Avanti Capital Share Discussion Threads

[adam] 18/8/2010 13:37

I think I find EVG accounts easier. £185m m/cap and £100m cash. Pays a div and near a five year low. They just did a financing for NPE. Took a 5% fee for raising £30m. If they do a few more deals like that....

Just having a quick look at Hirco. Thanks for the tip. It's a property developer in India, but their assets are booked as investments - i presume because it is a JV? I like the discount to NAV but i'm finding the accounts pretty opaque. Interesting I note in the annual report an old favourite...


"REQUISITIONED EGM
On 20 February 2009, the Company received a requisition to convene an Extraordinary General Meeting from Credit Suisse, acting as custodian to Laxey Partners Limited and holding approximately 10.05% of the Company's shares."

They state

"Our share price has recovered from its historic low earlier this
year, but still stands at a significant discount to net asset value.
We believe that the market capitalisation materially undervalues
the Company and its prospects. The Board continues to keep this
situation under constant review with the objective of redressing
this imbalance."


Their projects seem to be contained in four vehicles Burke 1 to Burke 4.

Would it seem like I am a birk if I ask where I can see the balance sheets of those vehicles?

At a staggering £414m net I find it surprising I can't get at basic information like gearing for a property developer. There is one obtuse comment from Nigel McGowan

"Aggregate gearing on the projects in which Hirco invests is expected to be less than 50 per cent. of the total project costs for development projects and less than 75% per cent. loan to value for completed, stabilised projects.
"

That sounds like it is currently geared up to the eyeballs but I have no way of finding out?

[hugepants] 18/8/2010 13:00

adam, I find stocks like EVG pretty hard to value so I'll probably give it a miss.
Think Hirco(HRCO) is worth a look though. Ive a largish position now via spreadbets.

[adam] 18/8/2010 11:51

HP

What do you think of EVG? I bought a few today at 78p.

[hugepants] 18/8/2010 09:47

Liars, Thanks, had a quick look at GBO but not really interested. Im mainly in cash at the moment and am being very selective.

[hugepants] 17/8/2010 22:58

....COMMENTARY: I am impressed with mBox because they are ideally positioned to become the industry leader in mobile ecommerce and messaging transactions processing. In short, mBlox is a gateway that allow consumers a safe way to buy things from businesses and wireless carriers using their mobile phones.

The fact that mBlox is making money, while Motricity, a competitor, is losing money on similar revenues, congers a lot of questions. Why? Is mBlox making money because of better technology, efficiency, execution, management decision-making?

I looked into Motricity's IPO filing, and Ryan Weurch, Motricity's CEO is highly motivated. It's about money, of course. An IPO would trigger a much needed salary increase under a new employment contract, there is a bonus incentive for selling the company or raising capital through an IPO before July 25, and he wants to pay-off loans owned to the company from the purchase of his residence and other personal loans he owes the company stemming from relocating Motricity to North Carolina after he purchased InfoSpace, the company that furnished the technology the company uses.

A lot of green tech and EV/hybrid startups are doing the same thing. Jumpting into the public markets to raise capital before that window closes is picking up steam. In January alone, 15 companies filed S-1's. See my previous post.

If I were mBlox, I would do an IPO now, while the window is still open. In my opinion, mBlox has a more compelling value proposition for investors, could fetch more than Motricity's $250 million (personal opinion), and this is a good time for the company to finally cut loose from the VC's and for their VC backers to exit nicely or stay in as minority investors.

[adam] 12/8/2010 10:35

Fairy snuff.

[hugepants] 11/8/2010 20:00

Think I'll go for 5% to be on the safe side. But AVA should state an up to date percentage so we dont have to estimate.
I really think mBlox could be a huge company. Mobile billing has hardly got off the ground yet.

[adam] 11/8/2010 17:35

It is just my best guess. I detailed my workings. I don't know of a definitive way until there is an S-1 filing or such like. There is no "companies house" equivalent in the USA. I think I am in the ball-park as any radical dilution that Avanti did not participate in would reflect in the book value.

[hugepants] 11/8/2010 12:04

adam,
Are you fairly confident AVA's stake in mBlox has not been diluted any further than the 6%-7% current estimate? I cant see any further fundraising announcements on the mBlox website but I noticed AVA had made a small further investment quite recently (approx 50 grand I think). I emailed the company about this but did not receive a reply.

[adam] 10/8/2010 10:47

Talking to myself still..



They just converted the Brighton Po NaNa to this new Lola Lo concept.

I would infer that the Brighton opening and trading is not disastrous otherwise they would have pulled the plug on a further roll-out - or you would think.

Also Motricity (mblox competitor) reporter their results last week



which seems to indicate the market is still strong. Surely it can't be long till mBlox make an S-1 filing.

[adam] 02/8/2010 13:32

mBlox Wins Juniper Research Mobile Payments Gold Award
mBlox Recognised for Making Outstanding Contribution to the Future of the Mobile Payments Market
LONDON--(BUSINESS WIRE)--mBlox, the world's largest mobile transaction network, has won the Mobile Payments Gold Award in Juniper Research Future Mobile Awards 2010 for Mobile Commerce. Juniper Research has recognised mBlox for making an outstanding contribution to the future of the Mobile Payments market.
The Future Mobile Awards are given to companies that have made a significant contribution to their sector and are poised to make considerable market impact in the future. The awards were granted by a panel of expert judges based on a number of criteria, including: product range and innovation; geographic market penetration; evidence of commercial campaigns; partnerships and potential future business development. Gold and Silver winners were selected from a short list of nominations for each category, with mBlox receiving the Gold Award in the Mobile Payments Category.
Howard Wilcox, Senior Analyst, Juniper Research states: "mBlox is at the heart of mobile payments with its mobile transaction platform which will support the planned expansion of mobile payments in the future as mobile commerce becomes mainstream."
Andrew Dark, CEO, mBlox: "We are delighted to have won the Payments Award from Juniper for Mobile Commerce as recognition of our focus on customers and continued investments in our systems infrastructure in all parts of the world. mBlox continues to expand its global transaction network, increasing reliability and security for our clients, resulting in 46% year-on-year growth of mobile transactions this past year. mBlox remains committed to innovation, as it builds upon the success of services such as our unique Sender-Pays Data solution."
About mBlox
mBlox is the world's largest mobile transaction network. The company specialises in simplifying the complexities, commercial and technical, of mobile billing and message transmission for our clients. Via a carrier-grade network, mBlox enables companies to communicate with mobile subscribers on more than 600 carriers in 180 countries, millions of times each day. The company has U.S. headquarters in Silicon Valley, with EMEA headquarters in London, Asia headquarters in Singapore and offices around the world. For further information, visit www.mBlox.com.

[adam] 30/7/2010 11:57

We have a 60% equity stake and the management 40%, so they are already well incentivised. Hopefully the "loan" (yields next to nothing) can be refinanced at least in part and we can then have a free ride on the equity. The loan covers our current market cap and then a bit more.

[errollc] 30/7/2010 11:20

I suspect the management team at Eclectic want to buy the business, which would be at a substantial premium to the last NAV. Strange as it might seem, in today's depressed world, the NAV seems only to be going one way.....

[hugepants] 29/7/2010 22:31

Any chance the Eclectic Bars valuation will be upgraded based on the current robust performance.

[adam] 30/6/2010 12:08

Eclectic company EBITDA for 12 month period £1.225m last year

They state "EBITDA for the 11 months to the end of May 2010 up 57% on the same period last year"

Site EBITDA was £2.9m last year

They don't state if company or site EBITDA. Let's assume the former.

We know that in June they closed Brighton PoNaNa for a refurb, but disregarding that we would have EBITDA at company level of nearly £2m and presumably dramatically higher for the site level.

Thus £7m book value very, if not excessively, conservative as it would be 2.5x EBITDA. (Typical transactions are 6x I believe)

mBlox clearly also going gang busters and given what we know of the valuations attributed to an inferior competitor, it would seem positively churlish to ascribe less than the current book value.

Fair value for the shares taking account of market conditions for AIM stocks in general and poor historical track record for Avanti management should be in my opinion at a minimum book value of 129 pence, with considerable upside from that.

[errollc] 30/6/2010 10:44

I hear and gather from the statement that both mblox and Eclectic are doing very well indeed....I suspect there will be capital event for one or both in the next 6-12 months. Float for mblox and sale of Eclectic...this will bring in alot of cash and enhance the NAV further. Can't get hold of many shares but will keep trying...

[hugepants] 30/6/2010 08:15

Trading update:



mBlox
The year to December to 2009 was a transformational year for mBlox and resulted in the company becoming profitable at an adjusted EBITDA level for the first time in its history. In 2010 to date mBlox has experienced strong revenue and adjusted EBITDA growth over 2009. For the full year 2010, the company is forecasting strong revenue growth and a significant acceleration of EBITDA....


Eclectic
The company has once again strongly outperformed the sector, with EBITDA for the 11 months to the end of May 2010 up 57% on the same period last year. Total sales were up 12% and like-for-like sales up 3%....

[adam] 23/6/2010 08:33

> each has the ability to wipe the other out

Not true.

> If mBlox prospers and Eclectic fails, the net effect for AVA is zilch

Not true. If mBlox prospers and Eclectic fails the net effect on Avanti will be £1 to £3 per share. If Eclectic prospers and mBlox fails the net effect will be 75p to 150p (say) per share

> AVA will only benefit in full as long as Eclectic holds its value

Clearly Avanti does better if both succeed. The market seems to be pricing in a high probability of failure for both, which may be warranted.

> You say they are conservatively valued and they say business is booming

I did not say business was booming. I have no insider information just the public statements. They are correct at the time of going to press. We also know that the directors sit on the board of both companies. I know they get weekly cash flow statements from Eclectic. They bought shares as late as April and any material change has to be reported to market immediately as it is price sensitive. I would not be surprised if trade is softening given the situation but a collapse in trade since April would have to be reported immediately. Equally cynically, I would point out that bars like LMR may be using the macro economic back drop as a convenient excuse for mismanagement of their brands and estate. Lastly as I think I have pointed out before - Eclectic is the result of two pre-packs and so has a large survivor bias. I am nervous too about the economic situation but the question for investors is how much of the risk and reward is reflected correctly in the price? I would say most of the downside is in the price and the upside is being ignored.

[jeffian] 22/6/2010 23:19

adam,

What I meant was that these are by far the two biggest investments (Eclectic 95p/share; mBlox 67p/share; the rest pennies) and each has the ability to wipe the other out. If mBlox prospers and Eclectic fails, the net effect for AVA is zilch. All I'm saying is that mBlox isn't the whole story; even if it prospers, AVA will only benefit in full as long as Eclectic holds its value. You say they are conservatively valued and they say business is booming. Well, they're about the only ones in the industry saying that.

[adam] 22/6/2010 19:58

Accountancy aside. what matters is how much of mBlox Avanti own (if you accept my figures it is between 6% and 7%), and how much it will sell for. I think it will be for more than Motricity - which is over 3x the current book value. It should trade at a premium given it is the lead aggregator and profitable, so 4x or more possible in the right IPO market.

I'm not sure I understand jeffian's statement "Eclectic HAS to succeed as well". mBlox is just a shareholding and independent from the bar ops, so one does not have to succeed for the other to. The Eclectic business is consolidated but is just a loan to the bar business and 60% equity, there is little or no parent guarantee, effectively ring fenced from mBlox.

I believe Eclectic booked conservatively at loan value of £7m. Given half year company EBITDA of £1.1m (say £2.2m annualised) taken together with bullish noises this seems not unreasonable. Possible to argue much higher numbers.

Both could fail. However if you take a very reasonable book value for mBlox (given Motricity value) and book value for the Eclectic loan you have stated NAV of 129p.

On the upside a more realistic view might be to take Motricity as a fair value proxy for mBlox and then you get £16m for mBlox. Similarly Eclectic on 6x EBITDA would be £13m. Total £30m with the other bits. Which is 375p before the directors carried interest.

Avanti should be trading at 120p pre mBlox IPO and run up towards £2 on IPO and or Eclectic disposal. At 63p it looks desperately cheap despite the risks.

[jeffian] 22/6/2010 14:09

Sorry to keep appearing like Banquo's ghost at the feast, but in the excitement over the potential value of mBlox, do keep a beady eye on Eclectic. They still represent well over 50% of total NAV and, far from being the 'tail that wags the dog', they ARE the dog! It would be great for mBlox to succeed but for AVA to reap the full benefit, Eclectic HAS to succeed as well. I note the recent positive statements in the interims but, as someone formerly involved in the licensed trade, have some difficulty accepting the rosy picture painted when most others are struggling (viz. LMR).

[rivaldo] 22/6/2010 11:39

:o)) I like your lack of ego HP - you can always tell the good posters worth following. I suppose if the Spark holding was 0.6% (rounded up to 1% for disclosure purposes) that would value mBlox at nearer £40m rather than £25m.

Many thx too to adam, very informative. I'll wait and see for the moment. On the watchlist though.

[hugepants] 22/6/2010 11:07

Ok we've established I can't count. Spark must have had some reason to write the value down by 50%.