For anyone wanting to learn more about what CXZ actually does, it's industry and future direction, then this article is a great primer. While it's quite an old article, it's still useful reading.
No analyst named in the report. The report was authorised by Mark Pittman of http://www.taylorcollison.com.au
Q1 FY21 – Profits look set to grow
Retain Outperform. XTE has built a variety of business lines in the defence area including body armour (XTclave) and SUAS (small unmanned aerial systems – drones) both of which are now being monetised. A recent contract win in Europe combined with the purchase of HighCom in the US shows that XTE has the distribution network to win contracts globally. One or two major contract wins within the body armour space could be the catalyst for a company re-rating.
The current valuation is reasonable, the business is now profitable and large new markets are being opened in part due to past investment in body armour. Underlying demand for XTE’s products continues to be solid, driven by defence spending, which has proven resilient to economic cycles and in the current COVID-19 environment.
In order to continue to grow the business XTE is required to win defence contracts, which no doubt played a part in the recent appointment of Christopher Pyne, former Australian Defence Minister, to the board of directors.
Encouragingly, XTE continues to release positive news:
Recent contract win(s), capital raising and trading update
Balance sheet and valuation
--- click on the link at the top for the full update/report from TC on XTE ---
Envirosuite's sales update for Q2 2021 isnt as clear as I would like, and requires a bit of detective work to see how it aligns with earlier expectations.
In the groups FY20 Results presentation (August 2020), the company provides a chart (pg 13) that shows targeted ARR growing by approximately $11m per annum, or about $2.75m/qtr.
In Q1 ARR grew by $1.2m, and then $1.1m in the quarter just reported. That's well below pace.
The company didnt provide total sales figures in the recent two quaters (only new ARR, renewed contracts and non-recurring), so it's hard to know how likely they are to achieve their targeted $65m in sales.
But with at least 2/3rds of income generated offshore in FY20, and likely more in the current year, i suspect the strengthening AUD will provide some headwinds.
It was encouraging that management still expect the business to be EBITDA positive on a run rate basis by the end of the current quarter. That will be an important milestone if that can be achieved sustainably.
Similarly, encouraged that Churn was very low (<0.2%), and that the airport sector appears to be holding up well despite covid.
Will be awaiting the half year results before making any further judgements -- but really hoping to see the pace of ARR growth accelerate, and to see if the expected cost reductions materialise.
14-Jan-2021: As @Rapstar has mentioned here in both the AVA General Forum and in his "Services Division" Straw for AVA today, AVA is held by DMX Capital Partners, a division of DMX Asset Management. Their monthly newsletters are free to access from here: https://www.dmxam.com.au/monthly_archive.html
I do see that in their September 2020 newsletter that they've said:
We are pleased to share below a summary of our notes and insights taken from meetings with management of several of our disclosed portfolio positions. We share these insights to showcase four of our holdings where we feel our discussions with management have highlighted some interesting aspects to the business, that are perhaps not well understood by the market.
AVA Risk Group (ASX:AVA)
Meeting with David Cronin (Chairman) and Rob Broomfield (CEO)
As previously noted, FY20 was a big year for AVA, as it delivered an impressive turn-around. In speaking with management, we were keen to focus on FY21 and whether that momentum could be sustained. Key insights are discussed below.
In summary, we took a lot of confidence from our meeting with AVA. Its Services division has significant momentum, and when sold, we think has the potential to generate sales proceeds to AVA of $50m to $60m (before Management profit share is accounted for). Its technology business will grow in FY21 underpinned by the IMOD contract. AVA’s fiber technology offering perhaps hasthe most upside, and its potential least appreciated by the market, but we acknowledge it will take some time for this potential to play out.
--- end of excerpt --- [to read the notes/insights from DMX's other 3 company management meetings (with PTB, EGH & UCW), click here.]
While I can't find any reference in there (or in any of their newsletters) to AVA extending their own management performance plan termination date to June 30, 2021 (from Feb 1, 2021), I'll take @Rapstar's word for it; it sounds right. I do note that they (DMX) stated: "With the Services business due to be sold in the next 12 months, Management are looking to target an EBITDA sale multiple of 9x to 12x, given the capital light nature of the business. AVA are happy to take a commercial approach in relation to the timing of the sale in order to maximise the sales price."
Onwards and upwards then.
During the past 12 months, DMX have mentioned AVA in their February, May, July, August, September and October newsletters - all can be accessed from here.
Their December newsletter had not been uploaded to that webpage when I typed up this straw, but I expect it will be shortly, once they publish it.
[I hold AVA shares.]