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Alstom reported Q1 FY22/23 sales in line with consensus. Order intake decreased 13% yoy due to tough comparables. Management reiterated the outlook for FY22/23, which includes inflation weighing on margins and component shortages delaying deliveries. While the risk was mitigated in Q1, the uncertain macro environment is weighting on consensus estimates. No wonder the share closed c.-3%. We will trim our estimates but are likely to maintain a positive stance on the stock.
Companies: Alstom (ALO:EPA)Alstom SA (ALO:PAR)
While Alstom’s FY21/22 performance was fully in line with the outlook, the low quality beat on FCF overshadowed the decent close. FCF continues to be a pain point for the stock which remained choppy throughout the day – up c.9% in the morning before falling c.11% around mid-session and finally closing at -5% – as investors unpacked the moving parts of working capital. Notably, the mid-term targets were confirmed with synergies being raised from FY25/26 onwards, and the BT backlog delivery timeli
Alstom reported Q3 sales and order numbers in line with our and street estimates. The company reported revenue growth across all product lines and an improved order intake. Management has reiterated the FY21/22 outlook and mid-term guidance. While the share price has remained choppy following this update, we do not see anything alarming in the figures. We reiterate our positive stance on the stock’s valuation.
Alstom’s H1 FY21/22 performance was ahead of market expectations. The c.10% surge in the share price (at the time of writing) was mainly a factor of the strong order intake and better than expected free cash flows, re-affirming our conviction on the structural strength of the business model. Management has reiterated the mid-term guidance for FY24/25, as the BT integration is fully on-track. We maintain a positive stance on the stock’s valuation.
Alstom’s share price jumped c.3% today after the group reported a better-than-expected Q1 FY21/22 trading update, with both order and sales figures coming in ahead of the street’s expectations. After a disappointing CMD earlier this month, the strong performance in terms of commercial wins reinforces our positive stock recommendation. We will tweak our estimates slightly to incorporate the reported figures.
Alstom’s CMD was disappointing with the financial guidance coming in weaker than our estimates, particularly on profitability and FCF generation — attributable to the challenging legacy BT projects. The group expects ‘significant’ FCF outflow in FY21/22 on account of the higher working capital consumption in H1 to deliver these projects. Unsurprisingly, the stock price collapsed c.8% today; with investors’ focus shifting to FCF generation and project stabilisation. We will reduce our estimates b
Alstom reported its FY20/21 results following the integration of BT – with standalone results meeting management guidance and the combined group’s results exceeding street expectations. While reported net debt was much higher-than-expected – with Alstom recognising additional provisions (>€600m) associated with BT contracts, the industry fundamentals remain intact and support the case for long-term profitability/cash flow growth. Importantly, dividends were resumed. Our positive recommendation s
Alstom delivered a positive Q3 FY20/21 update with organic revenue growth and an improved order intake. Management maintained its FY and mid-term outlook, raising the scope for a robust Q4 in terms of order intake. With all necessary regulatory approvals received, the Bombardier Transportation acquisition is expected to be completed by the end of this month.
Companies: Alstom SA
Alstom reported a 15% yoy decline in the H1 FY20/21 top-line (mainly impacted by the Q1 FY20/21 lockdowns), but its operational efficiencies/better project execution restricted the fall in the operating margin. However, the FCF generation was weak. While the order-intake was also soft, management remains confident about a recovery in demand, and has maintained its >1 book-to-bill target. The mid-term guidance has also been reiterated. Moreover, it now expects to close the acquisition of Bombardi
In the first full quarter under the COVID-19 crisis, Alstom’s order-intake advanced slightly but sales tanked 25% yoy on an organic basis. However, a gradual recovery in the top-line is expected throughout the year, as its operations return to normalcy to deliver the healthy order-backlog (€41bn; equivalent to almost five years of sales). Management has maintained the mid-term outlook and also confirmed that the acquisition of Bombardier’s transportation unit remains on track for completion by J
Alstom progressed well in FY19/20, with a limited impact from the Coronavirus towards end of the year. However, FY20/21 is likely to be rough, as containment-measures-led disruptions can delay production and demand for rolling stocks and maintenance/services, i.e. break the strong momentum in the European ridership. Consequently, the mid-term revenue guidance has been revised downwards slightly.
Being in the growing railway industry makes Alstom a safe play during challenging times – the Coronavirus, which is potent enough to disrupt global demand, may instead push infrastructure spending by governments. The scaled-up Alstom (post the acquisition of Bombardier’s rail business) will be even better placed to ride this trend.
Alstom has announced it is to acquire the rail business of the liquidity-crunched Canadian group Bombardier at a bargain price. The €5.8-6.2bn transaction will be c.85% funded by new equity issuance to existing shareholders of the target (CDPQ and Bombardier Inc.) and Alstom (via rights shares). The fate of this deal, which makes Alstom the second largest train-maker globally, is likely to be decided by competition authorities during the first-half of 2021.
Alstom ended Q3 FY19/20 on a positive note. While the revenue performance was mediocre (as expected), the robust order-intake lifted the group’s existing order-book to a record €43bn – equivalent to around five years of its annual turnover. Management has maintained the FY19/20 as well as the mid-term outlook.
During H1, Alstom performed well on the top-line and profitability fronts. However, free cash flow generation was poor, impacted by higher inventory requirements in the Rolling Stock business. While management has reiterated its mid-term outlook, we believe investors would be more alert about near-term shocks impacting the company’s FCF.
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Today’s trading update for H1 22 highlights the difficult operating environment over the first six months of the year, particularly in Q1. Trading picked up in Q2 and is expected to continue to improve in H2 22, in part, due to the inherent seasonality of the business, but also due to some catch up in demand. Guidance is for FY22 post-tax profit to be in line with the consensus estimate of £32.2m, as a result Zeus reduces its estimate by 2.5% to £32.2m. Previous guidance of £3.0m potential impac
Companies: Strix Group PLC
Last week, the UK government published the consultation paper on its Review of Electricity Market Arrangements (REMA). Any change potentially represents uncertainty in a market that has been wary of changes with a number of shares falling after early details of possible reforms were flagged in the press. We review the possible changes and conclude that while there is some risk, from what we can see at present the likely outcomes could be either minimal or beneficial for investors in clean energy
Companies: EQT IES DRX NESF PHE SAE
Companies: Crestchic PLC
Invinity has begun trading shares on the OTCQX Best Market in the USA. We see this as adding liquidity for North American investors and more generally increasing visibility for the company in key markets in North America.
Companies: Invinity Energy Systems PLC
Dish of the day
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What’s cooking in the IPO kitchen?**
Unigel Group, intends to join the Aquis Growth Market. Unigel Group is a pioneer in the field of thixotropic gels for the fibre optic cable industry. The Company is also a supplier of laminated steel tapes to the fibre optic cable industry in the US. Thixotropic gels and laminated steel tapes are essential components to the rapidly growing global fibre optic cable market. The Group exports
Companies: UJO FAB HAT HZM SYM TRAC
The US Inflation Reduction Act of 2022 now has a chance of passing the Senate next week as it is being voted under the Reconciliation procedure which allows bills related to the budget to pass on a simple majority rather than the 60-vote majority required to overcome a filibuster. If the act does find its way onto the statue books it will bring US$369bn in clean energy tax credits, grants and other incentives. Much is directed to protecting clean energy manufacturing in the USA, but it is a wide
Companies: IES DRX ITM VLS
Dish of the day
No joiners today.
No leavers today.
What’s cooking in the IPO kitchen?
Unigel Group, intends to join the Aquis Growth Market. Unigel Group is a pioneer in the field of thixotropic gels for the fibre optic cable industry. The Company is also a supplier of laminated steel tapes to the fibre optic cable industry in the US. Thixotropic gels and laminated steel tapes are essential components to the rapidly growing global fibre optic cable market. The Group export
Companies: SDI FUL PURP OSI IXI BSE BRSD ATM
Oil posted the biggest weekly decline since early April on growing signs that a global economic slowdown is curbing demand. Prices are near the lowest level in six months.
West Texas Intermediate settled at $89 a barrel, ending the week nearly 10% lower. US gasoline consumption has dropped, stoking demand concerns, while low liquidity has added to volatility. Supplies from Libya also picked up, helping to shrink key oil futures time-spreads and ease the tightness in the market.
Companies: FO 88E CHAR DEC EME GTC TRIN WEN
Companies: Staffline Group plc
Rolls Royce published mixed figures. Profitability was particularly low, pushing the net result back into the red zone. However, FCF generation was a positive surprise despite the rise in inventory. It has finally found an agreement to sell ITP Aero and will use the resulting cash to repay its only floating interest rate debt.
Companies: Rolls-Royce Holdings plc
Companies: Open Orphan Plc (ORPH:LON)Renold plc (RNO:LON)
Companies: Lok'nStore Group plc
Companies: Belvoir Group PLC (BLV:LON)SDI Group plc (SDI:LON)
We revise our estimates, primarily to incorporate the Paro acquisition, resulting in an average 3% increase in our forecasts for diluted EPS through FY25. Renewi's FY22 results demonstrated that its business and financial performance have moved to a new level, underscored by the positive 1QFY23/AGM update. While Renewi has started to re-rate, we continue to believe that the share price has yet to reflect the transformation in the company's earnings power fully, while the potential ECP bid for Bi
Companies: Renewi Plc