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IG Design Group has delivered another year of strong revenue growth (+10%), together with the transformational acquisition of the US company CSS. Adjusted profit before tax and diluted EPS were slightly down year-onyear but would have been ahead and in line with market expectations, adding back the adverse impact of Covid-19. A final dividend of 5.75p sees the full year figure up 3%. While the group has made a commendably strong start against its Covid-19 adjusted forecasts, the full year outturn for FY21E (and our view of a bounce back in FY22E) will nonetheless be adversely impacted by the ongoing changes brought about by Covid-19.
Companies: IG Design Group Plc
For this Monthly, we are delighted that Rooney Nimmo and 24Haymarket have allowed us to reproduce a recent report they jointly published, entitled An analysis of UK exits (2015-2019), which provides a granular analysis by sector of the activity in our dynamic private companies world. We hope you find the insights of interest.
Companies: AVO AGY ARBB ARIX CLIG ICGT NSF PCA PIN PXC PHP RECI SCE TRX SHED VTA
H1 combustible resilience and surprising improvement in the New Categories unit (vapour, THP, modern oral). We continue to be positive on the stock.
Companies: British American Tobacco
discoverIE’s trading update for the first four months of FY21 confirms that orders are moving in the right direction, with month-on-month increases in June and July. Revenues are down 8% y-o-y on a reported basis, in line with expectations. While COVID-19 is likely to present ongoing challenges in the short term, the company is confident it has the resources to manage the business through this and is well positioned to take advantage of growth opportunities post COVID-19, highlighting its intention to resume acquisitions in H2 as market conditions improve. We maintain our forecasts.
Companies: discoverIE Group Plc
Walker Greenbank is a higher end interior furnishings business with well-established global brand names and manufacturing facilities in the UK. The Group has this morning released an update to coincide with its AGM, which confirms that the improving trends reported at the full year results last month have continued to be seen.
Phoenix today announces the results of 7 of its 30 holes into the Empire Open Pit resource gold zone from its property in Idaho. Results are encouraging with several, close-to-surface intersections e.g. 13.7m grading 2.1g/t gold from 5m and another hole with 1.6m grading 8.5g/t gold from 32m down. The gold is associated with minor silver (on average just over 3x the gold grade). Additional channel and field samples were also taken from surface to help site drilling and to define better the surface expression of the skarn-host contact and the higher-grade zones – with grade demonstrated in most of these.
Companies: Walker Greenbank Sirius Real Estate
Red Dwarf, the very British sci-fi comedy franchise, ran for 11 seasons – most recently in 2017; and The Promised Land is a feature-length TV movie – out this year. Yes, the programme is an acquired taste. Strangely, too, many episodes are impacted by a virus or three (physiological, not main-frame).
Companies: WJG BKG CSP CRST MCS INL BDEV RDW GLE SPR TW/ PSN VTY GLV CRN ABBY BWY
Victoria has reported results to March 2020, including a positive update on trading for the first quarter. Whilst Q1 FY2021E revenues were 64% of the Group’s pre-COVID budget, there has been a strong recovery across the period from 35% in April to 102% in June. Like-for-like organic revenue growth for FY2020 was 0.4% despite significant COVID impacts from late-February and the gross margin improved to 36.4% (2019 35.6%). £385m net debt at 30 June (excluding IFRS16) also compares favourably to the year-end position at £380m (3x adjusted net debt/EBITDA). With current revenues running ahead of budget for FY2021E the statement will provide reassurance over the resilience of the business, albeit that some revenue growth may be the result of pent up demand. Guidance remains withdrawn but consensus estimates for FY2022E, based on c.£635m of sales were already anticipating an adjusted EPS result for that year of 32.5p, equivalent to a PER of 7.4x. We have no formal forecasts at the present time and will initiate coverage in due course.
James Halstead is a manufacturer and international distributor of commercial floor coverings. This morning, the group has provided a full year trading update for the twelve months to 30 June 2020, which illustrates stronger demand than anticipated at the time of the interims in March. A second interim dividend has been declared, whilst the year-end cash figure is reported to be ahead of the interim position. Furthermore, since the year-end, UK sales are reported to be less than 10% down against the comparative period, whilst key overseas businesses are near flat.
Dillistone has reported FY results to December 2019 with revenue of £8.0m (FY 2018: £8.7m), an adjusted loss before tax of £0.3m (FY 2018: £0.0m) and, against a favourable tax outcome (R&D tax credits), EPS of -0.15p (FY 2018: +0.61p). The company ended the year with cash of £0.4m (FY2018: £0.7m), and net debt position of £0.8m (FY 2018: net debt £0.4m).
Companies: Dillistone Group James Halstead
Due to a change in Analyst role, Cenkos Securities plc has suspended coverage of the following stocks (see table 1). Our previous recommendation and forecasts can no longer be relied upon.
Companies: BDEV BWY BKG VTY COST CRST BBY FERG GLE KLR KIE MSLH MER MTO NXR PSN RDW RNWH SFR SHI MGNS TW/ CTO TEF TPK GFRD
Covid-19 could be the catalyst for build-to-rent (BTR) to “come of age” according to residential for rent developer and manager Watkin Jones. It was already ramping up BTR alongside its core of student accommodation, but we now believe demand for purpose-built private rental could be further boosted by people choosing to rent and by an institutional hunger to replenish dwindling sources of yield. The recent interims showed BTR overtaking student housing’s pipeline and we believe WJ’s low-risk, capital light model is tailormade to serve this burgeoning market.
Companies: Watkin Jones Plc
A number of REITs have the ability to thrive in current market conditions and thereafter. Not only do they hold assets that will remain in strong demand, but they have focus and transparency. The leases and underlying rents are structured in a manner to provide long visibility, growth and security. Hardman & Co defined an investment universe of REITs that we considered provided security and “safer harbours”. We introduced this universe with our report published in March 2019: “Secure income” REITs – Safe Harbour Available. Here, we take forward the investment case and story. We point to six REITs, in particular, where we believe the risk/reward is the most attractive.
Companies: AGY ARBB ARIX BUR CMH CLIG DNL HAYD NSF PCA PIN PXC PHP RE/ RECI SCE SHED VTA
New Government rules yesterday allowing unused office and industrial sites to be redeveloped without planning permission into housing could, in our view, allow Watkin Jones to regenerate its city centre sites into build-torent (BTR) or student accommodation more quickly, and with greater certainty. This should further enhance the residential for rent developer and manager’s low-risk, capital-light offer to institutional property investors and support the Government’s aim of reviving urban centres.
Companies: Watkin Jones
Michelin’s posted revenue down 20.6% yoy, with the passenger car and truck segments driving the contraction (-22.3% yoy and -23.3% yoy, respectively), though in line with the global tyre market. Consequently, operating income fell to €177m (margin of 1.9% vs. 11.4% in H1 19), though benefiting from a favourable price-mix, and lower raw material prices and general & admin. costs. As for the FY20 outlook, Michelin expects to match the global market, volume-wise, and to reach a segment operating income of over €1.2bn.
Companies: Cie Gnrl des Etblsmnts Michelin SCA
Dame Agatha Christie (née Miller) published more than 80 books and plays; and the Guinness Book of World Records lists her as the best-selling novelist of all time with roughly two billion copies sold. ‘And then there were none’ was originally published in 1939, with an un-politically correct title; and it is still the world’s best-selling mystery (with more than 100 million sold). It is also number six on the list of best-selling books of all-time.
Companies: ABBY CSP WJG TW/ BWY PSN GLV BDEV RDW BKG VTY CRN GLE SPR GFRD
Sports Direct has resumed providing guidance with these interim results. Excluding House of Fraser it expects underlying EBITDA to increase by 5- 15% to £356-390m. We judge this and the fact that Underlying BITDA excluding acquisitions grew by 15.1% in 1H suggest that market consensus on this basis will increase by c5% at pre HoF level.
Companies: Sports Direct International