With the rights issue now fully underwritten and Vic committing $1m to the issue I now think MSC is a sure thing. The underwriter wouldn't put up if he didn't know stuff we don't know and which makes it a pretty good bet. I calculate they will have $3.8m cash on hand after the rights issue. That is plenty to fire up the plant and satisfy all the orders they already have. With the 6 J/V's already announced I have calculated that next year they will be earning $80mpa and that is just the start. Doing the calc's that is 1.2cps earnings and with a pe of 12 were looking at a sp of 14c. A market cap of more than $800m and MSC is no longer a small stock, perhaps in a year inclusion in the All Ords index. My bet is that with 2 weeks to go before the issue ends we may see more announcements of J/V's and perhaps a Broker's report on MSC to really fire up the long suffering shareholders. That said I still think there will be a lot of shareholders too gutless to take up the issue, so the underwriter will get a lot of cheap shares. I'm going to find a way to fund my entitlement.
MSC Price at posting:
20.0¢ Sentiment: LT Buy Disclosure: Held
