MPC Capital - Termination of coverage

Edison Investment Research is terminating coverage on: • 2G Energy (2GB) • Apontis Pharma (APPH) • Artec technologies (A6T) • Beta Systems (BSSA) • Blue Cap (B7E) • Cyan (CYR) • Consus Real Estate (CC1) • Daldrup & Soehne (4DS) • DATAGROUP (D6H) • Datron (DAR) • Delignit (DLX) • Deutsche Börse (DB1) • Deutsche Grundstücksauktionen (DGR) • Deutsche Rohstoff (DR0) • DVS Technology (DIS) • Edel (EDL) • Ernst Russ (HXCK) • Exasol (EXL) • expert.ai (EXAI/EXSY) • Fashionette (FSNT) • Formycon (FYB)

MPC Capital - Improved results under refined business model

MPC Capital reported a significant operational improvement in FY21, highlighted by a rise in PBT to €10.4m from €1.3m recorded in FY20. As the company operated under an optimised business model, moving operating management services in the shipping segment into joint venture (JV) structures, the revenue recognition method changed to proportionate consolidation. This led to an apparent decline in total sales despite a 28.3% y-o-y increase in fees from transaction services to €13.8m. We note that a

MPC Capital - Business model optimisation

MPC Capital recorded an 86% y-o-y increase in pre-tax profit to €2.3m and a €1.6m net profit ex minorities in H121 against a €0.5m loss in H120. This was assisted by the focus on high-margin business, cost efficiencies and synergies, coupled with a favourable market environment for real assets. At the same time, MPC’s year-on-year decline in revenues and operating expenses in H121 reflects the proportionate consolidation of joint ventures (JVs) in technical and commercial management. Consequentl

MPC Capital - Launching new sustainable funds

MPC Capital continues to bring new institutional assets onboard, with c €0.5bn added in 2020 (mostly in the real estate segment). This largely offset the declining legacy retail business, with MPC’s assets under management (AUM) declining slightly to €4.4bn (84% of which are institutional assets) from €4.5bn at end-2019. MPC guides to lower revenue in FY21 (partially due to negative JV consolidation effects) and an improved pre-tax profit, which may benefit from continued strength in the contain

MPC Capital - Shipping uncertain, real estate resilient

MPC Capital (MPC) experienced the impact of the COVID-19 crisis, particularly in its container shipping business amid the halt in global trade. As a result of negative valuation and currency effects of €0.3bn, its assets under management (AUM) fell to €4.3bn at end June 2020 from €4.5bn at end 2019. The company also recognised an impairment on its co-investment portfolio in the container shipping business. Meanwhile, real estate (AUM of €1.9bn, in line with the shipping business) has been resili

MPC Capital - Portfolio reorientation on track

MPC Capital expanded its assets under management in FY19 to €4.5bn from €4.3bn in FY18, with the largely inorganic growth in institutional business offsetting the legacy retail business decline. Consequently, the share of higher-margin institutional business is now nearing 80% (vs 60% at end-December 2018). The improved quality of the portfolio resulted in a 9.6% y o y increase in revenues to €46.8m, as well as lower impairments compared to 2018. According to management, the recurring income wil

MPC Capital - New AUM allows for higher management fees

MPC Capital has been consistently transitioning its assets under management (currently at €4.2bn) away from retail legacy assets to new, higher-margin institutional business, which represented 61% of NAV at end-June 2019 (vs 52% at end-June 2018). This translated into a 6% y-o-y increase in management fees, which has offset the impact of muted transaction activity in H119. Moreover, MPC was able to realize profits from disposals (which represent the majority of investment income in H119) and com

MPC Capital - Slower project progress and asset write-offs

MPC Capital’s overall performance in 2018 was rather subdued, affected by project delays and low transactional activity, as well as the write-down of a large legacy project. The latter, together with asset disposals, resulted in a decrease in assets under management (AUM) to €4.3bn. However, as MPC also attracted €0.8bn of institutional assets in FY18, the share of new, higher-yielding business in the current AUM has risen. Moreover, the company retained its solid cash position (€28.6m at end-20

MPC Capital - Expansion of container ship fleet

Although MPC’s legacy retail portfolio is still weighing on its results, the company is making steady progress in shifting its business towards institutional, higher-margin clients (representing 52% of assets under management (AUM) at end June 2018). We also appreciate MPC’s expansion of the container ship fleet given this shipping segment now enjoys the most favourable demand/supply outlook. The company’s shares are trading at a c 30–40% discount to peers.

MPC Capital - Investing in business development

MPC Capital met its 2017 financial performance targets. The share price has suffered in the recent shake-out. P/NAV has slipped to a relatively undemanding 1.83x. The current phase of investment in business development will only begin to bear fruit fully next year and the possibility of a capital increase to support this strategy may weigh on the share price.

- Steady progress

The absence of major transaction contributions to first-half profits and management’s reiterated guidance for progress in the full year throws the burden on results in the second half, notably the incidence of large transactions. Firm news on the dividend front may also have an impact on price performance. The process of shifting to higher quality AUM continues. The shares trade at 1.9x NAV.

Repositioned for real asset growth

An extensive restructuring programme, completed in 2015, has repositioned MPC as an asset and investment manager for real assets, targeting selected niche strategies in the shipping, real estate, and infrastructure sectors, for institutional clients. The new model is asset light and driven by recurring revenue streams across the investment lifecycle. New business margins are substantially higher and management sees scope to considerably grow AUM off a scalable platform.

Hargreaves Lansdown: Consensus estimates are too low, but HL is not significantly undervalued unless material cost savings can be realised.

Hargreaves Lansdown is the St James’s Place of retail investment platforms. It has scale and brand, which have enduring value, but, in our view, just the wrong price structure, which it cannot address without killing its own profitability. In current corporate form we see a low single-digit growth business, in the middle of a major technology upgrade, which looks cheap prima facie, given the 11x next year multiple and the 5.4% prospective yield, but which DCF valuation suggests is not. We are mi

Molten Ventures - Forward Partners deal completed

Molten Ventures has recently completed the acquisition of Forward Partners, which allowed Molten to further broaden its portfolio, add a complementary strategy focused on earlier stage companies and potentially provide a pipeline of new core holdings. Furthermore, its recent equity raise gave Molten the funds to pursue new investments in what it currently considers a buyer’s market, with an emphasis on the venture capital (VC) secondary market. In FY24 (to end-March 2024), Molten’s gross portfol

LIBERUM: Investment Platforms: Initial thoughts on the Dear CEO letter

Regional REIT - Performing as expected ahead of refinancing

In a challenging market, Regional REIT’s (RGL’s) FY23 operational and financial performance was robust, in line with expectations and previous guidance. Investor focus remains on the company’s loan to value (LTV) reduction and bond refinancing plans, explored in detail in our previous note and RGL will provide an update on this in due course.

Temple Bar – Foundations for success

We are now more than three years into the tenure of Ian Lance and Nick Purves as managers of the Temple Bar Investment Trust. In that time, the Redwheel team has aimed to establish a well-diversified portfolio of value-orientated holdings, which it says is positioned for a long-overdue reversion to more normal market conditions, after a decade of what the managers believe was exceptional economic policy and quantitative easing. They say that slowing growth and stubborn inflation in the UK have w

Avation - Exercise of ATR 72 purchase rights underpins long-term growth strategy

Avation is a lessor of 34 commercial aircraft to a diversified client base of 16 airlines. This morning, the group has provided an update on its aircraft purchasing strategy, reporting the exercise of purchase rights for 10 ATR 72 aircraft for delivery between Q4 2025 to Q1 2028, which will follow the delivery of two new ATR 72 aircraft in the coming months already on order. In addition, AVAP has been granted new purchase rights and extended its remaining rights for 24 further ATR 72 aircraft, w

Morning Note – 3 May 2024

Foresight Sustainable Forestry

Foresight Sustainable Forestry (FSF) has a long-term strategy aimed at capitalising on the value of existing forested land and the value that can be generated by converting land to forestry. The majority of total returns are expected to come from capital growth, although timber sales and carbon credits are expected to generate some income. Dividends are expected to be irregular and are not expected to be a selling point of the trust. FSF has clear sustainability and ESG credentials, especially v

Murray Income

MUT continues its impressive streak of consecutive dividend increases hitting half a century in 2023…

LIBERUM: DF Capital: Strong momentum carrying into FY 24

Hardman & Co Insight: 2023 was an annus horribilis for Quoted UK Infrastructure and Renewable Energy

The focus of Hardman & Co Research is on the nine quoted Infrastructure Investment Companies (IICs) and on the 22 Renewable Energy Infrastructure Funds (REIFs): the stocks analysed are all members of the Association of Investment Companies (AIC). We are updating our publication of January 2023, assessing both the lacklustre share price performances during 2023 and the key issues, including interest rates, inflation and power prices. As a 31-strong group, its combined market capitalisation is no

REMA - Zoning in on Zonal Pricing

Zonal pricing is now under consideration for implementation in the GB power market. While this is very much not a given, this note summarises the key reports on its potential impacts. We find that while there is an overall reduction in revenues across generation, this may be less than originally predicted and new regional price differences and timing differences may favour storage in Scotland and delay new gas plant construction nationally. We think this later second order impact improves the en

Mining Monthly: April Edition

What you need to know: • Following a big breakout in March, gold pressed on hitting new all-time highs, however, lost steam and fell towards the end of the month up just 2% in April. Silver outperformed gold, being up 5% on the month. • Copper held its big gains from early in the month, up 13% to $4.6/lb. However, copper equities lagged, being up only 8%. • We continue to see substantial M&A activity in the sector and have consolidated some transactions as of late in Figure 1. We view M&A as a

Morning Note – 2 May 2024

Gore Street Energy Storage Fund - Portfolio Developments

Gore Street continues to develop its portfolio with the acquisition of a 80MW project in the GB market and a 300MW expansion of its exclusive development pipeline. Extended revenue opportunity in Ireland and well optimised assets in the UK give us confidence that the company can maximise value from this larger portfolio.