Pinned straw:
Having given this some thought for a couple of days, I am going to hold off buying for the moment.
Too many times I have been burnt by management departures and/or selling shares
At minimum, this dramatically reduces the possibility of any rapid improvements in the business in the short-medium term. If the guy with the greatest knowledge of the business decides to leave to "persue other opportunities", then it pretty much implies that the opportunity at AHL is not that great.
Seems to me that the one sentence earnings guidance at the end was chucked in just to try and reduce the hit to sentiment (and the SP) from the CEO leaving. Somehow it worked too well
If there was one lesson to be learnt from the AHL announcement it was to read the damn announcement from top to bottom. I missed the Earnings guidance completely.
Didn't like the CEO transition bit - Kevin barely lasted a year, which isn't usually a good look. But sometimes, better to bite the bullet sooner rather than later.
Re: earnings, think they refer to EBITDA as their main focus from a financial standpoint if I recall. I had a look back at the numbers:
- EBITDA FY2024 was $17.5m
- 95% of that would bring FY2025 EBITDA to at least $16.6m
- With 1HFY24 EBITDA at $8.2m, it looks like 2H EBITDA will come in at at least $8.4m
Which, if the math is correct, would be a nice outcome and as @Strawman says, "would be extremely encouraging"! Anxious to understand the drivers for the slight uptick vs my March 2025 1HFY25 commentary:
Thesis Review
Thesis was predicated on:
- Revenue growth from HTS given dominant market position on Industrial Cooling, domestically and in Asia - tick
- Growth from AluFin taking off - good positive greenshoots, tick
- Thai manufacturing facility would give AHL an Asian base, from which to deepen penetration to Asia - tick
- Thai facility will also lower cost - cautious tick on this, the issue this half was more raw materials/AUD driven - without the Thai facility, the cost increase could well have been worse
- Cost advantages was not an explicit part of the thesis, although arguably, there was an implicit assumption that costs would stay under control and contained - the cost increases this half has knocked this assumption around a bit
- Management is aware of the challenges and have and will continue to focus on cost management
- Pricing increases will have kicked in in 2HFY25, expecting ~$2.5m to kick in - $1m from Distribution and $1.5m from HTS
In summary, while the cost increases have impacted EBIT and NPAT, and the downward trend of both is not great, the revenue-related thesis is actually playing out.
Still too early to call this result a thesis breaker, but will need to see improvement in cost increases to arrest the increasing trajectory.
Chart Review
The share price still looks attractive from a chart perspective - historical all time low was 56c a few months back, which caps the downside but leaving a lot of upside room to run ....
Discl: Held IRL and in SM