Well it's finally arrived a massive windfall for Avesco from the Disney litigation via a third party. From my calculations it will work out at about £1.69 per share. If you take this amount away from Avesco's current share price of £2.21 then currently the shares are closer to 52p or a market cap. of £13m. Laughable really. 52p is about a third of Avesco's NTAV and, on an average of it's previous two years underlying earnings (Avesco does better in even years because of its reliance on major events), it puts the shares on a p/e ratio of 4. I expect they will continue to maintain or improve the current dividend pay-out which effectively gives a yield of around 7.7%-9.6% (based on a 4p pay-out last year and a 5p pay-out this year).
The Disney windfall is more than the anticipated $60m, and should be closer to $66m. This probably took some investors by surprise but I did mention this possibility back in March:-
http://michae1mouse.blogspot.co.uk/2013/03/its-finally-over-disney-ordered-to.html
"I've read some absolute drivel on the BBs about this prospective payout with some posters speculating about possible scenarios on the negative side of any payout. Here are some things to consider on the positive side:-
Disney will already have paid tax on the profits that they made on the show, so this immediately clouds the picture, I would also be surprised if there wasn't nearly three years of interest to add to the payout since the case was won in 2010. However, I know nothing about these matters and clearly neither does anybody else.
In conclusion, the eventual payout will be substantial. Make no mistake."
The only negative in the update was that they may not meet market expectations for 2013.
Whilst that's unwelcome news, the material effect is negligible given the figures I've quoted above. Also, this is a highly cash generative business that should be viewed on a two year cycle, and 2014 sees the Winter Olympics, Commonwealth games and Football World Cup. As mentioned before, Avesco is sensitive to economic conditions, and has done remarkably well over the past two or three years. I fully expect conditions to improve over the next two or three years and Avesco to prosper.
Interim results will be published on Thursday 13th June and shareholders should receive more details about the Disney pay-out then, but they have always indicated that the majority of the monies would be distributed to shareholders and given that Taya and Richard Murray hold 50% plus of the shares between them, you wouldn't really expect them to renege on their promises. Unless of course they decide to bid for the entire share capital, which is something Taya have done in the recent past. See my previous comments below:-
http://michae1mouse.blogspot.co.uk/2013/02/interesting-development.html
Anyway, I am looking forward to what Thursday brings!!
Saturday, 8 June 2013
Sunday, 26 May 2013
Creative Technology (part of Avesco) building on the Olympic legacy
Here's an interesting link for Avesco shareholders:-
http://www.tpimagazine.com/company-profile/1893448/creative_technology_in_profile.html
A very worthwhile an informative read regarding Creative Technology's development in recent years and their current operations.
As a shareholder, I found the whole article very interesting, but a couple of highlights going forward might be :-
"Dimension (also Avesco) has grown steadily over the years. 2012, however, saw a huge increase in both inventory and staff on the back of the company’s involvement in Sports Technology - the joint venture business between CT and Delta, which supplied the majority of the audio and wired comms for the Olympics. “This puts us in a really good place going forward. We have a great team, up to date inventory and you’ll hear more from Dimension going forward,” said Crump.
“Similarly, CT has seen a huge shot in the arm on the back of the Olympics. Our contracts to deliver the video systems for all of the sports venues alongside Ceremonies and several pavilions have allowed us to upgrade and replace much of our inventory at a time when many competitors are struggling for cash and making do with ageing equipment.”
The long forward visibility of the Olympics also allowed the company to focus development of its people resource, adding around 30 full-time positions in the UK, most of which are on-site technical people that have been developed and trained in-house. “Legacy is a massively overused word when applied to Olympics, but I really believe in our case we are a much better equipped and stronger business as a result of the investments we have been able to make on the back of our Olympic contracts,” he continued.""
"Following an impressive run of major ceremonies over the last few years - Doha, Beijing, Delhi and London, Creative Technology’s music and live event work is currently on the increase."
"Further afield, the businesses in Asia and the US are structured in much the same way. In Asia the main operation is in Shanghai and Creative Technology has been active there for around six years and is one of the only Western players to have a real operation on the ground. “It’s been very tough, but we are now really starting to see the fruits of our endeavours. We are well established and are finally seeing a positive financial contribution coming from the region,” said Crump."
“I believe, however, that the real legacy that companies like ours can get from London 2012 is to take what we did and show the world that we really do this well in England. The Australians built an entertainment business on the back of their Olympics and they have given many of us a run for our money over the years. Now is our chance to go out and do the same, not just in Sochi and Rio but also at major events throughout Europe and the rest of the world.”
Avesco should release their interim results in two to three weeks which I am hoping will paint a positive picture going forward. If so, I expect they will further increase the interim dividend. Of course we may get news regarding the Disney settlement. If Avesco get anything near the £1.50 per share payout they are expecting then the current share price is effectively around 70p. At that price a full year dividend around 5p is a yield of 7%, the p/e ratio falls to single digits and the shares will be trading at less than half NTAV(around £1.50).
A growing company with major events in 2014 suggests that Avesco remains considerably undervalued in my opinion.
As ever no advice is intended or given.
As mentioned yesterday given that I can no longer post links on ADVFN, readers will be informed of blog updates via my twitter account:-
https://twitter.com/michae1mouse
http://www.tpimagazine.com/company-profile/1893448/creative_technology_in_profile.html
A very worthwhile an informative read regarding Creative Technology's development in recent years and their current operations.
As a shareholder, I found the whole article very interesting, but a couple of highlights going forward might be :-
"Dimension (also Avesco) has grown steadily over the years. 2012, however, saw a huge increase in both inventory and staff on the back of the company’s involvement in Sports Technology - the joint venture business between CT and Delta, which supplied the majority of the audio and wired comms for the Olympics. “This puts us in a really good place going forward. We have a great team, up to date inventory and you’ll hear more from Dimension going forward,” said Crump.
“Similarly, CT has seen a huge shot in the arm on the back of the Olympics. Our contracts to deliver the video systems for all of the sports venues alongside Ceremonies and several pavilions have allowed us to upgrade and replace much of our inventory at a time when many competitors are struggling for cash and making do with ageing equipment.”
The long forward visibility of the Olympics also allowed the company to focus development of its people resource, adding around 30 full-time positions in the UK, most of which are on-site technical people that have been developed and trained in-house. “Legacy is a massively overused word when applied to Olympics, but I really believe in our case we are a much better equipped and stronger business as a result of the investments we have been able to make on the back of our Olympic contracts,” he continued.""
"Following an impressive run of major ceremonies over the last few years - Doha, Beijing, Delhi and London, Creative Technology’s music and live event work is currently on the increase."
"Further afield, the businesses in Asia and the US are structured in much the same way. In Asia the main operation is in Shanghai and Creative Technology has been active there for around six years and is one of the only Western players to have a real operation on the ground. “It’s been very tough, but we are now really starting to see the fruits of our endeavours. We are well established and are finally seeing a positive financial contribution coming from the region,” said Crump."
“I believe, however, that the real legacy that companies like ours can get from London 2012 is to take what we did and show the world that we really do this well in England. The Australians built an entertainment business on the back of their Olympics and they have given many of us a run for our money over the years. Now is our chance to go out and do the same, not just in Sochi and Rio but also at major events throughout Europe and the rest of the world.”
Avesco should release their interim results in two to three weeks which I am hoping will paint a positive picture going forward. If so, I expect they will further increase the interim dividend. Of course we may get news regarding the Disney settlement. If Avesco get anything near the £1.50 per share payout they are expecting then the current share price is effectively around 70p. At that price a full year dividend around 5p is a yield of 7%, the p/e ratio falls to single digits and the shares will be trading at less than half NTAV(around £1.50).
A growing company with major events in 2014 suggests that Avesco remains considerably undervalued in my opinion.
As ever no advice is intended or given.
As mentioned yesterday given that I can no longer post links on ADVFN, readers will be informed of blog updates via my twitter account:-
https://twitter.com/michae1mouse
Saturday, 25 May 2013
FT Weekend - bring back My Portfolio
As I've mentioned in the past, on most weekends I like to pick up a copy of the FT. One of the highlights used to be the My Portfolio section. In particular I liked to read John Lee's column where he talked about the shares he currently held, had bought or sold.
However, not only has John Lee finished, but the whole My Portfolio page now appears to have been axed. What a pity. Whilst I don't ever recall buying any shares mentioned in their columns, it is interesting to read the thoughts of other private investors and hear their investing strategies.
We appear to be left with David Schwartz, a trader. Whilst it's interesting to hear him writing about some of the shares he is trading, over the past few weeks he has simply written a series of uninteresting articles pontificating on the next direction the markets will take. In summary, he's concluded that the markets will go up if they don't go down or if neither of these eventualties take place then the markets will go sideways. Brilliant! Well done, but perhaps instead of all that research into historical data about previous bull and bear markets, their durations etc, he might be better off admitting, just like everybody else, that guessing the future direction of stock markets is not worth the effort, because it nearly always takes you by surprise.
I do hope that in the future the My Portfolio section is re-introduced and that Schwartz gets back to talking about individual companies.
For balance, I might add that a good addition is the introduction of the small cap. section in the main paper.
However, not only has John Lee finished, but the whole My Portfolio page now appears to have been axed. What a pity. Whilst I don't ever recall buying any shares mentioned in their columns, it is interesting to read the thoughts of other private investors and hear their investing strategies.
We appear to be left with David Schwartz, a trader. Whilst it's interesting to hear him writing about some of the shares he is trading, over the past few weeks he has simply written a series of uninteresting articles pontificating on the next direction the markets will take. In summary, he's concluded that the markets will go up if they don't go down or if neither of these eventualties take place then the markets will go sideways. Brilliant! Well done, but perhaps instead of all that research into historical data about previous bull and bear markets, their durations etc, he might be better off admitting, just like everybody else, that guessing the future direction of stock markets is not worth the effort, because it nearly always takes you by surprise.
I do hope that in the future the My Portfolio section is re-introduced and that Schwartz gets back to talking about individual companies.
For balance, I might add that a good addition is the introduction of the small cap. section in the main paper.
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