9m 23: Dealing with the Space problem

Airbus’ 9M 23 figures missed the company-collected consensus estimate by 1% on revenue and by 11% on adjusted EBIT, largely due to the struggling Defence and Space segment in which a one-off charge of EUR0.4bn was booked due to the re-estimation of costs and re-assessment of risks, opportunities and competitiveness of the existing as well as the under-development projects. However, due to good performances from the other businesses and a FX tailwind, the company has re-iterated its FY23 guidance

H1 23: additional burden on the 2026 delivery target in sight

Airbus published its Q1 figures which beat our expectations. While the revenues were in line with our expectations, adjusted EBIT was 6% above AV’s estimate, thanks to higher deliveries and a favourable hedge rate. With no surprise, Airbus’s commercial order intake increased by 303%, leading to a record level in the order book of €7.9bn. While the company confirmed its FY23 targets, its FY26 delivery target will be watched closely due to the additional headwinds we have in sight.

Q1 23: full year guidance encompassed a weak Q1

Airbus published its Q1 figures below our and the market’s expectations. Revenues were 4% above our estimate but the adjusted EBIT was a miss by 8%. However, the management re-confirmed that the FY23 guidance announced earlier this year had encompassed a weak Q1 and is confident of achieving its FY23 target. Following this results release, we will revise our Q2 figures downwards while leaving our estimates for FY23 unchanged. Hence, there will be no impact on our target price.

FY22: supply chain headwind delays delivery targets

Despite an adverse operating environment, Airbus’s FY figures beat the consensus on all metrics. However, the supply chain is still far from full recovery and hence the company has postponed its 75/month narrowbody delivery target from 2025 to 2026. The guidance for 2023 stands at 720 deliveries and an adjusted EBIT of €6bn, which is below our current estimate. Hence, we will revise our estimates downwards.

Q3 22: still optimistic on the 700 delivery target

Airbus reported a solid set of results and, most importantly, maintained its delivery guidance for the full year. The supply chain remains challenging, but Airbus believes it now has most of the components it needs to achieve its target. Despite Airbus’ low profitability in its core activity, thanks to the massive order intake in the Q3 the strong PDPs have generated an impressive FCF, prompting Airbus to readjust its FCF guidance upwards for the full year.

No news, good news

Airbus has reiterated its guidance, with a delivery target of 700 jets for FY22 and an expected production rate of 75 jets per month by 2025. Profitability is expected to reach the pre-covid levels by 2024. Although Airbus seems conservative in its profitability guidance, its delivery target seems out of reach.

What to expect from the Airbus CMD

Airbus will hold its long-awaited Capital Markets Day tomorrow in Toulouse, with the objective to restore confidence on the stock after having revised downwards its initial objectives last quarter. We believe there could be additional drama.

Q2 22: Gliders pile up, guidance adjusted

Airbus has reported the toughest quarter since the pandemic. It is even worse as it surprised the market, given the positive signals coming from Farnborough and the massive contracts it has signed recently. The supply chain has been particularly tough on the engine markers’ side, and Airbus has had to adjust its guidance downwards, from 720 jet deliveries to 700. Luckily, its low-cost base combined with several one-offs has still enabled Airbus to report miraculously strong profitability.

Q1 22: the most bullish signal since COVID-19

Airbus has published a massive beat in profitability and confirmed its ramp-up roadmap of 75 jets produced per month by FY25. Its strong A320 deliveries and the cost containment measures since COVID-19 have driven margins higher than all expectations. The FY22 guidance has been reiterated despite the impressive EBIT, due to macro-economic/geopolitical uncertainties in the near future. The only slight downside comes from the postponement of its A321XLR programme.

Q4 21: a strong statement to finish the year

Airbus’s Q4 figures have beaten the consensus on all metrics, confirming its transition from a company mitigating its losses to a company well on track for growth. The success of its A320 family is unquestionable, and its high cash generation has enabled Airbus to propose a dividend again, and a stronger one than expected. Only the FY22 guidance seems conservative.

Q3 21: slight beat to restore confidence

Airbus has provided a solid set of results for its Q3. Indeed, even though sales came in slightly below consensus, the profitability was better than anticipated. The guidance adjusted EBIT has been increased consequently.

Q2-21: Spectacular yet unsustainable

Airbus reported a solid set of results and upgraded its minimum guidance for FY21. Through important one-offs and cost savings, it managed to explode the consensus on profitability. Airbus also reassured the market on future deliveries, a luxury that few companies in this industry can afford.

Solid Q1 21, short-term performance is still blurry

Airbus has shown robust sales in a complicated industry. The margins and cash were abnormally high this quarter due to good cost efficiency and significant one-offs. The company maintains its previously announced guidance, as the pandemic situation is still unpredictable.

Q4 20: too conservative guidance?

2020 was quite a year, and the company’s performance was very decent given the circumstances. The positive note of the publication was the strong cash generation achieved in Q4. However, this has been shadowed by a very conservative guidance for 2021.

Q3 20: operational improvement, good cash generation

Overall, the Q3 report was broadly in line with expectations. Q3 showed a clear improvement over Q2 on the back of the production/delivery convergence in Airbus commercial. Airbus recognized €1.2bn in restructuring charges this quarter, in both Commercial and Defence, which dampened its reported EBIT. The cash performance was better than anticipated and the target for no cash consumed in Q4 is maintained.

Supreme (SUP LN) - Record performance, EBITDA ~doubled

Supreme’s FY24 trading update confirms a record performance in the 12 months to 31 March 2024. Organic revenue and profit growth across all four divisions has driven Group revenue +45% YOY to £225m, with FY24 adj. EBITDA almost doubling to ‘at least £38m’, driving record levels of cash generation. Supreme is actively exploring complementary M&A, supported by a debt free balance sheet. Trading on an undemanding FY25 PE of just 6.7x, with a 3.4% yield, we believe downside risks are more than price

Morning Note – 22 April 2024

Morning Note – 25 April 2024

Supreme+ (SUP, House Stock at 125p) - Supreme, Supreme!

Vianet Group: FY24 trading update, strategic contract win

Vianet has published a positive trading update for FY24 with turnover up 7.6% to £15.18m, a 3.5 percentage point increase in gross margin YoY, and adjusted EBITA ahead of market expectations. Net debt continues to fall and closed FY24 at £1.52m (£2.1m at 30 September 2023), demonstrating strong free cash flow generation, even without the benefit of the £0.9m tax receipt received in 1H24, which augers well for a final dividend. The company reported a new contract with Wilcomatic Wash Systems, the

Renewi - Solid trading and better cash generation

Renewi’s FY24 trading update was in line with management’s expectations and its improved cash generation is reassuring for investors. Attention is now likely to turn the strategic review of the UK Municipals with management stating that they remain on track to update markets by the end of June. This could lead to an exit of key liabilities and leave Renewi as an attractive circular economy investment with strong market positions and organic growth plans, which should assist in generating value,

Vianet - FY24 ahead, strategic forecourt customer win

Vianet’s FY24 trading update shows FY24 revenue +1% ahead of our previous forecast, adjusted EBITA +2% ahead, EFCF and net debt +£0.6m ahead, and a strategic new customer win with prominent forecourt operator Wilcomatic. A robust FY25 pipeline and outlook leads us to reiterate our FY25E forecasts at this point, with the update highlighting: strong progress renewing and winning new customers on 3-5 year contracts as they migrate from 3G to Vianet’s advanced 4G LTE solutions; the successful integr

SP Angel Spec Sits: FY Trading Update (LTHM)

Headlam Group - Strategy for growth in tougher market

Headlam Group has laid out an ambitious long-term revenue target of between £900m and £1bn, as it seeks to grow its share of the UK floor coverings distributor market. Despite a challenging backdrop due to the low level of residential housing transactions, management is seeking to expand each of its sales channels: Trade Counters, Larger Customers, Regional Distribution and Europe & Other. The FY23 results reflected the more challenging environment and the group trades at a discount to its long-

Norcros (NXR LN) - Sale of Johnson Tiles UK streamlines the business and improves operating margin

Norcros has announced the sale of its Johnson Tiles UK business to the current management team for a consideration of £1.0m, with a further modest earnout based on the equity value of the business, both payable in April 2028.

Hardman & Co Insight: 2023 was an annus horribilis for Quoted UK Infrastructure and Renewable Energy

The focus of Hardman & Co Research is on the nine quoted Infrastructure Investment Companies (IICs) and on the 22 Renewable Energy Infrastructure Funds (REIFs): the stocks analysed are all members of the Association of Investment Companies (AIC). We are updating our publication of January 2023, assessing both the lacklustre share price performances during 2023 and the key issues, including interest rates, inflation and power prices. As a 31-strong group, its combined market capitalisation is no

SP Angel Morning View: Copper prices hit $9,700/t as China smelts concentrates for zero charge Tc/Rc

Norcros - Sale of Johnson Tiles UK agreed

Norcros’s disposal of Johnson Tiles is the latest strategic activity taken by management to better allocate capital to fit with priorities. Last year it closed its UK adhesives operation. Norcros has a compelling investment case, where its new product development initiatives, market positioning and self-help initiatives allow it to take market share in both the UK and South Africa. Its rating is low at 6.0x FY24e P/E, which is attractive, especially when compared to its yield of 5.4% on its well

Hybridan Small Cap Feast - 24 April 24

24th April 2024 * A corporate client of Hybridan LLP ** Arranged by type of listing and date of announcement *** Alphabetically arranged **** Potential means Intention to Float (ITF) has been announced Dish of the day Admissions: Delistings: What’s baking in the oven? ** Potential**** Initial Public Offerings: Reverse Takeovers: 16 April 2024: Electric Guitar (ELEG.L) Concurrent with its Admission to trading on AIM, Electric Guitar is proposing to acquire the entire issued share capital of 3radi

LIBERUM: Ilika: CMD confirms operational progression