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Valeo met the low consensus expectations for its Q3 23 trading update and stuck to its FY23 outlook, whilst implying a strong performance for Q4. The CEO’s confident speech contrasted with the recent share price trend (-46% over the 3M preceding the Q3 results) translating the market’s worries that the weakening demand for BEV could prevent the company from delivering on its targets. The implied strong performance in Q4 and limited visibility on FY24 calls for a prudence which is likely overdone
Companies: Valeo (FR:EPA)Valeo SE (FR:PAR)
AlphaValue
Valeo reported H1 23 results which required perhaps too many adjustments to understand that the underlying drivers remain robust, yet with a cost of debt we had underestimated. The group showed robust H1 23 results at the operating level. The unfavourable timing of cash ins drove a miss on FCF, while the FY23 remained sticky. This does not alter our view, supported by the restoration of shareholder confidence, while accelerating the benefits of the past investments.
Valeo’s Q1 23 trading update was as expected on the figures and guidance (confirmed), albeit with a reminder that the bulk of the performance is planned for H2. Amidst a pool of investors worried by the likelihood of a price-war-driven plunge in demand for new cars and caution about the Chinese recovery, Valeo offered only a limited amount of new news. However, some worthwhile comments were shared on the success of PTS’s high-voltage powertrain and the expanding business with Chinese OEMS.
Kudos to Valeo’s forecasting skills as the company delivered on its FY22 guidance, which had been set the day after the beginning of the war in Ukraine. The FY22 figures were close to expectations with revenues topping, and the margin bottoming their respective guided range. The Q4 22 was much stronger than expected, helped by easing supply chain bottlenecks. However, the FY23 FCF outlook disappointed at “<320m” vs. the €440m expected by the consensus, which we see as an all-weather guidance wit
Valeo’s Q1 22 sales topped analysts’ forecasts by c.5% on the back of strong volume outperformance in every region, Aftermarket sales maintained their momentum and there was a booster FX impact. For those who had expected increased headwinds from the war in Ukraine and lockdowns in China, Valeo answered with a noticeable guidance confirmation from sales to FCF. LVP updated forecast remains within the range used to set the initial outlook. We expect volumes in China to be decisive.
FY22 guidance was weaker than expected on the profitability and FCF front, as cost inflation and a late reversion of overstocks should weigh. THe mid-term plan confirmed that the targets set in 2019 will not be reachable even with a 5-year delay. With a plan relying on organic top-line growth, any success is highly dependent on global auto production targets. Bad news given the pending risks from the current geopolitical tensions.
Valeo released preliminary results which matched the upper end of the sales and margin guidance (CEO’s base case scenario). However, FCF generation took a strong hit (30% below consensus) due to overstocking to mitigate the supply-chain bottlenecks. With OEMs needing to rebuild their own inventories when tight supply eases, a saloon door effect is likely on suppliers’ FY22 FCF. We stick to our positive view on the stock seeing a good entry point, ahead of the CMD.
Valeo’s sales showed more resilience than expected in Q3 on the back of a growing aftermarket business but also a temporary pricing power at a level rarely seen in its history. FY21 guidance was cut by 5.5% in sales and implied EBITDA. Expectations for FCF were kept unchanged with a negative, as lower capex is likely to compensate for the rising WCR induced by spiking inventories. The risk of a postponement of the breakeven of Valeo-Siemens is reinforcing.
Valeo topped consensus on margins after a well-managed H1 21, disrupted by the chip shortage. Lower R&D and capex were the first glimpse of return from the 2017-19 investments. The market outlook was downgraded, though FY21 guidance was still confirmed with an upside risk on the EBITDA margin.
Valeo reported solid Q1 21 results, though underperforming auto production due to an unfavourable geographical mix. Based on 2019, lfl sales are almost at equilibrium. Rising input and logistic costs should be, at least partly, passed-on to OEMs. FY21 guidance was kept unchanged to account for the uncertainties remaining as of now.
Valeo posted declining sales in 9M 20 (-21% yoy), though showing some recovery vs. H1 20 (-27.8% yoy). The contraction was led by the OEM segment (-22% yoy), with the recovery down to Aftermarket stabilization (falling by “only” 2% yoy lfl in Q3 20). Due to a second wave of lockdowns in Europe (c. 47% of OEM sales), the recovery is expected to stop in Q4 20 (still expecting North America to continue recovering, accompanied by strong growth in China).
Companies: Valeo SE (FR:PAR)Valeo SE (0RH5:LON)
Valeo posted a surprisingly high H1 loss at €-1.2bn, driven by its Original equipment in Europe (Q2: -56% yoy) and North America (-68% yoy). A c. €-1bn FCF and a c. €4bn net debt (c. +38% yoy) suggest a strong case for a recap. Still, Valeo expects to undo by H2 much of the harm experienced in H1.
Companies: Valeo SE
Valeo’s Q1 revenue experienced an 8% yoy contraction, driven by declining OEM, Valeo’s largest division. As expected, Asia took the heaviest blow, though saw some relief during the latter part of March. China’s OEM contracted the most in Asia, followed by South Korea. In contrast, Europe and North America experienced increased signs of uncertainty during late March/early April. Due to such market development and the deterioration of Valeo’s largest geographical markets, we expect a declining Q2
While Valeo’s revenue and EBITDA numbers were very much in line with our projections, all other profit numbers were lower. Management blames a sizeable depreciation increase as having been one reason. The other was the negative at-equity contribution which alone was €50m higher than we had expected. Of this loss of €237m, €260m stemmed from the Valeo Siemens eAutomotive joint-venture.
Valeo had shown a sales fall of 1% for H1 and EBIT had collapsed by 44%. However, as revenue increased by 7.6% in Q3 and management sees an accelerating outperformance over the course of this year, it sees the full-year EBIT margin only slightly below last year’s.
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Watkin Jones’s guidance for FY24E is unchanged in its trading update for the first half to 31 March. We maintain our forecasts for the full year and introduce half-year estimates, in line with reiterated guidance that performance will be significantly H2 weighted. The group confirms a continuing gradual recovery in appetite among institutional investors to forward fund its build-to-rent (BTR) and student developments. We believe this should gather pace as the direction of interest rates becomes
Companies: Watkin Jones Plc
Progressive Equity Research
Ceres Power Holdings’ innovative technology uses electrolysis to produce green hydrogen and solid oxide fuel cells to generate power. In a year where it moved to the Main Market of the London Stock Exchange, it recorded revenue growth of 13% and gross margin expansion to 61% (the highest in the sector, according to management), but is yet to record an operating profit (FY23 operating loss of £59.4m versus £54.0m in FY22). Ceres continued its strategy to drive innovation and technology across sol
Companies: Ceres Power Holdings plc
Edison
Surface Transforms has issued new revenue guidance for FY24, with the company now expecting revenues in the range £17.5-22m. We are withdrawing our previous forecasts for FY24 and withdrawing our price target while we review the impact of the new guidance.
Companies: Surface Transforms PLC
Cavendish
Solid State’s trading update affirms the sustained strength in demand throughout H224, resulting in record FY24 revenue and adjusted PBT ahead of prior consensus of £155m and £12.5m, respectively. This is attributable to the earlier-than-expected delivery of a NATO contract. As a result, consensus FY24 revenue and adjusted PBT estimates have been raised by c 6% and c 20%, with respective FY25 estimates declining commensurately.
Companies: Solid State plc
Banquet Buffet*** Abingdon Health 9.25p £11.3m (ABDX.L) The lateral flow contract development and manufacturing organisation announces its unaudited interim results for the six months ended 31 December 2023. Revenue increased 117% to £2.4m (H1 2023: £1.1m). The Adjusted EBITDA loss decreased 47% to £1.2m (H1 2023: £2.2m). Furthermore, reduction in operating loss of 50% to £1.2m (H1 2023: £2.4m). The Board therefore expects that H2 2024 revenue will be significantly improved compared with H1 2024
Companies: CPX SLP FA/ FIPP ECR ETP ORCA
Hybridan
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
Companies: AFC Energy plc
Zeus Capital
Gooch has issued a positive update for H1. Trading has started to recover with stocking levels normalising at industrial and medical devices customers. The outlook is positive with growth returning, and management has confirmed our full year estimates (adjusted for the disposal of EM4). The order book and order flow appear healthy, and net debt is comfortable. Gooch clearly still has plenty to do to lift operating margins from a lacklustre 8.1%, but the transformation plan appears to be back on
Companies: Gooch & Housego PLC
Sanderson Design Group (SDG) continues to deliver on its key strategic initiatives and growth drivers despite a challenging global backdrop. The group’s FY23 performance showed flat revenue, with adjusted underlying PBT rising £0.1m to £12.6m. Net cash dropped back to £15.4m, with the total dividend maintained at 3.5p. The star performers were Licensing (reported revenue +25%), the Morris & Co brand (+16%) and the US market (+20%). Our forecast revisions assume more modest sales progression, wit
Companies: Sanderson Design Group PLC
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
AFC has made strong progress with products and its manufacturing strategy. Despite heavy investment, the cash position, at £27.4m, was slightly better than our estimate for £26.9m, demonstrating good discipline. The monthly cash burn rate (at c. £1.3m) is tracking in-line with our expectations. Generally, we maintain our estimates for significantly increased sales in FY24e and FY25e, with the cash position unchanged. Recent news on commercial progress has been positive. The 30kW H-Power Generato
We note the regulatory announcement this morning from Surface Transforms and withdraw our estimates and valuation, pending conversations with management.
SCE is raising £16m through a placing (and up to a further £3m through open offer) to fund substantial expansion and additional working capital. This will enable the Group to grow to £75m revenue capacity in the near term, commence the build and equipping of a new factory and then (with internally generated free cash flow) scale to £150m revenue capacity and beyond. With a contracted order book of £190m and a prospective pipeline of £400m, this is clearly the time to seize the opportunity. The e
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
Companies: PTAL GHH IGP MSLH PINE NXQ EQLS NXR AXL
Sanderson Design Group (SDG) has reported an 8% increase in interim adjusted PBT, to £6.8m. This was achieved despite a weak backdrop in the home UK market and a 2% decrease in overall group revenue. Increased profitability was driven by strong performances in two of its key and higher-margin strategic growth pillars – Licensing and North America – which grew by 82% and 10%, respectively, on a reported basis. New product launches, including Disney Home x Sanderson, have seen sampling running at
Sanderson Design Group has delivered its full-year trading update to 31 January 2024. Group revenue has eased back 3.1% to £108.5m on a reported basis, following the 2% decline in H1. The strongest performances were delivered by the strategic growth cornerstones of Licensing and North America, offset by challenging market conditions in the UK, Europe and the Rest of the World. A strong balance sheet saw year-end cash rise to £16.2m, compared with £15.4m at year-end FY23. Having traded in line wi
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