But the question is does the given guidance reflect realism or management’s wishful thinking? Beiersdorf needs open shops (DIY & retail stores) and travellers to whom to sell its products as the online distribution channels remain somewhat underdeveloped. The guidance seems to us like a strong bet on Asian markets, especially on China as we see the tide is turning.
Companies: BEI BEIEUR BEI BEI BDRFF BEI BEI
The skin envelopes the human body and regulates, amongst other ‘tasks’, moisture. In work-from-home times, wrinkles are accepted more.
Having already announced some preliminary figures, the decline in the top-line and the drop in profitability was only a matter of magnitude. Beiersdorf had re-started to strip out special factors, but even worse was the given outlook: negative.
The H1 figures came in below our already cautious expectations. Street estimates are not available.
Companies: Beiersdorf AG
H1 20 figures:
Group: -8.1% (-10.7% lfl) to €3,513m
Consumer: -8.1% (-10.9% lfl) to €2,891m
tesa: -10.0% (-10.0% lfl) to €622m
Beiersdorf’s sales statement provided some more details and the pattern of development was as expected. The effects from the lower oil price are expected to be mitigated by the usual cost-cutting measures. Due to the lockdowns in Europe and the Americas, Q2 is expect to face some strong declines in both its divisions.
Beiersdorf’s reaction is not unexpected, but a bit late. The provided preliminary figures give us an initial glimpse and confirm our view on 2020.
There were hopes in the appointment of Mr De Loecker as the new CEO and some of these have been met (for example higher dynamics, M&A). Higher dividends remain on the list for the future, despite €8.3bn (€8.1bn) of cash on hand. Management delivered towards its targets, when the effects of the acquisition and CARE+ programme are stripped out. But one has to bear in mind, it was only the CEO’s first year. Sustainability has become more strongly into management’s focus as a sustainability agenda has been announced.
Beiersdorf’s preliminary FY sales figures were above our expectations. Consumer continued its strong performance, driven by La Prairie and Nivea. tesa was also better than expected as Q4 came in unchanged yoy. Despite the confirmation of the group’s EBIT margin, the clarification ‘from ongoing operations’ raises suspicions. The recent acquisition of the former Bayer brand Coppertone might additionally burden the margin as the line was already brought down by the investments in future growth.
The high price brand La Prairie continued to generate double-digit growth rates and Eucerin also continued its acceleration, giving Consumer a good organic push. tesa’s development was not that good as the division reported the second quarter in a row of negative organic development, which forced management to adjust the division’s guidance, but the group’s guidance remained unchanged!
Beiersdorf reported a mixed set of figures despite showing higher sales and EBITDA. Customer’s core brand, Nivea, reported a weakening growth dynamics. tesa also came in a bit less dynamic.
The reported figures were at the lower end of our expectations. It looks to us that the effects from the CARE program and the related costs might kick in later. The confirmation of the guidance supports this view.
Showing activity for the sake of showing activity? We hope this will not become the new CEO’s mantra. Despite Beiersdorf’s huge cash pile, management will quickly learn one can spend a euro just once.
We believe the announced acquisition of Bayer’s odd brand Coppertone is not a bargain but rather a perfect fit for the established businesses. However, we have some doubts on the business volume that has been provided.
Beiersdorf’s small set of figures (just top-line) shows a good start in all businesses and most brands. However, the launch of the CARE+ programme will have generated higher costs, which will be seen in the H1 report. Due to the confirmation of the FY guidance, we do not expect major surprises. Reported figures were slightly above our expectations.
Preceding the full set of 2018 figures (preliminary had already been released), Beiersdorf announced CARE+ a kind of weak-up programme. It needs additional annual investments of up to €80m injected into Consumers in order to reach the new 2023 targets and the money box might be opened for acqusitions. The presentation of the programme and the higher investments make us feel more comfortable as a continuation of the ‘Heidenrich way’ could have led to an a unfavourable position for the company.
Beiersdorf reported a small set of top-line figures for FY 2018. Group sales rose +2.5% to €7,233m, driven by +5.4% organic growth, and meeting management’s guidance.
Management gave no further guidance.
The annual report will be available on 27 February 2019.
Beiersdorf’s figures were determined by the good to strong growth momentum, despite Latin America, in Consumer in the first nine months. But Q3 was not that perfect showing some weaknesses in the fast-growing regions, especially Latin America. tesa envisaged some weakness in Europe. Beiersdorf’s Q3 performance fits our picture, but we expect some negative impact on profitability due to the moderate organic growth, especially in Consumer. Higher freight costs are also expected to burden profitability.
Beiersdorf has announced the name of Mr Heidenreich’s successor. Mr De Loecker will become CEO as of 1 January 2019.
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Boohoo has announced meaningful progress in its Agenda for Change Programme, to deliver long lasting change to its supply chain and business practices. Sir Brian Leveson PC has been appointed to provide independent oversight of the programme, with KPMG engaged to provide additional resource, expertise and independence, working alongside the Group’s internal responsible sourcing and compliance team, as well as with external supply chain audit specialists Bureau Veritas and Verisio. We believe the calibre of the appointments reflects the Group’s unwavering commitment to implementing in full, and with complete transparency, all recommendations of the Independent Review.
Companies: boohoo group Plc
President Trump likes to project himself as a highly successful businessman, but surprisingly little is known about his true financial position. Various articles, including a 2016 in-depth analysis by The Wall Street Journal, have speculated about his income and asset base. All sorts of claims and counter-claims have been made about his wealth – by Trump himself, pitching his fortune at some $9bn, and by journalist Timothy O'Brien, suggesting that it is as “low” as $150m-$250m. It is doubtful whether we shall ever know the truth, but we can use Trump’s UK corporate filings to gain an insight into his businesses in Scotland.
Companies: AVO ARBB ARIX CLIG DNL FLTA ICGT PCA PIN PHP RECI STX SCE TRX SHED VTA YEW
discoverIE has weathered the pandemic well, with H1 sales down -6% and adj. PBT down -12%. Cash flow was particularly strong, reducing net debt from £61m at March 2020 to £42m at September. The second half has started well, with orders ahead of sales and up on last year, and dividends have resumed with a 3.15p interim (up +6% on last year). We are factoring a touch more caution into our forecasts to allow time for orders to build into sales, but reiterate our view that discoverIE is resilient, flexible and well positioned for growth in the structurally growing markets of Renewable Energy, Transportation, Medical and Industrial & Connectivity.
Companies: discoverIE Group PLC
We initiate coverage of Argo Blockchain with a 17p target price and conservative forecasts. Argo operates a highly efficient cryptocurrency mining platform in Canada and the US, where it uses c16k specialised computers/machines to mine the cryptocurrencies Bitcoin (c90% of revenue) and Zcash. It differentiates because of its access to abundant, low cost power in these locations, and the proprietary technology that its team has created to optimise its machines’ operations. Argo has already achieved a cash payback of 1.3x on the machine investment it made in 2019, and we expect that Argo’s platform will deliver strong growth in the rapidly expanding cryptocurrency market, where the price of Bitcoin has increased to $19,000 from $9,000 in May 2020. Using conservative assumptions for mining rewards, and a spot Bitcoin price, we introduce forecasts for organic revenue growth of +34% to £25.3m, EBITDA growth to £11.1m from £5.6m, adjusted EPS of 0.7p, and EFCF of £7m. We also highlight in our 95p upside case that Argo’s platform is strongly geared to the interaction between Bitcoin’s price and the difficulty of mining Bitcoin, and in our downside case we highlight that under highly adverse assumptions Argo would still continue to generate EFCF, and deliver FY23 net cash of £11m or 4p per share. This attractive skew of share price outcomes demonstrates that Argo looks undervalued on 18x FY21 P/E, 9x FY21 EV/EBIT, and 17% FY21 EFCF yield, with peers on 26-40x P/E, EV/EBIT of 21-28x, and EFCF yields of 2-3%. We watch for changes in Bitcoin’s price and mining difficulty, Argo demonstrating operational efficiency at its results, and the potential acquisition of its Canadian datacentres.
Companies: Argo Blockchain Plc
Victoria has proved to be highly resilient in a challenging first half with revenues of £305.5m (H1 FY2020A £312.3m). The Group has seen 9.2% like for like revenue growth since the AprilMay lockdown and with the added benefit of operational actions and synergies the underlying EBITDA margin for the June-September period was ahead 300 bps LFL at 20.1% (H1 overall 17.2%). Net debt at 3rd October reduced by £5m from the year end to £364.4m, excluding IFRS 16 lease liabilities of £78.5m, with improved cash flow conversion. Understandably, the statement notes that it remains difficult to provide formal guidance for FY2021. Nevertheless the Board expects an outcome that will be well ahead of current market forecasts. We have no formal forecasts at the present time and will initiate coverage in due course.
Companies: Victoria PLC
CAP-XX Ltd* (CPX.L, 6.8p/£30.1m) | Tern plc* (TERN.L, 6.85p/£20.6m) | Location Sciences Group plc* (LSAI.L, 0.45p/£1.0m)
Companies: CPX TERN LSAI
Springfield has been granted planning approval for 75 private rental sector (PRS) homes at Bertha Park. This is a positive step, opening up a new revenue stream for the Group as part of its mixed-tenure offering at the Villages. It is Springfield’s first development to be approved for PRS housing. We expect more to follow, supporting Springfield’s significant medium term growth ambitions. The shares have recovered from recent lows but continue to trade at a substantial discount to peers on P/E and P/B metrics.
Companies: Springfield Properties PLC
Full-year results were better than our forecasts, with PBT £0.8m better than expected, albeit showing a 35% decline following the effects of COVID shutdowns etc. Cash generation was also better than expected, resulting in net bank debt of £6.5m, a £7.8m reduction. No change to trading forecasts, with lower net debt. With maintained earnings, we also maintain our 1,100p price target based on a 32.3x P/E for FY21E, with the high P/E offering limited scope for further expansion, though today’s results should be taken well.
Companies: Gooch & Housego PLC
Games Workshop’s (GAW) update highlights that trading remains ahead of the board’s expectations and that PBT in H121 will be not less than £80m, with growth of at least 37% on H120, and just 10% below the COVID-19-affected FY20. Demand continues to be driven, predominantly, by the recent new Warhammer 40,000 release and through the Trade and Online channels, while Retail is still recovering from the COVID-19 closures. Retail outlets are closed where required by governments but, unlike during the previous lockdown, the factory and warehouses are still operating following investment to make the locations compliant with social distancing requirements. We upgrade our FY21 PBT forecasts by 14%.
Companies: Games Workshop Group PLC
A number of REITs have the ability to thrive in current market conditions and thereafter. Not only do they hold assets that will remain in strong demand, but they have focus and transparency. The leases and underlying rents are structured in a manner to provide long visibility, growth and security. Hardman & Co defined an investment universe of REITs that we considered provided security and “safer harbours”. We introduced this universe with our report published in March 2019: “Secure income” REITs – Safe Harbour Available. Here, we take forward the investment case and story. We point to six REITs, in particular, where we believe the risk/reward is the most attractive.
Companies: AGY ARBB ARIX BUR CMH CLIG DNL HAYD NSF PCA PIN PXC PHP RE/ RECI SCE SHED VTA
RA has announced interim results well ahead of H1/19, with H1/20 revenue up 53.5% and underlying operating profit up 118.8% versus the same period last year, despite the impact of COVID-19 causing delays to various (particularly Construction related) projects and highlighting RA's ability to consistently deliver under very challenging conditions. RA has now established firm contract award momentum with US$86m of cumulative new business awarded since FY19. Including the recently announced agreement (20 August 2020) with Danakali JV, Colluli Mining, where RA has been appointed preferred supplier, would add a further US$20m once finalised and bring the total to a value representing 153.4% of FY19A revenue. Despite the inevitable COVID-19 interruption during FY20, RA has demonstrated its ability to continue to expand its business substantially, further diversifying revenue by both geography and customer base. We expect to see further contract wins coming through during H2/20 and with all major delayed projects now recommenced and building towards normalised operational activity, the outlook into FY21 is strong.
Companies: RA International Group Plc
Today’s announcement confirms the strong trading momentum seen in Q1 has continued YTD. Group sales are +45% YOY with revenue growth across all geographies and brands, and profitability improving YOY.
FY20 results from CAP-XX Ltd, the leading designer and manufacturer of prismatic and cylindrical supercapacitors, demonstrated 12% revenue growth and reduced losses. The production expansion project, following the acquisition of the Murata assets, is on schedule and within the A$5.3m budget. The new facility is in the final stages of commissioning and product should be available by the end of the calendar year. The sales order book at year end was more than double the level of FY19 for existing CAPXX product and aggregate levels of customer enquiries that significantly exceeds the new capacity. COVID-19 created a number of additional challenges for the Murata project and limiting the impact to a three-month delay will represent a considerable achievement. The outlook for product sales is positive as CAP-XX takes advantage of the new manufacturing facility and there is scope for further licensing deals to develop ongoing high margin royalty revenues. Forecasts remain currently under review.
Companies: CAP-XX Limited
IG Design Group delivered H1 adjusted operating profit and adjusted PBT increases of 13% and 16% to $32.4m and $30.2m respectively, ahead of prudent market expectations for the full FY21E financial year. This robust H1 performance, accompanied by an intensified focus on cash management - which saw average leverage reducing to 0.2x from 1.1x last year – has enabled the group to declare an unchanged interim dividend of 3.0p. We have subsequently raised our FY21E PBT and dividend forecasts, though our H2 forecasts continue to reflect a cautious view across the peak trading period given ongoing uncertainties arising from the Covid-19 backdrop.
Companies: IG Design Group plc
Last year, Venture Capital Trusts raised the second-highest amount since their launch in 1995, according to the Association of Investment Companies. This is good news for smaller companies seeking growth finance. Changes to pension regulations mean that VCTs are expected to continue to attract investors. Individual qualifying companies can receive up to £10m from VCT investors.
Companies: KEYS NBI MPM PTY BOO W7L