Avingtrans – being considered for a net current asset value investment

PUBLISHED: 12 Nov 2016 @ 02:53 | Comments (0) |

Avingtrans (LSE:AVG) has a very big pile of cash relative to its market capitalisation. Cash, even after paying out £19.4m in a share buyback this month, amounts to £37.1m.

Once it has completed the repurchase of 35% of its shares, market capitalisation will be 18.3m shares x £2 = £36.6m.

(For simplicity, the cash number I’m using assumes none of its £5m May 2016 debt 2016 has been repaid – in reality I expect it to be paid off soon if it has not already been, then cash is around £32m).

On top of the cash Avingtrans has some nice businesses, which are really starting to pick up steam. Admittedly, they are not very profitable, but new contracts might make a majority significant value creators a year or so down the line.

The management seem both capable and interested in shareholder wealth; the share buy-back alone indicates a prioritization of the owners’ wellbeing, rather than empire-building by the Board.

Today I’ll concentrate on the balance sheet and the profit history, leaving the qualitative factors for subsequent Newsletters.

Net Current Asset Value, NCAV

£’000s	May 2016 (as reported)	May 2016 (adjusted for £19.4m cash used for buy-back)	May 2016 (adjusted for £19.4m cash used for buy-back and inventory reduced by 33%, receivables by 20%)
Freehold land + build	1,861	1,861	1,861

Inventory	3,046	3,046	2,031
Receivables	7,591	7,591	6,073
Current tax asset	85	85	85
Cash	56,503	37,103	37,103
Minus current liabilities	-11,243	-11,243	-11,243
Minus non-current liab	-1,383	-1,383	-1,383
Net current asset value	54,599	35,199	32,666
NCAV per share			£1.783
If I add the freehold L+B value			£1.885

To be cautious – to build in a margin of safety – I will…….To read the rest of this article, and more like it, subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1

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