Pennant Share Discussion Threads

[skyracer] 22/2/2017 09:10

"stepped down with immediate effect"

Anybody know anything more? Snook did sell 2/3 of his shareholding last year so perhaps indicates his outgoing mindset. There are only 2 executive directors on the board so not much scope for a fallout. I think personal or health reasons, we can understand that, but a little explanation would have been helpful.

[larva] 08/2/2017 15:15

last chances under 100p

[simso] 25/1/2017 20:01

Thanks Hastings, an excellent write up, really appreciated.

[hastings] 25/1/2017 19:19

Simso, write up below from my Cambridge News slot may be of interest.
I spoke with both the CEO and FD on Interim results day and in penning the piece quoted the broker numbers, which remain intact. The only difference is on the target price, which has been lifted to £1.10p.

As a holder, I am hoping for some additional contracts to be announced in the coming months which would no doubt make a material difference to 2017/2018.

I'm catching up with management again at the prelims.


Pennant International's interim results earlier this week may not have set the world alight in terms of numbers, share price appreciation, or for that matter coverage, but they have at least since seen another stirring of interest.

Whilst the shares had already enjoyed a great run, there was subsequently a bout of selling from the high sixties in the run up to the results, before some steady buying in the latter part of the week took the shares back up to a 68p Friday close.

Whilst for some watchers of Pennant there has been a view of too much to do for the delivery of the £2.2m full year pre-tax profit with a hefty second half weighting, it would seem that any such fears on that front may be well and truly overdone.
Speaking once more with CEO Chris Snook and FD Phil Walker on the day of the results I raised the very question in relation to the full year performance and an expected delivery of being at risk.

To this end, there was an emphatic and positive view that the company would very much deliver and that the board certainly doesn't envisage any hiccups in the run up to the finals.

Further to that, CEO Snook says they are already punching on for 2020 as the pipeline and prospects for the company continue building on the more recent and positive momentum.

Alongside this, Snook says that the first of its three additional and recently acquired facilities commences production next week, the second soon after, with the third coming on stream slightly further down the line all of which should meet both current and expected demand.

They board has also been busy lining up client visits, where it transpires that one major overseas visitor dropped in last week, which follows on from presentations to both existing and potential investors which the CEO said totalled a high teen number as opposed to just a few that featured not so long back.

Such appears to be the ambition to move the business further forwards and secure long term growth with diminishing lumpiness that both were happy to talk about the current solid order book, the strong pipeline of real opportunities and a serious intention to acquire another business to complement its organic growth.

That doesn't mean to imply there is another placing on the cards any time soon, as Pennant is now in a healthy enough position as demonstrated by the interim results numbers.

There was cash on the balance sheet of £2.6m which includes advances on
contracts, although importantly pre-dates the £3.6m fund-raise of August this year and the £1m purchase of property.
The YoY contrast is with £0.6m net debt figure at end of H1-15 against the £1m-plus cash generated in H1-16.

As the revenue builds so should profit, dropping straight to the bottom line says Snook, which appears to be increasing on the back of much improved prospects.

Phil Walker also confirmed that as a result of the progress being made, they are absolutely committed to resuming dividend payments as soon as is right and prudent.

“It is something we are very mindful of and certainly recognise the importance of dividends to our shareholders”.

Timing on this front will of course come down to the right boxes being ticked, but it does not seem beyond the realms of possibility that this could happen on the delivering of the preliminary results early next year.

On the very healthy, sizeable and what is a record order book, Snook says the current and significant middle eastern contracts are actually running in parallel, with both contributing to an overall expected full year sales figure of £17.3m which next year will edge up to the already visible £18m.

Importantly, these numbers are already in the bag as other contracts with Lockheed Martin and General Dynamics unwind with 100% visibility for the remainder of this year and all of next year, so any one of a large number of existing pipeline prospects being delivered in the coming months would almost certainly make a material difference to next years numbers and provide further support into 2018 and beyond.

To give a flavour of the potential upside on the Training Systems arm which currently accounts for 75% of revenue, there are at present several live near term prospects in play, where if just one or two are successful, it would not only provide another timely boost to the story but present additional longer term credibility.

Pennant would now seem to be be well placed in a market that has received a significant boost in terms of investment, which plays well into its hands as one that provides the key specialist skills that are increasingly needed within new areas, not merely defence, but rail and aerospace which also takes in new markets and territories.

The company has recently successfully concluded a contract in India which is worth noting, but whilst that growth country does provide for further opportunity's, the board doesn't see this as being a major revenue earner, as it cites other existing regions offering more extensive and lucrative growth potential.

Having earlier this year appointed a new Chairman the company has now announced that it has brought on board a non exec Director with seemingly strong credentials.
Tim Rice has some thirty years of extensive experience across both the defence and aerospace sectors through roles at Safran, Spirent and Dowty and his presence should further assist the company going forward in terms of raising its profile and prospects.

For now, WH Ireland is forecasting pre-tax profits this year of £2.2m and EPS of 7.4P giving a PER of 9, which remains at a considerable discount to the sector average of 21.
Looking to next year, although the pre-tax profit increases to £2.4m, EPS actually reduces to 7.1p, implying a forward PER of 9.5, before heading back to to EPS OF 7.4P in 2018 as profit is expected to hit £2.6m.

The reason for this is down to the factoring in of new shares issued via the placing earlier this year.

However, there would seem to be a distinct possibility that Pennant will indeed secure at least one, two or possibly more of those current targeted deals, which depending on the size and time scale would no doubt provide for an upgrade from the broker.

It is also worth noting that the board reiterates that it sees no potential downside from brexit and if anything, given its extensive export profile Pennant should be well placed to extend its already broadening reach and profit from a weaker pound.

WH Ireland states that it is comfortable in raising its target price to 80p which should really be achievable in the near term and possibly exceeded if news of further wins are announced over the next six months or so along with a signalling of reinstating the dividend.

Pennant has been a good story over recent years aside the delayed contract issues of just over a year ago and certainly seems to have got its mojo back.

Although I guess lumpiness will never completely disappear, the picture for the next two or three years looks intact providing scope for a longer term visibility and earnings appreciation.

[simso] 25/1/2017 17:33

Has anyone got access to the WH Ireland Forecast, and what Sales and EPS in predicts for the year ahead (2017)?
I can see summaries from different websites of the "Current Broker View" which don't all agree with each other...but my most reliable site seemed to forecast £18m of Sales and £2.4m PBT (EPS 7.9p).
Clearly a lowly P/E even now at just over 10* Earnings. If the £18m Sales and £2.4m PBT are indeed the correct brokers forecasts, then arguably the £18m sales for 2017 were already in the bag by September 2016 according to this quote from SA Moore at the Interims:
"future contracted Order Book, valued in aggregate at more than £46 million ... with delivery currently scheduled as to £18 million in FY2017...". Taken at face value and assuming this £18m is contractually secure, then surely there is significant opportunity to increase on that number with other contracts and work, and beat this Brokers forecast?
I would love to know the Sales and PBT number in the latest forecast, if anyone has access to it or at least a summary of it?

[boadicea] 19/1/2017 07:58

Very firm on keeping this as a lt hold.

[hastings] 19/1/2017 07:54

Excellent update this morning reinforcing earlier view.

[hastings] 31/12/2016 08:35

Also enjoyed a good run on this, but happy to sit tight.I'm not so sure that the Middle Eastern business is all with New Customers.Rather, a Country where PEN has been active before and one that is new.Given the length of such contracts one would hope (assume) the company has payment structured adequately.Both the CEO and FD were extremely confident in delivering the forecast numbers and if that is the case, then the shares really should have further to go from the current level.Interesting too that the broker target price was upped to £1.00 earlier this month.

[topvest] 30/12/2016 19:40

Yes, its recovered well. High risk / reward scenario - main risk is whether its new customers in the Middle East pay on time in my view.

[boadicea] 30/12/2016 09:47

This has recovered to become one of my better performers.
Possibly we could see a new all time high in 2017.

[hastings] 04/10/2016 07:54

May be of some interest to others here.

[hastings] 27/9/2016 10:22

Hi Varies, from the placing document.

An oversubscribed Firm Placing of 2,504,200 Ordinary Shares of 5 pence each, utilising the Company’s existing share authorities, at a price of 55 pence per share to raise £1,377,310 (before expenses); and an oversubscribed Conditional Placing of 3,967,072 Ordinary Shares of 5 pence each at a price of 55 pence per share to raise £2,181,890 (before expenses)
The Firm Placing comprises the placing of 1,527,739 Ordinary Shares held in treasury and the allotment and issue of 976,461 new Ordinary Shares, in each case at a price of 55 pence per share. A total of £1,377,310 (before expenses) has been has been raised by way of the Firm Placing utilising the existing share authorities granted at the 2016 AGM.

[cockerhoop] 27/9/2016 10:17

The no. of share figures you have quoted above were for the firm placing, in parallel there was a conditional placing (requiring shareholder approval) raising approx £2.2m.

[varies] 27/9/2016 10:05

It is disappointing that the payment of dividends is suspended until further notice although I can see that the money is needed for expansion of our capacity.
We are told that since 30.06.2016 PEN has raised £3,560,000 before expenses through the issue of shares, 1,527,000 + 977,000 @ 55p.
2,504,000 x 55p = £1,377,200. So there is a mistake here.
It does look as if we should make a bumper profit in 2017. Let us hope that our customers make good progress payments and that dividends can be resumed in 12 months time.

[hastings] 27/9/2016 07:50

Agreed, broker target price lifted with comfort to 80p.

[masurenguy] 27/9/2016 07:19

Looking good - losses eliminated, positive cash flow and a record order book.

RNS Number : 8785K
Pennant International Group PLC
27 September 2016

Interim Results for the six months ended 30 June 2016

Return to profit; Trading in line with market expectations;

Four new contracts secured; Strategic new customers including Lockheed Martin Corporation; Record Group Order Book of £46m at Period-End;

Pennant International Group plc ("Pennant" or "the Group"), the AIM quoted supplier of integrated logistic support solutions, products and services, principally to the defence, rail, aerospace and naval sectors and to Government Departments, announces Interim Results for the six months ended 30 June 2016.

Commenting on the results and the Group's prospects for the year as a whole, new Chairman Simon Moore said: "The Group recorded a modest pre-tax profit for the six months ended 30 June 2016, an outcome that is significantly better than the equivalent period last year. Furthermore, as highlighted in the Trading Update announced in June, the directors expect a substantial improvement in trading in the second half and, based on the levels of the confirmed record Order Book, are confident of a successful outcome for the year as whole."

Highlights: Financial

· Group revenues for the period of £6.6m (2015: £5.7m);

· Profit before tax of £10,582 (2014: loss before tax £0.75m);

· Profit for the period attributable to shareholders of £10,582 (2015: loss £0.75m)

· Cash generated from operations of £1.2m (2015: cash used in operations of £(1.0) m);

· Nil borrowings; Net cash at period end of £2.6m (2015: £(0.6)m);

· Basic earnings per share of 0.04p (2014: loss of (2.86p) per share);

· No Interim dividend declared (2015: 1.0p);

· Record Order Book: £46mn at Period-End including £36m for delivery in 2017, 2018 & 2019

· Effective nil tax rate; unrelieved tax losses of £4.7m;

· Minimal impact of Brexit on Group, other than short term currency fluctuations;

· Post period-end, an oversubscribed share issue at 55p per share to raise £3.56m before expenses to provide additional working capital for new and existing contracts;

Highlights: Operational

· Secured second phase contract with undisclosed Middle Eastern customer worth in excess of £7m;

· Secured the first phase of a supply contract with a new strategic Middle Eastern customer worth £6m;

· Awarded new landmark contract with Lockheed Martin Corporation MST (LMC) with potential value of £2.2m over 18 months;

· Secured second contract with LMC to provide Rotary Wing Rear Crew Winch Trainer (RCWT) in support of Rear Crew Training for the United Kingdom Military Flight Training System (UKMFTS);

· Successful completion of contract with an Indian customer for the provision of software based training capability;

· Re-profiling of strategic single source contract due to run rate progressing ahead of expected levels. Early discussions commenced to renew the contract and increase its value;

· Sale of new licenses for the use of the Group's Integrated Logistics Support Software product, OmegaPS, to Oshkosh.

Mr. Moore concluded: "The Board remains confident that trading will be in line with current market expectations for the year ending 31 December 2016. Notwithstanding the current global economic outlook, to date, we have seen very little noticeable impact on the Group's trading from the Brexit vote. Prospects for next year and beyond remain very positive with the future contracted Order Book, valued in aggregate at more than £46m including £36m with delivery currently scheduled as to £18m in FY2017, £10m in FY2018 and £8m in FY2019, providing good long-term visibility of revenues."

[hastings] 21/9/2016 08:43

Results next Tuesday and catching up with management, so will be penning something on the back of that.

[gengulphus] 16/8/2016 17:26

Well, it's now pretty clear where his million shares went:



Gengulphus

[cfro] 15/8/2016 18:18

SP down only 1p by the close. :-)

[hastings] 15/8/2016 17:34

Good point ed, but equally, I recall Directors at QXT and more recently KWS selling to meet demand and the shares in both have subsequently gone on to perform very well.

[edsullyjoe] 15/8/2016 16:58

Pennant RNS 15 Aug 2016

"....following excess demand for its Placing, details of which were announced on 12 August 2016, Chris Snook, Chief Executive of the Company, has today sold 1,000,000 Ordinary Shares"


The last time I read something like that was an RNS from Solid State on 15th July 2015. Since when their shares have fallen about 50%

"....there has been significant demand for the Company's shares, both from new and existing institutional shareholders. In order to meet this demand the founder of the Company, Gordon Comben and ex-director Bill Marsh, each of whom retired from the board at the end of last year, have agreed to sell some of their shares"

[masurenguy] 15/8/2016 13:16

It was good that they were able to get this placing away at a 12.7% discount to Fridays closing price especially when one takes into account the fact that the shareprice had doubled over the past 3 months. It'll be interesting to see in due course what new institutional investors have come aboard. However the CEO's disposal of two-thirds of his current shareholding - and without participating in the placing either - does not exactly constitute a very positive forward indicator.

[topvest] 15/8/2016 12:36

Hadn't spotted the 1m share sale. Hardly a vote of confidence. It looks to me that the customer on the new contract had them over a barrel and squeezed them on the commercial terms. Maybe this has what caused Powell to resign his Chairman position? Anyway, I'd be very wary here. It's starting to look like a cash consuming business for at least the next year. Too much risk of something going wrong.

[hastings] 15/8/2016 11:19

Revised EPS today from WH Ireland 7.4p this year 7.1p next year after full account of new shares take affect.

Fwd PER of little more than 8 looks very good value imo.

No doubt we will find out later in the week which new holders have joined the existing ones who recently upped their stake.

[nfs] 15/8/2016 10:47

You have to time phase in the issuance re new shares issuedThe earnings have been earned throughout the whole year So shares issued with say 1 month of the year left are weighted 1/12 in the eps calculation