Given the challenging macro backdrop of higher borrowing costs and sticky inflation, few companies are talking confidently about their outlooks.
Not so specialist engineer Avingtrans (AVG), which said today that after winning a slew of new contracts - most notably across nuclear power in Sweden (contract value £3m), Poland (£1.6m), South Korea ($2.5m) and the US ($1m)- that it presently had a “record order book” for this time of year, providing “the best revenue cover” since the start of the pandemic.
Better still, FY23 trading was in line with consensus estimates for sales, adjusted EBITDA and net cash (pre IFRS 16) of £108.9m, £13.5m & £13.6m (42p a share), respectively. That leaves the company in good shape to hit its corresponding FY24 analyst expectations of £116.5m, £14.5m and £14.0m.
Meanwhile, on the M&A front the board has submitted a conditional proposal to purchase the 82% that it does not currently own in medical devices firm Adaptix Ltd for 100p each, totalling £3.041m to be paid in Avingtrans stock.
The deal makes perfect sense for both parties: Avingtrans beefs up its high potential, yet early-stage healthcare division by adding a treasure trove of top notch IPR consisting of of more than 300 patents in complementary therapeutic areas. And Adaptix gets access to vital growth capital amid today’s VC funding drought, as well as further industry expertise via Avingtrans' Magnetica subsidiary to help commercialise its break-through, small-form 3D X-ray technology for point of care, veterinary and orthopaedic imaging applications.
Wrt completion, the transaction has already been approved by the majority of shareholders, although in accordance with Adaptix Ltd’s Articles, the board have to invite other third parties to submit a competing offer by 21st July.
CEO Steve McQuillan commented: "We are delighted by the performance of the Group in what have been difficult market conditions, including on-going supply chain disruptions, albeit that these have eased somewhat from their nadir. Despite the headwinds, order intake has been robust, notably growth in Engineered Pumps and Motors has been particularly strong. As a result, we are pleased that the Group is entering FY24 with the best order cover since prior to the pandemic which leads the Board to view the outlook for this year with confidence.”
House broker Singer Capital Markets has a BUY rating and a 510p price target on the stock. Preliminary results are scheduled for Wednesday 27th September 2023.