Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on ESSILOR INTERNATIONAL. We currently have 6 research reports from 1 professional analysts.
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Temporary issues mire the short term; strong fundamentals intact
25 Oct 16
Essilor released Q3 FY16 trading results in line with our estimates (total revenue: 6.4% vs AV estimate: 6.7%), primarily driven by the 4% scope impact vs AV’s estimate of 3.2%. However, organic growth slowed to 3.2% (vs AV’s estimate: 4.4%) due to lower than expected growth in the Lenses and Optical Instruments segment (2.9% vs AV’s estimate: 4.7%; accounts for c.89% of Q3 16 revenue). Within the segment, LatAm’s organic growth slowed to 4.5% (vs AV estimate: 11.5%; accounts for c.7% of Q3 16 revenue) due to macro-economic headwinds in Brazil (adverse impact on optical store traffic). APAC’s revenue growth also decelerated to 5.7% (vs AV’s estimate: 8.5%; accounts for c.16% of Q3 16 revenue) due to the consumer spending slowdown in the Middle East and Turkey. The sluggish performance continued in North America (1.3% vs AV’s estimate: 2.5%; accounts for c.39% of Q3 16 revenue), once again dampened by the decline in Transitions Optical sales to third-party casters and a slower than expected recovery in Coastal.com revenue. Moreover, the organic growth in Europe came in at 3.0% (vs AV’s estimate: 4.0%; accounts for c.27% of Q3 16 revenue) due to a poor performance in the UK and Central Europe. After dismal growth in H1 16, the Sunglasses and Readers segment clocked 6.9% organic growth (vs AV’s estimate: 2.0%; accounts for c.8% of Q3 16 revenue). The recovery was led by a good performance in North America (benefiting from favourable weather conditions compared to H1) and China (inventory management issue getting resolved). The Equipment division also witnessed robust growth (5.4% vs AV’s estimate: 2.0%; accounts for c.3% of Q3 16 revenue), leveraging on the increased demand for surfacing and coating machines by independent laboratories and optical chains in North America. The FX impact came in line with AV’s estimate (-0.9%). The company made 16 acquisitions/partnerships in the current fiscal year; aggregating c. €205m annualised revenue. Management now sounds cautious about achieving the 4.5% lfl target for FY16 but remains optimistic for 8.0% growth at CER.
Strong fundamentals intact; temporary impact from guidance cut
05 Sep 16
Essilor posted H1 FY16 results below our estimates as well as market consensus. In Q2 16, the lfl revenue increased by +3.2% (vs Q2 15: +4.4%), primarily due to a slowdown in the Lenses & Optical segment (+4.4% vs Q2 15: +4.9%; accounts for c.87% of group revenue). The organic growth of the North America lenses business slumped to +1.5% (vs Q2 15: +3.7%; accounts for c.37% of the group’s revenue) on the back of a sluggish performance in the ‘Transitions Opticals’ business and lesser than expected synergies from ‘US alliance’ (Vision source and PERC). However, while Europe once again showed a sustained performance (+4.5% vs Q2 15: +5.0%; accounts for c.28% of the group’s revenue), the positive momentum continued in Asia-Pacific/Middle East/Africa (+8.5% vs Q2 15: +5.2%; accounts for c.16% of group revenue) and Latin America region (+11.4% vs Q2 15:+10.5%; accounts for c.6% of group revenue). The biggest let down was the Sunglasses and Readers segment (-5.8% lfl vs Q2 15: +3.2%; accounts for c. 10% of the group’s revenue), affected by unfavourable / wet weather conditions and a slower than expected recovery in China. The company’s reported revenue grew by 2.9% (vs Q2 15: +20.0%; our estimate: 7.3%) as the positive scope impact (+3.7% vs Q2 15: 2.2%) was offset by currency headwinds during the quarter (-4.0% vs Q2 15: 13.5%; particularly due to the weakening of the BRL, CNY and GBP). In H1 16, the reported revenue increased by 5.1% (vs H1 15: +22.6%; our estimate: 7.4%) while the operating margin remained stable at 18.0% (in line with our expectations). Furthermore, lower than expected tax expense (attributable to a reduction in dividend taxes as a major portion of 2015 dividend was paid in shares) underpinned the EPS by 6.4% (vs H1 15: 18.7%; our estimate: 12.0%). Essilor made 12 acquisitions/partnerships in the current fiscal year, aggregating c. €200m annualised revenue. Management has lowered the FY 2016 guidance of lfl growth by 50bp (vs previous guidance of 5%).
Strengthening organic growth
30 Jul 15
Q2 sales rose 20% (including 4.4% lfl; 2.2% perimeter; 13.5% forex). Growth reached 19.2% (including 4.9% lfl) for lenses and optical instruments, 6.6% (-7.1% lfl) for equipment and 23.2% (3.2% lfl) for Sunglasses & Readers. H1 operating profit grew faster than sales (+24.2% vs. +22.6%) and the EBITDA margin reached 24.5% vs 24% in H1 14.
N+1 Singer - Morning Song 05-12-2016
05 Dec 16
RTHM is acquiring a profitable Canadian listed mobile specialist for equivalent of US$42.5m consideration in shares (88.235m). This helps adds to two growth vectors RTHM is targeting; (i) adds unique exclusive audience (10m unique) and (ii) Exclusive demand Yahoo and Facebook. The business has 15 premium and owned and operated apps which provide users with rewards for activity. The business is expected to deliver c$9m of EBITDA in FY18 including $2m of cost synergies. This equates to just 4.7x EV/EBITDA. This marks what we see the first step in RTHM activity to scale the business and deliver on margin potential (see our initiation notes). Our initial estimates for EPS revisions are very significant - for FY18 are 2.3 cents (currently 0.6) and for FY19 4.3 (currently 2.5). There is a call at 830 for investors and we will revise post this.
Panmure Morning Note 02-12-16
02 Dec 16
We expect CareTech to report FY results to September on 8th December. A positive trading update in October indicated that performance for the year was in line with market expectations therefore we are focusing on the outlook. We expect a confident statement since the end of 2016 showed positive trends across fee rates, expansion in places and occupancy. We believe CareTech is well positioned for further expansion, and remains at an attractive valuation. We retain our BUY and 380p price target.
N+1 Singer - Morning Song 06-12-2016
06 Dec 16
With FY16 volume and revenue already disclosed in the pre-close, the focus in today’s prelims is on PBT (£100.3m versus our £101m) and EPS (96.8p versus our 95.4p). No special dividend triggered this year (none forecast) and DPS is held at 46.8p (N1SE: 48.0p). On end markets, recent commentary is reiterated – the core business is growing, whilst consumer electronics will be subdued in the current year (competitive capacity from Solvay). On currency, there will be a material benefit in the current year (a little more than the £14m to £15m previously indicated), and a further tailwind next year if current rates are maintained (quantum TBC). There is also an investment of £10m today in a minority interest in Magma Global, Victrex’ oil and gas mega programme partner. Although the share price is now close to our TP of 1730p, we feel that there is enough in today’s announcement to retain a positive stance on medium term opportunities with strong cashflow and a special dividend potentially to look forward to in the current year.
Panmure Morning Note 05-12-16
05 Dec 16
This week will see Chi-Med present data on both fruquintinib and epitinib at the 17th World Conference on Lung Cancer, concerning two proof-of-concept trials in non-small cell lung cancer (NSCLC). This morning, the poster presentation ‘A Phase I Study of Epitinib To Evaluate Efficacy And Safety In EGFR Mutation Positive (EGFRm+) NSCLC Patients With Brain Metastasis’ is available for investors to view on Chi-Med’s website.
First patients enrolled in AML Phase II trial
06 Dec 16
Hybrigenics has started dosing the first patients in France and the US in a double-blind, placebo-controlled Phase II study in elderly or frail acute myeloid leukaemia (AML) patients. Data are expected in Q418 or H119. Additionally, an open-label Phase II study in patients with chronic myeloid leukaemia (CML) in combination with imatinib continues; an update will be provided by Q117. Hybrigenics has an R&D collaboration with Servier focused on oncology, from which it received a €1.5m milestone payment in H216. Our updated valuation is €146.1m or €4.1/share.
Small Cap Breakfast
07 Dec 16
Creo Medical group—Schedule 1 update.. £20m raise. Expected market cap £61.2m, admission expected 9 December. ECSC—Schedule 1 from provider of cyber security services. Raising £5m. Vendor sale £0.8m. Target date 14 Dec. Expected market cap £15m. RM Secured Direct Lending - The secured direct lending fund intends to float on the Main Market on 15 December raising up to £100m