This is a BUY tip from Tom Winnifrith...

Sorry if this is rather boring as the market cap is now c 350 million but at 470p Avanti Communications (AVN) - a stock held in the SF t1ps Growth Fund - is really very cheap whichever way you look at it. It is now funded to launch 3 satellites into space ( and fully insured if the worst happens which will only delay the programme by 6 months anyway). You value Avanti by discounting back the net cashflows these satellites will generate. That depends on how much capacity is sold and at what price. Use a model based on very conservative assumptions and this stock is worth 13 ( the lowest valuation in the market). But that model uses assumptions about sales prices which are already being beaten by forward sales Avanti is booking today. Use those prices and you head up to the 22.50 value of house broker Cenkos. My own view is that Avanti will do better still and this stock could therefore be worth 25. Exc itement will mount as the first satellite is launched later this year. Remember those valuations are the Net Present Value of future cashflows ( i.e. what they are worth today). If you can buy at under 600p ( as you can now) you should do so and sit back and wait. I suspect after HYLAS 1 is launched you will never again be able to buy at less than 600p.

StockMarketWire.com
Avanti confirms that revenue for the financial year ended 30 June is expected to be approximately $83m. This represents growth in core revenues year-on-year (excluding the spectrum sale in the prior year) of over 35%. EBITDA is expected to be approximately $8m.

But the group is reducing the recurring revenue growth target for FY17 due to the challenging economic backdrop.

Avanti's commercial reputation for high service quality and product innovation is strong, enabling it to win high value contracts with prestigious telecoms companies. In particular, the Group is leading the market in winning cellular backhaul business, and many opportunities are opening up around the EMEA region.

Contract wins in the fourth quarter were over $70m showing commercial traction is building. Cash at year end was $57m.

The economic backdrop is nonetheless challenging. In Africa, ongoing currency depreciation has resulted in the need for the Company to help some smaller broadband service providers with exchange rate adjustments and rework some of their long term commitments. Elsewhere, larger high credit quality telecoms and government customers are demanding longer credit terms, impacting working capital. Given these challenges, the previously guided 50% recurring revenue growth target will be reduced for FY2017 impacting EBITDA. At 2:34pm: (LON:AVN) Avanti Communications Group PLC share price was -33.25p at 26.75p

Creatıve accountıng wıth thıs one?

It would have been very busy in the skies over sub-saharan Africa if facebook satellite had'nt been lunched on the pad. Avanti are putting two Sats up next year', lol and as far as i understand it Avianti find it hard getting payments from the users of their Hylas 2 Satellite covering this area. Face book would give internet connection for free, things do not look good