tejo
27 Nov 2014
LTA Airbus Thanks LionKing -good to see that we are up with the news early in the day. Taking your comments and the Airbus contract together, I now feel more relaxed. It is of great benefit that you have been able to meet the key individuals over a few years and in a way, this is more important than the numbers. If Rolls Royce and Petrofac can sort themselves out, growth can be resumed. Thanks again, I am off to enjoy breakfast!
Lion Rock
27 Nov 2014
LTA - Airbus Hi Tejo[link] for your thoughts there, I can see where you are coming from understandably. In terms of your thoughts that it is being run for a sell off, I would have agreed with you but for the fact the Board is predominently engineers not accountants which in my mind makes a pleasant change in this day and ageOn re-reading the annual report much of the content of the Interim statement was mentioned there; albeit not in the same detail. Therefore to my mind a lot of the Interim statement was programmed before the Rolls Royce/Petrofac issues came to the surface, perhaps further actions seen to be advantageous as integration has progressed. This reaffirms my thoughts the Board is just being prudent in case issues get prolonged, this was exactly the issue at Crown and they managed that very well.I am waiting for the dust to settle, many companies are issuing profit warnings at the moment , but I do think the sp fall is overdone and ultimately hope to increase my stake at a good value price. Having met the Board on many occasions they to my mind are both committed and careful!
tejo
26 Nov 2014
Update Thank you LionRock for those thoughts and for the reference to Paul Scott's analysis which I had not seen before. Having given more than my usual casual glance at the figures, I find myself agreeing with Paul Scott's conclusion, that it is actually very difficult to evaluate AVG's true underlying earnings. I then refreshed my memory of past years by re reading their history section on their website and looking at the names of major shareholders. Finally I see that FinnCap and Numis have downgraded their valuations, in one case projecting the impact of these short term issues into 2015/2016Adding two and two together and making five, I wonder why Nigel Wray (major shareholder) would want to be an investor in AVG and then I think about some of the current activities being transferred to Sigma and/ or outsources. My mind goes back then to the sale of Jena to the Japanese. Jena was built up by a series of small acquisitions and then sold for a very good profit. Is AVG as much a corporate trading company with its deal making, as a long term manufacturer manufacturer.Back in the real world, two, at least, of its major clients are having problems i e Rolls Royce and Petrofac and I am not sure that these problems, especially Petrofac, are short term.In conclusion, I remain nervous of the fact that whilst I do feel that the management are doing their best, the events outside of their control , could lead to a further profit warning. They need some good news!
Lion Rock
24 Nov 2014
Re: AGM & update Hi Tejo - no need to apologise, your comments as and when are always enjoyed for the opinion!There was talk at the AGM of there being short term issues with regard to a major customer. It was suggested by the Board that the Rolls Royce issues were specifically down to RR and not the market generally, indeed they have an order backlog of 5700 engines not incl the Delta order of last week. When the takeover of RMDG was announced it crossed my mind that the two operations in the Derby locality would be amalgamated at some point. I also notice there is no mention of any changes to the China operations.The low oil price and its implications were also discussed at the AGM with the expectation of delayed orders by the oil/gas industry. The fact they say the relocation of Maloney is already in hand implies to me that this was in hand as part of the main reorganisation, perhaps even the outsourcing of manufacture may be part of the overall plan at the time of acquisition.I feel the Board is taking measures to be prudent and safeguard cashflow in the short term should the market uncertainties last longer than envisaged. Paul Scott who is usually very caustic when "proft warnings" are announced is quite neutral:[link] thoughts are that things have been overdone, I will maintain my holdings and like others first thing this morning may well increase my holding.Just a few thoughts!!
tejo
24 Nov 2014
AGM and update LionRock, I am sorry not to have thanked you before now for your report on the AGM. Much appreciated as always. A flare up of rheumatoid arthritis has kept me somewhat out of action. It seems that the problems referred to in to-day's update, were not highlighted at the AGM. The problems with profit warnings is the difficulty in assessing whether the Board really appreciates what lies beneath the surface. Invariably, the first profit warning creates the impression that the problems are short term and it is not until the second or third warning that the full extent is revealed. AVG,s customer Rolls Royce is a good example. Rolls Royce is very likely the key customer that is referred to.I find the warning worrying in that strategy seems to be being driven by events and that the very factors that made the company exciting, could emerge into being a major problem.Would appreciate your considered assessment Lion King and as to whether one should reduce one's holding?
Lion Rock
24 Nov 2014
Trading Update [link]
