Avingtrans Share Discussion Threads

[rogerrail] 05/5/2016 19:33

From the interims announcement , Sigma Hinckley site was to become the compipe production centre.

[dozey3] 05/5/2016 18:10

If management are looking round for a new field for investment they could do a lot worse than look at HYD. With plenty of ip and almost worldwide distribution of its storm- and waste-water products, expanding and undervalued. The thing is they outsource all manufacturing which AVG would be able to take in house (and perhaps improve).
Of course I talk my own book being long of both, and would also be happy with a large slug of cash.

[dgwinterbottom] 05/5/2016 12:52

Cisk: Indeed it is far fro clear how the Composite unit stands other that it moves to remain with E&M. In which case I believe if they have given over the jet engine tube research
I would have thought it can only be any patents or IPR rights

[cisk] 04/5/2016 23:32

DGW, that's exactly what I was speculating earlier today in previous posts.

It's by no means clear what the retention of the composites business actually entails - is it to produce composite components etc, or specifically composite tubing assemblies?

There's no doubt of the level of investment required to get such products onto the market in the years to come; the design, prototyping, testing and certification process would be extremely time consuming and costly, however the end results could be worth it.

No doubt this weighed heavily in the minds of the board when deciding whether to sell the aerospace business.

Regardless, I think the rump of the business is undervalued, and as others have said, I fully expect further announcements on the expansion of the remaining business.

[dgwinterbottom] 04/5/2016 19:02

Given the Composite division is remaining with the Group I wonder if they are keeping the rights to manufacture and supply the composite pipes for jet engines?

[puffintickler] 04/5/2016 18:11

Exactly, plenty more to come IMV

[nurdin] 04/5/2016 15:31

The Medical and Energy divisions had a tough time last year,but seems to me the businesses have now stabilised and the prospects look much brighter specially in the nuclear area.This is what they said at the Interim stage in February this year:

The Sellafield project is the precursor to a significant expansion of long term business in the nuclear decommissioning sector. Our first contract is for 1,100 waste storage containers over 10 years (worth GBP47m in revenue), but Sellafield require over 40,000 such containers over the next 20 to 30 years. Thus, we believe that a long term partnership is in prospect with Sellafield, utilising Metalcraft's expertise in producing high integrity vessels and containers, to time and budget, as we have done in other markets. This is potentially transformational for the division over the next few years. We are also delighted with the new contracts with Bruker and Rapiscan, as these demonstrate our ability to grow the division in new market sectors.

Cant believe the rump of the business is valued at just around £5m given the prospects!

[dgwinterbottom] 04/5/2016 15:06

Roger - My thoughts exactly, I would not be surprised if they have the potential acquisitions lined up ready to roll.............

[cfro] 04/5/2016 14:52

Bought in here today.

The deal announced today looks company transforming imo. Still need to carry out further research however as i am a first time investor here.

I wonder how much of the proceeds are likely to be returned to shareholders?

They could, for instance, pay out half and keep half back to make inward injections into the remaining business and still make a few earnings enhancing acquisitions on top in order to boost it.

[rogerrail] 04/5/2016 12:41

DG

Going on past history of what happened soon after the sale of Jena tec, we should expect further acquisition activity very soon, possibly announced on the day of the AGM.

[rogerrail] 04/5/2016 12:22

cellars

yes , I also wonder why as it would have been an excellent fit with Steico. No doubt they would have looked at it and perhaps they were not keen to acquire CH finishers as part of any deal so did not make the best offer.

[cellars] 04/5/2016 10:47

I wonder why Senior did not buy this. Competition regulation? Valuation grounds??

[dgwinterbottom] 04/5/2016 10:32

Morning Roger - very much agree with your sentiments I was looking for much more in the Aerospace division let alone Energy & Medical. They probably feel that further aerospace r&d as you say would require significant further investment for possibly little relative gaib whereas the E&M division is now at the threshold of much greater things. As I said previously it will make for an interesting AGM!!

[rogerrail] 04/5/2016 10:22

Personally disappointed with the disposal as I felt it was only a short matter of time ( ie the next results announcement) before the true value of the aero business was reflected in the share price , and the opportunities for investing in aerospace for PI's are further diminished, but not totally surprised for two reasons. Firstly the recent acquisition of Steico for £60m by Senior was a good indicator to the board as to the sales value they could achieve , secondly AVG needed to invest in the business to maximise its potential and potentially that would have required the raising of new capital.
On the positive side the management here are switched on and I don't believe they would have taken this move if they were not confident in the future of energy/medical div which up till now has been a near to zero contributor to the share price valuation.

[nurdin] 04/5/2016 09:49

Yes agree...and therefore have dipped my toe.Looks a bargain.

[eezymunny] 04/5/2016 08:37

Looks like remaining biz turnover c. £20m and making a small profit this year, being valued here (190p) at c. £5-6m above net cash? Does that sound right? I guess might still be cheap here but lots of parts...

Had a few for my EEZY3 portfolio in case it is :)

[cisk] 04/5/2016 08:28

The price reaction so far is somewhat muted - I would have expected more of an uplift than 16%. Regardless it's still a great deal and all we need now is news of more Sellafield wins etc.

[puffintickler] 04/5/2016 08:23

The sale at £65M for assets valued at £26M (accounting) looks very good to me. It equates to £2.30 per share. Over the period the results came out AVG was bouncing around £1.00-£1.20. These assets were generating all the profit at the time so if we give nil value for the rest of the business the uplift in value is £1.10 per share.

You could argue that the current price should be the pre-rise price (say £1.20) plus £1.10 so about £2.30. This look too high, but may not be.

Nice.

[bookbroker] 04/5/2016 08:19

Deal with this transaction is that it alleviates most of the risk for this co., and gives it tremendous flexibility to develop its other remaining businesses, one cannot crib the price received, and it removes a considerable amount of the debt in the holding co., a good deal for all parties, aerospace would have required considerable capital investment, and the payback is very much reliant upon the vagaries of the aerospace industry!

[dgwinterbottom] 04/5/2016 08:08

Cisk - My thoughts were that the composite pipes for jet engines once having passed regulatory tests would have been a game changer insofar as Aerospace was concerned especially if GE & Pratt & Witney became customers, but I suspect THAT was the carrot for the buyer in terms of purchase and price agreed!!

[bookbroker] 04/5/2016 08:02

Superb price realised!

[cisk] 04/5/2016 07:52

DGW - echo your comments, I too felt that there was much still to come from the division.

However that doesn't obscure the fact that they got a very good price - I expect the share price to react accordingly today.

I'm in two minds about energy - but they are retaining the composites business (unclear if that includes or excludes composite pipes), I fully expect to see good progress in energy, medical and road signage (areas that have suffered in the past few years), especially given that management can focus all their attention in those areas.

As an aside, do you hold either GKN or Senior? I hold both (and have long thought GKN should buy Senior), I believe both offer excellent value and continue to accumulate at these levels.

The price agreed today just shows you that the market is not pricing these assets correctly, which is why I continue to add to both Senior and GKN.

[dgwinterbottom] 04/5/2016 07:43

Cisk - I agree with your comments re the "mini Melrose - though had not thought of them in this respect. I have to say I am a little disappointed in selling Aerospace as I felt there was still much more to come. As you say the Board have done an excellent job over the yeasr against some quite stiff headwinds............should make for an interesting AGM!!

[cisk] 04/5/2016 07:31

very interesting news this morning:
Avingtrans (AIM:AVG) announces that it has entered into an agreement to sell (the "Transaction") its Aerospace Division (Sigma Components) to Anthony Bidco Limited (the "Purchaser") a company controlled by funds managed by Silverfleet Capital Partners LLP ("Silverfleet Capital") for an enterprise value of GBP65 million which, after adjustment for debt and working capital and associated transaction costs, will result in the Company receiving proceeds of approximately GBP52 million (before escrow arrangements).

I haven't looked at the numbers post-disposal (and note the composites business is kept) but suspect, given the value realised from this sale, the share price looks materially undervalued.

Ok so I invested in the company originally because of the aerospace division, but the remaining parts look to have a great future, the Sellafield contract in particular looks to have great potential.

The management look to have done a great job at realising value, indeed this company looks more like a mini-Melrose, buying businesses, building them and selling them.