Pennant Share Discussion Threads

[masurenguy] 16/6/2016 08:32

Bullish outlook but the dividend suspension illustrates their need to preserve working capital in order to fund their expanding order book. I think that they could be very tempted to go for a placing since the shareprice has risen by 75% over the past two weeks but we will first need to get past next weeks referendum before any further developments are likely in this context.

[interceptor2] 16/6/2016 08:32

Just looked at cash and borrowing situation here. PEN had £1,12m cash last December year end and unused bank overdraft facilities of £1.5m, increased from £1,0m year before.

With such good order book visibility I would imagine the bank facility could be increased relatively easily if needed?

Think prospects are very good here, low valuation and the likelihood of more contract announcements.

[lanzarote666] 16/6/2016 08:29

Good news. The suspension of the dividend makes sense as the cash is better used to fund this significant growth.

With the general market looking at uncertainty, PEN seems the opposite with clear sight on the next three years earnings. £45m worth of orders for a £15m market cap.

I think they will have no trouble finding the backers for any placing and the share price has further to run from here in my opinion.

As I said previously I think we will see the 'year high' taken out in the short term.

GLA 8-)

[shanklin] 16/6/2016 08:11

Will PEN need to raise funds to meet their working capital needs and, if so, will they be getting a loan or undertaking a placing?

[hastings] 16/6/2016 08:01

Taking an opposite view Topvest, but each to their own.Looks to me like they're stepping up a gear, so while a divi suspension not ideal, prospects look very positive.WH Ireland upgraded this morning target lifted to 76p citing good visibility into 2018.I would say they probably already have circa 50% + in the bag for 2018.

[topvest] 16/6/2016 07:43

A rather odd announcement this morning. You don't often get a major contract win, an exceed expectations for the current and next year and a dividend suspension in one announcement. I think this has to be a high probability candidate for a go-private transaction, particularly given the unexplained stepping down of the Chairman to NED. Something is obviously going on and I'm not sure I like it.

The £45m order book will absorb working capital initially rather than in total otherwise it is not a true profit...think the wording of the announcement is a bit poor.

It's certainly a good way of keeping a lid on the share price if there is something going on.

[dangersimpson2] 07/6/2016 22:30

Given the chairman's age then I don't think he's likely to want to take this private.

What is interesting is that the CEO and now CFO are incentivised to sell the company for more than £1 if there is an offer essentially aligning their interests with those of the Chairman.





An offer for the company at that sort of level is clearly a long way off given the recent period of weak trading but a bit closer after the recent contract wins.

[interceptor2] 07/6/2016 15:22

Very strong buying transaction today and share price advancing accordingly, wonder if it has been mentioned somewhere.

Even though I only bought in last week, PEN are already my strongest conviction hold, with order book visibility towards the end of 2017, and with a lowly rating any more contract news will just be icing on the cake imv.

[tromso1] 07/6/2016 08:42

Market cap £13.6m with recent won orders in excess of £13m - looks very good.

Dip buyers buying this morning by the looks of it.

[gengulphus] 02/6/2016 10:57

Do you mean that you think the vote indicates that enough shareholders think there is such a threat to have defeated the resolution - specifically, they think that there is a threat that the company would buy back enough shares to take the concert party over 50%, or so close to it that even a low-ball offer would succeed?

Or do you mean that it implies something more direct in the way of a threat, rather than just something indirect about other shareholders' thinking?

I ask because I don't think it would have taken all that much in the way of shareholder opposition to defeat the resolution. With the concert party required to abstain if the resolution is to be considered valid, the resolution's only effect being to enable share buybacks, share buybacks not looking very likely (at the time - yesterday's news might have changed that!) and the resolution being the only one on that particular proxy voting form, I suspect an awful lot of shareholders didn't end up voting... I know I didn't - not a conscious decision, I simply didn't deal with it immediately and it never got anywhere near the top of my 'to do' pile again!

Gengulphus

[hastings] 02/6/2016 10:49

Not so sure about that Staverly, I think if the now ex Chairman and major holder had any intention of taking this private on the cheap, then the opportunity has gone.

[staverly] 02/6/2016 09:56

Excellent contract win yesterday, but recent shareholder vote failing to renew concert party waiver carries implied threat of low-ball takeover offer. DYOR

[topvest] 01/6/2016 19:49

Yes very good news today. I tried to double up first thing but the price was moving too fast. Paul Scott got it right. Well done for those who topped up ahead of today!

[hastings] 01/6/2016 18:45

Thanks for that Lanzarote666, good points.
Added my own thoughts that may also be of interest.

Cheers

H

[lanzarote666] 01/6/2016 17:39

Today is the first time I have picked up a share after a 40%+ increase on contract news and I am kicking myself for not buying previously as this had been on my watch list since the March 2016 results announcement. This contract news was expected.

But even at the current level (50p) I think it may have some further upside and my confidence is high now that the contracts are confirmed.

This business does £8.0m revenue in a bad year and with £13.0m of new contract wins on top of the previously announced business with General Dynamics (£9m) and a 'leading global aerospace and defence contractor' (£2.20m), Flight Simulation and Synthetic Trainers (£2.40m), BAE Systems Australia (5 years part of £16.0m) and Australia Defence (3 years AUS3.30m) the future looks fairly robust.

We know that previously £17.0m revenues generated profits of £2.10m so this looks realistic, and I see this level as a minimum target over the next two years.

With a £13.0m market cap today the price still looks too low, particularly if these new contracts lead to other new business wins.

I can see the year high being taken out this year which would be a 60% increase from here. If there is a pull-back to 42-45p it provides a further entry point.

NAI. GLA

8-)

[cfro] 01/6/2016 13:04

I've picked up a few this morning too. Always been a fan of this company but in recent years it did seem to lose it's way.

Looks like now they are firmly back on track.

[modform] 01/6/2016 12:29

well done guys, a contract win the same value as the mcap. it's been on my watch list since Feb, but no position atm.

[eezymunny] 01/6/2016 11:00

It's a tricky one, PEN. After all its years there is just £4m retained profit and they've paid out a few divis here and there. Another £2m perhaps? So averaged perhaps £600k pa post tax profits. Suggests it's priced about right here to me but with such good visibility now for a year or two Mr Market may well push it higher. I think I'd like to buy it a bit cheaper. I should be so lucky...

[apfindley] 01/6/2016 10:57

GWMO looking good. Ready to rerate ahead of drilling. £1m mkt cap at 0.38p.Price target 4.8p (£13mill)

[boadicea] 01/6/2016 10:53

After recent weakness, 50p would be a nice target level to hold on to for the present until further contract or progress report causes it to resume an uptrend.

The vagaries of large contracts for small companies, bureaucratic delays etc are always a problem for the likes of PEN but if their technology is really good I am content to sit out the rough times, or better still do a bit of topping and bottoming to keep the total investment within a value band, by which, e.g. I mean sell down to £4K if total value exceeds £5k or invest to £4k if total later falls below £3k. (Figures purely hypothetical.)
SRT is an example of another company with excellent technology but lumpy and/or bureaucratically delayed contracts where this technique has worked well.

[interceptor2] 01/6/2016 10:34

Will add my well done to holders here :0)

I looked closely at PEN after the results and placed them on the watchlist with a view to add later.

Today's news was so significant that I decided even after a 40% increase they still look good value, so I have bought in this morning and hope for a repeat performance from when I held in 2012/13.

The more I researched PEN this morning, the more I liked the valuation and visibility over the next two years.

[battlebus2] 01/6/2016 10:20

Yes well done Hastings et al. Looked several times but took no action :((

[hastings] 01/6/2016 08:59

Thank you Mas and nice to have your company.I'm going to add something later, but for now on the upgrade this year's EPS of 7.1p gives us a PER of 7 at 51p falling to 6.5. 2p div gives a handy 4% yield.

[pj 1] 01/6/2016 08:45

Nice to see! Well done Boys :-)

No position :-(