Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on Investor. We currently have 13 research reports from 1 professional analysts.
While weak equity markets proved to be a sore spot for Investor’s FY18, the trend was fully reversed in FY19. The value of the listed asset portfolio lifted the group’s NAV, outdoing the performance of Patricia Industries, which surprisingly, posted a minor decrease in value over Q4 on the back of a contraction in multiples.
Investor continues to build upon a strong 2019, despite a mixed Q3 for its listed core investments. The blockbuster IPO of its fund investment arm EQT, along with the strong revenue momentum of its wholly-owned subsidiaries in Patricia Industries make for an enticing investment proposition. While the discount to NAV compression has seen some relief, the looming headwinds in the demand/macro-economic front could weigh on listed and unlisted investments alike.
Investor followed up a satisfactory Q1 with a positive value performance in Q2 from its listed companies’ portfolio (+5.8% qoq), Patricia Industries (+6%) and EQT (+8%). As the equity markets’ boon lingers on, investors cannot seem to get enough of Investor – with its share price climbing a further +9% over Q2, squeezing the already narrow discount to under 8% of its reported NAV.
Equity markets’ recovery over Q1 leaves Investor with a tight discount to NAV. Patricia and EQT investments reported positive performances.
Strongly affected by global threats, Investor’s listed assets cut into the NAV. Non-listed units (under Patricia) did well.
Irrelevant quarterlies cannot hide the fact that trade war worries have cut into the NAV. Too bad. Non-listed units (booked under Patricia) do well.
Despite lower earnings in Q1 18, Investor is as always in good shape thanks to its strong and recurrent cash-flow stream.
FY14 Consolidated profit, of which unrealized change in value, stood at SEK44.3bn, compared to SEK33.6bn in 2016. Change in value amounted to SEK36bn in 2017 vs. SEK22bn in 2016, i.e. a + 63.4% yoy jump. Except for this item, the net result would stand at SEK8.25bn, (-28.5%) including a received Dividend of SEK8,404m vs. SEK 8,351m in 2016. The positive value changes were attributable to Investor’s listed core investments, which saw their aggregated NAV increasing by 14.4% to SEK284bn, i.e. 72% of the holding’s total adjusted assets. Atlas Copco, the main contributor to the holding’s NAV, reported a 26.8% increase in its NAV to SEK72.8bn. Listed core investments contributed SEK42,636m to the NAV. Ericsson was the worst performer, reporting a thin contribution of SEK329m. Regarding the sub-holding Patricia Industries, we noted a mixed performance. The contribution to NAV amounted to SEK766m. Mölnlycke and Permobil contributed up to SEK2,880m and to €469m to Patricia Industries, respectively. Meanwhile, both contributions of Aleris and Laborie were negative amounting to SEK-947m and SEK-436m, respectively. Investments in EQT contributed SEK3,144m to the NAV. The parent company’s net debt amounted to SEK12.2bn in end 2017, i.e. a leverage ratio (net debt/total assets) of 3.5%. The average maturity of the debt portfolio stand at 10 years.
Over the first nine months of 2017, Investor reported a net income of SEK45,314m, compared to SEK24,485m over the same period in 2016. Indeed, positive unrealised changes in value worth SEK36,245m boosted the Q3 results vs. SEK16,174m recorded in the same period of 2016. Excluding the latter item, the net result would have stood at SEK9,069m vs. SEK8,311m a year earlier (+9.1% yoy). The holding’s bottom line included SEK7,428m in dividends received from almost all the listed holdings vs. SEK7,488m received over Q3 16. The positive value changes were attributable to Investor’s listed core investments, which saw their aggregated NAV increasing by 15% to SEK285.8bn. Atlas Copco, the main contributor to the holding’s NAV, reported a 23.9% increase in its NAV. At end Q3 17, the Swedish holding reported a NAV of SEK335.6bn, i.e. an 11.9% increase on a yoy basis, of which only a 1% increase over Q3 17. Listed core investments contributed SEK43,602m to the NAV. Ericsson was the worst performer, reporting a negative contribution of SEK-1,129m. The holding reported a mixed performance from the sub-holding Patricia Industries, for which the NAV was negative (SEK-121m). 3 Scandinavia and Mölnlycke contributed SEK425m and €450m to Patricia Industries, respectively. Investments in EQT contributed SEK1,774m to the NAV. Net cash flow from EQT amounted to SEK340m. The parent company’s net debt amounted to SEK11,936m at Q3 2017, i.e. a leverage ratio (net debt/total assets) of 3.4%, better than the holding’s long-term 5-10% target range. As for the group’s indebtedness, the Wallenberg’s holding arranged debt financing of the subsidiaries within Patricia Industries on an independent, ring-fenced basis and, hence, is not included in Investor’s net debt. Within Patricia Industries, Investor guarantees SEK0.7bn of 3 Scandinavia’s external debt. Patricia Industries’ total debt amounted to SEK4,988m at end Q3 17. In 2016, the shareholders’ return stood at 10.6%, while that of the stock exchange of Stockholm was 4.1%.
Over Q2 17, the Swedish holding announced net income of SEK9,537m, treble that in Q2 16, but lower than that achieved in Q1 17. At H1 17, consolidated net income amounted to SEK39,940m compared to a loss of SEK-6,288m for the same period in 2016. Positive unrealised changes in value worth SEK32,815m lifted this year’s result vs. a negative change of (SEK-12,857m) in the same period of 2016. Excluding the latter item, the net result would have stood at SEK7,125m vs. SEK6,566m a year earlier for the group share (+8.5% yoy). The holding’s bottom line included SEK6,594m in dividends received from almost all the listed holdings vs. SEK5,560m received over H1 16. The positive value change was attributable to the Listed Core investments of Investor’s portfolio, which saw their aggregated NAV increasing by 13.2% to SEK281.2bn. Atlas Copco, the main contributor to the holding’s NAV, reported a 16.4% increase in its NAV. Meanwhile, the contribution of the sub-holding Patricia Industries to Investor’s NAV was negative (SEK-226m). Divestments were made in the Nordics, Asia and the US, totalling SEK494m. 3 Scandinavia distributed up to SEK1.7bn to Patricia Industries. BraunAbility and Laborie acquired three small entities for SEK320m. During H1 17, the private equity firm, EQT, raised its positive contribution to the holding’s NAV (to SEK1,569m). The parent company’s net debt amounted to SEK16,752m at H1 2017, i.e. a leverage ratio (net debt/total assets) of 5.3%, in line with the company’s long-term 5-10% target range. As for the group’s indebtedness, the Wallenberg’s holding arranged debt financing of the subsidiaries within Patricia Industries on an independent, ring-fenced basis and, hence, is not included in Investor’s net debt. Within Patricia Industries, Investor guarantees SEK0.7bn of 3 Scandinavia’s external debt. Patricia Industries’ total debt amounted to SEK16,577m at end H1 17. In 2016, the return for shareholders stood at 10.6%, while that of the stock exchange of Stockholm was 4.1%.
In H1 16, the consolidated net loss amounted to SEK-6,288m compared to a net profit of SEK25,542m for the same period in 2015. A high amount of unrealised changes in value characterised this result as in every year, but this time the changes were negative (SEK-12,857m). Except for this item, the net result was SEK6,566m for the group share (-2% yoy), including SEK5,560m for dividends received (SEK6,266m in 2015), almost all from the listed holdings. The negative value changes were related to the Listed Core investments of Investor’s portfolio. The contribution to the NAV was negative from Skandinaviska Enskilda Bank, Sobi, AstraZeneca, Ericsson and Wärtsilä. Concerning the sub-holding Patricia Industries, the contribution to Investor’s NAV was in contrast positive for all the subsidiaries, the highest performance coming from Mölnlycke Health Care. During the half year, Investor acquired further shares in two listed holdings for a total of SEK0.4bn: Atlas Copco: 750,000 shares for SEK125m (+0.1% of the share capital, raising its stake to 16.9%); Wärtsilä: 700,000 shares for SEK247m (+0.5% raising its stake to 17.5%). In its interim reports, Investor now only communicates on the parent company’s net debt – even if the financial accounts allow consolidated net debt to be calculated. Investor’s management considers the reorganisation of the group made last year (see our Latest dated 11/08/2015) leads to a separation of the debt financing of the subsidiaries within Patricia Industries from Investor’s net debt. Investor’s net debt increased slightly from SEK15,892m at the end of 2015 to SEK17,430m at 30/06/2016, but this debt seems to be usually higher at the end of the half year. It corresponds to a leverage ratio (net debt/total assets) of 6.3% after respectively 6.7% in H1 15 and 5.5% at the end of 2015. For its part, Patricia Industries continued to divest financial investments to release capital for a total amount of SEK1,375m, while several subsidiaries made complementary acquisitions for SEK310m. Patricia Industries also made an internal transfer of SEK1,259m to Investor. All the subsidiaries performed well, recording sustained organic growth, with particular mention of Mölnlycke Health Care. Investor’s investments in the private equity group EQT contributed positively to the NAV during H1 16. Investor’s total outstanding commitments to EQT funds increased by c.SEK3bn to SEK11.6bn, boosted by the successful closure of two new funds: EQT Mid Market Credit and EQT Ventures.
The 2015 consolidated net result decreased to SEK17.4bn, including a lower amount of unrealised change in value than in previous years (SEK8.5bn, compared with SEK42bn in 2014). Except for this item, the group’s net result amounted to SEK8.9bn (+2.3%), of which SEK7,681m was dividends received from the listed holdings (SEK6,227m in 2014). During the year, Investor invested SEK12bn, of which about SEK6bn was used to acquire further shares in two listed holdings (ABB and Wärtsilä). The strong cash flow generation also allowed Investor to reduce its net debt. The parent company’s net debt amounted, consequently, to SEK15.9bn (after about SEK20bn at 30/06/2015), leading to a leverage ratio debt (net debt/total assets) of 5.5% (after respectively 6.7% in H1 15 and 7.3% at the end of 2014). The average maturity of Investor’s debt was 10.3 years at year-end (11.3 years in 2014), excluding the debt of the companies consolidated via the holding Patricia Industries. In Q4 15, Moody’s upgraded Investor’s long-term credit rating from “A1” to “Aa3”. Standard & Poor’s current rating is “AA–“. For 2015, a dividend of SEK10 per share (+11%), in line with our estimate, will be proposed.
In H1 15, consolidated net profit increased to SEK25.5bn compared to SEK23.7bn for the same period in 2014, characterised by a high amount of unrealised change in value (SEK18.8m), as in every year. Except for this item, the net result was SEK6.7m for the group share (-13%), including SEK6.3bn for dividends received (-7%), almost all from the listed holdings. The parent company‘s net debt amounted to SEK19,975m, corresponding to a leverage ratio (net debt/total assets) of 6.7% after respectively 9.5% at 30/06/2014 and 7.3% at the end of 2014. The reported leverage has been reduced by both the increase in NAV and the reorganisation of the group. In Q2 15, Investor’s new structure was implemented, with investments within “Listed core investments”, the private equity firm EQT and Patricia Industries. As a consequence of the reorganisation with the constitution of Patricia Industries, cash previously held by Investor Growth Capital (IGC) is now included in Investor’s gross cash. During the first half-year, Investor acquired a further 19.2m shares in ABB for a total of SEK3.5bn, leading it to own 9.5% of the capital and votes in the company. Within Patricia Industries from Q2 15 onwards, Mölnlycke Health Care continued to grow with stable profitability and launched two initiatives in the US wound care market. Aleris reported growth and significantly improved profitability. In Permobil, the ramp-up of new products improved growth. The activities of Grand Hôtel progressed favourably with an increase in the EBITDA margin and the activities and operating results improved for the provider of mobile voice and broadland services: 3 Scandinavia (40% held).
Research Tree provides access to ongoing research coverage, media content and regulatory news on Investor. We currently have 13 research reports from 1 professional analysts.
The scaling of Duke's royalty portfolio was progressing as expected up to March 2020, with record cash receipts that month. Due to Covid-19 and the UK's economic shutdown, macro conditions have worsened and become highly uncertain. This is likely to see some royalty partners' future cash royalties decline, which in turn, will negatively impact FV's in the FY20E results. Duke's high margin and cash generative nature ensures it is well placed to trade through these challenges. Given the degree of uncertainty in outlook, we remove forecasts and put our recommendation Under Review and await further clarity on the portfolio.
Companies: Duke Royalty
Belvoir’s FY 2019 results were strong, with adj. EPS up 13% (13.6p vs our forecast 13.0p) and strong cash generation. COVID-19 will affect property sales in FY 2020 but lettings (61% of 2019 gross profit) will be more resilient, helped by the Government’s measures to support employment and incomes. Management has reacted quickly, reducing costs and putting plans in place to support franchisees. We now forecast a ‘lost year’ in FY 2020, assuming five months of no sales activity, a significant reduction in financial services and a reduction in lettings fees, partly offset by a £1.5m cost reduction. The capital light franchise model, inherent high levels of cash generation and no final dividend for 2019 mean we forecast gross cash of £2.0m at December 2020, down from £3.6m. Belvoir is in good financial shape to weather the storm and support its franchisees before returning to normal activity. The success of the strategy was again evidenced by a strong start to 2020 prior to COVID-19.
Companies: Belvoir Lettings
Alpha has released an update today, which highlights the impacts of the recent global lockdown and extreme FX volatility on the trading and working capital of their clients. We have reduced this year’s revenue forecast by 14% and EPS by 24%. We show the Company has sufficient capital to hit these revised forecasts and importantly has a business model, capital structure, technology platform and client proposition to continue to take share and return to high-growth when economies normalise.
Companies: Alpha Fx Group
The Coronavirus pandemic is a human tragedy of vast proportions – as well as the terrible human toll, COVID-19 has led to economies across the globe going into physical lockdown and financial freefall. Entire populations are adapting to the “stay at home” edict, to safeguard the vulnerable – and some of these changes will lead to long-lasting or perhaps permanent changes in the way we live or work. This note describes some of our client companies whose business models are well adapted to these changes, or who might see a change in long-term structural demand.
Companies: AMO BGO FDM GAMA KAPE LOOP TERN ZOO
Appreciate saw trading in line with expectations until the end of February, but the closure of fulfilment locations in response to COVID-19 has seen a substantial drop in billings in the past week. Management is withdrawing its guidance, but will provide an update in the second half of April. Meanwhile, the interim dividend (£2m) will not be paid and the FY dividend will be reviewed in June (c. £4m). We see the net cash balance sheet as strong enough to weather the storm. The company’s digital first strategy will accelerate and help to mitigate the pressure on physical vouchers. We will review our estimates in April, but we think that a CY20E EV/EBIT of 3.8x on existing numbers more than reflects the downside risks.
Companies: Appreciate Group
Companies: AVO AGY ARBB ARIX BUR CMH CLIG DNL GDR HAYD PCA PIN PHP RE/ RECI RMDL STX SHED VTA
U+I has confirmed the disposal of its share in the Harwell Campus, delivering development and trading gains of c.£11m. Crucially, these should fall in to FY20, subject to discussions with auditors. The >£40m cash realised from the sale compares to a £10m investment six years ago. An adjoining building on the Harwell Campus has also been sold ahead of book value, for £7.5m. We prudently leave any forecasts unchanged at this uncertain time. A post-close trading update with more detail will be given on 15 April. The shares now trade at a 72% discount to NAV, vs the UK sector at a 15% discount.
Companies: U&I Group
Covid-19's future impact is likely to overshadow FY19A results which delivered YoY growth, despite imposition of the tenant fee ban and the backdrop of a subdued lettings/sales market. With franchisee premises and the UK housing market now closed, FY20E trading will be materially affected and growth strategies (financial services, assisted acquisitions) are now on hold. The group will fall back on its recurring lettings revenue, streamlined cost base and debt-free balance sheet to seek profitable trading and positioning for a market rebound in FY21E. Given uncertainty as to Covid-19's duration and severity, we put our recommendation Under Review and withdraw forecasts awaiting further clarity.
Companies: Property Franchise Group
We believe that NSF’s response to the current pandemic is in the interests of all its stakeholders. The operational shift towards remote working helps protect its staff whilst enabling its clients to continue to access the services they need. Similarly, its decision to reduce lending and focus on its existing clients and those most in need, is the prudent thing to do. These actions, combined with the high risk-adjusted margins on its existing loan book should enable the group to generate positive cash flow, even allowing for an increase in impairment during the current period of economic uncertainty. This should leave the group in a stronger position to serve its clients and win share when the current government restrictions are lifted. As a result, of this medium-term outlook we reiterate our BUY rating.
Companies: Non-Standard Finance
FY Results – Significant strategic progress and well positioned for 2020 Digitalbox is an AIM-quoted digital publishing company, currently owning two distinct digital media assets and with a scalable platform to grow through acquisitions. This morning's FY2019 results evidence the substantial progress the company made in 2019 at both a financial and operating level and with a very robust balance sheet to capitalise on future M&A opportunities. The company reported revenue of £2.24m and a reported adjusted EBITDA of £0.53m, which after adjusting for prepaid costs from 2018 with respect to Facebook marketing cost, yields an EBITDA of £0.63m. Whilst key operating KPI's for 2019 were very strong y-o-y, and Q1:2020 is said to have traded ‘ahead of management expectations', increased traffic to their assets will likely be offset by increased pressure in advertising spend in 2020. As such, we prudently reduce our FY2020E and FY2021E adjusted PBT estimates by 35% and 22% to £0.59m and £0.74m respectively. Revenue and profitability is H2 weighted, and thus it is possible that the company might experience positive momentum in advertising spend, but it's too early to call. Assuming a 10x FY2020E EV/EBITDA multiple, we see fair value at 9.3p.
Favourable trading conditions have led to Plus500 issuing its second trading update in less than a month. Not only has the recent surge in volatility resulted in a significant increase in client activity, the strength of the group’s platform and brand has helped it deliver stronger user growth during Q1’20. The combination of the strong financial and operational performance sees us upgrade our FY20 PBT estimate by 52%. Despite the clear opportunity for the company to continue to win market share and deliver profitable growth, the shares trade on just 6.6x CY21 earnings. As a result, we reiterate our BUY rating and increase our TP to 1450p (from 1000p).
Numis expects to report H120 revenues c 10% higher than in H119 with revenue from investment banking slightly down and equities ahead on the back of increased market volatility. Given the impact of the pandemic we have provided indicative scenarios rather than a point estimate for FY20. Numis is strongly capitalised and has net cash of over £84m. Looking beyond the current dislocation, it is well positioned to serve its corporate client base in a period in which the need for fresh equity and a revival in corporate transactions could drive a sharp recovery in activity.
Companies: Numis Corporation
For fighter pilots, it is a minimum requirement. But having 20/20 ‘visual acuity’ (correct term) does not necessarily mean you have perfect vision (as convention assumes); instead, it indicates sharpness and clarity of vision at a distance. It is measured by a Snellen Chart, which displays letters of progressively smaller size and whereby 20/20 means that the test subject sees the same line of letters at 20 feet that a person with normal vision sees at 20 feet (or 6 metres; but 6/6 simply didn’t catch on).
Companies: ABBY BDEV BWY BKG VTY CRN CSP CRST GLE GLV INL MCS PSN RDW SPR TW/ WJG
Much of the UK’s privatisation programme took place between the early 1980s and the mid-1990s: subsequent sales have been few. Undoubtedly, privatisation attracted many private investors to the market, many for the first time.
Companies: AVO AGY ARBB ARIX BUR CLIG DNL FLTA GDR NSF PCA PIN PXC PHP RE/ RECI RMDL STX SCE SIXH TRX SHED VTA