Allomak Ltd ("AMA") - Cheap! [Archive]

steve fleming

21-06-2007, 11:17 PM

quote:Originally posted by Lizard

Hi Steve,

I bought a small parcel today after that announcement. Been watching for a while and made a small trade on it previously. Not a popular sector though which makes me think it might not go anywhere too quickly.

Though in valuation - don't forget the 15m of oppies - most of them issued to those involved in the IPO which seemed a bit of a negative.

Great potential if they can stay on track through 2008. As you say, communication seems to be passing the tests of reality and consistency so far.

Hi Liz

Almost all the options are exerciseable at either 47 or 57 cents - so not diluting at current levels, and not really a concern to me.

Pattersons, based on some very generous assumptions/multiples had initially put a $1.15 target on AMA.

http://www.allomak.com/news/Patersons_Research_Report_AMA060921.pdf

Pattersons have recently increased their valuation to $1.33 and is likely to be increased further following today's announcement.

The great thing about AMA (like HST and BOL) is that it benefits immediately from the private/public company multiple re-rate from its acquisitions....PLUS benefits in the medium/long term through synergies/efficiencies etc.

Great management
Excellent dividend
Demonstrating growth creation
Long term hold.

Lizard

22-06-2007, 08:38 AM

Thanks Steve. The way I look at the options is that they are all exercisable at the prices I'd expect to hold it till for a reasonable return, so worth including when considering target valuation (can always add back cash per share from exercise to be fair).

I think we have all seen that public/private company re-rate done both well and badly across various stocks over the years. (About here I'm thinking of HST versus DMX!).

I took yesterdays guidance as a (not unexpected) 10% earnings downgrade for 2007. However, the annualised figures make it look impressively cheap with upside potential as the market starts looking towards 2008 earnings. Management's forthright handling of this earnings hiccup was also comforting.

Patersons valuations are interesting, but perhaps best viewed in the light of their role as lead manager for the issue (and probable holder of the 1.5m underwriter options, excercisable at 40cps?). My current conservative valuation is 66cps, but I'd expect that to move forward fairly rapidly over the next 6 months if they demonstrate consistent performance and no significant negative news. (Current s.p. 45cps)

Halebop

22-06-2007, 10:19 AM

quote:Originally posted by steve fleming

The great thing about AMA (like HST and BOL) is that it benefits immediately from the private/public company multiple re-rate from its acquisitions....PLUS benefits in the medium/long term through synergies/efficiencies etc.

Sounds like we are coming full circle. This is the rationale of the conglomerate and AMA are essentially a mini conglomerate. The biggest challenge I see is that under the weight of potential baby boomer divestments, it seems unlikely even "cheap" EBITx3 acquisitions will retain their value.

While the market buys it though, private company roll-ups offer a cheap form of arbitrage. Worth considering there is considerable execution risk in an acquisition strategy, which requires ever larger purchases to maintain momentum. This strategy often fails in the long term but can deliver spectacular returns if the exit is timed right.

steve fleming

22-06-2007, 10:53 PM

quote:Originally posted by Halebop

The biggest challenge I see is that under the weight of potential baby boomer divestments, it seems unlikely even "cheap" EBITx3 acquisitions will retain their value.

Not sure if i follow you here halebop.

If baby boomers flood the market with their divestments, would this not make it a 'buyers market' and favour AMA?

A $ of earnings in a public company is always going to be worth more than a $ of earnings in a private company (due to liquidity, disclosure and funding advantages etc - though, admittedly, private equity tranasctions of late do question this theory)

steve fleming

03-07-2007, 11:52 PM

Closed at 50c today - second highest close since AMA listed 9 months ago.

Represents outstanding value at these levels IMO.

thereslifeafter87

04-07-2007, 12:24 AM

quote:Originally posted by Halebop

quote:Originally posted by steve fleming

The great thing about AMA (like HST and BOL) is that it benefits immediately from the private/public company multiple re-rate from its acquisitions....PLUS benefits in the medium/long term through synergies/efficiencies etc.

Sounds like we are coming full circle. This is the rationale of the conglomerate and AMA are essentially a mini conglomerate. The biggest challenge I see is that under the weight of potential baby boomer divestments, it seems unlikely even "cheap" EBITx3 acquisitions will retain their value.
While the market buys it though, private company roll-ups offer a cheap form of arbitrage. Worth considering there is considerable execution risk in an acquisition strategy, which requires ever larger purchases to maintain momentum. This strategy often fails in the long term but can deliver spectacular returns if the exit is timed right.

I wouldn't say AMA are a conglomerate HB. They own a number of businesses in the same market sector. "Conglomerate" generally implies a company with a bunch of unrelated businesses.

Likewise, isn't entirely dependent on acquisitions to grow. The businesses within the portfolio are introducing new products, exploring new sales opportunities and are growing organically.

The company looks cheap.

A possible concern is that around 10% of forecast profits relate to one service contract with Holden. This is a risk that seems to be factored into the shareprice.

The arbitrage acquisition strategy appears to be a good one, provided acquisitions can be integrated successfully, and the low multiples paid reduce the risks posed by an unsuccessfull integration significantly.

Definitely worth a closer look for mine.

steve fleming

04-07-2007, 08:51 PM

quote:Originally posted by thereslifeafter87

A possible concern is that around 10% of forecast profits relate to one service contract with Holden. This is a risk that seems to be factored into the shareprice.

Hi thereslifeafter87;

which contract are you referring to?

according to Fosters "Key customers: Fluidrive’s revenue is significantly exposed to the Holden warranty contract that accounts for some 60% work completed. This exposes to Fluidrive to key customer risk, i.e. Holden defaults on the terms of contract or a
Holden sales suffer from a change in consumer preferences. We note Fluidrive accounts for 7.1% of sales."

This 7.1% of sales would be further diluted through sales and acquisiitons since the Fosters report last September...Fluidrive have held the Holden contract for over 20 years, so i would think contract risk is not excessive.

Lizard

12-07-2007, 12:10 PM

Buried in this mornings announcement of Mr Gloss acquisition is the forecast for $10m EBIT in 2008. This is ahead of the previous update of last three months trading at $8.5m EBIT equivalent. Was too slow to get more before the cheap sells got cleaned up. But my current conservative valuation is now 72cps and will likely rise further after FY results.

steve fleming

13-07-2007, 12:16 AM

quote:Originally posted by Lizard

Buried in this mornings announcement of Mr Gloss acquisition is the forecast for $10m EBIT in 2008. This is ahead of the previous update of last three months trading at $8.5m EBIT equivalent. Was too slow to get more before the cheap sells got cleaned up. But my current conservative valuation is now 72cps and will likely rise further after FY results.

Yes Liz, excellent announcement. Confirms that management are making progress and the growth story is unfolding.

Just have to wait till next month for the accounts to be released so as the market has an idea as to how the numbers are now looking.

Exceedingly cheap, whatever way you look at it - PE, Div Yld, EV/EBIT.

Market cap < $50m. FY08 EBIT > $10m.

Lizard

13-07-2007, 06:01 PM

Hit 60.5cps today. 35-50% in 3 weeks (depending on your actual entry price). Not bad for the despised vehicle after-care market Steve! Hoping for a breather here though and for a return to the low/mid 50's to add. :)

thereslifeafter87

13-07-2007, 10:24 PM

quote:Originally posted by steve fleming

quote:Originally posted by thereslifeafter87

A possible concern is that around 10% of forecast profits relate to one service contract with Holden. This is a risk that seems to be factored into the shareprice.

Hi thereslifeafter87;

which contract are you referring to?

according to Fosters "Key customers: Fluidrive’s revenue is significantly exposed to the Holden warranty contract that accounts for some 60% work completed. This exposes to Fluidrive to key customer risk, i.e. Holden defaults on the terms of contract or a
Holden sales suffer from a change in consumer preferences. We note Fluidrive accounts for 7.1% of sales."

This 7.1% of sales would be further diluted through sales and acquisiitons since the Fosters report last September...Fluidrive have held the Holden contract for over 20 years, so i would think contract risk is not excessive.

They give an EBIT figure for the business with the Holden contract. I divided that by the percentage of sales the Holden contract made up of that company's business, then divided that figure by the total EBIT figure in the presentation.

That gives a rough approximation of the total percentage of AMA's EBIT that relates to the one contract.

steve fleming

16-07-2007, 09:02 PM

No retrace today Liz...this is turning out to be a nice earner.

Link to FN arena write up on AMA

http://www.fnarena.com/index2.cfm?type=dsp_newsitem&n=BDE661E2-17A4-1130-F52AA3BC246466F5

they say that AMA is now Patterson's number 1 pick in the retail sector.

steve fleming

25-07-2007, 11:34 PM

Continues to head into blue sky.

Biggest turnover day by volume and $'s for AMA today, thanks to some Patterson x'ings.

Getting ready for its next leg up.

Lizard

26-07-2007, 07:18 AM

Yes Steve. Still waiting for my retrace to add.... Doh!

Oh well, not complaining... :)

steve fleming

26-07-2007, 10:40 PM

quote:Originally posted by Lizard

Yes Steve. Still waiting for my retrace to add.... Doh!

Oh well, not complaining... :)

And another 5% today Liz....that would make it a 65% increase since the start of the thread just on a month ago...still lots of value left

Lizard

31-07-2007, 01:17 PM

So much for a pullback - even the recent weakness was lucky to knock a cent off the price for half a day... so now we're chewing on 70cps. :)

mamos

31-07-2007, 01:52 PM

I agree Lizard. I have been watching AMA from 45c and had constant bids in the depth at 50c all way up to 60c. Was hoping for a pull back to at least 60c but it didnt happen. Bit the bullet and got in at market for 66c yesterday. I guess they provided a market update with improved earnings guidance during this time so I had to pay for the extra information.

Still on reasonable multiples, especially if they can meet the earnings guidance for FY08. I like their business model and how they clearly communicate their strategy and areas for interrelationships between the business units.

OneUp

31-07-2007, 03:47 PM

I reckon AMA will smash their own 08 forecasts and is still trading at ridiculously low 08 multiples. And we will get a nice re-rate when they confirm forecasts have been smashed.

I was a bit skeptical six months ago when I had a look (not a big fan of companies that miss forecasts), but recent guidance suggests Pattersons is on the ball with this one.

Watch out for acquisitions over the next couple of months that will drive the share price much higher.

EDIT: the conservative game management seem to be playing is that they will only upgrade guidance after they make a new acquisition. Yet they let slip on June 21 they have already agreed terms with "a number" of potential targets which will add "significantly" to earnings early in the new financial year. Mr Gloss is only the first. AMA is a real gift at current levels.

Flying Goat

31-07-2007, 06:07 PM

Holy smoke,

Had this on watch list since reading about in AFR Smart Investor not long after IPO - yet did not management to keep up with announcements or notice it slowly creep up...! Sigh... another missed opportunity...

FG

David Hardman

06-08-2007, 03:54 PM

AMA has been solid over the last week.

One of the few stocks to actually be up since the rout began a few weeks ago.

Always a willing buyer around.

mamos

06-08-2007, 05:03 PM

Totally agree. I bought AMA very early on in the correction and it has feared well, unlike some others which I entered too early. Shows the quality of the business I believe.

steve fleming

07-08-2007, 09:15 PM

Totally agree. I bought AMA very early on in the correction and it has feared well, unlike some others which I entered too early. Shows the quality of the business I believe.

I see AMA closed at its all time high today.

Pretty good sign of quality - in management, strategy and execution.

steve fleming

31-08-2007, 07:56 PM

So AMA have a secured a $35 million ( Yes, thats right $35m) funding facility with Westpac. If that doesn't give you confidence in AMA's business model and prospects, nothing will.

Its not rocket science - AMA are acquiring businesses at say 4 or 5 x EBIT, or implied earnings yield of 20%/25%. Interest on WPC facility at say 8%, and the balance to shareholders thank you very much.

Lizard

31-08-2007, 09:42 PM

I liked the straight-up presentation that came out with the result. The level of growth in EBIT identified as "value-added" seems very positive. Also good to see a company that is not afraid to openly measure their performance against benchmarks and targets. Hadn't spotted that funding facility, Steve, but it certainly looks encouraging!

I was fortunate to finally get that retracement I'd been hanging out for on the recent dip and belatedly managed to add at 57cps.

steve fleming

06-09-2007, 08:54 PM

2nd $1m plus trade day for AMA in a row.

and the story gets better and better - DRIP at 5% discount announced this afternoon.

Footsie

06-09-2007, 09:57 PM

AMA closed at a new high today

Big volume. I think someone is building a stake....

This stock is so cheap its not funny

FY08 p/e of 7.2x at 70c.

Coy is making plenty of acquisitions.

Tenbagger and Pattos have targets around 1.40
Patto's describe it as the cheapest retail stock in Aussie.

on its way to $1.00

mamos

25-09-2007, 04:51 PM

I believe the decision to increase their exposure to the LPG market is a very schrewd move. This is definitely a growth area, with excellent fundamentals as the price of oil increases. The maintenance of LPG vehicles which will provide an excellent recurring revenue stream.

Furthermore the acquisition are within previous valuation paramater values, so will be immediately earnings accretive.

Out of all the sub-markets that AMA is involved in the LPG would clearly show the greatest organic growth. The benefits will be further enhanced from synergistic cost savings.

steve fleming

25-09-2007, 11:03 PM

AMA has been a pretty easy 1 bagger for me over the last few months.

These new acquisitions help to diversify away the business specific risks associated with each exisiting AMA operating entity, as well as generating the scale to provide AMA with synergies and cross sell opps.

Still on a PE less than 10.

Should be close to a $1 sooner rather than later.

Footsie

27-09-2007, 01:29 PM

CHOMP - breakout

tommy

03-10-2007, 06:44 PM

WTF, AMA up 9%?!

http://bigcharts.marketwatch.com/interchart/interchart.asp?symb=AU%3Aama&draw.x=0&draw.y=0

I was gonna buy in when profit takers came in... what happened to the breather? Obiously missed it, but still cheap considering PE level.

A J

03-10-2007, 06:57 PM

I've been looking at this stock just before the correction we had, wish I could've bought expecially when it bottomed out however money tied up elsewhere despite it not doing aswell (ISS). However given time it should do ok to.

Cheers
Aaron

Footsie

03-10-2007, 09:50 PM

great story..... will push through $1 soon

Try and pick some up on the next pull back which its probably due for

i'd be happy to buy more back in the 70';s

steve fleming

06-10-2007, 12:16 PM

great story..... will push through $1 soon

Yep, with only 1 seller below $1 (5000 shares @99c), and with AMA being consistently strongly bid up over the past 3 weeks, next week we may well see $1.

I see on the Allomak website, when introducing the new COO, AMA says "As many of our businesses are in a high growth phase and a number of new acquisitions to the group are anticipated soon, Bruce’s skills and experience give us expanded scope to support the businesses and build the appropriate structure to set the stage for further earnings growth.”"

Hard not to be very excited by the AMA story.

steve fleming

09-10-2007, 12:14 PM

Rumour of an insitutional $15m to $17m cap raising at 82 cents today.

To accelerate its industry consolidation plans.

drworm

09-10-2007, 12:59 PM

Looks like you're not to far off. AMA trading halt. Announcement expected before 10am Thursday

David Hardman

09-10-2007, 01:06 PM

Steve with the good oil. In trading halt now.

15m is a sizable raising for the 85m cap company. Wouldn't they have to issue a prospectus if they were after that much? I think the rule is greater than 10%???

Anyway...Thanks for the heads up on this one Steve. Got in at 67.

thereslifeafter87

09-10-2007, 01:21 PM

I hope existing shareholders have an opportunity to participate.

I'm tired of insto's getting to buy in well below market.

Footsie

10-10-2007, 09:15 AM

whether we participate or not..... its good news

ultimately its instos that drive the price

they've proven to be quite adept at acquisitions so the extra $$ should be good .

i'll buy more if they pull back

tommy

11-10-2007, 01:50 AM

Thanx for the tip Zman,

I am still waiting for a pullback to get in but this stock is so tightly held it's hard to get in... might have to bite the bullet at the current levels but will see how the market reacts to the announcement first.

http://asx.netquote.com.au/charts.asp?code=ama&x=0&y=0

tommy

11-10-2007, 05:14 PM

That's a bit cheap isn't it?

SHARE PLACEMENT TO RAISE $17.0 MILLION SIGNIFICANTLY OVERSUBSCRIBED
Allomak Limited (ASX: AMA) today announced a $17.0 million capital raising through an
institutional placement of 20,731,707 shares at $0.82 per share (being a 3.75 per cent
discount to the dividend adjusted VWAP1 of shares in the five days up to the recent trading
halt). The issue was significantly oversubscribed, with applications in excess of three times the
total amount of the placement.
The placement will be completed in two tranches and will not participate in the upcoming
FY2007 Final Dividend payment of 2.2 cents.
The placement tranches will be executed as follows:
1. The first tranche will comprise the offer and issue of 13,000,000 shares at $0.82 per
share pursuant to the Company’s 15 per cent placement capacity under the Australian
Securities Exchange (“ASX”) Listing Rules, to raise $10.66 million. The first tranche will
be due for settlement on Wednesday 17 October 2007.
2. The second tranche will comprise the offer and issue of 7,731,707 shares to raise an
additional $6.34 million. The second tranche will be subject to and conditional upon
receiving the requisite shareholder approval which is expected to be sought at the
Annual General Meeting of shareholders to be held on or about 22 November 2007.
Assuming such shareholder approval is granted, the second tranche will settle the
following day, expected to be 23 November.
The capital raising was undertaken to broaden Allomak’s institutional shareholder base and
reset gearing levels, enabling Allomak to continue to pursue its well developed pipeline of
acquisition opportunities.
The shares will be placed to more than 15 Australian institutions and several professional
investors. A considerable number of these shareholders will be new to the share register a
further diversifying Allomak’s shareholder base.
Managing Director of Allomak, Mr Rob Allan, said, “We are obviously very pleased with the
support the market has shown us in recent times and the tremendous response to this equity
raising. We take this support as a solid endorsement of our strategy to acquire outstanding
businesses in the automotive aftermarket and related industries and to drive operational
greatness within these businesses once part of the Allomak group – a strategy that our entire
leadership team have worked hard to realise over the past year and continues to focus on.
1
Volume Weighted Average Price
“In particular we welcome a number of very well respected institutional investors onto the
register as owners of Allomak and to receive the support of several existing institutions who
have taken the opportunity to increase their shareholding,.
“The capital raised will support the completion of transactions within our existing acquisition
pipeline in the auto aftermarket, and in our recently initiated national consolidation of the
smash repair industry, as well as underpin investment in numerous growth opportunities within
existing businesses.”
Patersons Securities Limited and Southern Cross Equities Limited acted as Joint-Lead
Managers to the placement.

- ENDS -
For further information contact: Peter Brookes or Pip Green, Cannings, 02 9252 0622

OneUp

11-10-2007, 05:22 PM

tommy

11-10-2007, 05:33 PM

"The issue was significantly oversubscribed, with applications in excess of three times the
total amount of the placement."

These guys are smart.

Sort of like an IPO. Underprice it and each insto only gets a small amount of what he wants - has to buy the rest on market.

Hi oneup,

Yeah, sneaky move but that's still 20% of the market cap diluted! Shame they did not offer any shares to existing shareholders at all. Will there be a slight pullback as a result of this announcement? I want AMA at 82 cents too you know!!

That said, resulting market cap will exceed 100 million so more instos may find AMA in their radar and feel more comfortable to get on board...

tommy

11-10-2007, 05:56 PM

LPG operations are a bit unpredictable in the long run (especially after 2011), being susceptible to changes in Govt subsididies, LPG and petrol pricing, and potential for manufacturers to offer factory LPG options.

Appreciate your comment Zman, well I was hoping the share price to plummet so that I can grab a few on the cheap :-P

That said, considering the number of taxis running on LPG in Australia, there should be a steady level of demand for the foreseeable future. And manufacturers offering pre-fitted LPG option is quite unlikely because of the costs and the small size of the Australian market compared to other countries from the viewpoint of automakers. If they are that desparate to get an extra penny from Aussie drivers, they would rather close down an Aussie plant to save costs (which has happened already) and manufacture cars overseas and import them. And why should they try to hard-sell a cheapo LPG conversion option when they can make more money by selling hybrids?

At the end of the day, automakers do very little cater to for uniquely Australian needs unless the vehicles are produced locally (ie Ford and Holden) and this trend is not likely to change when more vehicles are imported from other countries (look at the Holdenwoo!)

So I think AMA's target in the "niche" LPG market will do quite nicely.

My two cents mate :-)

tommy

11-10-2007, 06:59 PM

mmm, looks like AMA won't give in, looks like were closing at an all time high...

http://bigcharts.marketwatch.com/interchart/interchart.asp?symb=AU%3Aisso&draw.x=0&draw.y=0

Bit the bullet and bought a small parcel today. Damn, should have bought last week! Congrats to those who bought during the August carnage, one dollar seems to be just around the corner...

Footsie

11-10-2007, 09:32 PM

after the open i thought it might drop back to 82

but clearly its now big enough for the insto's

and boy were they hungry for this stock today !!

David Hardman

11-10-2007, 10:46 PM

after the open i thought it might drop back to 82

but clearly its now big enough for the insto's

and boy were they hungry for this stock today !!

Yup.. Instos clearly like what was shopped to them during the raising.

Obviously a good story was told during the presentations.

Placement three times over subscribed.

Going up.

steve fleming

12-10-2007, 10:54 PM

What AMA is attempting to do in terms of consolidating the smash repair industry is potentially huge.

The big auto insurers (IAG/NRMA, Allianz etc ) control the industry, and currently they are dealing with hundreds of independent and often less than reputable repairers accross the country.

The insurers are crying out for industry consolidation to provide them with the massive service efficiencies that are currently lacking as they deal with all these independents.

Mr Gloss already has strong relationships with insurance companies.
With AMA planning to "capitalise on Mr Gloss’ existing plans to acquire other quality smash repair businesses and expand to other key capital city and regional areas and developing Mr Gloss into a strong national brand", AMA are basically positioning themselves to ensure that they pick up a not insubstantial share of the $4billion smash repair market. The great thing about this is the revenue is pretty much underwritten by the insurers.

Then there is the LPG business which is going gangbusters....and all the other high growth businesses.

Management have set themselves some tough but realistic working cap targets, especially in inventory, where they want to improve from 3 stock turns to 4 stock turns a year. This will flow through to an improved cash position and reduced funding costs.

It really is a very exciting story.

tommy

15-10-2007, 04:47 PM

AMA penetrates one dollar mark, congrats to holders!

http://bigcharts.marketwatch.com/interchart/interchart.asp?symb=AU%3Aama&draw.x=0&draw.y=0

How high will it go until Xmas? $1.20?

steve fleming

01-11-2007, 09:41 AM

Southern Cross Equities are now covering AMA. Have a $1.20 target.

AMA now has 3 brokers covering it - Fosters, Southern Cross & Pattersons, - which, for a small cap, is pretty impressive.

Footsie

01-11-2007, 11:03 AM

$1.20

That's a joke.

This company is worth $2.00

thereslifeafter87

01-11-2007, 11:48 AM

Footsie, what do you base that on?

steve fleming

10-11-2007, 12:00 AM

Excellent announcement today

"Mr Mosley will pursue operational opportunities to take Allomak to its next level of growth, focusing this financial year on a roll-out of a common finance and management information system across each of the portfolio companies within the Allomak group."

Anyone with any experience in mergers/acquisitions will be aware of the crucial need to quickly implement group wide accounting information systems so as to ensure consistent and efficient management reporting. This in turn assists management decision making and business performance no end.

So get rid of the high level IPO CFO, and put in someone with hands on experience in the automotive game, so as to ensure the approriate systems are put in place.

steve fleming

10-11-2007, 12:03 AM

Latest Foster's Report - 7 November 2007

http://www.allomak.com/news/Fosters_Research_Report_0711071.pdf

FY08 EPS forecasted to be 6.3cps, up from 4.7cps in FY07 (FY08 PE of 14.1x)
and FY09 EPS forecasted to be 7.3cps (FY09 PE of 12.2x).

steve fleming

16-11-2007, 12:07 AM

Settling down post placement??

steve fleming

16-11-2007, 12:15 AM

What AMA is attempting to do in terms of consolidating the smash repair industry is potentially huge.

The big auto insurers (IAG/NRMA, Allianz etc ) control the industry, and currently they are dealing with hundreds of independent and often less than reputable repairers accross the country.

The insurers are crying out for industry consolidation to provide them with the massive service efficiencies that are currently lacking as they deal with all these independents.

Mr Gloss already has strong relationships with insurance companies.
With AMA planning to "capitalise on Mr Gloss’ existing plans to acquire other quality smash repair businesses and expand to other key capital city and regional areas and developing Mr Gloss into a strong national brand", AMA are basically positioning themselves to ensure that they pick up a not insubstantial share of the $4billion smash repair market. The great thing about this is the revenue is pretty much underwritten by the insurers.

http://www.news.com.au/heraldsun/story/0,21985,22610117-664,00.html

"Allomak bought Moorabbin-based Mr Gloss in July and plans to buy up to 10 more car repair shops to create a nationwide chain"

http://sa.iguana2.com/cache/4cae8f11697a81f790bfca41235cab40/ASX-AMA-480469.pdf

"Rob Allan, Chief Executive Officer of Allomak said, “With the completion of the Mr Gloss
transaction, we are now in a position to enter into other transactions in the smash repair
industry in support of our plans to build a national presence in this market”."

Looking forward to the ramp up of this national footprint!

steve fleming

16-11-2007, 05:36 PM

Settling down post placement??

More than settled...reaching all time highs.

steve fleming

21-11-2007, 09:26 PM

More than settled...reaching all time highs.

Fun and games going on here.

Biggest trade day ever for AMA today, thanks to a massive crossing going through...interesting to see tomorrow who traded it.

Will push on nicely once the post placement churn has finished - shouldn't be too long a wait.

steve fleming

15-12-2007, 08:39 AM

Fun and games going on here.

Biggest trade day ever for AMA today, thanks to a massive crossing going through...interesting to see tomorrow who traded it.

Will push on nicely once the post placement churn has finished - shouldn't be too long a wait.

So it was Thorney (Pratt) buying 1.625 million AMA shares that day.

Thorney now hold 7% of AMA.

_Michael

16-12-2007, 12:13 PM

Hi Steve

Do yu know what average price Thorney paid for their first tranche (5%) ??

cheers
michael

steve fleming

17-12-2007, 11:42 PM

Hi Steve

Do yu know what average price Thorney paid for their first tranche (5%) ??

cheers
michael

56c to 82c.

Picked up most of them in the placement.

http://sa.iguana2.com/cache/5ed9b59529faee54574708a7d792548d/ASX-AMA-477189.pdf

steve fleming

09-02-2008, 11:50 AM

AMA's house broker Patersons came out with a $1.50 target for AMA during the week - the most bullish they have ever been on the stock. Which should mean that the half yearly should be pretty positive.

Footsie

11-02-2008, 12:31 PM

I like the stock but cant help but feel that another cap raising is on the cards.

However, clearly at 70c they represent value and the ride back to $1.00 should be quick.
and hey thats 42%.... nothing to turn your nose at in this environment.

tommy

11-02-2008, 07:11 PM

AMA closed today at $0.63, some nutcase dumping stocks in panick... can I pick some up at 50c please? Or am I toooooooo greedy? hehehe

Are for possible capital raising, I think that is quite possible considering their debt equity ratio, but not sure how much cash in bank they have now. Anyone know?

steve fleming

14-02-2008, 12:01 AM

I am guessing the collapse of the largest auto-motive after-market parts distributor will dent market sentiment towards AMA....on the other hand, it may be an excellent opportunity for AMA to cherrypick some new assets on the cheap.

http://www.theage.com.au/news/national/more-car-industry-workers-lose-jobs/2008/02/12/1202760300942.html

tommy

28-02-2008, 04:22 PM

Commentary released, but where is da actual report?????

http://sa.iguana2.com/cache/a315915f2b6e8587bf44b5dec8394c37/ASX-AMA-495334.pdf

Sales up 145%
EBIT up 86%
Normalized EBIT up 178%
EPS up 22%
FF 1c dividend declared

Potentially Positive External Factors for Allomak:
C losure of National Parts
Future Closure of Mitsubishi Plant
Increased awareness of unethical practices in Smash Repair sector driving rogue operators from industry
Planned increased ATO audits on Diesel Fuel Tax Rebate compliance
Demographics of retiring baby boomers increasingly favourable for acquisition
Current market volatility driving assets prices generally lower – more favourable acquisitions

Positive Internal Factors for Allomak:
Debt facility in place for additional acquisitions – not conditional on share price movements
No Margin lending on shares held by any directors orexecutives of the company
Diversity of current portfolio performs well independent of economic cycle – benefits from economic downturn or upturn
Synergies between businesses being readily identified by strong business unit management team
Potential Challenges over next 12 months:
Any Prolonged weakness in share price potentially increases effective cost of acquisitions
Continued strong growth in profit dependant on availability of capital for acquisitions – although no specific threat evident at this stage on either debt or
equity front

KEY INVESTMENT METRICS
Shares on Issue: 128 m
Market Capitalisation: approx $80m
Forecast FY08 Sales: $70 m +

(UPGRADED)
Forecast FY08 EBIT: $10 m +
Forecast P/E 08 – 7.9 (@ 62 cents)
Full Year 2008 Dividend Yield:
– targeting top quartile performance

Footsie

28-02-2008, 09:33 PM

I used to like AMA
in fact bought at 72c & sold at 93c

However,..... what i dont like is all the acquisitions not adding anything to EBIT
Revenue forecast is up from 50m to 70m but no change in EBIT

This means margins are getting squeezed

At the end of the day.... its just another roll up biz - and i already have one in my p/f. CQU on a fwd p/e of 5.8x

Rodin

06-03-2008, 04:12 PM

Share price continues to slide, albeit on very low volumes.

I notice Foster stockbroking has released another research report, with a BUY recommendation and a price target of $1.10 (more than double the current share price).

Any thoughts?

Footsie

07-03-2008, 10:59 AM

its down bcoz they aren't adding any value from all these acquisitions.....
and debt in the company is on the rise.... and margins are gettins squeezed

seems they are just buying growth

Rodin

07-03-2008, 05:07 PM

its down bcoz they aren't adding any value from all these acquisitions.....
and debt in the company is on the rise.... and margins are gettins squeezed

seems they are just buying growth

I acknowledge that acquisitions are an important part of AMA's growth strategy. However within the company's existing portfolio there are businesses with solid organic growth prospects.

Some of these businesses are in emerging growth areas such as LPG conversions (LPGas 1 & Dual LPG) and emission testing (Diesel Test & Emission Services).

Another exciting opportunity is the continued roll-out of Mr. Gloss. AMA plans to acquire other smash repair businesses, rebrand them as Mr. Gloss and implement their own systems and processes. This should reap economies of scale and boost profitability.

Foster stockbroking expect AMA to comfortably exceed current management guidance. They are forecasting EBIT of $12.7 million in FY08 rising to $16.4 million in FY09 as the company enjoys a full year contribution from recent acquisitions. Increasing synergies and cross-selling opportunities are also expected to boost margins in FY09.

Footsie

07-03-2008, 10:51 PM

Rodin.......... ALL that means shizzle in this market

AMA are stuffed for a long time.

i could quote you 100 companies with good growth

but right now........ nobody cares....

steve fleming

07-03-2008, 11:44 PM

its down bcoz they aren't adding any value from all these acquisitions.....
and debt in the company is on the rise.... and margins are gettins squeezed

seems they are just buying growth

Footsie,

i've finally have had a chance to look over the 1/2 yearly, and i think you are quite wrong with your analysis. Have you looked at the accounts?

The four new acquisitions in the period contributed NP of $3mil, on revenue of $15mil - which are exceptional margins. AMA paid $40mil goodwill for these companies, which gives you an average acquisition multiple (PE) of 6.66 (before any synergies!!).....which hardly agrees with your comments about the acquistions not being good value!!!

Therefore it is AMA's existing portfolio of companies which is where the problem lies, no doubt in part because it appears AMA spent approx $1.5m in transaction costs related to acquisitions (legals and financial DD and tax advice) - which should really be normalised in any analysis.

The other thing to note is that over 2/3 of AMA's EBIT is generated in the second half of the year. This is exactly what happened last year - the market was disappointed with the first half result then ran hard when AMA confirmed their full year guidance.

Yes, there are some negatives - the $11 mil in deferred consideration that must be paid this half, as well as rising debt levels, however AMA is cash flow positive, paying a FF yield of nearly 10%. I'd prefer to be holding AMA than a lot of other companies out there.

steve fleming

21-03-2008, 12:18 PM

Allomak targeting acquisitions in Australia and New Zealand, MD says

mergermarket

Allomak, an Australian, listed diversified automotive company, is targeting more acquisitions, managing director Rob Allan said.

Allomak, which is separated into automotive aftercare and environmental services, would continue its "robust acquisitions program", Allan said. "We have three key areas for growth: acquisitional, operational performance and group synergy," he said. "Our acquisition criteria and key areas are businesses that give us opportunities in the broader wholesale and automotive aftermarket, and businesses that have dominance in the AUD 8.1bn (USD 7.42bn)market," Allan said. He said that targets would be companies with earnings between AUD 1m (USD 0.93m) and AUD 5m (USD 4.7m), but said "we are looking at someone larger than that."

He said that Allomak typically "acquires a business on average every six weeks since May 2006, and this will be the level we continue on" and "the opportunity may increase in size".

The focus for Allomak would remain predominately "in areas we are in, relating to alternative fuels, environmental services, LP gas. We would also look at broadening our distribution base as well as in selected manufacturing products," Allan said. The company would initially look to build on its platform of business for equipment to distribution, and for an environmental focus. "Now we have this platform, future acquisition would strengthen that position, with 80% strengthening, and 20% broadening", Allan said. Broadening would relate to diversifying its product base, he said, adding "we are looking at other niche markets. Four out of five acquisitions will be in existing areas."

The focus for these acquisitions would remain within the Australian and New Zealand markets. "Today, all our acquisitions are Australia based, and New Zealand is a natural extension of that,” he said, adding that discussions have already been held in the New Zealand market. He said that areas outside of Australia and New Zealand were not in focus, but that the company does see itself operating in a worldwide market.
The acquisitions would be financed ad hoc, Allan said, adding that Allomak has acquisition warchest, a debt facility with commercial banks and can issues shares: "We can rely on three sources."

"The current global market is volatile, but we see it as no immediate threat to how we buy, and there is no reason to cut back on our acquisition program based on capital markets," he said.

When asked, Allan said there were no definite plans for divestments, but "if we did a large acquisition, we would potentially look at divesting, we would contemplate it if we required the additional equity capital."

Allomak currently has an in-house M&A team, but could look at using external advisers. "We would look to supplement our skills with outside advice if the need arises."
Allomak recorded revenue of AUD 36m (USD 33.47m) last year, with a projected revenue between AUD 60m (USD 55.78m) and AUD 70m (USD 65.1m) for FY 07/08. It has a market capitalisation of AUD 42.81m (USD 39.77m).

Footsie

25-03-2008, 09:32 AM

Steve

The more experience I gain the more I realise that the acquisition growth model is flawed.....

Essentially you can combine two business that have no growth and still create EPS growth if one was bought for a slightly cheaper price.

The reality is............ THE model eventually blows up.... it always does.
in the current environment using debt to fund growth wont work and as for using shareholders funds??? imagine the dilution at 40c... no thanks

Over the long term the best growth is organic via new products/ new contracts or new stores.
think TRS, FLT

The Big Ease

25-03-2008, 10:03 AM

spot on footsie.
this is exactly what kept me out of abc and what made me sell out of funtastic about 4 years ago. they just kept buying and buying, but the underlying businesses weren't growing much if at all and the financial indicators were ordinary, but fast becoming poor.

scaleable businesses are what you want. service type businesses like pubs, restaurants, auto service shops and the like are great to own as an entrepreneur, but as an investment proposition on the asx, there are far better quality businesses to own.

Footsie

25-03-2008, 01:19 PM

Dont get me wrong .... I dont mind the odd acquisition every year or two.... a la FBU or BVA

but not this ROLL in ROLL UP style.

For the record. i sold ABS around $6.50 after being a strong advocate of eddie....but in the end the weak cashflows and low eps growth was the warning

I also really really dont like directors who buy their own stock on margin.....

I still own one roll up biz.... CQU.... It's early days for them, but I will have no qualms about cutting if they fail

steve fleming

25-03-2008, 09:16 PM

Roll ups require you to back management far more than your ordinary vanilla business growing organically.

But the synergies in combining businesses and the ability to leverage off complementary businesses should not be underestimated.

In these SMEs if you are able to have the head office look after administrative issues while the “front” office concentrates on getting and doing the business then revenue and then margin growth follows.

Once you have the systems in place, increasing your footprint organically is a natural progression.

But it is by no means easy to accomplish, and requires head office management having an absolute thorough understanding of the operations and culture of each rolled up business. The Fosters/Southcorp merger is often quoted as a classic example where management failed to fully appreciated the dynamics of each business.

Naturally the risks inherent in such a model far exceed organic expansion, but the rewards are most certainly there.

The Big Ease

25-03-2008, 11:17 PM

yes good points SF.
if you can get in early and get out before the growing pains hit (inevitably), then you can make a decent profit. its usually 18-24 month holding period between the shares taking off and an "operational review".

Rodin

26-03-2008, 12:36 AM

Sure there have been some disappointing roll-up stories (BLU and ABS are two recent ones that come to mind) but there have been numerous successful ones as well (HST, SHL, AUB, DCA, ABS in the earlier days etc.)

The successful ones don't simply play the PE arbitrage game (buying private companies on low multiples). They're the ones that can extract genuine integration synergies and realize economies of scale by combining the businesses they buy.

To my understanding, AMA has bought some solid niche businesses with a history of profitability in automotive aftercare. Whether they can integrate successfully and elevate the businesses to the next level of growth, I guess time will tell.

The Big Ease

09-04-2008, 07:27 PM

just hving a look at the sp. there is certainly a good margin of safety.

Rodin

10-04-2008, 11:07 AM

just hving a look at the sp. there is certainly a good margin of safety.

I agree, looks like very good value at the current share price. Trading on a 08 PE of about 6.3 times with low fundamental earnings risk IMO.

Potential upside to earnings forecast as the company continues on the acquisition trail. As Steve Fleming points out, acquisition multiples are low so are immediately earnings accretive.

thereslifeafter87

10-04-2008, 11:50 AM

The issue is their short term financial liabilities of c.$10mill. This seems to be for deffered cash consideration for acquisitions. The question is whether they have facilities available to fund this, and the terms of those facilities.

The market presentation suggested that they have a facility in place to fund future acquisitions. The question is whether they will be able to get the funding to fund the current $10mill of liabilities, and maintain a facility for future acquisitions.

At any rate, their gearing levels are quite high, and I would rather see them consolidate current acquisitions and use cashflows or script (provided it is EPS accretive) to fund acquisitions rather than take on more leverage or have a rights issue.

Rodin

22-04-2008, 11:08 PM

Bit of a pickup in volumes in recent days.

Perhaps the favourable writeup in this month's AFR Smart Investor Magazine has created some new investor interest.

Footsie

23-04-2008, 11:11 AM

i checked the April addition and couldnt find AMA.... is it in the May issue?

Rodin

23-04-2008, 12:31 PM

Footsie, it's on page 80 of the May issue.

Rodin

01-05-2008, 06:50 PM

AMA ranked No. 2 in this month's BRW Fast Starters list of fastest growing start-up companies.

There's an article/interview with CEO Rob Allan on page 47 of the magazine for those who are interested.

Rodin

18-06-2008, 06:53 PM

Steve, are you still in this one? I have been topping up as it seems very cheap at the current share price.

I have read that AMA has picked up a worldwide exclusive license of technology related to air and emissions management, This licence was inherited from one of the acquired businesses.

Apparently the technology has applications across a broad range of industries (including automotive and hygiene) and is quickly gaining traction with a pipeline of orders from Europe and Asia.

It appears this new business has the potential to be significant contributor to AMA's earnings in FY09 and is a key reason why AMA has recently created a new industrial products division, AlloAir, for reporting purposes.

We should expect to hear more all this at end of year reporting.

steve fleming

18-06-2008, 11:05 PM

Rodin

19-06-2008, 02:40 AM

The guidance for FY08 EBIT of $10m+ was initially given in Oct/Nov. This figure was based on the run rate for the businesses at that point in time.

Since then AMA has made further acquisitions (LPGas 1, Alanco, KT Cables and Surrey Panel) and has probably also realized more synergies from the portfolio of businesses.

One would therefore expect them comfortable exceed the $10m forecast. However this could be negated by the $1.3 million in non-recurring startup and finance costs which were booked in 1H08.

The presentation last week did paint a positive outlook for FY09 and it looks like this new technology business could be a serious earner for them.

The Big Ease

19-06-2008, 04:10 AM

steve fleming

19-06-2008, 11:53 PM

hi guys, can i be lazy and ask for your opinion before looking further into this stock.
it seems to have been completely smashed, down from highs of $1 plus. down more than 70% and still hitting targets.

what is the issue/s? surely its not simply a matter of the deferred consideration being met?

thanks in advance.

Possible reasons for AMA sp decline:

- Concerns over the auto sector which is un sexy at the best of times
- Small caps totally out of favour
- Concerns over acquisition model (ie BLU, BOL)
- Opes Prime selling
- Reassessment of risk associated with companies that lack earning history

AMA have advised they will meet/exceed its 08 guidance therefore it would appear the selling has been based on factors external to AMA.

Footsie

20-06-2008, 12:43 PM

ama mgmt are a joke

they have doubled revenue but have decreased margin
DUmb

EBIT was 10m on 50m revenue..... now its 6m on 80m reve?

asxt

20-06-2008, 03:01 PM

Not True:
In the 31/8/07 presentation the company Forecast* FY08 EBIT: $10 m + Based on acquisitions already announced.
First half EBIT was 2.6 m, a poor result well below expectations.
The latest presentation is not clear, but describes "Annualised Earnings" or "Underlying run rate of existing businesses" having EBIT of $10m. I interpret this to mean that currently the EBIT is $10m/12 or $833,333 per month. The company has not returned my calls attempting to clarify this. Thus I am expecting full year EBIT (before one-off start up costs) of around 833,333*5 (excluding Jan) + 2.6m = $6.8m . I have exclued Jan as it will be a quiet month for revenue with many costs still occuring.

I had thought the graph on page 12 of the 12/06/08 investor presentation was quite clear, and the figure "Annualised FY08 EBIT: Approx $10 m" on page 13 was reached by annualising the EBIT in recent months, as opposed to arriving at 10m by annualising only the second half profit, which would be quite deceitful. But I do see where you are coming from, hence the need for clarification.

steve fleming

20-06-2008, 08:37 PM

ama mgmt are a joke

they have doubled revenue but have decreased margin
DUmb

EBIT was 10m on 50m revenue..... now its 6m on 80m reve?

????

Footsie, where are you getting your numbers from???

The numbers released by AMA are very different.

As for your comment that management are a joke, given that 2 years ago AMA hadn't even been incorporated, to achieve what they have done so far is a top effort.

I find that people who sit in offices/at home all day lack real practical understanding of how hard it is out there in the real world to manage a small business. Trying to consolidate a number of different businesses in different parts of the country with differnet cultures/expectations/ethics is a task that i wouldn't wish on anyone. It is not as though they can press a magic button that increases margins.

steve fleming

20-06-2008, 08:41 PM

I had thought the graph on page 12 of the 12/06/08 investor presentation was quite clear, and the figure "Annualised FY08 EBIT: Approx $10 m" on page 13 was reached by annualising the EBIT in recent months, as opposed to arriving at 10m by annualising only the second half profit, which would be quite deceitful. But I do see where you are coming from, hence the need for clarification.

I don't really see any need for clarification.

People are getting confused between "RUN RATE" and "ANNUALISED"

Annualised = year to date results/months to date *12

Run rate = current month/s results * 12

Based on the numbers released, AMA will meet its guidance.

Zephyrus

23-06-2008, 05:42 PM

Hmmm, the presentation certainly is a bit confusing.

They say 10m EBIT annualised, & show it on the graph as full year EBIT.
However, they say 80m SALES annualised (@ May 08), but show 70m on the graph.
They say underlying run rate of existing business is 10m EBIT.

If they were to return an EBIT of 10m for the full year, then shouldn't their underlying run rate (current) be a lot higher (considering the 1st half was only 3m)?

The Big Ease

25-10-2008, 10:16 AM

Here is a link to the latest Pattersons update on the Allomak web site which describes the technology very briefly:
http://www.allomak.com/news/Patersons_Securities_Recommend_BUY_AMA_28-05-08.pdf

At first glance it looks to have lots of potential.

is russell wright the worst analyst in the history of equities?
in case you are wondering, that is rhetorical.

this is the second company he has recommended as a buy this year that has tanked over 90% since.

if you are interested, read up on Arasor (ARR). its a hoot. projected valuations of 10 bucks (it is now 4.9 cents hehe)
interestingly, paterson's was also the underwriter for Arasor. i figure wright must work in sales and marketing but the advisers get his cubicle mixed up with the equity analysts. clown.

_Michael

25-10-2008, 12:57 PM

In breach of banking covenants, makes them worth close to zero until that issue is resolved.

The Big Ease

11-11-2008, 12:27 PM

In breach of banking covenants, makes them worth close to zero until that issue is resolved.

there is no way this company is only worth 6million dollars.
it is in the banks interest to see that it doesnt fail and im sure its in the portfolio of "managed" loans at the moment to ensure they get through.

thereslifeafter87

15-10-2010, 03:50 PM

edited to remove post

thereslifeafter87

15-10-2010, 04:28 PM

edited to remove post

morton_mains

18-10-2010, 08:56 AM

thereslifeafter87...this one of my horror stories i put away for my daughters uni in a couple of years...anyway as of current situation..yes agree very undervalued but a 5-6 year wait?! sigh!

i love companies that have mkt cap under turnover, AMA cap $12m they turn $51m!!! in industries that aren't sexy but good earners

Yes the debt is a killer but to have pulled off any deal of this size when the worst of the GFC was still around is tribute to them. Ray Malone has continued to buy.

You have got into the details of the debt more than I - this looks promising based on your comments as i just shook my head even though i knew they were cashflow positive.

thereslifeafter87

18-10-2010, 11:28 AM

edited to remove post

STRAT

18-10-2010, 12:59 PM

Hi Fellas.
Interesting thread. Just skimmed over the whole thing. Will go back later for a deeper look.

Anyone want to see the broker reports on a price/time Chart? lol

Worth a good look over now though.

Lizard

19-11-2010, 05:32 PM

Pity TLA87 deleted his posts.

Saw the result on litigation today and acquired a (very small) amount, as all helps when it comes to managing the debt burden. Not sure if they can throw up much in growth, but all kudos to the current management for achieving the impossible so far!

Lizard

03-12-2010, 06:05 PM

I may kick myself later, but sold out again today for a tidy gain.

drillfix

03-12-2010, 06:09 PM

I may kick myself later, but sold out again today for a tidy gain.

Hey Liz, dont go too hard on yerself there gal. Some folks like me just love to hear them words as often as they can.

(sold out + tidy gain = happy chappy so give yourself a clappy ..lol)

msgoldenhair

17-02-2011, 06:33 PM

nice announcement today as AMA continues to pay down debt...I think this is a solid business going forward and a slow and steady creeper from here on...not for those wanting a quick gain

msgoldenhair

10-02-2012, 08:34 PM

Something happening...volume up...all going well they may pay an interim div in April...

Lizard

11-02-2012, 09:36 AM

Yes, looking for another leg up. Will be interesting to see what level of growth they have managed to produce now that debt reduction is finally less critical.

Management here has been impressive. I figure fair value up to 18cps.

Lizard

19-07-2012, 02:54 PM

Not much action on AMA share price for a while - mainly because it got ahead of itself in the last leap. However, is one of my favourite small-caps to turn in a good performance in upcoming FY results, so I am holding a few and hoping for another re-rate. They reported a strong start to second half and may also have a gain from legal settlement to report. Also expecting an increase in dividend which would likely act as a booster. Current price 15cps.

Lizard

09-08-2012, 07:26 PM

Clean-up/Break-out on the close (16cps)... hope this means all stars aligned for FY result! Would like a good "trajectory" here. :D

steve fleming

11-08-2012, 01:30 PM

Clean-up/Break-out on the close (16cps)... hope this means all stars aligned for FY result! Would like a good "trajectory" here. :D

Another big volume day yesterday (2.5m including a 1.8m crossing) following the 2m day prior - Liz's break out day.

Will be interesting seeing what the dividend comes in this year at. Could be looking at 1.5c plus (particuarly if there was a good result from the Alanco proceedings) , which would mean AMA is still pretty good value at 18c.

Lizard

23-08-2012, 01:33 PM

Market must have been expecting a bit much from AMA, as after running it up to over 20cps this week, it has dropped back to 17cps on result.

Personally, I thought result came in on target and reduction in debt puts them further into the safe zone. Growth may be getting more difficult without more investment, but they have still managed a good increase in revenue. The Alanco settlement contribution is not laid out, but I'm guessing contributed the best part of $1.4m, being the amount of "unallocated income" and the difference between the stated normalised EBIT of $8.9m and what seemed to be the normalised EBIT in accounts of $10.27m.

No dividend declared, but then they didn't declare it until September last year (and perhaps they are planning to pay off the $6m loan note?).

Still PE under 8.5 and dividend yield over 5.8% at 17cps (presuming a dividend is paid - which I think management would want to do, given Ray Malone reportedly framed his first dividend cheque last year and hung it on his office wall).

Joshuatree

24-08-2012, 01:45 PM

Back up to 20c now:). Some including me thought there is no div but that announcement will be later(assuming there is one).

Lizard

16-10-2012, 10:32 PM

Good to see revenue growth of 16.7% for first quarter in today's presentation!

Currently at 24cps. Div of 1.6cps was announced in September (up from 1cps in pcp) and is now ex-div.

Joshuatree

17-10-2012, 01:01 PM

Not understanding announcement protocols etc( i thought any div would be announceed in annual) report I eventually sold out thinking no div was forthcoming and s/p may drop because of that.Oh well got some great gains anywhichway.. Will watch for a dip.

soulman

17-10-2012, 01:50 PM

Good to see revenue growth of 16.7% for first quarter in today's presentation!

Currently at 24cps. Div of 1.6cps was announced in September (up from 1cps in pcp) and is now ex-div.

Cheers Liz....owed you a beer. Saw your posting yesterday and got some this morning.

I first bought AMA for their FF div and was impressed when they were quite strong after their ex-div.

Lizard

24-10-2012, 08:46 PM

Spiked to around 30cps recently and probably a bit expensive up there. Not surprised to see Ray Malone reducing. However, a collapse in share price also unlikely at this point (other than market weakness), so I will probably hold through to HY result unless we get another run.

Lizard

06-11-2012, 04:31 PM

I have now sold a few at 34.5cps. Just banking a few profits to force me to stop snoozing and start looking again...

Wondering if this market action is leading into an acquisition of some sort, as there have been a few suggestions they are looking, as well as an AGM special resolution allowing extra capital to be raised beyond the normal 15%. AGM on 27 November may give more insight.

steve fleming

07-11-2012, 09:37 AM

almost back to the IPO price!

Lizard

22-02-2013, 09:33 PM

steve fleming

22-10-2013, 11:40 PM

These pushed on up to 42cps, so well ahead of themselves by the time results arrived and have dropped back to 38cps on a fair, but perhaps weaker than expected, result. The test here will be what they do with the cash from the recent capital raising. Do they have an acquisition target in mind that will produce growth or are they picking an odd time to pay down debt (just when it had become manageable and cheap enough to be worth the leverage)?

Although dependent on the answer, I still only have a conservative valuation of 32cps.

well after a bit of a wait (10 months) after raising the $15m, a "significant" acquisition is in the works.

Management are some of the best going round, and focused on a meaningful strategic acquisition, so will be interesting to see what they have lined up!

steve fleming

06-11-2013, 10:48 PM

What a great story from the Eureka Report

Meet Ray Malone. He is aiming to double earnings for AMA Group (AMA) before he steps down as its chief executive in four years, and he’s leveraging his autism to help achieve that – a disability he was diagnosed with in 1998 by Monash University’s Krongold Centre.

The strategy has paid off so far, with the stock recording a more than seven-fold increase in value as earnings before interest and tax (EBIT) moved from a loss of $6.7 million to a positive $9.2 million since Malone ousted the board and took over the reins of the automotive parts and services group in 2009.

“Doubling earnings is easy and I’ll tell you how I am going to do that,” Malone tells Eureka Report confidently. “We will get 30% organic growth and the acquisition of Custom Alloy will add 15% [a year].”

He only has to make a few smaller acquisitions or one large one to hit his goal, by his calculation, and there are no shortage of targets in the fragmented market covering panel beating, automotive servicing, bull bars and auto components.

If anything, bull bar manufacturer Custom Alloy marks the first in what is likely to be a series of acquisitions in the coming years now that AMA Group repaid all its debt in August. The group had almost collapsed under the weight of its debt in 2009 as the previous managers witnessed the company’s shares collapse to around 3 cents by the end 2008 from $1 the year before.

Malone was the general manager in the panel beating division back then, and he successfully staged a coup in an attempt to save the sinking ship. This isn’t the most intriguing part of the man.

You can’t tell that he has autism just by listening to him. Malone is a straight talker and doesn’t seem to have much trouble communicating like some autism sufferers, although his compulsion to do things in a set way, fascination with detail and preoccupation with his 15-year written plan that governs both his personal and business life, gave him an edge in turning around AMA Group.

He not only spearheaded negotiations with Westpac Banking Corporation that saw the bank take a 25% haircut on AMA’s $34 million debt and set up an interest-free loan facility, but he instituted a business process across the disparate group to get it back to profitability.

This from a man with little formal education and who had a disadvantaged childhood. Malone was orphaned at 11, and had to be split from his siblings and left to fend for himself by 16 when his uncle didn’t want to look after him anymore. Malone took up a spray painting apprenticeship and worked 100 hours a week to support himself.

“What’s my secret? I’m just an optimistic person,” explains Malone when asked about how he overcame the odds. It’s always that simple with Malone. There were no business terms, management speak or clever strategies in his answers.

Investors have reason to feel optimistic too. Malone’s plan to double earnings is not baked into the share price. Far from it, in fact, as consensus estimates have only pencilled in a 24% increase in EBIT to $11 million on the back of a 19% lift in sales to $75.3 million over the next three years.

There’s plenty of room for AMA to grow. Malone estimates the total auto parts and services market is worth $8 billion to $9 billion, and panel beating alone takes up around a third of that.

The smash repair market may be over-serviced as auto insurers have started operating their own workshops to handle claims, but the pressure is expected to ease by 2014 or 2015 as smaller operators are forced into liquidation.

AMA is well placed to ride out the storm and even benefit from the turmoil. Its workshops are certified by all the major insurers, except for Suncorp Group (which owns AAMI), and the group has enough financial muscle to participate in the consolidation of the industry.

What is also surprising is that the well-documented troubles afflicting Australian manufacturing is not having much impact on AMA’s local bull bar fabrication business. This business is the most profitable division in AMA’s stable and accounts for 31.8% of group sales.

Malone has so far been over-delivering on his promises and if we give him the benefit of the doubt in regards to his plans to double earnings in the next two to four years, the stock will end up significantly higher than where it is today at 37 cents.

The celebrated chief executive wants this goal to be the crowning moment in his career, as he claims he is on his last contract as the head of the group.

The next step in his 15-year plan is to transition to become AMA’s chairman or non-executive board member. AMA’s chief operating officer, Ray Smith Roberts, to being groomed to succeed him.

We have a new “outperform” recommendation on AMA.