Stronger, albeit largely cyclical, cost inflation

The third-quarter results and the management’s updated guidance showed stronger-than-expected cost inflation. However, this inflation does not reflect a deterioration in efficiency as it is largely related to performance-related pay.

Recovery in profitability unlikely to calm down Ping An

The group posted a stronger-than-expected set of results driven by unexpected ongoing net interest margin widening and stronger non-interest income resilience. The RoTE upgrade comes with little surprise as new guidance is already largely factored in consensus expectations. The prolonged buy-back sends a positive signal but is unlikely to reduce Ping An’s pressure as the geopolitical risk remains intact.

UK Banks - Strong performance continues

Not enough for Ping An

The quarter enjoyed strong FICC revenues and benign asset quality trends, making the RoTE target easy to achieve this year. On the other hand, the company also confirmed that interest rate tailwinds are behind us – hence no upgrade to the short-term profitability target. Ping An immediately stated that it was not impressed by the results.

SHORE CAPITAL - Initial Trading Comments - 13 March 2023

Management more cautious than consensus

The fourth quarter results came in above expectations, driven by stronger revenues and tax gains. On the other hand, the upgraded 2023 RoTE guidance not only does not come as a surprise but stands below consensus expectations, due to higher-than-expected cost inflation. We are not in the same position as we set (too) cautious forecasts.

Ongoing Asian refocusing

The disposal of the Canadian operations makes sense not only from an industrial and a financial standpoint, but also geopolitically. The divestment and the likely reinvestment of a portion of the proceeds in Asia will please Ping An, even if it does not meet its request of making the Chinese operations Western-sanctions proof.

Downgraded 2023 guidance

The group posted a strong set of quarterly results, in line with the consensus’ full-year guidance. However, the management’s updated guidance stands below the consensus expectations, driven by the USD appreciation and, above all, cost inflation and a higher cost of risk.

Canada’s disposal will not solve the governance issue

We see the potential sale of the group’s Canadian operations as business as usual, not as a move aimed to reducing Ping An’s pressure for a separate listing of the Asian business.

Upgraded RoTE objective

The second quarter results were not that impressive in our view. However, the management’s upgraded RoTE objective signals a strong profitability improvement ahead, driven by rising yields.

HSBC’s largest shareholder supports a spinoff

The revival of the spinoff of the group’s Asian operations makes little sense from an investor standpoint in our view. On the other hand, it could make sense to prepare for the potential implications of the emergence of a bipolar world.

More confident about achieving the 2023 objectives

The group posted a reassuring set of results. Management’s reiterated guidance for both 2022 and 2023 confirms that, if central banks do not overreact, inflation will create a supportive environment making the 2023 financial objectives easier to achieve.

Morning Note – 22 April 2024

Frenkel Topping - Resilient with strong growth potential

FY 2023 was a challenging year for Frenkel with higher interest rates encouraging clients to place money into lower margin money market funds. Despite this, sales grew +32% (supported by recurring revenue +9% and +51% in non-recurring), EBIT margins remained strong at 22% and adj. EPS grew +17% (taking into account the higher number of shares). FY 2024 has seen a solid start to transactional business and there is a strong pipeline of new FUM opportunities both of which support further growth. Wi

Benefits of scale set to materialise

S&U - PBT ahead, encouraging volume trends

S&U reported FY24 PBT of £33.6m, down from £41.4m in FY23 on higher funding and regulatory costs and higher impairments in Advantage in H2. PBT was 2% ahead of our forecast as stronger revenues – up 12% to £115.4m – and better costs offset higher-than-expected impairments. Net receivables grew to a record at both Advantage and Aspen and management noted particular strength in Q4 and a good trading environment in the current year. Having absorbed a significant rise in funding cost as well as addi

LIBERUM: PayPoint: On track for £100m of EBITDA in FY 26

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

Hybridan Small Cap Feast - 22 April 2024

22nd 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

Regional REIT - Performing as expected ahead of refinancing

In a challenging market, Regional REIT’s (RGL’s) FY23 operational and financial performance was robust, in line with expectations and previous guidance. Investor focus remains on the company’s loan to value (LTV) reduction and bond refinancing plans, explored in detail in our previous note and RGL will provide an update on this in due course.

Foxtons Group (FOXT LN) - 1Q24 IMS shows real momentum

Foxtons Group plc first quarter revenue rose 9% to £35.7m (1Q23: £32.9m) with growth delivered across all business segments. Trading is in line with management's expectations.

LIBERUM: Speedy Hire: Weakness in FY 24 but recovery in FY 25

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

Jupiter Green

Morning Note – 29 February 2024

Hardman & Co Insight - Asset managers had a poor 2022

Asset managers had a poor 2022: the S&P Composite 1500 Asset Management Index was down 22% and, according to the Investment Company Institute (ICI), worldwide mutual funds fell by 20%, from $76tr to $60tr. When bond and equity markets fall, the results are unlikely to be pretty: with revenues trending down and multiples contracting, there is a double whammy to contend with. So how do valuations shape up now, after a bullish start to the new year? The first chart is my favourite chart of asset m

PCI Pal - +25% FY23 revenue growth, FY24 growth of +28% reiterated

PCI Pal’s FY23 results show revenue growth of +25% to £14.9m, gross profit growth of +31% to £13.1m at a margin of 88%, and an outlook confirming robust momentum in H1 24. The FY23 results are as expected following the August trading update, and FY23 Total Annual Contract Value (TACV) is +23% yoy to £16.4m, with ARR +14% yoy to £12.6m due to £3.1m of contracts in deployment. We expect ARR will increase +35% and +31% to £17.0m and £22.2m in FY24 and FY25, as management lands and expands following