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The preliminary results of 21/07/2021 were already discussed on the same day so we won’t cover it again. What can be added from the conference call of 29/07/2021 (H1 results) is that Wendel and the Deconinck family have additonally purchased shares in the market and their common JV holds now 88.7% of the share capital and 87.8% of the votes. As a reminder, they need 90% in total to be able to delist Tarkett. Just a matter of time indeed.
Companies: Tarkett SA (TKTT:PAR)Tarkett SA (0QSA:LON)
AlphaValue
Revenue and adjusted EBITDA were released and reveal a difficult environment. Revenue only increased +2% to €1.26bn (H1 20: €1.23bn). Sports is the biggest cause with another drop of -16.7%. Adjusted EBITDA grew +6% to €112.7m, but still far from H1 19’s (€127m). Note that the inflation in raws is estimated to have a €130m impact now versus €100m in April.
Tarkett Participation, the JV between the Deconinck family and Wendel (70-30), has finally obtained 86% of the shares and 85% of the voting rights after the public tender. This must be a disappointment as it means the delisting is not an option (90% required for a squeeze-out) and thus Tarkett needs to continue its public reporting as required for any listed company. Costly and must be unwanted.
The Q1 results were weak in general, mainly impacted by cost inflation and negative currency effects. The outlook for the end of the year still remains with a positive free cash flow. The most important news, however, was that the majority shareholder, the family Deconinck, in cooperation with long-time partner Wendel, will plan a bid of €20 per share on the free float (48% of the shares). Since were are in favour of selling, we won’t adjust the target price.
Tarkett was obviously hit hard by the pandemic and especially in North America where the dependency on the most hit commercial segment is highest. However, strong cost management in opex and capex led to a good year in terms of free cash flow generation, even though the net profit was slightly negative due to an impairment in H1. It is therefore mind-boggling that management hides behind the dividend policy not to distribute a dividend.
Companies: Tarkett SA
The Q3 results were slightly better than consensus, the latter having already been updated to reflect the detailed positive profit warning given on 28/09/2020. Europe did ‘well’ while Australia and North-America, and especially the USA, were (significant) laggards. Grower Sports was also heavily impacted by budget cuts.
H1 revenue landed (-12.4%) above our expectation. The full-year EBITDA looks as if it will end up in line or just below our expectations, driven by effective cost management. Free cash flow, as usual negative in H1, looks as if it will end up flat for the full year which is below our expectations. A dividend will depend on whether Tarkett used its government-backed credit line or not by February 2021 (currently undrawn).
A flattish Q1 in terms of EBITDA thanks to effective cost measurements. Free cash flow is protected by cuts in capex for the year. There is no worry on the liquidity side though ongoing talks with the bankers on a waiver of the covenants take a long time. It is Q2 that will bring real clarity on the COVID-19 impact. April is 40% down on sales already, so expect a tough one.
To protect its cash flow generation for 2020 regarding the effects of COVID-19, the management team will, unlike initially proposed in the full earnings 2019 release on 19 February, propose to distribute no dividend this year. Subject to the approval of the Annual General Shareholders meeting on 30 April.
The results for 2019 are average to say the least (organic growth of +0.7%) and a meagre €0.58 EPS (2018: €0.77). On the positive side, the free cash flow before dividend looks massive at €244m (€3.83/share), up from €-33m last year, but half of this counts as window dressing. The shareholder is confronted with a sudden dividend cut to €0.24 (€0.60 promised) but, at last, a healthy net debt ratio in return.
Following this earnings release, we expect to make minor changes to our target price and keep our Buy recommendation unchanged.
Tarkett posted a clearly disappointing performance and there was a somewhat blurred picture concerning free cash flow generation due to factoring, the amount of which is not disclosed in the presentation. Following the conference call and a deeper look into the financial numbers, we estimate the decrease in our target price to be in the range of 7-15%.
A mixed CMD in our opinion: the increased capex guidance means that the company is possibly a bit late in terms of automation and digital investments. Management hardly spoke about ROCE and cash flow generation, which is a shame. It spoke about capital allocation but was not really convincing. The new EBITDA margin target is a bit disappointing, as it is below the previous strategic plan. We expect to increase our target price by 5% to 10%.
With almost 4% organic growth in sales, 10% reported growth, a 50bp increase in EBITDA margin and 20% increase in EBITDA, the company is beginning the year strongly. However, management said that the business environment remains challenging with inflationary raw material and freight costs. In this context, Tarkett is pursuing its efforts to improve the cost structure and to increase prices with the aim of offsetting purchasing cost inflation over the FY19. We expect to keep our forecasts mai
Tarkett missed FY18 consensus significantly Management will come back in June 2019 with new targets. Consensus has priced Tarkett out of its 2020 targets with an EBITDA margin of roughly 10% in 2020. The China-US trade war, as well as Chinese competitors, will have to be carefully watched. Following this disappointing earnings release, we have cut our target price by 9% but we keep a positive recommendation. We believe that the bottom may have been reached, barring any unforeseen events.
Research Tree provides access to ongoing research coverage, media content and regulatory news on Tarkett SA. We currently have 0 research reports from 3 professional analysts.
NextSource is uniquely positioned to build a leading vertically integrated position, ex China, in the supply of Lithium-ion battery anode material which is essential for the Energy Transition. The company is commissioning phase 1 of its world-class Molo graphite mine in Madagascar and is in the final permitting process for its first Battery Anode Facility (BAF) to be located in Mauritius. The company is backed by Vision Blue, established by Sir Mick Davis, former CEO of Xstrata. On our calculat
Companies: NextSource Materials Inc
Capital Access Group
Falcon has raised gross proceeds of US$8.9m via a placing and subscription at a price of 6p/share and the granting of overriding royalty interests. The net proceeds, together with Falcon’s existing cash resources (cUS$4.3m) will be used to fund Falcon’s net share of 2024 capex (cUS$9m) associated with the 40MMscf/d Shenandoah South Pilot Project, including the drilling, stimulation, and flow testing of two 10,000ft horizontal wells. The funds will also enable Falcon to fund its share of the cost
Companies: Falcon Oil & Gas Ltd.
Cavendish
Beowulf is advancing a portfolio of projects in Europe focussed on metals and minerals that are critical to enabling the continent’s transition to a greener economy. Awareness of Europe’s over-reliance on external supply sources for such vital raw materials is driving growing political support for ‘home-grown’ projects. Beowulf is strategically positioned to leverage this fast-evolving trend – its Kallak project in Sweden holds potential to deliver high-quality iron ore to lower the carbon-inten
Companies: Beowulf Mining PLC
Alternative Resource Capital
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• Multiple tests over multiple zones in multiple horizons were run at the Mopane-1X exploration well. The flows achieved during the well test reached the maximum allowed limits of 14 mboe/d. The flow rate was constrained by the size of the available surface facilities. • The AVO-1 horizon encountered at Mopane-1X and Mopane-2X are in the same pressure regime, suggesting that the entire area (8 km diameter) between the two wells is connected. Overall, in the Mopane complex alone, and before dril
Companies: SINTANA ENERGY
Auctus Advisors
Companies: Touchstone Exploration Inc
Shore Capital
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Liberum
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SP Angel
Jubilee today reports its Q3 and third quarter operational results from its expanding operations in Zambia (copper) and South Africa (chrome and PGM). South Africa is on a growth trajectory with record chrome production of 409kt in the quarter (Q2 FY2024 381kt) and a monthly record in March of 145kt and production YTD of 1.13Mt (0.94Mt). Jubilee is well underway to its annual target capacity of 2,1Mt/yr especially with the new 300kt/yr chrome plant at Thutse expected to be operational in August
Companies: Jubilee Metals Group PLC
WHIreland
Alien today reports intraday that the Western Australian Government has granted a mining licence for the Hancock iron ore project for a 21-year term. The granting of the mining licence is the latest milestone delivered by Alien as it advances the project towards development and production.
Companies: Alien Metals Ltd
Adriatic Metals has announced their transition from mining contractor to mining operator at Rupice. The transition is expected to continue to benefit the development and productivity rates being achieved at Rupice mine, as well as result in cost efficiencies and improved HSE standards. The company has also announced a short-term loan facility with Orion of $25m, that is drawable at the option of the company in Q3/4 this year.
Companies: Adriatic Metals Plc Shs Chess Deposit Interests Repr 1 Sh
Tamesis Partners
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I3 has announced the sale of the majority of its royalty interests in Canada, for US$24.8m cash. This allows the company to fully repay amounts drawn on its debt facility and create a working capital surplus, giving I3 significant additional funding flexibility going forward
Companies: i3 Energy Plc
Zeus Capital
Since November, the JOG share price has moderated from a high of 250p to current levels of 149.5p. This is despite JOG having now made significant progress towards FID on its c.70mmboe Buchan project, with FID upcoming later this year. In our view this share price move is unjustified, with current levels further enhancing the value on offer, and making an attractive opportunity for investors.
Companies: Jersey Oil & Gas PLC
Trinity has announced a c28% reduction to its 2P reserves following a YE23 review. Despite the decrease in the Company’s 2P reserves, Trinity’s core business remains robust, with a reserves/production ratio of >12.5 years at YE23. Whilst there is significant potential for growth within the current portfolio, this will be difficult to unlock from the current balance sheet and we believe further financing will be required. We update our target price to 76p (from 202p), a c85% premium to the curren
Companies: Trinity Exploration & Production Plc
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