See what's trending this week...
Companies: ABBY, AVG, BDEV, BWY, BKG, BOO, BUR, CRN, CSP, CRST, EHG, TUNE, HAT, INL, LWB, MCS, GLE, PSN, RDW, SPR, STAF, TW/, TEF, VTY, WJG
UK Housebuilding Sector in 2017
by Hardman & Co, 12 Jan
Free Access
Abbey | Barratt Developments | Bellway | Berkeley Group | Bovis Homes Group | Cairn Homes | Countryside Properties | Crest Nicholson | MJ Gleeson | Inland Homes | Mccarthy & Stone | Persimmon | Redrow | Springfield Properties | Taylor Wimpey | Telford Homes | Watkin Jones
"Leonardo da Vinci's ‘Vitruvian Man’ (circa 1490) is often used as a representation of symmetry i.e. the workings of the human body are an analogy for the workings of the Universe.
The drawing, which is in pen and ink on paper, depicts a man in two superimposed positions and it is accompanied by notes based on the work of the architect Vitruvius - who believed that the human figure was the principal source of proportion among the classical orders of architecture.
Symmetry, when it is exhibited, is a harmony of parts with each other and the whole – and it can be beautiful. Humans, for example, find bilateral symmetry in faces physically attractive. It indicates health and genetic fitness.
The neo-classical UK Housebuilding Sector (circa 2017) is a picture of bilateral symmetry too."
Boohoo (BOO)
100% group growth delivered in Q3, strong trading through key Christmas period | Zeus Capital, 11 Jan
Paid Access
"boohoo has traded strongly across all regions in the four months to 31 December, including the key Black Friday and Christmas periods, delivering headline group sales growth of 100% (93% CER), or £228m.
As a result of strong trading over the period, management has again increased FY18 sales growth guidance for the group to c.90%, against previous guidance of 80%, whilst narrowing the EBITDA margin to be between 9.25% and 9.75% versus 9% to 10% previously. This drives modest upgrades of c.5%-6% to our numbers in FY18 as shown below. Our FY19 numbers remain unchanged for now pending further guidance post the year-end."
The Monthly
by Hardman & Co, 9 Jan
Free Access
1pm | Abzena | Advanced Oncotherapy | Allergy Therapeutics | Alliance Pharma | Arbuthnot Banking Group | Avacta Group | Burford Capital | Chamberlin | City Of London Investment Group | Collagen Solutions | Diurnal Group | Evgen Pharma | Genedrive | Inland Homes | Morses Club | Murgitroyd Group | Non-Standard Finance | Obtala | Omega Diagnostics Group | Oxford Biomedica | PPHE Hotel Group | Premaitha Health | R.E.A | Redx Pharma | Scancell | Surface Transforms | 600 Group | Tissue Regenix Group | Titon | ValiRx
"The latest Office for National Statistics (ONS) survey, ‘Ownership of UK quoted shares: 2016’, shows that retail investors are more important than most company managements realise or most capital markets professionals admit. When it is also appreciated that the data shows that retail investors set the share price for most quoted companies, most days, it becomes clear that engaging with such an audience enhances a company’s standing, whilst ignoring them courts disaster.
The Hardman Healthcare Index has been running since 2009. Its main function is to highlight the attractions of life sciences investments over the long term. 2017 was another successful year for the index, rising 20.3% to 437.3, and outperforming the London Allshare index, but trailing the performance of the AIM market. Since inauguration, the compound annual growth rate has been 20.5%, compared with 5.4% for the Allshare Index and 6.1% for the AIM Index."
Burford Capital (BUR)
Trading update indicates very strong progress | Liberum, 10 Jan
Paid Access
"Burford has reported that new commitments made from the company's own balance sheet and from the third party funds business reached a total of $1.34bn during 2017, more than three times the 2016 level. Further, the company intends to raise further debt funding which if successful should add further firepower to deploy to new investments.
We value Burford on a sum-of-the-parts basis. The sum of our valuations for the Burford Investment Company (911p), the fund management business (67p) and unaccounted for fair value gains relating to the Petersen and Teinver cases (a total of 130p) result in our 1108p Target Price. With the shares trading almost in line with our Target Price, we retain our HOLD rating."
Elegant Hotels Group (EHG)
Adjusting to the new norm | Zeus Capital, 9 Jan
Paid Access
"Elegant has delivered solid final results, which are 2% ahead of our forecasts at the adjusted EPS level. We are lowering our forecasts to reflect recent investment. Despite the uptick in debt following this investment, the current NAV of 163p should give some support. The dividend has also been rebased to 4.0p per annum from 2018E, albeit the yield on this in excess of 4% remains ahead of the sector average with solid cover in excess of 2.3x.
We reduce our forecasts to reflect the higher levels of investment made through 2017 and the associated increased depreciation and financing costs. We update our dividend expectations to reflect the updated guidance from the company, which still implies an above average sector yield in excess of 4%. We also introduce our 2020E forecasts for the first time. We assume marginal growth in the level of occupancy from 2019E with flat ADR and RevPAR, driving a 1% uplift in adj. EBITDA vs. our 2019 assumptions. "
H&T Group (HAT)
Positive update, strong Q4 trading in pawnbroking and retail | N+1 Singer, 8 Jan
Paid Access
"H&T has issued a positive FY trading update. This follows the key Christmas trading period, but also an unscheduled positive update (3/11). Trading was better than expected in pawnbroking and retail over the Q4/Christmas period. H2 has benefited from a stable sterling gold price which preserved margins in gold purchasing and scrappage. The pledge book saw some modest growth and the unsecured loan book is growing strongly from a low base. We expect a c.5-10% increase in consensus PBT estimates."
Focusrite (TUNE)
Music therapy | Edison, 10 Jan
Free Access
"Growth in revenue and cash is strong after four months of trading. Focusrite continues to build on its leadership positions in international markets and to benefit from its c 85% non-UK market exposure. Further growth in cash is also encouraging as it suggests good profit conversion despite expected cost increases. If these independent growth trends continue to the half-year, we would see upside risk to our forecasts.
As we are not changing our forecast, we retain our DCF valuation of 363p/share for now. This would put the shares on an FY18e P/E of 23.7x and EV/EBITDA of 14.2x. We include in our valuation year-end cash of £14.2m reported at the August year end, although cash is also reported as having grown strongly. The use of that cash could also be supportive of the valuation. "
Avingtrans (AVG)
H1 in line, with initial HTG cost savings delivered | N+1 Singer, 8 Jan
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"Avingtrans’ H1 trading update has confirmed good progress in the period, with all key financial indicators in line with management expectations. Market conditions are improving and the group has won c.£7m of new contracts. The integration of Hayward Tyler Group (HTG) is proceeding to plan, with improvements in profitability underway. Initial cost savings are being delivered as anticipated as a result of the now completed restructuring. Meanwhile, long-term banking facilities have been renewed at better terms. Supply chain savings and cross-selling provide further opportunities to drive long-term profitable growth. Management has reiterated expectations for FY18 and we have made no changes to our forecasts at this stage, although we note the potential for future EPS upgrades due to recent changes in US tax legislation. The shares offer good value, trading on a c.30% EV/EBITDA discount to the sector."
Low & Bonar (LWB)
Overreaction – solid yield premium | Capital Access Group, 10 Jan
Free Access
"The share price fell by almost 33.0% in Q4 2017 on the back of two trading updates and the departure of the CEO. Superficially, this appears consistent with reactions to similar announcements elsewhere in the market. However, we believe that the fall is an over-reaction and prefer to base our valuation on fundamentals. Specifically, relating the share price move to our downgrades to earnings implies a substantial de-rating which is not borne out by either the prospects for the bulk of the Group nor its ability to manage cash flow. On this last point, we continue to expect further progress in debt reduction, underpinning modest increases in the dividend across the timeframe. This is at odds with the current yield and is the basis for our theoretical value of 92p per share."
Staffline Group (STAF)
HCM Update | Allenby, 8 Jan
Paid Access
"The Group expects to deliver full-year results in line with market expectations which we believe to be approximately £37m* of adjusted PBT and EPS of 115p. Revenues are expected to come in at around £962m, which is around 4% below the Group's target (set five years ago) of £1bn but c9% above the £882.4m reported for FY 2016. Staffing volumes have remained strong through H2 with continuing good growth in OnSites. PeoplePlus has also made progress, with new contract wins and improving margins serving to offset reduced activity from the runoff of the Work Programme.
Allenby Capital comment:
It is disappointing that the Group couldn't achieve its ambitious five-year revenue target set at the beginning of 2013, but on any other measure, the growth record that Andy Hogarth and his team has achieved since Staffline's admission to AIM in late 2004 has been remarkable. Turnover for that year was just £49 million against current revenue of near £1,000 million. Over that period the share price has risen from a low of 23.5p (March 2009) to a high of 1,623p. (November 2015). Prelims are expected to be published on 24 January 2018."
