Having a bit more of a dig into MSG this morning and reckon that although something of a boring stock that it is genuinely undervalued, probably more of a mid term hold than a short term trade but well worth a look.
The EV was 2.6m a year ago when their quarterly revenue was 4.7m and they were losing money with net cash outflow of $182k and had a cash balance of $650k
In the last quarter they generated positive net cash of $1.286m on $7.7m of revenue and ended the quarter with a cash balance of $2.1, the EV at 2.1c is $2.05m so $500k lower than it was when they were making a loss. The MC is at $4m which seems very low.
They $1.286 free cash flow this quarter was primarily due to improved collections however when you look at the company over a longer time period it's clear that they are in pretty good shape.
Avg net cash last 4 quarters $366k or annualised to $1.464m
Avg net cash last 2 quarters $723k or annualised to $2.892m
Either time period to me suggests that they are deserving of a MC higher than $4m especially as they have shown their desire for growth and have the bank balance to do so.
GROWTH OPPORTUNITIES
During the previous Period the Company obtained a Security operating licence for Victoria. During the Period the Company lodged its application for a Security operating licence for New South Wales. The Company continues to seek further organic growth opportunities in its specialist security segments, including but not limited to leveraging its reputation with existing clients to obtain work at additional locations.
The company continues to actively review and enhance it’s marketing strategy.
The Company is also assessing the addition of new verticals to its business. The Company is constantly assessing the expansion of its operations in the Perth metropolitan area, regional Western Australia and interstate through the identification and acquisition of suitable targets. It may progress these opportunities if they are value accretive to shareholders and consistent with the Company’s strategy.
MSG Price at posting:
2.2¢ Sentiment: None Disclosure: Held
