to report very soon as well.
> 
> Additionally I think a lower Aussie dollar should help MCE with contracts in US dollars mainly.




Bought some at $6.95 late July and I still think that was a bargain, picked up some more on Monday at $5.17, average price paid $6.22 + brokerage. 

At this price unless things change drastically I am happy to hold well into the future for a expected great dividend yield, strange as that may sound to some.


----------



## Tyler

Is there main competitor Trelleborg? 

Trelleborg only has 27bil SEK of earnings = 4bil AUD

& there margins Are way lower than MCE


----------



## fanger

Tyler said:


> Is there main competitor Trelleborg?
> 
> Trelleborg only has 27bil SEK of earnings = 4bil AUD
> 
> & there margins Are way lower than MCE




So what are you saying?


----------



## McCoy Pauley

Anyone care to guesstimate when MCE might release its financial report?  I'm hoping it's sooner rather than later.


----------



## skc

McCoy Pauley said:


> Anyone care to guesstimate when MCE might release its financial report?  I'm hoping it's sooner rather than later.




26/8 according to morningstar.


----------



## McCoy Pauley

skc said:


> 26/8 according to morningstar.




Thanks kindly.  Looking forward to reading their report.


----------



## fanger

MCE is really having trouble pushing threw this $6 mark. Lets hope it has a good financial report like FGE came out with today will push the share price up.


----------



## fanger

Report out now and looks good revenue up and profit up.


----------



## Risk Chaser

operating cashflow still remains a problem and NPAT missed expectations. 
Will beinteresting to see how it opens..


----------



## McLovin

Risk Chaser said:


> operating cashflow still remains a problem and NPAT missed expectations.
> Will beinteresting to see how it opens..




OCF is what jumped straight out at me. $33m profit and $1.5m OCF. There was a pretty big jump in WC too. Income tax paid also was a bit more realistic than last year.


----------



## VSntchr

McLovin said:


> OCF is what jumped straight out at me. $33m profit and $1.5m OCF. There was a pretty big jump in WC too.




This was known at the HY report. Its improved significantly since then, but I agree - an issue none the less.


----------



## McLovin

VSntchr said:


> This was known at the HY report. Its improved significantly since then, but I agree - an issue none the less.




True, if you strip out 1H OCF the second half was ~$7m. Still not that great.


----------



## kermit345

Still well undervalued at current levels by my calculations but as stated here, looks like they've missed forecasts and the market has reacted accordingly.

Sounds like MCE are dealing with the same headwinds as a lot of Australian companies  in foreign exchange terms, greater competition in the sector and the continual expansion of employee wages due to a skills shortage. None of which are really in their control, however at least their order book is reasonable and they still signal growth in the sector which will continue as companies look for new oil and gas offshore.

On the basis of this announcement though if markets do get a brief rebound at some stage and MCE manages to meet its valuation (which for me is around the $8.10 mark) then it could be a good selling opportunity and still a great profit from these levels.

In short I think they are well undervalued, but growth may be more subdued in coming years then it has been previously.


----------



## VSntchr

kermit345 said:


> Still well undervalued at current levels by my calculations but as stated here, looks like they've missed forecasts and the market has reacted accordingly.
> 
> Sounds like MCE are dealing with the same headwinds as a lot of Australian companies  in foreign exchange terms, greater competition in the sector and the continual expansion of employee wages due to a skills shortage. None of which are really in their control, however at least their order book is reasonable and they still signal growth in the sector which will continue as companies look for new oil and gas offshore.
> 
> On the basis of this announcement though if markets do get a brief rebound at some stage and MCE manages to meet its valuation (which for me is around the $8.10 mark) then it could be a good selling opportunity and still a great profit from these levels.
> 
> In short I think they are well undervalued, but growth may be more subdued in coming years then it has been previously.




Yeah, report still reads quite well apart from profit coming in a little low and cash flow struggling, but I think the cashflow will be stronger in coming periods. They have done alot this year remember. The next 2 years could reap the benefits...time will tell..but for now definitely worth holding IMO...


----------



## kermit345

What makes this more interesting is that MCE was tipped as one of the few that would surprise to the upside this reporting season.

I'll continue to hold for reasons mentioned above as I believe a lot of companies aren't fairly valued at the moment due to the widespread economic situations. Being 24 years old means i don't have to stress about selling these anytime soon and hopefully they can move back towards their highs in the medium term.


----------



## Intrinsic Value

Looks like MCE has copped a bit of a battering this morning down under 5 dollars.

I bought at 4 and 5 dollars last year.

Looks like I should have sold when it hit 9 but I didn't want to pay the large capital gains tax.

I still think the long term prospects are good as the price of oil is only going up in the long term.


----------



## VSntchr

kermit345 said:


> What makes this more interesting is that MCE was tipped as one of the few that would surprise to the upside this reporting season.
> 
> I'll continue to hold for reasons mentioned above as I believe a lot of companies aren't fairly valued at the moment due to the widespread economic situations. Being 24 years old means i don't have to stress about selling these anytime soon and hopefully they can move back towards their highs in the medium term.




Bottom line, MCE is still a great business..if your confident in future cash flow streams - then just sit back and watch the dividends rise...


----------



## notting

It's had a great Roger rally since he mentioned it on sky news. Has a bit of support around the $5 area. Will be interesting to see what happens tomorrow morning. When most people will have seen the news.


----------



## McCoy Pauley

I'm still working my way through the report, but I find it interesting that MCE is forecasting just a 20% growth in revenues next financial year.  That seems on the low side for me.


----------



## skc

McCoy Pauley said:


> I'm still working my way through the report, but I find it interesting that MCE is forecasting just a 20% growth in revenues next financial year.  That seems on the low side for me.




MCE is a great business but it is in a very niche market.  

DRBM accounts for 84% of their revenue and is constrained by the overall industry size. They already have 1/3 of the industry and they are 1 of 3 players. They will need an extrodinary effort to grow at above industry rates at the demise of their competitors.

The other segments are only small and so they can't grow those fast enough to sustain historical growth rate.

The 2nd half numbers were terrible compared to the first half.

Revenue: HY $92.4m, FY $183.7m. H2 = $91.3m (-1.2% Half-on-half)
NPAT: HY $19.25m, FY $33.6m. H2 = $14.35m (-25%)

May be they saw the good first half numbers and took the opportunity to brought forward some expenses. EPS (~44c) is basically flat compared to last year thanks to the well timed capital raising. If they do grow revenue by 20% I think current price is probably around fair level, with PE ~11.5.


----------



## McLovin

skc said:


> DRBM accounts for 84% of their revenue and is constrained by the overall industry size. They already have 1/3 of the industry and they are 1 of 3 players. They will need an extrodinary effort to grow at above industry rates at the demise of their competitors.




I agree with you, but on the upside the size of the market and lack of participants has shielded them from the margin pressure some of the other mining services companies have experienced. Assuming they can grow revenue at 20% and maintain their margins I have a value of ~$6.50-$7.00 for FY12.


----------



## tinhat

Bought some today at $4.80


----------



## skc

skc said:


> The 2nd half numbers were terrible compared to the first half.
> 
> Revenue: HY $92.4m, FY $183.7m. H2 = $91.3m (-1.2% Half-on-half)
> NPAT: HY $19.25m, FY $33.6m. H2 = $14.35m (-25%)
> 
> May be they saw the good first half numbers and took the opportunity to brought forward some expenses. EPS (~44c) is basically flat compared to last year thanks to the well timed capital raising. If they do grow revenue by 20% I think current price is probably around fair level, with PE ~11.5.




Didn't expect another 10% fall on top of yesterday's rout even though the market is rough as anything today. 

Market is pricing in some pretty terrible outlook. PE of this year now 9.6. If forward PE is 12, the market things EPS is only 35c. Considering their H2 profits was only 19c, may be that's not at all unfair.

Tried a swing trade today and only managed to net 6c lol.

P.S. Down -12% now


----------



## fanger

People can't get out fast enough at the moment


----------



## VSntchr

Oil rig industry is cyclical, doesn't take much effort, can even be done just by reading MCEs report, to see where we are in the cycle. Patient investing will pay off with this one...
Additionally. the P&L statement included some expenses (~$5mil) from the new plant...so it could have been a better result without that included..


----------



## notting

I was hoping it would fall a little more this morning.  It did and I ate some.  Woops! A bit early!!  Knifing for $3 by the look of it.


----------



## Risk Chaser

It seems everytime i top up, MCE reaches a new low. needless to say i'm no longer greedy.


----------



## PinguPingu

I bought into MCE at $9, then sold at $7 thinking I may have bought it a little too high, took the loss and have been waiting the last few months to buy in at a much lower level. I think I may wait a little more...

Looks like MCE is in need of a Rodger rally...


----------



## notting

He shouldn't spruik it till it finishes collapsing. Will be more effective and I'd like to buy some more when it flattens.  Then he can pump up it's tyres.


----------



## skc

PinguPingu said:


> Looks like MCE is in need of a Rodger rally...




I think you will see a Roger capitulation first.



> My very long-term outlook for the price of oil hasn’t changed, but I can make the argument that the shares of Matrix C&E cannot currently be valued as a going concern any more confidently than I can a speculative exploration company.




http://blog.rogermontgomery.com/


----------



## McLovin

skc said:


> I think you will see a Roger capitulation first.
> 
> 
> 
> http://blog.rogermontgomery.com/




See this is what I don't get. RM has MCE as an "A1" business, I don't understand how such a company can, after one bad report, deteriorate to the stage that it "cannot currently be valued as a going concern any more confidently than I can a speculative exploration company."


----------



## PinguPingu

Ahh, but it's A2 now.


----------



## Intrinsic Value

RM was backpedalling pretty fast today on his blog.

Was hesitant to even give it an IV.

He was spruiking it bigtime for the last few months. 

He really went overboard and plenty on his blog bought at higher prices I imagine and are now bailing out.

Maybe when they have really depressed the price he will start talking it up again! 

Big problem is the order book.

Unless MCE gets more forward orders it could get even uglier.

It is back to what I paid for it last year. 

Still I think I will hold but I will be looking for some contract wins in the next few months to make myself sleep easier.


----------



## tinhat

tinhat said:


> Bought some today at $4.80




ouch!


----------



## suhm

roger has a bit of form with regards to these sort of results. Ends up saying that he was lied to by management and sells out at the bottom. Look at CCP. Cashflow is a bit of a worry but in a good sector, will see where this bottoms.


----------



## robusta

Intrinsic Value said:


> RM was backpedalling pretty fast today on his blog.
> 
> Was hesitant to even give it an IV.
> 
> He was spruiking it bigtime for the last few months.
> 
> He really went overboard and plenty on his blog bought at higher prices I imagine and are now bailing out.
> 
> Maybe when they have really depressed the price he will start talking it up again!
> 
> Big problem is the order book.
> 
> Unless MCE gets more forward orders it could get even uglier.
> 
> It is back to what I paid for it last year.
> 
> Still I think I will hold but I will be looking for some contract wins in the next few months to make myself sleep easier.




Could not resist buying more @ $4.20 today - had to sell something I did not want to sell but I could not let that price go past.


----------



## notting

I hope you feel as good about it tomorrow night!


----------



## skc

robusta said:


> Could not resist buying more @ $4.20 today - had to sell something I did not want to sell but I could not let that price go past.




You were able to recognise the ZGL entry mistake quite quickly and exit with minimal damage. 

Why not be similarly ruthless with MCE?


----------



## robusta

skc said:


> You were able to recognise the ZGL entry mistake quite quickly and exit with minimal damage.
> 
> Why not be similarly ruthless with MCE?




Because I see MCE as a excellent company with exciting growth prospects and sp that is significantly undervalued.


----------



## ROE

robusta said:


> Because I see MCE as a excellent company with exciting growth prospects and sp that is significantly undervalued.




have you consider its high fix cost, and heavy capex?

in good time you rack in because high revenues gloss over its cost...

but in bad times it can have devastating consequences.

Not talking down MCE just something to consider


----------



## craft

Earnings Risk.

If you don't respect it - it will eventually kill you every time. How many times must the lesson be learned?

Seems some are destined to never learn and others will have paid dearly for the tuition.


----------



## robusta

ROE said:


> have you consider its high fix cost, and heavy capex?
> 
> in good time you rack in because high revenues gloss over its cost...
> 
> but in bad times it can have devastating consequences.
> 
> Not talking down MCE just something to consider




Good points there ROE, I like you normally prefer businsess with low fix cost and low capex but I make a exception with MCE because of growth potentual.... Time will tell


Interesting article by Rudi from FNArena here

http://www.fnarena.com/index2.cfm?type=dsp_newsitem&n=F7E7FCC4-BA2D-7851-51A2374E7AA25FA3

JP Morgan have upgraded price target for MCE to $5.43

I think MCE is worth at least 25% more than this - if 20% revenue growth is achieved.


----------



## notting

Yeah but wouldn't it's positive prospects depend on reliable management who have now miss lead the market and Roger Montgomery.


----------



## McCoy Pauley

notting said:


> Yeah but wouldn't it's positive prospects depend on reliable management who have now miss lead the market and Roger Montgomery.




Montgomery claims he was misled by MCE's management, but cashflow issues were raised at the time the first half report was released.

Investing in any engineering service company is taking (hopefully an educated) bet on their capacity to tender successfully for contracts.  MCE is no different.  Either you speculate on their ability to win new orders to increase their order book and realise the 20% increase in revenues predicted in the full year report, or you wait on the sidelines and be prepared to sacrifice some gains on the back of contract announcements during the next year.


----------



## Intrinsic Value

McCoy Pauley said:


> Montgomery claims he was misled by MCE's management, but cashflow issues were raised at the time the first half report was released.
> 
> Investing in any engineering service company is taking (hopefully an educated) bet on their capacity to tender successfully for contracts.  MCE is no different.  Either you speculate on their ability to win new orders to increase their order book and realise the 20% increase in revenues predicted in the full year report, or you wait on the sidelines and be prepared to sacrifice some gains on the back of contract announcements during the next year.




I wouldn't be buying anymore until I saw some contract wins.

I think that their 20 percent increase in revenue prediction is dicey. That means that they need another 110 million dollars worth of orders that they currently don't have.
And if they dont get them the share price will really tank.


----------



## grug

Well, for what it's worth, I thought I'd share my experiences with MCE as a first post.

MCE is my fourth share purchase after an illustrious and lengthy involvement with the share market dating right the way back to May of 2011.  I bought at $5.29 at 3:58PM on Monday of this week - the day before the annual report.

It certainly has been an _experience_ watching the share price since.

Admittedly my views on purchasing MCE have been shaped largely by RM, but I really have noone to blame but myself on this one.  I was aware that the annual report was imminent, I was even aware of Roger's own comments noting he had not bought in at these prices as he was waiting for further information on cash flow.  What it was, in hindsight, was a gamble that a company whose SP had tumbled so far since I was watching it _had to be_ undervalued.  I felt sure that a company with a history (all 18 months of it?) of beating expectations would continue to do so, but - again in hindsight - it really was only a feeling.

I had done research on the nature of the company, and calculated both historical intrinsic value on the basis of previous annual reports and then used broker estimates to predict current IV at ~$11.

Really though, all the information was available to me to suggest that such an IV would not be met.  Lack of contract announcements was one, previous MCE comments about a high AUD was another:


> A number of Matrix’s contracts are or may be expressed in terms of foreign currency.  To the extent that such exposures are not hedged, fluctuations in the exchange rate between the contract currency and the Australian dollar may adversely affect Matrix’s revenue in Australian dollar terms.
> 
> In particular, as the majority of Matrix’s sales are in USD and the majority of its costs are in AUD, an appreciation of the AUD versus the USD may adversely affect Matrix’s financial performance without hedging.



_I note that MCE did hedge a portion of funds - I can't find where I was reading this but I was of the impression it was an amount that this would have likely been used during this FY?_

I also rather glaringly appeared to have not factored in the recent equity raising into my calculations!  

When all the information in the AR is factored in - information that I should have looked into better before the purchase - I get a IV of $4.61 for 2011 and $6.31 for 2012 (RR @ 14%)

I have mixed feelings about remaining with MCE at the moment. As noted on RM's blog, MCE's 20% revenue target is dependant on them landing ~$120m of new contracts.  According to MCE, they're quoting on about ~$500m of new work, and have historically landed about a third of what they quote.  On this basis you'd normally view the $120m figure over the next twelve months to be as easy as pie - but the problem is that they haven't landed _anything_ over the last six months.  

The establishment of MCE offices in the US certainly suggests that MCE management see opportunities there to improve market share.  And it's entirely possible that the Henderson plant offers an ability to improve on revenue without landing many new contracts. 

Regardless though, it really does seem like speculation from here on in.  Or perhaps as McCoy Pauley put it this morning, an educated bet?

tl;dr - newbie got burnt on this one.


----------



## cowboyA

This is my first post after reading this thread and a number of similar threads on this site.

Seems to me that RM caused a lot of stir with MCE and many people bought in because of him and thought of the stock in terms of his measures. That is, some idea of "INTRINSIC VALUE" (IV). 

In the short-term IV has NO bearing on movements. Indeed, MCE now is simply trending and a lot of commentators are trying to relate this to some idea about IV or future prospects or cash flow or pending orders or whatever etc.

Most commentators seem out of place. I personally have no doubt that many new orders will be achieved. Why? Because MCE's business works in cycles (and previously they had little capacity to expand beyond current orders even if the cycle permitted). Also, because while management seems not to have done a great job in informing the market, MCE only missed their forecasts by relatively small factors. However, this has nothing to do with the current price. It may have simply nudged an initial trend - then the trend has a life of its own completely removed from IV.

However, why this stock is so interesting is again the notion of IV. The IV for MCE is, almost unquestionably, well above the current price. But what people fail to realize is that huge numbers of stocks trade consistently, and for years, above any IV. So why IV in this case (whether it moves down or up from where you thought it was last month) has any business in the discussion (or at least to the level it does with MCE) is quite unusual. My suspicion is there are a lot of algorithmic traders (like myself) laughing at this fact and taking advantage by simply noting the trend. 

At some point it will bottom out, hover around this bottom for a while, then a new order will be announced, people will rush in and it will rocket up - but only a little - before levelling out again. 

Don't expect to see above $5 in a long long time with this (regardless of new orders, IV, cash-flow, blah). It can't trend that way now.


----------



## McLovin

grug said:


> Well, for what it's worth, I thought I'd share my experiences with MCE as a first post.
> 
> MCE is my fourth share purchase after an illustrious and lengthy involvement with the share market dating right the way back to May of 2011.  I bought at $5.29 at 3:58PM on Monday of this week - the day before the annual report.
> 
> It certainly has been an _experience_ watching the share price since.
> 
> Admittedly my views on purchasing MCE have been shaped largely by RM, but I really have noone to blame but myself on this one.  I was aware that the annual report was imminent, I was even aware of Roger's own comments noting he had not bought in at these prices as he was waiting for further information on cash flow.  What it was, in hindsight, was a gamble that a company whose SP had tumbled so far since I was watching it _had to be_ undervalued.  I felt sure that a company with a history (all 18 months of it?) of beating expectations would continue to do so, but - again in hindsight - it really was only a feeling.
> 
> I had done research on the nature of the company, and calculated both historical intrinsic value on the basis of previous annual reports and then used broker estimates to predict current IV at ~$11.
> 
> Really though, all the information was available to me to suggest that such an IV would not be met.  Lack of contract announcements was one, previous MCE comments about a high AUD was another:
> 
> _I note that MCE did hedge a portion of funds - I can't find where I was reading this but I was of the impression it was an amount that this would have likely been used during this FY?_
> 
> I also rather glaringly appeared to have not factored in the recent equity raising into my calculations!
> 
> When all the information in the AR is factored in - information that I should have looked into better before the purchase - I get a IV of $4.61 for 2011 and $6.31 for 2012 (RR @ 14%)
> 
> I have mixed feelings about remaining with MCE at the moment. As noted on RM's blog, MCE's 20% revenue target is dependant on them landing ~$120m of new contracts.  According to MCE, they're quoting on about ~$500m of new work, and have historically landed about a third of what they quote.  On this basis you'd normally view the $120m figure over the next twelve months to be as easy as pie - but the problem is that they haven't landed _anything_ over the last six months.
> 
> The establishment of MCE offices in the US certainly suggests that MCE management see opportunities there to improve market share.  And it's entirely possible that the Henderson plant offers an ability to improve on revenue without landing many new contracts.
> 
> Regardless though, it really does seem like speculation from here on in.  Or perhaps as McCoy Pauley put it this morning, an educated bet?
> 
> tl;dr - newbie got burnt on this one.




It happens to everyone mate, don't get too down about it. What you need to do is go away and piece together where you went wrong. Look at what your assumptions were back then and why they were incorrect. Learn from your mistakes, so you don't repeat them. The business won't go broke and the nature of contracting is lumpy sales so the world isn't coming to an end. From what you have written I think the most valuable bit of knowledge you have learnt is to always do your own research.

I do think MCE is being punished a bit more than it deserves, but such is life for former stars.


----------



## craft

cowboyA said:


> The IV for MCE is, almost unquestionably, well above the current price. .




How so??????

MCE always has had and always will have earnings risk. If you think you are going to hold it for the long term you must understand the whole business cycle as applicable to the company and value it on cycle averages using robust valuation methods.

The damage that has been done here is not because MCE is a particularly poor company it is just that it was never worth anything like some claimed.  Putting the wrong inputs  into the wrong formula is a sure way to build an unrealistic anchor as to what a company is really worth.

“It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so.”

Mark Twain


----------



## skc

cowboyA said:


> However, why this stock is so interesting is again the notion of IV. The IV for MCE is, almost unquestionably, well above the current price. But what people fail to realize is that huge numbers of stocks trade consistently, and for years, above any IV. So why IV in this case (whether it moves down or up from where you thought it was last month) has any business in the discussion (or at least to the level it does with MCE) is quite unusual. My suspicion is there are a lot of algorithmic traders (like myself) laughing at this fact and taking advantage by simply noting the trend.




The mistake many people make is taking the title "Intrinsic value" as gospel. There is nothing intrinsic in any stock valuation. The value one calculates should be called "Valuation Using Current Information and Assumptions". 

That's right. I am going to trademark my methodology as "VUCIA"...


----------



## Risk Chaser

when do the book come out? :


----------



## Intrinsic Value

grug said:


> Well, for what it's worth, I thought I'd share my experiences with MCE as a first post.
> 
> MCE is my fourth share purchase after an illustrious and lengthy involvement with the share market dating right the way back to May of 2011.  I bought at $5.29 at 3:58PM on Monday of this week - the day before the annual report.
> 
> It certainly has been an _experience_ watching the share price since.
> 
> Admittedly my views on purchasing MCE have been shaped largely by RM, but I really have noone to blame but myself on this one.  I was aware that the annual report was imminent, I was even aware of Roger's own comments noting he had not bought in at these prices as he was waiting for further information on cash flow.  What it was, in hindsight, was a gamble that a company whose SP had tumbled so far since I was watching it _had to be_ undervalued.  I felt sure that a company with a history (all 18 months of it?) of beating expectations would continue to do so, but - again in hindsight - it really was only a feeling.
> 
> I had done research on the nature of the company, and calculated both historical intrinsic value on the basis of previous annual reports and then used broker estimates to predict current IV at ~$11.
> 
> Really though, all the information was available to me to suggest that such an IV would not be met.  Lack of contract announcements was one, previous MCE comments about a high AUD was another:
> 
> _I note that MCE did hedge a portion of funds - I can't find where I was reading this but I was of the impression it was an amount that this would have likely been used during this FY?_
> 
> I also rather glaringly appeared to have not factored in the recent equity raising into my calculations!
> 
> When all the information in the AR is factored in - information that I should have looked into better before the purchase - I get a IV of $4.61 for 2011 and $6.31 for 2012 (RR @ 14%)
> 
> I have mixed feelings about remaining with MCE at the moment. As noted on RM's blog, MCE's 20% revenue target is dependant on them landing ~$120m of new contracts.  According to MCE, they're quoting on about ~$500m of new work, and have historically landed about a third of what they quote.  On this basis you'd normally view the $120m figure over the next twelve months to be as easy as pie - but the problem is that they haven't landed _anything_ over the last six months.
> 
> The establishment of MCE offices in the US certainly suggests that MCE management see opportunities there to improve market share.  And it's entirely possible that the Henderson plant offers an ability to improve on revenue without landing many new contracts.
> 
> Regardless though, it really does seem like speculation from here on in.  Or perhaps as McCoy Pauley put it this morning, an educated bet?
> 
> tl;dr - newbie got burnt on this one.




Don't feel too bad especially if you are holding long term as a few good contract wins will see the share price rise again.

It could be worse there are a lot of people who paid 8dollars for MCE.

MCE have 500 million out in quotes and historically they convert 38percent into contracts so that would give them at least a 20 percent increase in revenue next FY.


----------



## cowboyA

craft said:


> How so??????




Well, as skc says it depends on the calculations but simply look at current market cap (which is now quite low), assets, current order book (forget future orders), debt, cash, profit etc and it is pretty clear that classical notions of IV are above this price. JP has \approx 5.50 or something. I think my colleague was talking about $6-$7 but not sure how he came to this (and don't care to learn how).

However, I think you missed the point of my post (and my prev post was rather rambling I see - not used to posting in these boards). But my point is that trading based on this notion (even the somewhat classical idea) of IV is not going to get you anywhere in a market and with a stock that is not moving based on IV. 

Pricing models that move stocks like these are worked out by thinking trades will be closed out in minutes/hours and definitely within the day. Assets, order books etc are not used to price these things in the short-term.

My other problem with all this talk about IV (and again I use this term more classically) is that it drives emotional responses to market movements.


----------



## craft

cowboyA said:


> Well, as skc says it depends on the calculations but simply look at current market cap (which is now quite low), assets, current order book (forget future orders), debt, cash, profit etc and it is pretty clear that classical notions of IV are above this price. JP has \approx 5.50 or something. I think my colleague was talking about $6-$7 but not sure how he came to this (and don't care to learn how).
> 
> However, I think you missed the point of my post (and my prev post was rather rambling I see - not used to posting in these boards). But my point is that trading based on this notion (even the somewhat classical idea) of IV is not going to get you anywhere in a market and with a stock that is not moving based on IV.
> 
> Pricing models that move stocks like these are worked out by thinking trades will be closed out in minutes/hours and definitely within the day. Assets, order books etc are not used to price these things in the short-term.
> 
> My other problem with all this talk about IV (and again I use this term more classically) is that it drives emotional responses to market movements.




I didn’t miss your point. Just curious as to why everybody seems to think MCE is undervalued.

I’m certainly not inspired from a valuation perspective. But then I lack the knowledge to compensate for the lack of earnings visibility that exists in this stock, so would probably not be interested buying from a valuation perspective, at any price.

There are times that I would happily fade the short term trend when we are in what I would consider extreme value teritory for great companies but this is not one of those times for me.

Horses for courses Cowboy.


----------



## McLovin

skc said:


> That's right. I am going to trademark my methodology as "VUCIA"...




Pronounced "vuckya"?


----------



## BrightGreenGlow

I find this funny... not that RogerM had to stick with this stock but for one me PROMOTED so much on the media he only has 1% in MCE from his portfolio. Funny to see all the lemming buy this one and watch it dive.... what a con-job. Anyways best of luck to the sheep who bought in, hope you guys come out okay in the months to come. I wonder how many people bought in while RM was selling?


----------



## notting

Looks like I was a bit more of a sheep than a cow today.
Followed it up and bought.


----------



## robusta

robusta said:


> Could not resist buying more @ $4.20 today - had to sell something I did not want to sell but I could not let that price go past.






notting said:


> I hope you feel as good about it tomorrow night!




Let us see how good I feel in 6 months plus.


----------



## McCoy Pauley

Intrinsic Value said:


> Don't feel too bad especially if you are holding long term as a few good contract wins will see the share price rise again.
> 
> It could be worse there are a lot of people who paid 8dollars for MCE.
> 
> MCE have 500 million out in quotes and historically they convert 38percent into contracts so that would give them at least a 20 percent increase in revenue next FY.




To play devil's advocate, MCE also has not announced a contract win for six months. I'm sceptical that they can convert the $500 million in quotes/tenders into solid revenue growth just at this point in time.


----------



## craft

McCoy Pauley said:


> To play devil's advocate, MCE also has not announced a contract win for six months. I'm sceptical that they can convert the $500 million in quotes/tenders into solid revenue growth just at this point in time.




Revenue growth won’t mean much if you have to drop your margin to win the business.

Have MCE had no orders because the industry is not buying?

Or has MCE not won any orders because they have been under bid?

MCE is a relatively capital intensive business with high fixed costs, as are their competitors. No one wants their capital underutilised, that’s what drives margins down, and it’s also what allows margins to expand when supply is tight because there is generally a lack of will to invest extra capital. Capital intensive niches always tend to have huge ROE swings depending on where you sit in the Demand/Investment dance. 

What were the margins achieved by MCE prior to them coming to market? Why do you suppose the existing owners sold down/diluted their interests as they expanded production? 

Or is the attraction with MCE that people beleive we will return to a supply squeeze to keep the order books full and the margins high? 

Is Henderson the only new supply that has been brought online? 

Who understands the demand side? because I sure don't. I assume oil demad is durable but is deep sea going to attract capital over shale, gas, etc etc.?

Looking forward to a MCE investor on fundamental grounds filling in some of these ? for me.


----------



## notting

Have a look at NMS. That might give you an idea. Might be a safer buy at this point given there is less downside risk.


----------



## skc

craft said:


> Who understands the demand side? because I sure don't. I assume oil demad is durable but is deep sea going to attract capital over shale, gas, etc etc.?
> 
> Looking forward to a MCE investor on fundamental grounds filling in some of these ? for me.




Some background on the industry size and competitive dynamics from here.

http://www.thebull.com.au/articles/a/20790-broker-buy-for-the-week---mce.html

http://www.matrixap.com.au/files/Austock MCE.pdf

It is pretty evident the market demand is there. MCE is one of only 3 or 4 suppliers of this stuff in the world. I get 3 quotes even if I was just spending $2k on my driveway so I'd expect MCE to get invitation to tender on most if not all projects. The $500m tender book indicates that there is industry demand and MCE is not being excluded.

May be the competitors have improved their products, or may be they undercut on price esp at a time when MCE is busying building Henderson.

I think MCE can go either way from here. I am not confident enough to say they will definitely go back on the growth path and I have no element of faith in my valuation methodology... I will just stick with trading this based on technical and the assumption that someone else knows something better than I do...

Speaking of technical - today's candle looks promising for at least tomorrow.


----------



## So_Cynical

grug said:


> Well, for what it's worth, I thought I'd share my experiences with MCE as a first post.
> 
> MCE is my fourth share purchase after an illustrious and lengthy involvement with the share market dating right the way back to May of 2011.  I bought at $5.29 at 3:58PM on Monday of this week - the day before the annual report.
> 
> It certainly has been an _experience_ watching the share price since.
> 
> tl;dr - newbie got burnt on this one.




Its a 50/50 coin toss as to the direction of a stock after entry...you got this wrong ~ big deal, don't beat yourself up about it to bad, whether you come out on top of this investment experience with MCE now depends on your next course of action.

Take note that im a low cost averager not a value investor...most of the times i get my entry's wrong i buy more after a fall of at least 10% though in general i don't like "value" stocks because they tend not to own anything, and i particularly don't like service company's....some of my investments have taken 3 years to come good, time is on the side of the long term punter without leverage, its a massive advantage.

Good luck


----------



## Wysiwyg

Tightwad said:


> I'll be taking the opportunity to top up, I can't see it getting any cheaper.






fanger said:


> I'm looking to get back in to MCE do you guys think its bottomed yet or is there still more too go?






drlog said:


> Interesting, the share price is moving toward $8.50 - soon it may not even be worth participating in the SPP!
> 
> Having said that, I think MCE is currently undervalued and once they release this year's results it will be even more undervalued. Happy holding.






robusta said:


> I will not be participating in the SPP, I added 10% to my MCE holdings today @ $8.39 (should have been a little more patient)
> 
> This will make five times I have bought MCE first @ $3.96, $3.86, $4.73, $4.64 and now $8.39.
> 
> Have not found a reason to sell yet






fanger said:


> Jumped back onto MCE today near the low. I'm hoping that its close the end of its pull back from $10 and starts heading north again.




Still "value" buy? Let us know when it's going up hey. 

(April posts)


----------



## notting

skc said:


> Speaking of technical - today's candle looks promising for at least tomorrow.




That's what I thought.

Open was a bit of a line ball however.

It was a maiden Roger rally. 
 I am sure there are plenty of fans just lusting for that experience again having rued the day they did not get more of it when it began it's maiden Roger flight.

Now's their chance to feel it all again.  

Getting a bit sentimental.  

Love a good wick with a tight exit!


----------



## cowboyA

I am not into caring about the "value" too much but for what its worth (and what I hear only). The MCE business arena is hot and regardless of what shale, gas, bloody algae or anything else comes into play deep sea oil will be drilled as long as its there to be drilled (always profitable - even if something else is more so - so capital/projects will come). MCE is in a small group (maybe 3/4 players as skc said) and they have 500M on quote. Management is piss poor at updating the market it would appear but they have indicated (I am not sure where this officially comes from but I heard it somewhere (maybe RM on Sky?)) that they expect 30% of that to convert to orders (I do not think they are claiming it can all be converted and quite frankly it does not need to be). Of course, given the size of the competition and the past history this does seem quite reasonable. Also 30% is well enough to be a player. 

In terms of the last few months I also think they had some problems converting orders due to limited bandwidth (in a sense they were full up on work and busy trying to expand). If they can't handle the business at the right time in the right way then the customer is forced to go elsewhere (its not necessarily a matter of undercutting etc although this may also be true). They have since increased their bandwidth and may turn some of these existing quotes over more quickly in the future. Again, the past suggests they have about a third of the business in an arena with say 3 players. I think that is pretty good. There is nothing to suggest they are now out of the game either.

The problem is until the stock and market more generally settles down none of this really matters. Its hard to see a prolonged rally. Just short term swings and profit taking is my prediction. Possible to make one's money back if one rode the wave down but not as easy as sitting on the side. I would just like to see a contract announcement and see what happens (seems in the past they never announced them at all). I also particularly like seeing RM flip flop.


----------



## Miner

merriman said:


> i am looking to buy share in mce at the moment? are they available to buy and what is the best way of going about this?




Dear Merriman

You can buy and sell MCE and all other  shares through your broker. 

If you do not have any one then consider using either on line brokers (cheaper such as Bell Direct, Commsec, West pac, E Trade etc etc - no advise  ) vs full service brokers (normally expensive as they come with advice - example InterSuisse, Patterson, Bell Potter Securities, Aust stock, and many others)

More information can be had from Australian Stock Exchange Site
http://www.asx.com.au/resources/find-broker.htm

Good luck


----------



## Tyler

If you believe MCE has a strong competitive advantage. It is porbaly a bargain. but alot fo their technology is very 'high tech' & i havent learned engineering etc. so its very har dfor me to determine. I wouldnt be worried about the order book its a short term thing. & if it has a competitive advantage youll make alot of money 10 yrs from now.


----------



## Chalea

Wysiwyg said:


> Still "value" buy? Let us know when it's going up hey.




May bounce off $3.00 support/resistance level....


----------



## Wysiwyg

Could do but on Thursday support came in strong and Friday was indecisive. Probably waiting for some direction from the U.S. on Friday night in which those markets rose higher.


----------



## notting

I felt support looked quite strong on Thursday and Friday.  Especially as experienced investors have a tendency to by in the later stages of the afternoon on normal days.
It's looking very happy this morning.
They haven't announced a contract win in 6 months and have a 35% get rate.  With 500ml tenders out there they are well overdue. As soon as they do the stock is likely to rocket, with a 'Roger's still OK rally.'  There are also plenty of brokers who are backing this one too.


----------



## fanger

Another crap day for MCE on the market.


----------



## notting

Quite crappy. 
They need a contract win!
I hope their 6 month drought is not because they cannot compete since the Ausi passed US$90.:
I'm not a techspert but it looks strong at 4


----------



## cowboyA

MCE in free fall. Stocks like this are done when these turns happen (regardless of whether there is any rationale - although the more that comes out it seems management are clueless in regards to the market). Looks heading to the $2 range for a long long time. My bet is no announcement can save it.


----------



## Intrinsic Value

cowboyA said:


> MCE in free fall. Stocks like this are done when these turns happen (regardless of whether there is any rationale - although the more that comes out it seems management are clueless in regards to the market). Looks heading to the $2 range for a long long time. My bet is no announcement can save it.




Anything can happen in the short term.

MCE is certainly out of favour at the moment but things can change quickly with this sort of stock but it wont happend until they get a few good contract wins.

Not sure what management can do in the interim as market sentiment is riding against them.

For me any good announcements of contract wins could well signal an entry to buy.


----------



## skc

Intrinsic Value said:


> Anything can happen in the short term.
> 
> MCE is certainly out of favour at the moment but things can change quickly with this sort of stock but it wont happend until they get a few good contract wins.
> 
> Not sure what management can do in the interim as market sentiment is riding against them.
> 
> For me any good announcements of contract wins could well signal an entry to buy.




If a good announcement does come along, I am betting that the market will "under-react" initially and there'd be plenty of opportunity to enter at a good price with much reduced risk.


----------



## cowboyA

Intrinsic Value said:


> Anything can happen in the short term.
> 
> MCE is certainly out of favour at the moment but things can change quickly with this sort of stock but it wont happend until they get a few good contract wins.
> 
> Not sure what management can do in the interim as market sentiment is riding against them.
> 
> For me any good announcements of contract wins could well signal an entry to buy.




Management can't do anything now. However, they could have prepared the market much better for their final report which was never that terrible (and in fact initially received a lot of incorrect analysis pushing down). 

I say this because movements like these happen all the time with small cap stocks and they rarely recover well (short, mid, long term...). Best option for management (from, e.g., their own portfolio point of view) would be a buyout and this scenario would not surprise me. This would also benefit current holders.


----------



## Wysiwyg

Did Roger Montgomery announce his sale of MCE and at what price??


----------



## Intrinsic Value

Wysiwyg said:


> Did Roger Montgomery announce his sale of MCE and at what price??




I think he is still holding.

I am not as pessimistic as Cowboy A.

I believe if and when new contracts are announced then slowly but surely the share price will start to rise but it may take some time and whether it ever hits its previous highs I dont know.


----------



## Wysiwyg

Intrinsic Value said:


> I think he is still holding.
> 
> I am not as pessimistic as Cowboy A.
> 
> I believe if and when new contracts are announced then slowly but surely the share price will start to rise but it may take some time and whether it ever hits its previous highs I dont know.



He bought in August 2010 and I suppose around the breakout on the 9th August 2010 so above $3.00 I guess. Share price now $3.61. But that's investing isn't it?


----------



## craft

Intrinsic Value said:


> I think he is still holding.
> 
> I am not as pessimistic as Cowboy A.
> 
> I believe if and when new contracts are announced then slowly but surely the share price will start to rise but it may take some time and whether it ever hits its previous highs I dont know.




There may be an element that is just waiting for a contract win to be announced to get excited about MCE again. But I would suggest the majority of serious money will be waiting to see what margin will be achieved on future contracts. It’s easy to win contracts – you just have to bid low enough. I seriously doubt that even next year’s financials is going to give clarity on new contract margin. I Hope those premature accumulators that are so enamoured with MCE turn out to have some true staying power.


----------



## littleshire

"Mr. -95%" does it again!

Guys, this has always been and still is speculative buy, not value here...

My 2 cents... or should I say: MCE @ 2 cents? 

Regards,


----------



## Intrinsic Value

craft said:


> There may be an element that is just waiting for a contract win to be announced to get excited about MCE again. But I would suggest the majority of serious money will be waiting to see what margin will be achieved on future contracts. It’s easy to win contracts – you just have to bid low enough. I seriously doubt that even next year’s financials is going to give clarity on new contract margin. I Hope those premature accumulators that are so enamoured with MCE turn out to have some true staying power.




Good point. Time will tell i guess. 

A bigger factor against a rebound is the fact that there are so many other quality businesses out there that are trading at very attractive levels for long term investors. These business have significantly less risk than MCE.


----------



## RandR

Wysiwyg said:


> He bought in August 2010 and I suppose around the breakout on the 9th August 2010 so above $3.00 I guess. Share price now $3.61. But that's investing isn't it?




lol, i swear im sure he took part in the capital raising at $8 ?


----------



## craft

Intrinsic Value said:


> there are so many other quality businesses out there that are trading at very attractive levels for long term investors.




Hmmm I must be crap at this game because I just don't see that. Which ones?


----------



## McLovin

craft said:


> Hmmm I must be crap at this game because I just don't see that. Which ones?




Forge.


----------



## cowboyA

Intrinsic Value said:


> I think he is still holding.
> 
> I am not as pessimistic as Cowboy A.
> 
> I believe if and when new contracts are announced then slowly but surely the share price will start to rise but it may take some time and whether it ever hits its previous highs I dont know.




I wouldn't be worrying what RM is doing like the original asker anyway. But I am sure he has sold out a long time ago. No point riding the ship to the bottom. He can always buy again *if* it did rise.

MCE is probably a great business but I just don't think that has much to do with share prices in any case (not just for MCE). I mean look at how the market itself reacts to news. Half the time it is hard to reason one way or the other.

Right now though MCE is unbelievably risky. It moves way out of range with the market. I really couldn't guess why (things should be looking better for MCE given the time to digest their situation).


----------



## RandR

Tightwad said:


> I had a giggle at this:
> 
> Current Broker Consensus Recommendation
> Recommendation :	Sell
> Recommendation Date :	26th Oct 2010
> 12 Month Target Price (average) :	$3.73
> Brokers Surveyed :	1





			
				Robusta said:
			
		

> Yes have got to love the Consensus of one.
> I think UBS broker based this on no new orders for MCE. Do you think he looked hard enough to see MCE is currently at full capacity and building a new facility to significantly increase capacity?




This was on the first page of this thread, dated almost 12 months ago. funny how things can work out. 

Seems the analyst did his homework after all. MCE trading at about 3.60


----------



## Intrinsic Value

craft said:


> Hmmm I must be crap at this game because I just don't see that. Which ones?




Cochlear looks good with the recent drop.


----------



## cowboyA

RandR said:


> This was on the first page of this thread, dated almost 12 months ago. funny how things can work out.
> 
> Seems the analyst did his homework after all. MCE trading at about 3.60




Well really the response to the analyst was correct. MCE was at full capacity and was building a new facility. This took a chunk of cash and *may* have been a significant factor in the lack of new orders (along with natural business factors - MCE is not selling Weet-Bix). I would guess this single guy/girl just got lucky and should put this on his/her CV as it is probably one of the few times. Not much has changed with MCE really (they didn't build this new plant because they thought they were going to be uncompetitive) so it would be hard to imagine why this guy picked that price (as it is more market-wide/global factors playing a part and also some surprising volatility in MCE itself).


----------



## robusta

MCE is the largest holding in my personal portfolio and the second largest in my SMSF. Time will tell but IMO the market is overreacting to the bad second half of fy2011.  These guys have been through massive changes in the last two years from listing on the ASX to building the worlds most advanced manufacturing plant in its field. I am not surprised they have taken their eye off the ball with sales but I would be very surprised if this situation is not rectified.

The other thing I find interesting is how MCE has gone from a "market darling" to being shunned and hated by the majority. I think I may have to find a way to take advantage of this interesting situation.


----------



## LifeChoices

robusta said:


> MCE is the largest holding in my personal portfolio and the second largest in my SMSF. Time will tell but IMO the market is overreacting to the bad second half of fy2011.  These guys have been through massive changes in the last two years from listing on the ASX to building the worlds most advanced manufacturing plant in its field. I am not surprised they have taken their eye off the ball with sales but I would be very surprised if this situation is not rectified.
> 
> The other thing I find interesting is how MCE has gone from a "market darling" to being shunned and hated by the majority. I think I may have to find a way to take advantage of this interesting situation.




I reckon you ought to speak with your bank manager tell him what your plans are and get one of those massive loans and put all your eggs in the one MCE basket.

Opportunities like this don't come up very often - once in a lifetime at best.

You'll kick yourself if you don't.


----------



## skc

robusta said:


> MCE is the largest holding in my personal portfolio and the second largest in my SMSF. Time will tell but IMO the market is overreacting to the bad second half of fy2011.  These guys have been through massive changes in the last two years from listing on the ASX to building the worlds most advanced manufacturing plant in its field. I am not surprised they have taken their eye off the ball with sales but I would be very surprised if this situation is not rectified.
> 
> The other thing I find interesting is how MCE has gone from a "market darling" to being shunned and hated by the majority. I think I may have to find a way to take advantage of this interesting situation.




Expectation is a funny thing and it probably should be part of one's valuation methodlogy. Look at the difference in valuation for a share with 20%, 10% and 0% growth and you will see what expectation you are paying for.

The way to take advantage of market darling is to buy before it is a darling and sell before it's a dog. Alternatively short it as soon as it smells like a dog, shows a tail or says 'woof'.


----------



## robusta

Wild ride of Friday for MCE, opened $3.45, high $3.91, low $3.15, closed $3.53.

Wish I had capital available to top up close to $3.15


----------



## Chalea

Chalea said:


> May bounce off $3.00 support/resistance level....
> 
> View attachment 44230





Should've used the measured move for a more accurate target...

Will be surprised if it doesn't hit $3 after the next MACD bearish cross though...


----------



## robusta

Chalea said:


> Should've used the measured move for a more accurate target...
> 
> Will be surprised if it doesn't hit $3 after the next MACD bearish cross though...
> 
> View attachment 44705




I am not qualified to comment on the MACD bearish cross, support and resistance but IMO the thing that will move MCE share price is new orders (or lack of).


----------



## tothemax6

I would question how likely it is for oil companies to be placing orders for deep sea drilling gear in the near future. During an economic boom with soaring oil prices, its reasonable for oilers to be investing in risky, expensive deep sea rigs. 
During economic malais, as we have now, I don't see how they are going to justify it.


----------



## robusta

tothemax6 said:


> I would question how likely it is for oil companies to be placing orders for deep sea drilling gear in the near future. During an economic boom with soaring oil prices, its reasonable for oilers to be investing in risky, expensive deep sea rigs.
> During economic malais, as we have now, I don't see how they are going to justify it.




You may be right in the near future but somehow I doubt it. Countries are trying to secure energy needs and with a volatile middle east driling offshore seems to be the favoured alternative. Not even the Gulf of Mexico disaster could stop it.

Here are some pretty graphs on future oil output and demand.

http://www.oilcrisis.com/curves.htm

I know this is old so here is something more recent (this may prove you right in the near future)
http://omrpublic.iea.org/


But a glance at consumption by country and looking at China's growth, well draw your own conclusions.

http://www.nationmaster.com/graph/ene_oil_con-energy-oil-consumption


Then there is the Peak Oil arguement

http://www.energybulletin.net/primer.php


----------



## tothemax6

robusta said:


> You may be right in the near future but somehow I doubt it. Countries are trying to secure energy needs and with a volatile middle east driling offshore seems to be the favoured alternative. Not even the Gulf of Mexico disaster could stop it.
> Here are some pretty graphs on future oil output and demand.
> I know this is old so here is something more recent (this may prove you right in the near future)
> But a glance at consumption by country and looking at China's growth, well draw your own conclusions.
> Then there is the Peak Oil arguement



Well I have a big problem with the whole 'China is an unstoppable engine of economic growth' idea that seems to have been accepted rather too readily. I've addressed this in the 'End of the China bull' thread in the 'international markets' section. When it has a blow-off, it will smash the oil price down another peg.
Yes in the long run oil is going to be running out and ambitious extraction projects will become financially attractive (hence companies like MCE will profit heavily). However, we all saw what happened to oil during the GFC. MCE just built a big new expensive factory - how are they going to fair if say, they didn't get orders for a whole year? How will they pay off the debt that will come due, that they used to build the factory?

Risky. Definitely not a value company.


----------



## LifeChoices

robusta said:


> Wish I had capital available to top up close to $3.15




At this rate, in a couple of weeks you may get them at under $3.00. If you wait a few months they may be $2

Your portfolio has stood up extremely well since you got your 30K margin loan in late July- in just over two months you've only manged to lose 40% of it - remarkable.


----------



## Tightwad

I hazard to say he's investing for a longer period than two months.


----------



## robusta

tothemax6 said:


> Well I have a big problem with the whole 'China is an unstoppable engine of economic growth' idea that seems to have been accepted rather too readily. I've addressed this in the 'End of the China bull' thread in the 'international markets' section. When it has a blow-off, it will smash the oil price down another peg.




Will have to read the 'End of the China bull' thread, my opinion is there is no such thing as a miracle economy, China included, they will experience recessions and market bubbles and crashes but I have trouble finding any scenario where China does not become the worlds largest economy in our lifetime.



tothemax6 said:


> Yes in the long run oil is going to be running out and ambitious extraction projects will become financially attractive (hence companies like MCE will profit heavily). However, we all saw what happened to oil during the GFC. MCE just built a big new expensive factory - how are they going to fair if say, they didn't get orders for a whole year? How will they pay off the debt that will come due, that they used to build the factory?




It is difficult for me to believe that no new rigs will be built and MCE will get no part of those orders. MCE also is building the engineering side of the business with a particular focus on shale oil and gas. Quotation book was over $500 million at the end of FY, MCE is priced as if they will maybe win 5-10% of these not the historical 30% plus.




tothemax6 said:


> Risky. Definitely not a value company.




Definately risk involved (where are the rewards without risk?) but different opinions make a market.



LifeChoices said:


> At this rate, in a couple of weeks you may get them at under $3.00. If you wait a few months they may be $2




All things being equal and if I have capital left to invest that would be wonderful.




LifeChoices said:


> Your portfolio has stood up extremely well since you got your 30K margin loan in late July- in just over two months you've only manged to lose 40% of it - remarkable.




Thankyou.

Just as I am not going to cut my wrists about paper losses now, I will not pop the champagne with paper profits in a few years. 

I will update the portfolio this weekend if you would like to discuss the remarkable performance.  (bought some COH today and sold MIN)




Tightwad said:


> I hazard to say he's investing for a longer period than two months.




You have got thet right Tightwad, until proven otherwise I consider MCE to be a good growth stock with a decent dividend yield to follow.


----------



## Smurf1976

With regard to the underlying issue of oil, I'll just say that it we have global economic turmoil and the stuff is selling for over $80 per barrel, a price that would have seemed impossibly high just a few years ago.

Also consider that oil fields gradually deplete. So unless demand really does collapse on a scale far larger than 2008, we'll still need to be drilling new wells to replace falling production from existing ones.

So long term, the future seems fairly bright to me. It's more a question of whether or not MCE has the ability to ride out short term (year or three) down periods which could occur if the economy does fall in a hole.


----------



## cowboyA

tothemax6 said:


> Well I have a big problem with the whole 'China is an unstoppable engine of economic growth' idea that seems to have been accepted rather too readily. I've addressed this in the 'End of the China bull' thread in the 'international markets' section. When it has a blow-off, it will smash the oil price down another peg.
> Yes in the long run oil is going to be running out and ambitious extraction projects will become financially attractive (hence companies like MCE will profit heavily). However, we all saw what happened to oil during the GFC. MCE just built a big new expensive factory - how are they going to fair if say, they didn't get orders for a whole year? How will they pay off the debt that will come due, that they used to build the factory?
> 
> Risky. Definitely not a value company.




I think saying the oil price is going to be smashed down a peg is a bit extreme. I think the lack of new projects and haltings that occurred a couple of years ago is only going to put upward pressure on the price over time. Good for MCE. BHP just predicted a huge skills shortage in the next 5 years and do not see China slowing down yet. I can't see any issues for MCE going forward apart from mis-management and this is not unlikely in my opinion. It amazes me how incompetent these guys seem to be. Now there is the bad press over the lay-offs. 

Separately, I believe they owe very little on the new plant at this point.


----------



## cowboyA

cowboyA said:


> I think saying the oil price is going to be smashed down a peg is a bit extreme. I think the lack of new projects and haltings that occurred a couple of years ago is only going to put upward pressure on the price over time. Good for MCE. BHP just predicted a huge skills shortage in the next 5 years and do not see China slowing down yet. I can't see any issues for MCE going forward apart from mis-management and this is not unlikely in my opinion. It amazes me how incompetent these guys seem to be. Now there is the bad press over the lay-offs.
> 
> Separately, I believe they owe very little on the new plant at this point.




It is also worth noting that the BP fiasco in the Gulf had a negative impact on projects and this will, of course, be reversed over time. Its just a run of bad-luck for MCE along with (yes this is my opinion) poor management and market savvy.


----------



## robusta

Seems some companies are still going ahead with new offshore projects in this climate.

http://www.businessweek.com/ap/financialnews/D9Q348L80.htm

Here we go with the China thing again, even if optimistic the IEA figures do point to some growth

http://www.rigzone.com/news/article.asp?a_id=111339&hmpn=1


Lots of work seems to be going on in our region, when is MCE going to get a share of the spoils?

http://www.rigzone.com/news/region.asp?r_id=4

Demand seems to be increasing as well. This report is dated  02/05/11 so it would be interesting to see if things have changed

http://www.rigzone.com/news/article.asp?a_id=106716


----------



## robusta

Not sure of the facts, but this was enough to stop me buying more MCE.

http://au.news.yahoo.com/thewest/business/a/-/wa/10358025/matrix-staff-angry-over-relocation/

At the moment my exposure to this company is fairly large in my SMSF and a small personal account. I will want to see better from the business and management to continue to hold. A nice start would be some orders generated.


----------



## McCoy Pauley

That article rings alarm bells in my mind.  If MCE is keeping its workers in the dark, then what is it not telling its shareholders?


----------



## McCoy Pauley

Follow up article in The West Australian reporting that MCE laid off 70 workers from its Malaga plant.

http://au.news.yahoo.com/thewest/business/a/-/wa/10374174/matrix-lays-off-70-workers/


----------



## skc

McCoy Pauley said:


> Follow up article in The West Australian reporting that MCE laid off 70 workers from its Malaga plant.
> 
> http://au.news.yahoo.com/thewest/business/a/-/wa/10374174/matrix-lays-off-70-workers/




They made it sounds like the relocation is a big deal. Looking at google maps Malaga is ~50km from Henderson. Sure it's a bit of a drive if you lived on the wrong side of town but it's probably not a good enough reason to not stay on an otherwise good employment.

The situation doesn't smell right... with the most likely explanation that total employment needs are acutally much reduced stemming from the lack of work.

It will take an analyst a tour of Hendersen to confirm if that is the case.


----------



## robusta

skc said:


> They made it sounds like the relocation is a big deal. Looking at google maps Malaga is ~50km from Henderson. Sure it's a bit of a drive if you lived on the wrong side of town but it's probably not a good enough reason to not stay on an otherwise good employment.
> 
> The situation doesn't smell right... with the most likely explanation that total employment needs are acutally much reduced stemming from the lack of work.
> 
> It will take an analyst a tour of Hendersen to confirm if that is the case.




The Henderson plant is more automated and should save labour but I have to agree with you it is a little confusing.


----------



## robusta

Definately not the best indicator but i still like to see directors buying rather than selling.


http://www.asx.com.au/asxpdf/20111006/pdf/421l5mf1qc736l.pdf


----------



## robusta

Dont know why I am posting this I normally ignore brokers. Just trying to work out why MCE went up 11.7% today. 

http://www.thebull.com.au/articles/a/23375-brokers-think-this-stock-looks-cheap.html


----------



## Huskar

robusta said:


> Definately not the best indicator but i still like to see directors buying rather than selling.
> 
> 
> http://www.asx.com.au/asxpdf/20111006/pdf/421l5mf1qc736l.pdf




And he sure bought at the right time: $3.22 average price for his $130k worth of shares by my back of the envelope calculation...


----------



## skc

Huskar said:


> And he sure bought at the right time: $3.22 average price for his $130k worth of shares by my back of the envelope calculation...




May be he's not as in the loop as he thinks.

MCE just downgraded their FY12 revenue forecast from 20% growth to 0-10% growth, quantified with the most dredged 5 words for any investor, _"skewed to the 2nd half"_.

Share price printed a new low @ $2.93 but now recovered to $3.08. Lucky that their AGM is held on a day where the market is pretty mild.


----------



## VSntchr

Going to have to be a bonza second half if they are to even come close to comparing earnings with FY11 considering the statement is indicating a 'break-even' first half...
More downgrades coming???

This could be a great stock to purchase if demand increases and the AUD drops...however it looks like at least another 6 months of pain for holders..


----------



## robusta

VSntchr said:


> Going to have to be a bonza second half if they are to even come close to comparing earnings with FY11 considering the statement is indicating a 'break-even' first half...
> More downgrades coming???
> 
> This could be a great stock to purchase if demand increases and the AUD drops...however it looks like at least another 6 months of pain for holders..




Have to agree with you there VSntchr, I am way overweight this stock and am now considering swallowing the bitter pill and taking my losses and selling. 

I still have a positive long term view of MCE however and may consider a smaller holding in the future.


----------



## cowboyA

I am hearing they want to underplay their hand this time around after copping a lot of flak for stuffing the market around previously (not preparing well enough). I wouldn't be surprised to see an excess even mid year and then full year and a nice boost consequently in the price.


----------



## VSntchr

cowboyA said:


> I am hearing they want to underplay their hand this time around after copping a lot of flak for stuffing the market around previously (not preparing well enough). I wouldn't be surprised to see an excess even mid year and then full year and a nice boost consequently in the price.




Whom are you hearing from, if I may ask?


----------



## skc

robusta said:


> Have to agree with you there VSntchr, I am way overweight this stock and am now considering swallowing the bitter pill and taking my losses and selling.
> 
> I still have a positive long term view of MCE however and may consider a smaller holding in the future.




I hope you've read a lot about position sizing being the most important aspect of investing and risk management... and you do need a lot of discipline to follow that, no matter how enticing an opportunity may appear.



robusta said:


> SP $57.98 today, I am fairly happy however I do wish I threw everything into COH 20 days ago.




No you don't. On COH you managed a great entry, sized your position appropriately and have a nice % return on your capital. That's the right process and that's all you can ask for. 

If you threw everything into COH it would have been wrong even if it goes up.


----------



## tinhat

I heard Elio D'Amato from Lincoln Indicators talking about MCE today and I think what annoyed him most about the revised earnings outlook announcement was that is wasn't even marked as "price sensitive" when lodged with the ASX. I wonder what the the ASX think about that.

Well this is a stock I've completely stuffed up in holding onto.


----------



## drlog

tinhat said:


> I heard Elio D'Amato from Lincoln Indicators talking about MCE today and I think what annoyed him most about the revised earnings outlook announcement was that is wasn't even marked as "price sensitive" when lodged with the ASX. I wonder what the the ASX think about that.
> 
> Well this is a stock I've completely stuffed up in holding onto.




I was thinking about that as well - a 10% downgrade in outlook is certainly price sensitive, right?

I think this stock will have some pain for a while but the medium to long term prospects are very good. We shall see. I hold.


----------



## skc

tinhat said:


> I heard Elio D'Amato from Lincoln Indicators talking about MCE today and I think what annoyed him most about the revised earnings outlook announcement was that is wasn't even marked as "price sensitive" when lodged with the ASX. I wonder what the the ASX think about that.






drlog said:


> I was thinking about that as well - a 10% downgrade in outlook is certainly price sensitive, right?




Seems to happen a fair bit these days with AGM outlook statements. Without the announcement being marked sensitive there is no stoppage in the trading of the shares, and it ends up being a game of who can read the announcement quicker. 

Now they said H1 NPAT is breakeven and there's $9.6m non-recurring costs mostly related to relocating to the new plant. I am reading that as the breakeven result is after the non-recurring items. Is that what people think? It would be horrible if it wasn't.

It always amazes me how the market sometimes get it so right. When MCE results came out I thought the market over-reacted a little bit. Turns out the collective wisdom was correct this time (so far).


----------



## cowboyA

VSntchr said:


> Whom are you hearing from, if I may ask?




From the CEO - its a figure of speech.


----------



## notting

I'm hearing that they don't seem to have been up front with much and have been displaying a talent for hoodwinking astute and concervative analysts who are now putting them in the spec basket.


----------



## McLovin

The way this company has treated the market the SP deserves to be hammered. I still have my small parcel that I'll hold onto, I'm only down slightly, although I really should have flicked it above $7. Can't be right all the time.


----------



## Intrinsic Value

I am still holding but also wish I would have got when i was sitting on a nice gain.

I still think it looks good in the medium term but it has proven to be a very testing stock. There might well be further pain in the short term.


----------



## robusta

skc said:


> I hope you've read a lot about position sizing being the most important aspect of investing and risk management... and you do need a lot of discipline to follow that, no matter how enticing an opportunity may appear.




Thankyou skc, I am reading about position sizing now. Up until now my strategy has been to weight the investments to the largest dicount (IMO) to intrinsic value. 

Not sure yet if the fault lies more with the strategy, execution or the valuation method.

Putting emotion to one side I continue to hold MCE - for now.


----------



## Ves

Once you have done some reading on position sizing it might be a good idea to review your purchases (and sells) and see how much the results would have differed under certain position sizes. I'd be interested if you could post them under your results thread.


----------



## skc

robusta said:


> Thankyou skc, I am reading about position sizing now. Up until now my strategy has been to weight the investments to the largest dicount (IMO) to intrinsic value.




Something I wrote elsewhere wrt position sizing... it may be of value. 

https://www.aussiestockforums.com/for...l=1#post626488



> You would start with an overarching framework of position sizing... more stable stocks can afford larger sizes, more volatile stocks smaller size, near-death stocks probably amounts that are inconsequential. This is the first part of risk management.
> 
> The second part is the ability to brutally, honestly and correctly assess fundamental facts surrounding the company, and sell when those facts demonstrate (to whatever confidence level the investor deemed appropriate) that the valuation of the company has changed for the worse. This is as good a stop as any price-based stop.
> 
> With time based stop I would adopt that when I have a 'time based' event entry... there is a takeover brewing and I will exit in 3 months if nothing comes. You also size your position accordingly. I think if no takeover comes the stock will fall 10%, so I am comfortable allocating $X to the position. This would be similar to the 2% rule (which is start with controlling how much you lose), but it's application is not as precise.
> 
> As to judging fundamental reasons - that's a case by case basis so a bit difficult to say here. Market reaction to news will always depend on its starting point and expectations. Is a resource of 200m Tonnes of copper good or bad news? Good if the expectation was 0, bad if the expectation was 500m. Mis-interpreting expectations and news is bad for fundamental investing without a doubt. The same as mis-interpreting price action and volume is bad for technical analysis.






robusta said:


> Not sure yet if the fault lies more with the strategy, execution or the valuation method.
> 
> Putting emotion to one side I continue to hold MCE - for now.




IMO your first entry was mostly the fault in execution - buying into a downtrend ahead of full blown US debt ceiling crisis and brewing EU debt crisis. Your valuation assumed business as usual (which didn't eventuate but fair to say you had no way of knowing) and taking a position wasn't a terrible call.

Your second entry was clearly a fault in valuation - the results were out and didn't look good esp on a forward looking basis. Instead of cutting your losses you doubled up as you didn't adjust your valuation correctly.

Your third entry was just pure lack of discipline... discipline in terms of position sizing and respect for the market. You simply shouldn't add to the position no matter how cheap it is. The market may over-react and incorrectly price MCE after the initial result release, but this shouldn't last a whole month with it being a closely followed stock. You should have acknowledged the market's assessment and reviewed and challenged every one of your assumptions (e.g. what happens if they don't win contracts, what discount should I apply to the valuation because of such risk), instead you bought more.



Ves said:


> Once you have done some reading on position sizing it might be a good idea to review your purchases (and sells) and see how much the results would have differed under certain position sizes. I'd be interested if you could post them under your results thread.




His results are more than respectable without the 2nd and 3rd parcel of MCE, and probably beat the market if he simply cut MCE lose soon after the result release.


----------



## McCoy Pauley

From Richard Hemming's Under the Radar column in the SMH:



> President Bush and the Matrix
> 
> "There's an old saying in Tennessee - I know it's in Texas, probably in Tennessee - that says, fool me once, shame on - shame on you. Fool me - you can't get fooled again." George W Bush.
> 
> After its AGM on Tuesday, shareholders in Matrix Composite Engineering (ASX code MCE) probably won’t want to be reminded of this quote.
> 
> The company fell short of investor expectations at its fiscal 2011 result, and has done so again, only two months later.
> 
> At its results presentation in late August, its chief executive Aaron Begley gave guidance of 20 per cent revenue growth for fiscal 2012.
> 
> At the AGM he downgraded this to between 0 and 10 per cent, and cited “one-off” costs of $4.8 million that meant the company would break even for the first half.
> 
> The funny thing is that despite the disappointments, the company has a great business.
> 
> In its words, it is “the only major oil and gas equipment manufacturer and exporter in Australia and the global leader in the manufacture and supply of subsea buoyancy systems.”
> 
> Last year its revenues were a shade over $187 million, producing a net profit of $33.6 million, 88 per cent up on the same period a year ago.
> 
> Of course, not meeting expectations has hurt Matrix shareholders, which is why the Bush quote won’t seem funny. At $3.03 before today, its stock has fallen about 70 per cent in the past seven months or so.
> 
> Getting back to why the business is so good. The main reason is the massive demand for its services from oil and gas producers. This month the International Energy Agency chief economist predicted that $10 trillion in investment between now and 2035 was needed in the oil industry to meet demand.
> 
> From a shareholder perspective, Begley and his team appears to be on its last chance. President Bush hails from an oil producing family, and even he might agree that Matrix shareholders won’t be fooled again.




It seems to me that MCE's management still hasn't learned the lesson of poor communications with shareholders.

The company might have excellent prospects in the future, but unless MCE can learn to communicate more transparently with its shareholders, I would remain very wary about buying into this company, as I consider it reflects on the quality of management (based on the principle that as a shareholder, I'm a part-owner of the company I'm paying them to manage).


----------



## notting

Apparently when meeting Aaron Begley you should pronounce his name Bodgy.
Funny George Bush quote, especially as he fooled the USA twice!  But he was funny.
MCE is just not doing any business with the A$ so high.  Manufacturing in Australia


----------



## Ves

skc said:


> His results are more than respectable without the 2nd and 3rd parcel of MCE, and probably beat the market if he simply cut MCE lose soon after the result release.



Whether valid or not, I've been averaging into the market slowly since April. I'm currently ahead by a few percent. Pretty much all of my positions are the same size. Some red and some black. Mostly in the bigger end of the index, but my smallest position is a speccy that's down around 20% (purchased in April funnily enough). It's not much (and I don't really care for short term prices) but it would have been much worse if I put my cash into the market all at once. This plan obviously unravels if the market falls into a permanent down trend. I tend to gravitate to businesses with good cash flow, so not massively worried about the next few years (price action wise).


----------



## skc

notting said:


> Apparently when meeting Aaron Begley you should pronounce his name Bodgy.
> Funny George Bush quote, especially as he fooled the USA twice!  But he was funny.
> MCE is just not doing any business with the A$ so high.  Manufacturing in Australia




Manufacturing in Australia is OK as long as what you make is high end, high margin and best in class... which MCE probably qualifies.

Having said that, they make "Drilling Riser Buoyancy Modules" which sounds really advance and technical. But in the chairman's address there's a slip of tongue and they are called "synthetic foam".


----------



## notting

I wonder which manufacturing industries are thriving apart from I dunno restaurants?


----------



## notting

Looking very positive in a very flat market today, though could just be doing the Monday morning reversal of last weeks action which often happens.


----------



## RandR

skc said:


> Having said that, they make "Drilling Riser Buoyancy Modules" which sounds really advance and technical. But in the chairman's address there's a slip of tongue and they are called "synthetic foam".




Isnt it just a fancy foam floaty ?

Im quite sure ive read that MCE was spun off by another listed company, but I cant for the life of me think back to who it was they were previously a part of ..

anyone know off the top of there head ? Id like to be able to see if I can dig up some financial data from there time before being listed independently as MCE.


----------



## Ves

skc said:


> Having said that, they make "Drilling Riser Buoyancy Modules" which sounds really advance and technical. But in the chairman's address there's a slip of tongue and they are called "synthetic foam".



Are you sure he didn't say "syntactic"? That's what it says on their website, any how.

To the poster above: Matrix, if I recall correctly, was a family owned business before it listed. Founded in the early 80s.


----------



## garryd

It was Begley International. The current MD Aaron set up Matrix Composites as an offshoot in 1999. The businesses merged in 2007 & then listed.


----------



## robusta

RandR said:


> Isnt it just a fancy foam floaty ?




Yes in the same way a Coopers is just a beer 




RandR said:


> Im quite sure ive read that MCE was spun off by another listed company, but I cant for the life of me think back to who it was they were previously a part of ..
> 
> anyone know off the top of there head ? Id like to be able to see if I can dig up some financial data from there time before being listed independently as MCE.




Established in 1892, not spun out of another business.

This from the prospectus and annual reports.

Year/ Revenue/ EBITDA
2006 / $32.2m / $2.4m
2007 / $26.6m / $3.4m
2008 / $31.1m / $3.1m
2009 / $54.3m / $5.5m
2010 / $102.6m / $28m
2011 / $187.2m / $52.6m

Shareholders have contributed equity into this business (through capital raisings and low payout ratio) and I am not very sure how cyclical this industry is but having said that very impressive figures until recently.....


----------



## robusta

More details can be found in the prospectus from late 2009

http://www.matrixap.com.au/files/Matrix-Prospectus.pdf


----------



## Smurf1976

robusta said:


> Established in 1892



Typo? Or have they really been around for 119 years?


----------



## robusta

Smurf1976 said:


> Typo? Or have they really been around for 119 years?




Dyslexic, should read 1982


----------



## robusta

Interesting little article in The Australian on MCE.

http://www.theaustralian.com.au/bus...ernergy-industry/story-fn91v9q3-1226186217901

Lots of talk about growth but no guidance on when.


----------



## Miner

merriman said:


> i am looking to buy share in mce at the moment? are they available to buy and what is the best way of going about this?




Hi Merriman

You can  buy shares in many ways and there are large no of brokers in the market. Some however only want to deal with large investment such as Paterson Securities.
You can check the brokerage site advertisement posted in ASF website and choose one of them.
Rates vary from full service to Online investment for MCE or any ASX listed shares

Check the profiles of Bell Securities, Westpac, E Trade, Commsec, as On Line brokers and check with other brokers directly. Check ASX website where a large no of brokers are listed.

You need to allow at least three working days from the date you apply and they approve your application.

Good luck


----------



## clinta44

robusta said:


> Interesting little article in The Australian on MCE.
> 
> http://www.theaustralian.com.au/bus...ernergy-industry/story-fn91v9q3-1226186217901
> 
> Lots of talk about growth but no guidance on when.




will be interesting to see if there order book grows now that the price of Oil is over a $100. 

One would assume that projects that weren't profitable at $50 or $75 a barrell may be profitable at $100.... 

I guess we will jsut have to wait and see


----------



## robusta

It had to happen sooner or later, MCE got some orders.

http://www.asx.com.au/asxpdf/20111117/pdf/422lxmhkx2qzyx.pdf

Still some way to go to meet revenue targets however.


----------



## tinhat

robusta said:


> It had to happen sooner or later, MCE got some orders.
> 
> http://www.asx.com.au/asxpdf/20111117/pdf/422lxmhkx2qzyx.pdf
> 
> Still some way to go to meet revenue targets however.




$105m of unfulfilled orders to Feb 2013. Revenue for financial year 2011 was $187m so, yes some way to go yet.


----------



## fanger

robusta said:


> It had to happen sooner or later, MCE got some orders.
> 
> http://www.asx.com.au/asxpdf/20111117/pdf/422lxmhkx2qzyx.pdf
> 
> Still some way to go to meet revenue targets however.






Its a start and its better than no news at all.


----------



## skc

tinhat said:


> $105m of unfulfilled orders to Feb 2013. Revenue for financial year 2011 was $187m so, yes some way to go yet.




$105m of orders over the next 14 months is ~$7.5m per month, while previous run rate was ~$15-16m per month.

Net profit margin was ~18%... so even with no new orders they can get ~18% x $7.5 x 12 = $16.2m profit (21cps). Although it is doubtful that they can maintain 18% margin running at <50% capacity. These numbers can be refined further if people can breakdown MCE's costs into fixed vs variable. The new plant however makes last year's number not directly comparable.

At current share price of $3.25 against EPS of 21c (conservative if they win more orders, over-estimate if their net margin falls) it feels about right. I guess it will meander around this trading range as it waits for more news.


----------



## matches

Contract win for $35-50M per annum over 3 years with potential for 2 more years.

http://equmail.equ.com.au/t/ViewEmail/r/5BE67C7B95EB1BFB/8D9729BBF86A34E262AF25ACF5E3F0AC


----------



## fanger

matches said:


> Contract win for $35-50M per annum over 3 years with potential for 2 more years.
> 
> http://equmail.equ.com.au/t/ViewEmail/r/5BE67C7B95EB1BFB/8D9729BBF86A34E262AF25ACF5E3F0AC




Pitty that all this work isn't being reflected in the stock price.


----------



## notting

Opportunity or pitty?:dimbulb:


----------



## robusta

Little baby steps....

http://www.4-traders.com/MATRIX-COM...-order-for-our-new-office-in-Brazil-13968697/


----------



## fanger

Hasn't MCE become a boring stock. Its being tracking sideways for the last 4 months and now the its trading the very low volumes.


----------



## robusta

fanger said:


> Hasn't MCE become a boring stock. Its being tracking sideways for the last 4 months and now the its trading the very low volumes.




Booring is not allways bad.


----------



## fanger

robusta said:


> Booring is not allways bad.




I didn't say it was bad just boring


----------



## clinta44

I am chasing a date for when the Half year results will be released? can anyone help me out?


----------



## Huskar

clinta44 said:


> I am chasing a date for when the Half year results will be released? can anyone help me out?




Interim report is released on 16 Feb

http://www.morningstar.com.au/Stocks/CorpCalendar


----------



## clinta44

Huskar said:


> Interim report is released on 16 Feb
> 
> http://www.morningstar.com.au/Stocks/CorpCalendar




Thanks


----------



## fanger

Huskar said:


> Interim report is released on 16 Feb
> 
> http://www.morningstar.com.au/Stocks/CorpCalendar




It should have been the 16th but its looks like its the 24th now.


----------



## Chasero

fanger said:


> Hasn't MCE become a boring stock. Its being tracking sideways for the last 4 months and now the its trading the very low volumes.




Been following MCE on my watch list..

VERY boring indeed lols.

I wonder how the half yearly report will be... might be some action next week leading up to it.


----------



## fanger

Earnings are out and not looking good but I'm not sure what the market was expecting.

Revenue down 4.7%, Profit down 113%, div 2.0 cents, loss of 2.4mil. MCE expecting strong growth second half of this year.


----------



## Chasero

absolutely shocking report 

shares down 8% ouch


----------



## skc

fanger said:


> Earnings are out and not looking good but I'm not sure what the market was expecting.
> 
> Revenue down 4.7%, Profit down 113%, div 2.0 cents, loss of 2.4mil. MCE expecting strong growth second half of this year.




The $2.4m loss was helped by +$5m in tax. Operating loss was $7m.

The market is being pretty kind to them imo. IDL got hammered 20% for delivering a flat result. 

The $3 support on the chart is broken so watch out below...


----------



## McLovin

The call starts at 1130 for those who are interested...

http://www.brrmedia.com/event/92585/aaron-begley-ceo--peter-tazewell-cfo


----------



## Intrinsic Value

skc said:


> The $2.4m loss was helped by +$5m in tax. Operating loss was $7m.
> 
> The market is being pretty kind to them imo. IDL got hammered 20% for delivering a flat result.
> 
> The $3 support on the chart is broken so watch out below...




It was a very poor result. It could be sitting down around the 2 dollar mark very shortly.

You need to be very patient with this one. I think it was always going to be a poor result this time. The next twelve months will tell whether this stock sinks into oblivion or makes a Lazarus like revival.


----------



## fanger

Well MCE didn't perform to badly today all thing considered. It could have been a horror day.


----------



## Nutmeg

Let's be frank: the result was a shocker!


----------



## skc

fanger said:


> Well MCE didn't perform to badly today all thing considered. It could have been a horror day.




This reporting season has seen some strange price actions on poor (in my view anyway) announcements.

BKN - fell 5% soon after open but closed 5% higher by end of the week.
SAI - fell ~10% soon after open but now fully recovered.
DCG - fell ~6% and now a new high.
VOC - fell ~5% and now almost 30% higher.

Some may be there's hope based on today's candle


----------



## robusta

Had a buy order in today @ $2.77 - got nowhere near that.


----------



## Ves

How are you fundamental guys valuing this thing? For instance, Robusta, why $2.77? There is absolutely no earnings stability, any future assumptions seem to be "guesses" at best unless you are an industry expert or very close to the company. Highly cyclical businesses like this are way too hard for me (at this point?), I'm afraid.

Other than that, could be good for a short-term technical bounce, perhaps... but I wouldn't be brave enough to speculate on that with real money.


----------



## notting

skc said:


> This reporting season has seen some strange price actions on poor (in my view anyway) announcements.
> 
> BKN - fell 5% soon after open but closed 5% higher by end of the week.
> SAI - fell ~10% soon after open but now fully recovered.
> DCG - fell ~6% and now a new high.
> VOC - fell ~5% and now almost 30% higher.
> 
> Some may be there's hope based on today's candle




We're passing into a more positive mindset with regard to stocks in general.
It's a good time for indiscriminate buying of beaten up stocks.
Expect many legendary traders to be born!


----------



## McLovin

Most of the bad stuff is out of the way. I got the impression that they have really bottomed out. Margins should start to normalise with the new capacity at Henderson (CAPEX is done too) and they've said their quote book has started to lift. Plenty of people have been burnt on this one though, so I imagine there will be no need to pile into the stock just yet.


----------



## Intrinsic Value

McLovin said:


> Most of the bad stuff is out of the way. I got the impression that they have really bottomed out. Margins should start to normalise with the new capacity at Henderson (CAPEX is done too) and they've said their quote book has started to lift. Plenty of people have been burnt on this one though, so I imagine there will be no need to pile into the stock just yet.




Yes that is what the report is saying (hope it is right coz I am still holding) but if it doesn't live up to expectations over the next year MCE will sink like a lead balloon.

And you are right if you are not holding you have the luxury of waiting til things definitely turn around with some solid numbers.


----------



## notting

Showing a bit of relative strength over the last few days.
Buyers seem to be stepping up when it hits 2.80 or so.
I presume traders will get interested if it can break out of 3.50 with a bit of volume


----------



## fanger

Intrinsic Value said:


> Yes that is what the report is saying (hope it is right coz I am still holding) but if it doesn't live up to expectations over the next year MCE will sink like a lead balloon.
> 
> And you are right if you are not holding you have the luxury of waiting til things definitely turn around with some solid numbers.




People are buying because MCE painted a rosie outlook in its report, as intrinsic said if they don't live up to expectations the stock will get hammered.


----------



## notting

View attachment 46267


fanger said:


> People are buying because MCE painted a rosie outlook in its report.




Is that so?

What about:


----------



## notting

Bumped it's head on resistance at 3.40 and headed back down a little, finished on it's lows for the day but on lower volume than it's recent run up from 3.00
Needs to get past 3.40 with volume to be considered possibly on it's way.
So may turn out to be a false start.
But I'm no tech analyst so feel free to call over rule!!


----------



## notting

Out of Jail and running hard!


----------



## McLovin

McLovin said:


> I got the impression that they have really bottomed out. Margins should start to normalise with the new capacity at Henderson (CAPEX is done too) and they've said their quote book has started to lift. Plenty of people have been burnt on this one though, so I imagine there will be no need to pile into the stock just yet.




Looks like they had bottomed out but damn they've run hard the last couple of days.


----------



## notting

Yeah this one is a rocket when it moves. (last time however pumped up by R.Montgomery so will need to remember it may not have that baking it this time.)
Check out the weekly to see that if it can get pas $4 with a bit of attitude it's still worth a shot!


----------



## robusta

Just like a romance seems we are falling back in love


----------



## Intrinsic Value

I just can't fathom this stock.  Running very hard at the moment.


----------



## skc

Intrinsic Value said:


> I just can't fathom this stock.  Running very hard at the moment.




Director just sold 1m shares on market. May be that will dampen the enthusiasm a bit?

Here's my hypothetical short trade trade @ $3.75 with stop at $3.85.

Target $3.40.


----------



## notting

Stop at 3.39



Intrinsic Value said:


> I just can't fathom this stock.  Running very hard at the moment.




Probably should just leave it alone then and see if you can get a feel for it.
There's not much to be excited about fundamentally and as SKC pointed out if a director has just offloaded 3.4 million dollars worth then it hardly likly they are about to announce a great new contract!!!


----------



## skc

notting said:


> Stop at 3.39
> 
> 
> 
> Probably should just leave it alone then and see if you can get a feel for it.
> There's not much to be excited about fundamentally and as SKC pointed out if a director has just offloaded 3.4 million dollars worth then it hardly likly they are about to announce a great new contract!!!




May be he just needed to pay some school fees...

It's a hypothetical trade by the way as there isn't a lot of technical reason to go short at the moment.


----------



## fanger

MCE has fallen back in favor.


----------



## DocK

Michael Gable, of Novus Capital, was spruiking this one on YMYC Thurs night - said in his opinion the downtrend was over and the company had great prospects.  He said a solid break above $3.50_ could _ see it go to $6.  FWIW.


----------



## Intrinsic Value

skc said:


> May be he just needed to pay some school fees...
> 
> It's a hypothetical trade by the way as there isn't a lot of technical reason to go short at the moment.




So as a tech analyst where do you think it is going short term and medium term?


----------



## Intrinsic Value

notting said:


> Yeah this one is a rocket when it moves. (last time however pumped up by R.Montgomery so will need to remember it may not have that baking it this time.)
> Check out the weekly to see that if it can get pas $4 with a bit of attitude it's still worth a shot!




I bet R Montgomery wont be saying much about MCE. I reckon it cost him big time because the release of his Skaffold product was almost in line with the crash of MCE. A lot of people who may have bought in to Skaffold i reckon didnt because of MCE. He can say what he likes but he over spruiked MCE. Maybe he has learnt a lesson there.


----------



## Ves

Intrinsic Value said:


> I bet R Montgomery wont be saying much about MCE. I reckon it cost him big time because the release of his Skaffold product was almost in line with the crash of MCE. A lot of people who may have bought in to Skaffold i reckon didnt because of MCE. He can say what he likes but he over spruiked MCE. Maybe he has learnt a lesson there.



He may claim he bought it in large quantities at $2.80 if it keeps rising. Watch this space.


----------



## tinhat

Intrinsic Value said:


> I bet R Montgomery wont be saying much about MCE. I reckon it cost him big time because the release of his Skaffold product was almost in line with the crash of MCE. A lot of people who may have bought in to Skaffold i reckon didnt because of MCE. He can say what he likes but he over spruiked MCE. Maybe he has learnt a lesson there.




I haven't seen him on Switzer for a long time and I don't expect to see him on there again for quite some time yet.


----------



## fanger

Roger Montgomery is full of ****. Raved on about MCE begin worth $12 told everyone to buy it then didn't comment on MCE when it was $3 for the last 6 months like the stock didn't exisit.


----------



## zac

fanger said:


> Roger Montgomery is full of ****. Raved on about MCE begin worth $12 told everyone to buy it then didn't comment on MCE when it was $3 for the last 6 months like the stock didn't exisit.




I think Skaffold has it valued now at $1.70


----------



## tinhat

fanger said:


> Roger Montgomery is full of ****. Raved on about MCE begin worth $12 told everyone to buy it then didn't comment on MCE when it was $3 for the last 6 months like the stock didn't exisit.




I'm sure that many reading this thread will have already seen RG's comments on his blog from 24/08/11:

What is the value of a company that wakes up to find it has sold very little or even nothing in the last six months? My very long-term outlook for the price of oil hasn’t changed, but I can make the argument that the shares of Matrix C&E cannot currently be valued as a going concern any more confidently than I can a speculative exploration company.

While its a very harsh interpretation and its not the only interpretation, there are things to be concerned about.

Before I go into what disappointed me about the result, let me make an observation about the short term share price action.  It appears that many short term investors could be overreacting to the report.  Management are very confident that they will win new business and if they do, the share price represents and opportunity.

...

Prior to those comments, in April in fact, I noted we had participated in the capital raising at $8.50. But our holdings were small and hadn’t exceeded 1% of our portfolio because of our concerns about cash flow.  You may also remember I demonstrated declining intrinsic values for Matrix in the future, which triggered some concerned responses.  You really do need to understand the business, and the benefits of diversification.

http://blog.rogermontgomery.com/what-are-our-thoughts-on-mces-results-and-big-air/
​
How stupid does this person think I am? (pretty stupid it turns out!). He reckons that even after participating in the capital raising at $8.50, MCE still only represented less than 1% of his portfolio. What kind of portfolio is that? Does Skaffold help an investor determine capital allocation - because I would love to know how he decided to have a stock in his portfolio that represents less than 1% of his investment.

The guy is a clown. He's blown up before and his episode with MCE demonstrates he has the potential to blow up again.


----------



## fanger

Yes Roger Montgomery is a clown but he only gos on YMTC and shows like that to drum up business for himself. He will shout about all the stocks he picked that went up but won't mention the stocks he picked that get hammered. If we went off his ridiculous stock valuations the market would be lucky to be 2500 points.


----------



## McLovin

zac said:


> I think Skaffold has it valued now at $1.70




Incredible. Why anyone listens to this guy is beyond me. How on Earth does a company go from having an IV North of $10 to $1.70 in the space of about 12 months. Has anything materially changed wrt MCE over the last 12 months or is it just that a) RM's model is flawed b) he overestimated growth (value investors should be wary of growth under the best conditions, let alone for a contracting business). Not to mention MoS, a change in IV of such magnitude blows the theory of buying with a MoS out of the water.

Doesn't he advocate buying companies that display such "bright prospects" that even if the stock market was switched off for 5 years you wouldn't care.


----------



## Intrinsic Value

McLovin said:


> Incredible. Why anyone listens to this guy is beyond me. How on Earth does a company go from having an IV North of $10 to $1.70 in the space of about 12 months. Has anything materially changed wrt MCE over the last 12 months or is it just that a) RM's model is flawed b) he overestimated growth (value investors should be wary of growth under the best conditions, let alone for a contracting business). Not to mention MoS, a change in IV of such magnitude blows the theory of buying with a MoS out of the water.
> 
> Doesn't he advocate buying companies that display such "bright prospects" that even if the stock market was switched off for 5 years you wouldn't care.




I have defended him in the past and indeed I have bought a few stocks that he recommended and did well out of them.

But he did himself in on the whole MCE affair. It showed him up as a snake oil salesman and someone who couldn't be trusted. It also threw into play his whole ratings rubbish system. 

Anytime a stock goes down that he holds he tells you he sold it last week. WTF. Or it only represented a small percentage of his portfolio. I would really love to see his results for the last year from his RM fund. That is the only true test of his methods.


----------



## odds-on

McLovin said:


> Incredible. Why anyone listens to this guy is beyond me. How on Earth does a company go from having an IV North of $10 to $1.70 in the space of about 12 months. Has anything materially changed wrt MCE over the last 12 months or is it just that a) RM's model is flawed b) he overestimated growth (value investors should be wary of growth under the best conditions, let alone for a contracting business). Not to mention MoS, a change in IV of such magnitude blows the theory of buying with a MoS out of the water.
> 
> Doesn't he advocate buying companies that display such "bright prospects" that even if the stock market was switched off for 5 years you wouldn't care.




McLovin,

How should an investor value a business like MCE? I am all ears

Cheers

Oddson


----------



## notting

skc said:


> It's a hypothetical trade by the way as there isn't a lot of technical reason to go short at the moment.




Yeah I know, I figure that if it's going to go it should keep going. Getting stopped out at 3.39 would probably confirm the basing pattern is still in play so I'd still 11% up there so happy enough.

The blow off low seemed pretty bullish after their loss announcement, the probability is that it should trend higher according to my retarded technical analysis. (feel free to trash me on that!!)

Fundamentally MCEs forward book is pretty empty, however, you'd think it's due given the environment, the AU$ is probably making it unable to compete for international contracts.  That seems to be turning which would favour it also.

It's difficult to value as it is a bit like an investment bank that can be making a fortune during very active M&A times etc but then be dormant and perform very averagely during times of credit restraint etc.

So it's a trader and the techies could do well with it as it's movements are tradable regardless of how *valuable* one may speculate it is after one has filled ones pockets with it and subsequently recommended it to ones flock and to people who can bare to what the big goofball on SKY Business regularly salivating over Legends like Roger and John Hewson on his program.

Remembering John Hewson lost the unlosable election and then went on to chair a company called Natural Fuel Ltd which floated on the ASX with a 14% loss on its first day, then continued south till it was utterly bankrupt, without a pause!!  I’ve never seen a float(sink) quite like it.  

The Switzer is painful to watch most of the time, I can't for the life of me work out why he is even on it!  
Maybe he does it for free!  
I'm pretty sure he is the guy who plays big bird on sesame street for his day job.  He has the same street smart quality when he pears down into the camera and offers up his pearls of wisdom.

Peanuts any one?


----------



## McLovin

odds-on said:


> McLovin,
> 
> How should an investor value a business like MCE? I am all ears
> 
> Cheers
> 
> Oddson




How do you usually value a business?

MCE is a difficult business to value in the current period. RM's model is too simplistic, it assumes that the status quo today will not change. While that might be true for some businesses it certainly isn't for the majority.


----------



## odds-on

McLovin said:


> How do you usually value a business?
> 
> MCE is a difficult business to value in the current period. RM's model is too simplistic, it assumes that the status quo today will not change. While that might be true for some businesses it certainly isn't for the majority.




From what i have read about MCE I would use price to sales ratio and some good news announcement. Just interested in other investors methods - especially as the iv has jumped around so much.

Cheers

Oddson


----------



## McLovin

odds-on said:


> From what i have read about MCE I would use price to sales ratio and some good news announcement. Just interested in other investors methods - especially as the iv has jumped around so much.
> 
> Cheers
> 
> Oddson




Yours is probably a more sensible way of trying to estimate a value than RM's. At least you recognise that IV in a company like MCE is ephemeral. As notting said, it's a difficult company to value because earnings can jump around. If you believe that oil prices will continue to climb then it's probably got a higher value. There does seem to be a lot of bad news in the price. Personally, I think the company is in the right place at the right time and seems to be pretty well run, even with its current growing pains. 

The biggest issue I have with RM is that he preaches long term investing, but then can slash the company's IV by 80-90% (How can you be so wrong in such a short period of time?). To me, that would indicate he got something wrong with the original analysis. We all make mistakes and I've had some shockers but then again I'm not on TV trying to sell my system. He should at least say he got it wrong.

I use a DCF and PE ratio to value companies but in the case of MCE I tend to see it as more at the speculative end and any DCF is going to be extremely difficult.


----------



## McLovin

Intrinsic Value said:


> Anytime a stock goes down that he holds he tells you he sold it last week. WTF. Or it only represented a small percentage of his portfolio. I would really love to see his results for the last year from his RM fund. That is the only true test of his methods.




Isn't he up because he was in cash. Probably his best investment!


----------



## skc

Intrinsic Value said:


> So as a tech analyst where do you think it is going short term and medium term?




I don't qualify myself as a tech analyst (not a good one anyway), but supports/resistances are conveniently located at $3, $4, $5 and $6.

I'd say without substantial news it should meander between $3 to $4.



zac said:


> I think Skaffold has it valued now at $1.70




I read somewhere that Skaffold has CMI valued as having the best Margin of Safety on the market - when it neglected the large amount of preference share on issue


----------



## odds-on

McLovin said:


> Yours is probably a more sensible way of trying to estimate a value than RM's. At least you recognise that IV in a company like MCE is ephemeral. As notting said, it's a difficult company to value because earnings can jump around. If you believe that oil prices will continue to climb then it's probably got a higher value. There does seem to be a lot of bad news in the price. Personally, I think the company is in the right place at the right time and seems to be pretty well run, even with its current growing pains.
> 
> The biggest issue I have with RM is that he preaches long term investing, but then can slash the company's IV by 80-90% (How can you be so wrong in such a short period of time?). To me, that would indicate he got something wrong with the original analysis. We all make mistakes and I've had some shockers but then again I'm not on TV trying to sell my system. He should at least say he got it wrong.
> 
> I use a DCF and PE ratio to value companies but in the case of MCE I tend to see it as more at the speculative end and any DCF is going to be extremely difficult.




I was reading Bulls, Bears and a Croupier by Matthew Kidman (ex WAM) and he said in his experience that most companies are rubbish but they have good spells.  Wise words IMO and not to be forgotten when looking at companies like MCE. As for RM, my only gripe is the "extraordinary business" guff, like reading one book will help you spot one, me thinks once you have bought and sold a couple of dozen over twenty years then you might have an idea what to look for. 

Personally i only use PE ratio for predictable companies otherwise i prefer use price to sales or dividend yield with strong economic tailwinds (decent revenue growth over many years)

Serious question. when calculating IV how much range do you apply for it to be within a fair range? Personally i use +/- 20%. 

Cheers

Oddson


----------



## Ves

skc said:


> I read somewhere that Skaffold has CMI valued as having the best Margin of Safety on the market - when it neglected the large amount of preference share on issue



I don't know a thing about this company but that is a decent run up. 11.5% today alone! Did the program neglect the pref shares and over-state the ROE or something?


----------



## McLovin

odds-on said:


> I was reading Bulls, Bears and a Croupier by Matthew Kidman (ex WAM) and he said in his experience that most companies are rubbish but they have good spells.  Wise words IMO and not to be forgotten when looking at companies like MCE.




I agree with that 100%. I think someone else on here once pointed out that RM is really just following earnings momentum. Australia doesn't have a domestic marketplace big enough to support more than a handful of truly wonderful companies. COH is probably the real standout, IMO, of an Australian business with a fantastic product (despite recent hiccups) that has been able to dominate it's market worldwide.




			
				odds-on said:
			
		

> Personally i only use PE ratio for predictable companies otherwise i prefer use price to sales or dividend yield with strong economic tailwinds (decent revenue growth over many years)




I use DCF and PE. The PE model I use is actually designed for sideways markets, where PE is compressing. 



			
				odds-on said:
			
		

> Serious question. when calculating IV how much range do you apply for it to be within a fair range? Personally i use +/- 20%.




How long's a piece of string? It really depends on the company. The more predictable earnings are, the less fuzzy the IV. I try not to get too hung up on coming with a value because they're never that accurate anyway. I get in the ballpark and then apply an MoS. Sometimes doing a sensitivity analysis can really help, you can calculate the IV under different scenarios and then take the worst case and apply MoS to that.


----------



## notting

McLovin said:


> COH is probably the real standout, IMO,



Absolutely, and if it hangs around where it is for much longer I'm soon going to be irresponsibly dependant on it, and sleeping like a baby!


----------



## odds-on

McLovin said:


> I agree with that 100%. I think someone else on here once pointed out that RM is really just following earnings momentum. Australia doesn't have a domestic marketplace big enough to support more than a handful of truly wonderful companies. COH is probably the real standout, IMO, of an Australian business with a fantastic product (despite recent hiccups) that has been able to dominate it's market worldwide.
> 
> 
> 
> 
> I use DCF and PE. The PE model I use is actually designed for sideways markets, where PE is compressing.
> 
> 
> 
> How long's a piece of string? It really depends on the company. The more predictable earnings are, the less fuzzy the IV. I try not to get too hung up on coming with a value because they're never that accurate anyway. I get in the ballpark and then apply an MoS. Sometimes doing a sensitivity analysis can really help, you can calculate the IV under different scenarios and then take the worst case and apply MoS to that.




McLovin, thanks for the feedback. It helps me refine my own valuation techniques and stock selection criteria. You have pointed out that COH is one of the only "extraordinary businesses" listed on the asx - what approach should an investor take to make some money? Valuing companies like MCE has considerable risk. Hunting for liquidation value type investments has liquidity and diversification risks.
One approach i am considering is running a screen using Martin Zweig criteria based on earnings and revenue growth over many years and then perform balance sheet checks, those that pass this i buy with a greater % percentage of funds allocated to the cheaper stock. I ran screen on FT.com and it came up with CCV, CUE, JBH and MND. 

Cheers

Oddson


----------



## McLovin

It might be better to start a new thread or maybe ask Joe to move the last couple of posts into a new thread, instead of discussing broad things in the MCE thread.


----------



## skc

skc said:


> Director just sold 1m shares on market. May be that will dampen the enthusiasm a bit?
> 
> Here's my hypothetical short trade trade @ $3.75 with stop at $3.85.
> 
> Target $3.40.




Lol. Target hit to the dot. 3.5R in 3 sessions.

Somehow hypothetical trades always work better than real ones


----------



## notting

Bit of buying came it at 3.40!  
Or maybe maybe it was all those paper traders taking profits on their shorts!
Dropped it at 3.50 I mean really if you can't stand up today I don't like your chances for the near term Mr MCE!


----------



## StumpyPhantom

Wow!  What a saga lies in this MCE thread I've been reading over the last 12-16 months.  I too am (was) a RM follower who went into MCE on faith, and I'm a little over RM 'holier than thou' now.  I've now relegated RM to just one of the views that I take into account.  So MCE now waits in my SMSF fund for the magic to come back - I've got maybe a decade before retirement so it should make it up by then (and then hopefully with some added gusto).  I really do believe all the views that say it's got long-term potential but I'll hang around the explorers and the biotechs in the meantiime to get the "rush" once in awhile.


----------



## zac

StumpyPhantom said:


> Wow!  What a saga lies in this MCE thread I've been reading over the last 12-16 months.  I too am (was) a RM follower who went into MCE on faith, and I'm a little over RM 'holier than thou' now.  I've now relegated RM to just one of the views that I take into account.  So MCE now waits in my SMSF fund for the magic to come back - I've got maybe a decade before retirement so it should make it up by then (and then hopefully with some added gusto).  I really do believe all the views that say it's got long-term potential but I'll hang around the explorers and the biotechs in the meantiime to get the "rush" once in awhile.




With the high AUD value a lot of companies that rely on the export market as such arent doing so well. This is evident with the poor performance of the All Ordinaries where as the US markets have rallied nicely.
China now has caused further set backs but I truly see Matrix as being able to become a much more profitable company when the AUD devalues itself.
With the way the US is heading Im tipping to see better performance in the next few years.
There are obviously more factors than just that plaguing MCE but I think a more competitive market will help them spring back.


----------



## clinta44

zac said:


> With the high AUD value a lot of companies that rely on the export market as such arent doing so well. This is evident with the poor performance of the All Ordinaries where as the US markets have rallied nicely.
> China now has caused further set backs but I truly see Matrix as being able to become a much more profitable company when the AUD devalues itself.
> With the way the US is heading Im tipping to see better performance in the next few years.
> There are obviously more factors than just that plaguing MCE but I think a more competitive market will help them spring back.




How much do you think the natural hedge helps MCE? I haven't looked into it a great deal but they bang on about it a fair bit.


----------



## VSntchr

Still no major orders announced for MCE...ive got a feeling that the 2nd half may be just as  bad as the 1st..

Now to add to the worries of shareholders the original founder Max Begley has retired (although he is 70). 

Gladly not currently holding.


----------



## fanger

Its becoming one of the most boring stocks on the market. You would think that with MCE quoting on $700mil odd they would have one something by now.


----------



## skc

fanger said:


> Its becoming one of the most boring stocks on the market. You would think that with MCE quoting on $700mil odd they would have one something by now.




They don't need to report on every contract win. Some companies do it but it is not a regulatory requirement or anything. The Board only needs to disclose if the company's performance is expected to be materially different to what the market is told/believes.

But on the history of MCE and for the sake of investor's tickers, you think that management should disclose meaningful contract wins on a more regular basis. 

It is an interesting example of how "no news" is interpreted based on investor confidence of the board.


----------



## Intrinsic Value

skc said:


> They don't need to report on every contract win. Some companies do it but it is not a regulatory requirement or anything. The Board only needs to disclose if the company's performance is expected to be materially different to what the market is told/believes.
> 
> But on the history of MCE and for the sake of investor's tickers, you think that management should disclose meaningful contract wins on a more regular basis.
> 
> It is an interesting example of how "no news" is interpreted based on investor confidence of the board.




I think there are quite a few holders of MCE whose patience is sorely tested having bought high and hoping that things will turn around. But how long can they wait? MCE could really nosedive if they dont get some good positive news this year.


----------



## StumpyPhantom

Intrinsic Value said:


> I think there are quite a few holders of MCE whose patience is sorely tested having bought high and hoping that things will turn around. But how long can they wait? MCE could really nosedive if they dont get some good positive news this year.




+1 Dividend statement of 2 cents per share in the mail today!


----------



## Sutekh

Starting to become interested in MCE as it moves into the 2.80-2.90 region where it has bounced off 3 times before in the last year.





Today it closed off the bottom of $2.82, and I will definitely be keeping an eye on it in the next few days, *but* the volume was _very_ light; not nearly as convincing as the previous visit to $2.80, which was followed by a great run up to $3.80.


----------



## skc

Sutekh said:


> Starting to become interested in MCE as it moves into the 2.80-2.90 region where it has bounced off 3 times before in the last year.
> 
> View attachment 47023
> 
> 
> Today it closed off the bottom of $2.82, and I will definitely be keeping an eye on it in the next few days, *but* the volume was _very_ light; not nearly as convincing as the previous visit to $2.80, which was followed by a great run up to $3.80.




Does bouncing on the same region 3 times make the support stronger or weaker? 

I know the conventional answer is "the more touches, the stronger it is"... but I can't help but thing it is often the opposite.


----------



## odds-on

skc said:


> Does bouncing on the same region 3 times make the support stronger or weaker?
> 
> I know the conventional answer is "the more touches, the stronger it is"... but I can't help but thing it is often the opposite.




I want to buy MCE as it is a perfect candidate for some speculation. It is on my "fallen angels" stock screener. Speculation requires discipline and I will not purchase until the Price to Sales is less than 1 and I see some positive company announcements plus media reviews.


----------



## clinta44

odds-on said:


> I want to buy MCE as it is a perfect candidate for some speculation. It is on my "fallen angels" stock screener. Speculation requires discipline and I will not purchase until the Price to Sales is less than 1 and I see some positive company announcements plus media reviews.




Looks like Orbis Investment Management agrees with you. they increased there holding to 10%


----------



## StumpyPhantom

clinta44 said:


> Looks like Orbis Investment Management agrees with you. they increased there holding to 10%




Down 14 cents or about 5% at about lunchtime today to new 52 week lows, with no apparent floor underneath it.

Do you have a link to the Orbis rationale for increasing its stake.

There's another analysis below but I don't much trust it:

http://www.buysellsignals.com/10212685


----------



## clinta44

StumpyPhantom said:


> Down 14 cents or about 5% at about lunchtime today to new 52 week lows, with no apparent floor underneath it.
> 
> Do you have a link to the Orbis rationale for increasing its stake.
> 
> There's another analysis below but I don't much trust it:
> 
> http://www.buysellsignals.com/10212685




I can't seem to find anything...


----------



## robusta

Could not resist this price, got back in today for $2.53.


----------



## StumpyPhantom

robusta said:


> Could not resist this price, got back in today for $2.53.




Well done for catching it on the lows of the day.  But the downtrend in the technicals is so strong I wonder whether it will get all the way to $1.85 before it comes up for air?

Any t/a analysts out there to make a prediction on this?


----------



## So_Cynical

StumpyPhantom said:


> Do you have a link to the Orbis rationale for increasing its stake.




Orbis usually release a quarterly report and discuss some of there new and growing positions...but have had a name and perhaps management change so perhaps that will no longer be the case. :dunno:

https://www.allangray.com.au/


----------



## clinta44

StumpyPhantom said:


> the downtrend in the technicals is so strong I wonder whether it will get all the way to $1.85 before it comes up for air?




I dont really understand the Technical anyalisis side of things. can you explain it a bit further as to why you think it will get to 1.85?


----------



## CanOz

This is measured move analysis from the descending triangle pattern. Its not a prediction, only if the price continues to fall, where it may find support again...may be the debut price as well.

If you could have shorted at the triangle break then this would be your target.

CanOz


----------



## VSntchr

Trading halt pending announcement on operations/finances.

Anyone with any educated guesses as to what may be entailed?

Yesterdays massive slump directs me to think a negative announcement is on the way...!


----------



## skc

VSntchr said:


> Trading halt pending announcement on operations/finances.
> 
> Anyone with any educated guesses as to what may be entailed?
> 
> Yesterdays massive slump directs me to think a negative announcement is on the way...!




IDL went into a halt on the same terms and today announced a takeover offer by GE (along with a small profit downgrade).

So there's always hope.


----------



## clinta44

there is always hope I suppose... 

the massive slump yesterday implies that there are a group of people who know something. 

I would assume that if it was a take over they would only be selling if the take over price is below say the prices of the last couple of days. but then again maybe they don't know as much as they think....

My guess is that its a announcment of a loss of 2.5 - 5 Mil for the full FY and a capital raise..... 

all of the above is complete speculation.


----------



## Intrinsic Value

Yep it doesnt look good. It seems like plenty of sellers may have known something and are getting out.
I was predicting a decline in share price down to the 2 dollar mark just a week or so back but I didnt think it would get there this quickly.


----------



## fanger

clinta44 said:


> there is always hope I suppose...
> 
> the massive slump yesterday implies that there are a group of people who know something.
> 
> I would assume that if it was a take over they would only be selling if the take over price is below say the prices of the last couple of days. but then again maybe they don't know as much as they think....
> 
> My guess is that its a announcment of a loss of 2.5 - 5 Mil for the full FY and a capital raise.....
> 
> all of the above is complete speculation.




Strange they would go into a trading halt just to announce a down grade.


----------



## robusta

Comes out of trading halt at market open, still no Annuncement.


----------



## McLovin

robusta said:


> Comes out of trading halt at market open, still no Annuncement.




It's just been suspended. It's either _really_ bad or they have a takeover offer. The sp action going into the announcement would probably mean the former.


----------



## mikeydowndown

It's not a takeover offer. Otherwise the announcement would state something along the lines of "a change of control" or "change in control transaction", or "potential material transaction"

IDL's takeover and announcement just happened to coincide with them making a profit downgrade.

Given MCE has had to extend the trading halt and go into suspension for another week, means its taking longer than expected to work out (whatever "it" is).
90% chance this is the worst news, 10% chance its anything good.


----------



## McLovin

mikeydowndown said:


> It's not a takeover offer. Otherwise the announcement would state something along the lines of "a change of control" or "change in control transaction", or "potential material transaction"
> 
> IDL's takeover and announcement just happened to coincide with them making a profit downgrade.
> 
> Given MCE has had to extend the trading halt and go into suspension for another week, means its taking longer than expected to work out (whatever "it" is).
> 90% chance this is the worst news, 10% chance its anything good.




I agree. Once it's in trading halt there is no need to not at least say "we have received an offer which we are reviewing". Instead we get silence.

A capital raising doesn't seem right, because the balance sheet at HY looked pretty healthy. Maybe it's some left field event like accounting irregularity.


----------



## Intrinsic Value

McLovin said:


> I agree. Once it's in trading halt there is no need to not at least say "we have received an offer which we are reviewing". Instead we get silence.
> 
> A capital raising doesn't seem right, because the balance sheet at HY looked pretty healthy. Maybe it's some left field event like accounting irregularity.




I dont think it is a takeover or a capital raising which makes it all very intriguing but unfortunately the probability of bad news is almost 100 percent. I have been wrong about these things before but it does smell very bad.


----------



## Intrinsic Value

If you are interested this is what RM says over on his blog. 

"If that’s the case then I am taking a wild guess that Matrix (MCE) are about to announce a capital raising. Hypothetically, if the banks want their money bank, how long will the cash thats left last the company and how much pressure will there be on them to get some customers? 

If they don’t win new contracts, it took a couple of decades for the family to build the business and just two years to…???

Alternatively, the company may announce a new contract win but typically that type of announcement would not take this long to make and the shares wouldn’t need to be suspended for such an extended period of time. 

I am aware that another fund manager has been building a stake. Someone here reported they have moved to 10% of the register. I am guessing they’ll be hoping for the latter announcement (new contract win) but by not owning the stock we are on the side of a capital raising. It would have to be at a substantial discount to the market price in this kind of market too.

So once the announcement is made and if it is a capital raising ask yourself, how much cash is in the bank and how long will it last without announcing a customer win. Keep in mind, from the time a buoyancy contract is secured to to the company being paid can take 9 months."


----------



## robusta

Chasing awards while your business goes down the tubes?

Well I guess is wouldn't be the first time.

http://au.news.yahoo.com/thewest/bu...1/janet-holmes-a-court-recognised-with-award/


----------



## omac

the February report mentions restructuring and there was also a restatement of 2011 financials, maybe a continuation of that, with a cap raising thrown in, haha.


----------



## suhm

my money would be on an asset writedown and restatement of revenue recognition that they did previously with nameplate capacity not yet reached at their new plant.

Could be interesting has missed out on trading the last few days when the market was tanking so would expect some downards movement anyway just from market sentiment.

I don't think they would need to cap raise given they have done so recently so debtwise shouldn't be a problem they could get away with delaying capex until cashflow comes through and had a decent cash balance during the last reporting period.

Not much support technically and coming to the end of financial year you could see more selling but most people wouldn't have all that much in the way of cap gains to offset this year.

Looking on with interest when the good times come back this should perform well as it has invested in new plant and the ausd seems to be on the way down but its like catching a knife at the moment. I'd prefer to see it bottom out first.


----------



## Intrinsic Value

Well you wouldn't be looking at getting in unless it was off the back of some good news would you?

There are going to be plenty of better propositions the way the  market is going presently before you start looking at MCE again.


----------



## Nutmeg

odds-on said:


> McLovin,
> 
> How should an investor value a business like MCE? I am all ears
> 
> Cheers
> 
> Oddson




How about treat with extreme caution estimates of the growth potential of any contracting business that has been listed less than 5 years?  

I have just read the MCE thread from the beginning through to the end and it has been a very sobering experience.  I recommend others do the same as it is an experience that provides an invaluable lesson: be sceptical of valuations built on unproven growth potential. 

A few years ago I was burnt after buying shares in Hastie.  I didn't lose a great deal but it was a bitter lesson.  Since then, if I am buying contracting businesses, I make sure that, among other things, they have an established record, wide operating margins and, most important of all, good cashflow.  I don't care what the business is, cashflow is the canary in the coalmine: if it goes, I go. 

I don't want this to sound like hindsight reasoning but I remember seeing Montgomery touting MCE and FGE in one of his TV appearances in early 2011 and I came away thinking that MCE sounded like the better company.  But when I compared it to FGE, it was FGE that I bought.  Frankly, I found it disappointing then that Montgomery was so bullish about a stock that had no established track record of earnings.  That he did so dented his credibility in my eyes and merely reinforced the rule for me that, in the end, you can't let anyone decide your buying choices for you.  If you do so, you might as well just invest in a fund.


----------



## ROE

What's going on with this stock I last pop in here raising concern about its business structures but now in suspension? 

suspension is serious stuff usually ongoing financial concern that they cant sort it out
and have material impact on stock price...

I don't have any but I always read about other companies success and failure to add that extra little knowledge..


----------



## robusta

ROE said:


> What's going on with this stock I last pop in here raising concern about its business structures but now in suspension?
> 
> suspension is serious stuff usually ongoing financial concern that they cant sort it out
> and have material impact on stock price...
> 
> I don't have any but I always read about other companies success and failure to add that extra little knowledge..




You did warn me a long time ago about this one ROE, but no I knew better.


----------



## skc

Nutmeg said:


> I have just read the MCE thread from the beginning through to the end and it has been a very sobering experience.




I did that myself the other day and it was a worthwhile re-read definitely.



Nutmeg said:


> I recommend others do the same as it is an experience that provides an invaluable lesson: be sceptical of valuations built on unproven growth potential.




Or at least be ready to sell out when the growth potential proven to be illusive. 



ROE said:


> What's going on with this stock I last pop in here raising concern about its business structures but now in suspension?
> 
> suspension is serious stuff usually ongoing financial concern that they cant sort it out
> and have material impact on stock price...
> 
> I don't have any but I always read about other companies success and failure to add that extra little knowledge..




Accounting re-statement is one theory. Running out of cash (and hence cap raising) is another. A positive surprise such as big contracts / reaching nameplat capacity / corporate transaction remains possible.

If I was to bet, my guess is that they included some bullish EBIT-type convenent when they last borrowed money. An revenue-drought means that they are sailing too close to the wind (or already in the storm) so they need to either re-negotiate or raise some capital. But my guess is pure random speculation.

For holders sake I hope they don't do a HST.


----------



## robusta

skc said:


> Accounting re-statement is one theory. Running out of cash (and hence cap raising) is another. A positive surprise such as big contracts / reaching nameplat capacity / corporate transaction remains possible.
> 
> If I was to bet, my guess is that they included some bullish EBIT-type convenent when they last borrowed money. An revenue-drought means that they are sailing too close to the wind (or already in the storm) so they need to either re-negotiate or raise some capital. But my guess is pure random speculation.
> 
> For holders sake I hope they don't do a HST.




Come to think of it SKC, you and a few others warned me as well.

Maybe the are just buying time while frantically trying to sign some orders. 

Either way chances are I will exit this stock, share price volatility I can handle but earning volatility to this extent, not so much.


----------



## tinhat

I don't think Roger Montgomery can be mentioned enough in this thread, so that whenever someone googles "Roger Montgomery's" name this thread comes up hopefully warning people that Roger Montgomery is just another spruiker - spruiking the Roger Montgomery system.


----------



## skc

robusta said:


> Come to think of it SKC, you and a few others warned me as well.
> 
> Maybe the are just buying time while frantically trying to sign some orders.
> 
> Either way chances are I will exit this stock, share price volatility I can handle but earning volatility to this extent, not so much.




I didn't warn you specifically or calling this a dog. I just didn't see the niche market as being large enough to support further substantial growth without everything going right. I expected that they'd maintain steady state somewhere, even though the cracks were showing 12 months ago.

I certainly didn't foresee a signficiant drought in new orders... and based on management's huge capex investment in a new plant - they didn't either.


----------



## Nutmeg

tinhat said:


> ... Roger Montgomery is just another spruiker...




Spruiker or not, one is ultimately responsible oneself for a buying decision.  

If, in the final analysis, that decision has been made on the basis merely that "_X reckons ABC Ltd is a top pick_", then one has simply given up one's own judgment and relied on another's.   That breeds a very dangerous state of dependency that is made all the more dangerous if ABC Ltd actually turns out well since you will be even less questioning the next time that X recommends a stock.   

By contrast, if you rely on your own resources yet remain continually open to other's views, continually learning and improving your own financial literacy and investment expertise, learning from your stock shockers but  also conducting minute post-mortems on why they failed so as to know what to look for next time, then, when you pick a winner, as you will do if you remain conscious of your own limitations, it gives your confidence in being able to play this game a tremendous boost.


----------



## craft

craft said:


> Earnings Risk.
> 
> If you don't respect it - it will eventually kill you every time. How many times must the lesson be learned?
> 
> Seems some are destined to never learn and others will have paid dearly for the tuition.




This was post 176 in this thread. Time to drag it back to the top because some learning can only occur after some other learning/experience has taken place. That’s human nature.

I hope people don't pay too dearly for the lesson - but if they have there is an even bigger lesson about position sizing to comprehend.


----------



## McLovin

MCE reminds me of a shipbuilder (if you're from Tasmania you probably know the one I'm thinking about). They have a great product but their order book is so lumpy that they can go from being almost broke to having their best year because they sell a single ship.

As long as you know that risk, then there's no problem. I feel sorry for the guys who put large parcels of their portfolio into this without knowing the risks. I guess it's a lesson for DYOR.


----------



## craft

I put this on a certain Blog, Sept 3 2010, six months before it topped out.  Never made many friends over there, eventually excommunicated for thinking differently and objecting to being censored.




> Some quick thoughts on MCE, which seems to be flavour of the month as I read through the recent comments.
> 
> Probably belongs on an earlier post – but fits in with the cyclical considerations that are also appropriate to BHP.
> 
> I get return on funds employed for MCE of 11.5%, 14.5% and 36.6% over the last 3 years.
> In the year just gone, Profit margin has exploded while asset utilization has fallen.
> Operating cash flow plus PPE was Negative 15 Million last year.
> The company has increased its credit facilities from 3.5 to 39 Million to fund the remainder of the Henderson Development.
> 
> My reaction to the numbers is that I’m looking at a capital intensive business with high operating leverage. Margin explosions like this are typical in industries where capital investment is withheld because the whole of cycle return doesn’t justify the investment.
> 
> MCE is now investing capital for future growth – yet the owners have diluted themselves twice to fund that expansion – why hasn’t the business generated enough capital in the past to fund this expansion internally?
> 
> Why have the owners now sold down? Do they understand the industry cycle better than those they are selling too?
> 
> Perhaps I could be convinced that MCE is a cheap cyclical with the potential for upside speculation in the near term (based on forecasts and continuation of current macro picture). But an A1 that will generate good cash flows for many years into the future????
> 
> If history is any guide than somewhere in the future Oil price wil take a big breather and MCE will have a large asset base and very little revenue and that won’t do ROE much good at all.. what goes up quickly normally comes down even faster. I hope they are debt free at that stage. If the macro works out in MCE’s favour than I will look like an idiot for watching this one leave the station, but it won’t be the first (or last) time. Good luck to those who do choose to get on board.


----------



## Nutmeg

craft said:


> I put this on a certain Blog, Sept 3 2010, six months before it topped out.  Never made many friends over there, eventually excommunicated for thinking differently and objecting to being censored....
> 
> "_Operating cash flow plus PPE was Negative 15 Million last year_".




That is precisely what turned me off the stock and had me thinking that Montgomery must have been smoking crack to have pushed this as a buy.


----------



## Clansman

Is this the next Neptune Marine Services?


----------



## odds-on

craft said:


> This was post 176 in this thread. Time to drag it back to the top because some learning can only occur after some other learning/experience has taken place. That’s human nature.
> 
> I hope people don't pay too dearly for the lesson - but if they have there is an even bigger lesson about position sizing to comprehend.




Excellent post Craft.


----------



## McLovin

Mystery solved, they want $37m because they're in breach of a debt covenant.

They did confirm that Henderson was on track to be at nameplate capacity by June.


----------



## Nutmeg

What a disastrous 18 months - a textbook case in how _not_ to manage working capital!  And yet what's the bet that no heads will roll in consequence of this?


----------



## Intrinsic Value

It seems pretty obvious some investors knew about this capital raising because the share price dipped substantially on the back of no news or announcements in the preceding week or two before trading was suspended.

If i read correctly they are offering shares at 2.10c which makes you wonder what MCE is really worth now?


----------



## skc

McLovin said:


> Mystery solved, they want $37m because they're in breach of a debt covenant.
> 
> They did confirm that Henderson was on track to be at nameplate capacity by June.




They are still focusing on this nameplate business.. What's the point of reaching nameplate capacity when you have no business to put through it?! 



Intrinsic Value said:


> It seems pretty obvious some investors knew about this capital raising because the share price dipped substantially on the back of no news or announcements in the preceding week or two before trading was suspended.
> 
> If i read correctly they are offering shares at 2.10c which makes you wonder what MCE is really worth now?




Sometimes news get out because management does a bit of market sounding on placement etc... you are not supposed to talk about it, but in this instance it clearly wasn't the case.

Well $37m cap raising at $2.10 a pop = 17.6m additional shares... bringing the total shares on issue ~95m. FY13 NPAT forecast is $23-$25m... say PE 9x brings valuation to $216m or $2.30 per share, which seems to fit reasonably well with the $2.10 cap raising price.

The key variables are of course the PE multiple and trust in the management forecast... and one would think both are likely to be low at this point in time. Plus there's a 5% fall in the market that MCE has yet to catch up on.

So my punt is a close below $2 upon resumption of trading.


----------



## McLovin

skc said:


> They are still focusing on this nameplate business.. What's the point of reaching nameplate capacity when you have no business to put through it?!




Oh yeah. I get it now. I kept confusing capacity with output! Whoops.

I was wondering how they could be operating at capacity but running at a loss.


----------



## skc

McLovin said:


> Oh yeah. I get it now. I kept confusing capacity with output! Whoops.
> 
> I was wondering how they could be operating at capacity but running at a loss.




You get that sometimes when you have engineers running the show who, although being put in a business capacity, is still wearing the engineering hardhat.

Come to think of it... given the market sentiment and MCE's track record re disclosure and forecast thus far, raising at $2.10 is quite an achievement.

They didn't even bother telling shareholder which/what banking convenent was breached. Now wouldn't the market want to know what other convenents are there?


----------



## Intrinsic Value

skc said:


> They are still focusing on this nameplate business.. What's the point of reaching nameplate capacity when you have no business to put through it?!
> 
> 
> 
> Sometimes news get out because management does a bit of market sounding on placement etc... you are not supposed to talk about it, but in this instance it clearly wasn't the case.
> 
> Well $37m cap raising at $2.10 a pop = 17.6m additional shares... bringing the total shares on issue ~95m. FY13 NPAT forecast is $23-$25m... say PE 9x brings valuation to $216m or $2.30 per share, which seems to fit reasonably well with the $2.10 cap raising price.
> 
> The key variables are of course the PE multiple and trust in the management forecast... and one would think both are likely to be low at this point in time. Plus there's a 5% fall in the market that MCE has yet to catch up on.
> 
> So my punt is a close below $2 upon resumption of trading.




I think you are right there and maybe even a tad optimistic. As for trust in management and forecasts I think they have just about used up all of their trust.


----------



## Klogg

For any RM fans out there:
http://blog.rogermontgomery.com/wp-...10201-Your-money-top-stocks-2011-15-34-59.pdf

Article from Feb, 2011.


----------



## matches

Klogg said:


> For any RM fans out there:
> http://blog.rogermontgomery.com/wp-...10201-Your-money-top-stocks-2011-15-34-59.pdf
> 
> Article from Feb, 2011.




and in case they're not able to go back a few pages....


----------



## robusta

skc said:


> So my punt is a close below $2 upon resumption of trading.




It will be interesting to see the announcement regarding the institutional placement take up before the market opens tomorrow.

I will probably be selling anyway.


----------



## Klogg

matches said:


> and in case they're not able to go back a few pages....




Ah crap, sorry!

I should pay more attention


----------



## Nutmeg

I know this will offer little comfort for those who bought MCE in 2011 but the business has economic and competitive strengths that make it strong.  It's just that the business has been so poorly managed till now (and, most worringly of all, MCE's management appear to have taken no responsibility for this mismanagement whatsoever) that one just can't be sure that lessons have been learnt and systems put in place to avoid it occurring again in the future.  

Undertaking a massive capex in the absence of contract wins and in the mere expectation that, "_if you build it, they will come_", displays an appalling - almost reckless - lack of managerial skill.  Until MCE's management acknowledge its responsibility for this debacle or, better yet, its management is changed in key respects (which is unlikely), I'd be giving MCE a wide berth.


----------



## skc

Not a bad open considering what happened to the overall market during its suspension... and actually pretty strong take up on the placement and insto entitlement offer.

The underwriter is going to have a lot of stock to sell soon...


----------



## McCoy Pauley

Closed at $2.06/share which is beneath the $2.10/share retail entitlement offer outlined in the announcement to the market this morning.

MCE's management better hope market conditions improve in the next couple of weeks.


----------



## Miner

skc said:


> You get that sometimes when you have *engineers* running the show who, although being put in a business capacity, is still wearing the engineering hardhat.
> 
> Come to think of it... given the market sentiment and MCE's track record re disclosure and forecast thus far, raising at $2.10 is quite an achievement.
> 
> They didn't even bother telling shareholder which/what banking convenent was breached. Now wouldn't the market want to know what other convenents are there?




SKC
you were almost there when said 'engineers" . I would say incompetent engineers.
The fact is competent engineers always design a plant to break even when it runs in design plate capacity. The profit scenario entirely depends on commodity prices (if it is a commodity plant) or product cost and selling prices.  Yes if the production process is completed then production cost is high and engineers to take blame.

In case of MCE if you see critically they are claiming a tall order based on inquiries. In my day job I send so many inquiries some of them for fishing and some of them are serious. If the suppliers include them to inflate their projected demand then fools only to be blamed. MCE was predominantly a family based company even it went public. So when head of the family resigned the company is falling like a pack of cards. Hats of the brokers - Most of them they are bunch of idiots who are interested for their commissions and have little tech knowledge of product or process. 

I thank myself when MCE Henderson plant was being installed and they approached me to take up  a senior role. But they wanted to pay peanuts. I declined. Someone accepted the role but when you pay peanuts - you get NUTS. 

Further, MCE has no good order book . Unless a company has a one year solid order booking for such a value adder product, I will not waste my money on it.

Sorry for long holders for MCE and apology if I hurt your sentiment. Hope the SP rises sooner to increase the $2.1 CR price. But market is very harsh (I am a sufferer with my AYN) so excepting for a massive turnaround and some short term trade, immediate future for MCE is a bit cloudy for me.

DYOR - not a current holder.


----------



## skc

skc said:


> Not a bad open considering what happened to the overall market during its suspension... and actually pretty strong take up on the placement and insto entitlement offer.
> 
> The underwriter is going to have a lot of stock to sell soon...




Epic fail for the retail offer. Only 78,931 shares taken up, leaving 1,789,642 for the underwriter. Participation rate = 4.2%. That's what you get when you screw shareholders over with dodgy forecasts.


----------



## McLovin

skc said:


> Epic fail for the retail offer. Only 78,931 shares taken up, leaving 1,789,642 for the underwriter. Participation rate = 4.2%. That's what you get when you screw shareholders over with dodgy forecasts.




These guys are a case study in what happens when you treat shareholders like mushrooms.


----------



## fanger

Seriously who was going to take up the entitlement offer when if you buy them on market cheaper.


----------



## clinta44

Its funny how things work out, any announcement from this company 12-18 months ago would have created a whole bunch of chatter throughout this forum. 

Now there was a positive announcement and its all quiet! Perhaps everyone has just stoped giving a s..t!


----------



## skc

clinta44 said:


> Its funny how things work out, any announcement from this company 12-18 months ago would have created a whole bunch of chatter throughout this forum.
> 
> Now there was a positive announcement and its all quiet! Perhaps everyone has just stoped giving a s..t!




Well they won $50m in contracts. FY13 revenue forecast is still $225m (or is that revenue target => big difference) so they are no where near that at the moment.

The quote book up to FY14 = $490m. They said historical conversion from quote to order = 30%. So there's plenty of quoting before they can get anywhere near $225m in revenue.

The good thing is that it will surprise no one if they miss on the target.


----------



## fanger

Mce is still under preforming but I'm sure we can live in hope


----------



## Intrinsic Value

fanger said:


> Mce is still under preforming but I'm sure we can live in hope




Could be a long time coming....noticed that the price dropped significantly during the week ahead of the latest announcement of revised downward forecast. Seems like there are always lots of people who are in the know before the forecasts are published on ASX.  This is the third or fourth time the same has happened.


----------



## fanger

Intrinsic Value said:


> Could be a long time coming....noticed that the price dropped significantly during the week ahead of the latest announcement of revised downward forecast. Seems like there are always lots of people who are in the know before the forecasts are published on ASX.  This is the third or fourth time the same has happened.




Yes I think your right but I think most or us have known for a while now its no shock horror just par for the coarse now. As for the smart money they seem to know everything before the retail investor, ASIC seems to be unable or unwilling to do anything about it.


----------



## skc

Intrinsic Value said:


> Could be a long time coming....noticed that the price dropped significantly during the week ahead of the latest announcement of revised downward forecast. Seems like there are always lots of people who are in the know before the forecasts are published on ASX.  This is the third or fourth time the same has happened.






fanger said:


> Yes I think your right but I think most or us have known for a while now its no shock horror just par for the coarse now. As for the smart money they seem to know everything before the retail investor, ASIC seems to be unable or unwilling to do anything about it.




There's a less sinister explanation of this imho.

There are many facts about MCE that the market and the public know about - the date of AGM (which most likely include an update), the lack of large contract announcements since the full year report, and the uncertainty in commodity markets and outlook amongst mining service companies.

Over the past week or two, I've seen a few analysts alerting investors of the above facts. The same analysts also arrived at the conclusion that there's a risk of revenue miss / profit downgrade at the AGM. 

The "smart money" didn't know for sure that there would be a profit downgrade, but based on the facts and what's happening in the sector, the smart money would most likely conclude that the risk of a downgrade is pretty high. (Even an amateur like me saw the probability back in July). 

Hence you see increased selling / shorting since early / mid Oct. The short side was the better probability play, and it makes the chart looks like the smart money knew it beforehand. The reason that the shorting didn't start earlier was because, the longer the exposure period, the higher the risks. If you short it for 4 months, the chance of them landing a large contract is much higher than from 3 weeks before the AGM.

Take a look at say BOQ before the profit update a few weeks ago, or TWE, WOR and SMX last week... you will see that there are also plenty of examples where the "smart money" appear to get it pretty wrong.


----------



## Intrinsic Value

skc said:


> There's a less sinister explanation of this imho.
> 
> There are many facts about MCE that the market and the public know about - the date of AGM (which most likely include an update), the lack of large contract announcements since the full year report, and the uncertainty in commodity markets and outlook amongst mining service companies.
> 
> Over the past week or two, I've seen a few analysts alerting investors of the above facts. The same analysts also arrived at the conclusion that there's a risk of revenue miss / profit downgrade at the AGM.
> 
> The "smart money" didn't know for sure that there would be a profit downgrade, but based on the facts and what's happening in the sector, the smart money would most likely conclude that the risk of a downgrade is pretty high. (Even an amateur like me saw the probability back in July).
> 
> Hence you see increased selling / shorting since early / mid Oct. The short side was the better probability play, and it makes the chart looks like the smart money knew it beforehand. The reason that the shorting didn't start earlier was because, the longer the exposure period, the higher the risks. If you short it for 4 months, the chance of them landing a large contract is much higher than from 3 weeks before the AGM.
> 
> Take a look at say BOQ before the profit update a few weeks ago, or TWE, WOR and SMX last week... you will see that there are also plenty of examples where the "smart money" appear to get it pretty wrong.




Yes that is a plausible explanation that you have given for this instance.

But it doesnt cover all the other times it has happened.

I believe the same thing happened when there was a trading halt back last year due to some financial irregularities.


----------



## skc

skc said:


> Well they won $50m in contracts. FY13 revenue forecast is still $225m (or is that revenue target => big difference) so they are no where near that at the moment.
> 
> The quote book up to FY14 = $490m. They said historical conversion from quote to order = 30%. So there's plenty of quoting before they can get anywhere near $225m in revenue.
> 
> The good thing is that it will surprise no one if they miss on the target.




Well... there it is profit downgrade #? (I've lost count).

Revenue guidance for FY13 is now $145m vs $225m back in July. NPAT now $1m having just reported $0.5m of profit for the HY...

$1.50 is the low back in Dec and if it doesn't hold then the chart has no real support to speak of.


----------



## tinhat

They get my sympathy because the $AUD must be killing them. They lose my sympathy because the only thing you ever hear from the management is either silence or bollocks arising from wishful thinking.


----------



## fanger

skc said:


> $1.50 is the low back in Dec and if it doesn't hold then the chart has no real support to speak of.




The way this thing has been trading we'll be at 20 cents in 6 months.


----------



## zac

fanger said:


> The way this thing has been trading we'll be at 20 cents in 6 months.




Even though its under bool value now?


----------



## robusta

zac said:


> Even though its under bool value now?




I like to buy under book value but only with prospects of good sustainable profits.


----------



## fanger

zac said:


> Even though its under bool value now?




Why should that matter when is the market ever rational.


----------



## zac

It appears the forecasts for Matrix are on the mend and its getting contracts for expected production.

I notice it has no long term debt but short term debt has recently jumped to around $26M, anyone know why?
While its trading under Book Value with expected recovery im wondering if its a good Buy.


----------



## Intrinsic Value

It seems there is no floor to MCE. Down to 97c today.

How low can it go?

Maybe I should sent an email to RM and ask him his IV for MCE


----------



## ROE

zac said:


> Even though its under bool value now?




Book value are old school Ben Graham  

it doesn't do any good for retail holder plus unless you know intimate details of the asset
you have bugger all chance of knowing exactly how much it is

A machine they bought for $50K and book that as asset under their book, how much do you think
they can sell them for if it comes to sell time under pressure?  maybe 50% less or more...

I take the exception of real estate and discount a decent margin and that is a good book value play...

Buy only if you think the business can turn, don't buy for book value, you will go down with it...

PS: have no interest just observing before... after or now


----------



## fanger

Intrinsic Value said:


> It seems there is no floor to MCE. Down to 97c today.
> 
> How low can it go?
> 
> Maybe I should sent an email to RM and ask him his IV for MCE




Remember RM said it was worth $12 tells everyone its undervalued and buy it only to sell it and never talk about the stock again.

Earnings have fallen off a cliff, I think its only worth some where between 0 at 50 cents at the moment. Some more contract wins will change all that though.


----------



## Intrinsic Value

ROE said:


> Book value are old school Ben Graham
> 
> it doesn't do any good for retail holder plus unless you know intimate details of the asset
> you have bugger all chance of knowing exactly how much it is
> 
> A machine they bought for $50K and book that as asset under their book, how much do you think
> they can sell them for if it comes to sell time under pressure?  maybe 50% less or more...
> 
> I take the exception of real estate and discount a decent margin and that is a good book value play...
> 
> Buy only if you think the business can turn, don't buy for book value, you will go down with it...
> 
> PS: have no interest just observing before... after or now




Using book value is very dodgy indeed especially some of the things that I have seen over the last 15 years with the companies I have been working at and the games they play with their asset valuations.


----------



## skc

They did build a massive plant so there's plenty of value there if and when the order starts to flow again.

But there'd be plenty of time to buy after the signs of a recovery are confirmed imo.


----------



## zac

Intrinsic Value said:


> Using book value is very dodgy indeed especially some of the things that I have seen over the last 15 years with the companies I have been working at and the games they play with their asset valuations.




Wow im ive been made aware on the pitfalls of Book Value.
Where can I find more on this??

I was under the impression under Intrinsic Value is a good buy and under Book Value even better.
Clearly ive been misguided.


----------



## VSntchr

zac said:


> Wow im ive been made aware on the pitfalls of Book Value.
> Where can I find more on this??
> 
> I was under the impression under Intrinsic Value is a good buy and under Book Value even better.
> Clearly ive been misguided.




Book value is still a measure appropriate to some businesses. Just not all.

Are the assets worth value to other companies, are they actually realisable etc


----------



## tinhat

zac said:


> Wow im ive been made aware on the pitfalls of Book Value.
> Where can I find more on this??
> 
> I was under the impression under Intrinsic Value is a good buy and under Book Value even better.
> Clearly ive been misguided.




I did manage to learn a couple of useful things at uni. They were mainly to do with how to organise drinking games but in addition to that, one thing I remembered (from marketing of all things - truly the most feeble of academic disciplines) was *competitive advantage*. Just because you've gone and sunk a truck-load of cash into something doesn't mean you are going to be able to make money out of it. For whatever reason, Matrix has gone and geared up into a big fancy automated factory and now doesn't have the orders to justify the capital outlay.

As for book value - I buy stuff from liquidator auctions (grays online especially) all the time well below book value. How many people do you think are going to be in the market for a fully automated buoyancy riser production plant (in a market where you can't make any money making buoyancy risers under the AUD)?

When a company goes into liquidation (and I have been involved in one such case) the accountant's book value goes out the door. You call in the liquidator who send their valuer who puts a valuation based on an estimate of auction clearance price on everything that the company owns, from what is in the stationary cupboard onwards.


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## zac

Cheers Tinhat,
Thanks for clearing that up.

BTW im not a fan of drinking games. I dont like anything that may hinder me from getting drunk lol


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## fanger

So what changed MCE's sentiment on Friday? I skimmed thought the third quarter report and it seemed it was basically what they released in Feb.


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## zac

I was closing one trade and waiting for volume to hit my order so then I could buy MCE @ 80c and cant beleive it jumped up 20%.
The announcement that its looking more profitable than 1st anticipated I guess got some people on the band wagon.


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## fanger

I took a punt a bought some more at 92 cents.


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## clinta44

Another downgrade today. EBITDA now 8 Million down from 13 Million.

by my rough calculations that will be a wafer thin NPAT of around 400K, Without taking into consideration any loss from current foreign exchange contracts....

Any profit this FY would be a good result all things considered. 

Question, which company has more disenchanted shareholders? MCE or BBG? - Probably BBG but only just.


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## PinguPingu

Wow, 0.80, I remember when this was $8....


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## skc

clinta44 said:


> Another downgrade today. EBITDA now 8 Million down from 13 Million.
> 
> by my rough calculations that will be a wafer thin NPAT of around 400K, Without taking into consideration any loss from current foreign exchange contracts....
> 
> Any profit this FY would be a good result all things considered.
> 
> Question, which company has more disenchanted shareholders? MCE or BBG? - Probably BBG but only just.




Well BBG used to be $15 and now ~15c so only 1% of equity value left.

MCE reached ~$10 at its peak but now at ~80c still has ~8% of equity value.

So MCE vastly outperformed on a relative basis.

P.S. So funny closing matches (FTSE and S&P rebalance today) that saw MCE closed at 82.5c...


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## fanger

clinta44 said:


> Another downgrade today. EBITDA now 8 Million down from 13 Million.
> 
> by my rough calculations that will be a wafer thin NPAT of around 400K, Without taking into consideration any loss from current foreign exchange contracts....
> 
> Any profit this FY would be a good result all things considered.
> 
> Question, which company has more disenchanted shareholders? MCE or BBG? - Probably BBG but only just.




It still ended up on a day, it could have been worst. 
Buyers moved in near the close.


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## Intrinsic Value

At least MCE are consistent.

Consistent in so far as they always manage to underperform and disappoint

The only saving grace is that at least the Aussie dollar is dropping so they should benefit from that.


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## fanger

Report out tomorrow, keeps fingers crossed


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## Intrinsic Value

fanger said:


> Report out tomorrow, keeps fingers crossed




I am afraid you are going to be disappointed.

More of the same from MCE.

And the forecast for the next year is for more of the same and based on previous forecasts that probably means they are going to be worse than this year.


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## fanger

Just when you think this stock has bottomed finally it disappoints over and over again.


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## fanger

Does anybody know why MCE is up 75% since mid November?


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## piggybank

fanger said:


> Does anybody know why MCE is up 75% since mid November?




I haven't ever followed this stock previously even, when it was a market darling. 

There was an market update released to the market on the 9th of this month. It appears from having had a quick look at it and it appears the company is optimistic about the future. This quarterly update (Q2 FY14) can be read by clicking on this link:- 

http://stocknessmonster.com/news-item?S=MCE&E=ASX&N=663811


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## fanger

piggybank said:


> I haven't ever followed this stock previously even, when it was a market darling.
> 
> There was an market update released to the market on the 9th of this month. It appears from having had a quick look at it and it appears the company is optimistic about the future. This quarterly update (Q2 FY14) can be read by clicking on this link:-
> 
> http://stocknessmonster.com/news-item?S=MCE&E=ASX&N=663811
> 
> View attachment 56383




I've read there quarterly update and its no different to their last 5 or 6 quarterly updates.


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## tinhat

fanger said:


> I've read there quarterly update and its no different to their last 5 or 6 quarterly updates.




Indeed. Every report I have ever read from this company has been upbeat. I still hold MCE shares despite the massive loss I have carried on them (mind you I took most of my profit during the Roger Montgomery ramp) just to remind myself of how expensive holding onto losers can be - and especially that a stock coming off 50%, 100%, 200%, etc... from what you bought it for never makes it look like value.

I keep the $40,000 of losses in this stock on my "balance sheet" - a holding within my online broker account - even though I couldn't give a rat's **** about them, just to remind myself of the value of this lesson. Not that I haven't made similar mistakes with PEM, PNA, and more.


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## skc

tinhat said:


> Indeed. Every report I have ever read from this company has been upbeat. I still hold MCE shares despite the massive loss I have carried on them (mind you I took most of my profit during the Roger Montgomery ramp) just to remind myself of how expensive holding onto losers can be - and especially that a stock coming off 50%, 100%, 200%, etc... from what you bought it for never makes it look like value.
> 
> I keep the $40,000 of losses in this stock on my "balance sheet" - a holding within my online broker account - even though I couldn't give a rat's **** about them, just to remind myself of the value of this lesson. Not that I haven't made similar mistakes with PEM, PNA, and more.




FWIW I think MCE is one of the few turnarund stocks that I am keeping a pulse on.

It has the classic manufacturing high fixed cost operational leverage. When the tide turns and they start running the plant at full shifts and capacities, another Roger M will come and spruik them like there's no tomorrow. The probability of a turnaround is high, but the timeframe is highly uncertain (and could be very long).

It is not without risks of course. While their balance sheet is not stretched, a prolonged downturn may see them requiring fresh capital. Then there's a chance that they've simply lost competitveness forever. So as always keep position size within desired exposure limit.


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## fanger

skc said:


> FWIW I think MCE is one of the few turnarund stocks that I am keeping a pulse on.
> 
> It has the classic manufacturing high fixed cost operational leverage. When the tide turns and they start running the plant at full shifts and capacities, another Roger M will come and spruik them like there's no tomorrow. The probability of a turnaround is high, but the timeframe is highly uncertain (and could be very long).
> 
> It is not without risks of course. While their balance sheet is not stretched, a prolonged downturn may see them requiring fresh capital. Then there's a chance that they've simply lost competitveness forever. So as always keep position size within desired exposure limit.




Yes Roger Montgomery always tells people how great a stock is after its run also he seems to let people know he sold his stocks at there high points months after its tanked.

In regards to MCE I'll be a happy person if its can claw its way back to $3.


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## clinta44

Speaking of RM - Im pretty sure he was spruiking Forge at the same time as MCE and we all know what happened there. 

Anyway, we should get a good indication of MCE during the half year announcements... Does anyone know when that will happen?


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## piggybank

clinta44 said:


> Anyway, we should get a good indication of MCE during the half year announcements... Does anyone know when that will happen?




Hi Clinta44,

I tried to copy all the announcements made last year to the ASX but unfortunately I only was only able to capture what you see. At least it will give you an idea when they are due out...




Gee, I was just struck by lightening and had a thought why not try their announcments page of Matrix's own website.

http://www.matrixengineered.com/en/#/investors/asx-announcements/

Regards
PB


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## fanger

MCE Half Yearly Report is out and yet again its another shocker.

Revenue down 30%, eps 0.7 cents , too tired to read it all now going to bed. :bad:


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## VSntchr

fanger said:


> MCE Half Yearly Report is out and yet again its another shocker.
> 
> Revenue down 30%, eps 0.7 cents , too tired to read it all now going to bed. :bad:




Hey, at least they generated some FCF this time...


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## piggybank

Possibly on the move again!!


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## piggybank

No announcement made since the 15th April - P/E ratio up to just over 30 - The price is is increasing, up 10.5% over the past 3 trading days. However the volume isn't moving up much - The red line on the chart is the 250EMA.


​


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## piggybank

Up 11.5% over the past couple of days - closed today @ $1.55.


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## fanger

piggybank said:


> Up 11.5% over the past couple of days - closed today @ $1.55.




Well its come back to earth over the last 3 or 4 days.


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## fanger

I finally got rid of this dog a couple of days ago, I never want to see this stock again and in saying that it will probably triple now.


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## notting

It shot to fame on a major ramp to $9.50 in March 2011
Thank this guy for pain to yourself and probably countless others because of it.




He also had LYC heading for $16 if rare earths stayed on track.
Another killer for many!

Had TLS valued at around $1.60 whilst it had a fully franked div of about 12% trading at $2.75


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## tinhat

notting said:


> It shot to fame on a major ramp to $9.50 in March 2011
> Thank this guy for pain to yourself and probably countless others because of it.
> 
> View attachment 61333
> 
> 
> He also had LYC heading for $16 if rare earths stayed on track.
> Another killer for many!
> 
> Had TLS valued at around $1.60 whilst it had a fully franked div of about 12% trading at $2.75




TSM was another one of his dogs.


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## McLovin

Here's the list, boys.


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## Rainman

At the risk of stating the obvious, don't all those recommendations tell you one thing: Do your own research and don't blindly follow anyone else's "tips".


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## ROE

cant blame the guy for making a bucks, that the nature of these things.
they are sale people and sale people need spruik and spruik and spruik their products
and services.

they need to come up with a logical and simple explanation for the wild west and random walks of the stock market 
so they can then spruik to the mass, someone will believe it and pay up

mean while all that infor most people can get them all for free but human psychology if you pay for something you think you getting a better deal or better infor 

they paying for methodical logic in a random world if there is such a thing


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## fanger

notting said:


> It shot to fame on a major ramp to $9.50 in March 2011
> Thank this guy for pain to yourself and probably countless others because of it.
> 
> View attachment 61333
> 
> 
> He also had LYC heading for $16 if rare earths stayed on track.
> Another killer for many!
> 
> Had TLS valued at around $1.60 whilst it had a fully franked div of about 12% trading at $2.75






Yes Roger is full of crap and I remember that call on TLS, I think he said it on Switzer.
Some more of his picks that bombed in a big way FGE, ORL , ACR , TRS, IFM, SIV, AGI just
to list a few of those gold star Roger long term holds.


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## fanger

McLovin said:


> Here's the list, boys.
> 
> View attachment 61338




Its funny that he spruiks his software that's costs a bit of money to buy which list the top stocks according to that program yet he invests his money in different stocks.


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## notting

I had a look at a free trial of the software and it had NWH as a hot buy about 18 months ago.  
I think it was at around $1.80
Fortunately I didn't believe it! 30.5c today!


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## notting

Blind siding and bonkers.




Who get's a day in the sun when hell has frozen over?

WTF.


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## notting

Well suddenly the above made absolutely no sense what so ever.
Well until 1.15 today that is, to somebody :silly:


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## Gringotts Bank

A change of thing. Tgt 70+


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