Pinned straw:
Q4 Update
The Good
- Order backlog of $8.5m sets up a good position going into FY25 and an order intake of $9m annualises out to $36m which still sits inline with the bottom end of the FY25 guidance so Ava is roughly tracking in the right direction. Most of this is propped up by the detect business.
The Not So Good
- Ava just scraped into its guidance range with a full year revenue of $30.2m. This means that there is extra work that needs to be done over the next two years to meet previous sales targets.
- There were previous indications that the illuminate business unit would start to show signs of growth in H2FY24. So far both the illuminate and access business’s have been fairly stagnant. Changing the sales orders from the stacked column graph highlights this.
Watch Status
- No Change
Valuation Status
- Review at full year results. Current growth rate is below previous forecasts.
What To Watch
- Telstra trials of illuminate and detect products to be completed in H1FY25. Mal hinted in the Strawman meeting in April that the first sales from this agreement will be a surprise, so likely from one of these two business units.
- Impact of US sales on illuminate orders.
@Bradbury - given that your valuation hasn't changed for AVA for some time - despite their lack of progress towards profitable growth, and your valuation is higher than the highest point their SP has been for over a year, do you not think that lack of progress and more work now being required (than previously) to meet their growth forecasts demands a higher weighting to a Bear case rather than remaining Neutral? I would have thought that the longer it takes, the less faith we should maintain that management can actually achieve what they've said they would?, or should?, but of course I say that as someone who previously held AVA and sold out, having lost faith in management, so there is bias there, as there always is, in my case some confirmation bias I suppose.