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Faurecia reported a slight beat to expectations on Q1 23 revenues, while sticking to its prudent FY23 targets. We read this as a reassuring set of results with no major announcements on the group’s liquidity; the #1 priority for the management and Investors. We confirm our positive stance on the company, backed by an improving supply chain situation, sound implementation of the deleveraging plan and strong ties with Chinese OEMs to hedge against a price war.
Companies: Faurecia (EO:EPA)Forvia SE (FRVIA:PAR)
AlphaValue
Faurecia’s FY22 results met the company’s guidance through the P&L and showed better than-expected net cash, lowering the closely-watched leverage ratio to 2.6x. The FY23 outlook backs the margin recovery scenario with decreasing cost headwinds, yet with a cautious view on global automotive production. Faurecia also raised its cost synergies assessment and announced a divestment for €540m, reaching its €1bn divestment plan. This answers investors’ debt concerns and raises speculation on: is ther
With its Power25 CMD, Faurecia reset its mid-term targets to a more cautious level on trimmed worldwide auto production assumptions. Synergies with Hella were kept intact, with an upside potential as always, based on the usual prudence of Faurecia’s management. A focus was made on cash generation and deleveraging, eventually confirming that the structural benefits from the acquisition of Hella should account for the largest part of the NCF margin improvement. No dividend is likely to be proposed
With a FY22 guidance upgrade and a consensus-beating Q3 22 revenue figure, Faurecia at last came through although investor concerns about the company’s debt load the post-Hella acquisition seem to be overshadowing any reassuring daily business reports. The management reiterated its confidence concerning the €1bn (at least) divestment plan but only the materialisation of these divestments looks able to reverse the current doubtful sentiment. Market-wise, while Chinese OEMs are knocking at Europea
As planned, Faurecia is launching a capital increase as part of its financing for the acquisition of Hella. The most surprising thing remains the timing of this operation given that the company has until early 2023 to proceed with the €705m rights issue. This removes some uncertainty around the acquisition of Hella and its complex financing but raises questions on the management’s confidence in future market conditions.
Faurecia posted consensus-beating Q1 22 sales combined with a much more realistic FY22 outlook. The new guidance includes the 11-month consolidation of Hella and a +1% yoy expectation for global auto production (down by 6.2pp vs. last estimates). The improvement in the financial situation had been much needed; the dividend payment was thus cancelled, the debt covenant renegotiated and the asset disposal plan doubled. Anyway, the incomplete takeover of Hella is likely to be a drag on the company’
Faurecia’s standalone FY21 results and guidance met expectations at both the top line and margin, but the net cash flow line’s recovery looks weaker than anticipated. The US issue in Seating highlighted a lack of flexibility with the headcount. Faurecia reassured after two successive profit warnings in H2 21. The FY22 outlook offers upside risk on a cautious H1 22 volume assumption.
Faurecia released globally expected sales after its recent profit warning and guidance cut in late September. Some delays in volume and labour shortage in the US weighed on the Seating business, while this was offset by a consensus beat on Clean Mobility. Overall, Faurecia posted an 11.4% yoy organic decline, outperforming the market by 780bp. At current valuation, we believe that the share price does not fully reflect the opportunities offered by acquiring Hella.
Faurecia met consensus expectations on H1 21 sales, while posting a slight beat on the operating margin and cash generation, leading to a minor upgrade on the net cash flow guidance for FY21. A conservative speech and favourable seasonality in H2 21 call for guidance beat, but the market is concerned about the risk of an equity raising for M&A purposes.
Faurecia reported revenue up by 8.9% yoy including 12.2% yoy organic growth driven by China which overtook pre-crisis (Q1 19) figures. Despite an outperformance in all its markets, Faurecia underperformed worldwide automotive production by 60bp due to an unfavourable geographical mix. Q2 should see an acceleration of the outperformance as production in North America and Europe resumes. Lastly, the (too) conservative FY21 was maintained.
Faurecia and BAIC have just give birth to their 50/50 JV, expanding further the French auto supplier footprint in China. Though strategic for its Seating unit development, all eyes are currently on Hydrogen and the Symbio JV with Michelin. Additionally, the emancipation of Faurecia from Stellantis should come by the end of March 2021.
Research Tree provides access to ongoing research coverage, media content and regulatory news on Faurecia. We currently have 25 research reports from 2 professional analysts.
Watkin Jones’s guidance for FY24E is unchanged in its trading update for the first half to 31 March. We maintain our forecasts for the full year and introduce half-year estimates, in line with reiterated guidance that performance will be significantly H2 weighted. The group confirms a continuing gradual recovery in appetite among institutional investors to forward fund its build-to-rent (BTR) and student developments. We believe this should gather pace as the direction of interest rates becomes
Companies: Watkin Jones Plc
Progressive Equity Research
Ceres Power Holdings’ innovative technology uses electrolysis to produce green hydrogen and solid oxide fuel cells to generate power. In a year where it moved to the Main Market of the London Stock Exchange, it recorded revenue growth of 13% and gross margin expansion to 61% (the highest in the sector, according to management), but is yet to record an operating profit (FY23 operating loss of £59.4m versus £54.0m in FY22). Ceres continued its strategy to drive innovation and technology across sol
Companies: Ceres Power Holdings plc
Edison
Sanderson Design Group (SDG) has announced its FY24 full-year results, which are in line with the headline figures from its February trading update. A record year for Licensing and a strong performance in the key North America market helped to offset a challenging consumer environment in other geographies, most notably the UK. While this backdrop is set to persist in FY25E, the group will continue to focus on its strategic growth drivers, notably North America and Licensing, to deliver sharehold
Companies: Sanderson Design Group PLC
25th April 2024 * A corporate client of Hybridan LLP ** Arranged by type of listing and date of announcement *** Alphabetically arranged **** Potential means Intention to Float (ITF) has been announced Dish of the day Admissions: Delistings: Smart Metering Systems (SMS.L) has delisted from the AIM market What’s baking in the oven? ** Potential**** Initial Public Offerings: Reverse Takeovers: 16 April 2024: Electric Guitar (ELEG.L) Concurrent with its Admission to trading on AIM, Electric Guitar
Companies: SKL CAM HRN VNET NBB DEST ZIN CRCL
Hybridan
On 9 January last year, we set out our ten top stock picks for 2023, for what turned out to be another relatively poor twelve months for UK equities due to two wars, stubbornly high inflation and further tightening of monetary policy. This was even as other major markets, such as the US, largely recovered in the year. In the 2023 calendar year, the AIM All-Share index fell 8.2% and is still 42% off its 2021 high. From the release of our 2023 top picks note, the average total return (assuming div
Companies: PTAL GHH IGP MSLH PINE NXQ EQLS NXR AXL
Zeus Capital
Gooch has issued a positive update for H1. Trading has started to recover with stocking levels normalising at industrial and medical devices customers. The outlook is positive with growth returning, and management has confirmed our full year estimates (adjusted for the disposal of EM4). The order book and order flow appear healthy, and net debt is comfortable. Gooch clearly still has plenty to do to lift operating margins from a lacklustre 8.1%, but the transformation plan appears to be back on
Companies: Gooch & Housego PLC
SCE is raising £16m through a placing (and up to a further £3m through open offer) to fund substantial expansion and additional working capital. This will enable the Group to grow to £75m revenue capacity in the near term, commence the build and equipping of a new factory and then (with internally generated free cash flow) scale to £150m revenue capacity and beyond. With a contracted order book of £190m and a prospective pipeline of £400m, this is clearly the time to seize the opportunity. The e
Companies: Surface Transforms PLC
Cavendish
Surface Transforms has issued new revenue guidance for FY24, with the company now expecting revenues in the range £17.5-22m. We are withdrawing our previous forecasts for FY24 and withdrawing our price target while we review the impact of the new guidance.
Solid State’s trading update affirms the sustained strength in demand throughout H224, resulting in record FY24 revenue and adjusted PBT ahead of prior consensus of £155m and £12.5m, respectively. This is attributable to the earlier-than-expected delivery of a NATO contract. As a result, consensus FY24 revenue and adjusted PBT estimates have been raised by c 6% and c 20%, with respective FY25 estimates declining commensurately.
Companies: Solid State plc
Subsector price performance: In the fourth quarter to 29 December 2023 all but the AAA publishers and platform subsector saw share price declines. The UK PC and Console focused subsector was again the worst performing subsector (-26.2%) over the quarter and LTM (-70.1%).
Companies: TBLD FDEV DEVO
Companies: IG Design Group plc
Canaccord Genuity
Banquet Buffet*** Abingdon Health 9.25p £11.3m (ABDX.L) The lateral flow contract development and manufacturing organisation announces its unaudited interim results for the six months ended 31 December 2023. Revenue increased 117% to £2.4m (H1 2023: £1.1m). The Adjusted EBITDA loss decreased 47% to £1.2m (H1 2023: £2.2m). Furthermore, reduction in operating loss of 50% to £1.2m (H1 2023: £2.4m). The Board therefore expects that H2 2024 revenue will be significantly improved compared with H1 2024
Companies: CPX SLP FA/ FIPP ECR ETP ORCA
AFC has unveiled a groundbreaking modular ammonia cracker system demonstrating viable and scaleable production of hydrogen in the UK using this method. The cracker system is designed to deliver 140 tonnes of fuel cell grade hydrogen each year. Hydrogen from the plant will initially be targeted for sale into AFC’s UK H-Power Generator deployments, including those with Speedy Hydrogen Solutions. Along with the recent purchase of the mobile storage and distribution assets of Octopus Hydrogen, AFC c
Companies: AFC Energy plc
Sanderson Design Group (SDG) continues to deliver on its key strategic initiatives and growth drivers despite a challenging global backdrop. The group’s FY23 performance showed flat revenue, with adjusted underlying PBT rising £0.1m to £12.6m. Net cash dropped back to £15.4m, with the total dividend maintained at 3.5p. The star performers were Licensing (reported revenue +25%), the Morris & Co brand (+16%) and the US market (+20%). Our forecast revisions assume more modest sales progression, wit
Companies: GHH PHC GETB DEC LORD GELN
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