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Elior’s turnround is gathering pace with a near doubling of target recurring annual EBITDA synergies (€56m vs €30m) by 2026 following its April 2023 integration with Derichebourg (DMS). Also, with deleveraging the priority, net debt/EBITDA is expected by management to fall from 5.4x in FY23 to 4x in the current year and below 3x in FY26. Current momentum in terms of pricing, cost control, cross-selling and voluntary contract exits as well as an easing of inflationary pressures look to justify th
Companies: Elior Group (ELIOR:EPA)Elior Group SA (ELIOR:PAR)
Edison
Elior reported in-line FY23 revenue but a consensus-beating adjusted profit. Today’s positive stock performance is also likely to have been attributable to the group’s improving debt profile and mid-term projections, along with the upgraded target of recurring DMS synergies, while the FY24 guidance cut had been expected/foreseen by the market. We will cut our estimates which are higher than the FY23 actual figures and the FY24 updated guidance.
AlphaValue
Elior reported in-line organic growth for the past quarter, while the FY23 margin guidance was again revised downwards, mainly driven by the still-high inflationary pressure and heavier-than-expected new contract launch costs. Regardless, the group is hopeful that it reap the fruit of its ongoing structural and operational restructuring. We have a lower profit estimate for FY23 and a higher one for the next FY.
Elior’s H1 23 results were in line with the market’s expectations, while the FY23 guidance was revised downwards. The withdrawal of the FY24 guidance is another negative. We have cut our estimates and expect a downgrade in the consensus.
Following the ordinary Q1 revenue report and despite the maintained guidance for the next two FYs, Elior shares have been marked down due to inflation-related concerns raised by the company’s overdue contract renegotiations. Our current estimates remain however consistent with the updated outlook. We expect no major changes to our numbers until there is more visibility.
We have gained more visibility after meeting Elior’s management regarding the acquisition of Derichebourg’s Multiservices, in particular on the governance aspect.
Elior has agreed to buy Derichebourg’s Multiservices for €450m, barely equal to its pre-rumour market cap, with an all-stock payment. The recap dilution effect will be offset by the over 100% premium and we do not expect major changes in our valuation. As of the close of the transaction, Derichebourg will hold 48.4% of Elior and Daniel Derichebourg will assume the Chair and CEO positions at Elior.
Elior’s FY22 results missed the consensus but nonetheless managed to reassure the market owing to unchanged financial targets, against the previous concerns of further downward risks following the industry leader’s discouraging forecast earlier this week. The group’s ongoing portfolio review is hoped to bring additional buoyancy to the margin rebuild. The share consequently gained 10% and we have upgraded our recommendation from reduce to add (target price +17%).
Elior’s share price soared by 14% following its supportive Q3 trading update and guidance reconfirmation, as the market had had doubts about delivery. Expect an upgrade in the consensus and our estimates.
Elior’s founder and largest shareholder, Robert Zolade, has agreed to sell 14.7% of his holding to Derichebourg. The transaction will be completed by June 30 at a price much higher than the current one, while Zolade’s exit could raise some market concerns.
Elior published in-line H1 results and resumed its FY22 guidance. However, the inflation-driven downgraded forecast for the current FY and midterm depressed the market, while its major peers had indicated the prospect of absorbing the labour/food inflationary pressure. We expect a downward adjustment in the consensus.
The market’s reaction is expected to be negative due to the CEO’s sudden departure. The nomination of an interim CEO weakens further the group’s vulnerable governance profile.
Despite the slightly better-than-expected Q1 trading performance, Elior’s guidance suspension much disappointed the market (share price dropped by more than 12%). Analysts’ consensus is expected to be revised downward.
Elior’s FY21 results were mildly above analysts’ anticipations and the FY22 outlook was broadly in line with consensus. Some inflationary pressure is expected at least until H2 22, much like its peers. Nevertheless, the group’s longer-term forecast is encouraging, especially in terms of profit generation. We believe that the FY22 consensus will not see a major deviation from the current level but the FY23-24 consensus should be more upbeat.
Elior’s Q3 revenue recovery showed a moderate upgrade from the two previous quarters, while the Q4 is not envisaged to deliver buoyant progress. Regardless, the group’s recap concern seems to have been eliminated.
Research Tree provides access to ongoing research coverage, media content and regulatory news on Elior Group. We currently have 27 research reports from 5 professional analysts.
17th 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: 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 is proposing to acquire the entire issued share capital of 3radi
Companies: ARS TIDE SCE SNX ECK CNS TST SPEC SSTY
Hybridan
Market sentiment turned more cautious in the month of April, particularly regarding interest rates, with economic data producing mixed results. Despite housing transactions and net mortgage approvals continuing an upward trend, with the latter at an 18-month high and +20.1% YoY and +1.4% MoM to 61.3k (seasonally adjusted), Nationwide’s House Price Index dropped 0.4% MoM (seasonally adjusted) in April, below the +0.2% expected. This comes as mortgage lenders nudge rates up to factor in the potent
Companies: TPT EPWN VANL NXR LIKE
Zeus Capital
Companies: Cornerstone FS Plc
Shore Capital
Inchcape’s (INCH’s) FY23 results highlighted strong revenue and margin progression, with 12% organic revenue growth and a 70bp uptick in adjusted operating margin, leading to 18% EPS growth. The Derco acquisition contributed its full first year, helping to boost profits despite margin compression in the Americas and Retail. INCH anticipates another year of growth in FY24, although with caution due to expected softness in certain markets, particularly Europe and Retail. INCH will continue its dis
Companies: Inchcape plc
Domino’s Pizza Group’s (DOM’s) new CEO has set an ambitious long-term growth target, including an acceleration in its net store opening programme. With better alignment between the company and its franchisees, management believes DOM should be capable of generating improved profit growth, versus that achieved in recent years, and potential higher returns.
Companies: Domino's Pizza Group plc
CSFS reported its financial results for the year ended 31 December 2022 with revenue of £4.8m and adj. EBITDA of £(0.87)m. This is in line with the Trading Update provided Jan 2022, but ahead of expectations for the year.
SP Angel
The Hardman & Co Healthcare Index (HHI) has been running since 2009. Its main function is to highlight the attractions of life sciences investments over the long term. For the second year running, apart from global economic influences affecting world markets, performance in 2023 was dented by the capital-intensive nature of the sector. The HHI fell 3.7%, to 483.8, underperforming the main London markets – FTSE 100 (+3.8%) and FTSE All-Share (3.8%) but outperforming the FTSE AIM All-Share Index (
Companies: TXG NDVA TSVT BCOW Z29 TXG NCYT GNS SUN AMS OMG APH EKF EAH IMM AGL DEMG AGY TSTL IPO GDR ETX TRX HVO CTEC AVO OXB DEST VLG IXI VAL INDV AGR AVCT BAI 123F IMCR BCOW
Hardman & Co
Inchcape’s FY23 results were in line with Zeus estimates for most items. Underlying PBT increased by 35% to £502m (Zeus: £500.8m) as the Derco business was successfully integrated into the Group.
Today’s trading statement from ZOO highlights a ramp-up in demand following the end to the industry-wide strikes of last year. ZOO struck a note of caution in its January update regarding the timing of orders. However new productions are starting to translate into a healthy order pipeline, with a good recovery in revenue anticipated in H1 FY25. The update guides to revenue of at least $40m for the year to March 2024, ahead of our estimate at $36.8m. We have improved our adjusted EBITDA loss marg
Companies: ZOO Digital Group plc
Progressive Equity Research
At its FY23 results in June 2023, G4M announced its intention to focus on product margins, overhead cost reduction, and efficiency ahead of revenue growth, along with further net debt reduction, in FY24. The FY24 year-end trading update confirms G4M has delivered on these rebalanced priorities, with gross margin rising and net debt almost halving compared with FY23. Cost savings achieved in FY24 and the continued development of higher-margin categories should deliver further upside in FY25E.
Companies: Gear4music (Holdings) PLC
One Media iP (OMiP) has released a robust FY21E trading update, with Adj EBITDA of £1.65m; slightly below our forecast of £1.8m, owing to it taking a little longer to deploy cash raised on acquisitions of new royalty assets, and adverse foreign exchange movements. The company ended the period with £0.7m of net cash (vs our forecast of £0.3m of net debt), leaving further financial resources available for acquisitions heading into FY22E. Applying a conservative 8x Net Publisher Share (NPS) multipl
Companies: One Media iP Group PLC
Cavendish
During 2023, ME Group commenced the deployment of its next generation photobooths, which are integrated with the group’s newly developed proprietary software, gained market leadership in the Japanese photobooth market with an acquisition, continued to roll out laundry units with existing and new location partners, commenced a share buyback programme and gained entry into the FTSE 250. 2023 was a year of significant strategic and financial progress, with sales up 15%, EPS up 31% and net cash main
Companies: ME Group International plc
OMiP has released a robust set of results for FY23A, with group revenue up 5% YoY to £5.4m and adj. EBITDA of £1.4m – in-line with our forecasts, albeit a reduction YoY (FY22A adj. EBITDA of £1.8m), as the group made important investments to enhance its anti-piracy software (TCAT). The company successfully deployed £1.4m of capital during the period on acquiring further royalty rights at an attractive multiple. We upgrade our FY24E forecasts (adj. diluted EPS raised by 46% to 0.24p) owing to eff
Companies: One Media iP Group PLC (OMIP:LON)Trinity Exploration & Production Plc (TRIN:LON)
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