Have we entered a Golden Age for nuclear power?
Based on prime minister Boris Johnson’s pledge last week – to propel the UK into a low-carbon future, independent of Russian oil/gas - then the answer is a resounding yes.
Sure this won't happen overnight. Yet nonetheless it should provide decades of profitable ‘full lifecycle’ work for specialist engineer Avingtrans.
Here nuclear is already one of AVG’s most important markets. Helping extend the life of existing facilities in the US, UK & Asia, safely disposing of contaminated waste (eg storage boxes) & providing vital expertise for next generation reactors (eg SMR, TerraPower & ITER).
Better still AVG’s Hayward Tyler division today announced 2 new contracts for critical nuclear spare parts worth $7m - to be completed before June 2023 - from an existing South Korean customer, Korea Hydro & Nuclear Power.
CEO Steve McQuillan, adding: “Both the new political environment in South Korea & global sentiment towards nuclear power are of significant importance to HT. We are hopeful that this will lead to further orders in due course.
Wrt the numbers, house broker Singers are forecasting FY22 adjusted PBT of £7.8m on £100.9m of sales – even after continuing to invest (Est £800k) in its potentially game-changing healthcare division, Magnetica Limited.
Developing a ‘first-of-its-kind’ small form & cryogen free MRI scanner for the orthopaedics, neonatal & veterinary sectors (est £400m+ TAM).
Plus net funds (pre IFRS 16) closed Nov’21 at £22.7m (71p/share) – with maybe another c.£11m coming once some spare land in Luton is sold. Providing the Board with plenty of ‘fire-power’ to continue its disciplined M&A - particularly if the ongoing market volatility throws up attractive opportunities.
Finally wrt valuation, I estimate AVG is worth 541p/share on a ‘sum-of-the-parts’ basis - & possibly much higher once Magnetica’s MRI scanner is fully commercialised - with finnCap & Singers not too far behind either at 495p & 510p/share respectively.
