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.

Looks like we could get a tick up on these looking at the state of play on volume.

cheers GF.

This ones cracking on up 8.5p in the last half hour.

cheers gf.

Thanks MMs, greatfully accepted.

I see the analysts are nicking my tips again Uk Analyst Just brought this out........................

Buy Aero Inventory at 346.5p
Argues The AIM & OFEX Newsletter

The past year has not been good to holders of Aero Inventory, the parts manager for aircraft builders and repairers. While the shares were trading for as much 490p in October 2003, even after results in line with expectations this week they were selling for as little as 346p.

The SARS outbreak had a lot to answer for in reducing passenger numbers, albeit temporarily, with the knock-on effect of reducing revenues within the aerospace maintenance industry.

Aero Inventory's pipeline of business has been a bit thin and has just shifted into the current year and beyond. Although the HAECO contract has taking its time in getting back to producing pre-SARS revenues for the company, the deals with SR Technics, GAMCO and, in particular, FLS are likely to lead to a bumper year.

Consequently, broker Evolution Beeson Gregory is forecasting revenues to more than double in 2004/2005 to 49.2 million pounds, and pre-tax profits are set to jump five-fold to 10 million pounds.

All being well, this means that EPS should come in at more than 40p per share, making Aero Inventory look cheap indeed at the current price.

Turnover in the year to end June 2004 was up 32% at 21 million pounds, but the pre-tax profit of 2.1 million pounds was down 26% due to the lumpy contract flow. Fully diluted earnings per share of 9.22p were half the level of the previous year.



If investors can see past this bumpiness of earnings, in the current year and beyond the company should continue to operate in a growing market. Aircraft makers and maintenance outfits do not like to carry parts themselves as it is not what they see as their core competency. This means that the trend for outsourcing of inventory functions to companies like Aero Inventory, do nothing but manage parts, should prevail.

Aero Inventory's strategy is to grow its business rapidly and profitably by securing further long-term, sole-supplier contracts. So far, this strategy, barring one or two hiccups, has been working well, and the company provided a positive outlook with its annual results.

We should remember that the long term trend for the airline industry is for passenger numbers to increase. Airlines carried 1.5 billion passengers in 2003, and this is set to grow to three billion by 2015, according to IATA.

However, as always with anything related to the airline industry, there are risks. Another SARS outbreak or terrorist attack could be around the corner. Given the apparent inability of governments to remove these threats, the risk should remain serious considerations for investors. For this reason we rate Aero Inventory as a SPECULATIVE BUY.

Share price: 345p - 348p

Stockmarket: AIM

Symbol: AI.

cheers GF, REMEMBER YOU SAW IT FIRST ON MONEYAM.COM lol.

I note theres more sells than buys but this inbalance should be overcome.

cheers GF.

More buys than sells now and looking strong for a short term run up over the next few weeks.

cheers GF

Good day for Aero Inventory, more expected tomorrow especially if techs in the US keep on the up.

cheers GF.

To top for nelson.

cheers Gf

Down a couple of pence at the open, time to get in cheaper, dont let these run away.

cheers Gf.

Price coming back in as a few buyers go into the market.

cheers GF

Looking for a good week out of this one.

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.