Facilities By Adf Share Discussion Threads

[john09] 21/3/2022 12:25

“Since January” maybe

There were better things to acquire end Feb and early March though in my opinion

[rivaldo] 21/3/2022 12:24

:o))

These "caravans" have been outperforming the rest of the market by a mile since the January IPO, and should continue to do so for some time to come imo.

[john09] 21/3/2022 11:43

Rivaldo is obsessed with this caravan rental company

[rivaldo] 21/3/2022 11:27

The new issue of SCSW is now out, so it should be OK to copy some extracts from the prior issue, which had ADF as its main tip:



"The average age of the fleet is only 2.5 years. Such a comprehensive and high quality fleet means that ADF has become the supplier of choice for large scale and quality productions, says Proctor. Scale is a barrier to entry; Proctor says it would cost £40m and take 3-4 years to replicate the business fleet and any would-be-assailant would need costly specialised equipment and workshops to modify them (interior fit out, plumbers, electricians etc) and make them suitable for use."

"Most of the work tends to be repeat from the same client base, which includes Netflix, Disney, Apple, Amazon, HBO and NBC (Sky). The top four clients represent 55% of sales. Proctor says demand is running so high at the moment that whereas it historically used to be booked 3-4 months ahead of filming starting, bookings are now made 6 months in advance."

"Changing requirements add 80% to contract

Clients almost always change their requirements in the run up to filming and ADF has a track record of regularly boosting sales and profits as contracts become bigger than the original specification; in the five years pre-Covid, additional vehicles on average added 80% to the size of the original win.

To give an example of just what has been happening, take the example of Netflix’s The Crown, which had a production budget of £100m for the first series; by the time they filmed series 5, it had risen to £194m and they insisted on the same ADF team to handle the work. Facility vehicle spend for Series 1 was initially guided at £0.6m but additional requirements meant this more than doubled to £1.3m. The same has been true for each subsequent series - only bigger. Series 5, initially estimated at £2m, ended at £3.9m.

The increasing size and length of productions means that not only is there a greater need for a bigger fleet but the revenue per job is increasing - the firm’s average revenue per production has more than doubled in the last three years to £607,000 as programmes and films have become longer and more complex. Facility vehicles represent around 2% of the cost of production, which is why clients tend not to quibble on the pennies."

"Due to the material increase in the consumption of film and TV through streaming services, all the major US streaming companies have set up permanent bases in the UK, taking out studio leases of 10 years or more. ADF recently signed a 15 year lease at a site in Longcross, which will become its main operational centre and is one mile away from Netflix’s studios. Other studios in the vicinity include Shepperton (also leased by Netflix), Pinewood (leased by Disney) and Elstree (Sky)."

"For this year ending December 2022, Cenkos forecasts £3.7m pretax profit with £5m next year. This allows for a larger PLC central cost base as well as higher director emoluments, which temporarily drives deleverage of EBITDA margin. But I feel that profit is not necessarily the correct measure of progress at ADF because of this high depreciation charge on the equipment, running at c. 10% of sales, which disguises the large and stable cash generation. Instead, EBITDA (earnings before interest, tax, depreciation and amortisation) is a better measure. Cenkos is forecasting EBITDA to run as high as £7m or 9.2p a share this year and £9.5m or 12.5p a share next year. This implies that the shares are trading at 6.8 times cash earnings and 5 times cash earnings one year out.

Very likely to buy rival On-Set

Visibility of work is clearly very good. For the current year, ADF has issued £20m of quotes for new business. Of these, £10m are now firm bookings as filming is going ahead and a further £5m is likely to occur as they are repeat bookings. In other words, given brokers are expecting sales of £29.2m this year, ADF has 52% of the forecast “in the bag.” But if the historical run rate of 80% contract extensions continues, visibility is 90%.

At the same time, further sizzle is added to the story because Proctor is on the lookout for acquisitions, with the acquisition of a small trailer business in Scotland being considered. But I suspect it will buy rival On-Set, which has a high quality fleet and similar employment contracts. This would add 250 vehicles and if it happens, I expect the price to take off. Alternatively, given its strength in logistics, it could easily make bolt on acquisitions of businesses involved in transportation of props, lighting, storage, catering as well as expanding into Europe. I am a buyer."

[rivaldo] 18/3/2022 11:14

Cheers Desertrat13, good to know. Perhaps limit the postings to when you see something particularly new or noteworthy, but all company research/info is good in my book!

[desertrat13] 17/3/2022 17:54

They definitely are busy rivaldo,I’m still seeing their lorries&Trailers all over London almost on a nightly basis,I just stopped posting the fact as I thought it might be coming across as bit Rampy.

[rivaldo] 16/3/2022 10:23

ADF's own Twitter page is quiet in business terms (though it does show how busy they are with loads of job opportunities), but the CEO's Twitter page is very informative.

I assume that the retweets that Marsden Proctor highlights are for TV/film productions which ADF are working on - and there are lots of them, too many to mention individually:

[adamb1978] 13/3/2022 12:01

Hi Rivaldo

Thanks for confirming and agree with what you say. Not remotely helpful for the company to have garbage figures in the market. That said, I need to add a few more and might not have had the chance to at current levels if the market forecasts were more sensible!

Adam

[rivaldo] 13/3/2022 10:44

Adam, Cenkos's note on 11th February noted the "ahead of expectations" trading update, but didn't update their forecasts! Which seems ridiculous.

They could at least have upgraded to the increased figures quoted in the trading statement and then adjusted again once the prelims are released (since the new figures are "at minimum").

Cenkos do say their current target price range is from 85p-106p based on potential £4.7m PAT for FY23. But I suspect they've also mucked up their financial years as their front page refers to an incorrect January year end (the ongoing pages have the correct December year end), so I assume they actually mean FY22 for these numbers.

Confused?! I certainly was. Not very impressive at all from Cenkos.

[adamb1978] 12/3/2022 21:18

Has anyone seen updated forecasts after the trading statement? Looking on Factset they still have £25.2m revenue for FY21 and £29.2m for FY22, and the correspondingly low EPS figures
Thanks

Adam

[essential] 09/3/2022 11:32

Bought in this am. Back close to the level recommended by scsw.

[gswredland] 09/3/2022 10:22

Looking good along with a number of other shares with fundamentals that are strong
Wonder if this is the turning point?

[rivaldo] 09/3/2022 10:14

Moving back up very easily - not much stock around perhaps.

[rivaldo] 08/3/2022 10:20

Canny timing Aishah - welcome! The bounce should be substantial here.

[aishah] 07/3/2022 14:00

Maiden purchase this morning. Markets get irrational at times like this. Dyor

[74tom] 07/3/2022 12:04

Extract from the last Cenkos update on 11th Feb;

"ADF find themselves in a truly unique part of the market where they are at the epicentre of the battle for content between mega-cap streaming companies, and we see that clearly today with the demand for their services continuing to grow rapidly. In our view, the previously released scenario analysis becomes increasingly relevant and we believe a fair value range for the share price is 85p-106p."

Their fair value range is based on 2023 PAT of £4.7m which would put them on a P/E of between 13-17x. At todays 59p they are on a FY23 PE of just 9x... cheap as chips IMO.

[johndoe23] 07/3/2022 10:34

I hope you're right, every time I think this might be the bottom, it lurches down even more!

[74tom] 07/3/2022 09:23

You have to think that we are nearing capitulation levels in small caps, a clear sign being a 10% sell off for no reason in a company that has an extremely positive outlook & solid balance sheet. Almost everyone selling at these levels will be taking a loss as it only traded sub 60p for a couple of days post IPO.

I've added substantially this morning, most of the time it's been NT for more than 1k shares & then another retail seller pops up and the bid is dropped further!

Crazy times, but a real opportunity for those that have cash to deploy.

[rivaldo] 04/3/2022 07:11

ITV's shares were sold off heavily yesterday. The reason? They're going head to head with the streamers (Netflix, Amazon etc) and investing much more heavily in content - ££1.23 billion this year and £1.35 billion in 2023.

Which has to be yet more good news for ADF:

[rivaldo] 03/3/2022 13:41

Cheers rzzr - I'll copy the relevant text here before it becomes subscriber-only!

Any recommendation from John Lee should bring in further interest here:

"Turning to portfolio activity, I am particularly pleased with a new issue, Facilities by ADF, although I only bought a small holding at 55p on the first day of dealings. They are now nearer 80p. The company provides a rental range of the trucks and trailers used by actors, make-up artists, technicians on location and sets for the burgeoning content creation sector in the UK and Europe.

Few have appreciated the scale of investment in developing and upgrading studios — an estimated £1bn, according to the British Film Institute, in sites like Shepperton and the new Sky Studios Elstree, with total UK studio space planned to exceed that of Los Angeles."

[rzzr] 03/3/2022 11:36

Written up by John Lee in the FT today

[gswredland] 03/3/2022 10:38

Well done Rivaldo. It came back strongly from that dip which it hasn't done before when falling yesterday

[rivaldo] 03/3/2022 10:00

I added some more on the dip.

Looks like a time to buy imo for a share which should continue to thrive and provide good news flow for some years to come - with lots of opportunities for expansion both organically and via acquisition.

[johndoe23] 03/3/2022 09:40

Yes, 5p more like it. Hoping for 6-7p

[adamb1978] 03/3/2022 09:35

Factset showing 3.9p this year and 5p in 2023

These sort of things ensure companies continue to fly under the radar