In line results. Well placed for bounce in better TAMs

Having issued a pre-close update in February, these prelims were well trailed. While accelerated licensing income flattered profits during the period, the number and scale of new agreements bodes well for future cash profits, as the size of the receivables asset clearly signals. With strategic growth continuing at pace in the US, green shoots in other markets, and actions taken to improve operational efficiency, SDG is confident it can navigate further end market uncertainties, and forecasts are

PROGRESSIVE: Sanderson Design Group: Strategic growth drivers show their value in challenging trading conditions

Sanderson Design Group (SDG) has announced its FY24 full-year results, which are in line with the headline figures from its February trading update. A record year for Licensing and a strong performance in the key North America market helped to offset a challenging consumer environment in other geographies, most notably the UK. While this backdrop is set to persist in FY25E, the group will continue to focus on its strategic growth drivers, notably North America and Licensing, to deliver sharehold

Blinds 2go Licence Renewed and Expanded

Sanderson Design has renewed and expanded its licence with Blinds 2go a core licensing partner that sells made-to-measure blinds, curtains and shutters online. This 3-year agreement crucially includes the USA, a key strategic focus for Sanderson Design. The £1.1m contribution to PBT this year, which is non-cash accelerated income, underpins current forecasts. As such, we make no changes to forecasts today pending FY results next week. However, we see this licensing agreement as having positive i

New HQ move to historic West London site

SDG has announced an exciting new HQ development. The group’s HQ will move in the summer to Chiswick (West London) to a listed building that first opened in 1902 as wallpaper factory for Arthur Sanderson & Sons, designed by celebrated architect and designer CFA Voysey. The new London HQ will include showroom space, a design hub, events location and house the Sanderson and Morris & Co. design archives. This move will be cost neutral on an annualised basis, and should drive a number of business be

New DTC site for Morris & Co to launch later in 2024

SDG has announced an exciting new e-commerce development for Morris & Co, one of its largest and most recognised brands globally. The new site will launch in H2 with a full range of core and licensed products, to become an online destination for the brand. It will be operated by its existing partner that successfully launched and runs its Scion Living site. We don’t expect any material contribution in FY Jan’25 but thereafter we see scope for the site to add meaningfully to profits and FCF. Give

PROGRESSIVE: Sanderson Design Group: Morris & Co to launch online store

Sanderson Design Group (SDG) has announced it is to launch a dedicated online store for its iconic and second largest brand, Morris & Co, in the second half of 2024. This marks a major step-up for the group in terms of e-commerce and the direct-to-consumer (DTC) channel, where its presence to date has been limited to the smaller Scion brand. While not anticipated to make a significant financial contribution in FY25E, this represents an important strategic initiative for SDG to exploit another ch

In-line FY24 update, but caution on cost mitigation

The Y/E update signals PBT will be in line with expectations at c£12m. This will come as a relief to investors, even if the underlying position is slightly flattered by accelerated Licensing income, as reflected in slightly lower net cash. What may disappoint is FY25 guidance being tempered 7%, due to cost inflation (mainly wages). However, this still assumes no better than flat volumes, a scenario which we argue holds upside if activity improves in H2. We stay at Buy.

PROGRESSIVE: Sanderson Design Group: Strategic growth pillars bolster results

Sanderson Design Group has delivered its full-year trading update to 31 January 2024. Group revenue has eased back 3.1% to £108.5m on a reported basis, following the 2% decline in H1. The strongest performances were delivered by the strategic growth cornerstones of Licensing and North America, offset by challenging market conditions in the UK, Europe and the Rest of the World. A strong balance sheet saw year-end cash rise to £16.2m, compared with £15.4m at year-end FY23. Having traded in line wi

Hybridan Small Cap Feast - 10 Jan 24

10th January 2024 @HybridanLLP Status of this Note and Disclaimer This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment obje

Further licensing development in the US

Morris & Co has signed a new licensing agreement in the US, the 3rd such deal in a key target market. Beyond the £0.7m contribution to PBT this year, which is non-cash accelerated income, the almost immediate timing of initial product launches means this deal will start generating profit/cash in H1 Jan’25. We make no changes to any forecasts today pending the full year update in 4 weeks, but see this deal as having positive implications for valuation, with the shares trading on a miserly P/E of

Hybridan Small Cap Feast - 30 Oct 23

30th October 2023 @HybridanLLP Status of this Note and Disclaimer This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment obje

New Sanderson licence with Habitat

Through its Sanderson brand, SDG has announced a new licensing agreement with Habitat which will launch a range of table/kitchenware based on Sanderson’s National Trust collection of fabrics (one of its best-selling collections since launch). The new products will launch in spr’25 and generate incremental royalty income for both SDG and the National Trust from FY26 onwards, in line with the group’s Live Beautiful strategy.

Reassuring update helped by licensing and margins

H1 PBT came in ahead of our expectations, with licensing income, product margins and interest income all contributing. Crucially, the board’s expectations for the full year remain unchanged as its international diversity (especially US growth), ongoing licensing momentum, and cost savings offset pressures elsewhere (namely UK sales and manufacturing). High levels of sampling requests from its most recent launches are also encouraging. We stay at Buy.

Shoe Zone plc (SHOE LN) - Interim results

H1 trading in line with expectations and ZC forecasts: Group revenue of £76.5m is +1.5% YOY (H1 23: £75.4m), which we see as a strong performance in the context of ongoing consumer uncertainty; reflective of the appeal of the Group’s competitively priced product range. Gross margin of 19.3% is +120bps YOY (H1 23: 18.1%), driven by a higher product margin of 62.7%, +260bps YOY (H1 23: 60.1%) benefitting from lower container prices, partly offset by increased wage costs, and higher energy prices.

Spectra Systems - Banknote Conference 2024 – significant interest in SPSY polymer

Last week's global Banknote Conference 2024, taking place in Forth Worth, Texas, was a near-perfect sales opportunity for Spectra (SPSY) given (1) an exceptionally strong new product to offer in the banknote arena, (2) an expanded and highly experienced sales team post the recent Cartor acquisition and (3) patent appetite among the Central Bank client base for a new polymer substrate supplier in this market. Spectra, a leader in machine-readable high-speed banknote authentication and brand prote

PROGRESSIVE: Watkin Jones: Guidance unchanged as investment rekindles

Watkin Jones has maintained its FY24E guidance following today’s results for the six months to 31 March, which showed operating profit more than doubling. The group continues to expect a heavy H2 weighting as it has focused on operational performance while the forward-funding market has remained largely on hold, pending further clarity on the direction of interest rates. Sentiment is now gradually improving, according to the group.

Morning Note – 23 May 2024

LIBERUM: CT Automotive: Return to strength underpinned by efficiencies

Solid State - Capital Markets event shines light on strong prospects and diversification

Solid State is a specialist value added component supplier and design-in manufacturer of computing, power and communications products. Yesterday, the group held a Capital Markets event, providing a deeper dive into its Components and Systems divisions, reinforcing our view that this remains a high-quality business with excellent growth prospects. Following both organic investment and a number of successful acquisitions over the past few years, the group presented its recently rebranded Component

Dowlais Group - Margin expansion despite mixed auto markets

Dowlais Group’s traditional automotive and powder metallurgy operations continue to outperform the market, albeit the slowdown in EV adoption has affected ePowertrain, leading to a marginal reduction in expectations. However, the key remains further progress in operating margins (6.1% in the period, up 30bp) on the journey to c 10%. This margin expansion should drive earnings momentum and subsequently share price performance.

Surface Transforms (SCE): Open Offer

Surface Transforms (SCE) has announced the raising of £6.5m new equity and is launching an Open Offer to shareholders. It is raising capacity and quarterly revenue but has needed to address the two sets of production constraints it faced: scrappage and process-line pinch points. Pinch points have been much reduced through capital expenditure and expert maintenance teams. Major capital expenditure is ongoing and unaffected by the fund raise. The scrappage from the fast ramping up of volumes is re

PROGRESSIVE: IG Design Group: FY24 results well ahead of expectations – on course to hit operating margin target for FY25E

IG Design Group’s trading update for the year ended 31 March 2024 has exceeded market expectations in terms of both profitability and, most significantly, cash generation. The FY24 results confirm the progress the group has made on its strategic journey to simplify the business and improve operational efficiency. Notwithstanding ongoing uncertainty on the economic backdrop and consumer expenditure, the group remains confident of delivering its target of returning to its pre-Covid adjusted operat

Hybridan Small Cap Feast - 21 May 24

21st May 2024 * A corporate client of Hybridan LLP ** Arranged by type of listing and date of announcement *** Alphabetically arranged **** Potential means Intention to Float (ITF) has been announced, or it is a rumour Dish of the day Admissions: Delistings: What’s baking in the oven? ** Potential**** Initial Public Offerings: ITF announced: 7th May: Time To ACT plc, an engineering business focused on technology for the energy transition sector, has announced its intention to seek Admission to t

Dowlais Group - Firmly on track despite the UAW strike headwinds

Dowlais Group’s positive trading update, with growth ahead of the market and continued margin expansion, provides another marker in delivering on the stated strategy. Management intends to drive profitable growth through the EV transition and expand the underlying operating margin to 11% (FY22: 6.6%). Delivery on these targets will highlight the quality of the operations and valuation discrepancy.

Dowlais Group - Motoring forward

Dowlais Group’s first set of results were ahead of our expectations, with positive cash generation a highlight despite restructuring and demerger costs. Softer automotive markets will limit margin progress in FY24 towards the double-digit target. Despite this, margins of c 6.5% are still ahead of automotive peers, although the shares trade at a significant discount to our implied generic peer-based valuation.

Spectra Systems - Sustained growth, enhanced momentum

Spectra Systems (SPSY) has an excellent record in growing profits through its highly regarded technology and relationships with key clients, which include a prominent global central bank. Now, the company is ready for the next stage, and we see the acquisition of Cartor Security Printers as a game-changer in enhancing its ability to continue, and potentially accelerate, this momentum, even as it continues to benefit from a near-term, multi-million-dollar sensor refresh programme with a long-term

Spectra Systems (SPSY) - Solid FY results, cash on the balance sheet and a record FY24E beckons

Encouraging FY23 results from SPSY this morning show profits and cash a touch ahead of expectation and position the company well for a year of strong growth in FY24E. SPSY leads the market in machine-readable high speed banknote authentication, brand protection technologies and gaming security software. The company grew the business robustly in FY23 (PBTA +6%, EPS pared by increased tax payments, progressive DPS), building on a decade of double digit CAGR; and closed the year with the transfor

LIBERUM: Frontier Developments: New Jurassic World game announced