Great news from Avesco this week. Firstly they announced that results would come in ahead of market expectations for the year ending September 2012, and secondly the ninth court of appeals rejected Disney's appeal against Celador and upheld the verdict and payout. This amounts to over £1.40 per share to Avesco shareholders.
Disney do have the right to a further appeal, but the payout now looks almost certain in my view. Where would Disney go from here, and what would they hope to achieve? They lost the jury trial and were originally denied an appeal by the presiding judge. They took their case to the ninth court who have acted quickly in rejecting Disney's appeal. Both appeals were rejected unequivocally. Interestingly the ninth court of appeals indicated that they would reach their decision within 12 months but came back within 2 months. That clearly suggests the decision was relatively easy and in effect can't leave Disney with much hope, if any.
Avesco's shares shot up on the news to above £2 but have since pulled back a little. I expect them to go far higher. Broker forecasts were for EPS in the mid teens, and Avesco have beaten market expectations. Let's assume EPS of around 17p. That puts the shares on a modest rating of around 11 times earnings for a rapidly growing company (albeit on a two year cycle). Fairly modest in itself. Strip out the Disney payment and the P/E ratio falls to about 3. Net tangible asset value is £1.52. In my opinion the shares are worth north of £3 at this stage. The long term outlook is very favourable.
On a separate note, I am also a holder of Interior Services Group. They released an encouraging trading statement on Friday, despite the challenging economic conditions. They pay a very good dividend, and again I view the shares as a long term hold for income and capital gains.
However, I'll leave you with Avesco and one of the many reasons why I'm such a fan of this company. Look at this 3-D projection show by Creative Technology US:-
http://www.youtube.com/watch?v=i7Eqx7oQ0rA
Fantastic.
No comments:
Post a Comment