Bad news comes in threes?26 October 2011
Matrix Engineering's (ASX:MCE) share price has been cascading down since we last spoke. Unfortunately the situation has gotten worse.
Management have revised their FY12 revenue guidance growing 20% to 0-10%. And what's more, they've indicated that it'll be skewed towards the second half of the year.
On top of this the company is also staring down at barrel of increased "non recurring" expenses due to the decommissioning and writedown of the Malaga plant and the startup costs of their new Henderson plant. These expenses will result in a break-even NPAT for the first half of this financial year.
With a revenue guidance for the 1H FY12 of $85m, they're running behind the corresponding period last year. And quoting the order book of $110m as at 30th June hints to me that they've made no substantial progress in winning new work. This is of importance, as the order book for this time last year was around the $170m mark and they're way below that.
Overall, I get the feeling that the company is likely to miss their guidance yet again... so we may get get the third piece of bad news within the next 6-12 months. Maybe even a forth.
It's now important to work out whether we're observing a significant timing issue, or whether there's something inherently wrong with the company. If it is only a timing issue, with delayed contracts and migration between plants, this may become a great bargain when the dust settles. In the meantime, more short-term price downside is to be expected.
MCE was down 4% today to $2.91