Share Name Share Symbol Market Type Share ISIN Share Description
Pennant International Group Plc LSE:PEN London Ordinary Share GB0002570660 ORD 5P
  Price Change % Change Share Price Shares Traded Last Trade
  0.00 0.0% 41.00 0.00 08:00:00
Bid Price Offer Price High Price Low Price Open Price
40.00 42.00 41.00 41.00 41.00
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Software & Computer Services 20.43 -1.63 -4.16 15
Last Trade Time Trade Type Trade Size Trade Price Currency
- O 0 41.00 GBX

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Pennant Daily Update: Pennant International Group Plc is listed in the Software & Computer Services sector of the London Stock Exchange with ticker PEN. The last closing price for Pennant was 41p.
Pennant International Group Plc has a 4 week average price of 36p and a 12 week average price of 36p.
The 1 year high share price is 90.50p while the 1 year low share price is currently 34.50p.
There are currently 36,114,596 shares in issue and the average daily traded volume is 28,413 shares. The market capitalisation of Pennant International Group Plc is £14,806,984.36.
tole: This was the ST comment from mid late february.. before of course the coronovirus effect. Pennant’s contract momentum building Pennant (PEN:73p), an Aim-traded supplier of products and services that train and assist engineers in the defence and civilian sectors, has made an earnings accretive acquisition, won several new contracts and entered 2020 with a bumper three-year order book worth £33m. Moreover, having announced new orders for the provision of additional training aids on a Middle East contract, and one with the Australian Defence Force, Pennant has just received a Statement of Intent on a contract with another long-standing customer in the Middle East. The potential award to supply a generic suite of training aids has a contract value of £5m. Assuming it is confirmed in the first half of this year then £3m revenue will be recognised in the second half of 2020. On this basis, the 2020 order book will cover 85 per cent of analysts’ current year revenue estimate of £22.3m, up from £20m in 2019, which in turn underpins a two-thirds increase in this year’s underlying pre-tax profits (from £1.6m to £2.7m) and earnings per share (EPS) of 6.9p, up from 4.1p forecast in 2019. However, despite the raft of positive news flow, and an impressive conversion of the bid pipeline into confirmed contracts, Pennant’s share price has drifted since I last advised buying at 84p (‘Pennant’s growth back on track’, 4 November 2019). As a result the shares are only priced on 10.5 times 2020 EPS estimates even though a chunk of this year’s profit growth is already underpinned by substantial cost savings made by the company after the start date on a contingent contract (worth £28m in revenue over three years) was pushed back to 30 June 2020. Please note that Pennant’s £33m contracted order book excludes any contribution from this contingent award for the design, build and delivery of training equipment to the Ministry of Defence (MoD), thus offering upside for outperformance. Last month’s proposed acquisition of Absolute Data Group (ADG), a Brisbane-based software company, adds further weight to the investment case. It is highly complementary to Pennant’s existing Oracle-based software business that reduces the support cost of major capital equipment. Analyst Nick Spolair at house broker WH Ireland points out that “ADG’s software enables its client base (military aviation, commercial aerospace, and marine, rail, nuclear and automotive sectors) to manage vast quantities of maintenance and training data effectively, and is already being used as a dynamic extension to Pennant’s existing OmegaPS logistics product database.” This means that the combined business has a ready-made client base of new business targets, which already utilise one or the other of their systems. Furthermore, two thirds of ADG’s revenues are derived from the US where the company has worked with government agencies such as the US Air Force Communications Agency, thus extending Pennant’s geographic reach as well as strengthening its Australian business. The £3.4m consideration, of which half is being paid upfront and the balance is subject to an earn-out, equates to a reasonable 7.3 times ADG’s pre-tax profit in the 2019 financial year. From a technical perspective, a chart break-out above the 90p key resistance level would be a bullish signal and one that improves the chance of a move towards my 130p target price, albeit that’s below my original 180p target when I initiated coverage (Alpha Company Research: 'Pennant poised for a return to growth', 13 Aug 2018). Pennant’s heavily oversold shares rate a buy ahead of the annual results on 23 March 2020. Buy.
paleje: Simon Thompson gave us a boost today in the IC, saying it's a recovery buy. His concluding paragraph:- True, investors have marked down the shares heavily following Friday’s news and the share price has fallen by 40 per cent since I last suggested buying at 105p (‘Pennant repeat buying opportunity’, 9 May 2019). However, I can still see the company landing the three major contracts I have outlined above to double its three-year contract order book to £72m and underpin a step change in profitability in the years ahead. That possibility is simply not being priced into Pennant's market capitalisation of £23m. Recovery buy.
hastings: Had the chance to read Mr Thompson's lengthy piece and very good it is too. My more modest offering may also be of some interest to others. I have also popped a link to my previous piece earlier in the year. Pennant International delivered some very positive interim results earlier this week which set the defence/aerospace focused company well on course to meet the full year guidance.  Once more I have been fortunate enough to catch up with CEO Phil Walker for a few words who was able to expand on some of the highlights for the company along with expectations going forward.  The numbers reported painted a positive picture, as revenue jumped 38% to £13.2m which in turn saw pre-tax profits up 125% to £2.1m resulting in fully diluted EPS of 5.62p.  Walker was understandably pleased with these interim results which have been achieved as the company embarked on a number of strategic changes. The CEO says that its recent expansion programme continues, which will soon see the company further its capacity resulting in a quadrupling of where it was at a few years back.  He also highlights the nature of further investment in personnel,  infrastructure and facilities, including major and senior operational appointments, along with the purchase of an additional freehold property.  The headcount Walker says is now up to 200, with 140 based in the UK whilst the remainder is split between Australia and Canada and the company is still actively recruiting.  Alongside some more sizeable business Pennant has also benefited from a number of smaller contracts which have been achieved in various areas of its expanded operations.  Milestone and final payments on contracts have also come through as expected, particularly from the Middle Eastern clients which has assisted in positive cash generation.  Looking ahead Walker sounds a confident note on prospects, particularly in relation to the two previously named potential contracts, one of which would be worth between £25-£30m to Pennant.  Although always difficult to pin point exactly, the CEO is hoping that confirmation on one or both of the these sizeable contracts will be concluded by the end of Q4, adding that just one of these would underpin the WH Ireland estimate for next year and provide for £21m in revenue and a pre-tax profit of £3.65m. But, given the strength of its pipeline and the obvious activity, it is conceivable that Pennant will win additional business too that could then pave the way for an upgrade on the current 2019 EPS of 10p.  Walker says that the climate remains positive particularly in Australia alongside the UK and although the Middle East spend has been dictated largely by the oil price performance, long term the region remains very positive.  The dilemma in all this that Pennant seemingly faces at the end of the current financial year is whether to reinstate a dividend or not, where WH Ireland has pencilled in a 2p full year payment.  Walker adds it should be interesting come that time, as the company is weighing up the balance of rewarding shareholders with a dividend or holding back its much improved cash position for working capital given the momentum that has been built and the opportunities that exist.  No doubt shareholders will be divided on this issue, but from this writers perspective I would rather the Pennant board hold back on the dividend to maximise its growth prospects that appear to be strong.  It is certainly a different business than when I first took a look and the recent strengthening of its board has clearly further assisted, such as the appointment of a new FD and the drafting in of John Ponsonby (previously MD Leonardo Helicopters UK) as a non exec.  Pennant as I have also penned before is a very much respected player in the industry which although niche, operates in areas where there is an extremely high barrier to entry, particularly regarding its safety and training systems. Rail is also providing an additional boost for the company where although having been active in the sector for twenty years and built up a good pedigree, recent work for Network Rail and openings on H2 suggests there is scope for growth.  And on growth, Pennant has achieved this through organic means, despite the company being open to making future acquisitions if they are the right fit.  WH Ireland has today upped its fair value of the company moving to £1.45p from £1.37p although does add that it sees a significantly greater value opportunity assuming contract conversions.  Although nothing can of course be taken for granted, Walker and his team sound bullish enough on prospects and it would appear to be purely a matter of timing before it can confirm one or both of the recently referred to contracts, which would most likely provide for another lift in the share price.  To recap, these relate to the Middle East- “Letter of Intent” announced earlier in the year, and the provisional “Down-Selection” on a major programme from August. Both of these potential contracts would more than double Pennant's 3-year order book from £31m as noted 06/18, to around £70m, which would open the door to longer-term forecasts and the possible upgrades.  The shares currently stand on a forward PER of 12 at today's price of £1.20p which doesn't look expensive if you believe the business will come through as expected. There is of course an execution risk, which obviously has to be taken on board and that may deter some from buying in at current levels, whilst those sitting on a decent profit may wish to install a stop, should the price begin to drift.  That said, the team have a busy few days in the City doing the rounds where it appears the company is enjoying plenty of support for its recent strategy for growth.  The balance sheet is looking as good as it has in a long time, with no debt and net cash expected to come out at £3.1m rising to £4.5m next year.  Key customers are blue chip players such as BAE Systems, Lockheed, General Dynamics amongst others such as HMRC and ADO (Australian Defence Organisation).    Https://
spreadsheetsteve: Yes, big fall in share price. Cash generation, or lack of, might also be an issue.
gengulphus: Agreed, apart from the delay to revenues from the "UK Contract" and the consequential "broadly in line with current market expectations" guidance about profits for this year. And judging by what's happening to the share price, those seem to be the aspects the market is picking up on... :-( Gengulphus
gengulphus: That trading update repeated the May news about the Lockheed Martin contract extension and the March news about the Canadian Department of National Defence contract amendment, both of which added substantially to the company's revenue prospects - but the effects of those additions were of course already in the share price. Then it said "Pennant is also pleased to announce additional contract wins and extensions during the Half Year, valued in aggregate at over GBP600,000." I at least found that figure of ~£600k a bit underwhelming after the earlier contract announcements - not any sort of cause for concern, but enough to temper the high expectations I had for the half-year results to somewhat lower ones. That hasn't prompted me to sell - I'm very definitely a long-term holder, with my earliest purchase now nearly 11 years ago. But I can very well imagine it prompting other, more 'trading'-oriented investors to sell. And the stock is illiquid enough that it doesn't take all that much selling to cause share price falls, which are liable to prompt more sales by 'trading'-oriented investors - so there's probably a bit of a sales -> lower prices -> more sales feedback loop happening at present. Or at least that's my guess. I don't think it's Brexit - Pennant's sales are very internationally based, while I'd guess much of its cost base is in the UK. So the pound falling as a result of Brexit probably acts in its favour, lowering costs relative to revenues. And while the trading statement did mention Brexit, it was only to say that they hadn't seen an effect: "Notwithstanding current economic uncertainty surrounding the recent formal commencement of the UK's Brexit from the EU, the Group has not yet detected any loss of confidence from its global customer base." Gengulphus
pj 1: Well, its not often you see a Companys share price chart make a 'V' recovery, but this one is pretty close. Shame I missed it
gengulphus: Results out - see . I did wonder whether the recent management changes would cause them to be later than announced in back in January, but they've kept to schedule - which indicates that the management changes haven't been too disruptive. No further details on Chris Snook's departure - just the bald statement that he has gone, followed by what the new management have done so far. They also look, at least on a first skim-through, to be as good as that trading statement indicated - indeed, a bit better than I felt it had indicated, though that may just be me having taken the trading statement with a pinch of salt too many! And certainly a lot better than I feared after the abrupt, unexplained departure of Chris Snook! No resumption of dividends yet, but I don't find that especially surprising given previous statements about the company's need to build up working capital for new contracts. Gengulphus
gengulphus: Whatever the problem was, they're sorting it out quickly: The mention of the new Management Committee, of ensuring "compliance with all regulatory and legal matters" and of adding "greater depth to our risk management and commercial functions" suggests to me that this might be a case of a company that's grown a bit too big for its management structure, and of a clash of views about whether the time had come for another layer of it... If so, the difficult question is whether significant irregularities had happened within the company involving poor risk management, regulatory non-compliance, or such like? Or had someone simply highlighted the danger of that happening and insisted on closing the stable door before the horse bolted? The fact that they've now issued two RNSes without mentioning any specific problems suggests the latter - they're obliged by regulations to inform the market asap about such irregularities, and companies generally do, even though they often downplay them initially with a "we've got the matter in hand and are investigating, too early to say what the outcome will be" sort of statement. But this is AIM, the regulatory Wild West of the stockmarket, so it's not all that strong a suggestion! We should know more at the end of next week (Friday 10th), when the preliminary results are scheduled to be released. Edit: not intended as disagreement with leading's comments, which I didn't see until after I'd posted. And indeed, I think the possibilities he mentions are quite plausible triggers for a clash about management structure changes... Gengulphus
hastings: Simso, write up below from my Cambridge News slot may be of interest. I spoke with both the CEO and FD on Interim results day and in penning the piece quoted the broker numbers, which remain intact. The only difference is on the target price, which has been lifted to £1.10p. As a holder, I am hoping for some additional contracts to be announced in the coming months which would no doubt make a material difference to 2017/2018. I'm catching up with management again at the prelims. Pennant International's interim results earlier this week may not have set the world alight in terms of numbers, share price appreciation, or for that matter coverage, but they have at least since seen another stirring of interest. Whilst the shares had already enjoyed a great run, there was subsequently a bout of selling from the high sixties in the run up to the results, before some steady buying in the latter part of the week took the shares back up to a 68p Friday close. Whilst for some watchers of Pennant there has been a view of too much to do for the delivery of the £2.2m full year pre-tax profit with a hefty second half weighting, it would seem that any such fears on that front may be well and truly overdone. Speaking once more with CEO Chris Snook and FD Phil Walker on the day of the results I raised the very question in relation to the full year performance and an expected delivery of being at risk. To this end, there was an emphatic and positive view that the company would very much deliver and that the board certainly doesn't envisage any hiccups in the run up to the finals. Further to that, CEO Snook says they are already punching on for 2020 as the pipeline and prospects for the company continue building on the more recent and positive momentum. Alongside this, Snook says that the first of its three additional and recently acquired facilities commences production next week, the second soon after, with the third coming on stream slightly further down the line all of which should meet both current and expected demand. They board has also been busy lining up client visits, where it transpires that one major overseas visitor dropped in last week, which follows on from presentations to both existing and potential investors which the CEO said totalled a high teen number as opposed to just a few that featured not so long back. Such appears to be the ambition to move the business further forwards and secure long term growth with diminishing lumpiness that both were happy to talk about the current solid order book, the strong pipeline of real opportunities and a serious intention to acquire another business to complement its organic growth. That doesn't mean to imply there is another placing on the cards any time soon, as Pennant is now in a healthy enough position as demonstrated by the interim results numbers. There was cash on the balance sheet of £2.6m which includes advances on contracts, although importantly pre-dates the £3.6m fund-raise of August this year and the £1m purchase of property. The YoY contrast is with £0.6m net debt figure at end of H1-15 against the £1m-plus cash generated in H1-16. As the revenue builds so should profit, dropping straight to the bottom line says Snook, which appears to be increasing on the back of much improved prospects. Phil Walker also confirmed that as a result of the progress being made, they are absolutely committed to resuming dividend payments as soon as is right and prudent. “It is something we are very mindful of and certainly recognise the importance of dividends to our shareholders”. Timing on this front will of course come down to the right boxes being ticked, but it does not seem beyond the realms of possibility that this could happen on the delivering of the preliminary results early next year. On the very healthy, sizeable and what is a record order book, Snook says the current and significant middle eastern contracts are actually running in parallel, with both contributing to an overall expected full year sales figure of £17.3m which next year will edge up to the already visible £18m. Importantly, these numbers are already in the bag as other contracts with Lockheed Martin and General Dynamics unwind with 100% visibility for the remainder of this year and all of next year, so any one of a large number of existing pipeline prospects being delivered in the coming months would almost certainly make a material difference to next years numbers and provide further support into 2018 and beyond. To give a flavour of the potential upside on the Training Systems arm which currently accounts for 75% of revenue, there are at present several live near term prospects in play, where if just one or two are successful, it would not only provide another timely boost to the story but present additional longer term credibility. Pennant would now seem to be be well placed in a market that has received a significant boost in terms of investment, which plays well into its hands as one that provides the key specialist skills that are increasingly needed within new areas, not merely defence, but rail and aerospace which also takes in new markets and territories. The company has recently successfully concluded a contract in India which is worth noting, but whilst that growth country does provide for further opportunity's, the board doesn't see this as being a major revenue earner, as it cites other existing regions offering more extensive and lucrative growth potential. Having earlier this year appointed a new Chairman the company has now announced that it has brought on board a non exec Director with seemingly strong credentials. Tim Rice has some thirty years of extensive experience across both the defence and aerospace sectors through roles at Safran, Spirent and Dowty and his presence should further assist the company going forward in terms of raising its profile and prospects. For now, WH Ireland is forecasting pre-tax profits this year of £2.2m and EPS of 7.4P giving a PER of 9, which remains at a considerable discount to the sector average of 21. Looking to next year, although the pre-tax profit increases to £2.4m, EPS actually reduces to 7.1p, implying a forward PER of 9.5, before heading back to to EPS OF 7.4P in 2018 as profit is expected to hit £2.6m. The reason for this is down to the factoring in of new shares issued via the placing earlier this year. However, there would seem to be a distinct possibility that Pennant will indeed secure at least one, two or possibly more of those current targeted deals, which depending on the size and time scale would no doubt provide for an upgrade from the broker. It is also worth noting that the board reiterates that it sees no potential downside from brexit and if anything, given its extensive export profile Pennant should be well placed to extend its already broadening reach and profit from a weaker pound. WH Ireland states that it is comfortable in raising its target price to 80p which should really be achievable in the near term and possibly exceeded if news of further wins are announced over the next six months or so along with a signalling of reinstating the dividend. Pennant has been a good story over recent years aside the delayed contract issues of just over a year ago and certainly seems to have got its mojo back. Although I guess lumpiness will never completely disappear, the picture for the next two or three years looks intact providing scope for a longer term visibility and earnings appreciation.
Pennant share price data is direct from the London Stock Exchange
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