Thank you @sahil_vi ! I am glad that the thread is leading to a nice discussion about this very unique company.
Regarding how they will fund the growth, I am really curious as to what path MTAR will take over here. While I will not be bothered if they do a follow-on offering, QIP, rights offering, or something similar, I would prefer if they tried to raise debt instead. Their net debt levels are still fairly low, and if they have received a big order from a long time client, and they take that to a bank, contingent on everything being in order, I do not see why a loan officer would not sanction a short term loan of sorts. In short, I hope they go down the debt route before equity.
I love what you highlighted regarding receivables (90% are not even due), and the nature of the inventory (no finished goods inventory, negligible write down, etc.). It’s a great sign, and speaks volumes about the company’s working capital management, and the quality of its customer base. You are correct about the high levels of inventory serving as a barrier to entry for would be competitors. Also, as we know, high inventory levels are the nature of the beast in this business, and cannot be avoided. If I were disturbed by that, I would solely be investing in tech platforms and SaaS companies instead.
I hope that MTAR continues to over-deliver for shareholders with mid double digit annual revenue growth, new revenue streams in sunrise sectors (ex: energy storage systems), maintaining (or expanding) the current margin profile, and higher asset turns. All this has the potential to nudge the stock higher and higher. In case growth prospects start becoming mediocre, any perceived margin of safety will prove to be imaginary in nature.
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