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.
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