Australian (ASX) Stock Market Forum

MCE - Matrix Composites & Engineering

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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.
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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?
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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.
 
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?!
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Oh yeah. I get it now. I kept confusing capacity with output! Whoops.:eek:

I was wondering how they could be operating at capacity but running at a loss.
 
McLovin said:
Oh yeah. I get it now. I kept confusing capacity with output! Whoops.:eek:

I was wondering how they could be operating at capacity but running at a loss.
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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 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.
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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.
 
skc said:
So my punt is a close below $2 upon resumption of trading.
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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.
 
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.
 
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...
 
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.
 
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?
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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 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...
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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.
 
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.
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These guys are a case study in what happens when you treat shareholders like mushrooms.
 
Seriously who was going to take up the entitlement offer when if you buy them on market cheaper. :banghead:
 
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!
 
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!
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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 said:
Mce is still under preforming but I'm sure we can live in hope :eek:
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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.
 
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.
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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.
 

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