Ben Richardson, CEO at SulNOx, confident they can cost-effectively decarbonise commercial shipping. Watch the video here.
FY23 results saw revs +44% and an encouraging move to an adj EBITDA profit of £1.63m in H2. We see that momentum extending into FY24, introduce FY25 forecasts and retain a 26p/share fair value.
As you can read/hear in full new research note below:
https://www.equitydevelopment.co.uk/research/encouraging-h2-supports-a-positive-outlook
After record results and a 10% dividend increase, Equity Dev raises FY24 forecasts. With a strategically firm defence outlook, fair value is seen at 650p/share.
As you can read in a detailed new rsearch note, free access here:
https://www.equitydevelopment.co.uk/research/record-results-in-fy23-and-positive-outlook
Begbies Traynor Group plc (AIM: BEG), the professional services consultancy, conducted an Investor Presentation covering their final results for the year ended 30 April 2023.
Ric Traynor (Executive Chairman) and Nick Taylor (Group Finance Director) talked through the performance in their key business areas of insolvency, property advisory & transactional services, and also outlined their future plans. Management then answered a wide range of questions from the audience.
The full presentation video has been divided into chapters as below:
0:00:03 Introduction and results highlights
0:03:19 Financials
0:13:15 Strategic Review
0:25:52 Summary
0:26:45 Questions & Answers
Link to full video: https://www.equitydevelopment.co.uk/research/fyresultspresentation-19july2023
Hercules Site Services (AIM:HERC), a leading supplier of labour to the UK’s construction industry, hosted an online presentation for investors.
Brusk Korkmaz (CEO & Founder) and Paul Wheatcroft (CFO) ran investors through the company and its principal business areas, highlights of their strong H1 period including an 85% YoY turnover increase, and key tenets of the growth strategy. The team also answered a wide range of questions from viewers.
The full video has been divided into chapters as below:
0:00:03 Introduction & Business Overview
00:03:16 History of Growth
00:05:41 H1 2023 Highlights
00:08:25 Group Statement
00:11:11 Labour Supply
00:14:28 Suction Excavators
00:17:11 Civil Projects
00:18:46 Financials (Balance Sheet & Cash Flow)
00:21:08 UK Infrastructure investment
00:23:38 Growth Strategy
00:26:22 Investment Case
0:27:53 Questions & Answers
Link to full video: https://www.equitydevelopment.co.uk/research/hercules-site-services-investor-presentation-with-qa-july-2023
New note here: https://www.equitydevelopment.co.uk/research/growth-on-track-as-is-target-of-profitability-in-fy24
Invested customers reached 211k on 30 June 23, with 28k added over H1-23 (+15%) and 52k y-o-y (+33%). Assets Under Administration was up £678m over H1 (+22% over 6m, +38% y-o-y), reaching £3.7bn, with £469m added from net client inflows and £210m from positive investment performance.
This progress is on track to meet our previous growth targets and confirms that PensionBee continues to gain market share in the £700bn UK transferable pensions market (it is aiming for a 2% share of this market i.e., 1m customers, in the next 5-10 years).
They remain on track to be adjusted EBITDA (H1’22: -£15m; H1-23, -£8m) positive in FY24, a target set back at the 2021 IPO.
Our forecasts remain unchanged, as does our fundamental value of 150p per share which is now 100% above the current share price of 75p.
Note here: https://www.equitydevelopment.co.uk/research/all-fine-on-the-infrastructure-front
Sharp eyed investors would have noticed the recent mixed messages from the UK’s June Construction PMI report, whereby positive output across infrastructure and commercial was offset by weakness in house building due to rising borrowing costs. Equally though, input cost inflation and supply chain bottlenecks were said to be reducing, which should help alleviate margin pressure.
Similarly in today’s ‘on track’ trading statement, Chairman Jeremy Pilkington commented that Vp had also “experienced varying levels of demand across a range of markets.” With water, transmission and rail being “supportive”, in contrast to housebuilding, where activity had stabilised at a level 10% below LY.
Elsewhere Vp’s international divisions (re AirPac & TR Ltd) continue to make good progress. Meaning that overall the Board expects FY’24 to be in line with consensus estimates.
As such, we reiterate our £10.90/share valuation and FY’24 forecasts of adjusted PBTA of £42.8m on revenues up 2.8% to £381.7m. Alongside net debt (pre IFRS 16) closing Mar’24 at £123.9m (vs £134.4m LY), equivalent to a comfortable 1.3x EBITDA.
What’s more, we would argue that for investors with a 2-3 year view, there seems to be exceptional value on offer from this specialist equipment rental group, which has previously demonstrated consistent delivery through thick & thin. In fact at 570p, the stock trades on a PER of only 7.1x whilst paying a bumper 7.0% dividend yield. To us, the shares are simply mis-priced.
Strong prelims announced with record levels of both adj operating profit of £19.1m and revs of £182.7m. The Board's outlook is 'encouraging'
You can see the CEO and FD explain in more detail at a webinar THIS Friday, 21st at 11am, just register here : https://www.equitydevelopment.co.uk/news-and-events/cohort-plc-investor-presentation-21july2023
Corero is a cyber software business that is overlooked by the market, in our view. Huge progress has been made over the last three years bringing the business to operational maturity. The company is predominantly now a recurring revenue business, but this does not seem to be recognised in the current valuation. Corero's technology has been validated with major market leading customers and go-to-market partners.
Group revenues have grown c20% compound between 2018-22A, enabling the business to fully recover its total cost base and report positive EBITDA since FY21A. Corero has repaid all outstanding debt and is now unleveraged. The recent trading update for H1E has confirmed strong trading with revenues growing 20% YoY to $10.6m and net cash on the balance sheet of $6.2m.
Back in 2019 the stock was trading around 5x EV/sales. On just 2x FY22A EV/sales the shares now, the shares look materially undervalued. We will be initiating coverage with forecasts in due course.
Full report: https://www.equitydevelopment.co.uk/research/corero-initiation-report-july2023
Full detailed report here: https://www.equitydevelopment.co.uk/research/an-undervalued-high-quality-growth-story
Springfield Properties is one of Scotland’s leading housebuilders. It has an enviable track record of growth and profitability and a reputation for building high quality homes in attractive locations. Whilst market headwinds have increased, in our view the 50% decline in Springfield’s share price over the past year is significantly overdone. The business has navigated previous cyclical downturns impressively and has emerged strongly from them.
We initiate coverage with confidence in the Group’s long term growth prospects and see scope for a material re-rating of the shares as investor sentiment improves.
Whilst sector commentary is likely to remain cautious in the near term, we expect investor sentiment to improve once there are clear signs that inflation is easing and interest rate rises are coming to an end. We initiate coverage with a Fair Value per share of 110p, which is based on a sector multiple of 0.9x Price/ Book. This represents a level c.70% above the current share price.
The Artisanal Spirits Company (ASC) FY2023 H1 trading update reported 1% sales growth with 7% growth in the second quarter and, importantly, a 9% increase in membership numbers to above 38,000. In addition, the statement reconfirmed the benefits of the company’s ultra-premium distilled spirits positioning, its focus on Scotch whisky, and the benefits of not only being international but also in control of its supply chain and distribution system.
While the ASC’s H1 sales growth was beneath our full year expectation of 14%, the company was lapping a particularly strong growth in the same period a year earlier when sales advanced by 25%. The company itself remains confident that full year market expectations for sales and adjusted EBITDA will be met. We leave our own forecasts unchanged at £24.7m and £1.3m respectively for these two measures.
We draw a positive read-across from Diageo PLC's investor presentation in Edinburgh on 1st June (“Delivering sustainable long-term growth – our vibrant Scotch portfolio.”) Diageo’s central investment messages focused on premium Scotch as a growth category and its value creating qualities relative to other distilled spirits categories. In our view ASC is already a clear beneficiary from these trends and opportunities.
We base our 150p fair value/share, which implies a 4.8x FY2023 EV/sales ratio, on a relative valuation comparison with other international distilled spirits companies and luxury providers.
Link to report: https://www.equitydevelopment.co.uk/research/investing-in-ultra-premium-scotchs-global-growth
New note from Equity Development: https://www.equitydevelopment.co.uk/research/debt-reduction-confirms-financial-strength
UPGS announced a significantly better-than-expected improvement in its debt position today. Net FY23 year-end bank borrowings are expected be in the region of £15m compared with current market expectations of closer to £21m. The financial benefits of lower net debt in the current climate of rising interest rates are clear.
UPGS’s cash generation capabilities not only underpin its generous dividend policy (50% of net profits) but also enhance strategic flexibility. The company is not only able to weigh up the relative benefits of increased pay-outs to shareholders (e.g. a higher dividend pay-out ratio or share buybacks) but also to take advantage of potential acquisition targets on offer.
Today’s announcement reinforces confidence in both our own and consensus FY2023 forecasts being achieved. Our 29 March 2023 report commented that a £163m full year revenue figure would require double-digit growth in the second half. Given that UPGS expects its end-year FY2023 net debt:EBITDA to be 0.7x (vs. 1.3x a year earlier), we infer that the company itself shares our confidence. Second half sales growth clearly accelerated sharply.
A combination of strong sales growth and associated financial strength is central to the investment case for UPGS’s shares as the company strives to deliver affordable “feel good” branded products for every home. We reiterate our fair value of 250p; this valuation implies 1.4x EV/sales and 11.7x EV/EBITDA using an improved £15m end-FY2023 net debt estimate.
Apologies - the correct video link is here: https://youtu.be/8I_Vl-hKho0
David Hallas, CEO, and Christopher Wilks, CFO of ECO Animal Health Group plc (AIM: EAH), a leader in the development, registration and marketing of pharmaceutical products for global animal health markets, conducted a live presentation following the company's FY Results.
The management discussed highlights of the period, which included revenue & EBITDA above expectations, an improved cash position and double-digit revenue growth in LatAm and S&SE Asia regions. The team provided a detailed financial overview, updated viewers on R&D developments, and answered a wide range of questions asked by the audience.
The full video has been divided into chapters as below:
0:00:10 Key Highlights
0:01:31 Financial Highlights
0:06:55 Revenues
0:17:20 R&D Expenditure & Administrative Expenses
0:23:40 EBITDA bridge, cashflow & balance sheet
0:31:04 ESG and China
0:33:50 R&D Update
0:36:36 Summary & Outlook
0:38:26 Questions & Answers
Link to full video if you missed the live event: https://youtu.be/uv7Jqa9i5Z4
FUM closed FY23 (30 Jun 23) on £16.9bn, 7.5% up y-o-y (30 Jun 22: £15.7bn) and 0.3% up over Q4 (31 Mar 23: £16.8bn). Q4’s net FUM flow of +£97m continues BM’s impressive run of positive net flows (now spanning nine consecutive quarters) during a period of difficult market conditions and investor nervousness. FY23 net flows totalled +£817m (FY22: +£785m). BM has flagged a healthy pipeline for FY24, although investor sentiment is still subdued.
Andrea Montague has been appointed CFO and Executive Director, effective 1 Aug 23, to replace Ben Thorpe, subject to regulatory approval. Andrea has an impressive executive and board track record in the long-term savings and asset management sector. She leaves Aviva where she was Group Chief Risk Officer, and prior to that, Group Chief Financial Controller.
BM has indicated it expects FY23 results to be in line with forecasts, although we see a slight change in how revenue is made up (FUM ending the year a little below our previous estimate and average revenue yield expected to be a little higher with the continued rise in interest rates). The slightly lower closing FY23 FUM level reduces our FY24 forecasts: revenue from £131.5m to £128.2m and underlying PBT from £34.1m to £31.2m. Our fundamental valuation reduces to 3,100p per share but is still 38% above the current share price.
An additional noteworthy point for investors is the marked uptick in the volume of shares being traded since late 2022, which suggests growing investor interest in BM (see page 2 of the note).
Link to note: https://www.equitydevelopment.co.uk/research/fy23-results-justify-recent-rise-in-share-price
New report from Equity Development here: https://www.equitydevelopment.co.uk/research/investment-returns-mean-that-fy24-starts-well
AUM was up 3% over Q1 of FY24, from £19.2bn on 31 Mar 23 to £19.7bn on 30 Jun 23. Investment returns were strong over the quarter, contributing +£700m (+4%) to AUM growth. Net flows were negative at -£201m, but the trend continues to improve from the technology sector driven outflows of calendar year 2022 (we remind readers that over FY23 to 31 Mar 23, technology strategies accounted for £1.2bn of the £1.6bn total net outflows). The closure of the Melchior European Absolute Return fund also decreased AUM by £7m.
Polar reported continued demand and inflows into its Sustainable Emerging Market Stars, European ex-UK Income, Healthcare Blue Chip, Biotechnology, and Smart Energy Funds with combined net inflows of £313m. Importantly, with 38% of AUM in technology strategies, the rate of net outflows from open-ended technology funds continued to decline, with just £103m of net outflows in Q1.
The Q1 AUM level is ahead of the trajectory required to meet our FY24 AUM forecast, but being so early in the financial year, we believe it would be premature to revise forecasts at this stage. Our fundamental valuation remains at 625p per share, 32% above the share price, and we maintain our position that there is strong potential for both a company and sector re-rating.
Loungers has reported record revenue of £283.5m, up 85% on pre-Covid FY19. 29 new sites opened during the year, taking the total to 222 at year end. Excluding the continued estate expansion, like-for-like revenue growth was up 7.4% on the last year, and an impressive industry-leading 17.6% over the last three years.
Inflationary pressures have impacted margins, especially wage inflation, while the results also reflect the end of government Covid-support measures. The adjusted EBITDA margin (IFRS16) was 16.7%, down from 22.6% in FY22 and 18.7% in FY19. However, management reports that inflationary pressures are easing and they aim to restore margins to pre-Covid levels over the medium-term.
Loungers’ continued expansion has allowed it to develop a strong understanding of its optimal locations and density of sites. The group sees longer-term scope for at least 600 Lounges and 50-65 Cosy Clubs across the UK, giving significant headroom for growth from the current portfolio of 195 Lounges and 35 Cosy Clubs. The larger prize remains within the Lounges offering, which continues to push further into the North and the South-East. We also expect the first Lounge in Scotland within the next couple of years.
Brightside, the new roadside dining brand, is up and running, with the first two sites open near Exeter and Saltash, and a third expected to open shortly. Brightside is focused on busy A-roads near towns and has met with largely excellent customer reaction.
LFL sales growth in the first 12 weeks of FY24 has been 5.7%, despite the Easter timing, and new site openings continue to perform very well, achieving record levels of sales.
Brief note here: https://www.equitydevelopment.co.uk/research/record-revenue-and-industry-leading-lfl-growth
News of continued partner interest in XF-73 plus positive comments from the Scientific Advisory Board both bode well for DEST
As you can read & hear below in new research note with Fair Value unchanged at 279p/share:
https://equitydevelopment.co.uk/research/xf-73-momentum
Link to report here: https://www.equitydevelopment.co.uk/research/trading-update-h1-meets-expectations
In a Trading Update for the first half to 30 June 2023, Mpac reports that trading was in line with management expectations, reiterating - as stated at the AGM in May - that performance remains second half weighted, supported by the strength of the order book and projects underway. The Group closed H1 with a strong balance sheet and positive net cash.
Mpac notes that order intake for the year to date is significantly ahead at £62.4m compared to £32.8m a year earlier, with the H1 closing order book at £78.4m, +25%YoY above the start of FY23 (£62.7m). The performance of (higher margin) Service operations has also been strong, whilst the Group is able to report that supply chain issues that impacted completion of Original Equipment projects have now largely eased. This adds confidence for second half performance and a return to normalised margins: our FY23 gross margin outlook is 28.9%, for FY24 31.3% (FY19: 29.3%; FY20: 29.0%). We expect net debt of £4.7m to revert towards a positive FY23 net cash position of £7.5m.
On site commissioning of the assembly line at FREYR’s Battery Customer Qualification Plant in Norway continues.
Our FY24 outlook remains 11%YoY revenue growth and 35.0%YoY growth in (adj.) EBITDA with fair value for Mpac seen at 485p/share, indicative of a FY24 EV/EBITDA multiple of 7.9x.
FY23 results show ongoing track record of performance across the economic cycle. Revs rose 11% and the dividend 9%, rising for 6 consecutive years. With a confident outlook ED keep a 175p/share fair value.
Read & hear new note from Equity Dev below + you can register for the BEG webinar on 19/7 there too:
https://www.equitydevelopment.co.uk/research/strong-fy23-and-well-set-for-further-growth
Research note available here: https://www.equitydevelopment.co.uk/research/fy23-results-ahead-of-expectations
ECO Animal Health Group reported revenue for the year to 31 March 2023 of £85.3m (+4%YoY) and adjusted EBITDA of £7.2m (+34%YoY), ahead of market expectations. Revenue growth was led by S&SE Asia (+42%YoY) and LatAm (+15%YoY). Gross profitability improved from a 42.7% margin in FY22 to 45.0%, whilst the (adj.) EBITDA margin was also up from 6.6% in FY22 to 8.5%. The year closed with net cash of £21.7m, with cash from operations of £15.9m (FY22: £(0.5)m), in addition to which the Group retained £10m in undrawn £10m RCF.
ECO allocated the equivalent of 9.8% of revenue in R&D spend in FY23 (£8.34m). They reported that two late-stage development projects are to be submitted in FY24; we note the collaboration (from 2022) with Imperial College London, and Moredun Research Institute in Scotland. Our medium-term cashflow outlook indicates ample resources to maintain the level of investment for over a dozen major projects underway or planned, alongside a healthy c£22m cash balance. A well-planned and well-resourced R&D and product development programme – the fruits of which are not factored into near-term estimates – form the basis for additional revenue streams which we estimate could add >£70m by FY28. We expect the group to update on R&D progress and spend before the end of this financial year.