New US Tier 1 client most likely coming

FY EBITDA ahead of expectations, notably driven by the margin on variable costs FY EBITDA (company definition) came in at EUR106m, up 81% yoy and 7% above consensus. It was driven by a 430bps improvement of the margin on variable costs. It was explained by scope (relative impact), lower procurement costs, forex tailwind (USD) and margin improvement of both ESL and services margins. This performance was achieved in spite of reinvestment in the cost base (SGandA in % of sales up 70bps yoy) as Vus

Less is more

After a strong run in 2022, the shares have been moving sideways since the start of the year. We believe investors should go beyond quarterly order intakes, which can be lumpy, and re-focus on mid-to-long term prospects. Disruption is coming, as is the Walmart deal. Wider and faster adoption should be near, while services, currently underpenetrated, should keep accelerating from here. Battery-less, Infra-less, environmentally friendly: hardware differentiation to the fore The next generation of

Operating leverage notably driven by services growth

USD strength not preventing operating leverage to kick in H1 EBITDA was up 68% at EUR25.3m while sales was up 41%. The EBITDA growth was driven by a 60bps improvement of the margin on variable costs. It was supported by a mix with a higher share of value added services (15.8% of sales in H1 22), price increases and a focus on containing production costs. This performance has been achieved in spite of USD strength costing SES Imagotag 3 percentage points of margin on variable costs. We believe se

Robust delivery, robust outlook

EBITDA (Company Definition) doubled in FY21 EBITDA reached EUR32.3m, up 103% yoy. It could have even been better, given SES-Imagotag decided to impair old inventories by EUR4.3m. The EBITDA margin has thus improved by 210bps. The margin on variable costs is down 20bps due to an adverse evolution of COGS (input cost inflation) and mitigated by a larger share of added value services (15% of sales vs 13% in FY20) as well as the implementation of some price hikes. The opex-to-sales ratio declined s

Flawless H1 execution

Meaningful H1 EBITDA improvement SES-Imagotag H1 EBITDA was EUR15m. It compares to a EUR0.2m loss in H1 20. Margin on variable costs was 20.8% as compared to 19.1% the year before. It benefited from an increased share of value added services (13.5% of sales in H1 21). SES-Imagotag also benefited from a positive volume effect (EUR15.9m impact) and EUR/USD tailwind (EUR3.6m positive impact). This is a solid performance in the context of input cost inflation and component shortages. The balance s

Updating forecasts post Q1 sales

Q1 sales at EUR84m Q1 sales, released on April 28, were particularly dynamic, with sales of EUR84m, up 66% yoy. Europe was up 60%, benefiting from a favourable base effect, while Rest of the World was up 85% with Ses-Imagotag further increasing its market share. Rock-solid commercial activity Order intakes in Q1 were EUR111m, up 55% yoy and +37% on a trailing twelve-month basis. Ses-Imagotag benefited from repeat orders from the existing client base (re-equipment) and mostly new deals, notab

Impressive Q4 order intakes and Q4 growth

Q4 order intakes up 70% yoy Q4 order intakes reached EUR202m, up 70% yoy. This was above the bracket guided by SES Imagotag at the end of last year (EUR160m to EUR200m). Over the FY, the majority of order intakes came from the company''s ability to gain new clients, notably Kesko. The company also estimates that its hit ratio on new clients was above 50%, implying that SES Imagotag is gaining market share. As we enter FY21e, the pipeline for new business also looks rock solid. Sharp accelerati

Growth uptick in Q3

Sharp Q3 acceleration SES Imagotag reported Q3 sales of EUR73m, up 46% yoy. This growth was led by further progress on the international front, with sales up 82% yoy. France remained penalised and fell by 37% in Q3 with the 9-month performance at -39%. Solid order intakes Order intakes were EUR88m in Q3, down 6.2% yoy. Order intakes at the end of September were up 17%. On a 12-month basis they reached EUR373m, up 32% yoy. In addition, the commercial pipeline is strengthening further. Improv

The gateway to retail IoT

Global leader in the ESL market, SES Imagotag is focused on expanding its retail IoT platform as fast as it can. While this may come with bumps in the road, the company''s growth prospects look bright in a market that remains barely equipped. Once services success becomes visible, we believe the valuation gap with peers should narrow. Global leader in the electronic shelf labels (ESL) market Commanding a 55% market share, double that of the runner-up, SES Imagotag''s fusion platform is the mos

Record EUR98m order for non-food retailer

Store Electronics Systems (SES) has announced that it has won the largest ESL order in the history of the market. The €98m order from a leading electronic retailer headquartered in Germany follows on from a €35m order from the same customer, which is currently being executed. The order will see SES’s subsidiary Imagotag install its ESL systems in 1,000 stores across 14 countries, with a concentration of high-spec colour and NFC-enabled e-graphic labels. The contract will commence in Q116 and we

The pieces are dropping into place

Over the last 18 months, Store Electronic Systems (SES) has transformed its business, investing in a range of next-generation electronic shelf labels (ESLs) and extending its distribution network into the Americas and Asia. The new labels are generating strong interest from the existing food retailer base as well as from non-food retailers, but with their production runs still relatively small, they are margin dilutive. We see significant upside for earnings as sales growth leads to operational

Coming to a shelf near you

Store Electronics (SES) reported a more than doubling in y-o-y revenues in Q3 on 212% growth in international sales and a 16% increase in French revenues. The results reflect strong H1 order inflows arising from the transformation of SES’s product range and its international expansion efforts. We expect SES’s new products to continue to gain traction, and major new orders in markets so far resistant to ESLs. Europe should fuel the bulk of this growth in 2016-17 as ESL penetration is still less t

Record order book supports strong growth in H2

Following a weak Q1, Store Electronic Systems (SES) has delivered an improved second quarter with revenue up 13% year-on-year and 47% sequentially. Gross margin was 200bp lower y-o-y but better than we expected given the US dollar strength and mix of newer, lower-margin products. The order book stands at a record €101m, much of which is expected to be delivered in H2. Therefore, our revenue forecasts remain unchanged despite H1 reaching only 40% of our FY15e revenue forecasts.

€35m contract win and record order book

Store Electronic Systems (SES) has signed a €35m contract – its largest ever – with a leading German retailer, which extends the already record order intake announced in the Q1 trading update. Revenue was down 16% y-o-y in Q1, but the healthy order book provides a solid foundation to our €102m FY15e revenue forecast and shows market demand is growing. The strong US dollar and increasingly competitive market, however, are likely to put pressure on margins, and therefore we have reduced our FY15e

PROGRESSIVE: Sanderson Design Group: Strategic growth drivers show their value in challenging trading conditions

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

STCB: 4Q Review: Setting Up the Next Steps; Reiterate Buy, PT

We are reiterating our Buy rating and $0.25 price target for Starco Brands, leaving our 2024 projections basically unchanged and rolling out another year of double-digit top and EBITDA growth after the company reported inline 4Q23 results and left 2024 guidance unchanged. We believe, with multiple potential expansion opportunities in category adjacencies and new relationships, continued innovation and vertical integration and the potential for further accretive acquisitions (which are not in our

AKA: Initiating Coverage of a.k.a. Brands with Buy and $14 PT: Upside Ahead

We are initiating coverage of a.k.a. Brands Holding Corp. ("a.k.a. Brands" or the "company"), a leading owner of primarily online apparel-based brands focused on Generation Z and Millennial consumers, with a Buy rating and $14.00 price target, or 10.9X our 2025 EBITDA projection of $20.2 million. The company's brands include: 1) Princess Polly, focusing on 15 to 25 year-old women; 2) Petal & Pup, which offers feminine styles for 25 to 34 year-old women; 3) Culture Kings, a street wear destinatio

Games Workshop Group - Steady as she goes

Games Workshop Group has reported that trading for the three months to the end of February 2024 is in line with expectations. The fourth dividend of the year has been declared at 105p/share, which takes the year-to-date total to 420p/share, marginally ahead of the 415p/share declared in FY23 at a similar stage. The declared dividend compares with our prior estimate of 425p/share, and we have therefore nudged our estimate down to be consistent with the amounts declared.

Allenby Capital TMT Update - 04.03.24 - ENSI.L, MIRI.L, BIRD.L, PPS.L, CHSS.L, ENET.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.

Spectra Systems (SPSY) - Solid FY results, cash on the balance sheet and a record FY24E beckons

Encouraging FY23 results from SPSY this morning show profits and cash a touch ahead of expectation and position the company well for a year of strong growth in FY24E. SPSY leads the market in machine-readable high speed banknote authentication, brand protection technologies and gaming security software. The company grew the business robustly in FY23 (PBTA +6%, EPS pared by increased tax payments, progressive DPS), building on a decade of double digit CAGR; and closed the year with the transfor

LIBERUM: Mears Group* - Ongoing trading in line but 8% dilution from disposals

LIBERUM: SAS UK SMID Monthly: Should we expect a rally in retail stocks?

Gooch & Housego plc (GHH LN) - Into the light

We think Gooch & Housego is attractive at the current share price and initiate research coverage with a valuation of 1,150p, indicating c.30% potential upside. Manufacturing is gradually recovering from COVID and supply chain disruptions, and the orderbook is now at record levels. Recent H1 results were mixed but the strength of the recovery in orders, particularly for industrial lasers, combined with abating disruption, prompted management to continue to support full year consensus earnings est

Zeus Top Picks for 2024 - 2023 review and outlook for 2024

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

PROGRESSIVE: IG Design Group: Strong profit growth, key strategy initiatives and quantified aspirations

IG Design Group delivered a 27% increase in adjusted PBT to $34.8m for H1 FY24 (to 30 September) with a significant reduction in net debt to $15.1m, as signposted in last month’s trading update. The adjusted operating profit margin was some 270bps higher at 8.6% (vs 5.9% in H1 FY23), the highest achieved since H1 FY20 ahead of the CSS acquisition. Management has provided more details on the key attributes and initiatives for its new growth-focused strategy. The group is on track to return to pre

Allenby Capital - Character Group - Trading update

At its AGM scheduled for 11.00am today, the Group will state that the business continues to trade satisfactorily and financial results are expected to be in line with current market expectations. Although trading conditions in the current financial year to August 2024 remain challenging, the Group has a strong product offering which has been well received by the trade. Adverse trading conditions will at some stage revert to normality which we believe will allow strong historic growth to resume.

Initial Equity Trading Comments - 11 May 2023

The Joy of Techs - Cavendish Technology quarterly sector note

£23.3bn in enterprise value has been returned to AIM technology shareholders over the past six years in the form of 51 public to private takeouts, including 10 in 2023 alone with the takeovers of Smoove* and Tribal announced in early October. With UK valuations appearing cheap and looking more attractive to potential acquirers, we take a moment to reflect on the trends of corporate and private equity bidders targeting AIM-listed technology companies going back to 2017, through the uncertainties

Morning Note – 16 October 2023