George Frangeskides, Chairman at ALBA, explains why the Pilbara Lithium option ‘was too good to miss’. Watch the video here.
Unite have landed a sizeable Uni deal - a joint venture with Newcastle University to develop 2000 beds.
Unite will act as developers and ongoing asset manager with a 51% ownership, putting in 51.2% of the £250m capital. The 51% share is all important in ceding overall control of the jv to Unite; this signifies the trust that Newcastle Uni is placing in Unite. Unite's strong reputation places them in pole position to secure such deals with Unis - deals which will be long-term and upon which the Uni's students' well-being will be dependent.
This is a nice Uni partnership deal that will hopefully be a model for others; the effect of which will be to accelerate development in a hugely under-provided market.
httpS://www.investegate.co.uk/announcement/rns/unite-group--utg/university-joint-venture-/8043328
Excellent results - the transformation is now clear to anyone that cares to look. The share price has run-up in advance but it looks like these results are good enough to justify the valuation. Against a pretty grim market back drop it's very pleasing to see the performance SGE is achieving.
Highlights
>> Underlying recurring revenue increased by 12% to £2,096m;
>> Margin increasing by 140 bps to 20.9% (constant currency);
>> Underlying basic EPS increased by 22% to 32.3p;
>> Cash conversion of 116%;
>> Final dividend of 12.75p, increasing the full year dividend by 5% to 19.3p;
>> Share buyback programme of up to £350m announced.
SGE have a clear winner with SGE Intacct and are aggressively rolling out geographically as well as investing in developing tailored versions for specific market verticals - for manufacturing, construction etc.
The successful transformation to a SaaS business is clear in the metrics:
>> Renewal rate by value of 102% (FY22: 101%), ahead of last year driven by more sales to existing customers and retention.
>> Sage Business Cloud penetration of 84% (FY22: 75%);
>> Subscription penetration of 79% (FY22: 75%).
Really good to see this strong underpinning that is hugely attractive.
With high quality revenue; evident pricing power; growing operating margins; generating surplus cash and growth - these are very impressive results.
If you top-up now at our shorted depressed price you'll be locking in a nice yield of c.4%.
One further point the 2023 dividends of 152p looks to be no change on 2022. However, the 152p paid in 2022 included one of BVXP's regular special dividends of 26p. So, excluding this the dividends increased a very healthy 20.6%!
In the last five years BVXP has paid three Special Dividends - so that 4% is probably understated albeit the corp tax increase will slow cash accumulation.
If you're wondering about the price drop - we've picked up a shorter: Michael Taylor (shiftingshares). Very odd choice - yes BVXP is priced highly - but for very good reasons. So, courtesy of Michael you may wish to pick up some more at a good price.
That in the knowledge that at some point he's going to have to close his short ;-)
Q3 nine month update today. Growth is continuing and on-track for FY23 of 10% growth overall. No impact seen from macro-economic factors - interest rates/inflation.
The renewal rate is 101% consistent with past 18 months indicating a stable competitive environment.
Looking beneath the headline numbers - there are some positive growth drivers building momentum. Intacct US growth 30% and >40% in new territories - albeit from a low base. The launch in Europe has started well and I note Q3 growth was 7% up from 3% at 1H. The Sage Business Cloud organic growth at 28%.
Margins are targeted to rise - with 20.8% for FY23 and to continue widening thereafter. The aim is for SGE to be a 'Rule of 40' SaaS business.
In recent years, Rule of 40 has gained widespread usage as a yard-stick target measure of growth by investors in SaaS firms, first coined by Brad Feld. The Rule of 40 states that if a company's revenue growth rate is added to its profit margin, the total should exceed 40%. No breakdown offered on the mix today - and it'd be very interesting to know what their thoughts are?
The rationale is ofc that a SaaS Rule of 40 firm will command a premium rating, but again not stated, and on a p/e of 27 as mentioned above SGE is already considered highly valued in the context of the UK market.
After market close - UTG have just released their 1H23 Results and are looking to raise £300m via a placing and separate retail offer via Primary Bid. The funds will be used:
'The Placing will enable Unite to continue to invest in its market-leading platform and enhance future earnings growth. The Company intends to use the net proceeds of the Capital Raise (the "Net Proceeds") to commit to two new PBSA development schemes and accelerate asset management initiatives to enhance future returns.'
'Background to the Capital Raise' - Selective edits - link below.
'The Board believes the current market environment offers a compelling multi-year opportunity to accelerate the Company's growth.'
'structural factors continue to drive a demand/supply imbalance for the Company's product. Demographic growth will see the population of UK 18-year-olds increase by 140,000 (19%) by 2030. Application rates to university have also grown steadily over recent years, reflecting the value young adults place on a higher level of education and the life experience and opportunities it offers. Demand from international students also continues to grow, as reflected in the 2% increase in undergraduate applications for the 2023/24 academic year.'
'The Company also sees opportunities to secure new development opportunities at attractive returns and is in advanced discussions for a number of schemes in London and prime regional markets. Moreover, the Company has seen a growing willingness from universities to explore more strategic options to grow and improve their accommodation offer, given the vital role it plays in helping them to attract and grow student numbers. This includes a number of advanced discussions for strategic partnerships with universities for the development of new accommodation on- and off-campus, as well as the stock transfer and refurbishment of existing university accommodation.'
https://www.investegate.co.uk/announcement/rns/unite-group--utg/proposed-placing-of-new-ordinary-shares/7651606
I've been anticipating the Unis to be looking for partnerships for a long time - looks like it might now be happening.
Reading the runes - a few indications that SGE's business transformation is largely complete. The presentation of accounts has been revamped to give 'greater emphasis to underlying revenue and profit measures'. Accompanying this, the cloud-based SaaS firm supporting small and mid-sized company's digitisation needs has had a face-lift with a jazzy new branding, sports sponsorships and a load more awareness building advertising.
Then looking at the rns history there has been some chunky insider share purchases indicating internal confidence in the outlook.
My crystal ball is telling me to expect an up-beat set of results and outlook.
Excellent results - NGR incl. BetMGM +22% and positive progress across the business - still a few areas such as Germany disappointing - but out of ENT's ability to influence.
365scores - the purchase rationale - adding content - good conversion to real-money gambling and positioning at the top of the hopper - top 5 App globally.
BetMGM - on track for profitability in H2- market share target 20-25% remains. Presumably, on the Sports Betting this target will come back into focus once the competitors dial-down the promotional bonanza - which at some point they must.
Brazil - moving forward with regulation - 15% betting tax on the cards plus Corp Tax. ENT in leading position and looking to establish the same in the regulated market. There was previously Analyst concern that if Brazil didn't move forward with regulation - ENT may have to withdraw.
Whitepaper - not concerned about a material impact.
Australia - despite new market entrant ENT believe that they are taking market share in a very competitive market.
So, a few pinch points but overall a very strong performance.
Highly positive Q1 trading update today:
Richard Smith, Unite Students Chief Executive Officer, commented:
" We continue to make strong progress with bookings for the 2023/24 academic year with 90% of rooms already sold, demonstrating the strength of student demand and the attractiveness of our fixed-priced all-inclusive offer. Reservations are significantly ahead of recent sales cycles, reflecting strong demand from both new and existing students as well as new nomination agreements with universities. This progress reinforces our confidence in delivering rental growth of 6-7% for the 2023/24 academic year. Rental growth also continues to support our property valuations as the market adjusts to a higher funding cost environment.
The supply of purpose-built student accommodation cannot keep pace with growing student demand at the same time as HMO landlords are leaving the sector. We are therefore tracking a number of new development opportunities at attractive returns, which we are uniquely positioned to deliver through our university relationships and development capability. "
Picking-out the key points:
>> Demand is out-stripping supply: the implication is full-utilisation can be anticipated looking at the forward bookings.
>> Pricing power: UTG is able to increase rents to mitigate inflation and interest rate rises. Despite the rises UTG is very competitively priced due to wider market rental price acceleration. Pricing power is extremely important for investors in an inflationary economic environment.
>> Development Pipeline: IMHO the pressure is mounting on Unis to resolve the growing accommodation crisis. This will provide the long-anticipated partnership opportunities for UTG. Something to keep an eye on.
Hopefully, with the development cost-pressures ameliorating we will see a further acceleration in the development pipeline - to meet the evident demand. Whilst pressures on yield cause property valuations to pause - new development and partnership deals are the likely pathway to growth.
Simon Thompson of Chronic Investor tips RBGP as BUY to take advantage of 45% price anomaly to peers. No share price target is stated but doing the math and it would be 157p.
ST's investment case is laid out in much more detail in this report from Progressive Research https://progressive-research.com/wp-content/uploads/data-sync/research/RBGP%2020220719.pdf
Estate Agents Knight Frank have conducted a survey with UCSA that finds that Purpose Built Student Accommodation is better value than renting a room in HMO (house in multiple occupation). The gap was most extreme in London where it was found that students pay 33% less.
Students in HMOs are also going to be directly exposed to further gas and electricity price rises which must be a further concern.
htTPs://www.lettingagenttoday.co.uk/breaking-news/2022/8/agency-backing-purpose-built-student-accommodation-over-buy-to-let
Looks like Mr Market has looked past our CEO's doom-laden remarks and liked the performance and outlook. Strong bounce-back in the sp following the awful 91p -7.7% fall on the Results.
I judge UTG's management team to be highly competent - they hardly ever put a foot wrong IMHO - but the results rns' wording was poor. Their Financial PR, Powerscourt, need to sharpen up their act - they should have known how that statement would have been interpreted by the Mr Market.
Great set of results for 1H22 from UTG - showing a very strong bounce back from Covid and a very positive outlook. Just what you want to see in these uncertain times. However.....
So, why on earth did CEO Richard Smith have to put a negative slant upfront on the RNS!! With Mr Market in a particularly skittish mood he didn't need to give him an invitation to focus on the negatives rather than the positives. He said:
"We have seen continued momentum in the first half, as earnings and dividends have grown strongly and reservations for the 2022/23 academic year are now ahead of pre-pandemic levels.
"Our business model offers inflationary protection but, like others, we are not immune from the impact of rising costs and interest rates. We are also very conscious of the current cost of living pressures facing students and parents. Our customer offer provides students with significant savings on their bills, as part of a simple, fixed price all-inclusive rental payment.
"Despite increased economic uncertainty, we remain confident in our ability to deliver significant growth over the medium to long term. Demand for Higher Education has proven to be resilient through economic cycles and we have significant opportunities for growth through our alignment to the strongest universities and by leveraging our best-in-class platform ."
The irony is that UTG have hedged their utility costs out to 2024! They have also managed their salary costs, have LTV at a very conservative 30% and debt profile that will minimise the impact of rising interest rates.
Looking beyond that the figs are great:
'Earnings and dividend ahead of their pre-pandemic peak'
>> Adjusted earnings up 32% to £96.0 million (H1 2021: £72.6 million)
>> Adjusted EPS up 32% to 24.0p (H1 2021: 18.2p)
>> IFRS profit before tax of £334.1 million (H1 2021: £ 130.4 million), driven by adjusted earnings and a valuation gain of £214.9 million in the period (H1 2021: £54.3 million)
>> EPRA NTA per share of 940p, up 7% (31 December 2021: 882p)
>> IFRS NAV per share up 8% to 948p (31 December 2020: 880p)
>> Total accounting return of 8.3% for H1 (H1 2021: 3.9%)
>> Interim dividend of 11.0p up 70% (H1 2021: 6.5p), targeting 80% pay-out of adjusted EPS for full year.
Great to see in today's trading update that despite the depressed stock market RBGP is trading well and in-line with market expectations. I'm particularly pleased to see that 'market expectations' is referenced and stated: This adds absolute clarity and I wish more firms would follow this best practice.
The integration of MC appears to be going well and the EBITDA margin improvements are very positive. The other Divisions are trading strongly which is reassuring with the general poor economic sentiment.
A key attraction for me is that the Legal Services market tends overall to be uncorrelated with the general economy. If one part of the market is suffering another tends to be busy. The degree to which this true and recognised by Mr Market we'll have to wait and see - Legal Services as an investible sector is still relatively recent.
Just to let you know MANO are presenting on MelloMonday today Monday 11th July at c. 6pm - full event starts at 5pm.
It'll be a good opportunity to get the latest trading position and ask any questions that you have on FY 23 results.
Https://melloevents.com/mellomonday-11th-july/
Lots of positives in todays' trading update from Unite but first we have the Quarterly Fund Valuation Report as at 30 June 22 for the two funds that Unite manages. These are in addition to Unite’s wholly owned student accommodation portfolio.
The two funds are:
USAF – Unite own 28.2% (up from 22% due to recent investment) - like-for-like asset value increased 3.5% during the quarter; and
LSAV – Unite own 50% - like-for-like asset value increased 4.0% during the quarter.
Just to emphasise those above jumps in valuation are quarterly not annual rises. This is reflecting the strong demand for this asset class by Institutional Investors - the RNS mentions the acquisition of Student Roost by GIC and Greystar announced in May. It also points out that we can expect to see a similar uplift to Unite's own portfolio of property. Student Accommodation is uncorrelated with the wider economy and is thus highly attractive in the face of a potential recession. It was the best performing property asset class during the 2008/9 Global Economic Crisis (GEC).
Outlook is highly positive based on the forward bookings for 2022/23 academic year an UTG are confident in achieving 97% occupancy. Much of the portfolio's rental rates are inflation linked and there is strong demand for the other direct-let beds; so the 3 - 3.5% rental rate growth guidance might be beaten.
UTG are highly exposed to utility costs and wage inflation - but have hedged their utility costs out to a 'substantial proportion' of 2024. Hopefully the current price pressures will wain before their protection winds-out. They have shown great foresight here and similarly they have locked-in their finance at the pre-fiscal tightening rates.
Clearly, Covid is still a risk, not least in China, but accepting that, UTG is emerging from the Covid-19 disruption in a strong position.
Results 1H22 - Strong underlying performance, as always, masked by the transformation, planned wind-down of services revenue and disposals (removing revenue). The tone is increasingly confident with a rebranding and relaunch of the Sage Brand.
So, looking through the statutory numbers to underlying performance the highlights are:
>> Organic Revenue up 5%
>> Organic Recurring Revenue up 8% (Annualised Recurring Revenue(ARR) up 10%)
>> Subscription penetration 74% (68%)
>> Business Cloud penetration 72% (65%)
>> Renewal by value 100% (97%)
>> Underlying cash conversion 120%
>> Underlying Op Margin 19.6 (20.4%)
The Op Margin reflects increased marketing spend and product development with the guidance that it will widen again in H2.
The key positives are the new customer acquisition (+£150m of ARR) driven by the Cloud Native products up 43% (ARR). Of this new customers comprised 75% and re-activations of 25% with Intacct again the star product delivering +31% recurring revenue in the competitive North American Market.
They have finally completed the disposal programme and the declining legacy services revenue is becoming less significant - so the optics should start to improve. Clearly, the global economic outlook isn't looking good but the trend to digitisation and Sage's resilience suggests they will continue to progress. The re-instatement of the progressive dividend policy should help support the share price.
The BetMGM business update yesterday - the highlights 'BetMGM will confirm that it has:
>> Established itself as a market leader, delivering strong performance inline with its ambitions
>> Achieved the number one position with 25% (See 1 below) share in U.S. sports betting and iGaming markets where it operates
>> Consistent leadership in the U.S. iGaming market with 29% (See 2 below) share;
>> A total addressable market (TAM) in the U.S. and Canada that is now expected to be approximately US$37billion, driven by expansion in online sports betting and strong customer dynamics;
>> Committed to leading the industry in sustainability and responsible gambling;
>> Reiterated long term ambitions in the U.S.:
o Expected market share of approximately 20% -25%;
o Expected EBITDA margin of 30-35%.
>> Reaffirmed its outlook guidance:
o FY 2022 net revenues over $1.3 billion;
o Reach positive EBITDA during 2023.
Presentations by BetMGM’s management team - Adam Greenblatt, Chief Executive Officer; GaryDeutsch, Chief Financial Officer; Matt Prevost, Chief Revenue Officer, and Jarrod Schwarz, Chief Product Officer.
A replay can be accessed through the following link:
https://event.webcasts.com/starthere.jsp?ei=1546306&tp_key=20ae892484.'
So, all looking very positive and pleasing to see that the sp has responded.
Note 1 - Active market share by GGR for retail, OSB and iGaming including only U.S. markets where BetMGMwas active; internal estimates used where operator-specific results are unavailable. Results for Feb-22.
Note 2 - Total market share by GGR for retail, OSB and iGaming across all U.S. markets, including markets where BetMGM is not currently active; internal estimates used where operator-specific results are unavailable. Results for Feb-22.
The BetMGM business update yesterday - the highlights 'BetMGM will confirm that it has:>> Established itself as a market leader, delivering strong performance inline with its ambitions>> Achieved the number one position with 25% (See 1 below) share in U.S. sports betting and iGaming markets where it operates>> Consistent leadership in the U.S. iGaming market with 29% (See 2 below) share;>> A total addressable market (TAM) in the U.S. and Canada that is now expected to be approximately US$37billion, driven by expansion in online sports betting and strong customer dynamics;>> Committed to leading the industry in sustainability and responsible gambling;>> Reiterated long term ambitions in the U.S.:o Expected market share of approximately 20% -25%;o Expected EBITDA margin of 30-35%.>> Reaffirmed its outlook guidance:o FY 2022 net revenues over $1.3 billion;o Reach positive EBITDA during 2023.Presentations by BetMGM’s management team - Adam Greenblatt, Chief Executive Officer; GaryDeutsch, Chief Financial Officer; Matt Prevost, Chief Revenue Officer, and Jarrod Schwarz, Chief Product Officer.A replay can be accessed through the following link:https://event.webcasts.com/starthere.jsp?ei=1546306&tp_key=20ae892484.'So, all looking very positive and pleasing to see that the sp has responded.Note1 - Active market share by GGR for retail, OSB and iGaming including only U.S. markets where BetMGMwas active; internal estimates used where operator-specific results are unavailable. Results for Feb-22.2 - Total market share by GGR for retail, OSB and iGaming across all U.S. markets, including markets where BetMGM is not currently active; internal estimates used where operator-specific results are unavailable. Results for Feb-22.
Yep IDEA takeover looks inevitable but I'll be sorry to see them go. I first bought in at 32p so a ten bagger for me. Their consistency of performance has been remarkable - particularly excellent takeover execution. The management team, Ben and Emma are very impressive and David Hornsby previously. Their shareholder engagement with individual shareholders has been exemplary. I wish I had ten more IDEA's in my portfolio.
I know you're not supposed to fall in love with your shares - but there are exceptions.
Regards, Maddox