Revisiting our March Stock Pick
A decrease in share price and an increase in revenue always sparks attention here at the Compounding Club - time to re-invest?
Overview As a reminder, AVG is a UK-based engineering group that specializes in designing, manufacturing, and supplying critical components and associated services to a range of industries, including aerospace, energy, medical, and industrial markets. The company has a strong reputation for innovation and quality, and its expertise has been recognized by major international customers.
Founded in 2004, Avingtrans has grown rapidly through a combination of organic growth and strategic acquisitions. Today, the company has a global presence, with operations in the UK, USA, Europe, and Asia. Its main business segments include Aerospace, Energy and Medical, and Industrial.
Recent ResultsLet's kick things off with a breakdown of Avingtrans' recent
financial results. The numbers paint a picture of measured growth over the last 12 months. A revenue increase of 17.5% to £116.4 million is noteworthy. Adjusted EBITDA and PBT also registered healthy upticks—10.6% and 11.1%, respectively. Diluted earnings per share also joined the growth party, rising by 8.3% to 23.4p. A final dividend of 2.8p per share, totaling 4.5p for the year, sweetens the deal for dividend-seekers such as ourselves.
Operational Exploits: Navigating Challenges with Strategic AcquisitionsThe operational landscape at Avingtrans showcases a tale of two sectors. In the energy sector, challenges have been met with resilience. Revenue increased by 16.8% to £112.8 million, driven by ongoing projects like the Metalcraft contract for Sellafield 3M3 boxes. Strategic acquisitions, including HES/HEVAC and Slack and Parr, position Avingtrans as a contender in the specialist pump manufacturing domain.
In the medical sector, the growth narrative is robust, with a 44% revenue surge to £3.6 million. Notable strategic moves include the acquisition of Adaptix and progress in a helium-free MRI system, hinting at Avingtrans' commitment to innovation.
Contract Wins Signal Opportunities To ComeA $10 million
heat pump contract
with TerraPower in the nuclear industry stands out in both financial benefit, and also international trust in the company. While the immediate impact on current-year forecasts may be limited, the potential for extended collaboration and the growth prospects with TerraPower's Natrium Reactor project is tantalising.
National contracts in nuclear waste management, totaling £14.5 million, fortify Metalcraft's order book with over 90% visibility for the 2023-24 financial year. It's a testament to Avingtrans' foothold in a sector where safety and responsibility are paramount.
Looking Ahead: A Prudent Approach to Future GainsAs we gaze into the crystal ball of Avingtrans' future, Chairman Roger McDowell's words echo prudence. Despite a challenging landscape, Avingtrans remains confident in its strategic direction. The company aims to refine its business through targeted acquisitions, maintaining a cautious financial approach.
Conclusion
As we revisit Avingtrans, the company's recent fiscal performance, operational resilience, and strategic acquisitions paint a measured picture of success. With a prudent outlook from Chairman Roger McDowell, Avingtrans stands as a compelling investment choice, balancing challenges with strategic foresight and signaling potential for future gains. The recent contract wins, including the TerraPower deal, underscore the company's ability to secure international trust and navigate complex sectors.
Conclusion
