Rainbow Rare Earths Phalaborwa project shaping up to be one of the lowest cost producers globally. Watch the video here.
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#MRK A better than expected EPS outcome, strong cash conversion and an unusually high return on capital were pleasing financial features of Marks Electrical Group’s (MRK) FY2022 results statement, published today. The company also reports an upbeat start to FY2023 while articulating a clear path to sustainable growth through its customer proposition, increasing brand awareness, higher operational capacity and favourable financial dynamics. Expecting further meaningful progress this year, we reiterate our 150p / share fair value.
Marks Electrical’s FY2022 results follow a trading statement released on 11 April in which the company reported 44% net sales revenue growth and guided towards 9.0% EBITDA margins. Today’s announcement incorporates a pleasing 5.01p adjusted EPS outcome, a 57% ROCE and 119% cash conversion, as well as a 0.67p final dividend. End-year net cash was £3.9m.
The group’s invigorated customer proposition implies an ability to deliver both to a wider UK geographic footprint while maintaining service levels. Moreover, the company expects to broaden its product offering both within major domestic appliances (MDAs) and consumer electronics (CE).
Given the company’s still relatively low 1.6% share of a sizable market (up from 1.2% in FY2021), there should be significant revenue gains available from its improved brand awareness programme. Currently, recognition of MRK is estimated to be 7% in England. Encouragingly, progress was made in FY2022 with an increase in London (the UK’s largest next day delivery market) from 3% to 4%.
Expansion of operational capacity at the company’s single headquarters site in Leicester gives headroom to match increased demand. MRK continues to add to both warehouse capacity and increase the size of its branded van delivery fleet while making important additions to hiring. A strong people culture remains an important component of the growth story. Furthermore, the company’s ability to finance growth should benefit from being a debt-free business with strong cash conversion.
Valuation does not reflect the clarity of MRK’s growth outlook in our view. In particular, we argue that the company’s well defined growth strategy - and ability to implement it - is superior to its peer group: much of which is not profitable. At our 150p fair value level, implied valuation ratings are an FY2023 EV/sales ratio of 1.6x and 18.6x EV/EBITDA.
https://www.equitydevelopment.co.uk/research/marks-electrical-fy2022-results-connecting-with-customers
Marks Electrical Group plc, the fast-growing online electrical retailer, will be conducting an investor webinar following publication of their FY results.
The online presentation will be hosted by Mark Smithson (founder & Chief Executive Officer), and Josh Egan (Chief Financial Officer).
This event will take place at 10.30am on Friday 10th June. The webinar is open to all existing and potential shareholders. Questions can be submitted during the presentation to be addressed at the end.
Sign up to register here: https://www.equitydevelopment.co.uk/news-and-events/marks-electrical-fyinvestorpresentation-10june
a very solid YE performance. Over £80m revenue at at 9% margin gives EBITDA of £7.2m. A PE of 20 for such a fast growing business seems quite conservative IMHO - currently valued at c14.
Marks Electrical released today a pre-close trading update for twelve months to 31st March, which confirmed our expectations of 44% sales growth and 9.0% EBITDA margins. Moreover, the company’s strong end to the year – i.e. over 25% year on year growth in March 2022 - augurs well for FY2023, when we expect sales to expand by a further 20%. The strong £3.9m net cash position, sustained investment in marketing, and expansion to the UK delivery footprint all combine to support an optimistic view going into the new financial year.
Operational highlights in FY2022 included strong market share gains in Major Domestic Appliances (MDAs) and Televisions, added focus on brand awareness initiatives, an increase in the number of delivery vehicles and warehouse efficiency improvements. Encouragingly, the company’s Trustpilot rating - an objective measure of customer service - improved to 4.8.
Looking ahead to FY2023, MRK confirms that trading momentum has continued during the start of April, which sets the company up well to match its targets for the new financial year. Other progress points which we infer are expansion into the southern areas of Scotland (including Edinburgh and Glasgow) as well as a broader English distribution footprint.
Today’s statement confirms that prospects remain exciting. The scalable nature of the business should deliver increased operating margins even after brand promotion costs. Plus, there is scope to sustain growth from relatively low inventory levels, which benefits free cash flow. At our 150p fair value level the implied ratings are an FY2023 EV/sales ratio of 1.6x and 18.7x EV/EBITDA.
Read our full research report here: https://www.equitydevelopment.co.uk/research/sales-grow-44-in-fy2022-with-ongoing-momentum
well i think there is a trading/YE update on Monday 11th April, and based on Q3 performance all seems to be going well.
A well run profitable company that is slowly eating into the big boys market share.
What's not to like?
Who sees this making any inroads on the big Boys?/
AO, Currys to name the obvious?
Or will it merely become one of the many smaller delivery firms?
Most certainly had a rude awakening on it's IPO SP.
*** We initiate coverage today - full research report & audio summary is available on the link below. ***
Marks Electrical’s proven ability to serve the sizable UK major domestic appliance market with premium products on a next day delivery basis is central to its impressive growth story. The company’s combination of proprietary technology, scalable business model, ample demand headroom and demonstrably high-quality leadership supports the case for a higher valuation than so far awarded by investors. This report argues that a fair value / share is 150p.
- The group’s core operating model benefits from a 5-pillar approach which embraces up-to-date technology, a simple and proven distribution network, a scalable delivery model, premium products, and the importance of a favourable online user experience. These qualities should mean market share gains and sustainable financial strength.
- MRK’s addressable markets are sizable. It sells into a £5.3bn UK Major Domestic Appliance (MDA) market, of which it currently has just a 1.2% share. Moreover, MRK is now establishing itself in Televisions using the same operating platform. Importantly, online appears set to grow in importance for both MDAs and TVs with the likelihood that next day delivery, judging by other leading e-commerce providers, will become almost essential.
- Marks Electrical as a brand has substantial room to grow its recognition and overall identity, which means that reinvestment in the brand should generate notable returns. The company is actively increasing its own brand awareness and thus enhance sales in key regions. Aside from cash investment the Marks Electrical brand can benefit reputationally from the integrity of both the premium branded product and service offering – i.e. the “Marks Electrical Difference.”
- This is a well-run business with a dynamic leadership team. The group is centrally run from a single site in the logistically convenient city of Leicester, close to the UK’s all-important M1 motorway. Operating as a single site business massively simplifies daily running of the company’s delivery system. In addition, it allows employee performances to be enriched by a ‘tight’ focus and a common ambition to provide best-in-class service.
Prospects look exciting. First, the scalable nature of the business should deliver increased operating margins even after brand promotion. Second, there is scope to sustain growth from relatively low inventory levels which has clear, positive implications for free cash flow. At our 150p fair value level the implied ratings are an FY2023 EV/sales ratio of 1.6x and 19.1x EV/EBITDA.
Link to full research report here: https://www.equitydevelopment.co.uk/research/marks-electrical-initiation-lighting-the-touch-paper
Mark Smithson (Founder / CEO) and Josh Egan (CFO) will be live and in person at the Small Caps Live Midlands investor meet on the 23rd March.
Details and registration here: https://sites.google.com/view/scl-meet/
https://youtu.be/PfHfwrQz2Mg
This is well worth a watch.
Jim Slater talks about finding shares that have a competitive advantage or something new as well as a small growing company.
MRK seems to fit this bill. It certainly is growing while remaining profit making and cash generative. As for something new, well the way it controls costs by using just 1 centralised warehouse where it to deliver to 99% of England with next day delivery and still be able to deliver EBITDA margins of 8-9%, almost double that of it's competitors.
LOL......
Didn't Sell.! Limit Order timed out.
Looks like I will have £10k to buy RR on Monday instead.
Decided to put in a limit sell order, waiting the sale, going to put an extra £10k into RR now the price has dropped through the floor.
.
RR getting boring, so thought I would re-post on here for a change.!
@117.50
£10,000 bought
dragged......
look who the cat tracked in...literally hahaha
I thought I would be the first to post.!