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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
The group has announced it has successfully raised £11m in an equity placing to help accelerate capex on a new IHT manufacturing site based on guaranteed minimum production volumes and ahead of anticipated customer orders. It is expecting a significant ramp up in production in FY21 following a multi-year £38m production order from a UK-based EV manufacturer. Strong progress is being made with its customer trials for the medical catheter market, which together with other expected new business requires additional capacity to be put in place.
Companies: Trackwise Designs Plc
Trackwise has announced a placing and open offer, potentially raising up to £12.0m (gross). This is to fund a new manufacturing facility that is expected to quadruple IHT production capacity. The additional capacity is required to support the up to £38m electric vehicle (EV) contract announced in September and potential volume orders from electro-surgical catheter manufacturers and aerospace OEMs and suppliers.
We believe Accrol’s acquisition of LTC represents a transformational transaction which the potential to consolidate the Group’s leading position in the private label tissue market to c.30% share. On completion of the deal, the Group’s combined customer base will be stronger and broader with a step change in capacity to further accelerate its already impressive growth which continues to outpace the market. We estimate the acquisition to be 14.2% EPS enhancing in FY22E the first full year of ownership. The core Accrol business continues to trade solidly, driving an additional upgrade to our underlying numbers today. We believe Accrol’s established platform can deliver an market capitalisation of £400m+ over the medium term.
Companies: Accrol Group Holdings 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.
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
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
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
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
McBride has delivered a mixed FY20 performance, with a weaker H1 and a bounce back in H2 as a result of increased demand due to COVID-19. A strategy review has been undertaken, and the company will be reorganised into separately managed product divisions. Time will tell if this will successfully address McBride’s long-term challenges, but the new CEO has a thorough knowledge of the business, and we await further details, which are due to be announced in February.
Companies: MCB MCBRF 10W
The interims reflect COVID challenges, which reduced order intake, and the acquisition of SCL. A milestone three-year agreement with a UK-based EV OEM was recently awarded, potentially worth up to £38m, which substantially underwrites further growth prospects. In the short term however, we reduce our FY20 forecasts, although with the EV contract kicking in next year, we see good growth coming through.
Boohoo has released the now complete Independent Review into its UK supply chain in full this morning. Whilst a number of areas for improvement have been identified, there is no suggestion failings were deliberate or intentional and the chances required involve a relatively easily achieved realignment its of governance systems. We believe the Group remains well-positioned to lead the fashion e-commerce market in the future and can successfully implement an agenda for change in UK garment manufacturing.
Residential for rent developer and manager Watkin Jones has taken advantage of land opportunities and a renewed institutional investment appetite to increase its development pipeline – at what we believe to be attractive prices. Today’s FY 2020E trading update from the build-to-rent (BTR) and purpose-built student accommodation (PBSA) specialist shows a big rise in its pipeline and new forward funding deal plus solid trading in housebuilding and accommodation management. Net cash has risen and the group has reinstated guidance and its intention to pay a FY dividend.
Companies: Watkin Jones 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