Avingtrans Share Discussion Threads

[cockerhoop] 25/7/2017 17:15

ST in the Investors Chronicle tipped.

[dgwinterbottom] 25/7/2017 17:10

Any particular reason for the 7p uplift today?

[rogerrail] 25/7/2017 09:19

Interesting snippet from the HAYT annual report, mainly because in their proposal to the UK gov competition, R/Royce said there were no UK based suppliers of STG's. Clearly the RR proposal involves larger STG units than PB can supply. Odd though that the turbines referenced in this para were supplied to RR, and RR are also involved in the NuScale project in the US.

"Building off the expertise of manufacturing steam turbines for the nuclear submarine fleet Peter Brotherhood is well placed to support a sub-set of the SMR market, such as the NuScale technology which could see twelve modular 50MW reactors being built on one site.
NuScale are in the process of applying for a Design Certificate from the US NRC and are one of the companies in discussion with the UK Government for the £250 million of funding to support SMR localisation and deployment in the UK".

[puffintickler] 24/7/2017 09:07

Thanks for that Wilmdav.

I have been in and out of AVG over many years, I recently sold out everything (my biggest holding) for the open offer at 200, bought most back averaging 190, sold almost all again at an average of 240 and bought back at 205. It is (again) my biggest holding but I am less sure what AVG is now than before.

Much depends on the Hayt acquisition which is a bit of a black box to us outsiders but AVG management make their money essentially from turning businesses around, their track record is excellent so I think your optimistic view is more than justified. They have timed the purchase well and avoided overpaying. But it is a big beast that changes the nature of the company.

Fingers crossed.

[wilmdav] 24/7/2017 08:46

Below is a link to an exercise I do on any company before deciding whether to invest. In this case the company is HAYT. It is easy to see why the bank took fright.



HAYT’s year ends on 31 March. There was a significant difference between its performance in H1-17 and H2-17.

In H2-17 revenue was £40m compared to 23.1m in H1. Adjusted EBITDA in H2 was £4.6m compared to -4.6m in H1.

The CEO reflected this in the full year report saying, “We increased the run rate on an annualised basis to £80m of revenue and over £8m of EBITDA.”

Paying the equivalent of £50m for an implied forecast of £8m EBITDA in HAYT’s current year does not seem a lot. It is worth remembering, however, that HAYT forecast £80m revenue for the 16/17 full year in their half-year report. Only £63m was actually achieved. There also seems to be an element of seasonality in HAYT’s previous results.

AVG’s year to 31 May 2019 will be the first full year of contribution from HAYT. I am going to assume HAYT does contribute £80m revenue in that year and have a stab at making an earnings forecast.

For HAYT’s year 2016/17, D & A was £2.5m and interest £1.2m.

Using £8m as the EBITDA figure, and deducting D&A and interest gives an adjusted pre-tax profit (PTP) of 4.3m.

Add £1.2m PTP forecast for AVG in their 2018/19 year. This gives a total of £5.5m as an estimate for AVG’s PTP for their year to 31 May 2019. It is made on the conservative assumption that HAYT makes no improvement on its adjusted pre-tax profit ‘run rate’ of H2 16/17.

Deduct £1.0m as a ‘normalised’ tax rate of 23%, giving a post-tax profit of £4.5m.

AVG currently have 19,171,123 shares, which will increase to approximately 30.7m when the acquisition is completed. Divide £4.5m profit by 30.7m shares to arrive at an adjusted eps of 14.7p and a prospective P/E of 15.1 at the current share price of 211.5p.

Long-term holders, of which I am one, might justifiably expect that AVG directors are capable of knocking spots off this, with a possible question mark over what could happen during Brexit negotiations.

[cisk] 20/7/2017 16:20

Good spot Roger, agree with you that it probably was valued at zero, but know, like you, I think there is definitely value there. Still think we're undervalued at current levels, happy to sit in and wait for the re-rate to happen!

[rogerrail] 03/7/2017 09:20

The good new is that 70% of sales last year where aftermarket - the key is to manage the peaks in OE build without carrying excessive overheads. This was achieved at Maloney by closing the factory, not that I am suggesting they close Peterborough.

[dgwinterbottom] 03/7/2017 07:41

Roger - I fully agree that once control of HAYT passes to AVG the BOD will hit the ground running in terms of reorganisation as I have no doubt that plans have been under way for some time already as to how things will be programmed.

Historically AVG has generally produce items for which there is constant on going demand ie: pipes and tubes for RR and in the near future 3m3 boxes for Sellafield, thereby avoiding the nightmare of holes in the order book. My concern is that taking on PB that manufactures such large capital equipment this is one problem they could start to experience, as you highlight in your above comment.

[rogerrail] 30/6/2017 12:35

DG

Bearing in mind I have not had a chance to fully digest today's results, IMO I think HAYWARD has a strong well invested business with a good order pipeline and concerns on oil are overdone - just needs a strong balance sheet to underpin confidence with suppliers , preferably with ELB in place as MD of the business if he accepts which seems unlikely as he is due to take a non-exec position.

I think Austen Adams will take charge of PB. Though not so dependent on oil it has won work with Oil refineries and has some synergies with Maloney. Historically it has a very lumpy OE order book though aftermarket is good and has been building up well. Factory overheads need to be trimmed to avoid the big losses sustained last year, and this may be possible by outsourcing some work to Chatteris which is located close by, until more consistent workload work is achieved - I am not sure if they are in the running for the 4 boat Trident submarine contract for STG's but this may be a crucial and lucrative opportunity, they should have a good chance of winning this as they have previously supplied the Astute programme.

[dgwinterbottom] 30/6/2017 11:35

Roger - given your accurate insight in the past with AVG what are your thoughts re the way AVG Board will set about reorganisation of HAYT?

[rogerrail] 30/6/2017 10:19

Outcome as I predicted 45p-50p on my post 2523 on 23rd/june though I did expect some cash as a sweetener. I have always maintained that preserving cash is essential for supporting growth of the individual businesses and hence an all share merger is the best outcome for long term shareholders of both companies. The directors of both groups clearly understand this. Some HAYT shareholders more interested in a quick buck may quibble , but the market reaction has confirmed the deal is in the right ballpark.

[dgwinterbottom] 30/6/2017 10:12

"Avingtrans intends to perform a full review of the executive management function of the Enlarged Group. Although, where feasible, Avingtrans may seek to redeploy the members of HTG's executive management team within the business, it makes no guarantees in this regard. This review process may result in expanded roles for certain members of the Avingtrans existing executive management team." It would appear that AVG will take over at operational management level.

[tiswas] 30/6/2017 09:56

I am not sure about the "strange comments" Pavey but what it boils down to is how distressed HAYT really was.

I reckon AVG are paying about £27m for the equity and taking on £22m of debt so a valuation of circa £50m?

An all share deal means AVG can presumably either use their cash to pay off the debt or refinance on better terms and keep the cash for further deals.

I do not think it is a steal but think it is a good long term deal which is why I will probably wait until buying back in. It will be interesting to see what Maurice Critchley, who has a decent holding and does not appear to have recommended the deal, does next although presumably he has had a while to find an alternative deal.

[pavey ark] 30/6/2017 09:22

Strange comments here but then as we have seen (above) there is usually an other motive/agenda in play.

This looks a done deal and it looks a great deal for AVG.

It is not often that I make 27%-35% in a couple of months and find myself disappointed but I certainly felt that HAYT would go for more or stay independent and prosper.
(different percentage as price changes but that will settle down and due mainly the fact that those quick of the mark could sell their AVG shares and buy them back through HAYT for less)

Anyway, we are where we are and my AVG shares cost me 183p so we will see where we go from here.

I suspect that this is such a good deal for AVG that the price will rise to give me the silly profit I was expecting but it will take a bit longer.

EDIT: I see that the market has sorted itself out.
Not a lot to do with this being anything but a good deal for AVG it is just that if you sell AVG now you can't profit from immediately buying them back via HAYT.
Until the deal is done these shares are liked in this way.

[toffeeman] 30/6/2017 08:53

Well, in at 200 out this morning at 240 so nice short term trade.

[dgwinterbottom] 30/6/2017 08:51

The AVG Board have an experienced oil man no doubt he will have the deep inside industry knowledge and what the future is in this respect. I think the real benefit is on the Nuclear business

[buywell3] 30/6/2017 08:39

Seems like the market thinks AVG has swallowed something that might prove to be hard to digest

HAYT was getting more exposure to the OIL sector I believe (over 30% of turnover)

If OIL continues to stay under $50 for another 2 years or so

This might prove to be a tad costly

[tiswas] 30/6/2017 08:07

I wonder what Maurice Critchley will do now, he holds a few shares from memory.

Not a great deal, short term at least, with all that debt to be taken on.

[toffeeman] 30/6/2017 07:31

Nope agreed bid just announced: paying at the top end?

[toffeeman] 30/6/2017 07:19

Is this a technicality or should we expect yet another delay?

30 June 2017

Hayward Tyler Group plc

("Hayward Tyler", the "Company" or "Group")

Update on banking facilities

Further to the announcement of 1 June 2017 Hayward Tyler Group plc, the specialist engineering Company comprising the operating companies of Hayward Tyler and Peter Brotherhood, is pleased to announce that the repayment of GBP2.4 million of short term banking facilities and the annualised measurement of the financial covenants, have both been extended from 30 June to 28 July 2017

[puffintickler] 29/6/2017 13:35

Well done tiswas.

Trouble is that long term irrespective of the HAYT deal these shares still look very cheap. I did sell out at 226 on its way up last time, bought back at 205 but I'm hanging on this time.

[tiswas] 29/6/2017 11:37

I hate trading, it is a habit I am trying to get out of, but having been lucky enough to buy a week or so ago sub 200p it is too hard to resist at 245p bid.

As toffeeman says above, too low volume to indicate anyone really in the know. What price will they pay, debt/equity mix, how much debt would the enlarged group run with?

Hopefully, if it is a steal, I will have time to get back in as the group would have a very promising long term future, who knows?

[toffeeman] 29/6/2017 10:31

BBT dark surely:)

Anyhow - given that we should know the outcome tomorrow - the market seems to think that any deal will be advantageous to AVG and I hope that is the case......