Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Mpac, a global packaging and automation solutions group, will be conducting an Investor presentation covering their Full Year results for the period ended 31st December 2023.
The online presentation will be hosted by Adam Holland (CEO) and Will Wilkins (Group Finance Director).
This event will take place at 9.45am on Friday 22nd March.
The webinar is open to all existing and potential shareholders, and registration is free. 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/mpac-fypresentation-22march2024
Innes Smith, CEO, Iain Logan, CFO and Martin Egan, COO of Springfield Properties hosted an Investor Presentation where they discussed highlights of their Interim results (period to 30th November 2023).
The team talked through the decision actions they have taken to strengthen the company's position and commented on current trading being in line with market expectations. Management provided a detailed Financial Review and insights into the Scottish housing market. They also answered a wide range of questions from the viewing audience.
The full video is available below and has been divided into chapters for ease of viewing:
0:00:03 Introduction & Summary of key points
0:03:20 Financial Review
0:08:40 Large, high-quality Land Bank
0:11:31 Operational & Strategic Review (Private Housing, Affordable Housing, Build quality)
0:15:52 Housing market in Scotland
0:24:37 ESG: Environment and People
0:25:07 Conclusion
0:26:23 Questions & Answers
Link to video: https://www.equitydevelopment.co.uk/research/investor-presentation-interim-results-february-2024
Trond Williksen, CEO, and Septima Maguire, CFO of Benchmark Holdings hosted an Investor Presentation following publication of their Q1 results for the period to 31 Dec 2023. Revenues were £40.5m for the quarter, 26% below a particularly strong Q1 FY23, but 11% above Q4 FY23, maintaining quarterly momentum.
In Genetics, management discussed solid performance in the core salmon business and progress in growth vectors. In Advanced Nutrition, the company posted strong performance in Europe and in the Health division significant steps have been taken to transition to new business model for Ectosan® Vet and CleanTreat®.
Watch the full presentation for more details on period highlights and operational performance per division, including a Financial overview and an update on Outlook. The video has been divided into chapters, as below:
0:00:03 Introduction
0:00:36 Overview of Q1 & period highlights
0:05:40 Operational Update - Genetics
0:13:28 Operational Update - Advanced Nutrition
0:17:47 Operational Update - Health
0:23:46 Financial Update
0:30:26 Outlook
0:33:23 Questions & Answers
Link to video: https://www.equitydevelopment.co.uk/research/investor-presentation-q1-results-february-2024
Research note here: https://www.equitydevelopment.co.uk/research/new-partnership-supporting-growth
Corero has announced a new partnership agreement with TechEnabler, a Brazilian network solutions provider. Latin America is a relatively untapped market for Corero and this agreement should yield considerable upside as it develops. We continue to see fair value at 14p and upside risk to our current forecasts.
Kentik channel partner. TechEnabler is a Kentik channel partner and integrator headquartered in Sao Paulo, Brazil. Kentik is a US based network observability platform which visualises cloud and network traffic. Kentik enables the resolution of any troubleshooting problems many times faster than normal and helps mitigate cyber-attacks.
$1m+ booked. The partnership agreement has already generated bookings for Corero’s products and services in excess of $1m as part of its Scrubbing-as-a-Service offering.
Strong trading in FY24E. Corero recently highlighted that revenues for FY24E are to be in the region of approximately $22.3m, indicating YoY revenue growth of +11%. Corero closed last year with annualised recurring revenue (ARR) showing even stronger growth of +17% YoY to $16.9m.
Debt free. Corero is now debt free and, with a very experienced CEO Carl Herberger now onboard, it can focus on executing a growing pipeline of new business. We see plenty of capacity for upside risk to our FY24E forecasts. The business is self-sustaining and, in our view, undervalued on an EV/sales ratio of 1.8x this year.
New research report with audio summary here: https://www.equitydevelopment.co.uk/research/interim-results-24-looking-to-the-future-with-confidence
Springfield has reported encouraging H1 results, reiterating full year expectations and confidence in longer term growth prospects. The strategy to maximise cash generation is bearing fruit, costs are being carefully controlled and there are signs of market recovery, both in terms of Affordable contract successes and, more recently, a pick-up in Private Housing activity since mid-January. It is too early to extrapolate but the average weekly reservation rate in Private Housing since mid-January has been 62% higher than for the year to that point
Debt reduction is a clear priority for management and today’s results highlight the progress that has been made in realising cash from the land bank in recent periods. Springfield has one of the largest land banks in Scotland and an excellent reputation in both Private and Affordable Housing.
With increasing confidence in forecasts and improving market sentiment, we believe the 40%+ discount to sector peers is unwarranted and reiterate our ED Fair Value/Share of 130p (Price/ Book multiple of c.1.0x).
We are encouraged by several aspects of the pre-close trading update covering H1, not least the outcome and movement in net cash. A renewed focus on the cost base should result in improving conversion rates, offsetting any further shortfall in fee income during H2. We also remain confident that a recovery in Gattaca’s markets should emerge during Q4 ‘24/early FY25 supporting a further re-rating of its shares.
The yoy shortfall in NFI of 16% during H1 includes a large RPO contract which ended in September. The H2 ‘23/H1 ’24 comparison is as a result more favourable, with the larger contract included for just two months of the former period, with fee income down 8.6%. Overall, contract NFI was more stable, declining 6% yoy, compared to 38% in perm.
H2 ’24 onwards will witness a greater focus on productivity, resulting in outgoing sales heads in the business not being replaced and further room for cost cutting within perm focused employees. Over the medium term, we expect administration headcount as a proportion of total heads to move towards best industry practice of c.25%, down from the current 32%.
Should we be proved correct on expecting a recovery in the Group’s markets then the current valuation appears too low. Based on a DCF model we retain our fair value / share at 175p.
New research report here: https://www.equitydevelopment.co.uk/research/profit-expectations-maintained
Link to new research report: https://www.equitydevelopment.co.uk/research/cash-generation-drives-shareholder-value
Ultimate Products’ (UP) sales fell by 4% in the first six months of FY2024, with the likelihood of a broadly flat full year. But the company’s FY2024 profit expectations - and our own EBITDA forecasts - remain unchanged as improved gross margins should offset lower sales.
UP’s first half sales setback was caused by 3 important temporary effects. First, the company lapped an unusually strong period a year earlier when demand for air fryers was at a peak. Second, supermarket overstocking has taken longer to dissipate than might be expected. Third, UP was negatively affected by disruptions to global supply chains related to conflict in the Red Sea. In contrast, the gross margin outlook is significantly more positive as the uplift to gross margins achieved in the second half of FY2023 appears likely to be retained in FY2024. We increase our gross margin expectations in FY2024 from 25.5% to 26.6%.
Some idea of buyback potential is available from today’s trading update. The company targets long-term net debt/EBITDA at 1.0x. If our expectations for end-FY2024 net debt of £8.0m are met and £21.6m EBITDA are met, the implied headroom for share buy-backs would be of the order of £13m to £14m – equivalent to around 10% of the company’s current market cap.
With positive news on the scope for buybacks in our view offsetting lower than expected sales revenue in FY2024 we maintain fair value of 250p for the shares.
We hosted a webinar given by Brusk Korkmaz (CEO and Founder) and Paul Wheatcroft (CFO) of Hercules Site Services on 8th February 2024. Management discussed recent Full Year numbers which included record results and the importance of its newly opened Construction Academy.
The team provided a financial overview, discussed the company's growth strategy, and commented on current trading. Management also answered an extensive range of questions submitted by viewers.
The full video is available to watch below, divided into chapters for ease of viewing:
0:00:03 Introduction from Brusk Korkmaz
0:02:45 Highlights of 2023 & revenue growth
0:08:17 Group Financial Overview (including Labour Supply and Construction Services)
0:24:55 Post Period End
0:31:58 Current Trading and Industry Outlook
0:34:03 Growth Strategy
0:36:37 Questions & Answers
Link to full video: https://www.equitydevelopment.co.uk/research/investor-presentation-with-qa-february-2024
New research report available here: https://www.equitydevelopment.co.uk/research/h1-24-showcases-benefit-of-diverse-income-streams
H1-24 revenue (to 30 Nov 23) was up 8% y-o-y to £59.1m (H1-23: £54.9m), with 4% organic revenue growth. H2 revenue is typically higher than H1 due to end of tax-year advice and H2 bias of client year-ends, and we maintain our FY24 revenue forecast of £123.6m (+11% y-o-y). Adjusted EBITDA grew 10% from £15.0m to £16.5m with positive effects from organic growth (409 new clients, +13% over H1 23) and a changing revenue mix towards higher-yielding services.
The core pensions business was the standout performer with 21% revenue growth, driven by strong demand for advice and increased banking margin on cash balances.
MW has a strong net cash position of £32.7m, after paying £9.3m of dividends and £6.2m of acquisition-related payments. MW has no debt. Management maintains a confident outlook, with the interim dividend up from 8.8p to 9.0p.
Our revenue forecasts are unchanged with adjusted EBITDA forecasts down slightly due to lower Amati profits but statutory profits increase on higher net finance income. Our fundamental valuation remains unchanged at 900p per share (53% above the current share price). With powerful longer-term structural tailwinds supporting the wealth management sector (see page 16), we think a sector-median PER of 15.7 is too low. Moreover, with MW being so well positioned (page 17), we find it strange it’s PER of 12.3 is below this median. We see potential for a re-rating.
New report available here: https://www.equitydevelopment.co.uk/research/hercules-construction-academy-launch
Hercules officially launched its Construction Academy on 31st January at an event attended by c.150 industry partners, education professionals, local politicians and Hercules employees. This is the culmination of an ambitious plan to address the significant skills shortage in the construction industry and support major infrastructure projects across the Midlands. The Academy aims to train up to 400 entrants in its first year, making a valuable contribution to local skills and career prospects and underpinning Hercules’ own growth ambitions.
In our view, Hercules’ share price performance does not reflect recent strong progress. Our Fair Value / share estimate is 55p, representing an FY25 EV/EBITDA rating of c.11.5x.
Springfield Properties (AIM: SPR), a leading housebuilder in Scotland focused on delivering private and affordable housing, will be conducting an online presentation for investors following the release of their Interim results for the period ended 30th November 2023.
The event will take place at 12.45pm on Thursday 22nd February.
Innes Smith, CEO, Iain Logan, CFO and Martin Egan, COO will be hosting the presentation and answering questions submitted by investors. This is open to all existing and potential shareholders, and registration is free.
You can sign up to register at the link: https://www.equitydevelopment.co.uk/news-and-events/spr-investor-presentation-22feb2024
Clinical Development Updates - new research note with audio summary from Equity Development here: https://www.equitydevelopment.co.uk/research/clinical-development-updates
Destiny Pharma has started the year with two important clinical development updates on its lead products which enhance both their profiles.
The clinical development update on XF-73 Dermal, which is a variation on Destiny’s XF-73 Nasal product included a preclinical study of an XF-73 Dermal formulation demonstrating that like XF-73 Nasal, it is also safe and applications to wounds results in negligible systemic levels.
On the non-toxigenic Clostridioides difficile strain M3, Destiny and partner Sebela Pharmaceuticals improved M3’s chemistry, manufacturing and controls program to incorporate a solid dose, rather than liquid formulation – which should improve patient compliance, manufacturing and storage costs – and changed the product’s contract manufacturer. While these changes may necessitate a bridging study between the two dosage forms, the costs all future M3 studies will be met by Destiny’s partner.
Our fair value remains unchanged at £245.7m, or 279 pence per share.
"Trading update: an excellent quarter" - full PDF research report (free & accessible) is here: https://www.equitydevelopment.co.uk/research/trading-update-an-excellent-quarter
In a Trading Update for the 3 months to 31 December 2023, Supreme reports “excellent trading performance” during its traditionally busiest quarter, leading to the expectation that FY24 revenue should be at least £225m with (adj.) EBITDA of at least £38m (our estimates were £221.2m and £33.5m). Supreme highlights in particular the success of ElfBar distribution revenue and the Vaping division as a whole, plus growth in Sports Nutrition & Wellness.
The Group also notes the UK Government decision to ban disposable vaping devices and will work to manage a seamless transition to alternative ‘pod’ devices which retain a major role in reducing tobacco smoking.
Supreme also announced a £1.0m share buyback programme to be conducted over the coming three months. Our Fair Value remains 225p/share.
Results highlight the emergence of demand for Kromek’s Advanced Imaging and CBRN detection, evidenced by contract wins and collaboration agreement momentum. Supported by strong financial discipline and persistent geopolitical risk, our fair value remains at 26p/ share.
For the six months to 31 October 2023, Kromek reported revenue of £7.1m, +5%YoY, gross profit of £3.9m, +41%, a 54.2% margin compared to 40.4% a year earlier, and an (adj.) EBITDA loss of £0.1m (H1 23: £(2.7)m loss). The loss before tax was £(3.5)m, reduced from £(5.7)m a year earlier. As of October 2023 the cash position was £3.7m, with net debt at £5.2m (H1 23: 8.3m). Significant cost controls are also evident, with administration and distribution costs reduced from £7.6m in H1 23 to £6.2m (-20%).
Link to full report: https://www.equitydevelopment.co.uk/research/kromek-group-interim-results-h1-24-profitability-up-costs-reduced
New report from Equity Development: https://www.equitydevelopment.co.uk/research/growth-still-strong-adj.-ebitda-turns-positive-in-q4
In March 22, our initiation note was titled A pensions fintech starting to look like a Rocketship. Since then, market, investor and consumer confidence have been rocked by geopolitical events and deteriorating economic conditions. But despite that, PensionBee has delivered. What’s more, it has moved into profitability on an adjusted EBITDA basis within the timeframe targeted at its Apr 21 IPO.
Over FY23 (to 31 Dec 23), 46k net new invested customers (ICs) were added (ICs + 25% to 229k), £1.3bn of AUA were added (AUA +44% to £4.4bn, net inflows +£857m, market movements +£464m), and revenue grew 35% to £23.8m. It was a continuation of an already-impressive growth story.
As scale benefits continue, adj. EBITDA improved from -£19.5m in FY22 to -£8.4m in FY23 and was positive in Q4 (>£0.5m). The business maintains a healthy cash position of £12.2m and does not envisage further equity raises. Our fundamental valuation remains 150p per share.
Research note here: https://www.equitydevelopment.co.uk/research/strong-h2-cash-flow
There are several encouraging messages which jump out from Strix’s trading update released today, led crucially by the strong cash generation during H2. This has enabled the Group to come in below the year end banking covenant test, thereby removing significant risk from the rating. In addition, the strong performance of Billi and LAICA has largely offset the slower than expected recovery within the regulated kettle controls market, resulting in FY23 numbers modestly below expectations at the adj. EPS level.
With significant scope for recovery in its key market and the focus switching to the most profitable areas, we expect a marked uplift in profitability and its share rating over the medium term.
Hercules Site Services (AIM:HERC) is a leading supplier of labour to the UK’s construction industry.
On Thursday 8th February, Brusk Korkmaz (CEO and Founder) along with Paul Wheatcroft (CFO) will present the Company, its recent Full Year results and prospects, along with explaining the importance of its newly opened Construction Academy.
The webinar will start at 10.45am, is open to all existing and potential shareholders, and registration is free. Questions can be submitted during the presentation and, if possible, will be addressed by the management at the end of it.
Link to register: https://www.equitydevelopment.co.uk/news-and-events/herc-investor-presentation-8february2024
Benchmark Holdings plc, the aquaculture biotechnology company, will be conducting an investor presentation following publication of their Q1 results for the three month period ended 31 December 2023.
The online event will be hosted by Trond Williksen, CEO, and Septima Maguire, CFO, and will take place at 12.00pm on Thursday 15th February.
The webinar is open to all existing and potential shareholders. Questions can be submitted during the presentation to be addressed at the end.
Register here: https://www.equitydevelopment.co.uk/news-and-events/benchmark-q1-investor-presentation-15february2024
New note from Equity Development with audio summary: https://www.equitydevelopment.co.uk/research/30m-energy-management-disposal-to-unlock-growth-potential
eEnergy reported in early November that it had received a number of unsolicited approaches for its Energy Management (EM) division and that it had entered a period of exclusivity with one of the interested parties. An agreement has now been reached (subject to General Meeting) to dispose of the business to Flogas Britian Limited (a subsidiary of FTSE 100 constituent DCC plc).
The initial consideration of £29.1m comprises £25.0m cash with the balance of £4.1m being used to repay amounts due from the Group to the EM division. The total initial consideration equates to an enterprise value of £30m after customary adjustments reflecting net debt and normalised working capital. Before factoring in the earnout, this represents an immediate return on the £23.4m invested in the division since December 2020, principally through the acquisitions of Beond and UtilityTeam.
£25m net proceeds will eliminate debt and fund growth in Energy Services. Net proceeds will be used to pay down the Group's debt facilities of £8.1m, to reinvest in the high growth Energy Services division and for general working capital purposes.
With significant balance sheet strength, the Group will now have the opportunity to invest further in the higher growth segments of Solar and EV Charging. See our initiation note for a detailed overview of Energy Services activities: Driving net zero through innovation and technology
The Board expects trading for the period to 31st December ‘23 to be at the lower end of market expectations as a result of previous cash constraints, which have now been eliminated. We will publish new forecasts following the General Meeting (7th February) and completion of the disposal.
The encouraging recent strong run of orders continues: in Advanced Imaging they have won 4 new orders from existing OEM clients, worth a total $1.6m and cover CT, gamma imaging and gamma probes.
CEO delighted with evidence of the repeatability of business in the AI segment✔️