22 Feb 18
Car Genie should be magic for Trakm8
The AA strategy update has set out an ambitious plan for the business to move into the future; taking it from “a company helping when you break down to one actually predicting when you might break down in the first place”, flagging game-changing growth drivers in the areas of Connected Car and insurance. The key element enabling this refocused strategy will be its Car Genie product (provided by Trakm8) and it is set to see an extended rollout to “tens of thousands” of existing clients. We thus see significant upside in Trakm8 forecasts from FY 2019 for additional AA orders.
12 Feb 18
Doubling and Delivering
PROACTIS’ interim trading statement provides the first opportunity to gauge performance since Perfect was consolidated. The overall picture looks healthy: revenue of £26.3m has more than doubled yoy and EBITDA of £8.5m is ahead our expectations (£8.0m). While customer activity is not quantified, it is described as strong, and the target of £5m in annualised synergies by the end of FY18 is confirmed. We believe PROACTIS can deliver £20m in EBITDA in FY18 and leave our forecasts unchanged.
15 Feb 18
Interims results – confident outlook
Interim results to 31 December were in line with the 19 January trading statement, with revenues rising 31% to £4.2m, resulting in a pre-tax loss of £30k and period-end cash of £2.0m. A positive outlook statement, supported by strong post-period end growth data for Skinny Tan and Roots, should provide the comfort that investors are looking for and justify H2 seasonality, which is expected to account for 69% of FY revenues (vs. c.65% in the past two years); driven by product line extensions, increasing retail shelf space and geographic expansion. Minor changes to forecasts (<5%), -2% EPS (offset by lower tax charge) are made with better year-end cash. We retain our target price of 400p, which implies a 2019 P/E, EV/EBIT and EV/Sales of 19.3x, 17.0x and 3.1x, respectively, underpinned by rising ROCE and free cash flow yield.
15 Feb 18
Following the nomination of preferred bidder status in November, Avon has announced that an agreement has been reached with the UK Ministry of Defence (MOD) for the General Service Respirator contract. The contract builds order visibility on both sides of the Atlantic while demonstrating the new strategy in action.
Companies: Avon Rubber
16 Feb 18
Steve Brown to step down as CEO
Steve Brown is stepping down from the CEO role and will be replaced by Paul Noland, current President and CEO of the International Association of Amusement Parks and Attractions ("IAAPA”), when he joins the accesso Board on 9 April. Mr Noland has extensive industry experience having previously held senior leadership and operational roles at Walt Disney Parks and Resorts and Marriott International. While news of Mr Brown’s departure may disappoint the market initially given that he was viewed as a quality operator, his replacement’s extensive industry experience will be invaluable to accesso’s next phase of growth and global ambitions. Reassurance is also provided by the fact that Mr Brown will serve as an advisor to both Mr Noland and the Board throughout 2018.
Companies: Accesso Technology Group
16 Feb 18
Proposed placing and interim results
CVS has this morning announced an intention to conduct a placing of up to 6.391m shares via an accelerated bookbuild. The proceeds will be used to pay down debt and create additional headroom to help fund a strong pipeline of future acquisitions. Management has an excellent consolidation and investment track record and we note that it successfully put to good use the Dec’16 fund raise in a timely manner. Today’s corporate news is accompanied with an inline set of interims. We put our forecasts under review and will publish updated numbers once the final outcome of the placing is confirmed.
Companies: CVS Group
19 Feb 18
Unique model continues to deliver results
Gleeson’s interims confirm another period of excellent progress, the highlight of which is the 31% growth in completions at Gleeson Homes. The Group is well on track for the full year with an increase in new site openings planned for the coming months as management puts the infrastructure in place to build towards its 2,000 home target. We increase our dividend forecasts by c.2% (with more potentially to come) noting a more generous dividend policy. EPS edges up by a similar amount (lower tax rate). Gleeson is in excellent shape with strong growth momentum, a highly impressive management team and income attractions (4%+ yield). It remains a Best Idea for 2018 and we are highly supportive of its unique affordable housing model.
Companies: MJ Gleeson
19 Feb 18
Forecast update pre tomorrow’s CMD - minor EBITDA upgrades
We have updated forecasts ahead of tomorrow’s Capital Markets Day, which we expect to provide a comprehensive update on innovation strategy, R&D plans and commercial progress. We continue to argue that the market’s negative reaction on the Trading Update on 1st February, which highlighted FY2017 EBITDA in line with our forecast, represented an overreaction. We reiterate our Buy recommendation with a revised target price of 230p (from 250p).
Companies: Horizon Discovery Group
19 Feb 18
Trading Update - Material Earnings Upgrades
Dart Group has provided a trading update this morning, indicating that improving pricing dynamics are likely to see FY18 underlying PBT materially ahead of current market expectations (Bloomberg consensus: £95m). In addition, the Group highlights that FY19 trading performance is expected to be “broadly” inline with FY18.
Companies: Dart Group
21 Feb 18
Some signs of stability return
Since our last missive, we have continued to experience volatility but there have been some signs recently of increasing stabilisation, although some nervousness clearly still persists. We have a Spring Statement from the Chancellor of Exchequer on 13 March where he will respond to the forecasts from the Office for Budget Responsibility. We have the prospect of a rise in interest rates in the short run, with further increases likely over the medium term with negative implications for ‘defensives’. In Share News & Views, we comment on Hargreaves Services, RWS Holdings, Staffline and Synectics*.
Companies: APC BMS CRPR ECSC EUSP FDM GETB PCF SNX SPRP TCN W7L
21 Feb 18
Share buy-back signals strong visibility on capital generation
Quarterly results showed no changes in underlying operating trends. The symbolic share buy-back announcement signals management’s strong visibility on future excess capital generation in spite of pending regulatory impacts, potential residual litigation charges or future pension contributions.
Companies: Lloyds Banking Group
17 Jan 18
Taptica has taken advantage of investor demand following the recent positive trading update to raise $30m in an oversubscribed placing in order to reduce its debt. It has issued 4.85m new shares at 450p; approximately 7.7% dilution excluding dormant shares. Furthermore CEO Hagai Tal has sold 1.65m shares (a further $10m) to pay a CGT liability due on the reorganisation of his holding in 2016. Founder Ehud Levy has also taken the opportunity of strong institutional demand to reduce his exposure to the business through the sale of 2.0m shares. Although there will be some dilution, the placing will strengthen the balance sheet and better position the Taptica for prospective M&A opportunities.
Companies: Taptica International
14 Feb 18
Strong results as another Advair generic bites the dust in the US
GSK’s Q4 results were ahead of our as well as the street expectations. Forex had a negative impact of 3ppts on sales and 4ppts on adjusted EPS. All segments outperformed sequentially, but vaccines stood out with 9% growth (vs flat Q3). The main drivers included HIV in pharma, flu and meningitis in vaccines and international markets in the consumer health business. Management maintained interest in consumer health assets but ruled out a compromise on the pharma focus.
20 Feb 18
Strong 2017 sets foundation for future years
Although the macro scenario is still positive, more than 40% of LNGC projects under construction is behind schedule or slowing down, which has reduced GTT’s expected orders from 52 to 37 by 2022. As a reminder, LNG carriers remain GTT’s main activity, contributing 83% to sales in 2017.
Companies: Veltyco Group
20 Feb 18
Wider WS losses short term, but no change to longer term opportunity
Interims are a slight miss due to costs, and increased cost guidance, especially WS losses, points to downgrades of c4% this morning, which is disappointing so soon after the pre-close. The dividend was better than expected though driven by confidence in the future potential, which hasn’t changed, and cash generative dynamics. Significant investment in the last 2-3 years, incl. areas with rapid payback, and a low-ticket bias (£30 ATV), mean DNLM isn’t reliant on the backdrop. In particular, integration benefits from WorldStores have turbo-charged its online and category capability, further distancing it from the discounters. Key to today is a positive update on strategic growth initiatives, and reassurance on reversing H1 gross margin mix dilution (H2 margin expected to be c+100bps). But the additional costs/losses at WS are a disappointment. Whilst the previous lack of clarity about the growth strategy has been addressed (CMD, 11 Oct), recovering confidence in Dunelm’s potential and online growth may be set-back today, albeit temporary. Weakness in the shares, should it materialise, would present an opportunity.
Companies: Dunelm Group
22 Feb 18
Moderate outlook less inspiring
All financial targets met in 2017 and revenues up 2.5% to €74.9bn. Dividend increase of €0.05 to €0.65 per share; dividend in kind to be discontinued. Transfer of 12% BT stake into pension fund. CFO Dannenfeldt will leave the company for private reasons; Christian Illek, at present CHRO at Deutsche Telekom, will succeed. Moderate outlook; revenues are expected to increase marginally and adjusted EBITDA should reach €23.2bn (€22.45bn in 2017), of which T-Mobile US$11.3bn.
Companies: Deutsche Telekom
22 Feb 18
The main questions (Caixa and La Poste) still unanswered
A good 2017 for CNP with the highest net profit in the last 10 years. The insurer decided to distribute €0.84/share, better than the €0.80 expected. The rapid transformation of the business model contributed to the improvement in the APE margin and the solvency ratio as the newly-generated business needs lower capital. The new agreement with Caixa has not been signed and management refused to comment on the rumours concerning a probable “marriage” with La Poste.
Companies: CNP Assurances
22 Feb 18
Soft quarter again
Sanofi continued to report a soft operating performance in Q4. While the headwinds in the diabetes space are widely known, the slower growth in the MS portfolio, poor fate of Dengvaxia and some one-offs weighed on the performance. The weak guidance, although masked by the recent two acquisitions, was a clear disappointment for 2018. The acquisition of Bioverativ (reminding us of the reaction ever since Shire acquired Baxalta) has also not gone down well with the market.
22 Feb 18
No real surprise
Underlying trends were broadly in line with expectations as are management’s mid-term profitability targets. The revival of market volatility is good news for CIB activities but the $/£ weakness less so. The stock continues to show a large valuation discount, only partly justified by Brexit-related risks in our view.
22 Feb 18
The business division bites, consumer losses continue; dividend maintained until 2020
• The Centrica Business division hammers the group’s results. • The company lost 5.2% of its clients (-1.4m) in the customer segment and -7.1% in the Business one (-100k). • Price cap should hurt 2019 margins (and earnings), but impact unknown. • Reassurance on the dividend side and OCF guidance (£2.1-2.3bn) is a positive.
22 Feb 18
A sound FY17 and confident about FY18e
Wolters Kluwer reported FY17 results globally in line with expectations. The guidance for FY18e is for diluted adjusted EPS rising by 10-15% at CER, with an adjusted operating margin anticipated at 22.5-23% (compared to 22.2% in FY17 under IFRS15). Minor upward adjustments made to our forecasts and a Reduce recommendation reiterated as our valuation metrics are currently still a bit stretched.
Companies: Wolters Kluwer
22 Feb 18
FY top-line weaker than expected; shifting sands for the tobacco industry
On a standalone basis, the underlying performance of the top-line was weaker than expected; on the other hand, organic profitability seemed to be good. The numbers were much helped by the integration of Reynolds. It seems that the tobacco industry has been in shifting sands territory as unprecedented dynamic changes in the market have put pressure on tobacco players to accelerate their transformation and expand less-risky offers. We do not expect sharp changes to our target price as we had already taken a more prudent approach to our tobacco industry valuation.
Companies: British American Tobacco
22 Feb 18
An outstanding year for Bouygues Telecom
Q4 sales were up by 4.8% yoy: a solid performance and better than the 2.6% and the 3.5% respectively recorded in Q3 and H1. The Construction business confirms the return to growth after a poor year in 2016 with a good +4.3% growth in Q4 (vs +2.5% globally for the first 9m 2017). The Construction backlog was at nearly €32bn at end 2017, up 6% yoy. Note Bouygues Telecom’s revenues were up once again by an impressive +8% yoy (+6.8% for the whole year). The Q4 EBITDA was down by 2.5% yoy (but was still up by 7.6% for the whole year) due to the construction businesses which posted an 8.5% decline in EBITDA but a 13.5% growth in current operating profit (a better parameter to reflect this type of business) thanks to the recovery of Colas’ operating profit. But, above all, note the impressive performance of Bouygues Telecom (however, already announced in November after the Q3 release) whose EBITDA grew by 27.2% in 2017 with a margin expansion of 4.6ppt! As a result of this good performance, the group has decided to increase its dividend from €1.6 to €1.7 per share (+6.25%). The dividend yield of Bouygues is therefore 4% at yesterday’s price.
22 Feb 18
Highest-ever reported net income
AXA’s underlying earnings and net income both crossed, for the first time, the threshold of €6bn, and the entire geographic regions contributed to this performance. Revenues remained stable, but a more profitable business mix contributed to the improvement in margins. Investment income remained under pressure but the spreads are above the guaranteed rates. The cash remittance from subsidiaries reached €4.9bn, more than covering the proposed dividend (€1.26/share). The projected IPO for AXA Equitable Holdings is on the right track.
22 Feb 18
Still an impressive negative forex impact
A good set of results for the Q4 if we leave the negative forex impact out of the equation. Revenues were up organically by 4.8% yoy: this the best quarterly performance of the year after the 4% and the 2.3% respectively recorded in Q3 and H1. Note also that, excluding the impact of the regulation, revenues would have risen by 5.9% yoy. But the reported revenues were eventually down by 4.1% due to the strong depreciation of South American currencies vs the Euro (note the Venezuelan collapse alone explains 25% of the impact as well as the 35% depreciation of the Argentine peso). The EBITDA has increased by 9.2% yoy lfl at constant change: a good number and very reassuring compared to the poor Q3 which had recorded a weak 1.3% EBITDA growth despite the 4% revenue growth. Note that the reported Brazilian and Hispano American EBITDA was… flat despite an adverse forex impact of 19%! Telefonica has confirmed a dividend of €0.4 per share for 2017 and… 2018. The group appears to prefer to be cautious given the depreciation of some South American currencies. As for the outlook for 2018, the group expects a cautious but solid 1% revenue growth (+2% excluding the regulation) and a continued margin EBITDA expansion of 0.5ppt (despite a regulation drag of 1.6ppt).
Companies: Telefonica Sa
22 Feb 18
Improved organic top-line growth in Q4 17
Veolia released a rather robust set of full-year results, marked by a positive momentum in Q4 driven by France and non-EU countries, higher dividends and the confirmation of the 2018-19 guidance.
Companies: Veolia Environnement
22 Feb 18
Custodian REIT - Income and capital growth supporting valuation
Custodian REIT recently provided an update on the three months ended 31 December 2017 (Q318). NAV total return in the period was a healthy 2.6%, including a 1% increase in EPRA NAV per share, in addition to a quarterly dividend paid of 1.6125p. Management’s aim is to sustainably grow the fully covered dividend and generate less volatile returns than is typical for the sector over time. Its strategy is to maintain high levels of occupancy and grow income through rental growth and accretive acquisitions. The 8% premium to FY18e NAV has proven robust, justified by the conservative gearing and one of the highest dividend yields in the sector.
Companies: Custodian Reit
22 Feb 18
FY17: investment thesis intact, rebound in India and France
Our investment thesis is intact. We still believe that the 26% cement capacity located in India (15% of EBITDA) is a strong catalyst: the utilisation rate remains low at 70%, which underlines that there is still significant upside potential and, in Q4, consolidated sales rose +28.3% lfl. On top of this, a recovery in the French market showing its teeth: consolidated sales in France (29% of EBITDA) rose +10.8% on a lfl basis in Q4.
22 Feb 18
Stable dividend despite earnings drop
Thanks to a good Q4 17 (up 58.2% in net income to €261m), Scor posted a higher than expected bottom line at €286m. Sales reached €14,789m (up 7% yoy), in line with our estimates. The generated operating cash flow stood at €1,144m with a strong capital position of 213%. The proposed dividend amounts to €1.65/share and the reinsurer will pursue its share buy-back programme. Scor announced that the non-recurring cost of the US tax reform could reach $350m in 2018.
22 Feb 18
More surprises to come on capital...
KBC released its numbers for Q4 17 this morning. Total income at €1.88bn is 2% above expectations (in line with ours) and total expenses at €1.02bn are 2.3% higher than expected (6.5% above our expectations). Profit before loan losses is therefore 1.5% above expectations at €857m. The CET1 ratio at 16.3% is 40bp higher qoq (15.7% pro forma the impact of IFRS 9 at 40bp and the announced share buy-back programme). More importantly, management is expecting 9% inflation of RWA due to the impact of Basel IV, which is well below our expectations (around 30%) and probably below those of the consensus and management’s previous expectations (in the area of 15-20%). The CET1 ratio target has therefore decreased to 14% (vs 14.6% previously).
Companies: KBC Groep
19 May 17
Leading UK fund manager, Gervais Williams, discusses investing, his outlook and two companies he's excited about
16 Jan 18
1pm (OPM) Interim results January 2018
24 Jan 18
Bango Strategy Day, 24th January 2018
16 Feb 17
Trifast - Trading update
22 Jan 18
Reabold - Company Overview
23 Jan 18
Boku - Trading Update
30 Jan 18
Filtronic - Company Overview
08 Sep 17
MiFID II & the private investor
05 Feb 18
AB Dynamics (ABDP) February 2018 update interview with Tim Rogers CEO
13 Dec 17
Research Tree's new investor tool - Watch our 3min "How to" guide here
25 Jan 18
Character Group - Toy Fair 2018
26 Jan 18
Cadence Minerals - Company update
02 Feb 18
Bushveld Minerals: An Emerging, Integrated Vanadium Producer
03 Jan 18
Executive interview - door2door
11 Jan 18