Trading statement - PBT to be above expectations.....so likely to be around 2.3p EPS.
Good news is a recovery of £0.7m cash under a settlement. Bad news is that £1m of revenues have been deferred to this year, so that's merely a timing issue and will benefit this year's PBT.
In particular the visibility of revenues for this year bodes well:
"the Group continues to trade profitably and enters 2018 with an order book of £18 million. Over £12 million of this is scheduled for delivery in the coming year and the Board remains confident of the Group's future prospects."
Happy new year to everyone here. Given the outlook in September's interims I'm hopeful that 2017's - and 2018's - results will be good:
"The results for the first half of the year and a strong order book that includes almost £8 million of revenues scheduled for delivery in the second half of 2017 and nearly £11 million for 2018 providing good support for the current year and a foundation for 2018.
"That growth in product development and projects has been financed from its own resources without recourse to shareholders or debt demonstrates the strength of the Group.
"Against this backdrop and on-going customer discussions for new projects, the Board continues to be confident about the Group's future prospects."
Just announced a few minutes ago - Bombardier have won another huge contract to "to supply 333 new rail cars, along with a contract for maintenance work, with a U.K. rail company" - these will be new Aventra trains:
From the rather successful Chelverton Growth Trust's results yesterday - having top-sliced PEG at the peak (which may be largely the reason for the share price fall from the top given PEG's tiny £8.5m m/cap), they've been buying back again more recently.
"The holding in Petards plc was reduced as the share price moved up very sharply and then towards the end of the year the holding was modestly added to at much lower prices despite very positive interim results. Petards plc supplies sophisticated products to the rail industry and is building a very large order book to be delivered over the next two to three years."
From the FT - five firms have just been shortlisted for a huge £2.75 billion HS2 contract.
PEG already work with four of the five, and even the fifith - Patentes Talgo - recently announced UK localisation plans to build a production facility here.....with a localised supply chain:
"Thursday 2 November 2017
HS2 names Bombardier and Alstom among five shortlisted firms vying for £2.75bn trains contract
HS2 has named its shortlist of firms in the race to win a £2.75bn contract to deliver trains reaching up to 225mph for the railway linking the capital, Birmingham, Manchester and Leeds.
The bidders vying for the contract are Alstom Transport, Bombardier Transportation, Hitachi Rail Europe, Patentes Talgo S.L.U and Siemens, and they will now be invited to tender for the contracts which cover the design, build and maintenance of at least 54 trains, in spring 2018."
Talgo unveils localisation plan for the UK, scouts plant locations in Northern England
The company has already visited potential places around Leeds and Liverpool
Spanish train manufacturer Talgo is set to gain a foothold in the United Kingdom rail market and has devised a detailed long-term industrial plan which includes the construction of a plant in the UK and the creation a fully localized supply chain.
Enough time has passed since publication to post WH Ireland's full post-interims views.
They see 2.12p EPS this year rising to 2.31p EPS next year. At 25.25p that's a forward fully diluted P/E of only 10.9 now, and an adjusted EV/EBITDA of less than 6. The order book has increased by 20% to £24m since the start of the year, giving excellent forward visibility:
Interims illustrate good progress; order book +20%
Petards supplies advanced security and surveillance systems to the Transport, Defence and Emergency Services markets. H1 2017A results demonstrate a creditable performance, with growth in Transport and Emergency Services more than making up for a reduction in Defence sales. The order book has increased by 20% since the beginning of the year to £24m, providing excellent visibility over the next 18 months, including £8m order coverage for H2 2017E. Following the results, we have left our revenue and profitability forecasts unchanged, whilst reducing our year-end net cash expectation to reflect the increase in working capital and higher capex in the year. We maintain our Buy recommendation and 42p share price target.
H1 2017A revenue increased by 8.1% to £8.0m, reflecting good performances in Transport, which accounted for almost two thirds of Group revenue, and Emergency Services, offset by lower activity in Defence, albeit with the latter ending the period strongly. The gross margin moved 340bps higher to 38.6%, this reflecting the fact that two of the six major eyeTrain contracts were nearing completion. Administration costs increased by £432k, in part reflecting a full period of costs from QRO, along with higher depreciation and amortisation following increased investment. PBT of £503k was 5.9% ahead of the prior six month period, with diluted EPS moving 3.2% higher to 0.98p. The Group ended the period with a net cash position of £33k (FY 2016A Â£0.8m), reflecting an increase of £1.1m in working capital and total capex of £585k, principally relating to three major eyeTrain orders. Management expects to see positive cashflows from these eyeTrain contracts in H2 2018E.
The order book is reported to have increased by 20% to £24m as at 30 June, with eyeTrain accounting for more than 75% of this and including Stadler Bussnang AG on the list of customers for the first time. H2 2017E order coverage presently stands at £8m, with approaching £11m secured for FY 2018E.
On the back of the results, we have left our revenue and profitability forecasts unchanged. However, given the anticipated working capital and capex requirements, we have reduced our year-end net cash forecast by £0.9m to £0.3m before expecting to see an improvement in H2 2018E. The shares currently trade on a FY 2017E fully diluted adjusted PER of 13.8x and adjusted EV/EBITDA of 6.0x. Given the level of secured work, in addition to the pipeline of opportunities, we believe that these multiples continue to undervalue the business."
Bargain time imho, especially given the high forward visibility, with the MMs screwing sellers on tiny volumes.
Beaufort are positive this morning (didn't get proof-read though!):
"Our View: Petards reported a strong performance for H1 FY2017, continuing its recent progress by winning several contracts for its eyeTrain systems.
In particular, the £4.3m contract secured from Stadler was an important step forward for the Group as it further strengthens its product position as 'system-of-choice' across the industry. Stadler is a well-known, global system provider of train manufacturing and maintenance services, operating in 18 countries with 7,000 employees. It manufactures a wide range of products, including high speed trains, intercity, regional and commuter trains, trams, tram-trains and underground trains.
Successful delivery of the current project brings potential for long-term relationship to roll-out Petards' various products to other vehicles manufactured by Stadler. An addition of Stadler lead to 6 of the world's top 10 rolling stock manufactures now in Petards' customer list, with 4 of which have current projects with the Group (Stadler, Siemens, Great Western Railway and Hitachi Rail Europe Limited).
Post period, the Group also won a £1.0m contract from the Ministry of Defence and £0.5m from Leonardo MW (previously Agusta-Westland). The Group's order book at the period end increased by +20% to c.£24m, of which £8m is scheduled for delivery in the H2 FY2017 and £11m for FY2018, providing excellent visibility.
Petards ended the year with good cash position of £1.5m with no debt, after financing product development and projects from own resources. As such, the Board anticipates positive cash flows to return in Q3 and Q4 FY2018 as existing contracts progress to advanced phases.
The Share have increased by approximately +60% year-to-date, currently valued at FY2017E and FY2018E P/E multiples of 13.0x and 11.9x, having seen its shares fall back in May after its Chairman reduced its holdings (now 3.2% holder). In view of the continue positive progress along with a strong order book, Beaufort retains its Speculative Buy recommendation on the Shares.
Sound H1 results, with prospects good across all 3 divisions and a particularly optimistic outlook:
"It is encouraging that we are continuing to see a flow of new opportunities across all of the Group's target markets with a particular emphasis on the UK rail market which continues to generate a good level of potential new business.
The results for the first half of the year and a strong order book that includes almost £8 million of revenues scheduled for delivery in the second half of 2017 and nearly £11m for 2018 providing good support for the current year and a foundation for 2018.
Against this backdrop and on-going customer discussions for new projects, the Board continues to be confident about the Group's future prospects."
This section also reads very well:
"Several of the new orders for eyeTrain systems have embodied requirements for additional functionality such as automatic selective door opening (ASDO) and driver only operation (DOO) which materially increases the software content of our systems. This is becoming increasingly essential for train operating companies to increase capacity and efficiency within rail networks. Consequently, eyeTrain is establishing itself as a core system for train operators in addition to its role in security, surveillance and passenger and train safety."
Hybridan have issued a new 6 page report on PEG, which concludes as follows FYI:
"Yesterday's new business wins for the defence division, from both a Government agency and a major equipment supplier is a pleasing uptick for a division which was reported to have had a relatively slow Q1. The rail division by contrast has already announced new business wins of over £7m since the year end.
Following a terrific performance in the shares, they have paused for breath somewhat over the last month, down 6.8% and are some 19% below their year high of 38.5p. We certainly see scope for the shares to break back through this level and are confident that our full year expectations will be met.
At current levels, the shares are on a fully diluted current year fully diluted PE of 14.8x. As at 31 March, the order book was £21m with £13m scheduled for delivery this year. Yesterday's orders serve to further underpin our forecasts for 2017 and to establish a foundation for further growth in 2018. The Company has net cash and as such is on an EV/EBITDA multiple of just over 5x."
At 750 cars this is "the largest AVENTRA train order ever".
Let's not count our chickens yet - but there could/should be a lot of chickens to count :o))
Particularly as May's contract win RNS was for AVENTRA trains too:
"The new contract, which is worth £3 million, is for the supply of Petards eyeTrain systems to be fitted to five and ten car BOMBARDIER AVENTRA Electrical Multiple Unit (EMU) trains to be built by Bombardier."
- increased £21m order book
- international expansion via the new Stadler customer and contract
- QRO acquisition integrated well
- encouraging to see the defence business at last getting potential orders from NATO and non-MOD customers
Above all, there's a very positive outlook:
"The strength of the order book gives the Board confidence of a good outcome for the year"
Haha I bought a good chunk of the stock RA sold yesterday. I think maybe he was just taking advantage of the liquidity and market demand to take some capital gains before the end of the tax year. The stock is still well bid with the market makers with little on offer so I'm relaxed.
Hybridan pointed out in a new note yesterday that:
- new client Stadler have recently won a framework agreement with Hungarian operator MAV-Start for "up to forty 600+ seater trains". More work for PEG perhaps?
- most of the Stadler contract will benefit 2018
- PEG are still trading at a discount to their peer group
- they see scope for a further re-rating "should the current run of contract wins continue"
- they go for 2.95p EPS this year (2.09p fully diluted)
- they forecast £2.8m cash at the end of this year
Petards, the AIM quoted software developer of advanced security and surveillance systems, announces that it has been awarded a contract to supply Stadler Bussnang AG ("Stadler") with its eyeTrain CCTV and Automatic Selective Door Opening ("ASDO") systems.
The new contract, which is worth £4.3 million, is for the design, development and supply of CCTV and ASDO systems integrated into Stadler's FLIRTUK trains. Engineering activities will commence immediately with the first equipment deliveries starting in June 2017 and is expected that the project will be completed during Q2 2019.
The equipment will provide the trains and the driver with enhanced capability in the areas of security and surveillance through CCTV coverage of both the internal and external of saloon areas combined with pantograph, forward facing and track debris monitoring systems integrated with our video management software. Additionally the ASDO system delivers improved passenger operations at stations where the platforms are shorter than the trains.
Commenting, Petards Chairman Raschid Abdullah said: "We are delighted that Petards eyeTrain CCTV and ASDO systems have been selected by Stadler for their first UK Mainline Rolling stock contract.
"This new contract provides Petards with another exciting rail project with a new customer, which significantly enhances its position as a leading provider of security and surveillance systems to the UK Rail industry and considerably adding to the Group's present order book for delivery over the next three years.
"We welcome Stadler as a new customer of Petards with the integration onto their FLIRT platform. We are all thrilled about the potential of this new partnership with Stadler, a long established world leading train builder."
About the Stadler Rail Group
Established 75 years ago, headquartered in Bussnang, Switzerland and operating globally with 7,000 employees in 18 countries, Stadler is a system provider of train manufacturing and maintenance services. Stadler's range of products is comprehensive. It includes high speed trains, intercity, regional and commuter trains, trams, tram-trains and underground trains. Stadler manufactures dual mode locomotives, shunting locomotives and passenger carriages, and offers the most powerful diesel-electric locomotive in Europe. It remains the world's leading manufacturer of rack and pinion rail vehicles. Stadler's service division maintains vehicle fleets in 16 countries.
In the UK, Stadler's Variobahn trams operate on the London Tramlink. Its Class 68 diesel locomotive is the most powerful to run in the UK, and the Class 88 dual mode locomotives are used on freight and passenger services. It has recently been awarded a contract to build electric and bi-mode multiple units for the new East Anglia franchise, part of the largest ever rolling stock procurement in the history of the UK, and is providing the vehicles for the Sheffield tram-train, the first of its kind in the UK. It is also part of the consortium supplying a new fleet of trains for the Glasgow Subway. "
I also note from today's Times that two of PEG's main customers, Bombardier and Hitachi, look like combining to build £2.75 billion of new HS2 trains - with another £2.5 billion of new trains set for London's new "deep Tube":
Britains two train manufacturers could team up to build £2.75 billion of superfast rolling stock for the High Speed Two rail project.
With HS2 due to start canvassing soon for bids to deliver 60 225mph trains, each able to carry 1,000 passengers by 2026, Bombardier and Hitachi seem increasingly likely to pitch together for the contract.
That would replicate the joint venture they formed to bid for the London Underground contract to build Tube trains in Derby and Durham for the Piccadilly, Central and Bakerloo lines....
....The competition for HS2 bears similarities with the bidding for Transport for Londons £2.5 billion deep tube. Both are demanding all-new trains for unique environments, and will need well-funded bidders . Both also offer the chance to give a huge boost to renascent British train manufacturing."
Beaufort have increased their target price to 34p:
"Petards Group (PEG.L, 28.54p) Speculative Buy
The AIM quoted developer of advanced security and surveillance systems, reports its audited results for the year ended 31 December 2016. Revenues rose 17% to £15.3 million (2015: £13.1 million), while gross margin up to 36.3% from 35.2% in 2015, leading to an operating profit increase to £1,095,000 (2015: £935,000 profit) and profit after tax £910,000 (2015: £765,000 profit). Having generated £1 million of operating cash inflows (2015: £1.2 million), cash at 31 December 2016 was £2.3 million (31 Dec 2015: £2.5 million) with the Group holding no bank debt. Its closing order book was £20 million (2015: £16 million), having grown by £8 million in the second half of 2016 with orders received from Siemens Mobility, Bombardier Transportation, Greater Western Rail, Hitachi Rail Europe and the MOD. Exports increased by 57% to £5.3 million and now comprise over one third of Group revenues. The acquisition of QRO Solutions successfully completed in April 2016 for net cash consideration of £239,000, contributing £78,000 to EBITDA before acquisition expenses.
Our view: In light of the strength of the Group's order book, with some £12 million expected to be shipped and taken to revenue during 2017, together with on-going discussions with both new and existing customers for further projects, the market should remain confident about Petards prospects for 2017. Importantly, an improved gross margin also reflects the quality of work being undertaken.
On this basis, Beaufort has now upgraded its 2017E and 2018E earnings forecasts, to 2.2p and 2.4p respectively, implying P/E multiples of just 13.4x and 12.3x. Year-end net cash should also build out to over £1m this year, even though working capital and capital expenditure demands remain high. Improving visibility now suggests the valuation gap with larger peers in the support services sector should close, taking it to around a 15.5x, or 34p a share, for the current year. Beaufort retains its Speculative Buy recommendation on the shares."
Although I've known the company for over 10 years and RA for much longer, I've always given the shares a wide berth as a classic jam tomorrow stock. However when I read the results this morning I realised I'd missed an opportunity. Needless to say I called my broker and bought a few. On any measure these shares are cheap. I hope Chelverton will let some more shares go to allow us value investors to tuck in. It joins Touchstar and LPA in the electronic products for transportation section of my portfolio which has done alright.
Very good results. EBITDA of £1.62m is well ahead of the £1.4m forecast, and EPS and revenues are also ahead of forecasts.
Good to see the £2.3m cash pile, which should increase further given the adverse working capital movement in 2016.
Above all, the outlook is extremely bullish:
"In light of the strength of the Group's order book containing orders of £12 million expected to be shipped and taken to revenue during 2017, and on-going discussions with both new and existing customers for further exciting projects, the board remains confident about the future prospects of the Group for 2017."
"The contract to build the new generation of trains is generating international interest. Hitachi Rail Europe has said that it will bid for the contract. The manufacturer builds trains at its plant in Newton Aycliffe, Co Durham.
Nick Hughes, Hitachi Rail Europes sales director, said: Our HS2 trains would be built in Britain, for Britain, and combine world-leading Japanese Shinkansen technology with British manufacturing knowhow.
Siemens Mobility, meanwhile, has ramped up its high-speed rail division with the appointment of two executives to lead its HS2 rolling stock bidding team. Gordon Wakeford, managing director, said that a contract of this size was exciting news for the rail industry and would have a positive impact on the wider British supply chain."
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