Avanti Communications Share Discussion Threads

[yorgi] 29/3/2012 16:56

More likely to respond to big contract win and news of definite date early rather than late for launch of Hylas 2.

As we know AVN have kept a steady stream of contracts flowing a big one or two would make all the difference.

With the gains made last week the recent weakness is not altogether surprising taking into consideration end of tax year and add to that a weak market generally being spooked again by the Euro crisis which just rolls on and on.

[martin3042] 29/3/2012 15:09

charts are all very well but do they work for a very small company with one satellite when in a few months time it will put out an RNS as its about to be a small company with two satellites.

[johncsimpson] 29/3/2012 15:03

backmarker:

Fibonacci I use all the time. I'll try and find an on-line explanation for Eliot Waves, with a video guide.

[backmarker] 29/3/2012 14:26

johncsimpson,

I'm no expert on Elliott Waves, so my numbers are just a bit of fun really.

From what I've seen the waves work better over longer periods, but the theory is that within each wave of whatever scale you choose there are sets of smaller waves within them, and each set of waves is part of a wave of larger scale. a sort of fractal arrangement.

so the set I suggested of 243-275-262-295-282-315 might be wave 1 of a 5-wave cycle of next magnitude.

so an upwave of 243-315 would need to be followed by a downwave of 3 elements, say 315-290-300-280, then an upwave of 5 elements, and so on.

in fact, having looked at the downwave set against recent chart history makes me think that I may have estimated my first wave too low. 243-275-262-310-290-330 looks a better "fit", with a second wave of say 330-310-320-300 before a 3rd wave to 380 and a 5th to 440.

the purists will probably try and incorporate Fibonacci intervals as well as more accurately looking for the expected support and resistance levels.

anyway it will be amusing to look back and see whether any of this speculation turns out remotely close to what actually happens.

[johncsimpson] 29/3/2012 11:15

Just looked again at that (those) big trade(s) that went through just before 5.00pm yesterday.

Don't understand them at all. There are now two displayed (half an hour ago) but they're different quantities by 100.

We need VOLVO's imput - he's usually well informed in these matters.

[johncsimpson] 29/3/2012 10:57

Morning backmarker - I've read about Eliot's Wave Theory (that's what your on about isn't it)? but know nothing of the 'subtleties'.

I'll watch your numbers with interest - I too had identified that gap but they're not always filled in my experience.

[johncsimpson] 29/3/2012 10:52

There goes that big trade from last night - thought it was all a bit suspicious at the end of the day.

[backmarker] 29/3/2012 10:25

if this is the start of the climb - and I think it is - then we should start looking for the first 5-wave up.

starting with 243 to 275 as wave 1, falling back to say 262 for wave 2. then we might get a rise to 295 for wave 3, back to 282 for wave 4 then to 315 for wave 5.

one hiccup with this is if instead of the daily close you look at the candlesticks. this shows a gap between 257 and 260 four days ago, not to mention some lower intraday lows that might contend for the end of the downwave / start of upwave.

so the count may be 243-275-257-295-280-315.

or of course we might be in one of those "continuation" phases, which the cynic in me views as a way of explaining away those price movements that don't conveniently fit the 3-up 2-down pattern.

[johncsimpson] 29/3/2012 09:32

Think that's shaken the tree for now.

C'mon Tim.

[johncsimpson] 29/3/2012 08:32

Well, looks like we can forget the big purchase then . . .

Fear not, 260ish ought to be support or we really are in trouble . . .

[johncsimpson] 29/3/2012 07:47

Well, what an interesting last two minutes that was yesterday afternoon, followed by the +600,000 after hours buy reported a little later.

This gives me a slight anomaly because up until 4.28, AVN was looking like closing down on the day but in the last minute the offer jumped to the 268 area and actually has a reported end of day close higher than the last traded price, not withstanding the biggy.

I've put a volume histogram on the upper graph, the eagle eyed will spot it doesn't reflect the large after hours buy. So I have a graph that tells me one thing whereas I think it's short one piece of important information. Even with the end of day price showing 269.25, looking at the overall picture I would have been pessimistic about today's prospects but we have yet to factor in that big purchase. Bit tricky really but I'll go out on a limb here because I was always taught that everything you need to know about a share is there in the chart. (That's actually too much of a generalisation for me because charts don't contain the next RNS do they)? But we still have resistance in the 287/290 area so I won't be surprised to see a run up towards that followed by a fall back.

As I said earlier, without the big trade, things were not looking good for any real forward movement. AIMHO, of course.

[peterwaller395] 28/3/2012 18:36

Major purchase, we are on our way at last

[yorgi] 28/3/2012 17:43

Yes no small amount it does look encouraging I agree :-)

[lazyj] 28/3/2012 17:13

Late purchase of £1.72m @ 272 looks encouraging for tomorrow.
Sadly it wasn't mine!

[newswseller] 28/3/2012 12:12

lol... it is a bit of an overkill

[colva] 28/3/2012 11:22

Yes please John .

[yorgi] 28/3/2012 10:53

Spread closed right up now, are we about to move on up.

[johncsimpson] 28/3/2012 10:08

Anybody like to read the FULL article from RHPS earlier this month . . . ?

[yorgi] 28/3/2012 09:38

Volvo does seem to have been well informed ! :-)

[yorgi] 28/3/2012 09:36

Well it's making a good start Someuwin....:-)

[yorgi] 28/3/2012 09:35

Looks like a good start to the day, even if not from the bell but AVN is often not one of the earliest risers of the day.......mind you it has not risen very much at all over the last year in fact pretty much the opposite.

Well worth reading the RHPS info and TW's (I know he has had a bad run) but it all adds up to showing how oversold AVN is.

[someuwin] 28/3/2012 09:32

So, basically its gonna move up big style.

[yorgi] 28/3/2012 09:31

For anyone who missed the posting by Newswseller last week :


AVN


Avanti launched HYLAS 1 in November 2010, it will launch HYLAS 2 in July, and it recently
announced that HYLAS 3 would be launched in 2015. The valuation of Avanti's shares depends upon
a number of things: the cost of building, launching and running these satellites; the revenues that
each satellite can deliver through sales of transmission capacity; the timing of costs and revenues; the
method and terms of financing; and finally, the value that is placed today upon future profits.
Let me review the progress of the three satellites.
HYLAS 1 was launched in November 2010 and covers Europe. The launch was a success, HYLAS 1
has been performing well and Avanti is on track to sell out the 3GHz of capacity by April 2014, defying
some critics who argued that it would not be able to compete effectively with the big incumbent
satellite operator Eutelsat.
Eutelsat's Chief Executive believes that the European market is at least six times as large as the
current combined capacity of both itself and Avanti. Eutelsat has the advantage of greater capacity,
though Avanti's more advanced Ka-Band technology compensates somewhat for this. While attention
has been focussed upon the delivery of broadband services to customers in remote locations, Avanti has
also been developing other markets, for instance for corporate data, as an emergency backup to existing
broadband networks, the mobile backhaul market and satellite distribution of films to cinemas.
New contracts and better contracts
The attractions of Avanti's services have been the subject of much debate, but we now have firm
evidence. Avanti says that a full HYLAS 1 should generate approximately £50m in annual revenue
when it reaches 'full saturation' at the end of the third year in service (i.e. by April 2014). This is in
line with original budgets (when I first tipped Avanti in March 2008, I suggested that annual revenues
would be £34m, based on prices being achieved at the time).
Thanks to contracts already in the bag, Avanti expects to achieve sales of £17m in its first full year
of sales, to June 2012, with the possibility that this could be exceeded if other significant contracts are
signed in time.
With £23m of new contract wins announced in the last two months for HYLAS 1 and HYLAS 2, sales
momentum has been increasing and Avanti has reduced the length of time within which it expects to
achieve full capacity utilization for HYLAS 2 from five years to four. Although the original five-year
figure included some contingency, this is an expression of confidence.
With capacity of 8.3GHz, compared to the 3GHz of HYLAS 1, HYLAS 2 covers the Middle East
and North Africa although it could also be used as an overflow capacity for HYLAS 1. Its steerable
antenna is attracting attention from the military while HYLAS 2's qualities of resilience, encryption,
security and quality are enabling it to sell on the basis of quality and technology fe atures and benefits
rather than just merely on price. Accordingly, Avanti is 'confident that our capacity can be filled at the
expected prices'.
Avanti's cracking deal on its next satellite
Clearly, the forthcoming July launch of HYLAS 2 carries some level of risk, but all being well Avanti
should soon have two operating satellites. A third, HYLAS 3, is now scheduled for launch in 2015.
Originally Avanti had planned to launch a third large satellite financed by bank borrowings secured
against advance sales. However, the tightening of lending criteria by the banks has made this option
increasingly unattractive and so Avanti has jumped at the chance to pursue an alternative.
At the end of 2011, however, the opportunity arose for it to launch HYLAS 3 on board a new
European Space Agency (ESA) satellite scheduled for 2015. The 4GHz capacity of this third satellite is
less than the capacity that Avanti had originally envisaged for HYLAS 3, the launch will be later, and to
secure this arrangement Avanti has had to raise £75m of cash through a share issue.
The deal is nonetheless very attractive to Avanti though. The sharing of costs with the ESA means
that for each additional GHz of capacity Avanti will pay just £18.8m on HYLAS 3, compared to £41.1m
for HYLAS 1 and £33.7m for HYLAS2. Besides that, the ESA is responsible for any cost overruns. As with HYLAS 2, HYLAS 3 will be aimed at emerging markets with a fully steerable cluster of beams that can be deployed anywhere in Africa or the Middle East.
How to price a space-age company
Assuming they all go successfully into operation, how much money might Avanti make from these three satellites?
At full capacity, which should be achieved by mid-2014, HYLAS 1 should be producing annual revenues of c.£50m. After deducting the operating and other costs, and the depreciation charge of c.£7.5m, HYLAS 1 should be generating a profit before interest and tax of c.£30m. This level of profitability is expected to stay fairly constant over HYLAS 1's expected life of 15 years and, discounting these future cash flows at a rate of 8.5% broker Daniel Stewart calculates a value today of £310m, which is worth c.278p per share.
On the same basis, Daniel Stewart values the larger HYLAS 2 at £684m, equivalent to 612p per share and HYLAS 3 at £551m, or 493p per share. That makes a total of £13.83p per share to which Daniel Stewart adds the discounted value of Avanti's projected 2031 cash balance of £784m – to arrive at a total of £20.17 per share.
Another calculation that we can make is of Avanti's net asset value, a figure that simply looks at Avanti's assets less liabilities today and ignores any future profits. At 30 September Avanti had net assets (excluding intangibles) of £195.2m, to which we can add the £75m raised in the recent share issue. Dividing the total of £270m by the 111.7m issued shares gives a number of c.242p per share, to which we can add the value of Avanti's orbital slots. That this space real estate has a value was demonstrated last October when Brazil held an auction of orbital slots and reportedly received a bid of $88.3m for a single slot.
So the share price looks very well supported by net assets while the future profit projections are, in my view, not especially risky. Satellites are built and launched under fixed price contracts, and operating costs thereafter are low and unlikely to be subject to significant change.
So the big swing factor is revenues. There is little risk that the sky will become oversupplied with satellites and despite some fantasies about other, wireless, means of transmitting data to remote locations there is unlikely to be a genuinely competing technology at least within the 15-year life of Avanti's satellites.
We also have some circumstantial evidence. HYLAS 2 was funded by the USA Export-Import Bank and the French agency Coface, two government bodies that are notoriously rigorous and cautious. Avanti's directors have been regular buyers of the shares and would hardly have done so if they had any serious doubts about the business. Paul Walsh, the Chief Executive of Diageo, has joined the Avanti Board. Avanti has stated its intention of moving from AIM to the Main List of the Stock Exchange. And in October Avanti's Chairman John Brackenbury, alluding to 'some short-term speculators who have attacked the share price' said:
"It is clear that Avanti owns scarce and valuable resources in one of the few lightly competed sub-sectors of the global telecoms industry which should see us create very significant value. I see great opportunity in emerging markets telecoms and our advantages in these markets are significant. I am grateful for the resolute support of our core long-term investors. Patience and confidence in the quite exceptional and unique advantages Avanti has will be rewarded. Our pipeline of new business gives us confidence in our ability to meet expectations."

RHPS Verdict: None of these statements and actions are consistent with a business that is failing to deliver. In my view, the case for Avanti is as strong as ever. I am looking forward to the launch of HYLAS 2 in July and to this time next year when Avanti should be earning good money from two operating satellites. My share price target remains £15, so BUY UP TO 750p.

[johncsimpson] 28/3/2012 09:26

Why on earth do people keep posting the same content . . . ?