Q3 23: margins’ downside potential

Mercedes-Benz’ Q3 23 results disappointed as the company indicated that rising costs are now eating into the profitability of the MB Cars division (its largest segment). The low end of the 12-14% MB Cars FY23 guided range is the new base-line. Also, the BEV market ramp-up now appears to be anything but linear, thus questioning OEM’s pricing policy up to MB’s premium segment. As it is starting to be rainy outside, let us reconsider the downside potential of our FY24-25 margin expectations.

Vans does well again

Mercedes reported brilliant figures for Q2 23, meeting guidance expectations and beating consensus for both cars and vans’ profitability and industrial FCF. The unexpected outperformance of vans raised the company’s confidence and led to a positive guidance upgrade for this segment and FCF in H2. Despite the stunning performance of vans this year, the real question is whether the division will be able to keep up with this growth in the medium-to-long term.

Strong start to FY23, meagre impact on market sentiment

Mercedes published preliminary Q1 23 results beating expectations on the margin and industrial free cash flow as pricing remained strong, volume rebounded (especially in the Vans unit) and the product mix continued to grow in line with the groups’ premiumization strategy. Today’s good print from Mercedes adds little to Renault’s report yesterday in terms of answering investor concerns about the risk of a price war. While we do not expect an upgrade to the group’s FY23 guidance, the Q1 figures un

M-B reached its FY22 targets without a hitch and launches a €4bn buyback

Mercedes announced a €4bn buyback plan, highlighting the management’s confidence and suggesting that it sees its current plan as sufficient to finance its EV transition. Although this had been well discounted, the company reported very strong FY22 results with a slight beat on the dividend proposal. The FY23 guidance was also as expected, with caution on volumes and a slight decrease in margins. M-B is pushing towards more direct sales believing that this move will yield a net benefit for the br

Q3 22: meet and raise

Mercedes-Benz Group posted another excellent set of results for Q3 22, meeting the street expectations and raising its FY22 outlook on profitability for both cars and vans. While this sent a positive sign to investors the sole confirmation of the FCF target somewhat cooled the optimism. Our figures will thus need to be upgraded on the bottom line while M-B’s robust cash generation for the year looks largely priced in.

Mercedes vaccinated against cost pressures?

Mercedes-Benz Group posted another excellent set of results for Q2 22, ahead of consensus estimates. This was triggered by M-B Cars division’s rock-solid adjusted EBIT margin (15% above expectations) as the premiumization strategy and BEV push materializes. The guidance upgrade also confirms management’s confidence into H2 during which supply should remain a larger concern than demand. Direct gas dependence is being reduced but suppliers’ exposure is the key variable. BEV profitability has alrea

Q1 22 beats expectations; Mercedes remains prudent on FY outlook

Mercedes-Benz released strong Q1 22 results, with revenues increasing +6% yoy despite passenger car volumes declining by 10%, demonstrating great execution of the company’s luxury-led strategy. Pricing discipline and improved product mix have allowed the group to offset rising raw material costs and semiconductor-constrained production volumes. While the operating performance in Q1 exceeded the FY objectives, Mercedes is sticking to its guidance as it remains cautious given the current industry

Preliminary FY21 results: Mercedes' luxury focus bears fruit

Mercedes-Benz’ FY21 preliminary results proved the company’s operating resilience as a now standalone premium OEM in the face of ongoing supply-chain challenges, surpassing the upper end of its industrial RoS and FCF guidance. The excellent margin performance of the Cars & Vans business shown in Q4 demonstrates how a luxury-focused strategy should lead M-B into a strong position to withstand better the industry’s headwinds expected in 2022.

Daimler Truck is ready for a life of its own

The time has come, Daimler Truck is ready for independence. While the May CMD introduced the broad strokes of the group’s strategy, November’s presentation went deeper into the mid-term ambitions at a group and segment level, with management providing interesting commentary on the financial performance ytd and the expectations for FY21/22 based on current supply-chain headwinds. The detailed mid-term financial targets and refreshing transparency given at the segment level are encouraging signs t

A solid Q3 beat in spite of headwinds

Daimler’s Q3 release put in evidence the relative strength of premium OEMs in the face of the current supply-chain challenges. The 25% cut on volumes seen in Q3 only made a small dent to the top line, as revenues came in basically flat yoy, attesting to Daimler’s ability to leverage its luxury-focus and achieve remarkable mix and price improvements.

Mercedes-Benz Q3 retail sales: chip constrained but luxury and EV-led

M-B Cars & Vans released Q3 retail sales figures that showed the substantial impact of the semiconductor shortage. Nonetheless, the company’s higher-end and electrified models appear to have remained mostly unscathed by the supply issues, seeing significant volume growth ytd. Overall, the higher ASPs should help offset the lower volume effect on revenues and support margins.

Daimler's board and management approve Daimler Truck spin-off

Daimler’s management and board of directors have approved the spin-off of Daimler Truck as an independent company and will submit it to a vote to shareholders at an extraordinary shareholders meeting set for 1 October. The spin-off and listing is expected to take place before the end of 2021.

Mercedes-Benz electrification update: an ambitious strategy but read the fine print

Mercedes-Benz presented its new electrification strategy, which entails accelerating the pace towards an EV-only future. While the 2030 target for full electrification has a caveat depending on a swift adoption of EVs across the globe, the plan presented appears quite sound and bold enough to keep M-B in the race for dominance in the premium EV space. All this while sticking to its financial targets presented last October.

Q2 21 mostly unscathed by chip crunch, but H2 outlook clouds

Daimler had already pre-released most of the key Q2 figures, showing another strong quarter that beat consensus and our own estimates, despite mounting supply-chain pressures from the semiconductor shortage. The full release still held some surprises, with improved margin expectations for Daimler Trucks and reassurance that the 2021 top-line and earnings will stand well above the 2020 levels, still, the impact of the chip crunch won’t abate in H2, casting a shadow on Mercedes-Benz’s FY volume ou

Daimler Truck CMD: building a compelling case for the soon-to-be independent company

Daimler Truck hosted its first CMD, setting the stage for its corporate strategy ahead of the spin-off and separate listing, expected before the end of 2021. During the presentation, the company did not hesitate in recognising its faults and challenges for lagging regional performances, particularly in Europe. Through a new region-based corporate structure, a more aggressive clean mobility strategy and broad cost reduction targets with a 2025 horizon, DT is building a compelling case for the soo

AFC Energy (AFC LN) - First modular ammonia cracker system

AFC has unveiled a groundbreaking modular ammonia cracker system demonstrating viable and scaleable production of hydrogen in the UK using this method. The cracker system is designed to deliver 140 tonnes of fuel cell grade hydrogen each year. Hydrogen from the plant will initially be targeted for sale into AFC’s UK H-Power Generator deployments, including those with Speedy Hydrogen Solutions. Along with the recent purchase of the mobile storage and distribution assets of Octopus Hydrogen, AFC c

Spectra Systems - Today's deal powers polymer banknotes and provides a big earnings lift

This morning's announcement that SPSY is to acquire Cartor Holdings provides the company with significant new firepower as it embarks on lucrative central bank currency bids with its powerful and innovative polymer banknote technology. Cartor is a global market leader in security printing with manufacturing sites in the UK and France, supplying a range of printed security products which are highly complementary with SPSY's core portfolio, and offering significantly enhanced capabilities in rela

CAP-XX - Tax rebate received and JV signed

CAP-XX has announced the Australian Taxation Office has approved the FY23 R&D grant and associated rebate of A$2.1m. The net proceeds of A$1.0m, after repaying the principal and interest associated with the revolving line of credit drawdown, were received by CAP-XX last week.

Games Workshop Group - Leviathan

Games Workshop Group (GAW) enjoyed another record year of revenue and profit growth in FY23 despite the more challenging macroeconomic backdrop and economy-wide cost pressures. Underlying volume growth is testimony to the appeal of the IP to its hobbyists. GAW entered FY24 with strong revenue momentum, implying that the June 2023 release of Leviathan, the 10th edition of its most significant property, Warhammer 40K, has boosted growth in Q124. Easing cost pressures should be supportive of underl

Hybridan Small Cap Feast - 4 Dec 2023

4th December 2023 @HybridanLLP Status of this Note and Disclaimer This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment obje

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

Initial Equity Trading Comments - 1 December 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

First quarter of 2020

The covid-19 pandemic has had a devastating effect on the share price of property companies, with 31% wiped off the value of their total market capitalisation during the first quarter of 2020.

Solid State - Strong interim results – trading in line with FY24 expectations

The group delivered a strong set of interims, boosted by a full contribution from Custom Power (CP) and its large military contract delivery. Organic growth was over 35%, with an improvement in underlying margins, albeit with the margin mix diluted by the military contract delivered. As flagged, H1 order intake saw some customer destocking, although there may be some early signs this could be abating. Even so trading remains resilient. The outlook points to trading in line with recently upgraded

LIBERUM: Ceres Power - Initiation - A Compellingly solid case

Games Workshop Group - FY23 profit ahead of previous FY24 estimates

Games Workshop Group’s (GAW’s) FY23 trading update indicates an improvement in underlying trading in the latter months of the period and the expected easing of cost pressures. The strength of the improvement is evident in the fact that FY23 PBT is greater than both our previous FY23 and FY24 estimates. We upgrade our FY24 PBT estimates by c 4%, which incorporates an underlying upgrade offset by a new foreign exchange headwind.

PROGRESSIVE: Sanderson Design Group: H1 trading driven by US and Licensing

Sanderson Design Group (SDG) has reported on its H1 trading performance for the six months to 31 July. The continued strong performances of both the Licensing channel and the US market, echoing last year, have offset the previously anticipated tougher market conditions in the UK. Thus, while group revenues eased back by 2.1% on a reported basis, H1 FY24E’s adjusted underlying profit before tax, supported also by some UK cost savings, is expected to be marginally ahead of last year’s £6.3m, drive

Byotrol - Interims and forecasts reinstated

Interim results to 30 September reflect lower one-off IP income. However, the trading outlook now appears more predictable, allowing for the reinstatement of forecasts. Revenues reported at £2.2m (vs £3.2m) with adjusted EBITDA £0.5m lower at -£0.35m, entirely driven by lower (£0.5m) IP income in the period, but illustrating a strong recovery (+490bps) in product gross margins. Evidence of market stabilisation post-pandemic and continued market share gains for Byotrol as companies exit the marke