Avanti Communications Share Discussion Threads

[togo2] 22/2/2010 15:37

Why the sudden drop?

[kevinford2] 18/2/2010 14:30

I received this in my inbox today...On 5th February Avanti Communications Group*, the satellite broadband company set to launch its first satellite (Hylas1) in the second quarter of this year, announced its results for the six months ended 31st December 2009. These were broadly as expected and it remains our view that the current share price significantly fails to reflect the future cash flows this company is poised to deliver. With the shares at 475p, we consider them a strong and compelling "buy".

[johnroger] 18/2/2010 14:18

UK-Analyst update

Avanti Communications* Update & Interim Results Comment - Reiterate 'Buy' at 475p

Key Data

EPIC
AVN

Share Price
475p

Spread
470p – 480p

Total no of shares
63,883,785

Market Cap
£303.45 million

12 Month Range
172p – 539.5p

Net Cash
£68 million (est)

Market
AIM

Website
www.avantiplc.com

Sector
Mobile Telecommunications

Contact
David Williams (Chief Executive)
020 7749 1600

On 5th February Avanti Communications Group*, the satellite broadband company set to launch its first satellite (Hylas1) in the second quarter of this year, announced its results for the six months ended 31st December 2009. These were broadly as expected and it remains our view that the current share price significantly fails to reflect the future cash flows this company is poised to deliver. With the shares at 475p, we consider them a strong and compelling "buy".

As the key to the investment case is the cash flow to be generated from the services provided by Avanti's satellites, the important numbers at this pre-launch stage were that despite £36.33 million of capital expenditure, the £24.65 million cash balance was actually slightly ahead of that at 30th June 2009 – largely due to £31.5 million of June placing proceeds. At the period end net current assets totalled £24.58 million, with £45.52 million of long-term debt on the balance sheet.

Subsequent to the half-year end, Avanti shareholders have approved a placing of 22.25 million shares at 400p each to raise £89 million, which together with an agreed £194 million of debt funding means that the construction and launch of a second, 2.76 times larger satellite (Hylas2) is fully funded. As well as duplicating Hylas1 coverage over Europe, this will also provide Avanti with new coverage in the Middle East, Africa and Eastern Europe – offering customers back-up and additional capacity as well as providing Avanti with economies of scale.

The demand-supply dynamics continue to appear compelling. In terms of the latter, satellite spectrum is scarce, finite and highly regulated and the industry is highly capital intensive and involves relatively long lead-times – Hylas2 is slated for launch in 2012 for example. Avanti's early mover status in offering advanced, 'Ka band' services can thus be expected to prove a significant advantage and the company noted in the results statement "it is now clear that the demand for Ka band services worldwide will be large". Demand, particularly in the provision of rural broadband, is described as "high" and the company also noted that other governments are now following the lead of early Avanti customers, such as the Scottish Government, and seeking to address 'digital divide' problems. Other markets – such as mobile network connectivity (with man y rural base stations capacity constrained) – also have clear potential and Avanti has recently completed a trial with "a major mobile phone company" and reports it is "moving forward in negotiations with several such companies".

At the interim stage Avanti reported that over 14% of Hylas1 capacity was committed to for the satellite's first year of operations, with "several new large contracts with major telecommunications customers under negotiation" and that, as launch approaches, "demand is increasing and the prices we are able to secure for pre-sales are rising". The company added it has been "thrilled by the strength of inbound enquiries resulting from the announcement of HYLAS 2, particularly in the Middle East, and have a number of significant contracts under negotiation for that region".

For the half year period the Income Statement showed an adjusted pre-tax loss of £496,000, suggesting our full-year forecast loss of £1.25 million remains reasonable. However, with the upcoming launch of Hylas1, the minimised risks and additional potential the financing of Hylas2 provides and the demand-supply balance suggesting the company should be able to quickly fill both satellites as well as benefit from launching further satellites in future, we continue to believe that on a very conservative, risk-weighted DCF basis these shares should currently be trading at above 800p. We continue to expect much higher returns than this as the company further advances as an intercontinental satellite player and at the present 475p rate the shares a strong and compelling buy


Forecasts Table:Year to 30th June
Turnover
(£million)
Adjusted Pre-tax Profit (£million)
Adjusted Earnings Per Share (p)
Price Earnings Ratio
Dividend Per Share (p)
Dividend Yield (%)

2008A
5.92
(1.47)
(5.3)
-
0.0
-

2009A
8.04
(1.13)
(4.1)
-
0.0
-

2010E
7.00
(1.25)
(2.4)
-
0.0
-



*The SF t1ps Smaller Companies Growth Fund, managed by a subsidiary of Rivington Street Holdings, the ultimate owner of GE&CR, owns shares in Avanti Communications.

[123prezzie] 16/2/2010 14:18

The Investors Chronicle (Feb 12, page 67) is "concerned on the slowing pace of pre-sales". There was a flurry of announcements in Dec, only one in Jan and none since. Let's hope that today's buyer knows something.

[wraggo] 11/2/2010 15:35

lets hope so big sell of 24100 gone through so im hopeing that was holding us back. onwards and upwards!

[dolores123] 11/2/2010 15:16

Wraggo - spot on! Perhaps now the share price will rise to £13 ps in accordance with the Broker's valuation!

[dolores123] 11/2/2010 14:54

Personally I'm expecting a new contract announcement any day now.

[wraggo] 11/2/2010 14:09

there must be a seller about nothing but buying for days now!

[jonnyno1] 11/2/2010 12:24

Lots of press coverage so there must be some momentum building.I am very happy owning these shares.

j.

[dolores123] 11/2/2010 12:06

Phil - great news and well spotted

[philanderer] 11/2/2010 00:00

10 Feb 2010
Avanti Communications

Questor says BUY

[arai] 09/2/2010 08:29

All looking well over here. Picked as my top stock of 2010 and had to choose between this and AFR. Exciting year ahead - cant wait.

GLA.

A.

[dolores123] 08/2/2010 14:02

Red Hot Penny Shares magazine said over the weekend to buy up to 550p. In a previous issue the RHPS price target for the end of this year was 800p.

[melody9999] 07/2/2010 21:00

Yeah - the one thing that I had not fully appreciated was how the 2nd satellite, as well as providing further earnings potential, will act as resilience. This has to remove one barrier to sale for potential customers.

[zimbi] 06/2/2010 20:02

Avanti looks ready for lift off

[johnroger] 06/2/2010 17:33

UK-Analyst comments on the results

Broadband satellite operator Avanti Communications* (AVN) reported a pre-tax loss of 440,000 pounds in the six months to 31st December, down from profits of 2.7 million pounds a year ago. Revenues increased slightly from 3.22 million pounds to 3.26 million pounds, and the diluted loss per share was 0.6p, down from diluted earnings per share of 6.37p in 2008.

Avanti commented that its order book and sales pipeline for the HYLAS-1 product is strong with over 14% already committed for the first year of the product's operation. It was also encouraged by the strength of inbound enquiries regarding its HYLAS-2 product, with a number of contracts under negotiation. Daniel Stewart said that the results were consistent with its forecasts, which expect a capacity utilisation for HYLAS-1 of 30% by June 2011. The 'buy' target of 1,111p was left unchanged. Avanti shares dropped by 24.75p to 481.75p.

[codhead1] 05/2/2010 18:59

5070481 Yes your summary this morning was spot on. This market is fickle. Looks like that dip I spoke of is on. Monday beckons to top up. Will be watching closely.

[jonnyno1] 05/2/2010 09:43

very strong statement , very weak market!

[dolores123] 05/2/2010 07:57

The potential growth is huge and seems almost guaranteed!!

[5070481] 05/2/2010 07:37

Good results but unspectacular. NOt sure what the market will have epxected from them so hard to guage what the short term price movememnt will be. SO far this results season it has been sell on meeting expectations and only buys if the company exceeds.

as far as I am concerned though there is only the potential for a short term blip before the rise will continue. Very impressive company and management continue to deliver on everything they promise. Great stock

[codhead1] 05/2/2010 07:20

These guys never fail to impress. The only set of results out in a long while with nothing nasty sneaked in. Brokers tipping £11 AND £13 plus targets and launch in May/June and a chart to die for. My star performer. Will buy more on any more dips before launch. Have a good one guys.

[dolores123] 03/2/2010 15:43

Back at my desk and just seen a nice purchase of 10,000 shares - bring them on!!

[dolores123] 03/2/2010 09:35

More good coverage - the planned growth of AVN is slowly being recognised.

[terryebby] 03/2/2010 09:06

Investors Chronicle columnist just tipped Avanti as the best growth tip for 2010: