An interesting security company

AVA has just published surprising figures for Q1 21 : + 73 % for sales and + 522 % for EBITDA.
The businesses is moving in the right direction both for their services division and technology division (core business).
The strong rebound of EBITDA is due both a large improvement of gross margin in the services division and a good cost control across the group, like for FY 20.

Going forward, the business seems to still have a good potential of growth :
- for the services division, the management incentive scheme has been extended to end of FY 21 (vs February 21 before) as the company probably expects further profit improvement to be able to sell it at a higher price than initially expected,
- for the technology division, the group explains that some orders have been delayed due to covid, so there is probably a good reserve of growth.
More importantly, there is a strong interest for their new product (conveyor belt).

Lastly, it is interesting to note that AVA begins to be less dependant on their major contract with the ministry of defense.

Overall, the valuation of the stock looks cheap with an EV/EBITDA of 3.5 (based on Q1 21 annualised) and a free cash flow yield of 15.6 % (estimated based on the cash increase during Q1 21). Both figures calculated with a share price of 50 c.