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AMA - AMA GROUP LIMITED


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Correct company name is ALLOMAK and i like the story and the fundamentals of this stock despite being in the motor industry which perhaps explains the apparent lack of inerest. Listed earlier this year with 59m shares at .40(current price) Has exceeded prospectus forecasts and is forecasting NPAT of $4.2m for 2007 giving a currnt P/E of 5.6!!!!!!! Has announced dividends totalling 3.2 cents for 2007 giving an 8% yield!!!!!! Fosters stockbroking has a price target of .59(p/e 8 too low IMO) whilst Patersons has a target of $1 Both reports are available on the companies website. the reports do not include the companies recent purchase of the Autolak business or todays announcement of a wholesale supplier of LPG conversion kits which is what alerted me to the stock as the demand for these devices is massive and offers bluesky if they can make it work. I particuarly like the fact that they are already working in the trade which will surely generate business for this venture. The existing businesses are autoprotection equipment workshop dynometers automotive paint and warranty/repair work. My reseach shows this to be a gift at these levels and i would encourage you to research and provide your feedback. thanks crookers
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  • 2 weeks later...

Initial investigations look promising crookers - the company certainly seems cheap....why would this be?

 

- Perhaps first year of listing so reliable audited financial statements arent available? (I have not yet read the prospectus to see if they are included in there?)

- The motor industry has been a tough one in recent times (ION bust, increased competitiveness from cheap asian manufacturing - not sure if AMA have much exposure to these types of risks?)

 

 

pretty big increase in profitability being predicted from EBIT of about 3.4 mil to NPAT of 4.2mil thats a huge increase - can we be confident that management can deliver on this?

 

Just a few of my initial ramblings....I do like the cheap price, but perhaps some of these uncertainties are why the SP is being discounted to the rest of the market?

 

 

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well reading the broker reports on the website is answering a few of my questions.

 

I guess really need to decide if this i going to happen or not:

 

We are forecasting a NPAT of $4.2m and $5.1m in FY07 and FY08 respectively. Our FY07

forecasts are in line with managementÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s guidance. Our estimates are based on the following

assumptions:

ÃÆâ€â„¢ÃƒÆ’ƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚§ Automotive protection: Growth in sales from the introduction of new product

lines, i.e. sports bars, trade racks and heavy truck bars. We assume meaningful

benefits such as a reduced cost base and cross selling across customers will arise

from the integration of ECB bull bars with Barjo Bars. (+$1.1m FY07 EBIT)

ÃÆâ€â„¢ÃƒÆ’ƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚§ Diagnostic testing: Offshore expansion and the introduction of the digital dyno in

the Diagnostic Testing division should drive gains in this division. We also expect

improved margins from the newly established subcontracted US assembly plant.

(+$0.9m FY07 EBIT)

ÃÆâ€â„¢ÃƒÆ’ƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚§ Warranty and repair services: We expect expansion into out of work warranty

work and a reduction of expenses will be the key earnings driver in this segment.

(+$0.6m FY07 EBIT)

ÃÆâ€â„¢ÃƒÆ’ƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚§ Consumables: Expansion of promotion and distribution of paint products and

growth in sales from improved market conditions should drive earnings

improvement in this division. We also expect gross margin and operating expenses

will improve. (+$0.6m FY07 EBIT)

ÃÆâ€â„¢ÃƒÆ’ƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚§ Corporate costs: We assume $1.0m in corporate costs due the new company

structure.

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In reply to: stockpanther on Saturday 09/12/06 09:19pm

gooday Stockpanther thanks for your comments. i guess there is an element of risk in relying on any companies forward estimates though one would expect a newly listed company to be conservative in their approach. If we assume the company achieves none of the anticipated growth EBIT would reduce by $2,246,000 and profit after tax would be approx. $2,556,000 giving EPS of 2.9cs and a P/E of 13.8. Wether the company would pay the forecast dividend is unlikely so lets halve that to 4% yield and you still have imo a pretty good investment scenario with potential for growth in each of the businesses as outlined by you. I also like the fact that the company is operating in the wholesale market and the synergies that should flow with the businesses under the one banner. none the less the element of risk remains where the company has no history as a listed entity. Time as always will tell http://www.sharescene.com/html/emoticons/smile.gif

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  • 2 weeks later...

In reply to: stockpanther on Thursday 21/12/06 09:55pm

Hi Stockpanther Yes very positive announcement which would indicate that the increased revenues for the other businesses in the group are being achieved. With an increase in EBIT to $6m i now calculate NPAT of $4,239,000 which equates to EPS of 4.9cs and a PE of 8.5 based on the closing price of 42cs. taking into account the proposed 8% dividend this stock must surely be one of the most undervalued stocks on the market. What i particuarly liked about the purchase of Diesel Test is that it was an existing customer with which AMA is very conversant and provides evidence of the proposed synergies that can be made through incorporation of these businesses under the one banner. See this potentially as a very profitable long term hold. cheers

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I have only had a brief look at AMA but was slightly put off by the large amount of options issued at IPO. My initial valuation was a conservative 59cps. Plus high risk as they have yet to establish a record. But plenty of potential and I will take a closer look in the new year.
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  • 4 weeks later...

In reply to: chris12nz on Saturday 13/01/07 02:30pm

Hi chris 12nz yes the announcement confirms at least NPAT of $4.2million. I think it is interesting to note the Foster Stockbroking comment that-

"Acuisition Upside- A strong balance sheet and managements appetite for growth should make acquisitions a regular feature of the business. If history is a guide deals are likely to be executed on low multiples. We estimate an acquisition on a multiple at the top end of previous deals could add 28% to our valuation."

Since the IPO 4 acquisitions have been made-

Autolac P/L- expected to be earnings accreditive in 2007/8

Dual LPG- kits to be available by end of 2007

Diesel Test-EPS accreditive immediately

Spanns Trucks-EPS accreditive 2008

I am particuarly hopeful of a signifigant 2008 contribution from the LPG conversion business given the demand and backlog of orders following the Governments incentives.

The recent presentation contained some "bad news" to take the cream off the bottom line from these new businesses but once they are fully integrated i would like to think that this will be a very good long term investment. Certainly attractive at these levels i feel. cheers Crookers

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