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The group’s FY25 year-end trading update is positive, confirming robust trading conditions and momentum continue. Revenue and profit expectations are in line with recently upgraded forecasts, so we make no further changes to numbers. AES continues to see strong momentum, boosted by a recent defence contract win. Development pathways and commercialisation costs are in line with management plans for the Imaging businesses. The shares have started to outperform but remain attractive both on a near-term view as well as a longer-term opportunity to realise shareholder value in both AES and Imaging. We essentially still view the current valuation as justified by AES alone, with Imaging in for free.
Avingtrans plc
Another upbeat update from Avingtrans which follows from its recent profit upgrade (click here). The key themes will be familiar to Avingtrans’ watchers: a core Engineering business which is going from strength to strength and outperforming expectations, whilst Medical is still early in its corporate journey but making progress towards key milestones. AVG should be a core holding in our view on account of strategic execution and exposure to enduring growth trends. TP rises from 525p to 580p, driven by progress in Engineering with Medical providing further upside as a free option.
Following today’s unscheduled trading update, we have upgraded our FY25 (May Y/E) EBITDA by 11%, from £15m to £16.6m whilst leaving our sales expectations unchanged. The beat reflects a positive mix impact and prudent forecasting. PBT (c.25% upgrades) benefits from lower D&A and interest costs. FY26 numbers are unchanged at this stage. We continue to see opportunities for strong value creation within Avingtrans’ portfolio of businesses and remain firmly in the buy camp here. Our unchanged investment case highlights a well-executed and disciplined buy, build and sell strategy focussed on the highly regulated and growing energy and infrastructure markets. There is also significant upside potential in the early stage Medical business. BUY, TP unchanged at 525p but we will review this post the June update.
Geopolitical events indicate a rapid potentially generational shift: The geopolitical events of the past two months are likely to be seen in future history textbooks as being one of those transitional phases from one era into another. The stable political alliances and relationships established since WW2, both from a security as well as a trading/tariff standpoint, have been thrown into the air. While the full extent of the withdrawal of US support for NATO and western democracy is as yet unclear, this is a big wake-up call to Europe that its biggest international security relationship is no longer to be completely relied on. President Trump has been consistent in his requirement for European members of NATO to increase the level of defence expenditure to a previously agreed 2.5% of GDP. Very few NATO members have maintained this level of commitment. Even assuming a peace time, strong alliance going forward, then 2.5% implies a significant uplift in defence budgets. If you factor in heightened threats from Russia, this adds to the need for further defence commitments and perhaps a change in the way European forces are organised. Any appeasement of Russian aggression may prompt the US to echo “peace in our time” but – as with the Munich Agreement in 1938 – any agreement now may only serve to buy time for Europeans to step up to the plate. This signals a sea-change in spending on defence and security and where procurement is sourced. It is particularly unwelcome as it comes at a time of government budgetary constraints across Europe. Have the UK and Europe got the stomach for welfare cuts to fund significant defence increases?
AVG CNC FTC GHH PEN RCFX RNO SOLI
Interim results, yet again, show continued strong strategic execution with sales +21.2%, to £79m, and adj. EBITDA +18.7%, to £8.7m. This puts AVG well on track to deliver our unchanged FY expectations. The core Engineering business (1H25 sales +20.6%, EBITDA +29.5%) has achieved a 16% EBITDA CAGR in the last 5 years. This is testament to a well-executed and disciplined buy & build strategy focussed on the highly regulated markets of Energy and Infrastructure which carry enduring and positive growth trends. A strong Engineering order book (best cover position in over 5 years at >95% FY25e and c.60% FY26e) gives confidence in the journey ahead. There is also significant upside potential in the early stage Medical business. Adaptix is making encouraging progress whilst Magnetica is yet to be FDA approved. We reiterate our BUY rec and 525p TP (>50% upside) which, conservatively, only captures our view of value for the established Engineering business.
Interims results highlight strong growth in AES, with a robust improvement in margins; OE growth outpaced aftermarket growth, with some effect on the gross margin mix. The scale up of Medical Imaging as it nears commercialisation incurred an increased loss, such that at the group level, profits were broadly level. With strong order cover of over 95% of FY25 forecasts, management signals it is on track to achieve current expectations. No change to our forecast or 495p TP, which offers significant upside; with our sum-of-the-parts calculation offering further upside, this implies that the current valuation not only undervalues the AES division but is throwing the huge potential of the Medical Imaging businesses in for free!
Avingtrans has announced today that its subsidiary, Booth Industries, has won a new £4.5m contract with HS2 to supply pressure rated fire doors. This builds on Booth’s existing partnership with HS2 and initial £36m contract for the supply of cross-tunnel doors. We think more opportunities could follow, not only with HS2 (e.g: high security and fire doors at train stations) but also with similar projects internationally. Our investment case on Avingtrans highlights a well-oiled Pinpoint-Invest-Exit strategy resulting in an attractive portfolio of Engineering businesses which offer exposure to resilient, highly regulated growth markets (infrastructure, energy, defence). There is also significant potential value from the Medical business. BUY. 1H25 results are due in a few weeks’ time (26th Feb). As per the pre-close update in January, we expect the results to strike a positive tone.
A positive update confirming that 1H25 trading is in line with expectations and management expressing confidence in meeting FY25 market expectations. The outlook is robust, underpinned by a strong order book and the group’s exposure to resilient and highly regulated end-markets (energy, infrastructure and healthcare). In the core AES division, Booth is singled out as making good strategic progress, delivering on a key milestone for its HS2 contract. The Medical division, which is in the early stages of commercialisation, is seeing good traction in signing up distribution partners with revenues trading in line with expectations. We continue to believe there is a clear path to creating shareholder value in the core Engineering business as management executes its Pinpoint Invest Exit strategy with significant potential value from the Medical division. We make no changes to our forecasts and reiterate our BUY recommendation.
Visible progress is being made in bringing to market two disruptive technologies Adaptix a small, portable and low-cost 3D X-ray machine and Magnetica a differentiated MRI solution at the point of care. Our analysis shows a clear need for Adaptix as existing solutions are inadequate and Adaptix brings benefits to all stakeholders (patients, physicians and payers) with richer, safer and cheaper imaging. Magnetica offers high-quality MRI systems which are smaller, lighter and cheaper than existing whole-body MRI systems. In keeping with AVG’s Pinpoint-Invest-Exit strategy, we expect management to seek to realise value on its investment with an IPO/trade sale the most likely outcome. Our analysis suggests a fair value range of £85m-£140m (251p/share to 422p/share). Assuming successful execution of the Medical growth plans, this suggests plenty of upside potential beyond our stated TP which is derived solely from the Engineering business for now.
A pleasing set of numbers with 9% organic sales growth in the mature Engineering division, an excellent outturn in the current climate. Despite ongoing investments in the early stage Medical business, group EBITDA increased +3% to £14m. AVG looks well set for another year of progress supported by an order book cover of c.90% FY25e. Our FY25e EBITDA forecasts move 8% higher, led by Engineering. With a number of Engineering businesses moving towards the “E” of the Pinpoint-Invest-Exit (PIE) strategy, we expect to see further proof points of management’s skill in creating value for shareholders. Our 525p TP (up from 510p) is based on our view of value for the core Engineering business and, at this stage, makes no allowance for the building value in Medical despite ongoing progress in gearing up for commercial launch. This suggests further upside beyond our stated target price
FY24 results were slightly better than our recently upgraded forecasts, with top-line growth driven by the acquisition of Slack & Parr and organic growth of 9%, which we consider a strong performance in challenging markets. Development investment in Medical & Industrial Imaging (‘Medical’) offset the otherwise good performance from the AES division. We are upgrading FY25E EPS by 147% with better profitability at AES and lower losses at Medical Imaging than expected earlier. We introduce new FY26E forecasts. As some of the AES businesses achieve margin targets, their disposal potentially moves nearer. Our TP remains at 495p, with huge potential valuation upside as Medical Imaging starts to gain commercial traction.
Today’s pre close update (May Y/E) confirms record FY24 group sales, in line with expectations with a material EBITDA beat (c.34% at the mid-point of the new £13-14m guidance range). We have upgraded our FY24 forecasts accordingly. We leave FY25 unchanged for now but note that the new financial year is said to have started well. Upgrades to FY24 reflect both strong operational momentum in the core Engineering businesses as well as some moving parts (negative & positive) in Medical. FY25 is also said to have started strongly. FY24e net debt, which had been in focus at the interims, is now expected to be c.£6.1m, better than the £7.3m we had forecast. Avingtrans’ management has an excellent track record of creating shareholder value, driven by a focussed and successful Pinpoint-Invest-Exit strategy. We have every reason to believe this can be enduring. BUY rec reiterated.
A very encouraging year-end update: trading ahead of expectations, with a robust performance from AES built on record order book levels and strong performances in many of its businesses. The delay in some medical development expenditure boosts FY24 but does not reduce FY25, illustrating management confidence in underlying performance. With a £4m increase in adj EBITDA guidance in FY24, the boost to EPS is substantial. We maintain our 495p target price, although we recognise that if it is successful with its medical products, the shares deserve to be substantially higher.
Overall, this is a strong set of interim results with group sales +30% to £65m and adj. EBITDA up 14% to £7.3m. On a LfL basis (ex acq.), sales growth was c.24% and EBITDA growth c.30%, an excellent outturn in the current environment. Guidance has been reiterated, underpinned by a c.95% order book cover, and as such we leave our earnings estimates unchanged. A working capital outflow and acquisition spend drives a modest, £2.2m, net debt position in 1H24 (net cash £13m FY23) which is consistent with the movement in our FY24e assumptions (£7.3m net debt). We are BUYers of the shares as we think AVG has a proven “Pinpoint-Invest-Exit” (PIE) model and operates in end-markets with attractive structural growth opportunities (e.g: energy/nuclear, infrastructure, medical). In our view, the share price fails to reflect the potential value in the Group ahead of expected realisations as AVG moves towards the exit phase of its strategy for a number of its businesses. Shares have been weak in recent month (-15% rel. market) and present an attractive entry point in our view. BUY, TP 510p (unchanged)
Avingtrans reported FY24 interim results in-line with expectations with good growth and an improving operational performance. We maintain our existing forecasts. The formation of Advanced Engineering Systems (AES) by merging the PSRE and EPM divisions makes sense. Ongoing investment in Medical Imaging continues to make encouraging progress in its potentially market disrupting compact MRI and 3D X-Ray imaging equipment. The shares do not reflect the potential disposal valuations for the engineering operations nor the obvious value creation occurring in the development of market disruptive Medical Imaging products. Our conservative 495p target price offers significant upside to current levels.
Avingtrans have released a short statement highlighting that 1H24 results (to end Nov) are in line with the Board’s expectations and that they are comfortable with achieving FY24 market expectations. Furthermore, a new division Advanced Engineering Systems (AES), has been established, combining the Engineered Pumps & Motors (EPM) and Process Solutions & Rotating Equipment (PRSE) segments. We think this is a sensible move which will facilitate execution of the Pinpoint-Invest-Exit strategy. It will also allow investors to better identify the value creation potential of the mature engineering businesses (i.e: the newly formed AES) whilst increasing the prominence of the earlier stage Medical & Industrial Imaging division. No changes to forecasts or recommendation. BUY, TP 510p.
Avingtrans has reported a robust set of FY23 results with EBITDA growth of 10.6%, marginally ahead of expectations. The Group entered the current year with good momentum and a strengthened order book that now provides over 90% visibility for FY24 and over 45% for FY25. Post year-end the Group acquired the assets of Slack & Parr, a specialist pump manufacturer, and also recently completed the acquisition of Adaptix, a manufacturer of compact 3D X-ray machines, as well as investing further in Magnetica, its complementary earlier stage business focused on small scale MRI. There is significant potential for value creation in the expanded Medical division in the years to come. We have updated our forecasts and made significant changes to reflect the continuing investment in the Medical division ahead of commercialisation and anticipated strong sales growth.
Avingtrans results were slightly ahead of our expectations, a good out-turn in a challenging year. Growth has been driven across a number of Energy operations. Metalcraft going into phase 2 of 3M3 boxes for Sellafield, Hayward Tyler and Energy Steel in nuclear bids and Booth with HS2. Medical has made good progress with Adaptix products gaining FDA approval and Magnetica on plan. Adaptix is now fully owned. FY24 has started well supported by a decent order book and trading in-line with expectations. We update our forecasts for the recent Adaptix and Slack & Parr acquisitions, with EPS decreasing 87% to 2.8p in FY24E. We maintain our 495p TP but note that traditional valuation metrics are not doing justice to the significant valuation opportunity as the medical business achieves expected milestones.
The Group has announced the c. £5m acquisition of certain assets of Slack & Parr Limited (‘S&PL’) from administration, together with S&PL’s overseas subsidiaries. S&PL, a well-invested family owned business, is a leading manufacturer of custom precision gear pump solutions with a global footprint and a large installed base. The acquisition is an excellent fit with the Group and can be expected to generate strong shareholder returns under the experienced direction of the Avingtrans team. The Group has also confirmed that its offer to acquire Adaptix, which has been accepted by the majority of its shareholders, is now expected to complete by the early part of September subject to the receipt of regulatory approval. We see both developments as positive and will update forecasts in due course. We re-iterate our BUY and 510p target price.
The group has delivered another slice of its PIE strategy, with the acquisition of a small specialist pump manufacturer out of administration for a maximum consideration of £4.9m. The AVG team, via Hayward Tyler, has plenty of experience both in this market and of acquiring and turning round this type of business. While we anticipate EBITDA breakeven for its first nine months under AVG ownership, depreciation and interest charges result in a £1.0m reduction in adj PBT, with EPS down 10.4% to 21.9p. We retain our medium-term 495p target price, offering significant upside as the well regarded and experienced management team continue to turn around operations such as S&P or invest in growth opportunities such as Medtech to realise value as part of its PIE strategy.
The group’s interim results provide confidence, with a solid performance, certain markets seeing growth and turnaround gains continuing. Some supply chain challenges have gated progress in specific areas; however, this should ease and – coupled with a strong order book – there is cautious confidence in a better H2. Medical continues to offer significant medium-term development opportunities. The group’s strong net cash balance provides considerable flexibility to achieve EPS-enhancing M&A activity. No change to forecasts. It continues its PIE strategy to turnaround businesses and unlock shareholder value. Our TP remains 495p, offering decent upside, with the share price currently indicating mid-teens P/E, which we believe undervalues the company’s defensive qualities, medical opportunities, scope for EPS-enhancing M&A and the management’s PIE turnaround track record.
The Group has reported interim results in-line with expectations and forecasts remain unchanged. Adjusted EBITDA increased by 11% despite inflationary pressures and on-going supply chain instabilities. There is well over 90% order cover for FY23 and over 55% for FY24 that underpins the trading outlook. Positive operational cash flow saw period end net cash (excluding IFRS 16 debt) increase to £17.3m (FY22: £16.7m) after additional investments into Magnetica and Adaptix, and in working capital. Under its Pinpoint, Invest Exit (PIE) strategy, management continue to invest in and position its three divisions EPM, PSRE and Medical - for eventual exits. The standout opportunity is in Medical in small scale, multi-modal imaging where material value creation is occurring. Recent investments with third party involvement are suggestive of a valuation of over £50m for AVGs holdings in Adaptix and Magnetica. We reiterate our Buy recommendation and TP of 510p.
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Any reference to a partner in relation to Hybridan LLP is to a member of Hybridan LLP or an employee with equivalent standing and qualifications. A list of the members of Hybridan LLP is available for inspection at the registered office, 2 Jardine House, The Harrovian Business Village, Bessborough Road, Harrow, Middlesex HA1 3EX. *A corporate client of Hybridan LLP ** Arranged by most recent first *** Alphabetically arranged Dish of the day Joiners: No joiners today. Leavers: No leavers today. What’s cooking in the IPO kitchen?** Celsius Resources intends to join AIM. Currently ASX listed, Celsius is a natural resources exploration and development company principally seeking to explore and develop potential world-class copper-gold assets in the Philippines and a cobalt asset in Namibia. Amount planning to raise and anticipated market cap TBC. Expected late January 2023. Conviction Life Sciences, a newly established closed-ended investment company managed by Plain English Finance Limited, is seeking to list on Premium Segment of the Main Market of the London Stock Exchange, to invest in a conviction portfolio of life sciences and medical technology businesses, primarily in the UK, Europe and Australasia. The Company will invest in both publicly traded and private companies - c. 70% and c. 20% of the total portfolio value respectively. The Company will target an annualised Total NAV Return of 20% over the long-term. Targeting to raise c.£100m. Delayed to 3rd February 2023. Our daily digest of news from UK listed Small and Mid caps Banquet Buffet*** Ashtead Technology Holdings 328.5p £261.4m (AT..L) A leading subsea equipment rental and solutions provider for the global offshore energy sector provided an update on its financial performance for the year ended 31 December 2022. Strong performance has continued into the final quarter of the year as the Company benefits from the high levels of activity across both the offshore wind and oil and gas markets. Unaudited full year revenues are expected to be approximately £72.5m, up c.30% on the prior year. WeSubsea and Hiretech, both acquired in Q4, contributed a combined c.£1m to reported revenues in 2022. Both of which support the goal to provide a wider offering to customers both in the renewables and oil and gas markets. Avingtrans 450p £145.1m (AVG.L) A provider which designs, manufactures and supplies critical components, modules, systems and associated services to the energy, medical and industrial sectors announced that trading in the first 6 months of the financial year to 30 November 2022 was in line with market expectations. The Board announced that Avingtrans has acquired the business and assets of Hevac Limited, a heating ventilation and air conditioning firm and the business and assets of HeatExchangeSpares.com a plates and gaskets supplier. The acquisitions is expected to be £825k, funded from the Group's existing cash resources. In the latest reported financial year, ended December 2021, the combined businesses and assets generated £5.3m of sales and a loss before tax of £0.3m. IQE 48.8p £392.8m (IQE.L) The leading supplier of compound semiconductor wafer products and advanced material solutions to the global semiconductor industry, provided a trading update for the financial year ended 31 December 2022. Reported revenue is expected to be circa 8% higher than the prior year, subject to external audit review (2021: £154m). The Group's trading in 2022 has been largely resilient to the challenging macro environment. The first half of 2023 the Group expects to see some destocking in the wider industry which may impact demand from existing customers, but remains confident in its diversification strategy and long-term growth targets. Knights Group Holding 112.5p £105.1m (KGH.L) A fast-growing legal and professional services business announced its half year results for the six months ended 31 October 2022. Revenue increased by 19% to £71.2m (HY 2022: £59.7m) whilst underlying profit before tax up 19% to £9.0m (HY 2022: £7.6m). Net debt has increased to £35.6m (30 April 2022: £28.9m); however, in line with the Board's expectations. During the period, the Company broadened its footprint and strengthened its presence across the UK through several acquisitions including, Coffin Mew (South of England), integration of Keebles, Archers Law and Langleys (Yorkshire, North-East England and East England) and of Meade King (Bristol). With the focus on improving productivity along with improved gross margins, underpinned by increased interest income, the Company is confident of delivering full year results in line with market expectations. MediaZest* 0.06p £0.8m (MDZ.L) The audio-visual solutions provider announced it has completed the incorporation of a new, wholly owned, European subsidiary based in the Netherlands. The European Subsidiary will help the Group to deliver services more efficiently to its EU based clients, building on increased traction and recently completed projects in Germany, Italy, Spain, France, Sweden and the Netherlands, including audio visual work for the new Lululemon flagship store on the Champs Elysees in Paris. Board expects to see further substantial work within EU member states in 2023, building on the strong performance in FY22. MPac Group 268.5p £55m (MPAC.L) A global leader in high-speed packaging and automation solutions announced a trading update for the year ended 31 December 2022 (FY 22). The Group had an improved H2 2022 over H1 2022 and expects to report full year revenue and underlying profit before tax in line with market expectations. Order intake in H2 22 was significantly above H1 22, reflecting the resilience of the healthcare, and food and beverage end markets. The Group ended 2022 with a closing order book of c.£69.0m (December 2021: £78.4m) providing good coverage of FY 23 forecast revenue. PoolBeg Pharma* 9.7p £48.5m (POLB.L) A leading infectious disease focused biopharmaceutical company announces the strategic expansion of POLB 001 into oncology. While investigating the role of cytokine release syndrome (CRS) in severe influenza, Poolbeg discovered data specific to the overt immune response in CAR T cell patients that suggest POLB 001 as a potential treatment option. The filed patent application is expected to provide class protection for use of p38 inhibitors in CAR T cell treatment and opens up a significant new market opportunity for POLB 001 in addition to severe influenza. Long-term strategic objective for the Company is to evaluate POLB 001's potential value of the molecule and strengthen Poolbeg's position with a view to potential partnering and out-licensing. Power Metal Resources 1.425p £23.7m (POW.L) The London listed exploration company seeking large-scale metal discoveries across its global project portfolio announced it has completed a placing and subscription to raise £900k before expenses for the advancement of priority exploration projects and for general working capital purposes. The fundraising will be applied to the Tati gold project and will allow Power Metal to accelerate preparations for exploration its uranium portfolio in the Athabasca Basin region of Saskatchewan, Canada. It is further seeking to undertake exploration programmes at a number of its Athabasca uranium properties during the upcoming spring and summer, following snowmelt. Quixant 173.5p £115.3m (QXT.L) A leading provider of innovative, highly engineered technology products principally for the gaming and broadcast industries, provided a trading update for the financial year ended 31 December 2022. The Board expects to report full year revenues of $119.9m, 38% up year-on-year, slightly ahead of market expectations. Net cash at 31 December 2022 increased to $12.9m from $12.0m at 30 June 2022, driven by lower working capital requirements. Despite macro-economic challenges, including a looming recession, supply risks and inflationary measures, the Group is well placed to continue to deliver good growth. Totally 36.25p £70.4m (TLY.L) A leading provider of frontline healthcare services, corporate fitness and wellbeing services across the UK announced it has been awarded a new contract by NHS England to provide national NHS 111 contingency services. The contract, awarded to Vocare Limited part of Totally's Urgent Care division, will run from 1 March 2023 at a value of c. £10m per annum, initially for one year with the option to extend for a further year. This new contract provides additional flexible capacity, which can be precisely targeted where and when needed. If you would like to unsubscribe, please email enquiries@hybridan.com with “unsubscribe me”. Chef: Emily Liu 0203 764 2344 emily.liu@hybridan.com Chef: Sacha Morris 0203 764 2345 sacha.morris@hybridan.com
AVG IQE KGH MDZ MPAC UKXA
Despite ongoing supply chain disruption, the Group has reported results in-line with expectation. Adjusted EBITDA from continuing operations improved slightly to £12.7m with the Energy divisions growing by c.15%. Increased investment in the Medical division and the pivot away from 3rd party component manufacture resulted in an offsetting c.£1.5m EBITDA movement. The Group enters FY2023 with a robust order book that already provides 90% coverage for FY23E and 45% for FY24E. Our EBITDA forecasts remain cautiously positioned and unchanged save for further expected investment in the Medical division. We continue to see a potentially very significant market opportunity for the Group’s small scale cryogen-free MRI for veterinary and orthopaedic applications, noting that product is expected to be launched in Q4 calendar 2023. We maintain our Buy recommendation and 510p TP.
Full-year results were in line with expectations, with progress in PSRE and EPM operations reflecting their recovery, with some continuing effects from supply chain disruptions and delays. Booth, HT and ES all showed good growth. Sellafield moved into volume production phase. Medical exited third-party MRI components in favour of the exciting ongoing development of its own technology for a compact helium free MRI system, with planned investment increasing the division’s loss. With Medical investment continuing, we reduce our FY23 adj PBT forecast by £0.5m to £8.6m, with EPS subdued by 9.9%. We see a significant market opportunity and potentially huge embedded value in these new medical products. We maintain our PT at 495p, despite the snip to near-term EPS.
AVG has today announced contract wins for Booth, and Energy Steel and Hayward Tyler, Inc. The former is with a UK government organisation, and will see the group supply specialist doors for a total contract value of £6m. The latter is a pair of multi-million dollar contracts that supports the ITER project in France, and details the supply of integral components for the for ITER’s magnetic fusion reactor, which will be the world’s largest. The contract wins build on the robust performance in H1, showcasing the growing momentum in the business. Looking ahead, we believe the group is on track to deliver on undemanding full year expectations. At the current valuation levels, there is still value left to be captured. We remain at Buy – 510p PT.
The Group has reported a robust performance with adjusted EBITDA flat at £5.8m, an outturn that was in line with management’s expectations given Covid disruptions and the phased exit of (profitable) third-party MRI component manufacture. Whilst the order book is robust, notwithstanding some contract delays, the timing of contract revenue recognition is noted as providing good visibility over H2 revenues, leaving the Group on-track to deliver full year expectations. Our forecasts remain unchanged, save for incorporating a higher working capital requirement, the small bolt-on acquisition of Transkem post period end and a further £1.5m investment in Adaptix announced in Jan 2022. As such we now anticipate year-end net cash (ex-IFRS16 leases) of £18.2m versus £21.2m previously. We maintain a Buy and 510p PT.
Interim results show a solid performance, with trading on track to achieve full-year expectations. Market conditions have remained challenging, with some customer project delays seen; however, management has coped well, with supply chain glitches and with inflationary effects passed on. PSRE saw strong growth, with Booth continuing its recovery. EPM was down due to some contract timing issues, but should have a stronger H2. The Medical business exited low margin third-party MRI components to concentrate on developing its own new MRI product, which is showing good progress, further boosted by the recent investment in Adaptix. No change to profit forecasts, with a slight change to FY22 EPS from 23.1p to 22.6p and net cash adjusted for recent investments. We maintain our 495p price target, offering upside to current levels.
The Group has issued an in-line trading update for the first half of the current financial year and confirmed period end net cash (pre-IFRS 16) of £22.5m. Avingtrans has also announced that it has increased its shareholding in Adaptix to 11.9% at a cost of £1.5m. Adaptix and Magnetica have product launch plans that are convergent and there is clear benefit in the companies working in close collaboration as they bring about a transformation in (small-scale) diagnostic imaging. The funds are to be deployed in developing commercial distribution for Adaptix’s veterinary and orthopaedic 3D X-ray products that will also be used subsequently to distribute Magnetica’s MRI products. Market response to the launch of the Adaptix system is noted as very encouraging. We continue to see clear opportunity in Avingtrans’ Medical division for substantial value creation. The last year has also seen continued progress in the implementation of management’s ‘Pinpoint-Invest-Exit’ strategy that was most clearly evidenced by the accretive disposal of Peter Brotherhood and, alongside strong growth reported in FY21, the share price has significantly outperformed. We now introduce a Buy recommendation and 510p PT.
Avingtrans has invested £2.5m in cash in Adaptix Ltd to acquire a 5.9% holding by participating in Adaptix’s latest £12.9m funding round. Adaptix is looking to transform radiology by bringing to market its low cost, low dose portable imaging technology based around its proprietary Flat Panel X-ray Source (FPS). Avingtrans intends to collaborate with Adaptix to develop a disruptive business offering that envisages bringing together its low cost 3D MRI, through Magnetica, with Adaptix’s 3D X-ray and also potentially ultrasound in a solution for medical and veterinary applications. The collaboration is expected to deliver cost and market synergies for both businesses and creates an interesting additive pathway to enhance shareholder value.
Full-year results were in line with expectations, seeing parts of the business turnaround and others perform very strongly, gaining strong order intake especially in the nuclear and defence sectors. The prospects for the new helium-free MRI system offer significant medium-term upside and the group’s strong balance sheet means the group is well placed for the next step in the PIE strategy. Our FY22 forecast remains broadly unchanged. We raise our PT by 9% to 495p and continue to expect steady outperformance and M&A offering a catalyst to the shares.
The Group ended FY2021 with record adjusted profits and a net cash balance of £20.3m with management successfully disposing of Peter Brotherhood in March 2021 for an enterprise value of £35m, representing a fourfold return on the original investment in September 2017. The Group enters FY2022E in robust shape with important in-year and post-period new orders that cover c.85% and c.40% of FY2022E and FY2023E expected revenues. Significant investment is being directed to the refocused Medical division which looks increasingly well positioned in emerging small-scale MRI, following the merger of the Group’s divisional operations with Magnetica in January 2021. The Group’s ‘Pinpoint-Invest-Exit’ strategy is set to provide further opportunities to grow shareholder value and additional M&A remains a priority.
Avingtrans has issued a year end update confirming that FY21E trading is at least in-line with market expectations. The statement highlights a strong net cash position (excluding IFRS 16 lease liabilities) in excess of £23m (2020: net debt £7.4m) that benefited from the disposal of Peter Brotherhood for £30.6m (net) in March 2021. The Board has also confirmed the reinstatement of the final dividend that will compensate for the earlier non-payment of the interim dividend. We continue to see opportunities for strong value creation within Avingtrans’ portfolio of businesses and the statement notes management’s confidence in the outlook for the Group.
What’s cooking in the IPO kitchen? CMO Group PLC, the UK's largest online-only retailer of building materials, announced its intention to seek admission to AIM. The Group currently operates seven specialist websites, Roofingsuperstore.co.uk, Drainagesuperstore.co.uk, Insulationsuperstore.co.uk, Doorsuperstore.co.uk, Tileandfloorsuperstore.co.uk, cmotrade.co.uk and Totaltiles.co.uk. Admission due early July. Seraphine Group, intends to IPO on the Premium Segment on the Main Market. Seraphine, and together with its subsidiaries, is an international digitally-led maternity and nursing wear brand. The final offer price will be determined following a book-building process. Admission expected July. Literacy Capital PLC, announces its intention to seek admission of its ordinary shares of £0.001 to trading on the Specialist Fund Segment of the Main Market. The Company was created in September 2017 as a permanent capital vehicle to allow longer term decision making and with the intention to generate substantial investment returns. As at 31 March 2021, the Company's unaudited Net Asset Value is approximately £96.4m. Literacy Capital Asset Management LLP is the Company's investment manager. LungLife, a developer of clinical diagnostic solutions for lung cancer enhanced by artificial intelligence (AI), announces intention to seek admission to AIM. The Company's technology is a combination of the recovery of rare cells and blood-based biomarkers shown to be altered in lung cancer. The Company employs machine learning to improve upon existing computer software to identify informative cells from blood, and intends to build a deep, novel pool of lung cancer-related data for AI-enabled applications designed to improve test performance over time. Admission due early July. Helium Ventures PLC, announces admission to the AQSE Growth Market. The Company has been formed to identify either investment opportunities or acquisitions in the upstream natural gas sector and in particular in helium. Admission date TBC. Seraphim Space Investment Trust PLC, a newly established closed-ended investment company which will invest in a diversified international portfolio of early and growth stage Space Tech businesses, announces the publication of its Prospectus in connection with the IPO to the Premium Segment of the Main Market. The Company is targeting gross proceeds of up to £180m through the issue of up to 180m Ordinary Shares by way of the Initial Placing, the Offer for Subscription, Direct Subscriptions and the Intermediaries Offer at 100 pence per Ordinary Share. The Company will subsequently also acquire stakes in four Space Tech businesses upon the completion or termination of currently pending corporate activity in relation to those assets. Assuming the successful completion of these transactions currently underway, the Company's investment manager, Seraphim Space estimates approximately £70m of value relating to the Retained Assets could be acquired by the Company. Future Biogas Group plc, is a newly formed holding company which will acquire 100% of Future Biogas Limited ("FBL"). Future Biogas is a clean energy company that operates biogas plants in the UK. It is one of the largest biogas producers in the UK, delivering approximately 5,000 cubic metres per hour of green gas to the Gas Grid. FBL was formed in 2010 in order to develop and operate biogas plants. The Group has deployed over £125m and built 12 biogas plants in the UK since then, largely through tax efficient funding such as VCT and EIS. In 2020, the ten biogas plants operated by the Group generated over 426 GWh of renewable energy. TBC ordinary shares of £0.01 each in the capital of the Company. In addition to the biogas plants it operates on behalf of third parties, the Company intends to build on its experience by constructing its own portfolio of new bioenergy plants with carbon capture storage ("BECCS"). Target fundraise up to £35m. Anticipated market cap TBC. Admission date TBC Saietta Group, announces intention to list on AIM. Saietta, is a UK company that has developed an innovative AFT electric motor (a design of axial flux motor), designed to deliver class-leading performance for its target markets whilst being low cost and built for mass market production. Saietta's initial target market is the high volume, fast growing lightweight mobility market including motorcycles in Asia. Admission date and market cap TBC. Poolbeg, Proposed AIM listing and demerger from Open Orphan (ORPH.L). Funds raised as part of Admission will be used primarily to fund the clinical trial costs associated with the development of the Company’s POLB 001 asset as a treatment for severe influenza and to acquire and develop new portfolio assets. Offer details and timing TBC Wise, the Fintech and payments start-up is planning to pull the trigger on a direct listing on the London Stock Exchange, becoming the latest tech firm and this time a Unicorn to cash in on the ongoing boom in flotations on the UK’s public markets. Wise plans to establish a customer shareholder programme, OwnWise, which will reward customers joining as shareholders after admission to support its long-term mission. OwnWise, open for pre-applications from UK eligible customers today, provides participants with the chance to receive bonus shares in Wise, representing 5% of the value of the shares they buy and hold for at least 12 months (based on market value at the time of purchase) up to a cap of £100, amongst other perks. All existing investors, including the company's team of current and previous Wisers (employees) who hold options and shares, will be offered time-limited enhanced voting shares to support Wise's focus on its mission as it transitions to being a listed company. Admission Due TBC Orcadian Energy, the North Sea focused, oil and gas development company, announces its intention to seek admission to AIM. The Company's key asset is the 100% interest in the Pilot oilfield, with audited proven and probable reserves of 78.8m barrels (audited by Sproule BV). Orcadian plans to raise gross proceeds of c. £5m to progress its assets. Expected June/ early July. Baltic Classifieds Group PLC, the leading online classifieds group in the Baltics, announced their intention to IPO on the Premium Segment of the LSE. The Offer will comprise an offering of both new Shares to be issued by the Company, with gross proceeds expected to total approximately EUR 120m and existing Shares to be sold by ANTLER Equity Co S.à r.l and certain BCG shareholders. The directors intend to use the net proceeds from the Primary Raise for the repayment of existing debt in conjunction with the refinancing of the Senior Facilities Agreement targeting a net debt at IPO of approximately 2.75x FY21 Adjusted EBITDA. Expected early July. The UK Residential REIT, a proposed closed-ended real estate investment trust established to invest in a diversified portfolio of affordable, privately rented residential real estate assets in attractive locations outside of London, announces its intention to IPO onto the Premium Segment of the LSE. URES is targeting Gross Issue Proceeds of 150m before expenses by means of a placing, offer for subscription and intermediaries offer of 150m Ordinary Shares plus an Issue of up to 50m Consideration Shares in connection with the acquisition of Seed Assets at an issue price of £1.00 per Ordinary Share. Expected market capitalisation following the completion of the acquisition of Seed Assets of £200m. Due 16 July LionTrust ESG Trust PLC announces the publication of the Prospectus in connection with the IPO on the Premium Segment of the Main Market. The Company is targeting an initial issue of £150m by means of an Initial Placing, Offer for Subscription and Intermediaries Offer of Ordinary Shares at an issue price of 100 pence per Ordinary Share. In addition, pursuant to the Prospectus, a placing programme will allow the Company to issue up to an additional 250m Ordinary Shares and/or C shares, in the 12 months from the date of publication of the Prospectus and following Initial Admission. Voyager Life, the health and wellness company established to supply high-quality Cannabidiol (CBD) and hemp seed oil products, announces the Company's intention to seek admission to trading on the Access Segment AQSE Growth Market. Voyager was incorporated in November 2020 as a health and wellness business focused on CBD and hemp seed oil products. The Company's directors believe that a significant opportunity exists in the CBD market due to the forecast growth and ongoing regulatory changes. Due 30th June. Our daily digest of news from UK listed Small and Mid caps Banquet Buffet Avingtrans 430p £137.5m (AVG.L) Avingtrans PLC, which designs, manufactures and supplies critical components, modules, systems and associated services to the energy, medical and industrial sectors, announced that Stainless Metalcraft has received planning permission for the new training school to be located at its Chatteris site, with work due to begin on construction imminently. The centre, which will be funded through a £3.16m grant from the Cambridgeshire and Peterborough Combined Authority, will provide training across a range of vocational subjects for between 80 and 130 apprentices per year. Crossword Cybersecurity* 41.5p £24.1m (CCS.L) The technology commercialisation company focused on cyber security and risk management, announced that Spotlight Sports Group, the digital publisher and integrated betting platform, has implemented Rizikon Pro, Crossword's supplier assurance and third-party risk management platform for SMEs. As a result, Spotlight Sports Group has halved the time spent on supplier management, gained better visibility of supplier risks, and cut the costs of maintaining its ISO 27001 Information Security Management certification. Spotlight Sports Group is the owner of Racing Post, which has been the home of horse racing in the UK and internationally since launching as a newspaper in 1986. Today, its all-digital platform offers breaking industry news, race results, statistics, tips, and betting platform integration. As part of a heavily regulated industry, Spotlight Sports Group invests huge amounts of time and effort to ensure it, and its 40+ suppliers, meet the governance, regulatory and compliance requirements of its industry. Victor Mihăilescu, Head of Security at Spotlight Sports Group said "All of our supplier onboarding communication and management now takes place in Rizikon Pro. As a result, we have halved the time we spend on supplier management and made the process easier for our suppliers. All the information and discussions about questionnaires is kept in one place and we can clearly see when and by whom forms were completed, removing any non-repudiation risk." DXS International* 10p £5m (AQSE:DXSP) The clinical decision support developer and supplier of clinical decision support systems, announced the grant of NHS Digital certification, for DXS ExpertCare, its ground-breaking digital hypertension medicines optimisation solution. An open listing on the GP IT Futures online Digital Buying Catalogue gives GP practices, Clinical Commissioning Groups (CCGs), or any other NHS primary health systems in the UK the opportunity to buy rapidly evolving digital e-health tools and services that are centrally funded. DXS ExpertCare represents an important breakthrough in primary care hypertension management and reduces the risk of avoidable medicines-related consequences. Two-thirds of people with multimorbidity are hypertensive and treating them is often complicated. Different conditions and treatments may interact in complicated ways and cause negative impacts. ExpertCare employs complex medicines optimisation algorithms with the goal of mitigating prescribing complexity. It automatically provides just-in-time prescribing advice to clinicians and healthcare workers aimed at controlling the patient’s blood pressure to an appropriate target. The algorithm driving the solution uses a matrix pattern recognition approach so that the program can calculate the optimum drug regimen for any combination of comorbid diseases. It then compares this with the patient’s current medication and recommends a sequence of drug changes to achieve concordance with all Best Evidence Medicine (BEM) guidelines that apply to an individual patient. The ExpertCare solution, that also has CE Class A medical device certification, is currently being piloted in general practices across the UK in preparation for commercial release. Feedback 1.05p £11.2m (FDBK.L) The specialist medical imaging technology company, today announces that a UKCA mark, the post-BREXIT UK regulatory certification, has been affixed to Bleepa, Feedback's flagship medical imaging communications platform, adding to its portfolio of regulatory approvals for Bleepa. Dr Tom Oakley, CEO of Feedback, commented: "In addition to the CE mark affixed last year, Bleepa has now enhanced its regulatory technical file to include the UK's medical Device Manufacturing mark. The new UK product marking is used for goods being placed on the market in Great Britain post-BREXIT and further validates as well as provides confidence in the quality and expertise of Bleepa's technology." Gaming Realms 34.05p £98.3m (GMR.L) The developer and licensor of mobile focused gaming content, having received its provisional supplier license earlier this year, has now launched its Slingo Originals content in Michigan, U.S.A. with BetMGM. BetMGM is a leading sports-betting and online gaming operator in the U.S. and, as of May 2021, is the market leader of the iGaming market in Michigan. Under the terms of the direct integration agreement between BetMGM and the Company, BetMGM has launched with an initial three Slingo games, with more games scheduled to follow shortly. The Company has also signed agreements for Michigan with a number of other leading operators in the market, and its full portfolio of Slingo Originals games is set to go live in Michigan over the coming weeks. Great Western Mining Corporation 0.23p £8.57m (GWMO.L) Great Western Mining Corporation, which is exploring and developing multiple early-stage gold, silver and copper targets in Nevada, USA, advises that it has now completed its first-phase drilling programme for gold and silver at the Rock House Group, with 6 holes drilled at the Southern Alteration Zone (SAZ) totalling 1,685 feet (515 metres) using a reverse circulation (RC) rig. This week the cuttings from these holes will be bagged and trucked to an independent laboratory in the area for assaying. The SAZ is one of three potential prospects at RH, the others being the Eastern Shear Zone and the Northern Slate Zone. Whilst RH has never previously been drilled, possible mineralisation has been identified through satellite imagery. This was confirmed prior to the commencement of drilling by rock chip sampling, soil sampling and trenching, with minor amounts of gold and silver produced from 'float material' collected on site. GWM has now completed the initial RC drilling programme for RH as well as the Olympic Gold Project, previously reported, with a total of 17 holes drilled since mobilisation in April. Once assay results become available, the next phase of follow-up drilling can be determined for later this year. The current pause in RC drilling will provide the opportunity to commence drilling at Mineral Jackpot and at the M4 copper target, using a small and easily transportable coring rig. Gresham House 910p £299m (GHE.L) The specialist alternative asset manager, announced the completion of the acquisition of Appian Asset Management Ltd, following regulatory approval from the Central Bank of Ireland. Based in the Republic of Ireland, Appian is an active asset manager with c.EUR350m in Assets Under Management (AUM) as at 31 December 2020. The Acquisition enhances the Group's capabilities to develop existing strategies in Ireland and Europe, particularly those with a sustainability focus including forestry, sustainable infrastructure and real estate. Appian's existing funds complement those offered by Gresham House and will benefit from the support of the Gresham House brand, infrastructure and central resources. In addition, the ambition to increase its presence in alternative asset classes dovetails with the Group's existing forestry asset management platform and growth strategy in Ireland. Okyo Pharma 6.15p £59.7m (OKYO.L) Okyo has retained the services of Ora, Inc., a world-class ophthalmology contract research organisation (CRO), to guide the company's upcoming product development and lead the regulatory strategy of OK-101 for the treatment of dry eye. OK-101, OKYO's lead pre-clinical compound is a novel long-acting GPCR-based anti-inflammatory drug candidate. "We are eager to complete IND-enabling studies on OK-101 and move it forward into the clinic as we believe the drug's novel chemical composition, designed as a lipidated stable peptide, offers a new approach to the treatment of DED," said Gary S Jacob, Ph.D., CEO of OKYO. "We are especially pleased and excited to be working with Ora as we move forward towards an IND filing." Oriole Resources 0.63p £9.95m (ORR.L) Final results for its recently completed maiden diamond drilling programme at the 51%-owned Bibemi gold project in Cameroon. Results reported today support the potential for large-scale mineralisation at the Project, with gold now confirmed at all four prospects within this 8.3km-long orogenic system. Best intersections from holes BBDD010 to BBDD029 include 3.10 metres grading 1.07 grammes per tonne gold and 0.80m grading 27.90 g/t Au, the latter of which correlates with a previously reported visible gold interval. The widest zones of mineralisation to date (up to 12m) have been returned from the southern end of the Bakassi Zone 1 prospect, with the most robust intervals including 2.45m grading 2.96 g/t Au, 3.60m grading 1.75 g/t Au and 12.40m grading 0.71 g/t Au. There appears to be clear continuity of the mineralised structures between drilling fence lines BZ1_L6 and BZ1_L7, which are 800m apart, and it is interpreted that the mineralisation continues southwards along strike to Lawa West. Infill and extension drilling around these lines will be a priority focus for further drilling later in the year, although work plans are currently being designed for all of the prospects. Proactis 74p £70.7m (PHD.L) The business spend management solution provider, today reports that forensic investigations into the cyber security incident first detected by Proactis on Sunday 16 May, have now concluded. The investigations confirm that none of Proactis' customer systems were compromised and only a very small amount of low level internal and non-commercially sensitive data, limited to a standalone, services-based business unit in the US was accessed by the perpetrators. The effectiveness of the network segregation in place played a key part in protecting Proactis during the incident. The Company confirms there will be no material financial impact on Proactis as a result of the incident. The Company will continue to work with the relevant regulators and law enforcement agency, including the Information Commissioner's Office, to ensure that any follow up action required takes place.
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Last week Metalcraft (part of AVG’s PRSE division) and Sellafield mutually agreed to exercise the option to enter into the second phase of the contract to provide a total of 1,100 high integrity 3M3 stainless steel storage boxes for Sellafield. This is a significant milestone, following commencement in 2015 of prototyping and refinement, and the establishment of dedicated, state of the art 3M3 box production and supply. We think It clear that Metalcraft has now established the leading position in the provision of storage for intermediate level waste (ILW) for Sellafield as it retrieves those wastes from its Legacy Ponds and Silos (LP&S). Whilst second phase revenue should be c.£10m p.a. over 6 years, c. 70,000 3M3 boxes will be needed to accommodate over 200,000 m3 of ILW. The announcement also highlighted management’s view that the contract underpins the Group’s outlook into FY22E and beyond.
The disposal of Peter Brotherhood (‘PB’) to Howden (owned by KPS Capital Partners) is a significant realisation for the Group at an EV of £35m. The transaction demonstrates management’s successful restructuring and investment into PB that has yielded an almost fourfold gross return on the original £9.3m investment in September 2017, which was part of the overall purchase of Hayward Tyler Group. On unchanged adjusted EPS forecasts for 2022E, the EV/EBITDA multiple is now 6.7x with the Group forecast to be £22.9m net cash (excl. IFRS16 lease liabilities). We see significant potential value within the portfolio and note a SOTP EV for the EPM and PRSE divisions of c.£120m based on operating profit metrics. Over and above this, the Medical division carries significant potential value creation and there is also value to be realised from the Hayward Tyler Luton site that could be worth £15m. Avingtrans featured in our ‘Best Ideas for 2021’, published in January 2021.
As part of its PIE strategy, the group has announced the disposal of Peter Brotherhood for £30.6m, a 4x gross return on its investment and a good demonstration of how the PIE strategy realises value for shareholders. Proceeds will be used to reduce debt, fund investment in newly acquired Magnetica and also enable new potential M&A opportunities. The disposal is EPS-neutral gaining cash worth 71p per share resulting in a PT of 416p (up from 345p), with further opportunities for potential EPS upside once proceeds are reinvested.
Avingtrans has produced a resilient interim result and continues to trade in-line with expectations. Whilst revenue was stable versus H1 FY2020, EBITDA rose by 36.6% due to further post-acquisition improvement at Booth and Energy Steel, and an improved margin mix due to cost reduction and better project margins. We have updated our forecasts for the recent merger of Sci-Mag and Tecmag with Magnetica, where the Group now has a 58.1% interest. Despite forecasting increased losses for the Medical Division, as investment is made in product development and commercialisation, our cautiously framed forecasts still anticipate adjusted EPS growth for the Group of 17% in FY2021E and 9% in FY2022E, against 17% and 10% previously. The shares trade on a prospective EV/sales of 0.9x that remains well below a divisional SOTP based on sector metrics. The potential for AVG’s small-scale MRI is substantial.
Results show an encouraging increase in profits driven by previous restructuring which has turned round trading at Booth and Energy Steel, with a better margin mix overall. This was produced from a stable sales base, which is creditable given some contract delays due to COVID. Only minor changes to forecasts factoring in the recent Magnetica deal, which enhances its compact MRI business. We raise our price target to 345p, and believe the shares look decent value.
Avingtrans has announced that it has continued to perform well in H1 FY2021 and is trading in line with market expectations. Our cautiously framed forecasts anticipate adjusted EPS growth of 17% in FY2021E and 10% in FY2022E, including the benefit of cost reduction measures. The Group confirmed high levels of order cover for FY2021E at 85% at the end of September and orders taken since then will have provided further comfort. The shares have given ground YTD and now trade on a forward EV/sales multiple of 0.9x and prospective PERs of 13.8x and 12.7x for FY2021E and FY2022E respectively which are well below sector metrics. Management is also making great progress within the medical division where the potential for its small scale MRI is substantial.
Avingtrans has announced that its two medical businesses – Scientific Magnetics and Tecmag – are to merge with Magnetica Limited, an Australian medtech and engineering business specialising in next generation MRI technologies. The transaction, which is subject to Magnetica shareholder approval at a General Meeting on 29th January 2021, supports Avingtrans’ ambitions to become a leading systems integrator for small scale, cryogen free MRI in a variety of niche markets. There is a substantial market opportunity in providing access to small scale high quality medical imaging, particularly for veterinary and polyclinics. Management expect to have market ready products in 15-18 months’ time, supported by further investment from Avingtrans of up to £3.2m that could take the Group’s interest in the merged business to 61.2%. We expect more detail with the interims in midFebruary.
In-line with its trading update, Avingtrans has reported record results for FY2020 despite the impact of COVID-19 which resulted in a number of delayed orders and challenges, particularly in the Oil & Gas sector, where exposure remains relatively low. Order intake has been building across the summer however and the Group now has 85% cover for FY2021E and, consistent with this time last year, 40% cover for FY2022E. Management has made significant progress with Energy Steel and Booth Industries, both acquired in distressed condition in June 2019. Booth announced a long term £36m multi-year contract for HS2 yesterday, underlining the view that these acquisitions will create significant shareholder value. Guidance is being reinstated and we now reintroduce cautiously framed forecasts that anticipate adjusted EPS growth of 17% and 10% in FY2021E and FY2022E, including the benefit of cost reduction measures. Having made use of government support during FY2020 a return to the dividend list is expected with the FY2021 interims. The shares trade on a prospective 0.8x EV/sales which is below comparable growth industrials.
Results were slightly better than expected, boosted by the acquisitions of Booth Industries and Energy Steel in 2019 with a solid performance despite COVID-related headwinds. Some supply chain and order delays did affect underlying revenues. Turnaround action has resulted in a strong profit improvement from the former HTG operations. Yesterday, Booth announced that it had won a landmark £36m contract to supply high integrity cross passage doors for HS2. This is a major multi-year boost and follows a spate of other recent contract wins. This helps give confidence, as does a pledge to return to paying dividends this year. We reintroduce forecasts with a TP of 330p based on a FY21 target P/E of 16.5x. The shares continue to look undervalued even after yesterday’s reaction to the contract win.
The company has announced that its recently acquired subsidiary Booth Industries has won a landmark multi-year contract for the supply of high integrity protection doors for HS2 worth £36m. This contract also with other recent contracts validates the group’s acquisition of Booth. No change to forecasts in advance of tomorrow’s full year results. Clearly, today’s news will be very well received, with the shares looking undervalued.
Avingtrans (AVG): Corp | Chariot Oil & Gas (CHAR): Corp | dotDigital (DOTD): Corp | Gateley (GTLY): Corp | Iofina (IOF): Corp | Synairgen (SNG): Corp | Universe Group (UNG): Corp
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Avingtrans has issued a brief trading update and confirmed that the Group’s preliminary results to 31st May 2020 will be published on 30th September. The trading update is reassuring, highlighting a Q1FY2021E order in-take in-line with management expectations. The statement also highlights two further contract wins in the nuclear sector for US$2.8m in South Korea to provide spare parts for essential water service pumps and a £1.5m UK contract for replacement valves. The previous update in early July has already confirmed that the Group expects to report revenue of £114m, EBITDA of at least £11.5m and net debt (excluding IFRS16 lease liabilities) of £7.5m, which is incorporated into our FY2020E forecasts. It would seem likely that the Group will wish to re-instate forward guidance at the time of the results and to this end we would expect management to indicate a year of solid progress in EBITDA for FY2021E. Over the first quarter the Group has demonstrated good resilience, operating at close to normal levels, with the exception of Oil & Gas (where there is fairly limited exposure) and HVAC activities at Ormandy, supported by exposure to multiple markets and a strong customer base that includes governments and their agents.
Avingtrans (AVG): Corp | Bango (BGO): Corp | Elixirr (ELIX): Corp | eve Sleep (EVE): Corp | Evgen Pharma (EVG): Corp | Maintel (MAI): Corp | President Energy (PPC): Corp
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The group has issued a trading update for the year ended 31 May 2020 highlighting an adjusted EBITDA of at least £11.5m which is close to the group’s original expectation, despite widespread disruption to operations in the second half. The statement notes ample liquidity headroom in excess of £10m with net debt (excluding IFRS 16 lease liabilities) reducing in H2 to £7.5m as planned. The Group’s order book and prospect pipeline remains strong overall and the update is accompanied by the announcement of two meaningful contract wins in the nuclear sector. A further significant positive development is the grant of outline planning permission for the conversion of the group’s 7 acre Hayward Tyler site in Luton into residential housing for up to 1000 dwellings. Whilst financial guidance for FY2021E remains withdrawn at this point due to on-going uncertainties around the impact of COVID-19, we see the group continuing to demonstrate good resilience, operating at close to normal levels, supported by exposure to multiple markets and a strong customer base that includes governments and their agents.
The year-end trading update was encouraging, with expected results showing good YoY growth, modestly below but close to our earlier expectations. Trading has been resilient, particularly in safety critical areas such as its nuclear exposure, with some weakness being seen in oil & gas, where there is limited exposure. Two new contract wins in the nuclear sector have also been announced today. FY 2021 forecasts remain under review. With strong finances, the company is well positioned to maximise M&A opportunities, through its PIE strategy.
The group has issued a trading update confirming that it believes that results for the year to May 2020 will be broadly in line with previous management expectations for revenue and profit, and that net debt is also expected to be no greater than previous guidance. The statement notes that despite the impact of COVID-19, many parts of the Group are continuing to operate as normal and to benefit as previously disclosed from a robust order book and prospect pipeline. Prudent measures are nonetheless being taken as necessary to reduce costs and mitigate disruption effects. The Group notes business progress has been affected by travel restrictions, lockdowns and supply chain disruption and as a result 20% of employees have been furloughed. China operations are back to normal and some sectors – medical, nuclear and defence are relatively unaffected as expected. The statement notes facility headroom of £8m and steps taken to conserve cash, including cancellation of the interim dividend. Guidance is withdrawn for FY2021E. In our view the experience of the management team leaves the Group in a strong position to weather events and to respond further if necessary. Once the crisis passes there should be opportunities for the Group to further implement its successful Pinpoint-Invest-Exit strategy.
Avingtrans (AVG): Corp Covid-19 update | Chariot Oil & Gas (CHAR): Corp Restructuring to last | Omega Diagnostics (ODX): Corp COVID-19 antibody test – part of consortium
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The group’s Covid-19 trading update provides some comfort on trading, with a strong order book and the majority of sites operating near normal. Cash conservation efforts appear sensible, including the cancelation of the Interim dividend, while their balance sheet remains strong. FY20 is trading broadly in line with expectations, with FY21 forecasts withdrawn. The group looks in a stronger position than many, with PIE opportunities emerging in due course.
First half results leave the group well placed to meet full year expectations. The statement highlights good progress in integrating Booth Industries and Energy Steel, significant new business wins that support Group results and provide good longer–term visibility, and a limited P/L impact from the first time adoption of IFRS16. Overall management remain optimistic about future prospects and the realisation of value consistent with the Group’s PIE (‘Pinpoint, Invest, Exit’) strategy. Whilst forecast EPS remains unchanged, net debt increases from £2m (FY2019) to £16.6m (FY2020E) due to acquisitions and injection of working capital as expected, and £8.9mE for IFRS16.
Avingtrans (AVG): Corp | Revolution Bars Group (RBG): Corp
Avingtrans plc Revel Collective PLC
Interim results show good underlying progress in the period and signal that the group is on track for full-year expectations, with only a limited risk currently seen from coronavirus. We make only minor changes to forecasts associated with the adoption of IFRS16, which leaves EPS unchanged. We slightly increase our price target from 300p to 315p, based on a targeted 2021 P/E of 15.5x and EV/EBITDA of 7.8x (pre-IFRS16 basis). The shares have seen a decent run recently, placing them fairly close to our price target. Recent acquisitions mean EPS-based targets tend to undervalue the group with potential for either further acquisitive activity or unlocking value through disposals acting as a share price catalyst.
Avingtrans has issued a trading update confirming that the group has continued to perform well in H1 FY2020E and is trading in-line with market expectations. The order and prospect pipeline are noted as being robust and the recent acquisitions of both Booth Industries and Energy Steel are integrating well and recovering from the distressed positions that they were in at the time of their purchase in June 2019. We make no changes to our estimates ahead of the interim results which will be published on 26th February.
Avingtrans has announced that its subsidiary Booth Industries has secured a new £7.2m Government contract for safety doors. This brings the total value of contracts secured by Booth since the acquisition of its assets in June 2019 to over £12m, spread over the next two years. This new contract provides a welcomed underpin to our existing estimates for the turnaround at Booth and we therefore make no change to estimates.
Full-year results were slightly ahead of recently upgraded forecasts, with an outlook that appears more confident than many in the sector and a further small upgrade in current-year expectations. The shares offer significant upside, and we maintain our 300p price target, although our SOTP valuation signals a much higher potential to be achieved on disposals.
Management has delivered a year of excellent progress as the team continues to execute on the Group’s Pinpoint-Invest-Exit (‘PIE’) strategy. The group’s portfolio of businesses is focused on the global energy and medical markets that provide the prospect of enduring and positive growth trends. A concentration on the opportunities for aftermarket products and solutions is enhancing growth and profitability as capabilities are added and operational improvements are made. We have upgraded FY2020E EPS conservatively by 8% and estimates for FY2021E now show 25% earnings growth. FY2021E captures the benefit of the turnarounds at both Energy Steel and Booth Industries, acquired at the start of the current financial year.
Avingtrans (AVG): Corp FY results slightly ahead, good margin gains achieved | Chariot Oil & Gas (CHAR): Corp Lixus licence additional prospects | ClearStar (CLSU): Corp Medical and direct sales continue to drive strong growth | Europa Oil & Gas (EOG): Corp Moroccan acreage award | Iofina (IOF): Corp IO#8 iodine plant launched | Quixant (QXT): Corp Market share loss at key customers will leave H2 short | Zambeef (ZAM): Corp Disposal of a farm yields US$9.25m cash | ZOO Digital (ZOO): Corp AGM statement
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The group’s year-end trading update points to trading ahead of expectations and a better-than-expected cash performance. It has also announced the acquisition of Energy Steel in the US – a neat bolt-on to its US nuclear operations. In accordance with the guidance, we upgrade FY19 EPS by 22% and on the back of the acquisitions also upgrade FY20 EPS by 6%. Our raised 300p target price offers significant upside.
Avingtrans has given a strong year end trading update for the year to May 2019, driven by performance improvement from the Hayward Tyler businesses in particular, but with good growth across the group. Management now anticipates FY19 adjusted PBT of c.£5.2m, c.£1m better than expected, with improved net debt. The group has also announced another bolt-on acquisition for $1m, of US-based Energy Steel. We have increased our adjusted PBT forecast by 24% for FY19 and by 15% for FY20 as the group integrates recent acquisitions. The shares trade on an undemanding EV/EBITDA multiple of 7.6x for FY20, offering material upside as management continues to deliver value in this latest cycle of its successful buy, build and sell strategy.
ANGLE (AGL): Corp Placing raises £18m | Avingtrans (AVG): Corp Positive year-end update; forecasts upgraded | Savannah Resources (SAV): Corp Aldeia licence option exercised at Mina do Barroso | ZOO Digital (ZOO): Corp Prelims – the waiting game
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Avingtrans has acquired the trade and certain assets of Booth Industries for £1.8m from the administrators for Redhall Group. Booth designs and manufactures performance certified steel doors for applications such as blast and fire protection, for markets including rail, nuclear and oil & gas. The acquisition brings complementary new expertise to Avingtrans, along with end market and customer overlap, and will be integrated into Avingtrans’ Process Solutions and Rotating Equipment (PSRE) division. Booth generated revenues of c.£11.7m and PBT of c.£0.3m in the year to September 2018, implying modest historic acquisition multiples of c.0.2x sales and c.6.0x EBIT. We have made no changes to our estimates to reflect the acquisition ahead of the FY19 year end trading update. However we would not expect Booth to have any significant impact on FY20 PBT, while management focuses on its integration into PSRE and restoring the business’ profitability. Our forecasts put the shares on undemanding EV/EBITDA multiples of 8.6x FY19 and 7.1x FY20, offering good upside as the group continues to deliver growth and build value.
Avingtrans has announced two more material new aftermarket contracts for its Hayward Tyler subsidiary. These are for critical pumps and spares for upgrade and refurbishment of nuclear reactors in the US and South Korea. The contracts are worth over $6m, for delivery during Avingtrans’ FY20. These awards continue the group’s strong recent contract momentum, following announcements on 18th February (nuclear aftermarket worth over £10m for Hayward Tyler) and 4th March (oil & gas original equipment worth over £10m for Peter Brotherhood). We have made no change to our estimates for today’s announcement, having upgraded by 6% in March. Our forecasts put the shares on undemanding EV/EBITDA multiples of 8.1x FY19 and 6.7x FY20, offering good upside as the group continues to deliver growth and build value.
Avingtrans has announced another material contract, for original equipment for the oil & gas market, for its Peter Brotherhood subsidiary. Peter Brotherhood will supply steam turbines for a new floating production vessel for an offshore & marine customer. The contract is worth in excess of £10m, with delivery expected primarily during Avingtrans’ FY20. This follows last week’s announcement of an aftermarket contract for nuclear life extension, worth over £10m across FY21 and FY22, for its Hayward Tyler business. We have increased our FY20 adjusted PBT forecast by 6%, reflecting strong contract momentum, ahead of that implicit in our previous estimates. Our net debt forecast has also increased to reflect working capital absorption from the end of FY19, reversing over the term of the contract. Our updated forecasts put the shares on EV/EBITDA multiples of 8.5x FY19 and 7.1x FY20. These appear undemanding given the group’s strong sales momentum and increasing profitability, as management focuses on building value in this latest cycle of its successful buy, build and sell strategy.
Hot on the heels of last week’s encouraging results, the group has announced that Peter Brotherhood has secured a new order for steam turbines as part of an overall contract value in excess £10m. This is a high-profile order in a specialist oil & gas market niche. We maintain this year’s forecasts, but upgrade 2020 EPS by 7.2% to 14.2p. We also raise our price target from 272p to 285p, based on a target 2020 EV/EBITDA of 9.4x or a P/E of 20x compared with the current value of 14.9x. The shares currently look attractive and should continue to outperform.
Interim results show a good profit improvement and confirm that trading is on track to be in line with full-year forecasts. The period has seen good organic growth of 11%, with a strong increase in aftermarket revenues and a pick-up in 3M3 nuclear container production for Sellafield. With trading on track for full-year expectations, we make minimal changes to forecasts, and reaffirm our 272p price target, which points to strong upside to current levels and with some exciting prospects over the next two years.
Avingtrans reported strong progress for H1 19. Sales grew by 11% organically with a 350bps increase in adjusted operating margin, as the group focuses on the build phase of its buy, build and sell strategy. Both Energy divisions delivered good growth, while the smaller Medical division continued to build capability. Momentum remains strong, underpinned by order wins, and management is confident in the outlook. The shares remain on undemanding EV/EBITDA multiples (8.3x FY19, 7.1x FY20), offering good upside as the group continues to build, and ultimately crystallise, value.
Arcontech (ARC): Corp Good interim results | Avingtrans (AVG): Corp Interim results – on track for FY forecasts
Avingtrans plc Arcontech Group PLC
Avingtrans’ subsidiary, Hayward Tyler, has been awarded a material aftermarket contract from Vattenfall in Sweden for critical parts and components to help extend the life of the Forsmark nuclear power station. These parts will replace original equipment supplied by Hayward Tyler in the early 1980s. The contract is worth over £10m, with delivery expected to be broadly evenly split across FY2021 and FY2022. We have made no changes to our estimates, as contributions from the new contract begin after our current forecast horizon. However we are encouraged by the increasing momentum at Hayward Tyler since its acquisition by Avingtrans. We also see good potential for the business to win further contracts in nuclear life extension, given its installed base of original equipment within nuclear plants around the world. Avingtrans shares remain on undemanding EV/EBITDA multiples (8.3x FY19 and 7.1x FY20), with interim results scheduled for 27th February.
Avingtrans has given a reassuring update for H1 19, confirming good trading in line with market expectations. The performance of the Hayward Tyler businesses continues to improve and the operations have a strong pipeline of prospects. Metalcraft’s 3M3 contract for Sellafield in now in production and scaling up. Meanwhile recent bolt-on acquisitions Ormandy and Tecmag are integrating well. We do not anticipate making any changes to our forecasts as a result of the update, which underpins our existing estimates. The shares trade on undemanding multiples (EV/EBITDA 7.5x FY19, 6.4x FY20, offering good potential for outperformance.
Actual Experience (ACT LN) Doubling of Open PO value highlights partner traction | Avingtrans (AVG LN) Bolt-on acquisition in Medical & Industrial Imaging | Directa Plus (DCTA LN) Significant textile order provides further revenue underpinning | 1Spatial (SPA LN) Interims show new strategy on track | Mattioli Woods (MTW LN) Consistency, control and opportunity: BUY | Tatton Asset Management (TAM LN) Impressive returns already evident, more to come
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Avingtrans reported very strong progress for FY18, with 11% organic sales growth and adjusted PBT up over 9x. This was driven by the acquisition, integration and prompt restructuring of Hayward Tyler Group (HTG), transforming its profitability within the first nine months of ownership. Management remains confident about growth prospects for its current portfolio, underpinned by strong order coverage for the coming year, contract wins in new markets and continuing growth in higher margin aftermarket business. It will also look to accelerate value creation through further M&A now that HTG has been digested, continuing its proven buy, build and sell strategy. To this end, the group has been restructured into three divisions to aid its eventual exits from the operations and crystallisation of value. Our FY19 PBT forecast is unchanged, but we have increased EPS by 9%, and published maiden forecasts for FY20 with PBT growth of 23%. The group trades on undemanding EV/EBITDA multiples and we see significant opportunity for share price appreciation.
The results were slightly above expectations and have been driven by the 9-month contribution of Hayward Tyler since its acquisition. The integration process has gone well and completed ahead of schedule, achieving its targeted cost savings. In-line results are reassuring. We see significant upside to profits over the next few years as PB’s and HTG’s profits progress towards mid-teens EBITDA margins in the medium term. In the mean time, significant hidden value is building up, as the PIE process continues. We retain our 272p price target, offering significant medium-term upside.
Avingtrans (AVG LN) Strong progress on buy & build
Amino Technologies (AMO): Corp Delivering on upcycling potential | Avingtrans (AVG): Corp A tasty slice of PIE – results slightly above forecast | Mporium Group (MPM): Corp Making an impact | PCI Pal (PCIP): Corp Large contract win underpins growth forecasts | SRT Marine Systems (SRT): Corp H1 prepares for major Systems delivery in H2
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Actual Experience (ACT LN) Capital Markets Day highlights year of significant progress | Avingtrans (AVG LN) Further contract wins in US nuclear and solar markets | boohoo.com (BOO LN) Planning for next phase of growth – strengthening of leadership team | City of London Investment Group (CLIG LN) Finals: No surprises after detailed trading update | Horizon Discovery Group (HZD LN) H1’s: EBITDA loss from increased investment expected to reverse in H2 | MJ Gleeson (GLE LN) Continuing to outperform; positive dividend surprise | Realm Therapeutics (RLM LN) Corporate update: strategic review and formal sale process | Restore (RST LN) H1 results in line; acquisition integration underway
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Avingtrans’ year end update has confirmed FY18 adjusted PBT in line with market forecasts, along with slightly higher than expected net debt due to working capital absorption from strong trading. Management’s expectations for FY19 have increased. This is driven by a new contract win for c.£5m over two years and improving margins as the integration of Hayward Tyler and Ormandy progresses. Our adjusted PBT forecast is unchanged for FY18, but we have upgraded our FY19 forecast by 10% - our second material upgrade this year. We remain positive on prospects for the enlarged group, which is reinforced by its latest contract win. This leverages the skills and capabilities of both Metalcraft (original Avingtrans business) and Peter Brotherhood (Hayward Tyler acquisition), as the group continues to create value from its proven buy, build and sell strategy.
The company has announced a positive end to the current year, being in line with expectations, but also signalling that 2019 profitability will exceed previous expectations, gaining from an improved margin mix and the recent purchase of Ormandy assets. We are raising our 2019 EPS forecast by 14.2% to 10.3p. This is a positive announcement and should help generate some momentum in the shares. We retain our existing 272p price target, giving considerable upside.
Avingtrans (AVG LN) Strong year end trading; FY19 PBT increased by 10% | Pebble Beach Systems Group (PEB LN) Solid full year performance underpinned by restructuring benefits | Severfield (SFR LN) Positive conclusion to FY18 | St Ives (SIV LN) 100% Strategic Marketing | Zinc Media Group (ZIN LN) More significant commissions announced
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Interim results were satisfactory and the group is on track to meet this year’s expectations with an upgrade in profit for 2019 plus the benefit of US tax rate reductions. It has been a transformational period for the group following the sizeable acquisition of Hayward Tyler. The initial integration actions have resulted in an improvement in operating performance. The main business units are on track operationally with good progress made in the nuclear sector, though a disappointing outturn for medical and challenging market conditions continuing for conventional power generation and oil & gas.
Avingtrans H1 results confirmed good headway has been made on integrating Hayward Tyler Group (HTG) and restoring its prospects. The group’s financials also showed pleasing progress, with a modest adjusted operating profit reported for H1 18. We have made no changes to our adjusted PBT forecast for FY18, but have increased our FY19 forecast by 13% driven by progress on restructuring savings. We have increased our adjusted diluted EPS estimates by a more material 6% for FY18 and 37% for FY19 reflecting the benefits of recent US tax reform. The enlarged group has good opportunities for growth in Energy & Medical markets, which should deliver another cycle of value creation from its proven buy, build and sell strategy. The shares offer good value, trading on a c.20% EV/EBITDA discount to the sector.
Avingtrans (AVG LN) Good progress on integration; FY19 PBT raised 13% | Devro (DVO LN) Upgrading to Buy on valuation and recovery grounds | Genus (GNS LN) H1’s in line with expectations: solid ABS performance | Vernalis (VER LN) Tuzistra® XR scrips below guidance: evaluating strategic options
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Avingtrans (AVG LN) Material contract win | Centaur Media (CAU LN) Investor seminar | Gooch & Housego (GHH LN) AGM trading in line - EPS upgrades due to US tax changes
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Avingtrans’ H1 trading update has confirmed good progress in the period, with all key financial indicators in line with management expectations. Market conditions are improving and the group has won c.£7m of new contracts. The integration of Hayward Tyler Group (HTG) is proceeding to plan, with improvements in profitability underway. Initial cost savings are being delivered as anticipated as a result of the now completed restructuring. Meanwhile long-term banking facilities have been renewed at better terms. Supply chain savings and cross-selling provide further opportunities to drive long-term profitable growth. Management has reiterated expectations for FY18 and we have made no changes to our forecasts at this stage, although we note the potential for future EPS upgrades due to recent changes in US tax legislation. The shares offer good value, trading on a c.30% EV/EBITDA discount to the sector.
Cradle Arc—holding company of a group of companies focused on the exploration and development of precious and base metals projects in Africa. Offer raising £2.4m with market cap of £20.13m. Expected late Jan 2018 Volex VLX.L—The global provider of cable assemblies is proposing to move from the main market to AIM on 19 January. £75m market cap. FYMar18E rev £241.5m and £7.19m PBT. OnTheMarket—Intention to float on AIM to raise c.£50m which will be used to fund the growth of the OnTheMarket.com portal, already the third biggest UK residential property portal provider. Expected valuation £200m to £250m.
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Avingtrans has reported FY17 numbers a little ahead of our forecasts, for its last period before the acquisition of Hayward Tyler Group (HTG) on 31st August. The enlarged group has good opportunities for sales growth and margin enhancement, leveraging its broader product offer and specialised expertise in its niche engineering markets of Energy and Medical. This should help deliver another cycle of value creation from Avingtrans’ successful buy, build and sell strategy. We have increased our adjusted PBT forecasts by 73% to £2.1m for FY18 and set our FY19 forecasts at £3.4m, based on deliberately cautious assumptions for HTG due to its recent trading difficulties. Despite these assumptions, our forecasts put the group on a FY19 EV/EBITDA multiple which is only in line with the UK peer group. This suggests potential for significant outperformance driven by forecast upgrades and a re-rating.
The group’s FY results are in line with expectations, but have been somewhat superseded by the acquisition of Hayward Tyler (HTG), which gives greater scale and transforms prospects, albeit requiring some “heavy lifting” to restore HTG profitability. We have re-introduced forecasts, using conservative parameters, which could provide some upside. We consider the shares have several strong potential drivers over the next few years. Our price target of 272p is based on an EV/EBITDA of 11x, which provides significant upside and underwrites our Buy rating.
Avingtrans^ (AVG): HTG acquisition transforms the medium-term opportunity (BUY) | Hotel Chocolat (HOTC): Marginal increase to forecasts (HOLD) | Synairgen* (SNG): Interims and portfolio update (CORP) | InnovaDerma* (IDP): Widening the distribution network (CORP) | Fulcrum (FCRM): Strong H1, confident outlook (BUY) | K3 Business Technology* (KBT): Getting on with it (CORP)
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Avingtrans is a precision engineering group which creates value through buying, building and then disposing of the businesses it has developed, with a focus on specialist niches where it can achieve market leading positions. Following the sale of its Aerospace division in FY16, Avingtrans’ operations are focused on safety critical equipment for Energy & Medical markets. Significant contract wins already announced drive our forecast for 44% organic sales growth by FY18 (53% in total). We also expect further M&A, in addition to today’s acquisition of Scientific Magnetics, as management looks to continue its successful buy, build and sell strategy, recycling its retained disposal proceeds of c.£28m (having returned c.£19m to shareholders). We believe Avingtrans’ track record of value creation and financial firepower provides an attractive shareholder proposition, which we value at 202p pre M&A. It also offers significant upside as the growth strategy is delivered, with our illustrative scenario suggesting 292p. Our intrinsic valuation is calculated as the average of these at 247p.
The interim results were in line with expectations and the group appears on track to achieve FY expectations. The small bolt-on acquisition of Scientific Magnetics adds technology in the MRI/NMR space. We make no change to our trading forecasts. There is a strong order book and we look for a production ramp up on the Sellafield, Bruker and Wuhan contracts. The £27.8m net cash will be reinvested to propel EPS from the current low levels. We raise our target price from 215p to 240p. We remain supportive in advance of acquisitions but move to a Hold rating post the recent outperformance.
Avingtrans^ (AVG): Satisfactory interim results: small bolt-on acquisition (HOLD) |Seeing Machines* (SEE): Major contract win for Guardian (CORP) |Revolution Bars (RBG): Good H1 generates 3% FY forecast increase (BUY) |Victoria* (VCP): Upgrading forecasts post acquisition (CORP) |Wentworth Resources (WRL): Q4 2016 results and operational update (BUY)
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Underlying FY results were broadly as expected, with the continuing operations comprised of the Energy and Medical (E&M) division post the £65.0m disposal of its aerospace business. The group is expected to return £28m to shareholders shortly. Outlook prospects are encouraging having recently had some strong new contract wins (e.g. EDF, Bruker and Rapiscan). The Sellafield contract will start to kick in through 2018. The underlying oil and gas market remains in the doldrums but will likely provide a recovery story in due course. We still see upside to the shares, and our price target of 215p indicates a post-tender-offer EV/EBITDA of 10x for 2018. Our rating remains a Buy.
Victoria* (VCP): May the floors be with you (CORP) | ClearStar* (CLSU): Screening Buy (CORP) | Avingtrans^ (AVG): FY results – at the fulcrum of change (BUY) | Netcall* (NET): Prelims show strategic progress (CORP) | Alternative Networks* (AN.): Year-end trading update (CORP) | Universe* (UNG): Project delays break up party (CORP)
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AKR Distribution Agreement, AVCT Affimer Binders, AVG Return of Funds, PRSM Interim Results, COG* Distribution Agreement, FISH Placing, FITB* Board Changes, Placing and Loan Capitalisation, FUM Agreements, HCM Phase II, IGE Agreement, LRM Selected, NWF Trading Updated, PLI* Fast Track, SCH Trading Update, TMT* Invests
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The group has now completed the disposal of its Aerospace operations, which unlocks significant hidden value and focuses the group on its Energy & Medical operations, with net cash per share level with its current share price. We expect proceeds will be partly used in a return of capital and partly on acquisitions; both have the scope to enhance EPS materially. We rebase forecasts for the disposal and pending buyback, while maintaining underlying forecasts for Energy & Medical. We see significant upside to the shares on a 1-2 year basis; with upside to forecasts as M&A activity occurs. The shares are cheaply valued and we rate them a Buy.
Avingtrans^: Cash proceeds offer huge opportunities (BUY) | Somero Enterprises*: Encouraging trading update (CORP) | Support Group: Analyst interview | Premaitha Health*: Analyst interview (CORP) | Amino Technologies*: Robust trading update (CORP) | Hardide*: Interim results (CORP)
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Interims saw a decent profit recovery and place the group on track to achieve recently upgraded FY forecasts. We expect this year’s profits to be second half-weighted and EPS growth well above most industrials over the next two years, a mix of customer recovery, new contracts signed, good husbandry and acquisitive benefits. In this context, Avingtrans stands out against the peer groups and looks cheap on a 2017 P/E of 6.3x: well below its peers. Our 160p PT is based on a 2017 P/E of 9.0x. The shares look attractive and are well placed to outperform over the next few years. Buy.
Avingtrans^: Acquisition of RR pipes business (BUY) | Wolf Minerals: Quarterly update and funding (BUY)
Having navigated through a tricky period, Avingtrans should see a return to growth in FY16 as the aerospace volume build is fully reflected and a new nuclear opportunity comes on stream. Forecasts for double-digit growth in both EPS and DPS supported by a strong balance sheet do not appear to be adequately reflected in a single-digit current year multiple, with inorganic development also back on the agenda.
The full-year results were broadly in-line with our expectations, affected by customer destocking in Aerospace and the contraction of demand in Energy, related to the oil sector. These were beyond the control of management, which reacted with a restructuring programme in November 2014 that will restore margins. With no change to our PBT forecast, the shares remain good value. We retain our 135p price target and BUY rating.
