Well, so much for my New Year resolution to post more often on my blog. Note to self, don't make resolutions that are almost impossible to keep. In truth I should have known that I don't really have sufficient time at the moment to post regularly due to other commitments. I might also point out that ad revenues from my blog, whilst welcome, are very small and hardly a great incentive to spend too much time posting when I can more usefully use the additional time on research.
Anyway, I shall endeavour to post at least once a week.
Avesco released their full year 2012 results this week, and as I predicted at the start of the year, results came in above market expectations with adjusted basic EPS at 21.7p. A gold medal performance indeed from staff and management who have clearly exploited the London Olympics to the full. In fact results would have been even more impressive if it wasn't for losses at CT Asia Pacific (around £1m) and costs associated with restructuring at Presteigne Charter.
Excellent results all round however, with revenues up 14%, operating profit 196%, trading profit 217% and EBITDA up 34%.
Markets are forward looking though, so what of 2013? Well the first quarter has been slow, but Avesco have indicated that Chinese operations are now more encouraging and that both the UK and US are showing clear signs of an upturn in business. It's highly unlikely that this year's bumper results will be repeated in 2013 due to the odd year effect, but it's probable that the underlying business will show further growth (although the first quarter will almost certainly show a loss).
Should I be looking to sell all or part of my holding in Avesco?
You must be joking.
This company is keeping its promises, and it's intentions are to continue to generate cash, reduce net debt, ensure the balance sheet remains strong and grow dividends. In the past two years Avesco have increased the dividend by 300% and 33% respectively with more increases on the way. Tangible NAV increased from £1.46 in 2011 to £1.52 this year. Margins have also been on the increase. As I have stated many times before Avesco is still cheap on any number of measures.
The share price is currently around £1.70, and is well supported by all of the above, throw in a possible £1.40 per share payout from Disney, a 29.9% shareholder in Taya Communications, a Chairman who fairly recently forked out a further £125,000 to buy shares in the group to bring his holding above 20% (most recently at prices around 160p - so not much below the current price), and their mysterious and tight-lipped reluctance to bring in a new CEO (although they would probably argue that management is sufficiently strong not to warrant hiring one in haste - umm...? over 6 months ago and counting).
This is also a company that is senstive to poor global economic conditions and yet Avesco has achieved outstanding growth in some of the most hostile conditions in the past 100 years. How will they fare when world economic growth eventually gathers speed? Very well I expect.
I can't see any reasons to part with a single share.
GCER have a 267p price target which I believe still underestimates the potential value to be unlocked here.
Anyway, as ever, interesting times ahead, and no advice intended or given.
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