Avingtrans: Pre-Close Statement

Avingtrans’s pre-close trading statement has highlighted not just the benefits of the strategy thus far, reflected in a c 20% increase in revenues, but also the continuing progress this strategy is delivering. While there are some areas such as Medical and Crown that remain sluggish, the Aerospace and Industrial growth and visible opportunities provide substantial opportunities to continue the pace of growth. When combined with improvements in efficiency, we see further upside potential as volumes increase and Avingtrans’s position as a strategic supplier becomes recognised.

Pre-Close Statement -- Good Performance Expected
The pre-close statement showed that Avingtrans is in a position to manage the performance across the group, both in areas that are growing strongly (Aerospace and Industrial) and those where there are near-term challenges (Crown and Medical). With revenues expected to be in line with expectations for a 20% increase in revenue, and with operational performance improvements across the group as the benefits of the lean manufacturing techniques employed come through, we believe Avingtrans is positioned to deliver further progress in the bottom line.

Strategic Activities Increasing
The statement also highlighted Avingtrans’s increasing position as a key member of the aerospace supply chain, with the announcement of preferred bidder status in the EU’s Clean Skies activity. The €1.7m potential contract is to look at the use of non-metallic tubing in aero-engines as part of the drive to improve efficiency and reduce emissions. This highlights both Avingtrans’s leading position in this key area, as well as the driver behind its recent push into composites and alternative materials as these become an increasing focus in the industry. We believe this could well be just the start of this evolution and in our view it underpins the strategic rationale of the CEG deal.

Valuation: Attractive Opportunity Remains
Given the positive trading update and ongoing progress the group is making, we continue to believe that Avingtrans remains an attractive proposition to gain access to global growth drivers. We are maintaining our forecasts and our sum-of-the-parts fair value moves to 120p/share as a result of updated peer valuations.

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