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MANROY (AIM:MAN) - Shares get shot down
Posted 05/10/11
The leading UK machine gun manufacturer (there aren’t many left!), and a relative newcomer to AIM, disappointed the market with its recent trading update for the year ending 30 September 2011 – up until now Manroy’s life on AIM had had been free of mishaps, so it’s a big welcome to the real world!
The UK Government’s delay (if in doubt blame the Government!) in the awarding of export licences for certain countries where Manroy had expected to deliver products in the current year means that revenues for the year will be approximately 15% below market forecasts. Delivery on a number of these orders is now expected to be during the 2011/2012 financial year, something that management already communicated at the interim stage.
Thankfully increased margins and tight cost control will largely mitigate the drop in turnover, with profit before tax for the full year anticipated to be broadly in line with market expectations, which are for pre-tax profit £2.90m and earnings per share of 14.90p – another dirt cheap stock!
Little Manroy has had a lot to do over the past few months having completed the acquisitions of AEI Land Systems Limited and a 49% interest in Manroy USA LLC(‘MUSA’) as well as satisfying the City’s demands
Since its acquisition in April this year, AEI has received UK Ministry of Defence and export orders with a value of over £2m and the enlarged MUSA business now has a significantly increased product range and the opportunity to complete contracts worth $10.0m for the US Department of Defense.
The house broker has also warned that full year headline profit of the holding company is also likely to be impacted by a number of one-off acquisition costs and acquisition accounting charges that have been too difficult to forecast given the nature of the original transaction that admitted the company to AIM, and the acquisitions that have occurred since.
Current forecasts for 2012 are for pre-tax profit of £4.2m and earnings per share of 17.80p, resulting in yet another sub 5x PER – given the news I’m inclined to believe those estimates will come down, although logically those sales delayed from 2011 should theoretically offer support into 2012
Anyone remember the dark days of 2008 when valuations were at a similar level…..and then got a lot cheaper?
This entry was posted 7 months, 2 weeks ago.
