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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.
Q3 AUM update: although Q3 was slower @ImpaxAM, there are no changes to Equity Dev's FY23 forecasts or valuation/share of 900p. Indeed its PER is back to peer-group median levels despite strong relative performance and good growth prospects.
Read / hear that new research note here (free access):
https://www.equitydevelopment.co.uk/research/slow-q3-dividend-yield-now-over-5
Supreme plc conducted an Investor Presentation covering its results for the year ended 31 March 2023. Sandy Chadha (CEO) and Suzanne Smith (CFO) ran investors through financial and operational highlights of the period, which included 19% revenue growth and strong cash generation.
They talked through the performance of each main division including the master distributor opportunity for Elfbar and Lost Mary within Vaping, and the recovery they are seeing in Lighting. The management team highlighted the very strong start to FY24 and answered an wide-ranging Q&A session from the viewing audience. The full video has been divided into chapters as below:
0:00:23 Supreme at a glance & key investment highlights
0:04:55 Financial highlights & Operational summary
0:12:06 Outlook
0:13:53 Batteries
0:15:07 Lighting
0:16:27 Health & Wellness
0:17:59 Vaping
0:29:57 Master distributor opportunity
0:32:24 Ark, Trafford Park
0:34:18 Financial overview & summary
0:38:54 Questions & Answers
Link to video: https://www.equitydevelopment.co.uk/research/investor-presentation-fy-results-july-2023
Detailed new research report (and reminder of the investor presentation this morning at 11am with Supreme management, sign up here: https://www.equitydevelopment.co.uk/news-and-events/supreme-investor-presentation-6july2023)
"Strong FY23 results backed by vaping acquisitions"
For the year to 31 March 23, Supreme reported revenue of £155.6m, +19%YoY (with H2 revenue rebounding 27%YoY versus H1 +6%YoY), and (adj.) EBITDA of £19.4m, -8%YoY (compared to H1 -19%YoY). Revenue was ahead of our estimate of £150m; (adj.) EBITDA matched our outlook. The Vaping product segment recorded revenue of £76.1m +75%YoY, 49% of total, with 40% of incremental revenue (c.£13m) generated by the acquired Liberty Flights, Cuts Ice and Flavour Core operations. Even excluding the contribution from acquisitions, we estimate that growth was an impressive 45%YoY. Batteries revenue grew 13%YoY to £39.5m, 25% of total. Lighting revenue declined 43%YoY (£15.4m) due to customer overstocking issues, but H2 recovered 50% on H1. Sports Nutrition & Wellness revenue grew 5%YoY (£16.8m), and the Branded Household Goods & Other segment contributed £7.8m of revenue (-17%YoY).
As of 31 March, the Group was (pre-IFRS 16) cash positive (£3.2m), having generated £19.3m in (net) cash from operations, in addition to which the disposal of TJuice yielded £4.0m. £30m in borrowing facilities offers the potential to grasp further suitable M&A opportunities. Consistent with Group policy of a 25% of net profit dividend policy, a dividend of 3p/share is payable for the year.
Supreme has announced a master distributor agreement in the UK for the popular Elf Bar and Lost Mary (QM600) range of disposable vapes across its retail network; we estimate that in FY24 this could add c.£25m in additional revenue and c.£2.0m in (adj.) EBITDA. The brands are owned by Shenzhen iMiracle Technology Co. Ltd., in China, and are some of the most popular disposable vape brands in the US (e.g. the Elf Bar BC5000).
Reflecting the potential impact of the Elf Bar distributor agreement, we have raised our FY24 revenue outlook by 20% to £194.5m, and (adj.) EBITDA outlook by 19% to £25.6m. Our Fair Value increases to 200p/share, indicative of a FY24 EV/EBITDA of 8.7x.
Link to report & audio summary: https://www.equitydevelopment.co.uk/research/strong-fy23-results-backed-by-vaping-acquisitions
The AGM update was encouraging and indicated that ‘green shoots’ continued to emerge, with momentum building during Q2 as the frequency of orders increased. Volumes, however, have yet to pick up, suggesting OEM customers are maintaining inventories and conserving cash. Significantly, the Group is seasonally H2 weighted with September to November critical months ahead of Christmas and Chinese New Year. Strix continues to trade in-line with market consensus (PAT of £25.8m) and as such, we see no reason to adjust estimates. The integration of the Q4 acquisition of Billi is on track, with a degree of excitement of the launch of the new one-tap system in Australia. We are particularly encouraged by the new product pipeline and the opportunity to gain a firmer foothold in North America.
We visited the facilities on the Isle of Man during an Investor Day ahead of the Group’s AGM. Meetings included an introduction to the Company, greater detail on the Chinese factory opened in Q3 2021, presentation of forthcoming product launches, and a factory & tool room tour (see main body of note for more details).
We think the shares have been largely overlooked, sitting on a single digit FY23 PER and at a marked discount to its peers. Our fair value / share of 216p, based on several valuation models, is more than double the current share price.
Full report here: https://www.equitydevelopment.co.uk/research/encouraging-agm-update-investor-day-insights
ECO Animal Health Group plc (AIM: EAH), a leader in the development, registration and marketing of pharmaceutical products for global animal health markets, is pleased to confirm that David Hallas, CEO, and Christopher Wilks, CFO, will be conducting a live presentation covering the company's FY Results for the period ended 31 March 2023.
The online presentation will take place on Wednesday 12th July at 2.30pm UK time.
This event is open to all existing and potential shareholders and registration is free. Questions can be submitted during the presentation and will be addressed at the end of it.
You can register at the link: https://www.equitydevelopment.co.uk/news-and-events/ecoanimalhealth-fyresultspresentation-12july2023
Trading update from Mattioli Woods of FY23 profits in line and healthy pipeline. Equity Development publish new research showing PER of 13 is 20% below a peer group median of 16.2 and calculate a fundamental valuation of 900p that is 45% above the last close.
Read full new note / hear summary here:
https://www.equitydevelopment.co.uk/research/fy23-profits-in-line-pipeline-strong
Discussions are underway to unlock value at R&Q Insurance, and looking at other completed deals Equity Dev's analyst sees potential scope to realise a net return above current market value.
Read / hear new note:
https://www.equitydevelopment.co.uk/research/discussions-underway-to-unlock-value
Begbies Traynor Group plc (AIM: BEG), the business recovery, financial advisory and property services consultancy, will be conducting an investor presentation covering their final results for the year ended 30 April 2023 and the outlook for the Group.
The presentation will be hosted by Ric Traynor, Executive Chairman, and Nick Taylor, Group Finance Director.
The online event will take place at 12.30pm on Wednesday 19th July, and is open to all existing and potential shareholders.
Questions can be submitted during the presentation to be addressed at the end - you can register to attend on the link below:
https://www.equitydevelopment.co.uk/news-and-events/begbies-traynor-investor-presentation-19july2023
Hercules Site Services (AIM:HERC) is a leading supplier of labour to the UK’s construction industry.
Brusk Korkmaz, CEO and Founder, along with Paul Wheatcroft, CFO, will present the Company and its ambitions to investors on Tuesday 18th July.
The webinar will start at 11.00am, 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.
You can register to attend at the link: https://www.equitydevelopment.co.uk/news-and-events/hercules-investor-presentation-18july2023
Mark Braund (Chairman), Shaun Doak (Chief Executive Officer) and Andrea Pankhurst (Chief Financial Officer) of REACT Group plc (AIM: REAT) conducted a live investor presentation covering their Interim results.
Management took investors through a detailed overview of the company, and talked through the highlights of the reporting period, which included strong growth in revenues & EBITDA. A rising proportion of recurring revenues, improving margins and strong cash generation in their specialist markets resulting in improved visibility. The team also touched on the outlook and their strategy as REACT aim to be the leading specialist cleaning business in Great Britain.
The full video recording of the investor presentation has been divided into chapters as below:
0:00:14 Introduction to REACT management team
0:01:44 REACT Group overview & customers
0:06:37 Interim Accounts summary & reporting segments
0:13:02 Outlook
0:15:18 Strategy
0:17:07 Significant shareholders & Summary
0:18:12 Questions & Answers
Link to full video: https://www.equitydevelopment.co.uk/research/react-group-investor-presentation-interim-results-june-2023
Polar Capital Holdings plc (AIM: POLR), the specialist active asset management group, conducted an investor presentation covering its FY results for the period to 31st March 2023.
Gavin Rochussen (Chief Executive Officer) and Samir Ayub (Finance Director) discussed how Polar has demonstrated resilience and improving investment performance in a difficult period for markets, their plans to improve inflows with new strategies, and how their digital marketing plans are augmenting their growth strategy. Management provided a financial review and gave their market perspective, also running viewers through the AuM and Fund Flow picture at Polar, as well as their fund performance and capacity details.
There was also a wide ranging Q&A session which you can see in full in the video, divided into chapters as below:
0:00:15 Overview & Highlights
0:02:19 Market Perspective
0:04:00 Fund Performance & Capacity
0:08:23 AuM & Fund Flows
0:13:14 Financial Review
0:23:15 Strategy & Outlook
0:34:07 Questions & Answers
Link to full video: https://www.equitydevelopment.co.uk/research/fy-results-investor-presentation-28june2023
The Group has delivered record revenues and EBITDA in H1 to March 2023. The rising proportion of recurring revenues, improving margins and strong cash generation in consolidating, specialist markets has resulted in improved visibility. As the final deferred consideration will be paid during FY24, we expect net cash to rise to £3m or 34% of the NAV during FY25.
Improved visibility generated by the focus on added-value, long term contracts has enabled us to introduce estimates for FY24 and FY25. We anticipate a CAGR in revenues/EBITDA of 15.3%/35.8% respectively between FY22A and FY25F. Adj. EBITDA margins increase from 7.0% to 13.4%. Our expectation is investment in the business and/or M&A will take precedence over dividends for now. We have increased our fair value / share estimate to 2.0p (from 1.7p), a 57% premium to the current price.
Link to report: https://www.equitydevelopment.co.uk/research/records-broken-and-encouraging-trends
Link to full note here: https://www.equitydevelopment.co.uk/research/driving-growth-through-innovation
Hercules Site Services is an innovative, entrepreneurial and high-growth business with a focus on the UK Infrastructure market. Its shares were listed on the AIM in February 2022.
The core business is labour supply, where Hercules has built a reputation as a trusted partner to an impressive blue-chip client list. Hercules has also expanded its offering in recent years into complementary construction services, namely civil projects and specialist equipment hire.
Growth to date has been highly impressive (three-year revenue CAGR 50%) and demand is underpinned by a favourable outlook for infrastructure spending, a structural undersupply of skilled labour and recent organic investment in technology and fleet expansion.
Infrastructure investment has been a key driver of the recovery of the construction industry post Covid and the medium-term outlook is well underpinned by major projects, not least HS2 with Phase One (London to Birmingham) approaching peak activity over the next 3 to 5 years.
We believe that our full year earnings forecasts are conservative and see Fair Value at 60p per share.
Detailed new note from Equity Development - report & audio summary here: https://www.equitydevelopment.co.uk/research/tough-fy23-outlook-improving-for-flows-returns
In FY23 (to 31 Mar 23), market conditions created strong headwinds for asset managers, especially those with a growth equities bias like Polar. AUM declined 13% from £22.1bn to £19.2bn, with net outflows of - £1.6bn (FY22: + £0.4bn), investment performance of - £0.9bn (FY22: +£0.9bn); and fund closures of - £0.5bn. However, the story of the year was certainly not entirely negative, but mixed, with an improving picture towards year-end and also post-year-end (although we caution that economic and market conditions remain uncertain).
The strength of FY22, buoyed by the bull market of calender-2021, makes FY23 results look comparatively weak. Gross income fell 18% from £226m to £186m. However, performance-tilted variable pay structures resulted in operating costs reducing by 16% from £141m to £119m, which limited margin impact. So, while core operating profit* fell 31% y-o-y from £69m to £45m, core margin fell from 37% to 31%. Statutory PBT fell from £62m to £48m, and PBT margin fell from 28% to 24%.
Polar maintains a strong balance sheet, with cash of £107m (down from £121m), and no debt. This strength has given the board confidence to maintain a full-year dividend of 46p, a yield of 9.3%.
We forecast AUM growth in FY24 based on an improving outlook, although revenues are expected to fall in FY24 (lower ave. AUM), before recovering in FY25. Our fundamental value is 625p per share, 26% above the share price, and we see potential for a company and sector re-rating.
Polar Capital Holdings plc (AIM: POLR), the specialist active asset management group, will be conducting a presentation covering their Full Year results for the financial year to 31st March 2023.
The presentation will be hosted by Gavin Rochussen (Chief Executive Officer) and Samir Ayub (Finance Director).
The event will take place at 10.30am on Wednesday 28th June.
The online presentation is open to all existing and potential shareholders. Questions can be submitted during the presentation to be addressed at the end.
Sign up here to register: https://www.equitydevelopment.co.uk/news-and-events/polarcapital-presentation-28jun2023
Tatton Asset Management (AIM: TAM), the investment management and IFA support services Group, conducted a presentation covering its Full Year results for the period to 31st March 2023.
Paul Hogarth (Chief Executive Officer), Paul Edwards (Chief Financial Officer), and Lothar Mentel (Chief Investment Officer) ran investors through key highlights of the period, which included strong growth in Assets Under Management and significant organic net inflows (+£1.8 billion). Management discussed their clearly-defined growth strategy, and took viewers through a detailed Investment & Fund update. The team also answered a series of questions from investors.
The whole video presentation is available below and has been divided into chapters:
0:00:58 Key highlights (financial & operational)
0:05:37 Financial performance
0:11:34 Strategic update
0:24:35 Investment and fund update & Summary
0:29:35 Questions & Answers
Link to video: https://www.equitydevelopment.co.uk/research/tatton-asset-management-investor-presentation-fy-results-june-2023
Driver Group plc (AIM: DRV), the leading global professional services consultancy to the construction and engineering industries, conducted a live investor presentation covering their Interim results for the period ended 31st March 2023.
Mark Wheeler (CEO) and Charlotte Parsons (CFO) ran investors through highlights of the Half Year, which included a return to profit at Group level, improving utilisation, a cost reduction programme and an improving pipeline of global enquiries. Management also answered a range of questions submitted by viewers.
If you missed the live event, the full presentation recording is available here and has been divided into chapters as below:
0:00:44 Service Offerings
0:06:17 Operational Highlights
0:07:48 Financial and Regional Updates
0:11:41 Cash flow Bridge
0:13:05 Summary & Outlook
0:16:15 Questions & Answers
Link to video: https://www.equitydevelopment.co.uk/research/driver-group-investor-presentation-interim-results-june-2023
Marks Electrical Group plc, the fast-growing online electrical retailer, conducted an investor webinar following publication of their FY results.
Mark Smithson (founder & Chief Executive Officer), and Josh Egan (Chief Financial Officer) took investors through highlights of the FY23 period, which included 21.5% revenue growth, ongoing market share gains and an improved net cash position. They discussed the roll out of their built-in installation offering, the significant brand awareness improvement in London over the past few months, and highlighted the strong start made already in FY24. Management answered a wide-ranging series of questions from investors.
If you missed the live event, you can watch the full presentation video here, divided into chapters as below:
0:00:21 Key FY23 highlights
0:05:11 Financial overview
0:14:58 Strategic update
0:36:36 Summary & Outlook
0:38:12 Questions & Answers
Link to video: https://www.equitydevelopment.co.uk/research/marks-electrial-investor-presentation-fy-results-june-2023
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Supreme (AIM:SUP), a leading manufacturer, supplier and brand owner of fast-moving consumer products, will be conducting an Investor Presentation covering its results for the year ended 31 March 2023.
Sandy Chadha (CEO) and Suzanne Smith (CFO) will be hosting the online event at 11.00 a.m. on Thursday 6 July.
The event is open to all existing and potential shareholders. Questions can be submitted during the presentation and will be addressed at the end.
You can register for the event here: https://www.equitydevelopment.co.uk/news-and-events/supreme-investor-presentation-6july2023