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Manroy

  • BY: Andrew Hore |
  • POSTED: 05/09/2013 |

Heavy machine guns supplier Manroy has won its second new contract in less than one month.

The contract for heavy machine gun spares is from a European customer and is worth 1.7m (1.4m). Deliveries should start before the end of September, if the licence is awarded, so there will be some contribution in the current financial year. There is also a seven year framework agreement which will generate further orders.

The other contract is worth 500,000 and is for a customer in Asia. This requires licence approval and will not be delivered until the next financial year.

A trading statement in August warned that orders had been delayed and that expected revenues were 9m, rather than the 12m originally forecast. House broker Allenby had forecast a small loss for the year to September 2013 and this is unlikely to change. The latest contracts helped to underpin the 2013-14 revenues forecast of 18m, which is double the forecast 2012-13 figure. That should generate a profit of 3.3m. However, the lumpy nature of the business due to the flow of orders and the need for licences to fulfil them means that there can always be delays.

At 56.5p a share, up 7p, Manroy is valued at 10.8m. The shares are trading on four times prospective 2013-14 earnings and this reflects the lack of confidence in Manroy to achieve its forecasts. If the return to profit does happen the dividend could be reinstated.

Download the latest AIM Journal from http://www.hubinvest.com/AIMPDFAugust2013_47.pdf

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