MS International (MSI) – 196.5p

MS International (MSI) – 196.5p

Doncaster-based MS International has released final results for the year ended 30 April 2021 and although the shares have moved higher on the news, which was undoubtedly positive, they remain good value.  The AIM-listed company has declared a final dividend of 6.5p per share and there is still time to buy in ahead of the ex-dividend date next month.  It has a relatively low profile at the moment and the shares are tightly held so any significant buying would probably see the share price surge higher.

The company operates mainly in the UK and also through subsidiaries in Brazil, Germany, Poland, The Netherlands and the US.  Its principal activities are the design, manufacture, construction and servicing of a range of engineering products and structures.  Operations are grouped into four divisions.  Defence covers the design, manufacture and service of defence equipment.  Forging concentrates on the manufacture of steel forgings.  Petrol Station Superstructures deals with the design, manufacture, construction, maintenance and restyling of petrol station superstructures.  Corporate Branding works on the design, manufacture, installation and service of petrol station and other brandings.  Executive Chairman Michael Bell joined the company in 1972 and Finance Director Michael O’Connell joined in 1980 so the management team should certainly know the business inside out! 

In the year ended 30 April 2021 the company returned to the black with a pre-tax profit of £1.59m versus a loss of £3.25m a year earlier, although revenue was broadly unchanged at £61.54m (2020: £61.15m).  Basic earnings per share were 7.2p, a significant improvement on the 15.1p loss per share incurred a year earlier.  The balance sheet has also strengthened and total cash increased to £23.56m (2020: £16.30m).  A final dividend of 6.5p per share (2020: 1.75p) takes the total for the year to 8.25p (2020: 3.5p).  The final dividend will be paid on 10 August and the ex-dividend date is 15 July.

Apart from results announcements twice a year, news from the company tends to be relatively thin on the ground.  This means that this is a share to buy and hold rather than trade in and out of, particularly given the thin levels of trading in the stock.  However, the upside could be significant and the current share price is well supported by a solid balance sheet, including an enviable cash pile.  The top four shareholdings account for over half the shares in issue, meaning that there is a lack of liquidity.  We believe that the scope for upside far outweighs the risks involved and rate MS International as a LONG TERM BUY.

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