Aveva Share Discussion Threads

[grigor] 26/5/2009 19:56

FINANCIAL TIMES

Aveva eases fears on grim outlook
By Philip Stafford

Published: May 26 2009 18:00 | Last updated: May 26 2009 18:00

Aveva, the engineering software group, hinted on Tuesday that underlying trading for the coming financial year could be marginally stronger than the market's current grim forecasts.

A trading update in April saw the Cambridge-based group, which has a reputation for cautious forecasting, reduce guidance in sales of initial licence fees by 30 to 40 per cent for 2009-10.

On Tuesday Richard Longdon, chief executive, said of Aveva's key commodities, shipbuilding and nuclear power markets: "We didn't think it was that bad but we let the market talk it down a bit, on the assumption that it was quite grim. We hope it's not going to be as bad as we think."

The comments helped push Aveva shares up 60½p to a six-month peak of 639½p.

Buoyant markets had pushed earnings sharply higher in recent years but the collapse in the oil price and rapid downturns in credit and global shipping constrained new construction projects.

Shares in the group have fallen two-thirds since August.

Revenue for the year to March 31 rose 29 per cent to £164m while pre-tax profits climbed 32 per cent to £59.2m.

Earnings per share advanced from 50.38p to 61.98p.

The proposed final dividend is raised 30 per cent to 6.5p, bringing the total distribution for the year to 9.36p, a 41 per cent increase.

The group has started a restructuring programme in which it will cut about 80 jobs and save £5m annually. Net cash rose 52 per cent to £126.2m.

● FT Comment
It is unfortunate the uncertain outlook obscures what had been another record year for Aveva but most of the bad news is surely factored into the share price. With the oil price steady, credit easing and nuclear power on the political agenda, it is likely that 2009-10 will see Aveva at the bottom of its business cycle. Even its suffering shipping business, which is dependent on global trade, accounts for only 34 per cent of revenue. One issue to watch will be revenues from customers who rent software on a year-by-year basis. The fear is that they simply may not renew. Here Aveva is in uncertain territory, not having had a comparable business in the last recession. So far it appears to be on track. Piper Jaffray estimates Aveva will make a pre-tax profit of £34.7m from revenue of £140m, putting it on a prospective price/earnings ratio of 14 times, which seems fairly priced given its cash pile and assuming no further deterioration in the global economy.

[masurenguy] 14/5/2009 10:43

Surprised that this has not benefiited much from the recent market rally. Sales and profits should still be slightly ahead of last year when the share price was circa £13 and @£5.75 they are now 65% lower. Although valuations have fallen accross the board, this now looks rather undervalued. Be interesting to see the year end results in a couple of weeks time.

[grigor] 01/5/2009 21:16

Cheap cyclical share with cash on the balance sheet

Should do well in this market

I'm in

[rajauk] 23/4/2009 15:54

This looks a good point to enter as I've had my eyes on these for a couple of years. Seems cheap and doubt it'll go much lower. So maybe a good entery point even though thisr could be iffy but the world economy these should benefit quite heavily.

Raja

[gunther1] 23/4/2009 12:08

Seems it's bouncing off the 100d MA

[thearcticfox] 20/4/2009 13:06

Well, I'm in... personally glad on the dip today, hope thats as much as is coming... gonna be a longhaul investment. See you in a couple of years... GLA.

[ukinvestor220] 16/4/2009 09:38

down we go on gloomy update

[waterloo01] 08/4/2009 08:55

Downgrade from buy to neutral from UBS but upped price target to 6.20 ahead of prelims next week. Nothing fundamental

[thearcticfox] 08/4/2009 08:49

21600 were traded between mm's this morning first thing. Listed as a sale... even with that included there have been a lot more buys than sells...?

[colinio] 08/4/2009 08:40

Why the big fall today?

[cockneyrebel] 26/2/2009 12:04

pretty poor performance seeing the cash they have - look very cheap still to me tho.

CR

[finbarr] 26/2/2009 12:01

look at the pe.The market clearly does not believe it to be sustainable

[lucky_lady] 26/2/2009 09:23

Any ideas why AVV is dragging its heels?

[colinio] 18/2/2009 13:41

Got out at break even.. going to leave this one alone too unstable for me... i think it will do well in the future but too much of a gamble!

[thearcticfox] 18/2/2009 10:47

Got the hell outta that...!?! What the hell's going on with this share? Got out and straight into BP, need some stability... Gonna watch this one from now on, think it might be heading to test the previous lows...

[johnrxx99] 18/2/2009 09:29

Got stopped out a few days ago - watching

[lucky_lady] 18/2/2009 09:26

I didn't mean down!!!!!

[colinio] 18/2/2009 08:47

lets hope so, I'v noticed the price can jump a lot in seconds am a little worried my stop loss may get hit at 490

[lucky_lady] 18/2/2009 08:39

I have just bought in so hopefully there is only one way for them to go.

[bigboots] 17/2/2009 09:09

Downgrade today from buy to hold - 4% fall not sure this is justified, topping up on every dip, cheap company or such a low p/e

[jeremye] 17/2/2009 08:51

Its also the uncertainty of the ship building market and the impact this credit crunch is having. We need clarification as to how much this will affect them.
Like everything at the moment, its a lack of confidence thats driving the price down rather than hard facts.

[debrae] 17/2/2009 08:45

I suspect shares are being hit by the fall in the chinese market Hang Seng down almost 4% now looking very cheap in my book.