Aero Inventory Share Discussion Threads

[milacs] 18/3/2009 15:50

Every year there is an options period.

Check out last years in April.

They can forget the options due in 2010.

How unfortunate for our greedy incompetant Directors.

M

[mdj8] 18/3/2009 08:03

That rumoured offer of around £7- a share last year now seems a very very long way off....

[russianlinesman] 18/3/2009 07:25

directors already have a scheme based on share price in 2010 (£15) so I can't see there being new ones.

[sleveen] 17/3/2009 17:25

milacs you cynic:-)

[mercury123] 17/3/2009 17:22

Well the directors are buying - usually a good sign

[milacs] 17/3/2009 12:37

Well what do you know options time falls in April.

Come on boys lets make sure the price falls to a low and we can make hay.

So far we are doing fine!!!

M

[milacs] 17/3/2009 10:47

Wonder if we are close to management options top up time.

M

[rat attack] 17/3/2009 10:01

Surprisingly balanced article from the Independent this morning:

Aero Inventory

Our view: Sell

Share price: 170p (-35p)

There is no doubt that investors are not too keen on the investment case for Aero Inventory, the group that provides the aviation industry with inventory software. In spite of some cracking numbers in the last year, and especially yesterday when the group announced its interim results, the shares have dropped by two-thirds in 12 months.

The reason, says the chief executive, Rupert Lewin, is that buyers do not like the fact that the group needs to put much of its cash into inventory that it might ultimately not need. The shares were down a further 17.1 per cent yesterday on news that the group has missed out on what would have been a major contract with a new airline client, despite first-half revenue being up 55 per cent, pre-tax profits by 54 per cent and EPS up 47 per cent. The spin was that in fact the loss of the contract means that the all-important cash will not need to be tied up in a new contract, and hey presto, the share price will rise. Mr Lewin has a point, and investors will also be encouraged to know that the stock is cheap against its peers.

Cautious as we are in these tough times, however, we would question the wisdom of investing in a company that relies so heavily on the airline industry. Mr Lewin makes the thankfully correct argument that aeroplanes need to be maintained regardless of the economic situation, and that tougher times for the airlines means fewer new planes and more maintenance for their older ones. True, but it also means fewer flights.

We think Aero is a good company and the shares have the potential to grow further, but we are wary about anything related to the airline industry, which judging by results is going through a very tough time. Sadly, now is not the time to own Aero stock. Sell.

[mercury123] 17/3/2009 09:18

You're right that there have been a lot of instances of poor judgement on the part of both institutions and wealthy individuals piling into stocks that seemed to be safe bets - Bear Stearns, Barclays etc etc. But AI to me doesn't fit this category - it is being hammered by its' lack of liquidity as an AIM stock and sentiment is driving it down unfairly in my view. Remember they are maintaining a reasonably generous dividend and the recent placing has given them cash at a much cheaper rate than they'd get if they had to raise it now. That shows reasonably good management....

[mdj8] 17/3/2009 09:18

MartinC from what I have seen of the managements actions, I have to assume their financial statement reflects the true situation. I feel they were caught somewhat off guard and approached by a larger potential client than anyone expected, hence scurrying around to raise funds should the opportunity develop. This would have put them in a difficult position as they have not fully integrated ACTS yet. In my view they were wise to walk away. a) they say the commercial terms were not acceptable, b)a huge client at this point would suck up all their cash flow c) in the current climate the market would not reward the shareprice appropriately. Far better in my view to do what they have said they will - consolidate, become more efficient and stronger and target digestible bits of business. As a result there is less risk to the business and if a "no brainer" opportunity come along as a result of the crunch they are more likely to have the resources to hoover it up.

[martinc] 17/3/2009 09:02

Arguing that an investment must be ok because an institution has recently bought in should really be fought against. There are dozens of examples of placings/rights issues performed at peak prices only for the shares to collapse 90%+.

I agree AI. looks pretty cheap if you assume they can sort out cashflow, and the inventory increase was a one-off.

I'm can't decide whether the management has peen prudent and careful in avoiding a poor contract, or whether they have failed: they had to dilute our holdings by 10% because they ran out of money, failed to secure a contract perhaps because they couldn't raise enough cash, have increased stock when it was supposed to be shrinking, and finally sold some stock with rather poor 1 year payment terms - not even 10% cash up front.

[pallett] 17/3/2009 08:55

I wonder how the market would have reacted IF they had taken a new contract on at what was later seen to be "not a very good deal"

[rogerbridge] 16/3/2009 22:14

Buys outnumbered sells

[mercury123] 16/3/2009 20:55

Can't imagine there would have been so many willing takers for the placing at 2.50 in February if there were any real nasties here - I'm very happy to have added loads in the 1.70s

[mercury123] 16/3/2009 19:32

Well surely this is an over-reaction. I've taken the opportunity to top up at these levels. Worth holding for the dividend and prudent management that doesn't enter into new contracts at uneconomic prices

[rat attack] 16/3/2009 15:48

Resounding thumbs down from the market today - everything to do with the cash position so lets hope the headroom of circa 80/90million will be adequate?

[phatprofit] 16/3/2009 15:39

Sorry to see this down considerably today fellas.

I dabbled with this around the time of the bid but have NO intention of moving back in.

Clearly a Sell after today's announcement.

They should've taken the bid price. Another example of overexhuberance by management.

P

[rafthorney] 16/3/2009 13:42

Nearly 20% down,seems a tad hard

[martinc] 16/3/2009 13:19

They still don't seem to have clearly stated whether they are going to recognise a profit or loss on the sale of those $100m of parts. Should I assume the worst?

[ydderf] 16/3/2009 11:41

we all know the story from here......what's the next trading update likely to say, with the airlines now showing declining passenger numbers and the GDPs everywhere shrinking? Then as the share price falls following the next trading statement, the dividend yield rises to an "unsustainable" 14,15,16,+ % and then it is cut because the directors wsill always cut because shareholders don't matter really, and directors will focus on their salaries first, even if they are shareholders as well - why should the directors share the spoils of their efforts with cfd gamblers and toothless institutional investors?

Its a mystery to me why you want to give them the benefit of the doubt - i sold my holddng of 130,000 after the strange statement about the 10% placing, and have no impulse to by back while shareholders are being treated as outsiders and with contempt.

[rafthorney] 16/3/2009 10:06

Markets not agreeing with you at the moment Robsy2 but with a 270 average,i,m with you!

[sleveen] 16/3/2009 09:58

Fungibility is the property of a good or a commodity whose individual units are capable of mutual substitution. Examples of highly fungible commodities are crude oil, wheat, orange juice, precious metals, and currencies.

Fungibility has nothing to do with the ability to exchange one commodity for another different commodity. It refers only to the ease of exchanging one unit of a commodity with another unit of the same commodity.

via wikipedia

[robsy2] 16/3/2009 09:43

I take great heart from the commitment to the dividend.If they just maintain the divi at 18p for the year investors get a 9% return while they enjoy a free bet on a return to a more normal rating for the stock. The market will decide of course but it will be a lot higher than 200p.How about full year EPS of 80p ( a guess) an d a per of 5 ,then we see 400p with a dividend of 5% ish.
The World has not ended.The future has not been cancelled.

[robsy2] 16/3/2009 09:20

Good posts
Results are reasonable. Positives are maintained dividend suggesting yield going forward of 8-9% . Interim of 6p covered over 5 times . Fully diluted EPS in GBP up 100% + from 16p to 34p.
the issue is cash flow.Steps being taken to sort this out.Stock sale has strengthened the balance sheet.Focus on operational efficiency and cash flow correct imo.stock purchases falling month an month now half of last years levels
No finance issues going forward.They have the finance in place. The Company has a committed US$500 million facility in place which does not expire until February 2013.
That is a long time in todays world.
Market has clobbered these. The cash flow issue is out in the open and have been largely dealt with already.Sp moves this morning supports the share price at 200p minimum.Fear has been removed.
We could see this move up sharply from here.Investors like me can see that this business is worth a lot more than the market cap of 120m GBP or 150m US $.They can easily do turnover 500m US $ a year with net margins after tax of around 10%, say 50m US $ a year.With existing contracts running for decades it is really cheap.
If you consider just the next 10 years worth of present turnover and profit you can buy into net post tax profits of 500m US $ for about 150m US $. If you say that new business and inflation net off then at 200p a share you are buying into a simple business franchise worth 3- 4 times its value. Cheap.