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Air Partner has reported a record H1 performance, with PBT increasing by 250% to £10.5m. This was driven by COVID-19 related work, in particular repatriation flights and transportation of PPE, which offset more challenging trading conditions elsewhere. Air Partner’s diversity has insulated it from the significant COVID-19 impact felt elsewhere in the sector. As expected, COVID related work has slowed down in H2, though there have been some early signs of improvement in Private Jets (number of JetCards sold +50% YoY) and Safety & Security (multiple contract wins in Redline). Given continued subdued demand, gross profit has reduced YoY in Q3 to date, though this was offset by cost initiatives. We reintroduce forecasts for FY21, assuming PBT of £10.5m, which implies break even in H2. The balance sheet remains strong, with net cash of £18m and the Board has proposed an interim dividend of 0.80p.
Companies: Air Partner Plc
Studio’s continued impressive sales performance in H120, despite the resumption of competitor trading on the high street, leads management to expect PBT from continuing operations (excluding Education) for FY21 will be ahead of its own internal expectations (there is no external management guidance). The company has a strong comparator for the upcoming key trading period to December, therefore the growth rate is likely to moderate. Its long-term targets of three million customers (versus current 2.1 million) and revenue of £1bn (versus FY20 revenue of £434.9m) as the shift to online retail continues suggests an attractive medium-term growth profile.
Companies: Studio Retail Group Plc
Alongside its AGM, STU has released an impressive update on trading. Notably, growth has strengthened in the last 6 weeks vs the preceding 8 weeks. After an exceptionally strong start due to lock-down, product sales are therefore up 39% in H1. FS income growth was 5.5% and, with no material change in collections/arrears, this could accelerate in H2. It has exited with a clean (spr/sum) stock position and starts H2 with 15% more customers. This performance means PBT is expected to be ahead of management’s expectations, albeit guidance remains withdrawn. Findel Education’s trading has returned to normal levels too, and the two parties are still working closely with the CMA to obtain clearance.
Angling Direct has achieved scale over the last 5 years and proven its multi-channel credentials. Under new leadership it is now being professionalised, and margin/profit weakness (notably online) is a key focus. Early signs are encouraging. With a fishing renaissance post covid, ANG is very well placed to deliver profitable and sustained growth over the medium to long term in highly fragmented markets. For these traits, valuation is extremely undemanding, and upcoming results are a possible catalyst.
Companies: Angling Direct Plc
Buyout rumours pushed William Hill’s stock price up 43% on 25 September, driven by initial speculation, and later confirmation that the firm had received acquisition proposals involving cash deals from Apollo Management International and Caesars Entertainment. While we believed a price of 300p+ was unlikely, fresh details about Caesars’ bid validate our initial thoughts. Moreover, we believe Caesars will emerge as a successful bidder. Hence, we will raise our target price to converge to the potential deal price of 272p.
Companies: William Hill Plc
Vertu has reported robust trading across the month of July, building on the strong trend seen over June. A July adjusted PBT of £7.4m (including £0.7m of restructuring costs) is ahead of both management expectations and the Group’s pre-Covid business plan, as ongoing pent up demand continues to drive a strong performance across new and used vehicle sales and aftersales services. The strong trading delivered since the majority of dealerships reopened on 1 June, alongside government support means the Group has generated an adjusted PBT of £2.2m YTD. This impressive performance looks set to continue into the crucial plate change month of September, where the Group’s new car retail order books are currently 20% ahead of prior year.
Companies: Vertu Motors Plc
Results are marginally ahead of expectations. The IFRS9 impairment for covid is £20m, partly offset by an in-year gain of £3.7m. Both the gross and net impairments are better than feared, and debtor performance remains stable. Trading so far in FY21 has been strong at Studio with product sales +42% and total sales +30%. The business is benefiting from operating leverage, especially in marketing. With net bank debt now just £35m, and Education trading starting to normalise, the business is in a strong position. This is not factored into the share price which has barely moved since the pandemic started.
Dart Group has released an AGM statement this morning indicating satisfaction with load factors and financial performance achieved year-to-date in the context of the challenging operating environment. In addition, the Group has applied to change its name to Jet2 Plc in recognition of the recent sale of the Fowler Welch distribution business and the sole focus on leisure travel. We keep our forecasts withdrawn at this time.
Companies: Jet2 Plc
Dixons Carphone has announced a strong trading performance for the 17 weeks ended 29 August 2020. The momentum was led by the online format (+124% yoy) which accounted for c.40% of total electrical sales. We also note the company’s success in gaining market share in the operating geographies. We believe DC is well placed to maintain lfl growth in the remainder of the year. No change in the stock recommendation.
Companies: Dixons Carphone Plc
GVC reported FY 19 sales growth of 3%, thanks to strong momentum in online (+13%), a decent showing in European retail (+5%) and a slower than expected decline in UK retail (machine revenue down 26% vs initial expectations of over -40%).
Pro forma EBITDA margin was down 10%, hurt by regulatory headwinds across multiple geographies. The company announced a final dividend of 17.6p/share.
Following the FY 19 performance, we do not expect any significant revisions in our estimates.
Companies: GVC Holdings Plc
New management has put in place a strategy which the February interim results revealed was returning the group to growth with very encouraging LFL statistics and attractive returns on refurbished outlets. In March, however, in response to COVID-19 and following UK Government guidelines, all venues had to be closed.
Management initiatives have materially reduced the cash burn while the group is unable to trade, and the group’s lender has been very supportive in significantly increasing the borrowing facility.
Management is now proposing an equity issue, the rationale for which is to strengthen the leverage ratio to create a more appropriate capital structure moving forward, to allow an immediate return to the estate refurbishment programme and to be able to potentially take advantage of strategic opportunities as they arise as the sector emerges from the COVID-19 crisis.
Companies: Revolution Bars Group Plc
The final results revealed adjusted PBT up 99% year-on-year, which was 10% better than forecast despite four upgrades during the financial year. This strong performance reflects the financial benefits that have accrued following the shift in the business model to online only, as well as management’s strategic decision to significantly increase marketing spend. A second special dividend for the 2020 financial year has also been announced, reflecting the strong cash flow characteristics of the business model. Our 2021 profit forecast implies continuing momentum and a year-on-year increase in PBT of 86%. We raise our target price to 1050p.
Companies: Best of the Best Plc
GVC reported H1 20 revenue of £1.62bn, in line with its earlier trading update, while EBITDA, at £348.6m, was at the higher end of the provided range. However, given the COVID-19 uncertainty, the board has decided to withhold an interim dividend. Looking forward, management now expects FY20 EBITDA of £720-740m, which is ahead of our estimates as well as consensus. We will upgrade our FY20 estimates, to reflect both the encouraging H1 performance as well as the improved outlook.
Gear4music continued its recent run of positive news announcements yesterday with an upbeat AGM trading statement. Growth, following an exceptional first quarter in FY2021 (April to June), remained brisk in July and August. Moreover, the company’s strong sales momentum is more than matched by improvements on costs and margins.
Companies: Gear4music (Holdings) Plc
The continuing fast-growing online business and well-managed product mix have resulted in better than expected profitability for H1 20 and, with the rapid recovery in recent weeks, the group has upgraded again its guidance for FY 20.
The group is expecting adjusted pre-tax profit to be £300m for FY 20 vs. £195m (previously revised at the end of July).
Companies: Next Plc