The never-ending widening in the net interest margin

Once again, the market’s fears over the sustainability of the net interest margin have proven misplaced as confirmed by the quarterly surprise and the group’s updated guidance for 2024.

Interest rate tailwinds or greedflation ? That is the question

The management has upgraded its 2023 expectations and is likely to do the same for 2024 in the first quarter of next year. This reflects a slower-than-expected deposit repricing which could be less accidental than officially stated, paving the way for a more resilient recovery in profitability.

Upgraded 2023 guidance

The quarter enjoyed stronger net interest rate tailwinds and more resilient asset quality trends, thus enabling the management to upgrade its full-year guidance.

Top-line surprise but no expected upgrades

The fourth quarter results enjoyed a stronger-than-expected net interest margin recovery. The Euribor tailwind will remain very strong this year. However, this will be mitigated by weaker non-interest income, strong cost inflation, and an increased cost of risk.

The best possible world

Like its peers, the group has enjoyed the full benefit of interest rate hikes without having to share this with employees and depositors, or book provisions for an asset quality deterioration. The management believes that these ideal operating conditions will largely recur in 2023.

Stronger fee income generation, benign cost of risk

While the quarter showed strong fee income generation, the earnings beat was also attributable to non-sustainable factors, thus limiting the upgrade potential in our view.

Adjusting forecasts and valuation

Less supportive short-term outlook for protective films Following very strong volume growth last year, the protective film business faces a high comparison basis (from Q2 22 onwards) while its end markets (construction and interior) are not as supportive, reflecting more adverse economic conditions. Pricing is expected to remain a strong driver combatting the continued spike in polyethylene prices, which should ultimately limit margin expansion. Fashion catching up, Museum Solutions not yet at

Dance on a volcano ?

Like many of its peers, CABK views the current environment as the best in the world, as if the only potential outcome of the escalating tensions between the West and the East was the end of negative interest rates. Not only the group’s view is already largely factored in the consensus expectations (and ours), but it could prove too optimistic in our view.

Q1 22 sales above forecasts

Q1 22 sales tracking ahead Q1 22 sales tracked 9% above our expectations at EUR204m, up 8.1% like-for-like. The upside to expectations was driven by stronger trends in protective films (+22%) and fashion (+58%) while healthcare came short against a high comparison basis. The museum business (+25%) continued to benefit from the recovery in retail and events activities as well as the return of long-term projects. Pricing ramping up Prices were a major driver in Q1 22. In protective films, they

Confirmed guidance

In our view, the underlying quarterly trends were in line with expectations thus enabling the management to reiterate its full-year guidance.

Slight adjustments to our FY22-23 outlook (Chargeurs)

Slight adjustments to our FY22-23 outlook EPS CHANGE CHANGE IN EPS 2022 : € 1.32 vs 1.36 -3.18% 2023 : € 1.48 vs 1.52 -2.36% We have incorporated the FY21 figures, with the group's net result outperforming our forecast by €0.24 per share. This was mostly explained by a higher operating performance for CPF and CHS, slightly offset by a lower than expected operating result for CFT-PCC. For FY22-23, the main changes to our forecast stem from a slight cut to our operating margin assumpti

Strong finish to 2021

Q4 21 sales sharply ahead of forecasts Chargeurs posted Q4 21 sales of EUR191m, up 43%, of which 41% was LFL. This came 20% above our EUR160m (+20%e LFL) estimate. The upside to expectations was driven by stronger trends across the board except at the healthcare solutions division (against high comps). Revenues stood 19% above 2019 level on a LFL basis. FY 2021 EBIT in line reflecting input cost headwinds FY 21 EBIT came in at EUR51m, down 36% YOY (against Covid boosted earnings in 2020) and

Strong fee income generation

The fourth quarter operating trends are in line with the group’s 10% RoTE objective set for 2022 (without any interest rates support). Ongoing strong fee income generation, merger-related cost savings and the benign cost of risk will help absorb net interest margin headwinds.

Strong Q3 21 sales release

Stronger than expected Q3 21 sales trends Chargeurs posted Q3 21 sales of EUR173m up 2% of which 0.7% LFL. This came 13% above our forecast of EUR153m (-10% organic growth). The upside to expectations was driven by stronger trends at CPF, CFT PCC and Luxury Materials. Strong CPF, CFT PCC gradually returning to normal CPF (+28% LFL) continued to see strong trends driven by demand in construction and price hikes. CFT PCC (+20% LFL) saw a strong momentum in the US where sales were above 2019 lev

Disappointing activity, better asset quality trends

The quarter exceeded expectations on lower loan impairments but slightly disappointed on the top-line front driven by low activity levels.

LIBERUM: Plus500: Strategic progress pays dividends

Tatton Asset Management (TAM LN) - Record net inflows

Tatton, the leading on-platform discretionary fund manager (DFM) and IFA support services Group has released a trading update ahead of its results to 31 March 2024, due on 18 June 2024.

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

Ondo InsurTech FY24 Trading Update

Ondo InsurTech has released a brief post-YE update revealing its good progress continued through 2H24 and consequently FY24 will be in line with market expectations.

BlackRock World Mining

BRWM’s managers: we see all the classic signs of high commodity prices...

NextEnergy Solar Fund - Attractive Refinancing

The refinancing of a £135m revolving credit facility and the extension of a similar £70m facility gives NESF firepower as development opportunities for new solar are especially attractive thanks to lower module prices in Europe. They give the fund key financial flexibility at a critical time as it pursues its capital recycling programme.

The Hardman & Co Monthly: April 2024

Feature article: Steady as she goes, but could be better: A review of investment company liquidity since 2016 Liquidity is the lifeblood of equity markets. The measurement of liquid asset availability to a market or company is a way of gauging a market’s health. This article builds on our previous work, which analysed the liquidity data for non-financial trading companies, by applying the same analytical techniques to the investment companies (IC) space. We analyse liquidity for ICs as a whol

Initial Equity Trading Comments - 19 February 2024

M Winkworth+ (WINK, House Stock at 163p) - Solid FY23A results, well placed to grow

Resilient FY24, confident long-term outlook

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Hybridan Small Cap Feast - 16/04/2024

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AUM up 30% in FY24, record flows, forecasts raised

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Hybridan Research: Sector Review: Artificial intelligence in UK cybersecurity: the human uplift 17/04/2024

Artificial intelligence (AI) is a double-edged sword in cybersecurity. Whilst new AI models, architectures, and innovations are emerging to protect the security posture of organisations, attackers are also benefiting from deepfakes, sophisticated phishing, and automation of malicious codes. To ensure the impact of AI on cybersecurity to be a net-positive, we need to pit good AI against bad AI. Point solutions enhanced with machine learning: Global cybersecurity has been built with point soluti

NextEnergy Solar Fund – High- and growing-income opportunity?

NextEnergy Solar Fund (NESF) is almost 10 years old. Since launch, it has built a £1.2bn, 933MW portfolio of 100 operating solar assets, powering the equivalent of over 330,000 homes, declared dividends totalling £333m, and avoided the emission of about 2.2 Mt CO2e. NESF is on track to pay 8.35p in dividends, with forecast dividend cover of about 1.3x. Share price weakness that has afflicted the whole sector means that dividend translates to a yield of 11.1%, one of the highest in its sector, a

Morning Note – 18 April 2024