What does Roger Montgomery think about Matrix?
In the height of reporting season, and following the announcement of the annual results from Matrix Composite & Engineering (ASX:MCE), Roger Montgomery shares his insights and Value.able expert opinion with Ross Greenwood. Listen to podcast.
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
John A
:
Hi Roger,
I think it would be helpful to explain again your MQR scheme. I understand that you’re keeping the exact formula to yourself and that’s ok but there are some elements that need explaining. How can a company that you liken to a ‘speculative miner’ still be considered an ‘A’ quality company? Also how can a business such as Matrix that makes little to no sales in the last six months and it’s future sales being under such a cloud be considered an A1 (now A2) type of business? Sure it’s balance sheet may be sound at the moment but if MCE’s ‘sales drought’ persists I would think another ‘liquidity event’ may be just round the corner.
Sorry to be so longwinded about my question, but I would have thought that stability of revenues and earnings is an important charactistic of a quality ranking system. As a shareholder, I have spent some time reading about the company and the industry in general but I am still struggling to understand the sharp decline in the company’s prospects. Last year the company was apparently turning away work because of capacity constraints and customers were paying deposits to elevate their orders up the list.
What a turn around! Well I continue to live and learn on this one.
I look forward to your ‘A1’ system as there is definately a gap in the market that needs filling, but for mind I would like to better understand how you rank companies.
Kind regards
John A.
Roger Montgomery
:
If Matrix sales cloud persist, their debt might rise or one of the many other measures will deteriorate and they wont be an A. If you can predict how they will respond or whether they will not receive an order, you could forecast whether that A will change. Sometimes an announcement makes that obvious to us, but equally frequently it cannot. They great thing is that without it we would be operating blind and wasting a lot of time digging where there are no diamonds.