MS International – a gradual improvement with “interesting opportunities opening up”

Having bought MS International shares at 186p July 2015 I’ve watched them slide to 170p -175p. Although the dividend of 8p is comforting, I’m still waiting for solid evidence of a reversion of profits per share back to the 19p – 34p range we have seen in the past. The latest annual results (to end-April) show a small movement back to the long term average.

	Earnings per share	Dividend	Profit after tax £m	Number of shares, m
2006	15p	2.78p	2.50
2007	18.2p	3.6p	3.02
2008	22p	4.5p	3.93	18.45
2009	19.5p	4.5p	3.52	18.4
2010	13.3p	4.5p	2.39	18.4
2011	30.6p	6.5p	5.50	18.4
2012	34.8p	8p	6.31	18.2
2013	22.5p	8p	4.08	18.2
2014	14.6p	8p	2.57	17.6
2015	8.2p	8p	1.35	16.75
2016	9.6p	8p	1.58	16.5
Average	18.9p

(Earlier Newsletters on LSE:MSI: 8th – 15th July and 1st Dec 2015)

Market capitalisation is 16.5m shares x £1.75 = £28.9m

One-year PER = 175p/9.6p = 18.2

The cyclically adjusted price earnings ratio, CAPE, over 11 years, is 175p/18.9p = 9.3; in single digits and still some way below the stock market average of about 13.

The dividend yield of 8p/175p = 4.6% is backed by a very strong balance sheet with over £12m in cash and no debt. There is a small pension liability, but that will disappear when discount rates used to calculate pension liabilities mean-revert.

£m	Extracts from balance sheet 30th April 2016
Cash	12.8
Inventories	7.0
Receivables	9.0
Other current assets	0.9
Total current assets	29.7
Minus current liabilities	-15.4
Minus non-current liabilities	-1.6
Current assets minus all liabilities except pension deficit	12.7
Pension liability	-7.6
Current assets minus all liabilities	5.1
Freehold property	12.0

Cash flow also supports the picture of a stable background for the dividend:

	Cash generated from operating activities after net additions to working capital and property, plant and equipment, and after tax
2011	£4.9m
2012	£1.7m

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