Metal Tech

I was having a look at some chemical companies other than Zirax, to see what I could see. Metal Tech looks very distressed - could there be a bargain there?

Here are a few notes in advance of this year's annual report (due Monday).

Market cap £25m at 65p

2006 full year
Revenue £60m
Profit £7m
Shareholder equity £28m

2007 interims
Half way through the year equity was up to £33m.
Everything was going well.

2007 full year
Results are not yet out, but trading updates are full of negative noises:

• "The Company expects to meet market expectations in respect of revenues but to fall significantly short of profit expectations".
• The fall of the US dollar has hurt them - revenue is in dollars, costs aren't.
• Its Uzbekistan operations has gone bankrupt. Cost of writing this off and associated legal costs: about £4m.
• It has accidentally created some Calcium Molybdenum in Mongolia, which needs reprocessing. Total value at risk: £6m.

The annual results should be out on Monday 12th May. I will have a look - it sounds interesting! This company appears to be quite accident-prone, but if they're a bargain, they're a bargain...

Future
The weak US dollar could continue for some time (and could get worse).

The Uzbekistan problems will obviously lead to writeoffs and lower profits.

The Mongolia problem is hopefully just a short term blip.

The real question though: what will they cock-up next?