AVA has announced a new contract to deploy Aura IQ across 15 Airbase sites with a large Asian country (I feel this may be India given the relationship with the IMOD contract).

I see this as a fantastic step in the right direction where AVA has created a lucrative new sales pipeline through their investment in Aura IQ and are now able to get the ball rolling. Remember this execution on strategy is two fold, not only does it give AVA a success story for future sales but it also nets them tidy revenues from a new product.

They mention they have the go ahead for 4 sites at $700k AUD. This is $175k a site, extrapolating this across all 15 sites,  (conservatively, I assume the cost will increase/decrease per site depending on size) we are looking for a total contract value of $2.625m AUD. At a gross margin of 40% that is $1.05m profit. This will be recognised across FY21 and FY22 which gives a good taper off to the IMOD contract.

This is very promising and has addressed some concerns I had about the companies ability to generate new sales. I still think the company will need more sales in late FY21/early FY22 like this to take the place of the IMOD contract but this is a step in the right direction.

You really do love to see it, record quarterly revenue of $17m and record EBITDA of $7.7 EBITDA for the quarter. Just to be clear, they have earned their FY20 EBITDA in one quarter.

My valuation has increased on the back of this release and I will be updating it shortly. Great to see IMOD cash receipts coming in and strong commercial interest on Aura IQ. The new CEO Rob Broomfield is still riding the wave of growth Scott left behind as he moved on however I think all things considered the growth and opportunity here is something to behold.

Full release here: https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02295346-3A552913?access_token=83ff96335c2d45a094df02a206a39ff4

AVA Group have released its Q4 and FY2020 Unaudited results for its services divisison, key points below:

• Despite the reduction in airfreight capacity around the world due to COVID-19, Q4FY2020 revenues increased by $3.5m to $9.7m over Q3FY2020 and full year FY2020 revenues increased by $9.2m over FY2019.
• 25% Gross Margin in FY20 compared to 21% in FY19
• EBITDA increased to $2.3m for FY20 from -$100,000 in FY19
• Large increase to addressable market with a threefold increase in new clients during the year, including several Central Banks, Mining companies, Precious Metals Refiners and Commercial Banks.

Something else to note: "In addition, market share opportunities, will likely play a part in FY2021 due to recent market consolidation with the acquisition of the 2nd largest market participant by the largest. Total addressable market spending is estimated to be well in excess of $1bn."

Rapstar and I have touched on the Group CEO Scott Basham retiring from his position and the loss that this is for the business however it seems they have created a strong board with great governance and experience this last year. If they can continue to succeed here and grow after Scott's departure AVA is trading at a massive discount and looks extremely good value presently.

Full release here: https://www.asx.com.au/asxpdf/20200723/pdf/44krts5bw33kh3.pdf

Headlines:

• Q4 revenue now forecast at $12.3m, exceeding previous guidance by +$1.8m
• H2 revenue forecast of approximately $24.6m, more than $2m higher than previous guidance
• FY2020 revenue now forecast to be approximately $45m
• FY2020 EBITDA now forecast be circa $6.8m, and $1.8m higher than previously expected
• Q4 IMOD revenue now forecast at $1.3m, exceeding previous guidance by $0.8m

Another big announcement is "After joining Ava Group in March 2019 Mr. Scott Basham will retire from his position as Group CEO and Executive Director". Rob Broomfield COO of the Technology Divison will takeover the CEO role, I am yet to do some digging on the impacts of this management shift.

Announcement here: https://www.asx.com.au/asxpdf/20200710/pdf/44kdy87pgc410z.pdf