Pennant Share Discussion Threads

[40 fathoms] 10/2/2024 00:33

Link to Directors Talk CEO update after the trading update. Key takeaway seems to be that they are bidding on record amounts of new business and prospects look strong.

[w t tutte] 07/2/2024 08:53

I think the other thing is that W H Ireland are desperate to get them to do a placement and make an acquisition. Any share price strength will be hit with a CR in my view.

[pireric] 07/2/2024 08:17

That's the problem I have with Pennant. The P&L bottom-line is not impressive (I think broker forecasts down to EPS are too high mechanically), and the FCF is poor given the capitalised R&D that is going on (that is also flattering the P&L EPS)

Hence the net effect from today that the broker is shaving back FCF and net cash forecasts on the back of higher investment.... not sure that's net good.

Eric

[hastings] 07/2/2024 08:02

It has always been an issue for PEN, largely given the nature of the large defence contracts and timing of payments. That said, increased focus on the software element and ARR should mitigate that somewhat going forward and provide for increased visibility.

Broker summary from this morning.

Cross-party agreement that defence is a growing priority, and globally an enhanced focus on defence, are likely to bring further benefits to PEN, which has long-standing relationships with major defence OEMs and with governments in relation to its sophisticated training software and products. We note positive developments on cash post the period end, which more than bring the latest reported net cash position of the company into alignment with our year end forecasts. We anticipate a cash-generative year in FY24E and also that the business will continue to invest in its faster growing and more profitable activities. Our net cash forecast for FY24E is shaved to £1.2m (was: £1.8m) to allow for further investment. This said, we expect that the software investment wave is likely to reduce in the coming year, leading to further increased cash generation and profitability. Otherwise, our forecasts are left intact, and we are encouraged by the management’s statements re the outlook. Our fair value estimate remains at 65p at this point; hence we see good potential upside for the shares.

[40 fathoms] 07/2/2024 07:43

I am happy with the TU, however there is always an issue with the cash. It never come through when or in the amounts it is expected to. I hope that is something they fix once and for all this year.

[eeza] 07/2/2024 07:34

Post year receipts (first 2 weeks Jan) ~£2m to go from net debt YE of £1.9m to net cash £0.3m.

[hastings] 07/2/2024 07:23

Speaking with the CEO this afternoon, so I'll add anything noteworthy for further interest.

[oldtimer169] 07/2/2024 07:21

Nice update

[masurenguy] 07/2/2024 07:12

Trading Update

Record Gross Margin & Return to Operating Profit

Pennant International Group provides the following trading update ahead of the publication of the Company's full-year results for the year ended 31 December 2023, scheduled to be announced in April 2024. The preliminary unaudited assessment of the Group's trading for FY23 indicates:

· Group revenues of £15.5m (2022: £13.7m);
. gross margin of 50%, a record for the Group (2022: 42%);
· adjusted (EBIT) of £0.4m (2022: EBIT loss of £1.0m)
· adjusted (EBITA) of £1.7m (2022: EBITA of £0.5m);
· adjusted (EBITDA) of £2.2m (2022: EBITDA of £1.1m);
· net debt at year-end of £1.9m (2022: net debt of £0.4m)
. post year-end receipts resulting in net cash of £0.3m during week commencing 15 January.

Note: the above results are adjusted for circa £0.3m of exceptional, non-recurring costs, including transaction and integration costs associated with the acquisition of Track Access Productions Limited in April 2022, and professional costs and expenses associated with another, aborted transaction.

Chief Executive Officer, Philip Walker commented: "The Board is very pleased with the Group's positive, and improving, trading performance. The results, which include a return to operating profit and a record gross margin of 50%, are strong indicators that Pennant's growth strategy is delivering."

[eeza] 05/2/2024 14:38

A few good buys, today.

But offer only creeping up, so MM's have a few to unload.

[eeza] 04/2/2024 10:34

4Q Tu was on 8 Feb last year - so maybe this week.

[hastings] 04/2/2024 10:20

Nice to see CNC another of my holdings tipped in the Sunday press, so perhaps PEN'S turn isn't too far away!With defence firmly in the spotlight and likely to remain so for sometime to come, the company looks very well placed with other areas such as rail also likely to benefit.Although the full year results aren't far away now, it's the new financial year outlook that should be of real interest and could provide for a quick start to the share price.

[premium beeks] 23/1/2024 13:19

Yes, it's certainly looking strong in the run up.

[chrisdgb] 23/1/2024 13:16

Will be interesting to see the trading update in the next couple of weeks......

[premium beeks] 18/1/2024 10:16

Bought some more today. Not showing.

[aishah] 17/1/2024 15:59

Hi Masurenguy, good to see you committed here. Price seems to have left the sticky 30p area. Also above 50d SMA now. Last year's trading update was on Feb 8th, so hopefully not long to wait for this year's.

[40 fathoms] 17/1/2024 12:18

Looks like a 5 year + 5 year contract from MOD is coming our way. Not huge at GBP 135k per year but is only for repair and software maintiance so should be high margin

[masurenguy] 16/1/2024 16:09

Topped up this morning. Also concur with Martin - good to see you back onboard AISHAH.

[aishah] 16/1/2024 11:42

The shareholder's roster is very interesting. Richard Staveley (Rockwood) holds 7.46% and Laurence Hulse (Onwards opportunities) took a 3.35% holding in November.

PEN are in a red hot sector at the moment and are hopefully bidding on more work than previously. Sticky clients, good recurring revenue and focus on software and technical services.

Cash at end 2022 of £1.1m. Mkt Cap £11m with a robust order book, 12mth rolling fcst p/e 7.4 and a peg of 0.4

[premium beeks] 16/1/2024 08:53

I've bought in today as well.Was last a holder well over a decade ago

[hastings] 16/1/2024 08:49

Nice to see you here and also rivaldo too.Aside the various moving parts I'm very interested to know how the GD next Ajax phase will pan out.Given a contract decision has to be made by June at the latest and with PEN having delivered on the first phase I'd guess it's looking increasingly likely that they will get the deal they want. At this stage, it would surely be problematic for GD to go elsewhere given another player would be starting from scratch!

[aishah] 16/1/2024 08:38

I have taken an initial position with defence related spending likely to remain strong in current troubled times.

[eeza] 15/1/2024 12:11

8 Feb last year.

[chrisdgb] 15/1/2024 11:53

Trading update soonish I would have thought......

[rivaldo] 05/1/2024 10:43

Techinvest had a nice review of the interims in their November issue FYI:

"Pennant has reported solid progress in the first half ended June 30. Revenue for the period was up 2.9% to £7.1m, with 46% of the total generated from software licensing and associated activities. Gross margin reached a record 47% (H1 2022: 41%). EBITDA doubled to £0.8m and the loss before tax was £0.4m compared to a loss of £0.8m a year earlier. Order intake secured during the first half was worth
£6.5m, which resulted in a three-year contracted order book of £25m at the period-end. Net-debt at the end of the first half was £1.9m, down from £4.1m a year earlier.

Management’s plan to re-engineer the business to build on software, services and
other higher-margin work is working well based on recent results. EBITA has been positive now for the last four reporting periods and the strong uptick in gross margin this time is particularly encouraging. Given the burgeoning technological complexity in Pennant’s military, aviation and rail platforms markets, the demand
for innovative integrated product support solutions is only likely to grow, particularly with increasing defence budgets globally.

Small acquisitions are also adding to the momentum and re-shaping of the business. The most recent addition is Track Access Productions in April, broadening Pennant’s existing rail offering and customer base, and adding circa £0.3m of subscription-based recurring revenues. Further positive news since the period-end is that new
orders worth around £1.5m have been secured during July and August. The company also announced a strategic partnership with Aquila Learning to collaborate on a number of projects.

The broker consensus forecast for the current year is for earnings per share of 3.5p rising to 4.2p for fiscal 2024. A prospective P/E of 6.1 for next year looks attractive if the progress in the business can be maintained. We rate the shares
a Strong Hold."