Avanti Communications Share Discussion Threads

[billytkid2] 05/10/2011 11:59

I don't have the investec note. It just says on my system that the last update was 3/10/11 and they re-iterated a HOLD and a £3.30 target.

[yorgi] 05/10/2011 11:53

Whether one could have got any any at 240p a short while ago I wonder !

[gnnmartin] 05/10/2011 11:51

Absolloo .. abslu .. right on Jonny.

If I wasn't so scared of the sky falling in I would be buying some more here.
Nigel Martin

PS Rimmy, bad luck on being stopped out at 240. The trouble with stops is they ensure you get the very worst price short term. I hope you will forgive me hoping that you got the very worst price long term too!

[geheimnis2] 05/10/2011 11:51

anyone have the investec note where they have a price target of £3 or so.

would be interesting to hear their case too

[jonnyno1] 05/10/2011 11:45

it's a cunund..conundr..connunru..it's a weird one.

j.

[yorgi] 05/10/2011 11:40

Agreed Cancun.

Shorting this stock from 700p has turned out to be very profitable for those that did, they succeeded in sowing doubts in peoples minds about AVN, yes maybe it was ahead of itself in the share price but as Monday has shown us everything is on track.

Add to that substantial buys by directors, yes I know they were buying in the 500's 400's and 300's, but it will turn around some time and the correction will be swift in my opinion.

[cancun tango] 05/10/2011 11:34

poj
Would you stump up £100k like DW has this week if you knew there was something not ok here?

[yorgi] 05/10/2011 11:32

Thanks for that Billy.

[pojscott] 05/10/2011 11:29

I should have shorted this stock--something not ok here. Whatever is said, whatever the news--mostly good--the S/P just keeps falling???

[christianf12] 05/10/2011 11:27

It is unbelievable as the share price is 10% of the target.

rimmy, mm's played a blinder in getting your shares. Someone just bought 30,500 10p over the current offer.

[billytkid2] 05/10/2011 11:25

At the risk of dropping the shares another 7% here is the latest from Daniel Stewart with an unbeliable target of £25.25:

FY'11 performance: a game of two halves
In our view Avanti's commentary on FY'11 performance amounts to (i) a review of
known progress throughout the year and (ii) an important update on current and
prospective capacity utilisation, i.e. a game of two halves.
Results and progress already known: "first half"
Avanti reported:
�� Revenue £(5.4)m and PBT loss of £(12.7)m in line with DSCE;
�� Reported EPS was (12.1)p/share;
�� Launch of HYLAS 1 in Nov'10, with start of commercial operations in Apr'11;
�� Refinancing of the PIK bond via a £70m equity raise;
�� Full financing of HYLAS 2 ($328m with $190.3m drawn down), and insurance
covering launch and year 1 of operation was completed at a premium rate that
Avanti reports saved an estimated $15m against its budget;
�� HYLAS 2 construction and launch remains on target for Q2'12.

The "second half": focus of attention on capacity utilisation.
The focus of attention is of the level of capacity placed and confidence in the
medium-term outlook.
HYLAS 1 update
�� HYLAS 1 is at 36.7% of projected 3-year capacity utilisation. Avanti noted: "Given
that the HYLAS 1 satellite has relatively modest capacity available, we are
confident that it will be full within the three years we have forecast. We have
already sold enough capacity to fill the satellite to 36.7% usage by the end of that
three year period, we are adding new customers every month and existing
customers are already returning to add to their capacity commitments";
�� On outlook Avanti notes: "We expect to continue to sign new customers and
remain very confident that we will sell out all of the capacity on HYLAS 1 within 3
years of service launch. At present, our backlog of customer contracts for HYLAS
1 is £141m". Of this backlog an estimated "52-53%" is military-related (Avanti).
HYLAS 2 progress
�� Construction of HYLAS 2 is progressing well and on schedule for launch in Q2'12;
�� Avanti adds: "Pre-launch sales interest has been very strong and we expect to ink
significant deals soon in Southern and Eastern Africa, Iraq and Afghanistan. The
backlog of customer contracts for HYLAS 2 is £30m. In addition the options over
capacity (for military use) increased to £170m. There is strong interest in Avanti's
military capacity, but since we are not presently regulated to sell directly to military
organisations, we sell to service providers who are, and some of those pay for
options to give them an advantage in bidding processes";
�� The prelaunch peak fill rate target is 25%.
Pipeline: £473m, carefully defined
Avanti notes that the pipeline of new business for HYLAS 1 and 2 stands at £473m.
Avanti is clear on what qualifies for inclusion:
�� "Pipeline is defined as the total potential value of contracts which are currently
under negotiation in respect of HYLAS 1 and HYLAS 2, and only includes projects
where detailed technical information and a committed price has been delivered
and the customer is proceeding with work on that basis.
�� Backlog includes the total value of contracts signed for sale of services. We do not
include any value for the potential renewal of the contracts we sign with service
providers beyond the specified term. We do include in backlog the value certain
historic continuing business:
�� The small directly contracted base of consumer broadband customers in the
UK which was built under government funded projects prior to HYLAS 1 launch
is assumed to roll forward, since those customers have continued with service
beyond their initial term.
�� We also assume that our small European consulting business which uses
HYLAS 1 to create advanced new technologies for government customers
continues to generate the level of turnover it has averaged in the last five
years".

Design phase
Updating on HYLAS 3 Avanti notes:
�� "We have announced our intention to construct our third HYLAS satellite and have
already completed the first phase of design and long lead time item work. We
have received a preferred offer of highly efficient debt financing to complete the
construction of HYLAS 3. The financing offer rests upon the successful pre-sale of
significant capacity. We have conditionally contracted pre-sales of $120m, and are
close to finalising the balance".
Replication of HYLAS 2
We expect HYLAS 3 to largely replicate the format of HYLAS 2:
�� Constructor: Orbital Sciences Corp.;
�� Construction to be based on OSC Star-2.4 platform;
�� Orbital location, 33.5º W; liftoff mass, 3,100 Kg; expected operation life, 15 years;
payload power, >5.0kW; capacity

[rimmy2000] 05/10/2011 11:24

a lot of this is a vicious circle of: Share price falling > investors hold off hoping they will buy at the 'bottom' > share price falls further > investors continue to hold off.

I was stopped out this morning at £2.4099, and in line with my hypothesis above, will now wait as I expect this to drop further.

good company, poor economic climate of uncertainty, people holding cash as index will likely drop further.

[christianf12] 05/10/2011 11:22

Could do with a takeover approach here. That might restore some normality.

[yorgi] 05/10/2011 10:53

I have to say I'm at a loss what to think.

[christianf12] 05/10/2011 10:52

Down 6% when the FTSE is up so we go down when the markets go down and we go down when the markets go up?

Directors have spent £200,000 on shares in the past few days, absolutely no justice in this share price

[yorgi] 05/10/2011 09:40

Yes it is Rimmy and that is on top of another £49k's worth the day before.

[rimmy2000] 05/10/2011 09:33

£50k's worth is quite a statement

[yorgi] 05/10/2011 09:08

Yes Gary good to see that DW is obviously happy with progress and hence buying even more shares in AVN.

[garymott] 05/10/2011 08:20

05 Oct 2011 8:00am
Director Buys Shares

Avanti Communications Group plc (AIM: AVN), the satellite operator, was informed on 4 October 2011 by David Williams, Chief Executive, that on the same day he purchased 19,420 shares at 254.8 pence per share.

[greengiant] 05/10/2011 07:42

Gorvachof,

As I posted earlier, this is my one concern, although the Board goes into great detail about why the fill metric has stalled (1.7% increase). To me, I am not thinking H2 and H3 are more important, getting H1 full is of primary importance. It is no surprise that things have stalled, people and companies are tightening their belts because their is so much uncertainty. However, this will pass and Avanti is nearly underlined by it Balance Sheet value of £207m.

Would be lying if I said that I am not disappointed by the share price decline, but that is life and although I am now showing a significant paper loss, it is only a paper loss.

gg

[yorgi] 04/10/2011 23:11

The T1ps comment.


Avanti Communications Group* - Full-Year Results

Avanti Communications* (AVN) has announced an anticipated increase in pre-tax losses for the full-year, as the satellite operator recruited more staff to sell and support its products and to manage three satellite projects instead of one.

The group reported a pre-tax loss of £12.73 million for the twelve-months ended 30th June 2011, which compares to a loss of £1.93 million a year earlier, as cost of sales rose by 145% to £7.68 million and operating expenses climbed ahead by 29% to £11.30 million. While the group generated revenues of £5.46 million from the successful launch of HYLAS 1 during the period, this was slightly lower than a year earlier after ceasing to sell its highly unprofitable interim broadband service on rented satellite capacity. There is no surprise here, and, with Avanti reporting a total pipeline of new business for HYLAS 1 and 2 of £473 million and a backlog of £171 million, this revenue figure is expected to increase significantly.

During the year, Avanti raised £70 million in an equity placing, to refinance an expensive PIK bond and fund the early stage design work for HYLAS 3, and drew $190.3 million on its Export Credit Agency debt facilities of $328 million. The debt is at attractive fixed interest rates of 5.5% and is drawn down during the period up to HYLAS 2's launch and then repayable over a seven year period from December 2012. This points to a strong balance sheet - with net debt of £79.85 million, net current assets of £17.12 million and net tangible assets of £207.36 million.

Since year-end, the group has signed four contracts for services on both HYLAS 1 and HYLAS 2. Today the firm announced a deal wwith Bentley Walker Ltd for bandwidth serving customers in Afghanistan for HYLAS 2 - which remains on track for a launch in the second quarter of 2012. The deal has a term of 2 years with a value of $2 million plus a further 1 year extension option. Furthermore, the company added that it recently completed its launch insurance policy for HYLAS 2 with a sum insured of $328 million. The rate achieved represents a saving of $15 million on the estimated cost for insurance included in the procurement budget for HYLAS.

The company also added, "Avanti's senior management team has faced a difficult period, as some short term speculators attacked the share price." One of which is a fat man that lives in Kensington.

Looking ahead, the company said "the market for our products remains strong and is growing and the progress made in sales for HYLAS 1 and pre-sales for HYLAS 2 means we are confident in achieving our objective of selling out HYLAS 1 in three years and HYLAS 2 in five years from service launch". What's more, I note that the growth in market demand has led Avanti to increase its efforts on the construction of HYLAS 3.

Currently trading at 272.5p, Avanti Communications is capitalised at £218.89 million - a mere 6% premium to net tangible assets (which does not even include its orbital licenses). The full-year results were in-line with expectations - and, as such, I am confident that the company will deliver sales of around £29 million and pre-tax profits of £6.8 million (earnings per share of 8p) for the current financial year (ended 30th June 2012) and sales of £125.4 million and profits of £36.1 million (earnings per share of 34.9p) for the following year. This equates to a prospective PE ratio of 7.8 times financial year 2013 earnings. This is a compelling valuation for a business that has only just entered into its first full-year of earnings, occupies a commanding position in a high value niche market and has a strong balance sheet.

Chairman, John Brackenbury, director David Bestwick and chief executive David Williams today purchased, in total, £130,000 worth of shares in the company. Following these transactions, the respective interests in the company equates to 0.47%, 1.52% and 1.98% - and the dealings reinforces my belief that the firm is heading in the right direction. The shares are a "strong buy".

[yorgi] 04/10/2011 23:07

Jefffries £13.40 target:

As the company has previously indicated, Avanti reported FY'11 results in line
with expectations. It also announced four new contract wins. Backlog now
stands at £171m and pipeline at £473m, up £4m and £46m respectively since
April. Book value of £207m puts the stock on 1.1x, and this excludes a valuation
of the company's scarce slots and spectrum. The company also announced the
start of Hylas-3 construction fully financed by debt.
As the company has previously indicated, Avanti reported FY'11 results in line
with expectations this morning (Oct 3). Avanti reported sales of £5.46m, in line
with our expectation of £5.4m (cons. £5.9m) and an EBITDA loss of £9.9m, ahead of our
expectation of -£11.1m (cons. -£8.5m). Net income loss of £9.7m was exactly in line with
our expectation and ahead of consensus at -£13.6.
Shareholder equity of £207m implies the stock is trading on 1.1x. We previously
indicated investors should be focusing on price to book. Avanti reported shareholder equity
of £207m, below our estimate of £230m, but shows the stock is trading on 1.1x book value,
a significant discount to the fixed satellite sectors which trades on 3.0x and this is before
including any valuations of the company's spectrum and slots.
Avanti also announced 4 new contracts wins with results. The largest was a $2m,
two year contract on Hylas-2 with Bentley Walker for broadband capacity in Afghanistan. The
other three were shared virtual network operator (SVNO) contracts on Hylas-1 in Poland,
Germany, and Spain. Furthermore, launch +1 year insurance was recently placed generating
a savings of $15m versus budget.
KPIs show good growth. Backlog of £171m was up £4m from the last time they were
reported, back in April, and we estimate £4m of satellite sales have been reported since
that time, implying an increase of £8m or 6% over the last six months. Pipeline at £473m
shows an increase of £46m from April, or +11%. Capacity utilisation now stands at 36.7%
in year three of operation. The company reiterates its confidence that capacity will be sold
out within the three-year target.
Early stage construction work has commenced on Hylas-3 and this will be
financed through debt. The current financing offer is contingent on pre-sales which
are now conditionally contracted for $120m with the company saying they are 'close to
finalising the balance'.

[yorgi] 04/10/2011 23:06

Cancun these were all posted yesterday by BillyTkidd


Cenkos note £23 taget:

Avanti has delivered results for the twelve months to June 2011 that are in line with
our expectations. FY11 was a transformational year for the group with the successful
launch of HYLAS 1. FY12 has equal promise with the anticipated commissioning of
HYLAS 2 in June 2012. Yet in direct contradiction to the progress that is clearly being
achieved, the shares languish at a two year low. The shares currently trade on 9x
FY13 which is a compelling opportunity given Avanti's commanding position in this
high value niche market. BUY
Results in line with expectations
Avanti reported sales of £5.5m and Loss Before Tax of £12.0m. This included three months
of contribution from HYLAS 1 service charges. Sales were marginally lower than the £5.8m
reported in FY10 due to the termination of Ku Band sales in H1. Interest was significantly
reduced as a result of the repayment of the HYLAS 1 PIK bond. Avanti has a strong balance
sheet with £207m of Net Assets, representing 243p per share. The first drawdown of the
EXIM/COFACE facilities has successfully taken place for the construction of HYLAS 2.
HYLAS 1 fully operational
The major milestone achieved in FY11 was the successful launch of HLYAS 1 in December
2010 which is performing ahead of expectations in terms of power and lifetime. The satellite
entered commercial service in March 2011. HYLAS 1 has 75 customers, some of whom are
already reordering. The Backlog (the total value of contracts signed for sale of services) for
HYLAS 1, is £141m. This gives us a high degree of confidence that management will
achieve full utilisation of the satellite within the three timeframe that we have forecast. Sales
to date have concentrated on the UK, Ireland, Germany and Poland, with sales in Spain and
Italy accelerating. We estimate that less than 50% of sales will come from consumer
broadband as Avanti finds increasing demand and new applications in the Enterprise and
Government sectors. An example of this is today's news that a project has started in
connection with the satellite distribution of films to cinemas . Avanti's GVNO software allows
its clients a high degree of customisation and better utilisation of their capacity than any
other satellite service provider.
HYLAS 2 on track for launch in June 2012
HYLAS 2 procurement is on track for Q2, 2012 launch. The Backlog already stands at
£40m, which is in line with the financing plan for the satellite. Crucially 75% of HYLAS 2 is
focussed on high growth emerging markets. The top geographies for the satellite are
Afghanistan, Iraq and Southern and Eastern Africa. Management are in discussions with
major telecom operators who are planning to use HYLAS 2 to rollout large scale consumer
broadband programmes. Management has also incorporated militarised design into HYLAS
2 which puts them in a strong position to win business that they are currently tendering for.

HYLAS 3 begins to take shape
Avanti successfully undertook a £70m placing in June 2010. This was used to retire the
expensive PIK bond which financed HYLAS 1 and also to begin the development of HYLAS
3. The preliminary design has been completed. $120m of pre-sales contracts have already
been agreed in principal and work is on-going to secure further pre-sales. This will facilitate
the drawdown of Export Credit Agency debt which is now in preparation.
Forecasts unchanged
We are confident that Avanti will deliver sales of £29m for the year to June 2012 and Profit
Before Tax of £6.8m. HYLAS 1 already has a backlog of £141m. We estimate that this
backlog covers just under half of the £29m we forecast with nine months of the year
remaining. Many of the 75 customers are already returning for further capacity. We expect
consumer broadband sales to account for approximately £12m, enterprise solutions £10m
and government sales the remainder £3m. High customer demand and limited capacity
reinforces view that HYLAS 1 sell out in three years and HYLAS 2 in five years.
Strong balance sheet gives high degree of flexibility
Net Assets stood at £207m at June 2011, or 243p per share. In addition to this, Avanti has a
user right in three satellite network filings and 14GHz of spectrum. This spectrum enables
Avanti to provide satellite services to South America, Europe, the Middle East, Africa, India
and Central Asia. The value of these licenses was recently demonstrated by the recent sale
of an orbital slot to HNS and Star One giving coverage only of Brazil for £160m. One slot in
this auction went for GBP60m. Avanti has three slots giving prime coverage across far more
territories and potential customers (including Brazil). This implies a value of $270m that is
not recognised in the balance sheet. Furthermore, Avanti has no debt payments or
covenants for the next 15 months giving a great deal of financial strength and flexibility.
Valuation is compelling
Avanti shares are trading on 34x FY12 falling to 8x FY13. This is a compelling valuation for
a business that has only just entered into its first full year of earnings and occupies a
commanding position in a high value niche market. Furthermore, the current price is
underpinned by the Group's strong balance sheet, with a NAV / share of 243p, which does
not even include its orbital licenses. We will be publishing a more comprehensive note
explaining the investment merits of Avanti shortly.