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.

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Matrix Composites and Engineering Limited (ASX:MCE) announced on Wednesday 21st 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 17th 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.

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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.

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