Avon Protection Share Discussion Threads

[2breakout] 01/5/2014 16:27

very good that write up in Telegraph

Avon Rubber
627p+16
Questor says BUY
AVON rubber is changing the way it sells its products to customers and that is having a startling impact on profitability. The company reported a sharp increase in both profits and the dividend in its first-half numbers yesterday, making the shares well worth a look.
Avon Rubber manufactures gas masks and rubber items used by dairy farmers in the milking process. Yesterday, the company said it had experienced "strong growth during the first half of its financial year and that it expected further growth in the second half. Adjusted pre-tax profits increased by 45pc to £8.2m, while revenue for the same period only increased by 3pc.
That is because Avon is steadily taking control of its distribution network allowing it to charge retail prices rather than wholesale prices for its goods. The difference between the wholesale and retail price can be as much as 33pc. Analysts are currently expecting a 17pc increase in full-year pre-tax profit to £15.3m, but on these first half numbers that looks conservative.
Although defence budgets are under pressure worldwide, Avon is expecting a strong second half of gas mask sales. Order intake in Protection & Defence was up 15pc to £46m
The majority of the profit, or 83pc, comes from the provision of gas masks to defence clients. Avon is well placed as the sole US defence supplier locked into a 10-year contract, on which it is currently about midway. Avon said orders of its M50 gas mask provide revenue visibility well into the second half of the year.
The reported results for the six months were less impressive with pre-tax profits of £5.7m, only marginally ahead of £5.5m at the same stage last year. Avon took charges of £2.3m during the period, the majority of which relate to closing down old manufacturing facilities in the US. The company expects to make savings of £1m a year from next year following the closure.
Avon generated plenty of cash during the first half and this resulted in net debt falling sharply to £5.5m, from £9.9m a year ago.
The interim dividend was increased by 30pc to 1.87p, with the shares going ex-dividend August 7 and payable September 5. Although the full-year dividend only offers a forecast yield of 0.8pc, it is expected to increase by more than 20pc for each of the next two years.
The company is increasing profits and has a strong balance sheet so Questor upgrades the shares to a buy.

[18bt] 01/5/2014 14:54

IC repeat Buy rec:

Broker Arden Partners forecasts full-year adjusted pre-tax profit of £14.9m, giving adjusted EPS of 38p, which at 630p a share, puts Avon on 16.6 times forward earning, dropping to under 15 next year. That's still cheaper than rivals. Buy

Last IC view: Buy, 616p, 24 April 2014

[18bt] 01/5/2014 14:32

Edison price target raised from 682p to 700p based on sum of the parts and competitors

[18bt] 01/5/2014 13:18

Edison note out. Summary:

30 April 2014
Avon Rubber is a research client of Edison Investment Research Limited
Avon Rubber's interims have clearly demonstrated the good underlying progress as the ongoing strategy to broaden the business and deliver margin-enhancing products flows through.
Although some of this is masked by a currency headwind – particularly in Dairy –
we are confident that Avon will meet our full-year expectations even if currency headwinds persist, effectively an underlying upgrade. Results are nonetheless likely to be H1 weighted as strong commercial revenues in protection & Defence are replaced by DoD revenues in H2.
With Avon's own-brand Dairy strategy continuing and new products such as the Deltair fire apparatus having achieved approvals, we see further growth drivers remaining.

[jeffian] 01/5/2014 12:59

I made the mistake (I now see with hindsight!) of selling half my holding in the 425-450 range on the basis of what was looking like a historically high PER and a miserable dividend yield. Better-than-expected growth seems to be taking care of the PER issue to some extent but even if they follow Questor's forecast of 20% p.a. dividend growth for a few years, it is still very measly. Avon used to be a 'high yield stock' (which is why I bought it in the first place). Even if they increase the final in line, it looks as if it is still going to be covered around 8x. Surely they could be a bit more generous?

[gswredland] 01/5/2014 12:57

Yep looks good!

[18bt] 01/5/2014 11:24

Recommended in Telegraph Questor column today. I might expect Edison to raise their forecasts after yesterday's results.

[wjccghcc] 30/4/2014 13:29

Yup. Got a few.

[18bt] 30/4/2014 13:13

Looks like a cracking set of interims. Any other holders out there?

[18bt] 28/3/2014 09:24

Nice update this morning. I've topped up a bit on this having taken advanatge of the strength in Febr to lighten.

[18bt] 07/3/2014 18:38

Comment from Edison on consolidation of US facilities:

Avon's announcement that it will consolidate its Lawrenceville, GA Protection &
Defence facility into its other locations makes sense in our view.

With the Lawrenceville lease due to expire in June 2015 and further investment or relocation already required at the site, the decision to consolidate operations and benefit from investment already undertaken elsewhere affords Avon the possibility to generate future savings.

The £2m cost of relocation will be taken as an exceptional in 2014, while benefits should begin to accrue throughout the subsequent years. While we aare not adjusting our forecasts, there is potential for cost savings to improve
profitability in our outer years.

As a further benefit , the consolidation provides an opportunity to improve customer service and flex ibility.

[18bt] 06/2/2014 10:16

New note out from Edison on back of today's IMS

Avon Rubber's Q1 IMS highlighted that dynamics across the group remain 6 February 2014
positive with both US Department of Defense (DoD) and non-DoD order
support and Dairy starting to improve as feed prices decrease. One area
that has remained slower has been the fire market as NIOSH approvals
have been pushed to the right across the industry, delaying revenue from
the group's new Deltair SCBA. With net debt also down (due to working
capital movements) we still believe 2014 will show further progress from
Project Fusion and a recovering dairy market.

That said, I've topped sliced these as a PER of 17x and little yield support looks a tad expensive and, in the absence of contract news, I think these will mark time at best. Will look to buy in closer to £6

[23retired] 03/2/2014 17:56

Still in here... glad I didn't get too greedy/too hasty!

[dasv] 11/12/2013 15:36

Nplus1 Brewin began coverage on shares of Avon Rubber plc (LON:AVON) in a research note issued to investors on Tuesday, Analyst Ratings.Net reports. The firm issued a buy rating and a GBX 682 ($11.15) price target on the stock.

[18bt] 22/11/2013 18:30

Upgrade from Edison post results. Summary is:

Avon Rubber's prelims have clearly demonstrated that the strategy pursued by the group is yet again delivering upgrades to forecasts. Core DoD work continues to be funded and the strategy to diversify into non-DoD markets is supported by the product development pipeline. The dairy market has provided a headwind during FY13, but, despite this, Avon has delivered ahead of our forecasts and has the potential to accelerate earnings as more products are introduced and the portfolio effect of international business reduces volatility. We are therefore upgrading FY14 PBT and EPS forecasts by 3% and 4% respectively and we initiate our
FY15 forecasts with a further 9% EPS growth.

[18bt] 21/11/2013 07:41

These are beginning to look expensive in the absence of some increased forecast. That said, I'd expect some increase in forecast for 2014 on the back of these and more stabs at 2015. Waiting for a new Edison report.

[gargoyle2] 20/11/2013 09:49

I don't hold here, but was impressed by those results. I guess they must have been factored in, judging by the lack of share price movement today.

[dasv] 20/11/2013 07:44

Financial highlights:
§ Successful delivery against growth strategy

§ EBITDA growth of 22% to £20.0m

§ Operating profit growth of 22% to £14.2m

§ Operating margins improved by 0.5% to 11.4%

§ Profit before tax up 27% to £14.0m

§ Diluted earnings per share up 34% to 34.0p

§ Dividend increase of 20% to 4.32p reflecting business growth and confidence

§ Cash generated from operating activities of £15.3m, representing 114% of operating profit



Operational highlights:

§ In Protection & Defence, increased non-DOD order intake

§ Award of $6.7m DOD JSAM design, development and testing contract

§ Market share of newly introduced ImpulseAir (mouthpiece vented liner) reached 19% in the US

§ Investment of £6.4m in new products and new markets

[cheaky monkey] 25/10/2013 07:35

Following the acquisition of the business and assets of VR Technology Holdings ("VR"), a market leader in diving rebreather systems and dive computers, in April 2013, Avon is pleased to announce the award of two development contracts:--- A contract award with Defence Science and Technology Laboratory (DSTL), which develop new technologies for the UK MoD, for diving rebreather design work.-- A contract award with Oceaneering, a large oil field services and products company, for a new generation of advanced deep-water data loggers.Commenting, Peter Slabbert, Avon's Chief Executive said 'We acquired VR to broaden our reach in the global respiratory protection market. These contracts together with our own R&D investment in innovative new diving technologies and products will provide increased opportunities for the Group, in particular with navies around the world.'Another great contract win, well done Avon.

[dasv] 15/10/2013 14:07

18BT - I was away for 3 weeks. Still hold AVON.

[18bt] 05/10/2013 11:41

Latest Edison note:

Avon Rubber's pre-close statement and full-year upgrade to forecasts highlights the growing momentum in non DoD sales, a key part of the strategy.
With strong Q4 orders and a quick delivery turnaround, Avon has outperformed forecasts heading into the year end and we are therefore up grading our FY13
PBT and EPS forecasts by 5% and 4% respectively.

Given the lumpy nature of such orders, we are broadly maintaining our FY14 numbers at this stage, although we do highlight that recent contract announcements such as the 52,000 C50 respirators and MILC F50 filter order for the Middle East support our current growth forecasts for Protection & Defence,
and any further orders should lead to upgrades

[18bt] 01/10/2013 11:54

Surprised no comment on here about the great IMS yesterday. Haven't seen any revised forecasts. Share price up from 300p a year ago - rating now appropriate, but still room for share price growth if the profits keep on being revised upwards imho.

[meijiman] 09/9/2013 15:34

I think you will find that there have been some very decent orders from the M. East. But for commercial reasons and sensitivity the company choses not to name buyers/countries. Can't blame them in all honesty.

[18bt] 06/9/2013 07:17

Building momentum for 2014 with a decent Middle East order. With current situtation, you'd think that this would be fertile ground and I can see the shares still going higher. Hoping for some small upgrades for next year.

[phoenix1234] 16/8/2013 12:42

Avon Rubber IMS – at 489p worth 510p: Edison