30-Jan-2024: AVA-Q2-FY2024-Trading-Update.PDF

Generally positive. They have to deliver in H2 however. They've said today, "Expected H1 FY2024 revenue of $14.2 million, within the guidance range. Second half revenue is expected to be substantively stronger than the first half."

It will need to be!

Other highlights:

• Record Q2 sales order intake of $12.0 million, resulting in H1 sales order intake of $19.7 million, up 37% on the prior year.
• Strategically important orders received in Q2 relating to major infrastructure projects in Australia and Latin America, and strong growth in new verticals in North America.
• Confirmed sales order backlog of $8.9 million, reflecting strong Q2 sales order intake. Most of the sales order backlog is expected to convert to revenue through calendar year 2024 as key projects are delivered.

AVA is the second of two companies I hold that has had a +3.13% share price rise so far today on the back of news, and both have moved (so far) from 16 cps to 16.5 cps. The other company is Genex Power (GNX). I'll post a short straw on them now. I am on my way out the door to visit someone in hospital however, so it will be short.

The following is an excellent investment thesis on AVA from Patrick Melville, Freelance Writer at Rask Australia (published 19-Jan-2021):  Epic post: Everything you need to know before investing in AVA Risk Group Ltd (ASX: AVA) shares.

[I hold AVA.]

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:

Management meetings

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.

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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.

• AVA’s logistics business (“Services”) recorded $3m sales in July 2020, with EBITDA in excess of 15% (compared to FY20 EBITDA of ~9%). Management confirmed they expect revenues to remain strong for the remainder of FY21, as it benefits from the full year contribution of client wins during COVID-19 (in 4Q20). AVA also expect Services to maintain its EBITDA margin of ~15% for the balance of the year. 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.
• Technology revenues for FY21 are tracking ahead of the same period in FY20, while management continue to expect at least $11m from its Indian Ministry of Defence (IMOD) contract this year (at close to 100% margin).
• A key feature of the FY20 result was the margin expansion resulting from both revenue growth and reduced operating expenses. AVA expect to maintain FY21 OPEX at similar levels to FY20.
• Management are particularly excited about the progress they are making with their powerful fiber optic technology. We believe this is a key part of the AVA thesis that is under appreciated by the market. AVA are positive about the commercialisation of AuraIQ (using fiber optic cables for conveyer belt monitoring) where one potential deal is currently progressing its way through a customer’s CAPEX approval process. In addition to AuraIQ, AVA has been applying its fiber technology capabilities incrementally into other non-security applications such as condition monitoring for roads, rail lines and power cables. Potential distribution partnerships are being worked on for some of these use cases that are in early stage validation. One such example is monitoring the impact of wave motion on power cables in the Hudson River in New York.
• Management expect publicity around a similar focused company, chaired by technology entrepreneur Bevan Slattery, to drive further interest in what AVA is doing with its fiber technology.

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.]

30-Oct-2020:  IMOD Project Update

Indian MOD Data Network Protection Project Update

Ava Risk Group Limited (ASX: AVA) (Ava Group or Company) today provides the following market update and clarifications with respect to the large-scale supply of FFT’s SecureLink technology to protect data communications cables for the Indian Ministry of Defence (IMOD):

• Large scale supply of FFT’s SecureLink technology to protect more than 40,000kms of data communications cables for the Indian Ministry of Defence
• FFT licenced technology to in-country manufacturing partner SFO Technologies Private Limited (SFO)
• Total contract value estimated at US$11.9M+
• SFO’s Bank Guarantee to Ava for US$2.1m (A$3.0m), to cover the 120 days payment terms remains in place.
• Contract establishes FFT technology in growing cyber security market
• Fulfilment and licencing model providing low working capital, low risk and high margin GTM approach

FY2020 Recap:

• US$3.2 (A$4.8) million in revenue recognised
• US$0.1 (A$0.2) million in tax credits recognised
• US$1.0 (A$1.5) million in cash received

Q1 FY2021 (unaudited):

• US$2.4 (A$3.6) million in revenue recognised
• US$0.3 (A$0.4) million in tax credits recognised
• US$1.0 (A$1.3) million in cash received

Updated Forecast:

• Contract balance of circa US$5.9 (A$8.2) million (revenue and tax credits)
• Q2 FY2021 revenue expected to be A$3.3 – A$3.8 million
• US$1.8 (A$2.6) million in cash due to be received within Q2 FY2021
• Additional revenue from subsequent seven-year spares and maintenance contract with an estimated value of a further US$3.4M (A$4.8M)

Historical A$ amounts are based on actual USD/AUD exchange rates achieved. Forecast $A amounts are based on the current USD/AUD exchange rate at time of release. Actual final A$ amounts achieved may differ depending on exchange rates achieved at the time.

[I hold AVA shares.]

29-Oct-2020:  Annual General Meeting Presentation

That document is unfortunately NOT formatted to suit the ASX's new "FOR PERSONAL USE ONLY" always-on-top watermark (the left margin isn't wide enough) so the text is obscured.  To make matters worse, if you use AVA's own website (https://www.theavagroup.com/investors/) to download the document, they just use the ASX's URL, so you get the same damn problem because it's the same document.  AVA need to start using wider left margins or else have a library of their docs BEFORE the ASX damages them that people can access from their website.  Many other companies do this.  It's not hard.  Anyway, good report/presentation.  I liked it.  The market liked it.  AVA rose +13% to close at 65.5 cps ($0.655), which is where they also closed on Monday (3 days ago).  On that day (Monday 26-Oct-2020) they also set an intra-day 4-year high of $0.735 (during the day).

I hold AVA shares.  I also hold ZNO shares and they also rose +13% today (on their positive test results report), however ZNO are still in a strong 3-month downtrend, whereas AVA are most certainly in a very strong 3-month uptrend. 

I was bullish on AVA but they've certainly surprised me with how fast and far they've run in such a short time.  I bought them less than 7 weeks ago (on 15-Sep-2020) for 32 cps (cents per share) and they're already up +104%, i.e. their share price has more than doubled in a month and a half. 

I bought them in stages on my Strawman.com scorecard, as they kept rising, so paid higher prices, so I'm "only" up +81% on AVA here on Strawman.com, but in the real world, where brokerage costs exist, I tend to make fewer and larger trades, and I have just made the one purchase of AVA - back in mid-September.  My only regret is that I didn't buy more!