Inchcape delivered a strong set of H1 2021 results last week, with adjusted PBT 13% ahead of our forecasts. The Group is trading well across many areas of the business and is delivering margin improvements, strong cash generation, and new contract wins. Last week Inchcape also announced a £100m share buyback programme that it will complete in FY21. We have upgraded our forecasts once again and this flows through to a higher intrinsic value estimate of 1,080p.
Companies: Inchcape plc
Inchcape has delivered a strong set of H1 results, which are 13% ahead of our forecasts at the adjusted PBT level. The Group is seeing strong growth across the group and the operational disciplines put in place are also driving clear margin improvements. New contracts have been awarded, cash generation is very strong and a new £100m share buyback programme has been launched. We will be upgrading our forecasts by at least 10% post the analyst meeting, and we believe Inchcape continues to be well
In this note we focus on five key themes that we believe will shape the motor retail sector in the short-to-medium term. These are digital sales trends, electrification, the agency model, vehicle supply, and the economic outlook. The dealer groups have shown a great deal of resilience and flexibility throughout the Covid-19 pandemic – we expect them to continue to adapt and work closely with OEMs as the industry evolves.
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Inchcape released an unscheduled trading update last Friday stating that the Group’s performance to date has exceeded its expectations. The Group has announced the continuation of encouraging trends across the business, with an uptick in demand and margin resilience. As a result of this update, we upgrade our forecasts for FY21, leaving FY22 and FY23 forecasts unchanged at this stage. This upgrade increases our intrinsic valuation to 1,048p per share.
Inchcape delivered better than expected Q1 results last week and is showing signs of a broad-based recovery across a number of geographies. The Group recently announced its decision to right-size its Russian retail operations with a £70m disposal, set to complete in Q2 2021. We have updated our forecasts accordingly and our intrinsic value increases to 1,045.5p.
Inchcape has delivered a strong Q1 performance, which is trending ahead of expectations in what we see as a broad-based recovery. There is good evidence that most markets are moving in the right direction leading to sequential revenue progress for Inchcape during the quarter, particularly in Asia, which is a high margin area of the business. We have not taken account of the Russian disposal yet but expect this to be absorbed with stronger than expected trading momentum elsewhere. We believe the
Inchcape delivered resilient FY20A results last week that were ahead of our expectations. We remain confident in Inchcape’s long-term investment case as a unique and cash generative model.
Inchcape has delivered a strong set of results that are ahead of our expectations. The outlook statement is positive, albeit clear uncertainties remain, and we are maintaining our below consensus forecasts for now. Overall, we believe Inchcape is well positioned and remain confident in its long-term investment case as a unique and cash generative model.
Looking Ahead At The Next Week
Inchcape has released a trading update this morning, indicating the Group better than expected in November. We believe this activity has come mainly in Europe in Retail, with a knock-on impact in Distribution. As a result, we upgrade our 2020E PBT forecasts by 16% and remain confident in the long-term investment case as a unique and attractive cash generative model.
Post the Q3 trading update last week, we have reviewed our model and made some changes to our core assumptions. Our revenue assumptions were reshaped and reduced by 8.5% for 2020E to reflect the lockdown in UK/Belgium as well as FX pressures in the Americas and Russia. However, given the cost initiatives and underlying margin control/recovery in key areas (notably Retail), our earnings estimates increased by c7% for 2020E. We remain comfortable with the long-term investment case given its cash g
Inchcape has delivered a better than expected Q3 trading update, which reflects an encouraging bounce back, and would have seen it on track to deliver a strong H2 ahead of expectations. However, given the current Covid-19 situation, management have withdrawn guidance. That said, we envisage a small increase in 2020E consensus on the back of this strong Q3 performance and will firm up our forecast assumptions post the analyst call at 8am.
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Draftkings has made a £16.4bn ($22.4bn) bid to acquire Entain in a cash (630p) and stock offer, valuing the target at 2800p/share. While the bid is promising, MGM (BetMGM’s JV partner) can throw a spanner in the works (counter-bid or a veto).
Companies: Entain PLC
Exactly one year ago, the FTSE 100 closed at 5,862, having fallen 100 points on the day, the lowest point since mid-May 2020, due in part, to the strength of sterling vs US$ at $1.34. One year on, the FTSE 100 has risen to 7,119, a rise of 21%, it remains 7% below the peak in January 2020. From an international viewpoint, US and European markets continue to trade at record highs. The US Federal Reserve is close to withdrawing some of its economic support this year as inflation picks up and the e
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SCS Group’s full year trading update for the 53 weeks to 31st July shows that the strong demand that has been a hallmark of post lockdown periods over the past 15 months has continued, with LFL orders through the Group’s weeks 47 to 53 up by 23.7% on pre-Covid levels. Lower costs underpin a 16% upgrade to FY21 CPTP expectations, whilst the strong order book drives a 17% upgrade to our FY22 CPTP forecast. We look for EPS of 32.2p and 30.8p for FY21 and FY22 respectively. Year end net cash of £87.
Companies: ScS Group plc
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Unprecedented times over the past 12 months have seen ScS Group deliver an exceptional set of H1 2021 results, dominated by the surge in orders post Lockdown 1.0. Group revenue grew 14.4%, with an incremental gross margin, tight cost control and UK government support (£6.6m) underpinning EBITDA* of £19.5m (£3.8m in H1 2020). We believe the average net cash through the period was c£97m (c£60m excluding customer balances). H2 2021 visibility remains low, with post Lockdown 3.0 demand uncertain, th
Companies: Loungers Plc
Marks & Spencer 'M&S' hosted a preview for its Autumn-Winter 2021/22 clothing season in London on the 7th September. As may be expected, no trading or financial information was issued, noting our recent upgrade to our financial forecasts following the Group's surprise trading update on 20th August. The session was hosted by Chief Operating Officer, Katie Bickerstaffe, and Managing Director of Clothing & Home, Richard Price, whom we felt displayed the growing confidence that M&S is progressing in
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Last week Lookers announced a record set of H1 results for the six months to 30 June 2021. Underlying PBT was £50.3m, versus an underlying loss of £36.5m in H1 2020. This stronger trading, coupled with cost control and working capital initiatives, has led to substantial cash generation. Lookers has gone from net debt of £40.7m (excl. leases) at the FY20 year end to net cash of £33.0m at 30 June 2021. With legacy issues now behind them, good evidence of trading outperformance and a strong balance
Companies: Lookers plc
Kingfisher reported better-than-expected figures at its H1 FY21/22 results, with lfl sales and adjusted PBT coming in ahead of market expectations and management’s guidance. Lfl sales outlook for H2 has been raised, the share buy-back programme re-introduced and the interim dividend increased. However, the share price was down c.5% today, as investors worried about inflationary cost pressures and supply chain constraints which are expected to continue into 2022. We will update our estimates and
Companies: Kingfisher Plc
Pendragon have published a revised strategy update reaffirming the investment in its used car business and software platform to be funded through strategic disposals and lower capital commitments to the new car market. This includes the potential sale of the group’s US Motor Group. We have modelled the implications of successful implementation of this strategy which would result in a £200m swing from a net debt position to a cashrich group over coming years. Whilst the US disposal would be earni
Companies: Pendragon PLC
Pendragon has communicated a clear strategy focused on investment in its used car business and software platform to be funded through ongoing cash flow, strategic disposals and lower capital commitments to the new car market. This includes the disposal of the group’s US Motor Group. We have modelled the implications of successful implementation of this strategy which would result in a £200m swing from a net debt position to a cash-rich group over coming years. Whilst the US disposal would be ear
FY20 results – All Focus on Resuming Operations
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Dart Group has released an AGM statement this morning indicating satisfaction with load factors and financial performance achieved year-to-date in the context of the challenging operating environment. In addition, the Group has applied to change its name to Jet2 Plc in recognition of the recent sale of the Fowler Welch distribution business and the sole focus on leisure travel. We keep our forecasts withdrawn at this time.
The final results revealed adjusted PBT up 99% year-on-year, which was 10% better than forecast despite four upgrades during the financial year. This strong performance reflects the financial benefits that have accrued following the shift in the business model to online only, as well as management’s strategic decision to significantly increase marketing spend. A second special dividend for the 2020 financial year has also been announced, reflecting the strong cash flow characteristics of the bus
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