Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on Arkema. We currently have 11 research reports from 1 professional analysts.
Arkema announced its 2023 targets at its investors day. Management aims to generate a REBIT margin of 11.5-12.5% (2016: 9.7%; 2014: 7.5%) and EBITDA (based on recurring EBIT!)/free cash conversion of 35% (2016: 36%). The financial frame consists of ROCE to be at least at 10%, a net debt/EBITDA of <2x and an investment grade rating (2016: S&P: BBB; Moody’s: Baa2).
Arkema was up +14% (v: +5%; p: +5%; portfolio: +3%) to €2,152m and the gross profit margin improved from 22.1% to 23.0% in Q1. EBITDA increased +17% to €340m and net profit attributable to shareholders came in at €137m (€98m). Operating CF (+20% to €73m) was driven by the better operating performance despite the higher NWC outflow (€-179m after €-151m) due to higher receivables against the seasonality backdrop. Investing CF was broadly unchanged (€-97m after €-101m) slightly lifted by divestment proceeds. Financing CF doubled (€-20m after €-10m) seeing a decrease in short-term debt. For 2017, management had already confirmed its guidance of €1.3bn in EBITDA.
Arkema reported +5% (v: +6%; price: +1%; FX: -1%; portfolio: -1%) higher sales (to €1,852m) and the gross profit margin clearly improved from 18.0% to 19.3% in Q4. EBITDA strongly rose +26% to €246m and net profit attributable to shareholders jumped +76% to €86m. Operating CF came down from €380m to €246m, despite the higher operating performance, but NWC inflow declined from €205m to €97m and D/A was also lower. Investing CF moved from €-19m to €-327m burdened by significantly higher acquisition costs (€-337m after €2m) due to the closing of the Den Braven takeover. Financing CF was €-177m (€-57m), which suffered from higher net gross debt repayments (€-147m after €-25m). Management proposes a €0.15 higher dividend of €2.05 (€1.90) per share at the AGM on 23 May 2017. For 2017, management confirmed the achievement of the 2014 target of €1.3bn EBITDA. We expect the publication of the annual report in the coming weeks.
Arkema’s Q3 sales dropped 6% to €1,838m, but the gross profit margin improved from 20.2% to 22.3%. EBITDA went up +5% to €284m and net profit attributable to shareholders rocketed +57% to €96m. 9M operating CF strongly grew (+20% to €575m) due to the higher operating performance, despite a strong increase in NWC outflow (€-86m after €-19m). Lacking the huge cash outflow for the Bostik acquisition, investing CF abated from €-1,616m to €-337m, seeing capex far below D/A. Financing CF swung from €428m to €-79m, primarily due to the strong decline in net gross debt issuance (€26m after €478m). Management lifted FY guidance again, now expecting EBITDA growth in the 9-10% (7-9%) range based on the assumption that energy costs, raw material costs and FX will be in line with current levels. This does not include the announced acquisition of Den Braven. Closing is still expected in Q4 16.
Arkema’s Q2 sales (-7% to €1,952m) suffered from lower prices (-5%) stemming from lower raw material prices, adverse FX developments (-3%) and divestments (-2%), which may have been partly offset by higher volumes (+3%). EBITDA saw a strong increase (+38% to €351m) and net profit attributable to shareholders was up +11% to €147m. Operating CF remained broadly unchanged at €259m after six months of 2016. The better operating performance was mostly absorbed by higher NWC outflows (€-186m after €-67m). Lacking the cash outflow for the Bostik acquisition (~€1.3bn) in the previous year’s period, investing CF declined from €-1,531m to €-222m. Financing CF swung from €484m to €-104m as net gross debt proceeds melted away (nil after €486m). Management lifted the FY guidance and now expects EBITDA growth in the 7-9% range based on the assumption that energy costs and FX will be in line with their current levels. This does not include the announced acquisition of Den Braven for which the close is still expected in Q4 2106.
Arkema plans to acquire Den Braven, a leader in sealants for insulation and construction in Europe, for an EV of €485m. As the deal is subject to anti-trust approvals, closing of the deal is expected to take place in Q4 16.
Q1 sales were slightly up (1% to €1,893m) seeing one month of Bostik and some divestments (portfolio: +5%) and higher volumes (+3%), but lower raw material prices and the low point of the acrylic cycle ate up 6%. The gross profit margin improved from 18.25% to 22.1% and EBITDA strongly rose +32% to €291m. Net profit attributable to shareholders more than doubled (€98m after €42m). Operating CF (€61m after €34m) reflected the stronger operating performance, which was partly offset by higher NWC outflow (€-151m after €-110m). In Q1 15, investing CF was characterised by the Bostik payment and CF came back to a more normal level (€-101m after €-1,415m). The same is true for the financing CF (€-10m after €489m), which saw very minimal financing activities. Management confirmed its previously given guidance, expecting EBITDA to grow based on the assumption that energy costs and FX will be in line with current levels.
Bostik was a game-changing acquisition and the figures are dominated by this effect. In Q4, sales clearly improved +23% to €1,760m and the gross profit margin strongly improved from 15.5% to 18.0%. EBITDA went up +23% to €195m and net income attributable to shareholders nearly doubled (€49m after €27m). Operating CF more than doubled (€380m after €162m), driven by higher D/A and, additionally, propelled by a stronger NWC inflow (€205m after €61m), helped by lower inventories and receivables as well as higher payables. Investing CF came up from €-288m to €-19m as the previous year’s quarter was impacted by acquisition costs. Financing CF swung from €907m to €-57m. In the previous year’s quarter, Arkema issued a hybrid bond as a first building block to finance the Bostik acquisition. Management proposes a slightly higher dividend (€1.90 after €1.85 per share) at the next AGM on 7 June 2016. The payout ratio drops from 73.1% to 49.1%. For FY 2016, management is confident it can increase EBITDA, based on the assumption that energy costs and FX will be in line with current levels. The annual report should be available within the next few weeks.
Arkema will receive €73.6m from Klesch Group as compensation for the majority of costs incurred in the arbitration procedure.
Q3 figures remained dominated by the Bostik acquisition as sales strongly ramped up by +32% to €1,946m (volumes: -1%; prices: -4%; portfolio: +29%; FX: +7%) and the gross profit margin increased from 17.9% to 20.2%. EBITDA jumped +65% to €271m and net profit attributable to shareholders more than doubled (€61m after €24m). Operating CF (+31% to €224m) reflects the better operating performance and benefited from higher D/A. Investing CF (€-85m after €-111m) was helped by fixed assets payables (€79m after €-12m) despite higher capex (€-161m after €-107m). Financing CF swung from €128m to €-56m due to the lack of the previous year’s quarter inflow from short-term borrowings and the change of dividends to be paid (balance qoq: zero). In 2015, management expects EBITDA including Bostik in the range of €1,020-1,040m (previously: slightly above €1bn).
Q2 sales went up strongly by +39% (organic: -1%) to €2,106m and the gross profit margin improved from 18.1% to 20.3%. EBITDA ramped up by +35% to €254m and net income attributable to shareholders more than doubled (€133m after €50m). In H1, the operating CF benefited from the far higher operating performance coming in at €254m (€174m). Due to the Bostik acquisition, investing CF swelled from €-271m to €-1,531m, of which €-1,298m is attributable to the acquisition. Financing CF swung from €-107m to €484m due to the net gross debt issuance (€486m after €-25m). In 2015, management expects EBITDA including Bostik to be slightly above €1bn (previously: EBITDA to grow excluding the effect of the Bostik acquisition).
Research Tree provides access to ongoing research coverage, media content and regulatory news on Arkema. We currently have 11 research reports from 1 professional analysts.
CyanConnode* (CYAN): Leader of the narrowband (CORP) | Ideagen* (IDEA): Consistent strength in delivery (CORP) | K3 Capital* (K3C): Director changes (CORP) | Lighthouse Group* (LGT): Trading update (CORP) | Somero Enterprises* (SOM): Strong June trading shows a pick-up in US market activity and affirms FY forecasts (CORP) | Castleton Technology* (CTP): Solid prelims (CORP) | Cello (CLL): Strengthening the offer in Health (BUY) | dotDigital* (DOTD): Yet again – positive trading update (CORP) | Allergy Therapeutics* (AGY): FY trading update drives 7% upgrade (BUY)
Companies: CYAN IDEA K3C LGT SOM CTP CLL DOTD AGY
We update this table which we first published in early January and highlight the continued progress of the biggest AIM companies so far this year and activity in general. The latest AIM Statistics show that there are 963 companies currently, with 28 new issues year to date raising £441m. What’s more, this momentum has been maintained since June. This demonstrates that despite, the uncertainty surrounding the UK economy, generally investors continue to be active in the AIM market. In Share News & Views we comment on Cohort, ECSC*, Porvair, Quarto*, SQS* and Xafinity.
Companies: BMS CRPR ECSC EUSP FDM PCF PPIX QRT SNX SPRP SQS TCN W7L
Carador Income Fund (CIFU LN) CLO new issuance and reset activity continues | eg solutions (EGS LN) Strong H1 drives full year upgrade | Howden Joinery Group (HWDN LN) Successful NPD/pricing see pick up in recent LFLs, but risks growing | IQE (IQE LN) Photonics ramp up begins in earnest | Nichols (NICL LN) Strong interims and an accretive deal
Companies: IQE CIFU HWDN NICL EGS
The AIM market turned twenty-two in June and it is fair to say it has had its fair share of difficultiesH1 2017 saw a further net loss of constituents and we ask what will the rest of 2017 hold in store. Arguably the stability of the UK government, Brexit and the shift in global monetary policy will be the biggest themes for the remainder of the year.
Companies: IDP PEG AMYT SOU EVRH TST VANL W7L G4M
Solid State continues to make progress towards management’s goal of doubling revenues over the next five years. It delivered pre-exceptional profit growth from continuing businesses of 6% during FY17. The record order book combined with investment during FY17 in both the Manufacturing and Distribution divisions shows management is driving organic growth to complement its successful acquisition programme.
Companies: Solid State
accesso Technology (ACSO LN) TE2 accelerates growth, but does not materially benefit EPS until FY19 | Alliance Pharma (APH LN) In line update; Diclectin UK approval expected Q3 | Cello Group (CLL LN) Trading update | City of London Investment Group (CLIG LN) FuM +7% in Q4, modest positive earnings surprise, better final dividend | Clinigen Group (CLIN LN) Clinigen Group (CLIN LN) | Horizon Discovery Group (HZD LN) Synergistic acquisition and proposed placing | Renold (RNO LN) AGM trading update reiterating expectations for FY18
Companies: CLL CLIG RNO CLIN HZD APH
Since its inception in 2010, the Panmure Gordon Conviction List has outperformed the market, returning 284% against a Small Companies index that would have returned 221% over the same period.
Companies: ALD AVON CTH GKN HVN HCM INF NOG OTB POLY SNR SQS STJ
No change to forecasts following H117 update; our forecast equates to earnings growth of 23% in FY17. We believe a PE valuation around 10x remains inconsistent with current trading, geographical alignment and delivery of the strategy to acquire niche growth businesses such as Rishworth and ConSol. We anticipate an ongoing narrowing of the discount to its peer group as superior growth rates compensate for size/liquidity and cash generation drives a rapidly improved balance sheet. A rating of at least 13x is a realistic short term expectation providing scope for meaningful share price outperformance from current levels.
Companies: Empresaria Group
Today we publish our H1 review of our Best Ideas for 2017 – the document in which we also outlined our key top down and bottom up investment themes for the year. Our 12 top picks in January were Cineworld, Elementis, Herald Investment Trust, Hill & Smith, IQE, MySale, Redde, ReNeuron, RhythmOne, SDL, Servelec and Severfield which have collectively outperformed the wider market by 13% YTD. At the half way stage we retire Cineworld and Hill & Smith from the portfolio (both were moved from Buy to Hold in May after outperformance), to be replaced by CVS Group and Renold. We also give a brief update on the rationale for our picks.
Companies: IQE RNO SDL CVSG ELM REDD RENE MYSL SERV HRI SFR RTHM CINE HILS
Forbidden Technologies plc (FBT.L, 5.75p/£10.4m) North American pilot opens multiple potential opportunities (12.07.17) | CloudCall plc (CALL.L, 120p/£24m) H1 trading update: accelerating growth and positive KPIs (12.07.17) | Amino Technologies plc (AMO.L, 193p/£138m) Interims: Enable provides interim upgrade and new sales route (11.07.17) | Falanx plc (FLX.L, 7p/£8.8m) Prelims: Increased push into cyber security (10.07.17) |
Companies: FBT CALL CCT AMO FLX
As we approach 3rd January 2018 and the coming into force of the MiFID II legislation which changes the landscape for research, we are beginning to see some of the practical implications and complications. Brokers are in the early stages of working out how to structure charging for research, asset managers have already begun cutting their brokers’ lists and a model code of conduct for Research Payment Accounts for institutions has been published.
Companies: ABZA AGY APH ARBB AVCT BUR CMH CLIG COS DNL EVG MCL MUR NSF ODX OXB PPH NIPT PHP PURP RE/ SCLP SPH VAL
Renold’s AGM update has confirmed that trading is on track to deliver FY18 results in line with expectations. The group has delivered strong underlying sales growth for Q1, ahead of our assumptions. However this outperformance has been offset by a decline in margin due to rising raw material costs, and while prices have been raised in response, there will be a time lag before this benefits margin. Growth prospects remain positive, with order intake 11.4% ahead of sales, or 4.7% ahead excluding revenues to be delivered post year end. STEP 2020 self-help initiatives remain on schedule. We do not anticipate making changes to our headline profit forecasts at this stage. The shares are trading on a significant discount to sector EV/EBITDA and P/E multiples and offer material upside to our target price.
QinetiQ’s AGM statement reconfirmed the outlook even in an environment that remains uncertain post the UK election. While some order deferrals in EMEA Services have undoubtedly occurred, this was to be expected and management maintains the modest revenue growth expectation for the full year. This suggests confidence that such delays are likely be recovered during the year, leading to a more heavily weighted H2. Global Products’ results are more lumpy and dependent on timing of deliveries but further growth is forecast from improved year-on-year order backlog and pipeline, enhanced by the Target Systems acquisition. With LTPA investment on track and customer-focused change embedded, QinetiQ remains focused on driving medium-term organic growth and returns.
The QCA, which campaigns for smaller quoted companies, says that the latest MIFID II policy statement by the Financial Conduct Authority (FCA) will enable smaller companies to continue to commission research that can be distributed to fund managers for free. This will include when a smaller company is raising additional cash in order to finance growth. There were worries that the EU’s MIFID II directive could have made it more difficult to make small company research available to investors.
Companies: MLIN RHL ANCR EVG AUTG RLD
GetBusy PLC—Sch1 from the holding Company of its subsidiary undertakings, which operates as a document management software business with over 110 full time employees, headquartered in Cambridge, UK and operating across the UK, USA, Australia and New Zealand. Capital to be raised via a rights issues of £3m at 28.3p with anticipated market cap of £13.7m. Work Group PLC—Sch1 from the Company that proposes to acquire the entire issued share capital of Gordon Dadds Group Limited (GDG). GDG is an acquisitive law firm and a group of other complimentary businesses, including Prolegal, an acquisition vehicle model focused on smaller law firm. Capital to be raised is £20m with anticipated market cap of £40m. Quiz—Sch 1 from the omni-channel and international own brand in the women's value fast fashion sector. Offer TBA. Expected late July. Last year Quiz posted sales of £87.4m while pre-tax profits grew by 17pc to £5.7m . Arena Events Group -provider of temporary physical structures, seating, ice rinks, furniture and interiors. Raising £60m. Mkt cap £63m. Expected on the Chef’s birthday, 25th July. Altus Strategies—African focused natural resource Company. Offer TBC. Expected Mid July. Harvey Nash Group— Provider of professional recruitment and offshore solutions moving to AIM from Main. No capital to be raised. Mkt Cap c. £57.8m. Greencoat Renewables - Schedule 1. Targeting a portfolio of operating renewable electricity generation assets, initially investing in wind generation assets in Ireland. Offer TBC. Due Mid July. I3 Energy –Schedule 1 Update. Independent oil and gas Company with assets and operations in the UK. Offer TBC, Mid July Admission. Verditek— Sch 1 update. The Company's subsidiaries will be involved in advanced solar photovoltaic, filtration and absorption technologies specialising in providing environmental services. Issue price 10p. Admission late June. Hipgnosis Songs Fund investment Company offering pure-play exposure to Songs and associated musical intellectual property rights. Prospectus yet to be published. Impact Investment Trust—Exposure to a diversified portfolio of funds providing SMEs across developing economies with the growth capital they need to have a positive impact on the lives of the world's poorer populations. Raising up to $150m at $1.00. Curzon Energy—Report on Proactive Investors of intended LSE float this year with acquisition of coal bed methane assets in Oregon. Looking to raise £3m plus. NLB Group—financial and banking institution based in Slovenia, with a network of 356 branches. Seeking Ljubliana Stock Exchange listing with GDRs on the LSE. Expected mid June. Kuwait Energy— has not been able to complete its initial public offering as announced in its Intention To Float of 3 May 2017. However, in light of positive feedback from potential investors, the Company remains committed to obtaining a London listing and continues to explore its options. Supermarket Income REIT– Up to £200m raise to acquire a diversified portfolio of supermarket real estate assets in the UK, providing long-term RPI-linked income. Due 21 July.
Companies: TAL PGH YU/ FRAN OPTI GRA KENV GMR AFX ELCO