A favourable ruling on the Spanish merger is expected to boost the stock

Q3 revenues and EBITDAaL, up respectively by 1.8% and 1.4% yoy, were in line with expectations. Capex was down by 7% yoy also in line with the target of a significant reduction in 2023. Orange is still awaiting a ruling regarding the merger of its Spanish activities with MasMovil. However, Christel Heydemann appeared confident that the transaction can be completed in the Q1 2024. For the past year Orange has been in a virtuous circle of FCF growth: we maintain our Buy.

Everything is OK despite a last difficult year in the Enterprise segment

Q2 revenues were slightly better than expected, up by 2.6% yoy and lfl while the EBITDA was more in line with expectations, up by 1% yoy and lfl. The only weak point of the release was the expected pronounced decline in the Enterprise EBITDAaL which should only improve from 2024. The clear positive is that, in 2022, the group entered a virtuous circle of vigorous FCF growth for the coming years. We maintain our strong buy on the stock.

On track with the plan

Q1 revenues were in line with expectations, up by 1.3% yoy and lfl while the EBITDA was up by 0.5% yoy and capex down by 5%. Note that the EBITDA margin is traditionally lower in the Q1 and the next few quarters will further benefit from the price increases introduced in early 2023. This Q1 confirms that, in 2022, the group entered a virtuous circle of vigorous FCF growth for the coming years. We maintain our Buy on the stock.

The dividend will finally be increased in 2023 and 2024

The Q4 performance was pretty much in line with our expectations. The key point is that Orange has announced it will increase its dividend floor to 72 euro cents for 2023, and to 75 euro cents for 2024. Very good news indeed in that only three months ago the group had dashed our hopes of a 2022 dividend increase despite the sharp expected rise in Orange’s cash flow in 2022 (+27% yoy). We maintain our Buy on the stock.

Unfortunately no dividend increase for 2022

Nothing special to say regarding the Q3 performance which was pretty much in line with our expectations, with a reassuring Spain but a modest growth slow down in Africa. The key point is that having confirmed its outlook of EBITDA growth coupled with a capex decline, the group had been expected to increase its dividend. Unfortunately this will not be the case. Since Telcos are yield stocks and shareholders have been overlooked, this news is likely to weigh on the stock in the coming months.

Confirmation of entering a virtuous circle

A decent set of Q2 results for Orange with stable revenues yoy in reported terms and EBITDA up by 4.5% yoy (adjusted for the co-financing). With a forecast of a fairly significant increase in EBITDA less capex, the group should be able to steadily increase its dividend from 2023. We stick to our Strong Buy on the stock. However, in the short term, the rotation toward quality growth stocks at the expense of telcos is likely to continue.

A Q1 in accordance with the start of a possible virtuous circle

The Q1 figures were in line with our expectations but they confirmed the outlook for 2022 of an EBITDA growth of 2.5/3% and a c.5% decrease in capex. We still expect the group to enter a virtuous circle of vigorous FCF growth in the coming years allowing steady dividend growth. So we stick to our Strong Buy. Orange deserves to return to the best-in-class group in the telecom sector consistent with its 4.5% dividend yield.

Stephane Richard's great leaving gift

Orange and MasMovil announced this morning the combination of their operations in Spain. The combined entity would become a strong second player in Spain with revenues of €7.5bn (vs €12.5bn for Telefonica), EBITDAaL of €2.2bn. It is expected to generate €450m of synergies from the third year post closing onwards. So, clearly a nice leaving gift for Orange from its future ex-CEO Stephane Richard. We maintain our Buy on the stock.

Start of a possible virtuous circle

Nothing special to say about the Q4 results which were in line with expectations. For the whole year, revenues were up by 0.8% yoy and lfl, while EBITDA was down by 0.5% yoy. The key point is indeed the outlook for 2022 which is finally as we hoped. EBITDA should grow by 2.5-3%, while capex should decrease by 5%. The time has arrived to see a regular increase in the FCF in the coming years. We stick to our Strong Buy.

A dividend desperately... flat

A correct Q2 for Orange but the poor EBITDA outlook for 2021 has been confirmed and the dividend proposed for 2021 will be stable at €0.7. So nothing to wake up the stock. The group is not expensive compared to its peers, and it offers an enticing c.7.5% dividend yield. Although not for this year, the group could surprise the market by a higher dividend increase than expected in the coming years. We stick to our Strong Buy.

A solid Q4 but a misunderstanding regarding the towers assets

The EBITDAaL was eventually down by 1% yoy but should have grown by 3.2% excluding the COVID-19 impact. Despite this solid performance and the return to normal of its dividend, the stock is still languishing 20% below its pre-pandemic levels. At first investors were also quite circumspect about Orange’s determination to keep its new towers company within the scope of the group. But later, Stephane Richard made it clear that Orange won’t go it alone in the towers space.

A return to a €0.70 dividend for 2020

A decent Q3 for Orange as the impact of COVID-19 was more limited than in Q2 with only the sharp decline in roaming due to travel restrictions. The key point of this release is, however, a proposed return to a €0.70 dividend for 2020 (with an interim dividend of €0.40 in December). We maintain our Strong Buy on the stock with a 7.75% dividend yield for the coming 12 months.

A correct Q2 and a return to normal for the future dividends

Q2 revenues were down by only 0.4% yoy and the impact of COVID-19 was indeed very limited. This correct Q2 performance reflects a better than expected solid growth in France. But, more importantly, given an expected stable EBITDA less capex in 2020, Orange will pay a dividend of €0.70 for 2020 (to be confirmed after Q3). So a return to normal which deserves a better price. We maintain our Strong Buy on the stock.

Take advantage of the disappointment on dividend to... buy the stock

Orange presented yesterday its new strategic plan “Engage 2025”. The stock was, however, down by 4% yesterday while the group refused to commit to increasing its dividends over the period. We maintain, however, our opinion at Buy on the stock with a significant upside.

Solid growth in Africa but slight disappointment in Spain

Q2 revenues were up by 0.7% yoy and lfl, a satisfactory number and better than the zero growth recorded in Q1. The correct Q2 performance reflects this time a very solid resilience in France (+0.4%) and an acceleration in Africa & Middle East (+5.8%), while Spain was disappointing with revenues down by 1.6% due to a highly promotional market. EBITDA has grown by 2% yoy and lfl and was slightly above expectations. We maintain our Buy on the stock.

The Joy of Techs - Cavendish Technology quarterly sector note

£23.3bn in enterprise value has been returned to AIM technology shareholders over the past six years in the form of 51 public to private takeouts, including 10 in 2023 alone with the takeovers of Smoove* and Tribal announced in early October. With UK valuations appearing cheap and looking more attractive to potential acquirers, we take a moment to reflect on the trends of corporate and private equity bidders targeting AIM-listed technology companies going back to 2017, through the uncertainties

SRT Marine Systems - 1H24 results: preparing for all Systems go

As expected from the 1H24 trading update, SRT Marine Systems has reported £5.5m revenue derived entirely from the Transceivers division, but with substantial levels of critical preparation activity in the Systems division in advance of equipment delivery revenue milestones expected in H2. Progress on the £160m Systems order book continues in line with unchanged FY24 revenue expectations, underpinned by the expected completion of revenue milestones from scheduled deliveries during H2. Importantly

Filtronic - Making good progress towards FY24 targets

At its AGM on 26 October, Filtronic confirmed that based on trading year to date and its outlook for the remainder of FY24, it is confident of delivering FY24 results in line with market expectations; we maintain our forecasts. Recent contract wins in the space market and ongoing technology development to support E-band frequencies for space applications and W-band frequencies for terrestrial backhaul solutions support growth in the medium term.

CyanConnode (CYAN LN) - Investing in growth

Advanced Metering Infrastructure Service Providers (AMISP) are planning to source smart meters from a larger number of suppliers, requiring increased R&D investment from CyanConnode. In addition, growing delivery schedules, combined with large year-end shipments and potential changes in supplier payment terms, are likely to require significant additional investment in inventory and working capital. To finance these investments, the company has raised £2.72m of gross equity at 10p per share. The

Morning Note – 18 September 2023

Calnex Solutions - H1/24 interims update

Calnex’s H1/24 interim results, in line with the 10 October trading update, show revenue down 38% to £7.8m, albeit with the gross margin holding up well at 74.4%. Pricing and competition have not been problems for Calnex in the period, with customer engagement levels remaining high and the sales pipeline remaining strong. With a declining economic outlook earlier in the year leading to lower activity levels in the Telecoms sector worldwide, the conversion of the sales pipeline into orders slowed

Morning Note – 21 November 2023

Allenby Capital TMT Update - 20.11.23 - MWE.L, BIRD.L, MBT.L

Please find below our weekly update covering themes that we feel that are of interest to investors and participants in the small and mid-cap TMT sector as well as commentary on recent newsflow.

Morning Note – 6 October 2023

Morning Note – 26 October 2023

Hybridan Small Cap Feast 09/08/2023

9th August 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 object

Hybridan Small Cap Feast 15-11-2023

Dish of the day Joiners: No joiners today. Leavers: Wheelsure Holdings has left AQSE. What’s cooking in the IPO kitchen?** 9 November: Chapel Down Group ITF: England's leading and largest wine producer with an award-winning range of sparkling and still wines, under the Chapel Down brand. The Company owns, leases and sources from 1,023 acres of vineyards in South East England announces its Admission to AIM after its transfer from the Aquis Apex market. The Company will not be raising new capital

Growth Companies - Share & share alike Sell in May?

MTI Wireless Edge+ (MWE, House Stock at 32p) - 9M FY23F results OK, prudent downgrades

Bigblu Broadband - Strong H1 progress, net cash upgrades of 4-5% in FY23 & FY24

In today’s results, H1 financials are slightly ahead of the June trading update, both divisions have delivered strong operational progress, and we upgrade our FY23 and FY24 net cash due to the focus on cost driving lower capex. H1 revenue of £15.0m reflects Australasia’s H1 growth being impacted by Starlink, and we expect a strong rebound in H2 and FY24, as SkyMesh leverages new NBN Co tariffs from June, selectively increases prices, and begins scaling through new reseller agreements for fixed w