Back in profit after Avanti releases encouraging interims

Regular readers of my blog will remember that I bought shares in a company called Avanti Communications back in April 2012 for about £2.60 per share:-

http://michae1mouse.blogspot.co.uk/2012/10/speculate-to-accumulate.html

The share price subsequently rose towards £4, but following a concerted bear raid after releasing their final results the shares fell back below my purchase price. I didn't pick any more up, but I did retain my holding.

http://michae1mouse.blogspot.co.uk/2012/10/a-bear-raid-on-avanti.html

Quite frankly I have always considered this to be a high risk stock that could be prone to wild gyrations in it's share price until it starts to generate cash.

On Tuesday of this week, Avanti released their interim results and, touch wood, I 'm glad I've held on because I'm now back in profit and cautiously optimistic that my speculation could bring rich rewards.

In summary, the interims were very positive not least because they reported that they expect to be cash flow positive in the second half of this year. If indeed they do deliver on this promise then the bears will be running for the hills.

In the outlook statement they state that:-

"Sales momentum for HYLAS 1 and 2 continues to build very well with a Backlog of firm committed orders of GBP290 million giving us confidence that we will sell out our satellites in the timescales contemplated."

They also state:- "Sales momentum continues to build very well. We operate in rapidly developing markets in Africa and the Middle East which are showing very strong demand for our market-beating services, with several HYLAS 2 beams already fully sold."

So very positive all round. Furthermore, Avanti hope to list on the Main Exchange this year and Paul Johnson, a new non-executive director has just purchased £27,700 worth of shares.

It appears the scales have tipped in shareholders favour for now, but it always pays to be cautious with speculative investments like these where fortunes can turn on a sixpence.

I shall continue to hold whilst recognising the inherent risks.

For interest this weeks FT Weekend commented on Avanti as follows:-

"Satellite operator Avanti Communications was up 27.8 per cent after saying it expected to turn operating cash flow positive in the second half of the year. Management said it had invoiced all customers for a new satellite in January and added that contracts in the pipeline should be enough to meet its targets."