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Aveng (AEG)...free lunch?!

Aveng AEG small cap construction

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#41 andi222

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Posted 28 September 2018 - 10:53 AM

Extract from the Group report: 

"Management has prepared a budget and business plan for the 2019 financial year and the following two years, as well as cash

flow forecasts covering a minimum of 12 months from the date of these financial statements. These forecasts have been
prepared with the assistance of independent external advisers to ensure that they have been accurately compiled using
appropriate assumptions. The budgets, plans and forecasts have, together with the assumptions used, been interrogated and
approved by the Board. These forecasts and plans, being implemented by management, indicate that the Group will have
sufficient cash resources for the foreseeable future. In approving the operational and liquidity forecasts, the Board has
considered the following information up to the date of approval of these financial statements:
􀁘􀀃 Strategy adopted by the Board and announced on 26 February 2018;
􀁘􀀃 Successful R493 million rights issue concluded on 4 July 2018;
􀁘􀀃 Early redemption of the R2 billion convertible bond, including the successful raising of a new R460 million debt instrument
to facilitate the settlement of R657 million of existing convertible bonds at a 30% discount ahead of the early redemption.
The remaining R1,4 billion bonds were settled through the specific issue of ordinary shares at R0,10 per share on
25 September 2018:
􀁘􀀃 Implementation of a revised Common Terms Agreement with the SA lending banks that includes renewed facilities, additional
funding of R400 million and extended funding terms to 2020;
􀁘􀀃 Updated non-core asset disposal plan, targeting majority of disposals by 30 June 2019, including the announced property
disposals of R254 million;
􀁘􀀃 Updated budget and business plans for the post year end period up to 31 December 2019 for the Group, incorporating the
benefits already realised from the Strategic Action Plan such as improved operating performance, greater predictability of
performance and working capital enhancements, as well as future benefits to liquidity to be achieved once non-core
businesses have been disposed;
􀁘􀀃 Sensitivity testing of key inputs included in the operating and liquidity budgets to ascertain the effect of non-achievement of
one or all of the key inputs (operational performance, non-core asset disposal timing), including any effect on the ongoing
compliance with covenant requirements in place with the SA lending banks, Australian banks and other financing agreements;
􀁘􀀃 A short-term liquidity forecast management process that has been introduced and embedded in all the South African
operations with the help of external consultants.
The Group has cash of R2,1 billion (2017: R2,0 billion) at year end, R568 million (2017: R625 million) of which is held in joint
arrangements. Advance payments that will be used in the short term amount to R85 million (2017: R146 million) while short-term
debt repayments are R255 million (2017: R704 million). After working capital requirements of R800 million (2017: R800 million)
and unutilised facilities of R536 million (2017: R1,4 billion), the short-term liquidity of the Group is considered to be satisfactory to
the Board with liquidity headroom of R904 million."
 
This in my opinion is great. New customers now know if they enter into a contract with Aveng they will be able to finish the project because they have enough cash to do so. A debt to equity ration of 40% is amazing.
 
As soon as Allan Grey has sold their required shares to fit their strategy we can see the 10 cents in my view. They are currently selling at 70% loss. 

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#42 Magnet

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Posted 28 September 2018 - 10:40 AM

Definitely, at 1c the market cap would be R200m with circa 20 billion shares issued.    3c is a bit too much for me - would imply market cap of R600m.  Noting Group 5 current market cap is R100m with similar order book sizes moving into the next year.  But with new 3 year construction budget this may be where the smart money is moving to.

 

50mil on the 3c bid side and 350m on the 4c sell side. 

 

Like I said before this will go down to 1c again or R200m market cap equivalent (which is still double group five current mcap).  Expect a 1:100 share consolidation from 1c.  and then a further drop from R1.00 to perhaps 70c at fair value until industry stabilises and company retruns to profit - maybe 3 years.


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#43 andi222

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Posted 27 September 2018 - 06:40 PM

 

Thank you for the link. Definitely good news and I'm looking forward to see what will happen. I'm topping up my holdings at 3 cents. 


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#44 SB45

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Posted 27 September 2018 - 05:55 PM

https://www.iol.co.z...s-pace-17240259
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#45 SB45

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Posted 27 September 2018 - 05:52 PM

https://www.business...on-right-track/
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#46 Magnet

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Posted 27 September 2018 - 03:29 PM

a cash shell is normally worth 1c....so cant go wrong buying at 3c and below even if it perishes

 

Definitely, at 1c the market cap would be R200m with circa 20 billion shares issued.    3c is a bit too much for me - would imply market cap of R600m.  Noting Group 5 current market cap is R100m with similar order book sizes moving into the next year.  But with new 3 year construction budget this may be where the smart money is moving to.


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#47 Polly

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Posted 27 September 2018 - 03:12 PM

a cash shell is normally worth 1c....so cant go wrong buying at 3c and below even if it perishes


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#48 andi222

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Posted 27 September 2018 - 02:56 PM

Close to 300 000 000. I really wonder who is buying up these big chunks. We will probably soon see a SENS


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#49 andi222

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Posted 27 September 2018 - 01:07 PM

Over 200 000 000 shares traded. Wow that's insane.


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#50 andi222

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Posted 27 September 2018 - 11:13 AM

Thanks Jet.

 

Saw the article.

Also read my prior posts.

All this seems like very good news to me.

The risk seems so "relatively" low, that it frustrates me not to know what I'm missing here.

I don't understand why the 500million shares are being dumped at 4c.

I presume the share price has not been impacted due to this 500million available at 4c, and supply being higher than demand.

 

AEG's convertable bonds are being suspended on the JSE today.

Don't know if we'll get an update subsequently, but hope so.

Will be interesting to see what the market cap does.

Either Market Cap will increase three fold to let's say 1Billion, or share price will have to drop to let's say 1 cent.

But if amount of shares increase from 5 billion to 20 billion the market cap or share price has to give way.

 

Eager to hear some inputs from Polly and Andi on what's going on and what short term outlook is.

 

Yes the bonds have been converted to shares on the 25 Sep. Thus these volumes that get chucked into the market. In my opinion it's the lenders that did not vote for the conversions. 

The market cap will increase because Avengs liabilities have been reduced by 1,4 billion rand. So equity has been increased by 1,4 billion. Thus its ridiculous where this share is trading. The lenders are selling their shares at a 70% loss. Because conversion price was 10 cents. These banks or investment company follow strict rules and have strict risk strategy plans. If one of their investments is out of their plans they need to sell. Its their nature of their business. 


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#51 andi222

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Posted 27 September 2018 - 09:34 AM

could be one of any reasons:

 

1. Fund manager after rights issue now holding more than what mandate allows. Has to dispose even at a loss

2. Fund feels better opportunities elsewhere so selling out

3. Quick profit for those who bought at 1 or 2c..at least 100%

4. Fund feels this is a bust scenario

5. Stops triggered..IE when fund bought at 10c or took up rights, could have had a 50% stop level..5c... forced to sell now when below as per mandate

 

But hay no worries...There are buyers there too mopping up..

 

Good points, I would just add that not all of the bondholders have voted for the conversion and those that have not probably need to sell because of their risk strategy. 


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#52 Matrix

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Posted 26 September 2018 - 06:48 PM

could be one of any reasons:

 

1. Fund manager after rights issue now holding more than what mandate allows. Has to dispose even at a loss

2. Fund feels better opportunities elsewhere so selling out

3. Quick profit for those who bought at 1 or 2c..at least 100%

4. Fund feels this is a bust scenario

5. Stops triggered..IE when fund bought at 10c or took up rights, could have had a 50% stop level..5c... forced to sell now when below as per mandate

 

But hay no worries...There are buyers there too mopping up..

 

Thanks Polly,

 

Feedback much appreciated.

I just don't see much risk in this.

But then again, at some point I bought 160k SNH shares. - Fortunately not involved in this anymore.


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#53 Polly

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Posted 26 September 2018 - 06:37 PM

Thanks Polly,

 

Any insight into why 500million shares are being dropped?

Seeing as AEG has no debt and an order book of 17billion what possible short term risk is there?

could be one of any reasons:

 

1. Fund manager after rights issue now holding more than what mandate allows. Has to dispose even at a loss

2. Fund feels better opportunities elsewhere so selling out

3. Quick profit for those who bought at 1 or 2c..at least 100%

4. Fund feels this is a bust scenario

5. Stops triggered..IE when fund bought at 10c or took up rights, could have had a 50% stop level..5c... forced to sell now when below as per mandate

 

But hay no worries...There are buyers there too mopping up..


Edited by Polly, 26 September 2018 - 06:37 PM.

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#54 Matrix

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Posted 26 September 2018 - 06:22 PM

said it before....dont look everyday at shareprice....bought and put away for 2 years.....excellent r./r at 4c and below...either bunk or 20 bagger!!!

 

Thanks Polly,

 

Any insight into why 500million shares are being dropped?

Seeing as AEG has no debt and an order book of 17billion what possible short term risk is there?


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#55 Polly

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Posted 26 September 2018 - 04:29 PM

Thanks Jet.

 

Saw the article.

Also read my prior posts.

All this seems like very good news to me.

The risk seems so "relatively" low, that it frustrates me not to know what I'm missing here.

I don't understand why the 500million shares are being dumped at 4c.

I presume the share price has not been impacted due to this 500million available at 4c, and supply being higher than demand.

 

AEG's convertable bonds are being suspended on the JSE today.

Don't know if we'll get an update subsequently, but hope so.

Will be interesting to see what the market cap does.

Either Market Cap will increase three fold to let's say 1Billion, or share price will have to drop to let's say 1 cent.

But if amount of shares increase from 5 billion to 20 billion the market cap or share price has to give way.

 

Eager to hear some inputs from Polly and Andi on what's going on and what short term outlook is.

 

 

said it before....dont look everyday at shareprice....bought and put away for 2 years.....excellent r./r at 4c and below...either bunk or 20 bagger!!!


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#56 Matrix

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Posted 26 September 2018 - 04:17 PM

Did you aveng people see this ? https://www.moneyweb...-be-profitable/

 

Thanks Jet.

 

Saw the article.

Also read my prior posts.

All this seems like very good news to me.

The risk seems so "relatively" low, that it frustrates me not to know what I'm missing here.

I don't understand why the 500million shares are being dumped at 4c.

I presume the share price has not been impacted due to this 500million available at 4c, and supply being higher than demand.

 

AEG's convertable bonds are being suspended on the JSE today.

Don't know if we'll get an update subsequently, but hope so.

Will be interesting to see what the market cap does.

Either Market Cap will increase three fold to let's say 1Billion, or share price will have to drop to let's say 1 cent.

But if amount of shares increase from 5 billion to 20 billion the market cap or share price has to give way.

 

Eager to hear some inputs from Polly and Andi on what's going on and what short term outlook is.


Edited by jtsuch, 26 September 2018 - 04:20 PM.

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#57 SB45

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Posted 26 September 2018 - 04:07 PM

So many shares for sale.....these news....brought no positive impact so far.
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#58 Ms Jet

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Posted 26 September 2018 - 03:43 PM

Did you aveng people see this ? https://www.moneyweb...-be-profitable/
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#59 Matrix

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Posted 26 September 2018 - 06:21 AM

So, audited results are out.

Polly etc., your experienced inputs will be appreciated.

 

On face value results seem materially better than last year, when share price was 40 fold higher, and they're currently following an active plan to rescue company.

I do understand that they made a loss, but just don't see how a company without debt and an order book of R17billion has a market cap of R213million.

 

Polly etc.:

Why would shareholders be dumping 500million+ shares at these prices?

I must be missing something, but don't understand what the risk is and why share price is so low with parties willing to accept it??

 

Edit: Share price was 80 fold higher last year on release of results: R3.30.

I have subsequently learned that since then certain assets have been sold.

 

Various news articles seem positive about Aveng's future and high probability of being profitable next year.

Still seems materially undervalued at the moment taking the absence of debt into consideration, and the action plan being followed.

 

Any inputs or technical opinions on this?

Any opinions on why so much shares are being dumped at this point and these prices?


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#60 Matrix

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Posted 25 September 2018 - 06:19 PM

So, audited results are out.

Polly etc., your experienced inputs will be appreciated.

 

On face value results seem materially better than last year, when share price was 40 fold higher, and they're currently following an active plan to rescue company.

I do understand that they made a loss, but just don't see how a company without debt and an order book of R17billion has a market cap of R213million.

 

Polly etc.:

Why would shareholders be dumping 500million+ shares at these prices?

I must be missing something, but don't understand what the risk is and why share price is so low with parties willing to accept it??


Edited by jtsuch, 25 September 2018 - 06:23 PM.

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