Ab Dynamics Share Discussion Threads

[wylecoyote] 23/8/2013 13:13

Hello Riv,

Thanks for this... I do understand why they needed the funds. My question is why, when they could have funded it themselves?? It isn't a major issue for me, I was just curious. Also, are the directors likely to cash in their investment as a consequence of the placing?

[rivaldo] 23/8/2013 11:00

Expansion Wyle. They only raised £2.5m anyway (plus a £2.5m vendor placing), so really not a lot of fresh funds or dilution on IPO.

Incidentally, they are forecast to have £4.3m net cash at the end of this month (their year end).

The new public profile will benefit ABDP in terms of their increased presence in Asia, potential for attracting key new staff, customer relationships - a raft of worthwhile reasons.

The funds are to be used as follows - it really only takes 10 seconds to research their opening day RNS :o))



Extract:

"The Company will be using the proceeds of the IPO to fund expansion into a new factory, establishing a presence in Asia, further recruitment and the exploration of developing complementary technologies."

[wylecoyote] 23/8/2013 08:46

Hello Riv,

thanks for all the work here. Anyhow, I do have a question in mind, maybe it can be a discussion point? I also need to read through the IPO document in more detail as well. They obviously decided to raise funds through AIM in order to support an expansion plan. However, I don't get why they needed to do this? They are clearly cash generative and have little debt, a forward order book, increasing revenues,etc. So why would they place the private company to be publicly listed?

[rivaldo] 23/8/2013 07:17

FYI I talked to ABDP's FD yesterday. I don't think that any of it was confidential, so in brief:

- he anticipates a year end trading update being issued in early September
- the finals to 31 August will be issued in November
- there is a decent amount of recurring income from service and maintenance etc. My inference from the conversation is that this is around 10%-15%, but that's purely my guesswork
- ABDP's technology is applicable to other industries, particularly mining. Work is going on regarding this, but it's early stage.

Having stated that I appreciated it was difficult for the FD to say much, I noted that the broker forecast for the upcoming year to 31/8/14 seemed a little "conservative" and asked whether he thought this might be the case. From the tone of the response, imho that is indeed the case. We agreed that it was always best to underpromise and overdeliver!

[rivaldo] 22/8/2013 12:16

Cheers Saucepan. I've also just come across this useful summary of ABDP from t1ps.con from around the IPO date - it's been a couple of months now since then, so I doubt t1ps will mind if I post it here:

hxxp://t1ps.com/shop/page-article/action-article.show/id-130022737

"AB Dynamics
71 Days ago (2013-06-12 16:48:51)
Print this Article by Richard Gill & Thomas Coleman

Background...

Founded in 1982, AB Dynamics (ABDP) provides testing systems and measurement products to the automotive industry. Since inception it has helped to design the suspension of the McLaren F1 road car and was behind the first steering robot for quantitative vehicle testing. More recently the firm has manufactured the driverless test system - a system for testing vehicles on the track without a driver onboard.

The company joined AIM on 22nd May, raising £2.5 million before expenses (£2 million net) through a placing of 2,906,976 new ordinary shares at 86p each. Since admission the shares have soared to 122p, giving a market cap of £19.89 million. The proceeds of the fundraise will be used to acquire a facility in Asia to provide additional capacity for the forward order book and for further recruitment and technology development.

Operations...

Anthony Best Dynamics Limited is the operating subsidiary of AB Dynamics and currently provides seventeen of the twenty major international car manufacturers, including Ford, Honda, BMW and Volkswagen, with testing and measurement products for vehicle suspension, brakes and steering, for use in both the laboratory and on the test track.

The company has 50 employees on its books which are all based in its Bradford upon Avon headquarters, where all areas of design, manufacturing and sales are carried out. The group also has a strong international distribution network, including a presence in the USA, Brazil and the Far East as it attempts to penetrate growing markets such as China and India.

Specific services provided by the group include kinematics (the geometry of motion) and compliance testing; testing vehicle suspension, steering and brake systems; driver assistance system testing; driverless vehicle track testing; steering system testing; and noise/vibration testing of power train assemblies.

Some of the company's services

Financials...

Revenues and profits have been on a clear upwards trend over the past few years, with revenues increasing from £2.66 million in the year to August 2010 to £8.91 million pounds in 2012. Over the same period the company turned a £129,000 loss into a pre-tax profit of £1.88 million. During 2012, 90% of revenues were generated from exports to markets in Europe, Asia and North America.

Further growth was experienced in the six months to 28th February, with revenues of £5.87 million being posted and a pre-tax profit of £1.07 million. Net cash at the period end was £3.05 million.

In its admission document the company confirmed that current trading is in line with expectations. Looking ahead, the group's current collaborative partnerships provide good revenue visibility for 2013/14. AB Dynamics has also hinted that it could diversify away from the automotive industry into other areas which rely on testing and measurement in a move which could see a significant ramp up in earnings.

Management...

Timothy Rogers, Managing Director, has extensive experience in managing companies in the engineering and chemical sectors. Rodgers was the CEO and Executive VP of Clean Diesel Technologies between the years of 2004 and 2011 which began trading on AIM in 2001 and he went on to oversee the merger of the group with Catalytic Solutions in 2010, which resulted in the creation of a $65 million business.

Rob Hart, Finance Director, has a wealth of experience in public companies working in financial capacities. He served as Financial Controller of the manufacturing division of Unite Group and also served as a Commercial Financial Analyst at First Group from 2000 to 2002.

Assessment...

It has been good to see a raft of solid and growing businesses join AIM in recent months, with AB Dynamics being one of them. The firm has a very good recent track record, a strong cash position and good opportunities to expand within a growing industry.

The global automotive research and development (R&D) market is well funded at present and is also well regulated, making it hard for new companies to penetrate. According to a report by Booz & Co, R&D spending in India and China - regions in which AB Dynamics is planning to increase its presence - increased from around $100 million (£63.9 million) in 2004 to over $2.5 billion (£1.6 billion) in 2011 as companies attempt to satisfy increasing vehicle demand for an emerging middle class. This increase in spend has been mirrored in territories such as Japan and Europe, albeit to a lesser extent.

Additionally, new vehicle legislation is coming into effect in many of the group's markets which will inevitably increase demand for its products in these regions. For instance, under the European New Car Assessment Programme an Advanced Driver Assistance System (a service which AB Dynamics provides) is required for a vehicle to score top marks in safety testing. Similar regulations will soon be enforced in the US.

Although, by its own admission, AB Dynamics faces competition from companies which offer specific products, there is a lack of competition in terms of a company which can offer the full range of services which AB Dynamics offers. We feel that AB Dynamics has created a strong position for itself within the niche it operates in and can use this position of power and reputation to gain more business and grow further.

Valuation...

Considering figures for the six months ended 28th February 2013, AB Dynamics looks on course to generate pre-tax profits of around £2.1 million for the current financial year. Assuming a 24% tax charge the shares thus trade on a multiple of around 12.5 times for the year, which is just under three months from ending. This multiple does not look at all expensive for a business which has grown revenues by 235% over the past two years and has turned losses into significant pre-tax profits. Pre-placing, the firm had net cash which covers 15% of the current market cap and the additional IPO funds give the firepower to continue to expand the business.

Despite the decent price rise since IPO we believe that there could be significant long-term growth here and rate the shares as a "speculative buy"."

[saucepan] 21/8/2013 20:21

rivaldo: interesting find, post no.35. Looks like you have been excelling yourself on the research front - what with this and OPAY.

Keep it coming :-)

[rivaldo] 21/8/2013 14:02

Interesting to see how tightly held ABDP is:

Major Shareholders Stake %

Naemi Best 9.81
Best 44.13
Amati Global Investors LLP 4.43
Stephen Neads 4.42
Anne Middleton 12.26
Miton Group PLC 11.25

Total 86.29

[rivaldo] 21/8/2013 06:43

Cheers, but there's no point in diluting my holding as I like ABDP.

This news of a new product/partnership appears to be from 2 days ago per Google:

hxxp://www.velocitybox.co.uk/index.php/en/applications/179-forward-collision-warning

"Forward Collision Warning (FCW)

Forward Collision Warning systems (FCWS) have been proven to actively avoid or drastically reduce the severity of accidents. They work by monitoring the road, providing the driver with sufficient warning to change direction or apply the brakes when entering a predefined threshold to the vehicle in front.

Validating the performance of these systems is therefore vital, with the National Highway Traffic Safety Administration (NHTSA) stating that systems must activate before the time to collision reaches a minimum of 2.1 seconds.

The VBOX ADAS package measures the position of the Target and Subject vehicles to within ±2cm accuracy. Testing and validation can be conducted on the test track using a static DGPS RTK Base Station, or via the Moving Base solution.

The Base Station system comprises of:
VBOX3i-RTK 100Hz GPS data logger in both the subject and target vehicles
Brake pedal sensor
DGPS RTK Base Station
Linking radio pair
Video VBOX (optional)

The Moving Base system comprises of:
VBOX3iSL-RTK 100Hz GPS data logger in both the subject and target vehicles
Brake pedal sensor
Linking radio pair
Video VBOX (optional)

To help achieve the speed, distance and braking force required when testing, Racelogic has teamed up with AB Dynamics to develop a Controlled Braking and Acceleration Robot (CBAR). This regulates the brakes and accelerators on both cars, shortening the length of track required.

Live separation values can be viewed on a laptop or tablet PC whilst testing, allowing users to instantly compare their data with NHTSA regulations to show a simple pass/fail indicator."

[owenski] 20/8/2013 16:10

One can get exposure to this company ABDP, and also another recent float QXT, via the AIM VCT; RSB.

RSB has 400k in QXT and 217k in ABDP.

RSB still trading below NAV and pays out circa 10% plus in divs, tax free.



Regards

[wylecoyote] 16/8/2013 14:47

how very interesting this looks.

[pjhutchy] 16/8/2013 08:20

Yes definitely undercooked in my opinion as well. Certainly not overlooked. Could be a great long term investment this.

[rivaldo] 16/8/2013 07:21

ABDP will in 2 weeks' time be on a historic P/E of only 12.99 based on forecast normalised 9.89p EPS.

It's also forecast to have £4.3m net cash, against a £21m m/cap.

Strip out the cash, and ABDP will soon be on a historic P/E net of cash of probably only 9 or 10.

Which strikes me as rather undercooked for a world leader in its global and growing field.

[cfro] 15/8/2013 16:28

Good day here considering overall market.

[pjhutchy] 15/8/2013 16:16

The rating is low and don't forget the net cash. 200 would be a more reasonable valuation

[dewtrader] 15/8/2013 15:48

Looking a bit over cooked now

[pjhutchy] 15/8/2013 15:16

Great growth company in the making. The car industry is recovering well and this company is undervalued and has a strong balance sheet. Once the market trusts the company as its a new listing a rerating will occur for sure

[rivaldo] 15/8/2013 07:48

A pre-open buy at 127.5p - always good to see.

Hi cfro, good to see trusted fellow bargain-spotters here!

[cfro] 14/8/2013 20:14

Count me in too...;-)

I have been snapping a few of these up today. Thanks to rivaldo for highlighting these on another bb and bringing to my attention.

Pe about 12 but based on rather conservative future estimates, so looks really good value. Contract win of £1.7M announced yesterday and i suspect there will most likely be more similar types of contracts won in the coming weeks ahead.

[interceptor2] 14/8/2013 19:40

Thanks for the welcome rivaldo, and pleased to see saucepan here now, it certainly doesn't take much buying to move the share price

ic2...

[saucepan] 14/8/2013 13:45

Cheers, rivaldo. We now have one of my favourite chart set ups: a recent issue making its first new highs after forming a base pattern.

[rivaldo] 14/8/2013 13:38

New highs now. And welcome Saucepan :o))

[saucepan] 14/8/2013 10:58

Joined the group:-) Thanks for drawing to attention, ic2. ABDP looks a great young growth Company with a niche offering.

[rivaldo] 14/8/2013 10:32

Hi ic2, good to see you here. As you say, ABDP is completely under the radar - this is only the 19th post here...perhaps we can help spread the word a little.

We should get a 31st August year end trading statement soon which, given recent news flow, and that ABDP floated so far into its year, should be good news imho.

It's also interesting that over 86% of the shares are held by directors and major shareholders. Any sort of demand for the shares could result in a nice squeeze (perhaps borne out by today's rise on small volumes).

[interceptor2] 14/8/2013 09:13

Decided to buy in today with a small initial purchase and would hope to build position into strength. New contract wins makes 2014 broker estimates look rather light now, so plenty of room for some upgrades. ABDP look very much under the radar, with very low volume in the past 2 months. Yet from my research, they look to be a great little UK business operating in a good niche sector, and a very strong customer base.

I can see that, I am in good company on the thread already.

ic2...