Roger has stated on his blog that if the company has EPS this...

Roger has stated on his blog that if the company has EPS this year of 52c (in line with managements guidance of a 20% increase in revenue and then working out the corresponding profit) then his valuation is $6.80 and his rating is A2 (whatever that means.)

I have a lot of respect for RM although do not rate his formula for determining intrinsic value, his constant promotion and marketing of his upcoming A1 service, many of the companies he rates as A1, nor his system of rating companies A1, A2... noone knows what that means.

On the other hand Roger has contributed a lot of knowledge and information to the Australian investing public on the subject of investing and company analysis although basically distilling what Warren Buffet and Ben Graham had already said before him. How to determine a wonderful business (many on here say Matrix is not, I still think it is) how to determine excellent prospects and to buy these companies with a margin of safety to their intrinsic value. This is for you to determine, not Roger.

I do not share this apocalyptic outlook which has become so pervasive on this thread about Matrix. The two concerns most people have are cash flow and the order book, both legitimate concerns although ones which can be fixed.

It is the nature of the industry that cash flow will come in fits and starts, if this is unsatisfactory to you it is probably better to find another company to invest in. Should Matrix receive in the near future upfront payments and deposits for product orders the cashflow figure will look far different.

The order book declined by 70 million from the HY report and this is concerning although not so concerning if you put it into context. Matrix is currently quoting on around $500 million of work, they traditionally win 38% of this which is just under $200 million. This brings possible short to medium term revenues of around $300 million.

The investment case for Matrix is simple. They are the leaders (by market share) producing the best quality products from the most technologically advanced facility of its kind in the World. Growth (in the industry which buys its products) is currently booming and is set to continue to do so for the foreseeable future. I believe Matrix has the people and expansion plans in place to fully capitalise on these prospects.