Avanti Communications Share Discussion Threads

[michaelmouse] 18/11/2015 18:41

dangersimpson2 - "At the least the current numbers from Avanti are suggesting their equity is overvalued on what we know and can estimate at the moment."

We know no such thing. Good try though.

The key problem is that any model at this stage of Avanti's development relies on two many ifs, buts and maybes. That's why all previous attempts at valuing the company have failed.

Your timeframe for success is far shorter and more pressing than mine, naturally you have to talk your own book. I see the company as a speculative investment with potential. The client list is impressive and growing. Longer term I am hopeful that Avanti will ultimately achieve it's goals.

One thing we can agree on is this:-

"You don't have to be right on every position in the short term just better than average in the long term to generate very handsome returns."

Quite right.

[nugacity] 18/11/2015 16:40

Avanti's successful future is straightforward - it needs to make sales, the more the merrier. This is complicated because their sales are based on middle-men who need to build a base for the end customer, in a new business quite costly and not without risk.

Middle men are appearing and once a few of them establish an end-user market producing a decent turnover I am hopeful many more will want a slice. At that point Avanti might wish they had planned a few more satellites?

I think their approach has been sensible , very sensible given the time it is taking for the business to take off.

Years ago I planned to go from main-frame IT into web based systems with no experience of the web. Borland produced a new development platform called Delphi and I jumped in at considerable cost because it provided a chance to compete with other programmers on a level playing field. It never took off and Borland kept producing new versions that I could not afford. The Delphi market did eventually materialise and I was not well placed to compete by then.

Avanti are where I was , but they are seeing it through and I look forward to the day it does take off. If it happens I would not want to be shorting them. It may not happen of course and if you believe Africa and the Middle/far East will not want the web or phone systems you are wise to short.

As long as Paul Walsh stays on board I will remain optimistic that my dream is keeping me sound asleep.

[dangersimpson2] 18/11/2015 16:04

michaelmouse,

I enjoy the critical thinking process so although the write up takes a bit of time the main thrust of it came about by noticing the difference between the revenue and utilisation and thinking through what that might mean.

I agree that DCF can be over-used. My intention wasn't to say that this is the precise value of the company but what are the implications for valuation if the ratio of revenue to utilistation (i.e. pricing) stays at current levels. Also to look at what assumptions you need to make and where those can positively or negatively impact the valuation.

When initiating a position - particularly one like a short - you really need to understand where you might be wrong. The DCF really helps highlight this. In this case it shows that increasing utilisation or revenue isn't really to be feared. You can have both increasing rapidly and the equity can still be worthless. The big risks to a short position are increasing gross margin and pricing.

Of course every investment has a psychology aspect and rapid increasing utilisation may be met with a share price spike even though the long term implications of that may be negative for the company. But that is what portfolio management and position sizing are for. You don't have to be right on every position in the short term just better than avergae in the long term to generate very handsome returns. At the least the current numbers from Avanti are suggesting their equity is overvalued on what we know and can estimate at the moment.

Cheers,

Danger

[michaelmouse] 18/11/2015 15:23

dangersimpson2 - Hats off to you for writing such a detailed report, it must have taken you considerable time and effort. However, over the years I've read countless bullish and bearish projections and in-depth analysis of companies like Avanti (and indeed including Avanti) and quite frankly they're not worth the paper they are written on.

The next two/three years will determine Avanti's fate, but I'd put money on your predictions or anybody else's come to that (bullish or bearish) being anywhere close to the reality.

Avanti is a speculation, but I've seen figures and DCF models galore since they floated. All of them without exception have been well wide of the mark.

I see that you have a vested interest since you have taken out a short position. dangersimpson2 is certainly an appropriate alias.

The problem is that no matter how in-depth you think your analysis is, you always run the risk of waking up to a RNS that comes from left-field.

[aa29] 18/11/2015 14:58

Or people have focussed on how poor sales 'growth' is in the quarterly comparisons.

Nugacity, good luck to you - personally, I've usually found that when I thought I knew better than the market, I didn't!

(written before dangersimpson's post - the link makes the same point in far more and better detail)

[dangersimpson2] 18/11/2015 14:55

I've become increasingly bearish on Avanti - reasons & analysis here:

[sg31] 18/11/2015 13:46

There are a number of shorters pushing the price down. That is probably why it is weak at present.

[nugacity] 18/11/2015 13:11

Thanks to those who allowed me a top up at £2.13 which I never expected to see again.

[aishah] 18/11/2015 09:06

The value of the British space industry could rocket to £40bn in the next 15 years, creating 100,000 new jobs in the process, but the government risks holding the sector back with restrictive regulations and insufficient investment, a report out today has warned.

The UK's booming space sector is currently growing by around nine per cent year-on-year and commands a seven per cent share of the global space market, with firms like Inmarsat and Avanti leading the way.

hxxp://www.cityam.com/228976/engineers-are-urging-the-uk-government-to-speed-up-in-a-space-race-worth-up-to-40bn

[nugacity] 12/11/2015 11:06

hpcg Can you lend me $15M to buy a few houses please?

[jeffian] 12/11/2015 10:42

The hope must be around "management expects cash generation to grow swiftly as revenues exceed Avanti's largely fixed cost base". So do we! Go on, then, deliver it!

[jadeticl3] 12/11/2015 10:24

MMouse, these were exactly my thoughts. To me the report reads like a man telling me in a manner that appears happy that he won £1000 and on the way to bank it he was robbed, not only of his winnings but also of his other cash. So I am left thinking, "why is he telling this like it is good news?"
So what is the overall impression of these results? Is it good news, or bad news dressed up as good news?

[michaelmouse] 12/11/2015 10:06

Shares are in an uptrend though Jeffian. Intraday reversal suggests shorts closing or very interested buyers.

[jeffian] 12/11/2015 10:02

I find this company so frustrating. Flat revenues and only 20-25% utilisation rate are clearly disappointing. They love to obfuscate with talk of "backlog" and "pipeline" and all sorts of other mumbo-jumbo but the only figures we are really interested in is revenue growth. I'm also not that excited about talk of "fleet expansion" whilst we have 75% vacant capacity on the existing sats that have been floating around for a year or two already.

[hpcg] 12/11/2015 09:19

divinausa1 - how is 13 million dollars revenue a good quarter? And still loss making. I used to be long here, but now short - it is so far behind revenue projections as to defy belief. I'll be honest, I have no idea who keeps buying.

[michaelmouse] 12/11/2015 09:04

A few thoughts.

[divinausa1] 12/11/2015 08:39

share price up down thru the year but back to dec 2013 levels, good trading share but wrotten investment

[divinausa1] 12/11/2015 08:38

looked like good results to me...market reaction says different

[weatherman] 12/11/2015 08:34

Overdone fall this morning. They say they have advanced talks on some big contracts. Flat turnover due to timing of government contracts.

[garymott] 07/11/2015 14:08

Cameron to vow that everyone in UK will have fast internet speeds



"The last 5 per cent of the country not covered under plans to extend broadband is likely to be difficult to reach by traditional fixed line broadband services, which means that there may have to be a mixture of mobile broadband and satellite services provided. The government will consult on plans in early 2016."

[scantrader] 06/11/2015 10:56

Sidam - thanks, but single digit what exactly? Upfront payment? Revenue pa?

[nugacity] 04/11/2015 11:12

Lucrative countries in Africa by GDP - Nigeria, South Africa and Egypt is 50%

Country................. $GDP Rolling % of Africa
........................ billions total Rolling Country
 Nigeria................ 569 569 23% 23%
 South Africa........... 353 921 38% 14%
 Egypt.................. 292 1213 50% 12%
 Algeria................ 214 1427 58% 9%
 Angola................. 131 1558 64% 5%
 Morocco................ 107 1665 68% 4%
 Kenya.................. 66 1731 71% 3%
 Sudan.................. 64 1795 73% 3%
 Ethiopia............... 55 1850 76% 2%
 Tanzania............... 49 1899 78% 2%
 Tunisia................ 47 1946 79% 2%
 Libya.................. 41 1987 81% 2%
 Ghana.................. 39 2026 83% 2%
 Ivory Coast............ 34 2060 84% 1%
 DR Congo............... 33 2093 85% 1%
 Cameroon............... 33 2125 87% 1%
 Zambia................. 27 2153 88% 1%
 Uganda................. 26 2179 89% 1%
 Gabon.................. 17 2196 90% 1%
 Mozambique............. 16 2212 90% 1%
 Botswana............... 16 2228 91% 1%
 Senegal................ 16 2244 92% 1%
 Equatorial Guinea...... 14 2258 92% 1%
 Congo.................. 14 2272 93% 1%
 Chad................... 14 2286 93% 1%
 Zimbabwe............... 14 2300 94% 1%
 Namibia................ 13 2313 94% 1%
 South Sudan............ 13 2326 95% 1%
 Mauritius.............. 13 2339 96% 1%
 Burkina Faso........... 13 2352 96% 1%
 Mali................... 12 2364 97% 0%
 Madagascar............. 11 2374 97% 0%
 Benin.................. 9 2383 97% 0%
 Niger.................. 8 2391 98% 0%
 Rwanda................. 8 2399 98% 0%
 Guinea................. 7 2406 98% 0%
 Mauritania............. 5 2411 98% 0%
 Sierra Leone........... 5 2416 99% 0%
 Togo................... 5 2420 99% 0%
 Malawi................. 4 2424 99% 0%
 Eritrea................ 4 2428 99% 0%
 Swaziland.............. 3 2432 99% 0%
 Burundi................ 3 2435 99% 0%
 Lesotho................ 2 2437 100% 0%
 Liberia................ 2 2439 100% 0%
 Cape Verde............. 2 2441 100% 0%
 Central African Republi 2 2443 100% 0%
 Djibouti............... 2 2444 100% 0%
 Seychelles............. 1 2445 100% 0%
 Guinea-Bissau.......... 1 2447 100% 0%
 The Gambia............. 1 2447 100% 0%
 Somalia................ -- 2447 100% #VALUE!
 Sahrawi Arab Democratic -- 2447 100% #VALUE!
 Comoros................ 1 2448 100% 0%
 São Tomé and Príncipe.. 0 2448 100% 0%
TOTAL................... 2448

[sidam] 03/11/2015 16:53

Cenkos suggest that the contract is mid single digit $m and has the potential to grow significantly. They suggest that it will have a material effect on utilisation rates. So possibly quite good news.