13 Nov '18

Wilsons initiates coverage of MSL Solutions MPW with Buy rating, $0.34 price target.

From Forager Note:

Another company to update investors was MSL Solutions (MPW), a provider of software to clubs and sporting venues. Revenue expected from software sold on annual and monthly payment plans grew by 5% in the quarter. But that’s where the good news stopped. 

Overall revenue was down 16% compared to the same quarter last year. Less revenue from hardware sales and perpetual licenses caused the decline. While some of these sales are lumpy, this was not a good result. Costs also rose, with MSL doubling the spend on research and development and increasing sales and marketing expense by a third. These should result in more revenue over time, but short term profitability will be impacted. Cashflow was also poor. The first quarter’s operating cash flow showed an outflow of $1.7m.

This is only one quarter, and MSL is growing an attractive recurring revenue source. The company now needs to show investors that it can collect cash on past sales and build a profitable business over the long term. 

From Forager Note:

msl solutions (MPW) updated the market on its full year performance. The company described their result as being “roughly in-line” with prospectus forecasts. “Adjusted” net profit came in at $5.7m. That stretches the truth. Including one-off benefits and excluding one-off costs is not a good look. The quarterly cashflow statement showed only $50k of operating cash from the most recent quarter.

The company blamed increased investment in new geographies and people. Over the next few years the business will need to start delivering on its promise to generate meaningful cash flow.