Avanti Communications Share Discussion Threads

[tsmith2] 20/4/2011 12:58

doubt he's wrong PDX!

[knowsleyman] 20/4/2011 12:32

Could it be that the hike in share price will render some lard off that block of fat?

[wookie77] 20/4/2011 11:24

He's also short on PDX which has also just started moving up, could be
whipsawed there...

[tsmith2] 20/4/2011 11:24

hopefully not kiss of death but L2 looking good to rude!

[restassured] 20/4/2011 10:51

Might just be a couple of days :-)

The shady character has been outed in the national press.

[geheimnis2] 20/4/2011 10:44

if cawky had any sense he would have closed at 420p when the going was good

he is now in a tricky situation if he still has the short open as most of his gains will have evaporated

i can see this back at 600p over the next couple of weeks

[tsmith2] 20/4/2011 10:38

he did better than that..got the decimal in the wrong place!

company is delivering the goods and beating expectations

[estienne] 20/4/2011 10:36

Incidently, backhaul business includes services to Helmund Province and Cyprus.

[estienne] 20/4/2011 10:34

Whether SC's estimates were false or not, he failed to take into account the value of both Hylas satellites to the MOD and security services.

[tsmith2] 20/4/2011 10:22

nt sure if these has been posted..

Avanti Communications* - Successful litigation award and positive trading update. Reiterate Strong Buy recommendation at 468.25p


Key Data

EPIC
AVN
Share Price
468.25p


NMS
800

Spread
463.75p-466.75p

Total no of Shares
80.33 million

Market Cap
£378.13 million
12 Month Range
423.75p-735p
Market
AIM

Website
www.avantiplc.com

Sector
Mobile Telecommunications

Contact
David Williams
(Chief Executive)
020 7749 1600 begin_of_the_skype_highlighting 020 7749 1600 end_of_the_skype_highlighting





On 18th April, Avanti Communications, the provider of satellite broadband services to telecoms companies, that it had been successful in its legal claim against Space Exploration Technologies Corporation. Avanti was awarded the full amount of refund it claimed under the contract, being $7,566,013 and was also awarded interest from the date of the claim. Whilst this was already anticipated in our cash flow forecasts, we view the removal of any uncertainty surrounding the refund as positive news.

The company also took the opportunity to give a further encouraging update on trading. A full Commercial Service on HYLAS 1 successfully commenced on April 4th. The process of migrating the base of approximately 5,000 Avanti end users currently using leased Ku band capacity onto HYLAS 1 has proceeded to plan, with 10% already migrated. Amongst Avanti's customers are other operators currently using interim leased Ku band capacity. Avanti is assisting these service providers in the migration of their end users to HYLAS 1, which amounts in aggregate to over 20,000 end users.

Avanti has also confirmed that the successful service launch has met contractual service parameters with all of its customers, confirmed their requirements for modem deliveries from the supplier and updated bandwidth demand.

In 2010 Avanti set a pre-sales target of 25% of pre-sales signed by service launch of 25%. Avanti confirmed that at service launch, having confirmed contracts and orders, the peak utilisation rate under HYLAS 1 aggregate contracts is 35.1% which is comfortably exceeding the 25% target set pre-launch. Hereafter, Avanti will regularly report the industry standard backlog metric. The backlog statistics are now £139.0m for HYLAS 1, £28.4m for HYLAS 2. Avanti also notes a £113.4m option for HYLAS 2 capacity which is subject to a significant option fee. On a like for like basis this is an improvement of 22.6% since February when the company last reported its backlog.

Approximately 52% of backlog revenues relate to Enterprise and Military applications and customers (not including the HYLAS 2 option), with the balance relating to SME and Consumer broadband. Avanti expects backhaul business to soon become a significant percentage of backlog.

In terms of service delivery and sales momentum Avanti has comfortably met all expectations and we are therefore surprised by the 31.75% decline in the share price over the last three months. While some pundits have voiced doubt about the viability of Hylas 1 and Avanti's business model, we believe that the growing traction in orders and diversity of customer base validates the Board's strategy. Catalysts for the share price could include individual significant sales of capacity, progress on Hylas 2 (on target for launch in little over a year), or progress on funding for Hylas 3.

We maintain our base case valuation of 1,079p per share and believe that the impediments to reaching our upside case of 2,194p are falling away. We argue that the current share price represents an excellent buying opportunity. We reiterate our stance of Strong Buy.

[marksnsparkle] 20/4/2011 10:05

The bulk of the short position is still open, at around 3.5 million shares ... should be fun when they start closing ...

[knackers] 20/4/2011 09:34

Nice to think so Yorgi, but I don't think the shorters will be put off as easily as that, they'll be looking for the next level to challenge things and feed -ve sentiment. Sure there's been a healthy bounce but the downward trend looks far from concluded. Real clarity on meaningful revenues are way way off and there remains uncertainty about the impact the sell-off of the analogy spectrum will have on AVN fortunes. Sure SatBB will have a part of play (in the future), and possibly it's a substantial part but WAY too early to call IMHO. Not one for W&O...

[yorgi] 20/4/2011 09:26

Yes false information. The trouble is there are too many that follow him blindly and in the process help him make money at others expense. I'm quite sure some of the shorters will be beginning to worry now.

[restassured] 20/4/2011 09:21

Looks like we are heading back to the 600p level as the market realises the false information that has been spread by highly dubious characters.

[greengiant] 20/4/2011 09:20

Tsmith, I agree. The drop was as a result of fear and a misunderstanding coupled with what was probably a rise which happened too quickly.

The management have done a good job in laying those misunderstandings to bed and have always been willing to put their money where their mouth's were. A quick recap:

1) % sales significantly ahead of forecast
2) prices continually stated at ahead of Market expectations
3) sizeable contracts being tendered for
4) Hylas 2 on schedule
5) Financing for Hylas 3 to be formalised soon.

Sure wouldn't like to be short, happy with my position

Gg

[yorgi] 20/4/2011 09:08

Worth the read I would think MrAngry :-)

I am pleased to see the rise continuing today, with the dip and the end of yesterday I wondered if we might have retraced a bit today but pleased to see we haven't.

[tsmith2] 20/4/2011 08:50

no resistance to £6 the rise to it will be as swift as the fall was..!

[mrangry2] 20/4/2011 08:41

In this morning's Times: "Just now, the only way seems to be down for market's Evil Knieval"

That's the main headline in the Market section online. I'd better not paste it on here for copyright reasons, but it goes through about 10 companies that SC has been criticising, saying how well they are doing. Surprisingly Avanti isn't mentioned, but it really tears him to shreds!

[qs9] 20/4/2011 08:39

Looks like a nice retrace is possible, lets hope it revisits £7 etc in short order!!

[garymott] 20/4/2011 07:22

badday, good find. Interesting to note the research analyst has a position in AVN. I think it's fair to say that position is long! :-)

[tsmith2] 19/4/2011 23:24

Expected News Flow

We do expect a continuing flow of new contracts and the possibility of a major contract from the US Department of Defence. A request for quotations was published in Marchand we consider that Avanti is well placed with a European satellite and ground stations in NATO areas.

Management has indicated that they were working on potential contracts for HYL 3 which would allow a decision to proceed this year. By this time next year, we expect HYL 2 to be launched. There is, of course, a small launch
risk, but this is insured. So by June 2012, we assume that there will be two satellites in operation and a third under order. Those factors, on our projections, should transform the Group.

[mjames20] 19/4/2011 21:51

RE 5293. Taking the revenue figure for the two satellites of £42m from the 11 April would imply Hylas 1 revenue of £11m pa. The Board have announced Hylas 1 sales of £139m so revenue of £11m per annum implies 12.5 years worth of capacity has been sold. Clearly nonsense!

£33m per annum implies just over four years worth of capacity has been sold. If the directors have already sold four years of capacity at this stage then they have done extremely well. I suspect they have sold less than four year's worth (wild guess based on what might be realistic). If less than four years have been sold this would suggest that the Directors comments that pricing is exceeding expectation are correct.

[badday] 19/4/2011 20:14

Charles Stanley have it as a strong buy

[blackberrydrop] 19/4/2011 17:33

GaryMott,

I think it has been well documented that Mr Cawkwell's so called 'informant' cannot do arithmetic. In addition he/she doesn't seem to be able to grasp the fact that Avanti's business model goes far beyond consumer broadband (which is what he/she bases all of his/her calculations on).

In fact, I'd go as far as to suggest that his/her grasp of basic economics is a bit flakey too. Perhaps he/she could answer this GCSE Economics question I'd expect to see on exam papers soon:

"The demand for high speed data communications via satellite amongst the military, enterprise and cellular backhaul markets is huge and expected to rise as the world becomes ever more data hungry. However, the available capacity on high speed (Ka band) satellites to serve these markets is limited and, because of large barriers to entry (such as the time and cost it takes to build a satellite and, most importantly, a shortage of orbital slots/spectrum in space) competition is low. What is likely to happen to the price of available capacity on existing satellites?

Answer in no more than four words ;-)

[garymott] 19/4/2011 16:51

Simon,

A summary of the recent forecast annual revenues via you from your informant is as follows:-

11 April - "the two satellites could generate revenue of about GBP 60m p.a., less than half the level of management guidance."

11 April - "implied revenue level would then be GBP 42m" (for Hylas 1 + 2)

18 April - "100% of Hylas 1 capacity, annual revenues would be about EUR 45m (or about GBP 38m)."

18 April - "it maybe more realistic to expect Hylas 1 to generate peak revenue p.a. of around £33m p.a"

These forecasts vary massively over just one week. Bearing in mind Hylas 2 will have 3 times the capacity of Hylas 1, what does your informant now expect the realistic revenue for both Hylas 1 and 2?

P.S. £33m x 4 = £132m which is more than twice the forecast of £60m on 11 April which was commented to be "less than half the level of management guidance."