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Research Tree provides access to ongoing research coverage, media content and regulatory news on JCDecaux. We currently have 43 research reports from 2 professional analysts.
Q3 flat organically, as expected. The end of a Spanish contract and China have weighed. The outlook for Q4 is weaker, with Australia slowing down too. We will revise our numbers to the downside.
Numbers in H1 19 were good, both top-line and profitability-wise That said, the group forecasts a slowdown in Q3 due to China and Hong Kong, as well as the end of a Spanish contract No worries at this stage, but we will monitor the evolution on the top-line, which is key to profitability in this asset-intensive business
Q1 19 revenues slightly above guidance at +5.3% organic Q2 19 revenues expected above +4% Street Furniture growth should improve while Transport could be a tick lower No major change to our estimates
JC Decaux released its FY18 numbers. Revenues (communicated on 31 January) reached €3,618.5m (+3.6% reported, +5.2% organic). Note the organic number excludes perimeter changes as well as FX impacts (€93.5m negative impact or -2.6% on the top-line). The adjusted operating margin stood at 13% (vs 15.4% in H1 17) or €655.1m (+0.2%), the adjusted operating profit at €339.8m (-5.1%) and net result at €217.7m (+6.6%). The adjusted free-cash flow was up 5.2% to €150.4m leading to a net debt of €1,200m (€494.6m in H1 18), as a result of the APN Outdoor acquisition. A dividend of €0.58 (+3.6%) will be proposed. In terms of outlook, the group expects Q1 19 top-line growth to be above 5% on an organic basis, as previously indicated.
JC Decaux released its Q3 18 trading statement. Adjusted revenues reached €867.7m (+6.2% reported, +7.3% organic). As usual, the reported revenue number is adjusted (i.e. before applying IFRS11, or proportionately consolidating the JVs instead of under the equity method). They include the impact of IFRS 15 (and also on the restated Q3 17 numbers). Note the organic number excludes perimeter changes as well as FX impacts (€10.6m negative impact in Q3 or -1.2% on the top-line). Over nine months, revenues were up 1.7% reported and 5.1% on an organic basis. Adjusted organic growth in Q4 is expected to be c.+4%.
JC Decaux released its H1 18 numbers. Revenues reached €1,643.3m (-0.5% reported after -2.6% in Q1, +4% organic after +2.8% in Q1). As usual, the reported revenue number is adjusted (i.e. before applying IFRS11, or proportionately consolidating the JVs instead of under the equity method). They, however, include the impact of IFRS 15 (and also on the restated H1 17 numbers). Note the organic numbers exclude perimeter changes as well as forex impacts (€74.3m negative impact or -5.5% on the top-line). The adjusted operating margin stood at 13% (vs 15.4% in H1 17) or €214.4m, the adjusted operating profit at €82.8m (-28.1%) and net result at €57.5m (-22.4%). The free cash flow was up 43.5% to €43.2m, leading to a net of €494.6m (€551m in H1 17).
JC Decaux released its Q1 18 trading statement. Revenues reached €742.5m (-2.6% reported, +2.8% organic). As usual, the reported revenue number is adjusted (i.e. before applying IFRS11, or proportionately consolidating the JVs instead of under the equity method). They, however, include the impact of IFRS 15 (and also on the restated Q1 17 number). Note the organic number excludes perimeter changes as well as forex impacts (€42m negative impact or -5.5% on the top-line). The group expects +3.5% organic growth in Q2, i.e. an acceleration in growth.
JCDecaux recorded lacklustre FY17 results. As a reminder, the group had already reported its FY17 revenues at the end of January (up 2.3% to €3,471.9m adjusted, i.e. before applying IFRS11 and +3.2% organically). The adjusted OP (i.e. before IFRS11, i.e. proportionately consolidating JVs instead of under the equity method) reached €653.5m, up 1.1%, under our forecasts (€693m) and versus €647m in FY16. This means an 18.8% operating margin, down from 19.1% in FY16 and compared to our 19.8% forecast. Note that IFRS11 OP (i.e. figures retained in our model) reached €524.8m (AV was €577m), reflecting a decline in profitability from 17.8% in FY16 to 17.3% (AV was 18.6%). The adjusted FCF also declined by 45.8% to €142.9m (after rising capex linked to new contracts in Brazil and in China), while the net income group share amounted to €193.7m, down 13.8% and below our expectations (€236m). The proposed dividend per share is flat at €0.56 (we had expected €0.58). Regarding the FY18e guidance, Q1 18 organic adjusted revenue organic growth is expected at around only +2% (to be read against a strong Q4 17 at +6.5% and compared to an easy basis of comparison as Q1 17 was -1%...). But the group namely highlighted the negative impact from the “Conseil d’Etat” decision to cancel the “City Information Panels” interim contract in Paris (with a 1% negative impact), as well as the opening of Guangzhou Baiyun airport delayed to Q2 18e (which will enable the group to reach 45 million international passengers every year) also with a 1% negative impact.
JC Decaux reported Q3 adjusted revenues (i.e. before applying IFRS11) up 2.4% to €812m (versus €792.7m, i.e. +€19.3m) and +4.9% organically, far above the +3% group’s guidance and our own estimate (+3%). This is positive news, even if the quarter offered a rather easy basis of comparison (Q3 16 was +1.5%, impacted by China). Overall, the consolidated 9 months organic adjusted revenue growth reached +1.9% (supported by a solid Street Furniture and a Transport recovery) and management is now guiding for a +4.5% Q4 organic revenue growth (in line with our forecasts), leading to a full-year trend of +2.5%.
After a poor start to the year, with adjusted revenues (i.e. before applying IFRS11, proportionately consolidating JVs instead of under the equity method) down 1% organically in Q1 17, JCDecaux reported a Q2 organic revenue growth globally in line with expectations at +1.5%. The H1 17 organic revenue trend therefore reached +0.4% and the adjusted consolidated revenues €1,641.4m (+€24.1m or +1.5%). The adjusted OP, however, declined by 3.6% to €255m implying a disappointing 90bp decline in the adjusted operating margin to 15.5%. The group’s net income decreased by 7.8% to €74.1m, while the adjusted FCF was also down by 69% to only €30.1m, impacted by a working capital requirement increase and higher capex (5.7% of revenues versus 4.9% in H1 16) linked to digitalisation (32% of total capex compared to 22.6% in H1 16). The Q3 guidance came as a positive with a further acceleration to +3% for top-line organic growth anticipated on an adjusted basis, namely supported by improving trends in China, an important market for the group, generating c.20% of total revenues. Management globally anticipates a stronger growth in emerging markets, not only in China but also in Latin America. Note at this stage that Q3 will offer an easier basis of comparison as Q3 16 organic revenue growth was +1.5% (as China had recorded a significant decline). As usual, no guidance was given in terms of operating margins going forward. While the group is likely to benefit over H2 from the growth coming from the London bus shelter contract as well as from the return to growth in China and lower integration costs linked to CEMUSA, recent new contracts ramp-up costs are likely to weigh, leading to a mixed impact on profitability.
After a poor FY16, JCDecaux reported Q1 17 revenues up 1.2% on an adjusted basis (i.e. before applying IFRS11, or proportionately consolidating the JVs instead of under the equity method) to €757.6m, down 1% organically. The guidance is for an improving trend in Q2 17e with organic growth expected to be “slightly positive” despite continuing strong volatility.
JCDecaux today reported poor FY16 results as expected. As a reminder, the group already had released its FY16 revenues at the end of January (up 5.8% to €3,392.8m adjusted, i.e. before applying IFRS11 and +3.3% organically; please refer to our 27 January Latest). FY16 consolidated adjusted OP (i.e. before IFRS11 or, i.e. proportionately consolidating JVs instead of under the equity method) reached €646.5m, down 7%, in line with our forecasts (€650m) and versus €695.2m in FY15. This implies a 260bp declining operating margin to 19.1% compared to 21.7% in FY15 and to our 19.2% forecast. Note that IFRS11 OP (i.e. figures retained in our model) are in line at €528.1m (AV was €533m), down 9.4% and reflecting a decline in profitability from 20.8% in FY15 to 17.8% (AV was 17.9%). The adjusted FCF also dropped by c.21% to €263.7m after higher growth capex (mainly linked to London and New York City Street Furniture digitalisation) and net income group share amounted €224.7m, down 3.9% and 5% above our expectations (€214m). The dividend per share is unchanged from the previous year at €0.56 (we had expected €0.59).
JCDecaux announced FY16 adjusted revenues (i.e. before applying IFRS11) up 5.8% to €3,392.8m (+€185.2m), slightly exceeding our forecasts (€3,375m) and +3.3% organically (i.e. better than the “slightly below 3%” guidance for the full year). It was the first time since 2010 that each of the group’s three divisions had delivered positive organic revenue growth. Q4 was nearly flat on a non-IFRS basis (-0.11% to €982.8m) and declined by only 0.3% organically, when the guidance was for a -2% organic trend. Note that the full-year results as well as the Q1 17e guidance are due to be provided on 2 March.
JCDecaux announced Q3 adjusted revenues (i.e. before applying IFRS11) up 3.8% to €792.7m (+€28.7m; slightly under consensus expectations) and +1.5% organically (from a rather unfavourable basis of comparison as Q3 15 was up +4.3% organically). The quarter lfl performance was driven by Street Furniture (+6%; 43% total adjusted revenues), while Billboard improved by 1.1% and Transport (42% total) declined by 2.4% lfl, impacted by Asia Pacific and North America (Washington airports contract loss). A “significant slowdown” was also highlighted in Greater China (an important market for the group, generating c.19% of total revenues). Overall, the consolidated 9 months organic adjusted revenue growth reached +4.8% (with growth across the board) but management is guiding for a FY16e organic and adjusted top-line performance revised downward to “slightly below 3%”, with Q4 anticipated to decline organically by around 2%.
Coming after a particularly strong Q1 16 (+10.5% on an organic basis) and in line with its guidance, JCDecaux produced a lower Q2 16 with an adjusted (before applying IFRS11, i.e. including its pro-rata share in companies under joint control) top-line growing at +3.4% organically. H1 16 adjusted consolidated revenues improved by c.€158m or 10.8% to €1,617.3m (+6.6% organic) after a negative foreign exchange impact of €41.6m and a positive perimeter change of +€103m. Adjusted operating profit declined by 7.4% (-€21.2m) to €264.5m, i.e. a … 320bp drop in profitability (16.4% to 19.6%) due to Street Furniture (unexpected -790bp to 22.4%...). Free cash flow at €98.3m was down 10% compared to H1 15. Within a slowing macro-economic environment and increased uncertainties in the aftermath of the Brexit vote in the UK, management is guiding for low single-digit Q3 adjusted organic revenue growth…
Research Tree provides access to ongoing research coverage, media content and regulatory news on JCDecaux. We currently have 43 research reports from 2 professional analysts.
The Character Group plc* (CCT.L, 360p/£80.2m) | Blackbird plc* (BIRD.L, 15p/£42.8m) |Gfinity plc* (GFIN.L, 3.90p/£18.5m)
Companies: CCT BIRD GFIN
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Disney+ hits 22m mobile users, SoftBank backed firm downsizes IPO, German mobile carrier selects Huawei
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OnTheMarket has announced that “as at 2 December 2019, over 3,000 more offices had been signed under new paying contracts to list all their residential properties at OnTheMarket . The progress builds on the support from thousands of firms already on long-term paying contracts at the time of admission to AIM in February 2018.”
Xbox Series X to launch holiday 2020
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Following continued delays of a Brexit agreement, few sectors within the UK market have remained attractive to investors despite low valuations. One sector which has continued to outperform despite the political drama has been the UK video gaming sector (henceforth UK gaming), which we are fans of. We believe a combination of sector-leading growth, strong cash conversion and timely cyclical positioning support our positive view on the UK video gaming sector.
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In a deal which will have a profound effect on the prospects for the group, Kape has announced the proposed acquisition of LTMI Holdings, the holding company for virtual private network provider Private Internet Access (PIA). PIA is a Denver-based security software business, the addition of which will transform the size of Kape by doubling group revenues (including a stronger recurring revenue base) and increasing adjusted EBITDA by around 2.5 times in FY 2020E. Reflecting that, our earnings estimates increase by around 90% for FY 2020E while our new FY 2021E estimates build strongly on that much larger base. Total consideration is c. US$95.5 million with an enterprise value of c. US$127.6 million. The deal is expected to complete within 45 days and is anticipated to be immediately earnings enhancing. The transaction will create a significant player in the digital privacy market and will enable Kape to expand its footprint in North America with a broader product offering.
Companies: Kape Technologies
Zinc Media has today announced a further £4.3m of new commissions on top of the £4.8m announced on 10 September. These new commissions are anticipated to deliver improved margins in-line with industry standards which represents a critical step in demonstrating progress against the Group’s transformation agenda, and is key to improved free cash flow and longer term profitability. Additionally, the announcement of a large international production with the US-based Smithsonian Channel titled ‘The Curious Life and Death of…’ won by Blakeway, demonstrating positive development in international business. We are encouraged to see management clearly executing against its four-part transformation plan laid out in September, targeting: 1) Increase London and Manchester TV gross margins; 2) Revenue growth and diversification; 3) Cultural and creative renewal; and 4) Investment in operational excellence. Management have maintained positive win momentum seen recently, adding to £4.8m of commissions announced in September, £2.8m in June, and £5.1m from May. Elsewhere, Reef TV has continued its recovery with additional programmes added for Police Code Zero, whilst Tern TV continues its strong performance with repeat commissions for Children’s Hospital amongst other titles.
Companies: Zinc Media Group
Techniplas –global producer and support services company providing highly engineered and technically complex components, making the supply chain to original equipment manufacturers more efficient. FYDec17 rev $515m. Circassia Pharma (CIR.L) - specialty pharmaceutical company focused on respiratory disease transferring from the Main Market. No funds being raised. Due 4 Feb. Greenfields Petroleum (TSX-V:GNF) production focused company with operated assets in Azerbaijan seeking AIM dual listing including $60m private placement. Mkt cap $12.6m CAD. Expected late January 2019. Chaarat Gold Holdings—RTO, the Company intends to acquire Kapan Mining and Processing CJSC, which owns the Shahumyan medium-sized polymetallic mine in Kapan in the Republic of Armenia. No raise, market cap of £110.1m, due early Feb
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Kape is set to acquire Private Internet Access (“PIA”) for a cash-free/ debt-free total consideration of $127.6m, representing an EV/FY’18 EBITDA multiple of 8.7x (presynergies). The strategic rationale is compelling, immediately doubling Kape’s paying subscriber base, creating an estimated $4.5m cost synergy – resulting in pro-forma sales and EBITDA of $110m and $27m respectively - and further, improving Kape’s Data Privacy geographic footprint and functionality stack. PIA is cash-generative (FY’18 CFO: $16.3), growing sales +5% pa. and is expected to quickly benefit from Kape’s digital marketing capabilities. Revenue is expected to be 57% higher for both FY’20E and FY’21E, with the deal forecast to be 13% EPS accretive in FY’21.
Companies: Kape Technologies
2019 has been a pivotal year with the opening of five Time Out Markets across North America. It is early days but initial performance provides proof that the concept can travel internationally. The delays to openings in Chicago and Montreal will lead to a small H2 loss, confirmed in the announcement today. We have updated FY19E forecasts to reflect this and some changes to future years largely to reflect phasing and additional investment given the growing opportunities for events and sponsorships at current sites and the large pipeline of future global locations.
Companies: Time Out Group
Pearson's H1 15 results showed revenues up 1% organically to £2.2bn (before a 4% forex positive impact) and adjusted operating profit down 4% to £72m. This is nonetheless rather meaningful as H1 is only a small part of the FY results (c.60% of sales and c.90% of profits generated in H2). The dividend is raised by 6% to 18p and management reiterated its previous FY15e guidance for adjusted EPS of 75p to 80p, assuming exchange rates at last 21 January's levels (2014 average £:$ rate was 1.65; as a reminder, a 5% move in the average £:$ exchange rate for the full year has an impact of approximately 1.2p on adjusted EPS) and no change in the portfolio. Note that the disposal of PowerSchool, sold to Vista Equity Partners for $350m in mid-June 2015, will reduce EPS by 1p and that, if current rates persist until end-2015, it would have a -2p impact. But largely overshadowing these results, was the announcement of Pearson's intention to sell the FT Group to Nikkei Inc. for a gross consideration of £844m cash (above Axel Springer's £750m offer), followed by the confirmation of also being in discussions over the potential sale of its 50% stake in The Economist (further announcements due; not done yet). This had been around for some time, namely since the departure of previous CEO Marjorie Scardino in early 2013, and definitely focuses the group on global Education.
PSON’s interims contain no major surprises, but we have revised our forecasts to reflect the patchy trading performance, a mixed outlook and the FT Group disposal (a positive initiative). The result is FY15E EPS and DPS reductions of 4%/1%, respectively. We remain cautious on PSON’s trading outlook, the execution difficulties implied by digital evolution in the global learning market and the possibility of contract losses in N. America. We have trimmed our TP from 1,179p to 1,131p and consider its stock fairly valued.
Revenue and EBITDA results for the full year are ahead of expectations on the back of strong trading. Revenues rose a total of 22% (15% organic) driven by sales execution. Strong sales has also boosted the deferred revenue balance by 32% to over £60m, supporting a strong outlook for 2018 and underlining the quality of revenues. The group is pushing ahead with commercialising its product by extending its addressable market yet again, boosting the ultimate growth potential of the business. EBITDA growth was 14% despite investment. Healthy trading and visibility (c75% estimated by Company) helps offset the likely US$ headwind likely in H2’18 meaning we have maintained our recently upgraded forecasts. Based on our peer-based approach to valuation we estimate an intrinsic value of 914p, thus implying some further significant upside potential for the stock. Another material acquisition could add more value.
We have seen a continuation of the rally evident so far this year. The factors are familiar with greater optimism regarding US-China trade talks. At home, the path to Brexit remains unclear as D-day looms. The possibility of a delay has increased. The company reporting season continues to highlight winners and losers with the majority of results in line. We have also seen an uptick in corporate M&A. Results set the morning agenda and Brexit votes the evening one. In Share News & Views we comment on AorTech International*, APC Technology*, DeepMatter*, Golden Ocean Group and P&O Ferries/DP World.
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