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Share price 193p – 197p (market cap £36m after share buy-back)
Net current asset value: £32.7m – £34.5m.
(See last Friday’s Newsletter for a net current asset value analysis of Avingtrans)
Avingtrans (LSE:AVG) is controlled by a long-standing team of directors who see themselves as assemblers and nurturers of businesses which can eventually be sold. Roger McDowell, Chairman, stated in the 2016 Report:
“Avingtrans has a successful track record of growing businesses from start-up, developing them internationally, and crystallising value through their sale at an appropriate stage in their development.”
While most of their businesses have not actually been “start-up”, rather established engineers bought for small sums because they were generally loss-makers, they have certainly successfully combined firms to create scale, enabling international operations with increasing professionalization of the management.
It would seem that they hold no sentimental attachment to companies or industries within their purview, but are willing to allocate and reallocate capital across engineering businesses with a focus on generating returns for shareholders. In an interview with Insider Media magazine Steve McQuillan, CEO said
“Our view is that we are not precious about anything because our key duty is to maximise shareholder value. If the best result for shareholders is to dispose of businesses – albeit very good businesses – then we are not scared of doing that.” (11 May 2016)
The beginning
The foundations for the Avingtrans described above were laid in December 2000 when it sold its operating business and became a quoted shell with £4m on deposit. The search was on for an acquisition.
In 2002 Jena Tec was bought. This consisted of a precision instruments manufacturer (spindles, in particular) and a metal finishing business for the aerospace sector. Another spindle producer was acquired in 2003. Combining these firms Avingtrans owned the largest precision machine spindle manufacturing operation in the UK.
A roadside branching out
Crown was bought for £1.56m in 2003. It designed and manufactured housings and stands for roadside speed cameras; and gantry and trackside poles for railway signalling. It still does this for Avingtrans, but has since added other lines.
Precision engineering for diagnostic imagery
A further niche engineering diversification was the purchase……..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
