LIBERUM: The Liberum Leisure Digest: NLW increase - pricing power is key

LIBERUM: The Liberum Leisure Digest: Festive cheer, optimistic new year

Q1 trading – the strong showing continues

There were no major surprises in JDW’s Q1 trading performance. Lfl sales increased by 9.5% yoy, with all segments clocking strong momentum. We expect the company to continue to perform ahead of the market average. However, we do not expect the inflationary headwinds to ease before the second half of FY23/24. The management seems comfortable with the consensus for the current financial year. We maintain our stock recommendation.

LIBERUM: The Liberum Leisure Digest: Encouraging updates, falling markets

FY22/23 performance: gaining strength in the UK

JDW’s FY22/23 performance was ahead of market expectations – although the EBIT was in line, the FCF was higher. The company continues to gain market share and is better placed vs most competitors, in our opinion. The strong start to Q1 FY23/24 (+9.9% lfl) is also a positive. However, the management’s FY23/24 guidance looks qualitative/open-ended, raising apprehensions among some investors. We will increase our TP by mid-single digits.

Strong end to FY22/23; guidance beat for H1 FY23/24!

JDW’s pre-close FY22/23 trading performance was slightly ahead of AV as well as the street’s expectations. Group’s lfl sales came in at +12.9% yoy. The management expects FY22/23 profit to be in-line with market expectations. The stock price is up 8% as investors have noted the step-up in Q4 lfl growth and the strong guidance for H1 FY23/24 – a performance expected to be in line with the second half of FY22/23. We will upgrade our financial estimates but maintain our cautious stock recommendat

Strong performance in Q3; momentum to moderate in future

JDW’s Q3 FY22/23 trading performance was below our estimates but stronger than the market’s expectations. The Group’s lfl sales grew by 12.2% yoy during the period. We expect the momentum to moderate gradually during the coming quarters. For FY22/23, the management expects sales to be at record levels and profit towards the top end of market expectations. We will tweak our financial estimates but maintain our cautious stance on the stock.

H1 performance below expectations; strong start to Q3

JDW’s H1 FY23 performance was below our expectations. Compared with FY19, the group’s lfl sales grew by 5% and the adjusted PBT was down 90.9%. Investors cheered the market outperformance during the initial seven weeks of Q3 (+14.9% yoy). The easing of supply chain issues is also a positive. However, the c.10% jump in the stock price jump seems something of an overreaction. Volumes remain under pressure and inflationary/macro-economic headwinds are here to stay, at least in the near-term. We mai

Weaker H1 trading; still lagging the close competitors

JDW’s trading performance for H1 FY22/23 was below our expectations. While the group’s lfl sales improved by 13.1% on a yoy basis, the figure remained in the red vs the pre-pandemic levels (-0.7%). JDW’s performance also looks weak when compared with close competitors like M&B and Marstons. We now see a worse-than-expected impact on the group’s profitability due to inflationary headwinds. We will revise our near-term EPS forecasts downwards. However, our positive stance on the stock is likely to

Decent Q1 lfl sales; investors concerned by weak October

JDW’s trading performance (for 14 weeks ended 6 November 2022) was in line with our expectations. Compared with 2019, lfl sales improved by 0.4%. However, the stock price slumped c.7% as investors are concerned about slowing trading momentum during October. Further closure of pubs is also not a favourable indication for punters. We expect sales and margin pressure to worsen during FY22/23. The stock’s valuation remains attractive at the current level.

A weaker end to FY21/22

JDW’s Q4 trading update was a disappointment. The lfl sales declined 0.4% (vs FY19) as price increases were not enough to offset the pressure on volumes. The management now expects a £30m loss for the current financial year (vs its previous guidance of break-even). We expect the FY22/23 performance to remain under pressure as inflationary headwinds and fragile consumer demand dent the EPS. We will trim the company’s valuation and expect the share price to remain under pressure for the remainder

Trying to find its feet in the post-pandemic world

JDW’s Q3 FY21/22 trading performance was slightly below our expectations. Although lfl sales declined by 4% (vs their pre-pandemic levels), the last two weeks of the quarter witnessed lfl growth. We expect the sector to remain battered by inflation-led headwinds (both on demand and profitability) but the publican is relatively better placed due to its cheaper prices and the gradual improvement in activity in/around the London/city centre. We shall need to trim of our financial estimates but main

Well positioned for future success

Strong performance against tough market conditions

Domino's Pizza - Growing the base

Domino’s Pizza Group’s (DOM’s) new CEO has set an ambitious long-term growth target, including an acceleration in its net store opening programme. With better alignment between the company and its franchisees, management believes DOM should be capable of generating improved profit growth, versus that achieved in recent years, and potential higher returns.

PROGRESSIVE: Vertu Motors: Traction control

Vertu is the fourth largest automotive retailer in the UK, with 188 sales outlets and a track record of cross-cycle growth, principally through businesses it has acquired, funded by equity, debt and most importantly cash generation. Vertu operates across the entire vehicle lifecycle, including new and used vehicle sales, and vehicle servicing, repair and parts. Service and repair is a 40+% gross margin repeating business. With economic headwinds, the transition to electric vehicles, recent overs

Pinewood Technologies (PINE LN) - Driving growth in automotive software

Pinewood’s transition to a pure-play automotive SaaS business is now largely complete. Today we introduce summary forecasts out to FY26 and reiterate the investment case. We see significant opportunity for Pinewood to grow its user base in the UK and internationally whilst generating high EBITDA margins and cash conversion. With a 24.5p special dividend embedded in the current price (payable Q1/Q2), the effective price today is 12.3p. Based on the Group’s FY27 target of £27m EBITDA, we estimate

Zeus Top Picks for 2024 - 2023 review and outlook for 2024

On 9 January last year, we set out our ten top stock picks for 2023, for what turned out to be another relatively poor twelve months for UK equities due to two wars, stubbornly high inflation and further tightening of monetary policy. This was even as other major markets, such as the US, largely recovered in the year. In the 2023 calendar year, the AIM All-Share index fell 8.2% and is still 42% off its 2021 high. From the release of our 2023 top picks note, the average total return (assuming div

React Inititation of Coverage

React Group is a well-managed, growing UK services business with a high degree of recurring revenues (c87%).

Marks & Spencer+ (MKS, House Stock at 255p) - 7Y FS HSBC UK tie-up– another brick in the wall

PROGRESSIVE: Zoo Digital: Recovery underway and a significant contract

Today’s trading statement from ZOO highlights a ramp-up in demand following the end to the industry-wide strikes of last year. ZOO struck a note of caution in its January update regarding the timing of orders. However new productions are starting to translate into a healthy order pipeline, with a good recovery in revenue anticipated in H1 FY25. The update guides to revenue of at least $40m for the year to March 2024, ahead of our estimate at $36.8m. We have improved our adjusted EBITDA loss marg

Allenby Capital - Nightcap plc - Interims

Nightcap’s interims for the 6m to end December 2023 were in line with expectations, as such, we make no changes to our forecasts. The number of bars at the period end was 46 up from 36 a year earlier – the expansion driven by the June 2023 acquisition of Dirty Martini. The portfolio expansion led to a year-on-year revenue increase of 42% to £33.4m and 5% growth in underlying EBITDA (IAS 17) to £2.1m. Post period end the Company announced the acquisition of Piano Works funded by a £1m equity rais

Judges Scientific+ (JDG, House Stock at 11,600p) - FY23A - solid organic order book

ME Group - Modernising and growing the estate driving growth

During 2023, ME Group commenced the deployment of its next generation photobooths, which are integrated with the group’s newly developed proprietary software, gained market leadership in the Japanese photobooth market with an acquisition, continued to roll out laundry units with existing and new location partners, commenced a share buyback programme and gained entry into the FTSE 250. 2023 was a year of significant strategic and financial progress, with sales up 15%, EPS up 31% and net cash main

Tasty - Trading update and restructuring plan

Trading conditions remained difficult in 2023, impacted by intense cost-of-living pressures, transportation strikes, and significant inflationary pressure on labour, food and utilities. In response, Tasty implemented various efficiency measures which helped narrow FY23 EBITDA losses to -£0.9m (FY22A: -£2.7m loss). With the economic environment remaining challenging, however, Tasty intends to implement a restructuring plan (funded by a new £750k loan with potential for conversion), which will inv

Hardman & Co Healthcare Index: 2023 – Capital demands dent performance

The Hardman & Co Healthcare Index (HHI) has been running since 2009. Its main function is to highlight the attractions of life sciences investments over the long term. For the second year running, apart from global economic influences affecting world markets, performance in 2023 was dented by the capital-intensive nature of the sector. The HHI fell 3.7%, to 483.8, underperforming the main London markets – FTSE 100 (+3.8%) and FTSE All-Share (3.8%) but outperforming the FTSE AIM All-Share Index (

B90 Holdings (B90 LN) - Successful transition, outlook unchanged

2023 revenue is expected to be in line with expectations. Adjusted EBITDA loss is expected to be higher than we expected.