focusIR May 2024 Investor Webinar: Blue Whale, Kavango, Taseko Mines & CQS Natural Resources. Catch up with the webinar here.
Doherty is a leading player in N Ireland and its purchase adds £635m of AUA and c 1,320 private clients to MTW. Equity Dev analysts expect the deal to be value accretive and have a Fair Value of 950p/share.
You can read/hear their new note with free access here:
https://www.equitydevelopment.co.uk/research/new-acquisition-adds-scale-looks-value-accretive
Certainly a busy week for KMK:
A 7 year deal to supply its CZT-based detectors to a Tier 1 OEM is great news + a new Tier 2 collaboration + solid trading update. Pending more detail we retain the near-term outlook and a Fair Value of 26p/share, as you can read/hear below
https://www.equitydevelopment.co.uk/research/major-medical-imaging-agreement-trading-update
FY23 AUM closed on £12.7bn (on 31 Mar 23), +12% y-o-y on a like-for-like basis (31 Mar 22: £11.3bn), and well ahead of our previous forecast of £12.2bn. Adding 8AM Global’s assets brings Assets Under Influence up to £13.8bn (Tatton acquired 50% of 8AM in Aug 22).
But most impressively, the bulk of growth came from exceptionally strong net flows of +£1.8bn (16% of opening AUM and +40% y-o-y), with momentum through the year (H1: +£907m; H2: +£887m). Tatton’s ability to attract and retain assets has been far above peers in recent years. It clearly has a strong strategic positioning and is gaining market share.
Our FY23 rev. forecast rises to £31.1m from £30.6m (FY24: £35.0m from £34.0m) and our FY23 adj. operating profit to £15.8m from £15.1m (FY24: £17.9m from £17.8m). We also highlight that Tatton is ahead of its medium-term growth plan. Our core value rises from 500p to 560p per share.
New research note with audio summary: https://www.equitydevelopment.co.uk/research/organic-growth-train-rumbles-on-with-inflows-40
New research note with audio summary here: https://www.equitydevelopment.co.uk/research/a-positive-update-of-further-momentum
Supreme has issued a Trading Update for FY23 performance (year to 31 March) which it expects to be ahead of market expectations, and again in FY24 to slightly exceed the current market outlook. We have revised up our FY23 revenue outlook by 8.5% and, for FY24, by 7.6%.
At the Interim we raised our outlook on the basis of strong results (see ED report 29th November 2022: "H1 23 results buoyed by strong performance from Vaping"): FY23 revenue by 7% to £138.3m, and FY23 EBITDA (adj.) by 6% to £18.5m. The subsequent Trading Update added evidence of continuing positive momentum (see ED report 10th January 2023: "Positive trading update – strong busiest quarter").
On the basis of the strength of trading Supreme now reports, we again raise our outlook: FY23 revenue, in line with the trading update, by 8.5% to £150.0m and (adj.) EBITDA by 5.2% to £22.6m. For FY24 we have raised our revenue outlook by 7.6% to £162.0m and (adj.) EBITDA from £22.2m to £22.6m. There is evident margin dilution to 13.9% from our prior 14.7% estimate; this principally reflects the surge in Vaping revenue such that FY23(E) already exceeds our prior FY24 estimate.
Our Fair Value remains 190p/share – a price indicative of a FY24 EV/EBITDA of 9.4x (see note for full details).
Having successfully executed the licensing of its lead Phase 3-ready product NTCD-M3, expectations are high for DEST's second Phase 3-ready product, XF-73.
Post-results research note out from Equity Development with Fair Value seen at 279p/share. Full note and audio summary here: https://www.equitydevelopment.co.uk/research/no-surprises-in-results
Today’s “in line” FY23 trading update from Vp reiterates that it had made “good progress within its core markets” since the interims in Nov’22. It has benefitted from strength in civil engineering (eg highways) and infrastructure (eg water, rail & energy), alongside successfully lifting prices to cover input inflation as well as rightsizing some parts of the group to further reduce costs.
Elsewhere, the international energy & testing divisions also performed well, while residential housing has stabilised at lower levels - partly supported by robust RMI activity where millions of properties need modernisation.
As such, we retain our projections and £11.30/share valuation. Based on forecasted FY’23 revenues, adjusted PBTA and EPS of £365.5m, £40.2m & 75.9p (+6.5% YoY) respectively - climbing to £376.5m, £43.3m and 81.3p (7.2%) in FY’24. This in turn puts the stock (at 670p) on attractive FY’24 EV/EBITDA, EV/EBIT & PE multiples of 4.2x, 8.2x and 8.2x – whilst paying a 6.0% dividend yield. We believe this is simply far too cheap for a best-in-class, economically resilient business with a proven track record through thick & thin.
Polar’s final quarter of FY23 (to 31 Mar 23) was a strong one, with AUM up by £0.75bn (+4%) to £19.2bn, driven mostly by an investment performance contribution of +£1.2bn (+6% of opening AUM). Net flows of -£410m were recorded but these were almost all down to profit taking from the Global Insurance fund (-£373m) which has delivered significant outperformance.
Year-end AUM has exceeded our previous forecast of £18.3bn. While the Q4 uptick in AUM doesn’t have a big impact on our FY23 financial forecasts, it does bump up our FY24 forecasts and our fundamental valuation increases to 625p, 36% above the current share price. Polar’s PER of 9.1 is also 40% below the 15.2 median of a UK-listed asset manager peer group.
https://www.equitydevelopment.co.uk/research/aum-up-4-in-strong-q4-inflows-for-many-strategies
BM has recorded yet another quarter of positive net flows: +£373m in Q3 of FY23 (to 31 Mar 23), its eighth in succession. This is a hugely impressive achievement considering the last five of these quarters was a period characterised by market falls, economic uncertainty, and investor nervousness – an environment more typically associated with depressed flows. BM’s net flows have now been above peer group median levels since calendar Q4 of 2021.
Our fundamental valuation remains at 3150p per share, 77% above the current share price. We also flag that BM’s P/E ratio of 11.9x is 30% below a peer group median of 17.0, despite its organic growth rate being higher than most peers. We see potential for a re-rating.
See link with audio summary here: https://www.equitydevelopment.co.uk/research/impressive-consistency-in-strength-of-net-flows
Defence-related newsflow has remained prominent and as above Cohort has won contract extensions recently.
Its shares are on a current FY EV/EBITDA of 8.1x and Equity Development retain a Fair Value of 650p/share. New research note out that you can read/hear with free access here:
https://www.equitydevelopment.co.uk/research/closing-fy23-orders-highlight-group-attractions
"All set to clean up"
Full report with audio summary (free & accessible) here: https://www.equitydevelopment.co.uk/research/all-set-to-clean-up
We see a promising outlook for REACT Group plc as a nimble, fast-growing business operating in a large, fragmented market with significant scope for rationalisation. Approximately 85% of revenues are recurring, with margins mostly high and on an improving path with a target of reaching 30% at the gross profit level by FY24. The cash generative LaddersFree operation is scalable and an important part of the Group’s growth profile. Cross selling of the Group’s services to a broader customer base is also expected to underpin expansion of both the top and bottom lines.
Our various valuation models suggest a fair value of 1.7p per share, which is significantly ahead of current levels.
Detailed research report here (free & accessible): https://www.equitydevelopment.co.uk/research/sales-advance-by-21.5-to-97.8m-in-fy2023
A better than-expected 21.5% increase in sales revenue to £97.8m, higher EBITDA margins and strong cash conversion were the key features of today’s Marks Electrical Group (MRK) FY2023 trading update. In addition, a positive start to April augurs well for FY2024, a year in which we expect to see further market share gains and expansion of the product and service offering.
The central investment case for the shares remains firmly in place, in our view. The company is well invested to meet demand growth in its business operationally as well as enjoying significant scope to generate this demand growth through increased brand awareness. Furthermore, market share is comparatively small at around 3% despite three consecutive years of exponential progress in sales.
With a trailing EV/sales ratio of only 0.8x we continue to argue that the shares appear undervalued and reiterate our fair value of 150p for the shares.
Impax maintained its impressive record of attracting and retaining client assets, with net flows in Q2-FY23 (to 31 Mar 23) of +£326m, achieved in a quarter characterised by further market turmoil and, no doubt, investor nerves. A strong investment performance of +£1.9bn was recorded. AUM reached £40.1bn, up 6% over Q2 and 12% over H1 (AUM end-FY22: £35.7bn).
In the context of the wider sustainable investing market, we highlight that flows into sustainable funds were indeed far lower in 2022 than in 2021 but held up better than flows into ‘conventional’ funds and remained positive, with flows into conventional funds turning sharply negative. Additionally, we note sustainable equity valuations have bounced back strongly.
Our forecasts remain unchanged as does our fundamental valuation of 1,000p, 27% above the closing share price on 6 Apr 23. We think Impax’s PE ratio of 17.1 (peer group median 14.9) is undemanding and looks justified given is recent performance and growth prospects.
Link to note with audio summary here: https://www.equitydevelopment.co.uk/research/positive-net-flows-continue-aum-12-over-h123
It is indeed a material transformation is under review by R&Q: to create 2 separate entities in program management and legacy. Equity Dev await details of the plan before amending numbers but publish comments today and expect any separation to highlight inherent group value.
Read/listen to new note here, free access :
https://www.equitydevelopment.co.uk/research/major-acceleration-of-strategic-refocus
Strix Group plc, the AIM quoted global leader in the design, manufacture and supply of kettle safety controls and other complementary water temperature management components, conducted an investor presentation covering their Full Year results for the year ended 31st December 2022.
Mark Bartlett, CEO, and Raudres Wong, CFO ran investors through key highlights of the year and a detailed financial review, including an update on the transformational Billi acquisition and an in-depth look at each of the company's business categories. Management also answered a wide range of questions asked by the viewing audience.
If you missed the live event, you can watch the full video recording below, that has been divided into chapters for ease of viewing.
0:00:36 Introduction by Mark Bartlett, FY22 highlights
0:04:48 Kettle Controls green shoots, update on Billi, capital allocation
0:11:15 Financial review
0:23:28 Business Categories
0:34:25 ESG & Outlook
0:39:03 Questions & Answer session
Link to video: https://www.equitydevelopment.co.uk/research/strix-group-investor-presentation-final-results-march-2023
The Artisanal Spirits Company (AIM: ART), the owner of The Scotch Malt Whisky Society (SMWS), conducted an online investor presentation following the release of Full Year results for the period to 31st December 2022.
Andrew Dane, Chief Executive Officer, and Billy McCarter, Interim Finance Director ran investors through key FY22 metrics, the long term global growth opportunity for Artisanal Spirits, and their pioneering model. Management also touched on current trading & outlook and answered a range of questions from the viewing audience.
The full video has been divided into chapters for ease of viewing, as below:
0:00:40 Introduction to ASC
0:03:46 Key metrics for FY22, growth & financials
0:12:55 Pioneering Model
0:17:18 Long Term Global Growth Opportunity
0:18:46 Robust Business Primed to Deliver
0:24:07 Current Trading & Outlook
Link to video: https://www.equitydevelopment.co.uk/research/the-artisanal-spirits-company-investor-presentation-fy-results
Ultimate Products, the owner of a number of leading homeware brands including Salter (the UK's oldest houseware brand, est.1760) and Beldray (est.1872), conducted a live presentation following the release of their Interim Results.
Simon Showman (CEO), Andrew Gossage (Managing Director) and Chris Dent (CFO) ran investors through a detailed financial review and the key operational highlights of the period. The team discussed in a Strategy section the strength of their brands, the resilience of the company model, and the growth opportunities ahead. Management also answered investor questions in a wide-ranging Q&A session.
If you missed the live presentation, you can see the full video at the below link (divided into chapters for ease of viewing):
0:00:30 Introduction to UPGS - Simon Showman (CEO)
0:03:47 Financial & Operational highlights
0:11:11 Strategy section - Andrew Gossage (MD)
0:25:11 Financials - Chris Dent (CFO)
0:35:41 Summary & Outlook - Andrew Gossage (MD)
0:39:43 Questions & Answers
Link to video: https://www.equitydevelopment.co.uk/research/upgs-interim-results-investor-presentation-march-2023
New research report (free & accessible): https://www.equitydevelopment.co.uk/research/well-placed-to-weather-even-the-harshest-of-storms
Gattaca reported in line H1’23 results (6M ending Jan’23). Underlying NFI climbed +5.2% to £22.7m (£21.6m LY) thanks to two new client wins and strategic price initiatives (+9% contract & 6% perm).
On top, there were standout performances (see note) from defence (+32%), energy (20%) and infrastructure (7%) - partly offset by the shedding of low margin business (2 large accounts) and a not surprisingly less buoyant TMT backdrop (-43.5%, tough YoY comps). We believe the group remains on track to achieve both its ongoing turnaround and longer-term targets, after raising fee earner productivity (+14% revs/head), employee engagement and EBIT/NFI margins to +4.2% (-0.5% LY). This has delivered an H1’23 adjusted PBT and diluted EPS of £0.9m (-£0.3m LY) & 2.0p (-0.8p) respectively.
Despite the economic conditions, we’ve held our conservative FY’23 and FY’24 PBT forecasts at £1.8m (£256k LY) and £4.25m respectively on NFI up 5.3% (£46.5m) and 8.9% (£50.6m), along with reiterating the valuation of 130p/share.
19% revenue growth, a 12% increase in membership numbers and a £1.0m favourable swing in adjusted EBITDA were key features of today’s FY2022 results statement from The Artisanal Spirits Company. With the Masterton Bond facility fully operational and group trading having started well in the current year, ASC appears well placed to deliver medium term sustainable profitable growth. As a membership organization which boasts substantial invested facilities and valuable whisky stocks, we reiterate our 150p fair value for the shares.
This implies a 4.9x FY2023 EV/sales ratio, largely on a relative valuation when compared with leading listed distilled spirits companies and luxury goods providers. ASC is simultaneously exposed to both these categories given its emphasis on ultra-premium-and-above Scotch malt whiskies. Furthermore, the £493m updated notional retail value of the company’s maturing whisky stocks (mentioned above) is currently over 7 times today’s market capitalisation.
https://www.equitydevelopment.co.uk/research/delivering-robust-profitable-growth
With FY22 now firmly in the rear-view mirror, Strix Group plc is looking forward with more optimism. China is re-opening for business following several COVID-related lockdowns and green shoots have begun to appear. Sales to OEMs have seen a substantial improvement in run-rates during the first two months of FY23 and, while a swallow does not make a summer, we see positive signs, not least the possibility that a recession may well be averted in Western economies. A combination of product launches, the acquisition of the high margin Billi and a cross fertilisation of sales between the consumer brands augurs well for FY23.
We expect FY23 to represent an inflection point for the Kettle Controls business. In the YTD, green shoots have appeared, with sales to OEMs rising 18% versus Q4 (which represented a low point in FY22). As COVID-related restrictions have been lifted in China, we expect revenues to improve further as bottlenecks are removed and trading returns to normal patterns. A combination of product launches within Water/Appliances/Billi, new listings (online and retail), and a cross-fertilisation of sales within the wider consumer areas is expected to result in strong growth in revenues and profitability.
Our comparative valuation models suggest that Strix Group is trading on the lowest FY1 EV/EBITDA and PER multiples within its peer group. Our fair value estimate of 216p/share is backed by a conservative DCF model and represents a significant uplift on the current share price. Even following the dividend cut, the FY1 yield amounts to 7.1%, with dividend growth slowing to reflect a desire to reduce indebtedness (we estimate the net debt/EBITDA ratio declining to 1.8x in FY23).
https://www.equitydevelopment.co.uk/research/green-shoots-now-visible
Ultimate Products' interim results strongly suggest that the company is well placed for sales growth acceleration in H2 and to meet current market expectations. Online sales in H1 increased by 78% to represent 26% of group total, which is positive as this distribution channel has a smaller skew to H1 than others. Moreover, UPGS’s brands continue to demonstrate an ability to gain market share and grow through volume rather than pricing.
We maintain our view that the company’s current valuation does not fairly reflect UPGS’s three key growth drivers - brands, online & supermarkets distribution, and international. With external headwinds easing, an H2 acceleration is in prospect. In addition, growth is volume driven off a strong financial base. We base our 250p fair value / share assumption on an FY2023 EV/sales ratio of 1.5x, 12x EV/EBITDA and 16.6x P/E.
https://www.equitydevelopment.co.uk/research/well-placed-for-sales-growth-acceleration-in-h2