Avanti Communications Share Discussion Threads

[hpcg] 23/2/2016 18:24

It isn't an additional facility. It is permission to go out and arrange an additional facility.

[weatherman] 23/2/2016 12:43

Presumably the additional facility was part of the original agreement. we don't know the interest rate - it may already have been agreed on similar terms to the previous.

By the time the loan needs repaying they will be generating stronger revenue and will be able to refinance at a lower interest rate.

It may be risky, but at the present price I can see a possible x 5 in a few years.

[shaunstar] 22/2/2016 23:56

jaknife spot on.

sincerely it is not nice to witness investors with best intentions being mislead by Avanti.

All too often its hard to try and identify we you might be wrong on an investment, rather than find facts which support our existing view.

More than a couple of red flags with AVN, the numbers tell the future here, it may be volatile but this looks like a probable zero.

[elrico] 22/2/2016 23:41

Very well put JN. I was kicked about when I suggested weeks ago AVN may have trouble signing off the accounts June 2016. Right glad I am that you have the same hunch.

Ref "consented credit capacity." I believe this means $71m loan facility is available to be drawn if needed (and we know it will) but the interest on this has not been agreed. My guess it will be well north of 21% for obvious reasons. I have asked for clarity on this assumption over a week ago, but as yet no answer.

[cocker] 22/2/2016 18:56

Spot on Jacki with the last paragraph.

[weatherman] 22/2/2016 16:52

The Edison does not say they will run out of cash in 18 months, they have an additional facility in place of $71m and the bonds are due in Oct 2019. Thw
e WACC will also fall once they reduce debt and refinance their bonds. Edison suggest a price target of 427p. Come on get your facts right.

[elrico] 22/2/2016 14:44

weatherman - Are you trying to suggest the bond market is at 75% para cross the market. It's a fact AVN bonds are telling you equity is worth NOTHING and there will be a cash call and the lower the share price the more dilution.

[weatherman] 22/2/2016 13:34

The Edison research note shows how the AVN bonds have moved in line with the ccc index.

[aa29] 22/2/2016 08:53

CC

I suggest you rework your analysis to adjust for the $25.1m 'sale' of spectrum rights (or really an asset transfer, non cash item) that inflated turnover.

[chriscallen] 22/2/2016 08:22

I'm puzzled by the underperformance of the share price Setting aside that the analysts who have looked at this company are all buys / outperform (and they will have looked at the numbers and talked to the company) it's the numbers that the market just doesn't want to recognise and prefers speculation to fact.

The 2015 audited figures in millions show sales of $85.2, cost of sales $38.0, operating expenses $35.6 and interest of $40.5. Depreciation is a sunk cost that doesn't involve cash being paid out.

The accounts state that the top 20 customers were growing at 53.7%. If AVN is typical the top 20 will account for 80% of sales so being conservative say $60.0. These statements will have been audited so evidence must have been produced to convince the auditors that they were true. At 50% growth I would expect sales for the top 20 to be $90.0 in 2016 and $135.0 in 2017. Even if cost of sales remained at its historically high percentage (and I would expect it to drop) that would give costs of 2016 $26.7 and 2017 $60.0. Operating expenses should remain fairly static say 2016 $40 and 2017 $45 and interest will increase but only marginally as the bonds are already in place, say $45 and $ $50. If I assume that the remaining 80% of the customer base remains static in terms of income (highly unlikely with the African market growing at such a pace) then I have(in millions):
2016 Sales 90+25 = $115 COS $26.7 OpEx $40 and Interest $45 Net before depn 3.3
2017 Sales 135+25= $160 COS $60 OpEx $45 and Interest $50 Net before depn 5

Not wonderful but my padding is a reduction in COS should be achieved and the growth may well be higher (what about Hylas 2b) so I think my figures will prove quite conservative. From 2017 Hylas 4 and then Hylas 3 kick in to expand sales capacity.

What I can be pretty sure of is that AVN does not have a cashflow crisis even in 2017. But we will see how the wind is blowing in the next two quarters.

[elrico] 22/2/2016 01:07

Weatherman - "Sentiment seems to be turning towards the bulls now anyway." Really! What do you base this on? Oh, your bond analysis is just wrong, you will see....eventually but it will be a tad late I suspect.

Jadetic - I don't understand how you conclude "shorters seem to get so agitated when others say anything else." All I have read is reasoned arguments for the bear case and nothing coherent for the bull case. The longs seem agitated at the bear case put before them.

[weatherman] 21/2/2016 18:01

The bond's have been moving in line with other bonds of this type - based upon global turbulance.

I am actually under-exposed to Avanti, and the low price means I can buy some more once the price is stabilised, but I don't like attempts to undermine a potentially successful company. I am perhaps more patient with management than many. Sentiment seems to be turning towards the bulls now anyway.

To raise cash, if absolutely necessary in 2018, Avanti could go into a joint venture with Hylas 4 as the Edison note suggests only 74% utilisation at peak in their forecast. But I don't expect that as we'll se incremental increases in revenue - even if it has been slowler than hoped.

[hpcg] 21/2/2016 10:00

JakNife - yes, I think that is a reasonable account of how this plays out. I imprecisely use phrases like bust, bankrupt and zero as short hand for any near complete loss of equity value.

[elrico] 20/2/2016 22:29

Weatherman - The bond price is screaming equity is worth pretty much zip, I have pointed you to examples of this several times and guess you have chosen to ignore this fact. Also, the creative accounting has been pointed out by me a number of times, again, you have chosen to ignore this fact. If I am right then it could be argued the company is effect bust. I believe the latest accounts have been reported to FCA for further analysis due the red flags I have previously mentions. So, to suggest people like me have deliberately attempted manipulate sentiment....whatever that means, is disingenuous of you at the very least.

[jeffian] 20/2/2016 19:04

I'm not sure it needs "careful analysis". We know what the costs are and we know that current income doesn't cover them. The only analysis you have to do is on how quickly sales grow and cash flows into the bank, and I'm not sure how you do that. AVN's forecasts proved wide of the mark. Why should yours or mine be any better?

[weatherman] 20/2/2016 18:40

To state categorically that "This is going bust," I would suggests is an untruth, a deliberate attempt to manipulate sentiment.

Where is the careful analysis?

[hpcg] 20/2/2016 15:54

Gekks - agreed, risk of a launched satellite failing is low. A failure in launch would be cash acretive.

Weatherman - nope, all the company has to do is make enough operational cash to pay interest and tax, a pro-rata proportion of the debt over the life of the satellites, and leave a surplus for the equity holder, and then the share price will go up.

[elrico] 20/2/2016 12:07

Point us to the lies then, weatherman! And perhaps these can be addressed. As for false sentiment....give your head a wobble, the sentiment is down like the share price or do you not get this!

[weatherman] 20/2/2016 08:14

The lying, faithless, shorters / derampers sow seeds of doubt through the deliberate spreading of false sentiment. Its like a snowball effect - they think if they can get enough negative sentiment going - whether true or not, then people stop placing orders and the revenues stop flowing etc etc. Its called slander or telling porky pies. This is the ugly side of capitalism and is a cancer upon the UK economy. You see how negative slander from market traders gets into the press - hxxp://advanced-television.com/2016/02/19/avanti-suffers-lack-of-confidence/

A company's management has to maintain and build the brand name, and responding to all the negative stuff can be a drain upon building the business. Avanti has shown itself capable of delivering high quality service, and having growing revenue. So they should not respond to the negativity of shorters.