Posted about this one before here and it certainly looks worthy of buying or placing on the watch list. Looks a genuine recovery stock after the results today.

Shrewd Tip: top investors back dynamic Aero
Published: 10:07 Fri 27 Aug 2004

By Algernon Craig Hall, Secret Buying Correspondent
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Shrewd investors are beginning to warm to former AIM wonder stock Aero Inventory, which ran into problems last year.

Aero (AI.) provides online procurement of aerospace parts to repair and maintenance firms. Its growth has been rapid and it has signed up a number of the industry's big players as clients since it came to market in 2000. However, the final six months of last year presented its shareholders with a raft of disappointments.


Aero's interim results for the six months to the end of 2003 were hit by rising overheads, contract delays, US dollar weakness and the impact of SARs (severe acute respiratory syndrome) on demand from an important Asian customer.


The catalogue of woes has taken the shares from a 2003 470p high to a today's year low of 290p down 2.5p on the day.


The share price performance paints the picture of a thoroughly unloved stock but a number shrewd investors have actually shown renewed interest in Aero recently.


AAA-rated contrarian investor Patrick Evershed picked up 70,000 shares in July for the New Star Select Opportunities fund New Star Select Opportunities, which took its holding to 250,000 or 1.6% of the 46 million company.


Gartmore's star smaller companies stock picker Gervais Williams has also been buying recently. He has bought 10,000 shares so far this month to take the Gartmore UK & Irish unit trust's Gartmore UK & Irish Small Companies holding to 470,000.


Framlington star Brian Watson has a 450,000 share holding in the Framlington Innovative Growth investment trust (FIT).


The underlying state of the business does not seem as bad as recent trading suggests
External factors have been at the root of a number of the company's problems especially the SARs epidemic, US dollar's weakness and delays to a big contract caused by an external union dispute.


Unfortunately there is the chance tough conditions could persist.


SARs may no longer be in the headlines but a lagged effect on aircraft maintenance could continue to subdue Aero's business with HAECO - linked to Cathay Pacific - in Asia. Another negative is the high oil price, which could cause delays to repair and maintenance spending and could possibly mean fewer flights.


Although there are reasons to be wary, much of Aero's recent plight was down to its reliance on the contract with HAECO.


Aero now has three very significant contracts - with HAECO, SR Technics and FLS Aerospace - which should strengthen the group's resilience once they get up and running. The company also continues to win new business.


When Aero's large contracts kick in next year they should have a marked effect on revenue and profit.


Brokers' consensus forecasts suggest turnover has fallen by 6.6 million to 22.5 million in the year to the end of June 2004 but should jump to 47 million in the current year. Profit before tax in the year just gone is predicted to fall by about 600,000 to 2.25 million before leaping in the current year to 8.25 million as delayed big contracts kick in.


The shares are valued at 28 times forecasts for the year just gone and 7.8 times next year's earnings if the group, despite the difficulties, Aero can meet expectations.

Aero has to build up large levels of stock to support new contracts, which makes growth very cash intensive and to date it has relied on share issues to support its expansion. However, the group has recently extended its borrowing facilities from 10 million to 25 million, which should ensure it can take on new business without issuing shares at the current depressed price.


Full year results are expected on 13 September and should meet expectations despite continued weak trading over the final three months of the year. The weakness has been mitigated by profits from the active trading of inventory held by the group.


Aero appears to still have some difficulties but the longer-term picture is encouraging.


The forthcoming results should give shareholders a better view of how the company is faring but there are unlikely to be many positive surprises. Still shrewd investors appear happy to pay the current price for a company that has made such impressive inroads into its market and should benefit once current troubles are over.


It looks like a good time to tuck some shares away for investors not afraid to take a long term view and possibly suffer a knock following the results. For others Aero looks like a good candidate for the watch list.

Please DYOR

cheers GF.

Wish this one would kick start itself. Mind Im the patient type.

cheers GF.

Starting to really perform now and the next 6 months could see some cracking results.





cheers Gf.

GF: You must have found it pretty lonely on this thread, so this is to let you know that AI has a strong supporter in our investment club, someone in a related operation, and having read it all here, I'm backing efforts to get our club on board.
sd.

Hi Squidd,

its well worth presenting the last results RNS to your club and underlining the OUTLOOK for the next 6 months. Ive quietley made a nice return here and I can see a lot more to come. Best of luck and as always, remain patient.

cheers GF.

Squidd, if you are looking in this might be of use to you................

THIS IS MONEY'S WEEKLY SMALL CAPS

Have we missed Aero Inventory take-off?
Chris Spink, Growth Company Investor
19 September 2005
OUR weekly analysis of the latest developments and hottest tips in the exciting world of Aim companies is written by Chris Spink, analyst at the UK's leading authority on fast-growing companies, Growth Company Investor.


Aero Inventory soars

AEROSPACE supplies specialist Aero Inventory was the pick of Aim last week, seeing its shares soar 18% to a 12-month high of 502.5p. The provider of web-based ways of tracking aeroplane parts reported a 332% leap in pre-tax profits to 7.2m on sales more than doubled to 43.6m during the year to June.

In March the group, which has won a number of long-term contracts in Europe and the Far East over the past year, raised 5m at 340p a share. Chief executive Rupert Lewin is optimistic that further strong growth is possible in the current year, as the new contracts come into effect for a full year for the first time.

Brokers believe pre-tax profits will jump 57% to 11.3m, putting the shares on a forward price-earnings ratio of 10.8. That is reasonably cheap given the stellar growth displayed.

cheers GF.

GF: Club members who are holding AI, won our latest monthly competition for the fastest climber and have asked me to pass on their thanks for your recent posts.
The previous month's winner, was myself with CSB, also one of yours, so thanks yet again. CSB seems to be a particularly robust performer, even managing a tiny gain today in an adverse market. I trust you are still holding this one.
sd.

Many thanks for that squidd.

Yup still holding CSB patiently.

cheers GF.

Techs being hit hard at the moment.

cheers GF.

Still holding these and hoping for a price surge. Still look cheap.

From shares mag today......

The Top Aerospace and Defence Shares:
*Aero Inventory (AI.L) - BAE Systems (BA.L) - Rolls-Royce (RR.L) - VT Group (VTG.L) - Ultra Electronics (ULE.L).

cheers GF.

These still look good value on prospective earnings forecasts.

cheers GF.

A link up with Airbus, cant be bad.

Fundraising at Aero Inventory
MoneyAM
Aircraft component supplier Aero Inventory said it is planning to raise a total of 92.3m through a share placing and rights issue.

The Barnet, Hertfordshire-based company said it plans to raise 7.4m through a proposed underwritten placing of 1,713,680 new ordinary shares.

It said it also plans a 3-for-2 underwritten rights issue of 28,301,274 new ordinary shares at 300p per share to raise 84.9m.

Aero said the exercise, which is expected to raise total net proceeds of about 88.4 mln stg, would allow it to capitalise on a number of important new business opportunities under discussion with potential customers 'including but not limited to possible appointment as a nominated service provider by Airbus'.

CEO, Rupert Lewin, said the fund-raising would significantly improve the company's capital base.

'We believe this is a transformational event for Aero Inventory,' he said.

Aero said the placing price of 433p per share represents a discount of about 4% to yesterday's closing share price while the rights issue subscription price of 300p per share roughly represents a 33.5% discount.

Aero supplies aircraft parts on long term sole supplier contracts and currently has ten such contracts with seven customer groups in the UK, Ireland, continental Europe and Asia Pacific.

The group, whose shares listed on AIM in May 2000, has gone from a loss of 39,000 stg in the year to June 30 2000 to a profit of 7.2 mln stg

It said Airbus intends to appoint two nominated service providers during the first half of 2006 to provide parts supply and stock management to operators of Airbus aircraft worldwide.

It said Airbus already has performed some due diligence on the firm and a significant expansion in its capital base would be 'an important factor when considering Aero Inventory's possible appointment'.

The group added: 'In the event that Airbus does not appoint Aero Inventory, the directors are confident that, given the number of new business opportunities currently under discussion and the group's increased financial resources on completion of the rights issue, it will nevertheless be possible to grow the group's business at a substantial rate.'

It also said today that it has appointed JPMorgan Cazenove as its nominated adviser.


cheers GF.

If Airbus do indeed choose AI. then the shares will have a lot further to go (it is not a dead cert however).
The money from the placing and rights issue forms a very strong foundation should Airbus choose to go elsewhere. However the shares may take a breather without the Airbus contract.
Tremendous long term value all the same.

Agreed Ian.

cheers GF.

Still looks rather cheap.http://www.equitygrowth.co.uk/reports/EGRAeroInventory-04Jan06.pdf

A tip update in shares today.

cheers GF.

Looking relatively strong this one. p/E less than 12.

Greetings. I thought it was a bargain at 370, til it went to 330! What an almighty tree shake. Managed to stay firm as I've cottoned on to this shameless MM behaviour through many years of bitter experience.

As I understand it, they raised a shedload of cash in the hope of a huge order from Boeing or Mcdonnell douglas or something like that. Any rumours/gossip on this?

I was cursing when I missed the post rights issue price so glad to have got in at last.

P.S. JSP interims tomoz.....

JSP yes. Fingers crossed.

Not heard anything on future contracts but Im still holding and this market correction wont have me panic stricken like a lot.

Cheers GF.

From Shares Mag..........

Updates:
*Buy FDM (FDMG.L) and Aero Inventory (AI.).

Director sells big time, no Airbus deal although with Qantas deal things pointing in the right direction

So cheap valuation, strong growth, strong balance sheet.....director sells ??