Avingtrans Plc (LON:AVG) has announced an oversubscribed £21m placing as it steps up investment in a new US facility aimed at capturing a sizeable opportunity in the nuclear market, according to the latest research note from Cavendish.
The note takes a constructive view on the company’s strategy, highlighting the way AI and datacentre-led electricity demand is helping to accelerate interest in new nuclear generation, particularly in the US. Cavendish says the placing will fund capex, equipment and additional working capital for the new site, which is expected to expand the group’s capabilities and support growth at Hayward Tyler and Energy Steels.
Importantly, the placing was completed at 630p per share, with no discount to the prevailing price, and raised £21.0m gross through the issue of 3.3 million new shares. That represents an increase in shares in issue of 9.8%, but the research note argues the longer-term benefits should outweigh the near-term dilution.
The broker has introduced FY28 forecasts and raised its target price from 681p to 770p. It now sees Avingtrans trading on a FY28 adjusted P/E of 13.9x, which it describes as attractive given the scale of the opportunity in both advanced engineering systems and medical imaging.
According to the note, the new US facility is expected to begin contributing revenues from FY28 and then ramp up quickly. Cavendish says management sees a serviceable obtainable market worth $1.3bn over 10 years, with a path to grow revenues from £35m to £90m and an investment payback by 2030.
The research also points to the strength of the wider market backdrop. It notes that global electricity demand is being reshaped by structural growth in AI and datacentres, with nuclear generation expected to rise from 377GW(e) in 2024 to 992GW(e) by 2050. In that context, the company’s US positioning and existing relationships, particularly with Westinghouse, are seen as strategically important.
Highlights from the latest research note
- Oversubscribed £21m placing completed at 630p per share, with no discount to the market price.
- Funds to be used for a new US facility, including capex, equipment and working capital.
- FY28 forecasts introduced, with revenue expected to reach £219.7m and adjusted EPS forecast at 45.3p.
- Adjusted EBIT margin is forecast to rise to 9.8% in FY28, up from 8.2% in FY26E.
- Net debt is expected to improve to £4.5m by FY28E.
- Target price increased to 770p from 681p, implying 22% upside from the current share price of 630p.
On the numbers, Cavendish’s updated model shows FY26 revenue of £163.2m, rising to £188.3m in FY27 and £219.7m in FY28. Adjusted EPS is forecast at 31.7p for FY26, 35.4p for FY27 and 45.3p for FY28, while adjusted EBIT is expected to climb from £13.4m in FY26 to £21.6m in FY28.
The note also highlights improving balance sheet strength. Net debt is forecast to fall from £12.3m in FY25A to £5.5m in FY27E and £4.5m in FY28E, with leverage dropping to just 0.1x EBITDA by FY28E. That gives the group room to continue pursuing its long-standing PIE strategy, which focuses on improving underperforming businesses, investing for growth and crystallising value through disposals where appropriate.
Valuation remains a central part of the positive case. Cavendish argues that current near-term P/E measures do not fully reflect the group’s growth profile, particularly given the development losses in Imaging and the time needed to ramp up the new facility. It says the current market capitalisation implies a standalone AES multiple of 9.6x and zero value for Imaging, which it views as conservative.
The note adds that the company’s scarcity value is increasing, given its exposure to quoted new nuclear technology names in both the UK and US. It concludes that the shares still offer considerable upside over a two to three year horizon, supported by the new investment, the growth outlook in nuclear, and the potential value in Imaging.
For investors following the industrial engineering space, the message from the latest research note is clear. Avingtrans is using fresh capital to back a strategic expansion into a market with strong structural tailwinds, while also continuing to build value across its wider portfolio.
