This week, the shares of Mitec Telecom Inc. (TSE:MTM), (PINK:MTTIF) have started a new attack on the Toronto Stock Exchange (TSE). They are attacking on two fronts – price and volume. They are doing this with a vengeance, driven by the announcement of several positive company developments.
So far, the attack of the stock looks successful. In February, MTM has jumped by 40% on the TSE. It won numerous victories in terms of trading volume too. The last five sessions’ turnovers were always above the usual figures. Yesterday’s volume was even better – 8.3M shares, which is six times the company’s average and a record for the last three years.
The current rise is perhaps driven by two consecutive Mitec’s announcements from this week. They were both positive. On Tuesday, the company informed about fully repaying a previous $500K term loan facility arranged in October 2010. Yesterday, greater news was spread. Mitec notified it won approximately $1M order for flexible wave-guide from a major telecommunication provider.
In the light of these developments, it is no wonder that the company’s shares climbed north on the charts. However, things are not as simple and bright as they may seem. It will probably be a real wonder if the stock manages to continue moving up for a longer time.
The latest financial reports for the quarter ended Oct. 31, 2010, indicate negative trends:
- Current liabilities are 42% up in comparison with the amount at the end of April 2010. Accordingly, the working capital has declined to $4.88M, or by 36%;
- As at Oct. 31, 2010, Mitec had only $908K in cash, a decrease of 52% compared to the figure at the end of April 2010.
In addition to this, Mitec’s policy not to reveal the names of its partners is perhaps somewhat bewildering. This holds true for yesterday’s announcement too. The name of the telecom supplier, that Mitec has an agreement with, is not mentioned. In such case, some might doubt whether this is really “one of the world’s leading telecom companies”, as claimed by Mitec in the release.
Probably, the company will manage to progress further if it provides more detailed and full information about its deals. Otherwise, we have the impression that something remains hidden from the public. For what reason? Not easy to say.
