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We expect XXL to report Q4/20 EBIT of NOK 96m, 10% above latest Factset consensus of NOK 87m. The positive deviation is explained by an estimated gross margin of 39.0% vs. cons. 38.1%, as we expect profitability to benefit from limited discounting in the quarter. Despite warm weather and poor snow conditions we estimate like-for-like sales growth of 7.8%, driven by strong demand for sporting goods and outdoor equipment across the company's home markets.
Companies: XXL ASA
Arctic Securities
Q3/20 EBITDA of NOK 413m vs. Factset consensus of NOK 367m Solid Q3/20 gross margin of 40.5%, up from 37.3% in Q3/19 LFL sales growth of 16.1% Y/Y driven by 21.1% LFL growth in Norway We expect share price and estimates to move higher today
We expect XXL to report Q3/20 EBITDA of NOK 325m, 11% below latest Factset consensus of NOK 367m. The negative deviation is explained by a combination of lower sales growth and lower gross margins. We estimate Q3/20 sales of NOK 2.9bn, up 19% Y/Y driven by strong demand for sporting goods in all XXL's home markets. We expect gross margins to be slightly down Y/Y, explained by lower supplier bonuses and NOK weakening.
Strong Q1/20 sales driven by 25% Y/Y growth in e-commerce Massive clearance sales resulting in soft Q1/20 gross margin of 27.9% Negative Q1/20 EBITDA explained by increased overhead costs Norway and Sweden have started Q2/20 on a positive note
We expect Q1/20 results to be a non-event given the clearly communicated soft January with the subsequent clearance sale in February and March. As investor focus has turned from a disappointing winter season to the ongoing Covid-19 uncertainty, we expect an update on April 2020 sales to be key for short-term share price momentum. Following 7 quarters of negative LFL revenue growth (including Q1/20), we expect actual April sales to surprise on the upside.
Pål Wibe’s first day as new CEO of XXL was an eventful one, with the share price soaring 85% on the back of the balance sheet restructuring news. While the Nordic sporting goods market remains challenging, XXL has now secured 18 months to improve profitability without constantly worrying about its debt covenant. While we continue to see downside risk for consensus estimates for 2020, we expect improving results from 2021 onwards to drive the share price higher.
XXL announces new bank financing of NOK 1,450m XXL also announces underwritten rights issue of NOK 400m Rights issue guaranteed by Altor, Ferd and Odin Rights issue structures to Altor avoids mandatory offer obligation
Despite having significantly reduced net interest-bearing debt over the past 12 months, we expect the leverage ratio to breach the debt covenant of 4.0x in Q1/20. The ratio increase is explained by a drop in 12-month rolling EBITDA, which we expect will continue to decline through Q2/20 and Q3/20. While we continue to view XXL’s balance sheet issues as fixable, we reduce our target price from NOK 10 to 6 and downgrade our recommendation from Hold to Sell.
Bjørn Rune Gjelsten to become 50% owner of Gresvig Olav Nils Sunde will own 50% of Gresvig and Sport 1 34 out of 94 owned stores to close as part of restructuring Market consolidation positive for XXL in terms of price pressure
XXL’s main competitor Gresvig declares bankruptcy More equity needed to compete rebranding to Intersport Long-term impact on XXL likely to be positive Challenging 2019/2020 winter season to become worse
Research Tree provides access to ongoing research coverage, media content and regulatory news on XXL ASA. We currently have 7 research reports from 1 professional analysts.
The FY24 year-end update is very upbeat signalling trading being materially ahead of expectations, with a better-than-expected profit out turn and stronger cash generation. It continues to strengthen margins through efficiencies and investment in modern equipment. The order book remains close to record levels providing a robust view of future forecasts. In FY24E we upgrade EPS by 11% and in FY25E a significant upgrade of 27.6%. It looks capable of declaring a dividend in FY25 as well as manageme
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Cavendish
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Another Good Year of Diversified Growth with More to Come in 2024 CCapital have released their Q1 operating results. Overall, revenue has come in slightly lower than expected at $80.2m vs TamE of $85.9m but is largely tracking in line with our FY24 annual estimate and we note the company has maintained guidance. Drilling revenue for this quarter was impacted by a fall in utilisaztion rates as well as general remobilisation geographically but we expect a strong recovery throughout the year as k
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Tamesis Partners
FY23 results show very strong growth over FY22, driven by strong Structural Steel activity, with results slightly ahead of upgraded profit expectations, while stronger than expected cash flow resulted in an unexpectedly generous dividend of 33p (offering a FY23 yield of 7.0%). The group now has net cash of £22.1m and is debt free and is therefore in a strong position for potential M&A activity. Following the recent £90m of new orders to increase the order book to record levels we conservatively
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Plant Health Care announced it has signed a distribution agreement with AMVAC, an American Vanguard Company, to support commercialisation of novel fertiliser products incorporating Plant Health Care's Harpinαβ in China starting in 2024. The novel product combines Harpinαβ technology with an AMVAC fertiliser and is expected to help growers improve crop quality and yield as part of an integrated and environmentally responsible crop production programme. AMVAC continues to evaluate Plant Health Car
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discoverIE’s March year-end update confirms a strong operational performance in challenging markets. Following two years when sales increased by +48%, FY 2024 Group sales were +1% ahead of 2023 at CER (reported -3%) driven by a +2% contribution from acquisitions and organic -1%. As expected, organic growth returned in the later part of the year (Q4 +2%, +11% sequentially) and the order book has reverted to normalised levels of c.4.5 months’ sales, which – combined with a continuing strong pipeli
Companies: discoverIE Group PLC
Severfield’s trading update indicates that FY23 results are expected to slightly exceed market expectations and the company ends the year with a record UK and Europe order book. Furthermore, with a positive trading outlook and net debt coming in lower than expected, Severfield has announced a £10m share buyback, highlighting the cash-generative nature of the company and management’s confidence in its position. The stock trades on an FY25 P/E of less than 6x and yields 7%, which we believe appear
Companies: Severfield Plc
Edison
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Canaccord Genuity
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SP Angel
Acquisitions have been an important element of Severfield management’s growth strategy, with the aim of adding new products, sectors and regions to what we have identified as exciting long-term organic opportunities. In this Spotlight report, we focus on the group’s targeted M&A approach, highlighting three significant deals.
Progressive Equity Research
Liberum
Invinity’s update on discussions with strategic investors reveals interest from multiple parties. While this has slightly delayed finalising an agreement it increases the potential for a better outcome. Although details are unknown at this stage, we think there is enough in the statement to be comfortable that any agreements will be consistent with the company’s strategy of growing market share in core markets and using a licencing and royalty model in other markets.
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Longspur Clean Energy
Severfield’s full-year results to March will be ‘slightly above’ the Board’s expectations, according to today’s trading update, with net debt significantly better. We maintain our PBT estimates for both forecast years, which are ahead of consensus, but reduce our net debt for FY24E. Record orders were boosted by the steel specialist’s European operations, after last year’s Voortman acquisition, while the Indian JV has seen ‘another step up in profitability’. The group has also launched its first
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