Portfolio Update: MS International’s Transition Year — and a Takeover Bid for Gooch & Housego(GHH)

MS International (AIM: MSI), one of my top holdings, published its results this morning for the year to 30 April 2026. The headline numbers were soft, as pre-flagged: revenue held steady at £115.0m, but pre-tax profit fell 25% to £15.1m and EPS dropped to 67.4p — a cost story, not a demand one; gross margin improved. The balance sheet is the highlight: cash nearly doubled to £46.5m — around 283p per share — with no debt, and the dividend rises 13% to 26p.

Beneath the surface, the group is transforming. Defence & Security revenue fell 13% to £71.6m as the Middle East Terrahawk programme wound down, while the merged Petrol Station Superstructures & Branding division grew 41% to £30.0m with profits quadrupling — just as it’s being sold. Management hopes to announce a disposal before the end of summer, with unsolicited interest in Forgings too. Complete both and MSI becomes a pure-play defence company with a substantial war chest.

The strategic story strengthened: a first export contract for the new Multi Weapon Station, and official recognition of Terrahawk’s combat record against drones in the Middle East — a rare, battle-proven credential in the hottest niche in defence. The counterweight: order intake slowed, contract liabilities fell from £52.9m to £34.4m, and costs have been built ahead of demand. This is now a “show me the orders” stock.

It’s also the end of an era: Michael Bell steps down after 50-plus years, becoming Life President and remaining the largest shareholder, with Michael O’Connell promoted to CEO. On balance, I stay cautiously positive — the setbacks look cyclical, the improvements structural. If and when the British goverment gets its act together I expect substantial orders to follow.

Elsewhere in the portfolio, Gooch & Housego (AIM: GHH) has agreed a recommended cash takeover by US private equity firm Arlington Capital Partners at 1,230p per share, plus retention of the 4.9p interim dividend — a 41% premium to the undisturbed price. Completion is expected in Q4 2026, subject to shareholder approval and UK national-security and US antitrust clearances. So well done for those of you who bought into it.

Personal portfolio commentary, not investment advice. I hold positions in MSI and GHH.