The next focusIR Investor Webinar takes places on 14th May with guest speakers from WS Blue Whale Growth Fund, Taseko Mines, Kavango Resources and CQS Natural Resources fund. Please register here.
New research report here: https://www.equitydevelopment.co.uk/research/strong-h1-results-raise-full-year-outlook
The H1 outcome was as indicated in the recent (18 October) Trading Update. Group guidance for the full year is now raised: from revenue of £195m - 205m to £210m - £220m (ED estimate was £204.2m); (adj.) EBITDA from £28m - £30m to £32m - £35m (ED estimate was £29.0m). From incremental EBITDA of c.£4.5m, c.£1.5m arises from core operations and c.£3.5m from the Elf distribution agreement, which supplies retailers including Tesco, Morrisons, One Stop and WHSmith.
A series of initiatives – branding and pod vape developments in particular – mean that the Group can demonstrate a realistic strategy for the potential changes in the vaping market. Supreme also reports completion of its supply and distribution centre (the ‘Ark’), noting its capacity to support both organic growth and potential M&A opportunities, with £35.3m of borrowing facilities available.
Following the Group’s increased FY24 guidance (revenue raised 7%, and (adj.) EBITDA by 14% -17%), we have raised our outlook to revenue of £221.2m, +8%, and (adj.) EBITDA of £33.5m, +16%. We expect a FY24 total dividend of c.£5.1m, with £1.7m paid at the Interim. Our Fair Value is raised to 225p/share.
Link here: https://www.equitydevelopment.co.uk/research/delivering-growth-in-uncertain-markets
Vp’s interims confirm another solid performance and continued growth despite the challenging backdrop. Revenue increased by 2.4% to £190.9m and adjusted PBT by 1.9% to £21.9m. This is >50% of our full year forecast (trimmed by c.4% to bring us in line with consensus).
Infrastructure demand has driven a positive H1 performance for Vp’s Groundforce, Torrent and TPA businesses. Vp’s experience is consistent with the latest construction industry data, which showsinfrastructure demand offsetting weakness in general construction and housebuilding. Vp is well positioned to benefit when these softer markets return to growth.
The period was notable for the change in leadership with Anna Bielby succeeding Neil Stothard as Group Chief Executive. Keith Winstanley has been appointed Group CFO and joins the Group in January 2024. We expect the refreshed management team to build on the Group’s strong foundations, with Digital innovation and ESG commitment at the forefront of Group strategy.
Following recent share price moves, Vp still trades at a marked discount to its immediate peers and its historic average rating. Over the long term, Vp has traded on a P/E rating of c.12x and the valuation at today’s share price represents a 30% discount to this level. We maintain our Fair Value estimate of £10.90 per share.
Polar Capital Holdings (AIM: POLR) ran viewers through key details of Interim Results for the period to 30th September, which was a challenging macro environment for equities.
Gavin Rochussen (Chief Executive Officer) and Samir Ayub (Finance Director) highlighted the group's strong balance sheet, the decrease in outflows helped by inflows into a number of funds, and strong performance across their range relative to the Lipper peer groups. Management also answered a range of questions from viewers.
The video has been divided into chapters for ease of viewing, as below:
0:00:03 Overview & Highlights
0:01:43 Market Perspective
0:03:15 Fund Performance and Capacity
0:07:06 AuM and Fund Flows
0:09:36 Financial Review
0:20:36 Strategy & Outlook
0:26:36 Questions & Answers
Link to full video: https://www.equitydevelopment.co.uk/research/polar-capital-holdings-investor-presentation-interim-results-24-november-2023
ECO Animal Health Group plc (AIM: EAH), a leader in the development, registration and marketing of pharmaceutical products for global animal health markets, will be conducting a live presentation covering the company's Interim Results for the period to 30th September 2023.
The online event will take place at 3.00pm on Wednesday 29th November and will be hosted by David Hallas (CEO) and Chris Wilks (CFO) of ECO Animal Health.
Questions can be submitted during the presentation and will be addressed at the end.
Link to register: https://www.equitydevelopment.co.uk/news-and-events/eco-investor-presentation-29nov2023
Tatton Asset Management (AIM: TAM) ran viewers through highlights of the period to 30th September which included strong net inflows and growth in revenues & profits, with adjusted operating margin hitting 50.7% - far above any comparables.
Management provided a financial review and outlined the significant growth potential going forward. With strong tailwinds they detailed the opportunities and challenges around M&A with price expectations remaining high, while highlighting their organic growth in market share. An in-depth summary of investment performance was followed by questions from viewers.
Paul Hogarth (Chief Executive Officer), Paul Edwards (Chief Financial Officer), and Lothar Mentel (Chief Investment Officer) presented from the company.
The presentation has been divided into chapters for ease of viewing:
0:00:03 Overview of Tatton AM
0:02:01 Key Highlights
0:05:20 Financial Performance
0:13:15 Strategic Update
0:27:46 Investment Management Update
0:37:45 Summary
0:37:53 Questions & Answers
Link to video: https://www.equitydevelopment.co.uk/research/tatton-asset-management-interim-results-investor-presentation-22-november-2023
thomas will****s (ceo) and james eyre (cfo) of norcros plc hosted an investor presentation covering interim results to the 30th september 2023.
management highlighted the robust performance over the period, particularly in the uk, and the positioning of their market leading brands. the team discussed their strong balance sheet and excellent cash conversion, progress on their strategic priorities and esg as a key source of competitive advantage. management then took part in a wide-ranging q&a session with the live audience.
the full video is available below, divided into chapters for ease of viewing:
0:00:03 highlights & overview
0:04:16 financial review
0:07:40 group strategy
0:17:44 summary & outlook
0:20:28 questions & answers
link to video: https://www.equitydevelopment.co.uk/research/norcros-plc-investor-presentation-interim-results-november-2023
Vp plc (LSE: Vp.), the equipment rental specialist, will be conducting a presentation covering its Interim Results for the six month period ended 30th September 2023.
The online event will take place at 11.00am on Thursday 30th November and will be hosted by Vp management.
The presentation is open to all existing and potential shareholders. Questions can be submitted during the presentation to be addressed at the end.
Link to register: https://www.equitydevelopment.co.uk/news-and-events/vp-interim-investor-presentation-30november2023
FY results out next Wed 29th , and you can hear from the CEO and CFO on the same day: Webinar open to all investors at 1.15pm, simply register here to attend:
https://www.equitydevelopment.co.uk/news-and-events/ipx-fyinvestor-presentation-29november2023
Marks Electrical Group, the fast-growing online electrical retailer, conducted an investor webinar following publication of their Interim Results.
Mark Smithson (founder & Chief Executive Officer) and Josh Egan (Chief Financial Officer) ran investors through key details of their HY24 numbers which included strong revenue growth and the impact of distribution & installations costs on margin.
Management discussed their expanded geographic presence and the roll-out of their next-day installation offering, as well as their strong balance sheet and cash generation. There was also a wide-ranging Q&A session following the presentation.
The full video has been divided into chapters, as below:
0:00:03 Key highlights from HY24
0:03:00 Financial overview
0:10:51 Strategic update
0:24:14 Summary & Outlook
0:24:50 Questions & Answers
Link to full video: https://www.equitydevelopment.co.uk/research/marks-electrial-investor-presentation-interimresults-nov2023
Link to full PDF here: https://www.equitydevelopment.co.uk/research/strategy-update-sticking-to-its-objectives
In place of the trading statement which is usually released at this time of year, and ahead of RUA Life Sciences’ interim results, RUA has released a more material - and very well-received - strategy update.
In place of a trading statement that updates investors on the progress of its revenue-generating businesses and its products in development, RUA’s strategy update has been well-received by investors because it outlines the path of the business to greater and earlier revenues than we had expected in RUA Contract Manufacture and RUA Structural Heart. The strategy also lowers the risks for investors compared to funding the development of RUA’s products solely by an equity offering, at a time where life science markets are depressed and the potential dilution punitive.
RUA Contract Manufacture, the contract manufacturer of medical devices using implantable fabrics with a biocompatible Elast-Eon coating, is responding to a formal bid request that could result in around £2m in revenues, with much of that recuring on an annual basis. Thus, RUA’s board’s objective of doubling the scale of the contract manufacturing business in the medium term is on track.
A positive H1 trading update ahead of interims due 11 Dec: says activity levels across the group are encouraging.
New research note from Equity Dev out, retaining 175p/share Fair Value, as you can read/hear below :
https://www.equitydevelopment.co.uk/research/update-anticipates-13-h1-revenue-growth
Link is here: https://www.equitydevelopment.co.uk/research/navigating-tough-markets-better-than-most
AUM was slightly down by -0.4% to £19.1bn over H1-24 (to 30 Sep 23). This was however a relatively strong performance compared to most other asset managers. Amidst widespread sector outflows, only two from an 11-strong London-listed peer group outperformed Polar on AUM movement over H1, with some recording falls of more than 10% (see page 2).
Investment performance was +£546m, net flows -£581m, and fund closures -£50m. Average AUM was up on H2-23 but down y-o-y from £20.0bn in H1-23 to £19.4bn, with the H1-23 average still somewhat elevated as the full impact of Russia’s invasion of Ukraine had not hit markets (page 4).
We believe Polar is well-positioned to return to growth. It has an enviable track record of investment outperformance; its multi-niche strategy should prove attractive to asset owners; history suggests active management bounces back after market falls; and its net-flow position is certainly improving.
Our fundamental valuation is 575p per share, 27% above the share price, and the sharp falls in asset manager valuations look over-done to us, especially in light of recent M&A activity.
Norcros has leading positions in its market segments built upon strong brands, new product development, channel diversity and supply chain strengths. It is seeking to drive further market share gains organically by intensifying group synergy benefits and through M&A activity.
H1 results saw an 8.3% reported group revenue decline (or -4.1% on a constant currency, LFL basis) was substantially driven by lower demand in South Africa while the UK was broadly flat y-o-y. EBIT came in 2.7% lower (unchanged in constant currency) reflecting a better UK outturn – being the net effect of exiting Norcros Adhesives and two additional month’s contribution from Grant Westfield (GW) – more than offsetting adverse operational gearing in South Africa.
Norcros is profitable, strongly cash generative and moderately geared at 1x EV/EVITDA. We initiate coverage with our DCF analysis suggesting a fair value midpoint of 233p / share, giving c. 50% upside potential on a rerating.
Link to initiation here: https://www.equitydevelopment.co.uk/research/overlooked-and-undervalued
Results confirm 24.8% sales growth to £53.9m in H1, and despite lower EBITDA margins, Marks Electrical converted 145% of operating profit into cash (vs. 118% for the whole of FY2023), enabling a 0.30p unchanged interim dividend.
Margins, as expected, were reduced by the strategic decision to add integrated gas, electrical and television installation services to its next day delivery service, and increased wages for the company’s drivers. As a result, EBITDA margins were two percentage points lower than a year earlier at 4.3%. Importantly, gross product margins were almost unchanged – i.e. products were not discounted.
Market share improvements in both Major Domestic Appliances (MDA) and Consumer Electronics (CE) demonstrates the success of the company’s strategy. In H1 MDA share rose to 2.9% from 2.4%, while CE share increased from 0.3% to 0.5%. For online only, the MDA share was 5.4% and CE 0.9%. Given the substantial headroom the company enjoys in terms of awareness and reach, that over 1 in 20 UK online MDA orders are already put through Marks Electrical appears impressive.
Operating efficiency in terms of overhead costs improved in the six months. Inventory days reduced to 64 in FY2024H1 from 82 days a year earlier, and net cash rose by £0.9m to £10.9m in the past 6 months. The company generated a still impressive 37% return on capital employed in FY2024H1. With sustained robust sales growth, driven by consistent market share increases from an already meaningful level online and strong cash conversion, we retain our 150p fair value.
Link to report: https://www.equitydevelopment.co.uk/research/market-share-gains-and-efficiency-drive-cash-flow
AUM grew 8% over H1-24 (to 30 Sep 23) from £12.7bn to £13.7bn. Net inflows totalled +£910m (7% of opening AUM), an inflow rate far above most peers, with some experiencing substantial outflows (see page 2). Investment performance contributed +£100m to AUM. Encouragingly, Tatton reports that the level of net inflows of H1 has continued into H2.
Revenue was up 10% y-o-y from £15.9m in H1-23 to £17.5m; adjusted operating profit (AOP) increased 11% from £8.0m to £8.9m; and AOP margin hit 50.7%, from an already-impressive 50.1% in H1-23. These margins are far above any comparable business (see page 7).
We highlight the significant growth potential going forward (detailed on pages 9-12): Tatton is in a growing market with significant tailwinds; it has a market-leading proposition and is gaining market share; it has a huge opportunity to grow AUM even without winning new clients (by increasing average AUM per client); and it can accelerate growth through strategic partnerships and acquisitions.
Our fundamental valuation is 580p per share, 18% above the current share price. We also flag that since the end of the bull market (end of 2021), investment/wealth managers and platforms have ‘de-rated’ significantly, with the median PER of a tracked peer group declining 47% from 27.6 to 14.6. We believe there is potential for a significant sector re-rating (see page 16).
Link to report: https://www.equitydevelopment.co.uk/research/sector-leading-net-flows-double-digit-profit-growth
ECO Animal Health held a Capital Markets event focused on progress and developments in the the company's Research & Development portfolio pipeline.
A series of specialist speakers took investors through six key products and the transformative impact the successful execution of their portfolio will have on their valuation.
The full video has been dividend into chapters, for ease of viewing, as below:
0:00:03 Introduction and Strategy overview (Dr David Hallas, CEO)
0:04:21 R&D Overview, Strategic Approach and Portfolio (Dr. Hafid Benchaoui, Head R&D)
0:21:06 Importance of Mycoplasmas in poultry (Professor Naola Ferguson)
0:36:35 Best in Class Poultry Mycoplasma vaccines (Dr. Natalie Desloges)
0:43:10 Game changing Swine Biologicals (Dr. Brian Martinson)
0:55:37 Innovation in the treatment of swine respiratory disease (Dr. Alphonso Lopez)
1:03:33 Novel approaches to control enteric disease in poultry (Dr. Alphonso Lopez)
1:10:21 Biologicals Production (Dr. Mike Huether)
1:18:11 Portfolio Valuation & Financial analysis (Chris Wilks, CFO)
1:38:13 Summary (Dr David Hallas, CEO)
1:39:58 Questions & Answers
Link here: https://www.equitydevelopment.co.uk/research/eco-animal-health-capital-markets-day-november-2023-investor-presentation
Benchmark Holdings plc, the aquaculture biotechnology company, will be conducting an investor webinar following publication of their Full Year results for the year ended 30 September 2023.
The online presentation will be hosted by Trond Williksen, CEO, and Septima Maguire, CFO.
This event will take place at 12.00pm on Wednesday 29th November.
The webinar is open to all existing and potential shareholders. Questions can be submitted during the presentation to be addressed at the end.
Link to register: https://www.equitydevelopment.co.uk/news-and-events/benchmark-investor-presentation-29november2023
Link here: https://www.equitydevelopment.co.uk/research/strategic-developments-highlight-valuation-anomaly
eEnergy has announced a strategic investment from Luceco plc, whereby Luceco will invest £1.75m via a subscription for new ordinary shares at 5p per share, a 25% premium to yesterday’s closing price. Luceco is a significant supply partner to eEnergy’s eLight business (part of its Energy Services division). The investment looks strategically sensible, strengthening this longstanding relationship, as well as eEnergy’s balance sheet. Additionally, the Board is exploring the potential disposal of the Energy Management division.
After receiving a number of indicative cash offers, which valued the division at >£30m, the Board has entered into a period of exclusivity with one of the interested parties. Irrespective of the outcome of this process, we feel that these developments shine a light on the underlying value of the Group, which, in our view, is not reflected in a current market cap of just £15m.
After a strong run of encouraging news our positive outlook remains unchanged - as does Fair Value at 26p / share.
Read/hear new research note here (free access):
https://equitydevelopment.co.uk/research/bio-detection-becomes-a-commercial-reality
With both positive trading momentum and order book development, Hunting plc has outlined a clear growth strategy to 2030 – not reflected in its share price in the opinion of Equity Development.
Coverage initiated with current Fair Value seen at 421p/share, and you can see the full detailed research / listen to a summary here (free access)
https://www.equitydevelopment.co.uk/research/connecting-market-position-and-clear-ambition-1