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Avanti Communications Share Chat (AVN)

Share Name Share Symbol Market Type Share ISIN Share Description
Avanti Comm. LSE:AVN London Ordinary Share GB00B1VCNQ84 ORD 1P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  -7.75p -6.19% 117.50p 116.25p 117.50p 124.50p 116.75p 124.50p 112,215 11:51:00
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Mobile Telecommunications 54.2 -46.7 -39.2 - 173.19

Avanti Communications Share Discussion Threads

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Chris I do know how they work & I agree with some of your valid points. However, at the end of the day a debt of such magnitude needs paying back & could well prove AVN's downfall. The take up of Hylas 1 /2 have fallen well short of management's expectations. The market has made such an assumption & that is why the share price is at where it is.cocker
htTp://www.theregister.co.uk/2016/01/25/folk_shun_subsidised_satellite_broadband/ Poor advertising and expensiveness have been blamed for the woeful uptake of the government's subsided satellite broadband scheme, with just 24 people having so far signed up.waterloo01
To be honest I am not sure that I have ever seen such a share with such a bull/bear case. Obviously the debt is a huge worry to any investor & the management's ability to miss forecast on a regular basis is of concern. However, the fact that the satellite's are in orbit & working without any concern is a big bull case. I sold out on Friday purely on the basis that the market is hammering stocks that have such debt & I will review my options on a daily basis.cocker
I am not sure why anyone would feel bears will be nervous, do you have the share graph the wrong way up? Re; net asset value, I don’t believe anyone suggested the satellites had no value, however, the case for the satellite equating to or near current mc is just fanciful and quite frankly, foolish, but would go some way to explaining why he invested. As for the Edison note; it’s tosh, has no credibility, it’s full of assumptions and hasn’t even noticed the creative accounting where $25m was booked as receivables when in fact this simply was not the case. It’s obvious some here have invested in the sector thinking it an exciting one for the future and simply ignored the accounts, this as you can see is proving a mistake. The latest reports were uber-bullish, but the share price is telling you nobody believes the management anymore. AVANTI is an illiquid share that swings so use any swing up as an exit.elrico
"The company remains “very confident” that it will sell out the capacity on Hylas-1 within the targeted 3 years of service launch" (Research note 5th October 2011) "Average Fleet Utilisation was at the upper end of the 20% to 25% range during the period" (Q1 2016 trading update). They're just not selling or hitting their revenue forecasts. I'm out.jeffian
So Avanti may need more cash...even Inmarsat is investing $1bn in satellites - I guess much of this will be borrowed.weatherman
Page 11 of the Edison note has the cash balance at 30 June 2017 as $22.5m. My own calcs have cash lower but regardless, Edison note that the company will burn cash in 2018 and so are forecasting that they will run out of cash and need a future fund raise. On the other half, the interims included the comment: "...Avanti has surplus cash headroom at the low point in our own business plan in mid-2018 of over $90 million, giving us very strong headroom and full confidence in our full funding to maturity." see: http://www.investegate.co.uk/avanti-comms-group--avn-/rns/2016-first-half-results/201602040700070172O/ I don't believe Avanti's management, I think that they're spinning faster than the whirling dervishes. It is amusing to note that they've paid Edison and even then they can't hide the fact that Avanti are going to run out of cash. JakNifejaknife
Those who have gone short sounding nervous. Understandably so following the excellent note by Edison Research with value of £4.27 on the stock. By the way net asset value is easy to understand. Firstly you'd have to be an idiot to assign no value to the satellites already in orbit. Those assets will depreciate over several years, but this will be reflected in subsequent reports. Other satellite's will of course be launched. What has been assigned no value in the balance sheet is the orbital slots which are worth around $180m and not far shy of Avanti's current market cap. These are significant assets indeed, and will be coveted by others. Two things should worry those with a short position. 1) A possible offer for the company 2) Avanti hitting or getting close to their revenue target for the year. I've frequently seen illiquid company's share prices multi-bag in days or in some instances a day when the story suddenly changes. This is more than possible here. Shorts exacerbate the price rises as they try and rush through a narrow gap in the door before it closes tightly shut. Must be scary when you're betting with money you don't actually have? Anyway, more importantly here's that link to the excellent Edison Research note again:- Edison research initiated coverage today. Valuation of £4.27:- hTTp://www.edisoninvestmentresearch.com/serve_pdf.php?d=researchreports&f=GB00B1VCNQ84AvantiInitiation040216.pdf&;first_name=Bryce&lastname=Elder&;company=The Financial Times Limited&email=bryce.elder@ft.commichaelmouse
Yes Africa has 1.1bn people compared to just 60m in the uk. So if we scale up the 24 people who have taken up satellite broadband in the uk to the whole of africa... hxxp://www.theregister.co.uk/2016/01/25/folk_shun_subsidised_satellite_broadband/ ...AVN will have an additional 444 users. It'll take a few years to get those of course but this is going to be huge ;-)dangersimpson2
Cannot help thinking we are in a chicken and egg situation. Until Africa is using broadband how are people going to learn about Avanti's offering?nugacity
JK - That’s exactly what I have been saying for a while now. The emotional and blinkered will make excuses for the bond yields because, 1; they don't understand them, 2; they are emotionally involved, 3; forget it’s an investment and not a family member in trouble. One chap posted yesterday the sats in orbit almost equated to the MC as of yesterday, which is clearly wrong. Now I am prepared to accept this was not a deliberate attempt to fool anyone, it is more likely that he did not understand the asset value in orbit has a limited life, therefore a wrong conclusion.elrico
There we again with the emotional language, it only blinkers the vision! Point of correction, Todays bear case was not a TW piece, but it is the 3rd author this week to publish a bear case on share price this week. One of them must be right.elrico
All junk bonds have seen their spread widen. Edison showed a chart of avanti bond price, which was in line with high yield junk bonds. Time will tell. If avanti keep up to their 50% per annum revenue growth, which they seem confident about.akajimmy9
Bonds trading at 72.5% of par reminds me of Afren.jaknife
And when its 300p at Christmas you will see just how stupid TW isestienne
1p by christmas - "bloggers" seem to be lining up to with bear note, but this one at least give a value. http://www.shareprophets.com/views/18530/avanti-communications-target-price-1p-by-christmaselrico
Just a couple of issues with the Edison note as I see it: 1. They model CoS as flat despite rapidly increasing revenue. Avanti haven't managed this in the past as CoS have always fluctuated roughly in step with revenue. 2. They apply their DCF to EBIT (p.8) so they have ignored debt interest. At 2021 they get a cumulative DFC of $308m which if they had included $64m pa interest payment would see cumulative DCF near zero and all the value in the terminal valuation. (Even without this error the major value is in the terminal calculation.) 3. A terminal valuation is a really bad way to model assets with a limited life span. Also I can't see any of the assumptions made...maybe it features the capex fairy launching extra satellites for them for free! 4. Their cashflow model Exhibit 14 on p.10 is completely different to the numbers used in the DFC Exhibit 7 on p.8! 5. As others have already pointed out that assuming a 12.2% Discount Rate with debt at 21% YTM (I haven't directly checked this so am relying on others for this info - I do know from the accounts it cost them 10.9% to issue more notes 6m ago) would appear quite optimistic.dangersimpson2
Gary - I was not patronising you, merely pointing out a fact, which does make a material difference...SPECIALLY as I suggested AVANTI had more cash than reality, an error on my part. At the risk of repeating myself and being accused of deramping or working in cahoots with a group of shorters, YES I do think a round of refinancing will be needed because I don't believe AVANTI will meet its targets, it does afterall have a history which makes such an assumption a reseanable one. AVANTI quote cash figure of $90m including $71m facility, but the latter is not agreed, the bond holders have to pony up here and given they are already taking a haircut, at what cost? So, assume this is not drawn on the company has little wriggle room before June 30. Eample of accounting which gives me confidence I am closer to reality than you; last years Q4 results AVANTI booked sales $25m and EBITDA OF $25m, and how much did this actually equate? Zip, 0! Creative accounting!! Further, its committed to $14m outflow over time, which equates to negative cash outflow, not $25m profit. The CEO spun a picture of growth near 28% when in fact a mere $100k was the differenceand that was in reality, negative. Looking back at the recent contract wins and the statement which appears to suugest AVNTI will be booking c$29m in each Q would suggest a strong H2, but this is more like smoke and mirrors, because this is in all probability going to be a repeat of the accounting practise I mention in my 2nd para. What are the bonds telling you? I seen the same with AFREN in 2015.elrico
Re cash, what I like to do in situations like this is run a model to estimate the balance sheet position and P&L for the next few years. Personally I cannot reconcile the claim in the interims that: The Group held period end cash of $162.6m and furthermore has consent to draw down up to a further $71.0m in credit from multiple facilities. We do not expect to need to use this, but it does mean that Avanti has surplus cash headroom at the low point in our own business plan in mid-2018 of over $90 million, The $90m is fanciful in the extreme. I estimate that in the most optimistic scenario the cash will be zero by 31 Dec 2017. In a reasonable scenario the cash will run out in the middle of next year. The company will have to raise additional finance and my understanding of the phrase: period end cash of $162.6m and further undrawn consented credit capacity of $71.0m is that the additional facilities are lease facilities, which by definition could only be used to finance capex, not, for example, the cash needed to pay interest or continue to finance the ongoing losses. The company will need a very significant chunk of cash about this time next year at the latest. In the absence of a very significant change in business revenues then the bond market will be closed to Avanti and there will have to be a debt for equity conversion on some of the existing debt wiping out shareholders. Avanti is an obvious short in my mind.jaknife
Elrico,You were wrong on the cash position (fact), so please don't patronize me about arguing over the $/ exchange rate. Putting that to one side, do you still believe that new finance will be needed to be raised this summer as you stated recently?garymott
mickmouse - You say; It's worth noting that the report correctly points out that the value of Avanti's orbital slots are not reflected in the balance sheet. They are worth around $180m not that far shy of Avanti's current market cap. Well thats fine in a fire sale, but needed to generate revenues in the wild hope it meets its target, which is a reasonable assumption they will miss them AGAIN!elrico
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