Matrix Composites & Engineering: Results trumps potential

Matrix Composites and Engineering Limited (ASX:MCE) has been awarded a cooperation agreement by a leading European oil services company potentially worth $35-$50m in revenue per year for the next five years.

Mike King

Mike King is a Fool.com.au Investment Analyst and Writer. He caught the investing bug more than a decade ago, at a time when the U.S. had invaded Iraq and fear reigned in the markets. His initial success as the markets took off encouraged his passion and thirst for knowledge. With 13 years behind him at one of Australia's largest domestic banks, Mike's passion for stocks led him to join a boutique funds management firm, where he stayed for four years. A seven-year stint in equity research at one of the largest investment banks in the world followed that, giving Mike a thirst to pursue his passion further. Mike holds a Diploma in Applied Finance and Investment and a Graduate Certificate in Financial Planning. His passion is to help retail investors invest better, and that passion was one of his primary reasons for joining The Motley Fool Australia in late 2011. Mike has written thousands of articles since joining, including for Fairfax Media, Yahoo!7, Ninemsn and has also appeared on ABC's The Business. You can see all of Mikes' holdings here

Published December 22, 2011 9:40 am AEDT

Matrix Composites and Engineering Limited (ASX:MCE) announced on Wednesday 21^st December 2011, that it had been awarded a cooperation agreement by a leading European oil services company potentially worth $35-$50m in revenue per year for the next five years.

Matrix is involved in the design, manufacturer and service of engineered products using advanced composite and polymer materials for use in the oil and gas and resources industries. It is the global leader in the manufacturer of riser buoyancy modules, and the only major company in Australia that manufactures and exports equipment for the oil and gas industry.

Matrix shares initially jumped 5 per cent higher before settling at $3.05, still a far cry from their peak of over $9 earlier this year. The agreement comes on top of their announcement on 17^th November of $61m in new contracts.

The company stated that it will be working on new riser buoyancy modules to be used in 15,000 feet of water which is the greatest depth that these modules have ever been used.

Matrix's new Henderson plant has a 7500PSI deep water simulation chamber which is the largest of its type in the world and can test buoyancy systems to a service depth of 17,500 feet which can easily accommodate the depths required by the client.

That the share price hardly moved on this news shows the market is still wary of the company's performance and is waiting for further announcements. My sentiments exactly. Whilst potential is good, results is what eventually will drive the share price forward.

Are you looking for quality stock ideas? Readers can click here to request a new free report titled The Motley Fool's Top Stock For 2012.

More reading

3 ASX shares for stormy markets

5 Safe haven ASX stocks for 2012

Motley Fool contributor Mike King owns shares in Matrix. The Motley Fool's purpose is to educate, amuse and enrich investors. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Click here to be enlightened by The Motley Fool's disclosure policy.

Automatic Renewal

By taking up this offer, you will also be enrolled in our auto-renewal program, which is our way of making your ongoing subscription easier by ensuring uninterrupted service. Don't worry, though – you're not locked in, and can cancel your auto-renewal at any time before each 'anniversary' date without question or penalty.