Pick of AIM by James Crux

Three ventures, each registering on my radar recently with eye-catching contracts, are worth following.

Most exciting of the three, having cheered with numerous contracts this year (and batted away a cheeky unsolicited bid), is broadband satellite operator Avanti Communications, whose shares have recently moved skywards to 246.5p.

Piloted by the entrepreneurial David Williams, this fixed satellite services provider is benefiting from high demand for satellite broadband across Europe and contracts aplenty are coming its way.

Having built a subscriber base with rented satellite capacity, the real excitement surrounds this year’s launch of the company’s own satellite, named ‘HYLAS’. Currently under construction, HYLAS will be the first ‘superfast’ broadband satellite launched in Europe and once in orbit, Avanti will transfer leased capacity to its own satellite.

Deal momentum is mounting, with May wins ranging from a communications services win (backed by the EU) involving the improvement of the safety and security of freight operations in the North Sea region. This followed a deal to supply broadband and business continuity products to Cactuss (a provider of IT systems integration services to the government and others in Kosovo), a European Space Agency project award, as well as two new distribution deals in Italy.

Avanti shares, which have lifted from a 52-week nadir of 154p, should have much further to go as its satellite launch date nears and further contracts come to fruition. Cenkos is targeting 592p for the shares and believes sales could build from £6.9 million this year to £11.9 million next, ahead of £32.8 million in 2011, from which Avanti could be clearing almost £6 million of profit pre-tax. On that basis, the shares represent an attractive long-term lock away.

Cybit clinches Kwit Fit tie-up
Capitalised at £9.1 million at 33p – against 52-week peaks and troughs of 52p and 22.75p – is telematics specialist Cybit, whose shares recently tracked higher on an eye-catching tie-up with Kwik Fit.

Under the terms of the deal, it will provide Kiwk Fit Mobile’s tyre-fitting vehicles with web-based fleet tracking, thereby helping the client improve response times and the performance of its mobile workers, whilst helping Kwik Fit cut fleet fuel and maintenance costs. In these recessionary times, that looks a compelling sell, and I wouldn’t be surprised to see further deal announcements in the coming months.

Profitable, Cybit, whose clients include Ford, brewer Greene King and the Highways Agency, grew pre-tax profits 40 per cent to £855,000 on £12.3 million turnover at the interim stage. And with the market awaiting confirmation of profits of £2.1 million pre-tax from £26.4 million sales for the March 2009 financial year, producing 5.3p of earnings, the shares look good value on a forward p/e of 6.2.

Eruma – could be in the money
Far, far more risky – being a penny share with all the inherent risks – is Eruma, the provider of counter terrorism and burglary protection products as well as emergency lighting.

Bossed by aptly named CEO Wayne Money, Eruma has just secured its biggest single order for its counter terrorism products, being a £150,000 deal with a UK police force for its bomb-blast-proof security blinds.

Encouragingly, the deal follows on from a number of counter terrorism deals won for key buildings and Money insists the company is seeing burgeoning demand for its counter terrorism and intruder prevention products, ‘not only within the UK, but also in North America, Europe, the Middle East and Asia’.

Presently priced at a meagre 1.88p – valuing the entire business at £2.4 million – Eruma isn’t one for widows and orphans, having reported wider losses on lower sales at the interim stage. Nevertheless, I would urge you to keep a watchful eye on this small company, which as well as hoping to make eventual profits, is doing its bit to save lives.