Ampere’s CMD: a wink to its stakeholders, history and the competition

Ampere’s CMD was the opportunity for Renault to reassure investors on its near-term EV game plan. Ampere expects a FCF breakeven in 2 years with 300k units and an implied revenue per car of €33k. The BEV-ICE price parity was also on the menu but expected by 2027-28 as costs are slashed by 40%. Renault presented its interpretation of the “<€20k BEV”, thus joining Stellantis in frontrunning Tesla in the people’s car segment. The IPO window for Ampere was maintained.

Q3 23: destocking dealerships, holding targets and IPO talks

Renault’s Q3 23 results (only revenues) slightly missed consensus expectations on the back of a weaker-than-expected volume effect, stemming from a voluntary destocking at dealerships, despite a pricing effect beating expectations. However, we expect limited changes to the FY23 consensus as Renault confirmed its guidance with profitability seen at the upper end of the range. We confirm our positive rating, believing that this miss on the top line does not reflect the underlying structural improv

No surprise was expected, and yet it exceeded expectations again

The guidance upgrade was not enough. Renault posted H1 23 figures significantly above what it targeted only a month ago, therefore making delivery of the FY23 guidance an easier play. Market conditions in H1 were a clear support for numerous OEMs. However, we believe that Renault’s portfolio turnaround has a huge potential to deliver structural improvements on top. Bear in mind that the bulk of the renewal of the model lineup is coming next year. We keep our Buy rating.

Renault’s portfolio renewal has only just started

Renault upgraded its FY23 margin and FCF guidance sending a positive message on the margin profile and the welcome of its new product range. This was backed by the strong product mix and lower headwinds on variable costs. Consensus’ prudence is likely to remain for FY24E as the first impacts of the price war have yet to reflect on Renault’s and peers’ P&L. However, it puts 2025 targets within reach. Ampere’s IPO is still on the table but rather for early FY24.

Alpine: from a product to a brand

Renault has drawn up the guidelines for the future of its premium brand Alpine. This is a high-risk plan aiming at succeeding where Renault repeatedly failed (expanding in the premium segment, expanding globally, and getting recognition) but targeting the right trends, in our view. Though, we do not expect investors to buy into Renault shares on the back of this Alpine-specific teaching, given the shorter-term worries on the health of demand for autos, and the prospective IPO of Ampère.

Has Renault cracked the code of the software-defined vehicle?

Renault organised a tech session to showcase its vision of the SDV (Software-Defined Vehicle). This not-so-futuristic architecture should not only decrease development costs and times but also allow for revenues from services during the lifecycle of the vehicle. In our view, Renault’s approach appears very much consistent and well dimensioned with its overall “horizontal diversification” strategy. While the first SDV will be a van in 2026, its upcoming BEV offer already embarks building blocks o

Another Q1 result eclipsed by another war

Renault’s Q1 23 results beat the street’s estimates on the back of welcome outperformance in terms of volumes, product mix and price mix. Unsurprisingly, the guidance was confirmed but concerns over the sustainability of BEV prices remained an overhang for investors as Tesla is becoming increasingly aggressive. While we continue to find the Renault restructuring equity story compelling, we acknowledge that, in the short term, the weakness in the share price could continue until any impact or non

FY22 results: Renault continues to go flat out on profitability

Renault’s FY22 results beat the street expectations on both sales and margin, and were close to our above-consensus forecast. The company symbolically resumed its dividend payment to signal its confidence in future FCF generation, but we like that the investment grade rating remains the top priority. The FY23 outlook matches the long-term plan and includes a cautious margin step-up. The order book remains high and the company refrained from entering roller coaster pricing “à la Tesla”. Our FY23

Renault-Nissan-Mitsubishi put things straight and bet for simplification

The reshaping of the Renault-Nissan-Mitsubishi alliance has been officialised. The companies have defined a legal framework to their cooperation that lacked details and let the door open for disappointment by stakeholders. Renault is not in a hurry to divest Nissan shares. The latest announcements support Ampere’s valuation which remains highly tied to Nissan’s say. Other projects announced mainly highlight that the three companies are set to continue their operational partnerships. They still h

CMD: partnership diversification and business specification

The complexity of dealing with the Alliance have been weighing on Renault’s valuation for years but what if Renault leverages its knowhow in managing partnerships BU by BU? The last CMD of the “Renaulution” was all about reaching scale on each of the group’s businesses with an expected settlement of two new (but already well-equipped) entities (AMPERE and HORSE). Despite ambitious but credible financial targets, we wait for Nissan’s decision to get the full picture of this unique sprawling struc

Renault’s good Q3 22; only a diversion prior to the CMD

Renault’s Q3 22 sales figures came in bang in line with consensus estimates. Key worries from investors have yet to be addressed/materialised into figures, i.e. the risk of worsening demand for 2023, the risk of pressure on cash flow (sole indication is the confirmed FY22 guidance) and, most importantly, the future of the Alliance (likely to be a key topic at the CMD to be held on 8 November). We plan minor changes to our figures following this release.

Morning Note – 8 October 2024

Games Workshop Group - Sigmar the fourth

Games Workshop Group (GAW) is the global leader for tabletop miniature gaming, which has enjoyed impressive growth, with core revenue and total operating profit CAGRs of 17% and 19%, respectively, since FY15. A combination of improved product innovation, engagement with customers, geographic expansion of its distribution and licensing its intellectual property (IP) to third parties have driven its growth. Its vertical integration and control of its IP contribute to enviable returns on capital of

Gooch & Housego - Year-end update: H2 growth delivered and trading in line

The group’s year-end update highlights that trading in H2 has been stronger than H1 and confirms that both revenue and profits for FY24 are expected to be in line with existing market expectations. Cash generation has been good, with bank debt about £6.0m better than expected. The order book has shown a 5% decline, but positive signs are the ending of medical diagnostic destocking, and a strong increase in A&D orders. No change to profit forecasts and we reiterate our existing 680p target price.

Revolution Beauty (REVB LN) - Laying foundations

Growth in core ranges accelerated: Revenue from the Group’s core range of SKUs was +6% YoY in H1, with growth accelerating to +16% in Q2, implying solid underlying demand for these continuing ranges. Under its ‘Reigniting the Revolution’ plan, set out in February, the Group is rationalising its offer and refocusing on the Revolution Masterbrand, core product categories (complexion, lip, eye, skincare) and key regions (UK, USA, Aus/NZ, and Germany).

PANMURE LIBERUM: Revolution Beauty: Lots of noise in H1; strategy is on track delivering a positve outlook

Telematics and fleet management: Microlise vs. Quartix Technologies

The UK AIM market has three quoted commercial vehicle tracking businesses: Microlise Group (SAAS), Quartix Technologies (QTX); and Trakm8 Holdings (TRAK). This note focusses on the larger two, Microlise and Quartix, initiating research coverage on each and comparing respective business models, strategy, growth opportunities and valuation. Whilst the businesses generally target different parts of the market, our conclusion is that Quartix offers better near-term value, cash returns and ROCE, whil

Allenby Capital TMT Update - 07.10.24 - SPSY.L, CHSS.L, ELEG.L, SEEN.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 – 30 September 2024

Hybridan Small Cap Feast - 7 October 2024

* A corporate client of Hybridan LLP ** Potential means Intention to Float (ITF) has been announced, or it is a rumour ***Arranged by type of listing and date of announcement ****Alphabetically arranged Share prices and market capitalisations taken from the current price on the day of publication Dish of the day Admissions: None Delistings: None What’s baking in the oven? ITF announced:*** Potential** Initial Public Offerings: 30th September 2024: Applied Nutrition, the sports nutrition, health

Morning Note – 3 October 2024

Morning Note – 29 August 2024

Spectra Systems (SPSY LN) - Momentum continuing to build

Following on from the major new contract announcement from SPSY eight weeks ago, this morning’s results show more than half the forecast FY24 profits already achieved in H1 and confirmation of ongoing momentum including new polymer opportunities. SPSY is an established world leader in providing security technology that includes software and advanced materials for use in banknotes, product authentication, security printing and gaming. The 96% YoY lift to revenues in part reflects the impact of th

Solid State (SOLI LN) - Accretive components acquisition

Solid State is a specialist value added component supplier and design-in manufacturer of computing, power and communications products. This morning, the group has announced the acquisition of Gateway Electronic Components, a UK-based manufacturer and distributor of ferrite and magnetic components, for initial consideration of £1.4m. With the acquisition bringing Gateway’s complementary portfolio of own-brand and franchised components onto SOLI’s existing distribution platform, and the acquisitio

PROGRESSIVE: IG Design Group - Persisting US trends hold back performance

IG Design Group has published an AGM trading update for the five months ending 31 August, with an updated outlook for FY25E. The group expects to continue to make progress with its transformation plans, with cash generation remaining strong, and DG International’s (DGI) performance also remaining strong, led by growth in Continental Europe. The same trends that adversely impacted DG America’s (DGA) FY24 revenue are now expected to persist longer than anticipated and have resulted in a decline of

Allenby Capital - Spectra Systems - Interims

Interims from Spectra Systems reflect the first full contribution from Cartor Security Printers (announced in December) and initial revenue recognition from the sensor manufacturing contract signed with its central bank customer (announced in July), that resulted in substantial profit upgrades. FY24 P&L forecasts are heavily underpinned at the leader in machine-readable high speed bank note authentication, brand protection technologies, security printing and gaming software. The sensor contract,