Avingtrans Share Discussion Threads

[dgwinterbottom] 13/3/2017 09:49

Interesting recovery over the last ten days!!

[dgwinterbottom] 07/3/2017 08:24

Could see an uptick for the oil & gas side of the business!

[dgwinterbottom] 06/3/2017 14:25

Steve3sandal - many thanks much appreciated

[steve3sandal] 06/3/2017 14:03

A few snippets from ST. Mostly this is a repetition of results, contracts, acquisitions.....the intention is to invest wisely of course. The attraction for me here is their track record, and I am hoping for more of the same.

I had an interesting results call with the directors of Avingtrans (AVG:215p), a maker of critical components and services to energy, medical and industrial sectors, and a constituent of my 2017 Bargain Shares Portfolio.....

The small acquisition of Abingdon-based Scientific Magnetics, announced alongside last week's half-year results, is a good start as it brings in expertise in superconducting magnets and cryogenics, and broadens the capability in the supply of vacuum vessels and cryostats for Big Science, space and astronomy projects. For example, Scientific Magnetics has recently developed a number of technologies, including a helium-free magnet system for pre-clinical MRI and ultra-high vacuum applications. Bearing this in mind, Mr McQuillan believes that the acquisition offers "genuinely exciting opportunities across a number of key markets", adding that "the business had previously been constrained by a lack of investment". Including debt to be repaid on completion, the £815,000 purchase price seems fair for a business that made an operating profit of £55,000 last year. I understand that there are several other potential acquisitions being considered at the moment, albeit these are at an early stage.

Importantly, the company is bang on track to deliver on analysts' expectations that suggest a small pre-tax profit of £200,000 on revenue of £24.3m in the 12 months to the end of May 2017, implying a profit of £0.5m on revenue of £14.7m in the second half. Furthermore, contracts already in place account for the vast majority of the 33 per cent ramp-up in revenue to £32.8m forecast for May 18......

Analyst Jo Reedman at housebroker N+1 Singer has an intrinsic valuation of 247p a share, but notes that if the company can successfully deploy £15m of the cash pile in a buy-and-build growth scenario, then a valuation nearer 292p a share is more appropriate. I wholeheartedly agree.

[dgwinterbottom] 06/3/2017 13:36

Can anyone provide a run down of the article please

[mfhmfh] 06/3/2017 13:03

Yes interesting update from Simon.Thompson on IC

[x54v] 06/3/2017 12:09

Just been tipped by Simon Thompson in the IC-

[cockerhoop] 03/3/2017 13:03

There's no point in fretting, either you trust the management to do their job or you sell up. FWIW i'm highly encouraged by the fact they've got a wedge of cash to spend (more than they expected because of low take up in the tender, in itself a vote of confidence in the management) and they've bought a couple of cheap acquisitions. I imagine they have larger acquisitions lined up but for a variety of reasons it can take time to get over the line.

[dgwinterbottom] 03/3/2017 12:40

Roger - I agree with your thoughts above but as has been shown in the past, the BOD play their cards very close to their chest hence my comment above. They seem to make sure they have a bedrock of mass production items to provide ongoing cash ie: pipes and tubes in aerospace and now 3M3 boxes for E&M while at the same time look to expand by acquisitions of a niche nature

[rogerrail] 02/3/2017 19:47

DGYour right , the 3M3 boxes are the big money spinner I alluded to above and should provide a decent margin when they ramp up, and there is a good opportunity to win alot more work. However surprised no update as to timing. Perhaps I am getting a impatient but until then I am concerned they will burn cash. On current turnover levels on the sub contract type work AVG are getting they have not shown they can generate a decent return, and if so that will erode shareholder value. Hopefully also the recent aquisition, even though small will open the door to more higher added value work, and that may be reasoning behind the purchase, but would have been good to get more info on the strategy here.

[dgwinterbottom] 02/3/2017 15:08

Roger, I very much take your point but I have a gut feeling something may be going on in the background. At the AGM it was stated the manufacturing facility for the 3M3 boxes could undertake double the current requirement, so why would they create such a large facility twice as big as that needed..........

[rogerrail] 01/3/2017 16:18

Well they need to do something quickly, otherwise with a gross margin of under 12% they will burn cash. Seems directors are sitting on their hands.

Results Statement claims:

"Our Energy and Medical businesses are clear leaders in their chosen markets, providing customers with consistent quality, as part of a world class supplier journey. Our Chinese presence is also providing a crucial additional competitive advantage"
so why is gross margin so low?.

Other than the nuclear contracts , I am not totally confident (and there is no information to suggest otherwise) that the other recent wins were won on the basis of higher margins.

[puffintickler] 28/2/2017 16:48

The company looks fully, even over valued given todays results so the share price is likely to slide while nothing much is happening. Short-termers and traders are likely to bail out for now.

Nonetheless I hope they don't feel pressed to splash the cash. That would be a mistake, but I think they know that. There are bound to be good purchase opportunities out there to complement their expertise but they will have to be patient to find the best ones.

[ganthorpe] 28/2/2017 12:57

They went big game fishing and caught a minnow. Hope they have better luck next time

[ganthorpe] 20/2/2017 12:31

Without a deal I think the shares are fully valued with cash earning next to nothing

[wilmdav] 19/2/2017 22:37

Rubbish in - rubbish out.
At 31/05/16 NAV was £64.8m among 27.8m shares at 233p per share. Subtract £19.4m for shares repurchased at 200p leaves £45.4m among 18.318m shares = 248p per share. On this basis at 232.5p we are still below book value.
Still don't see where Simon Thompson gets the extra 22p from.
What sort of return can we expect them to earn on the remaining £26.1m of cash (ST's estimate) in 2017-18? 5% would be £1.3m or 7.1p. Fincap is forecasting 1.2p for this year and 7.6p for 2017-18. This obviously includes profits from the existing businesses, which made eps of 1.0p last year.

[wilmdav] 18/2/2017 23:56

"It’s not difficult to see why, given that the company’s share price is trading 30 per cent below pro-forma book value of 270p a share, even though I estimate that Avingtrans retains net cash of £26.1m, a sum worth 143p a share, after accounting for transactions costs on the disposal and working capital movements. This means that we are effectively getting £10.1m, or 55p a share, of fixed assets in the price for free, in addition to £4.6m of current assets. That’s anomalous....."

I don't yet see where Simon T gets his 'pro-forma' book value of 270p from. NAV at 31/05/16 was £64.8m. Subtract £19.4m for cancelled shares, leaving £43.4m or 236p (18.318m shares).

[puffintickler] 16/2/2017 13:37

Possibly there is some unknown news out there, the sudden rise is a bit suspicious! But I think the shares have been undervalued given the potential of the nuclear contract so it may be that the share price is just playing catch up.

The results will look quite different following the sale of Sigma and subsequent return of capital. The business, market cap and assets will be smaller so the various valuation ratios will be greatly impacted and the performance effect magnified. It may be that everything looks much healthier. But then again...

I'm not planning on selling as I am in this one for the long term.

[dgwinterbottom] 16/2/2017 13:06

Roger, I agree the 15p rise today implies something is going on behind the scenes together with the delay on Interim Results perhaps all will be revealed on the day

[rogerrail] 16/2/2017 12:46

still skeptical, to me share price is rising too strongly on no news.

pure speculation , but one consideration is whether directors are planning an MBO with the help of Nigel Wray, collectively they must be holding > 35% of shares?

[puffintickler] 16/2/2017 12:41

That makes close to a 30% rise since late Jan and no sign of pausing for breath either...

[cockerhoop] 16/2/2017 08:24

Of all Simon Thompsons tips, the Bargain Portfolio is the most influential imo. 1 of this years selections went up 33% in the morning of release.
Saying that, it's well known the company is looking for suitable acquisitions so it's only a matter of time before they announce another.

[dgwinterbottom] 16/2/2017 08:16

Roger - I too was beginning to think the same, the run up appeared to have been very high and continued for quite a while beyond the IC article.

[dgwinterbottom] 15/2/2017 15:11

Indeed, I thought it was rather interesting that it is two weeks later than last year. May be nothing in it of course but as you say the future could be very interesting.