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MCE - Matrix Composites & Engineering

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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.
 
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.
 
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.
 
odds-on said:
McLovin,

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

Cheers

Oddson
Click to expand...

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.
 
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.
 
Nutmeg said:
I have just read the MCE thread from the beginning through to the end and it has been a very sobering experience.
Click to expand...

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.
Click to expand...

Or at least be ready to sell out when the growth potential proven to be illusive.


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.
 
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.
 

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.
 
tinhat said:
... Roger Montgomery is just another spruiker...
Click to expand...

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 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.
Click to expand...

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.
 
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.
 
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.


 

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.
 

Excellent post Craft.
 
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.
 
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?
 
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?
 
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