ATTRAQT Group (ATQT LN) Interims show encouraging progress | Bodycote (BOY LN) Strong H1 growth, modest upgrade to guidance | Brooks Macdonald Group (BRK LN) FuM +6.5%: Better markets in Q4, net inflows sustained at 9% annualised | Findel (FDL LN) Strong start to the year with both divisions performing | Frontier Smart Technologies Group (FST LN) Trading in line with revised expectations | Howden Joinery Group (HWDN LN) Solid H1 results given circumstances + on track to meet FY forecasts | Renishaw (RSW LN) Strong growth in FY18, confident outlook | Sigma Capital Group (SGM LN) Landmark 2000th PRS home let in Greater Manchester
Companies: ATQT BOY BRK STU FST HWDN RSW SGM
Bodycote (BOY LN) Positive AGM update guiding to profit slightly ahead of consensus | Oxford Metrics (OMG LN) Continued progress versus goals | Photo-Me International (PHTM LN) Japan competition and restructuring impacts forecasts c15% | Urban&Civic (UANC LN) Buying well to sell better, more to come | Xaar (XAR LN) CFO to depart in November
Companies: BOY OMG PHTM UANC XAR
Be Heard (BHRD LN) Win momentum maintained into 2018 | Bodycote (BOY LN) 15 year contract signed with Rolls Royce | City of London Investment Group (CLIG LN) FuM +1.6% in Q3, no material net inflows but growth in smaller strategy | IFG Group (IFP LN) All change! New leadership team | Strategy The latest ONS data shows the first real wage growth for a year | N Brown Group (BWNG LN) PREVIEW – prelims due on Thursday 26 April
Companies: BHRD BOY CLIG BWNG
Bodycote (BOY LN) Strong FY17 performance, just above consensus | Cambria Automobiles (CAMB LN) In line update and progress with its property developments | Craneware (CRW LN) Strong interims, momentum building | Findel (FDL LN) Positive update on commercial supply arrangement with Sports | Direct | UK Housing Theresa May’s Speech and (overdone) Help to Buy coverage |SDL (SDL LN) Progressing against strategic goals Yu Group (YU LN)
Very strong growth and expectations increased again
Companies: BOY CAMB CRW STU SDL YU/
Actual Experience (ACT LN) 2018 year of execution | Adept4 (AD4 LN) Asset light strategy starting to deliver | Bodycote (BOY LN) Forecasts increased following positive year end update | City of London Investment Group (CLIG LN) Q2 FuM +6%, H1 profits expected in line | Clinigen Group (CLIN LN) H1 trading update in line with expectations | Earthport (EPO LN) Board changes
Companies: ACT CLCO BOY CLIG EPO CLIN
We have increased our forecasts for adjusted profits and EPS by 5% for 2017 and by 3% for 2018 and 2019, following Bodycote’s stronger than anticipated Q4 performance. Our adjusted operating profit estimate of £124.5m for 2017 is in line with updated guidance, ie towards the top of the previous market range. Our 2018 forecast assumes organic sales growth of 3.9% vs. a tough 2017 comparative, but offers potential for further upgrades given the supportive industrial backdrop. Meanwhile the group’s strong balance sheet would support M&A or another return of excess cash to shareholders in the form of a special dividend. We have increased our target price from 995p to 1105p and our recommendation remains Buy.
Companies: Bodycote Plc
ATTRAQT Group (ATQT LN) CEO stepping down, trading in line with October update | Bodycote (BOY LN) Good year end trading update | Carclo (CAR LN) Trading significantly behind; FD, chairman to leave | Sinclair Pharma (SPH LN) Trading update: stronger H2 as expected, EBITDA in-line |
Companies: ATQT BOY CAR SPH
Bodycote has signed a long term outsourcing agreement with Doncasters Group to provide HIP and heat treatment services in the UK. As part of the agreement thermal treatment assets, including a HIP vessel, and c.20 employees at the Doncasters site in Wales transfer to Bodycote. This will provide helpful additional HIP capacity in the UK, although we do not expect the agreement to have a material impact on our revenue and profit forecasts.
Bodycote (BOY LN) Outsourcing agreement providing additional HIP capacity | IQE (IQE LN) Photonics growth drives upgrades as expected
Companies: IQE Plc Bodycote Plc
Bodycote reported strong, broadly-based sales growth for H1 17, growth which accelerated within the period. Margin also advanced, leading to a 26% rise in adjusted PBT. Management expects this momentum to continue and increased guidance for the full year towards the top of the range. We have increased our low end PBT forecasts by 14% for 2017 and 15% for 2018 and also increased our target price from 690p to 995p. We believe prospects remain attractive for Bodycote. Industrial data series are supportive across many of its end markets; delivery of the strategy remains strong; and the group has a healthy balance sheet with net cash to support continued investment in organic and/or acquisitive growth. With the shares on a c.25% EV/EBITDA discount to the sector, we retain our Buy recommendation.
See what was trending this week...
Aberdeen Diversified Income & Growth Trust (ADIG LN) Unconstrained and flexible approach | accesso Technology (ACSO LN) Six Flags miss not a red flag | Bodycote (BOY LN) Good growth for H1 17, guidance raised to upper end of expectations | Brewin Dolphin Holdings (BRW LN) Positive Q3 update, upgraded 394p target price | Brooks Macdonald Group (BRK LN) Strong Q4 net inflows but additional cost investment planned | Burford Capital (BUR LN) Exceptionally strong first half results | Itaconix (ITX LN) First application agreement under AkzoNobel collaboration | Oxford BioMedica (OXB LN) Forecasts updated for new Novartis supply agreement | Renishaw (RSW LN) Strong growth for FY17, confident of further progress for FY18
Companies: RSW BOY BRW BUR ITX BRK ADIG OXB
Whether we know it or not, advanced materials are a core component in the everyday life of the everyday person. They are the key material in items we often disregard, such as printer inks and lotions, to objects which defy the laws of gravity like the Airbus A380 and London’s Shard. Furthermore, these materials are not only essential to many objects and structures, but, due to their superior qualities, are the key to the advancement of many industries. One such example is the use of carbon fibre which offers five to ten times more rigidness, stiffness, and strength than its aluminium counterpart. As a result of these impressive qualities, motorsport and athletics have improved ten-fold since their mainstream use and new records are broken every year.
Companies: AGM AUTG BIOM BOY CAR CKT EMH EXO GRPEF HAYD IKA ITX CRPR MGAM NANO OXIG SYN SCE SYM VCT ZEN HDD
In our second edition of “Trend spotting” we note how in the last three weeks the defensive rotation trend has gathered pace and further evidence has emerged of the “relative fading” in the UK economy. However we now see early signs of the “risk on” trend starting to reassert itself in equity markets and we look at small cap laggards plus European exposure as ways to play this.
Companies: GNS REDD SPH TRI XAR BOY VCT GHH CHH DPH INS HILS RPS LWB EKF UDG SYNT MYSL IMO BCA JUP KMK
Bodycote (BOY LN) Q3 update reiterating guidance | Oxford Instruments (OXIG LN) Disposal of superconducting wire business | RhythmOne (RTHM LN) Emphasis moves on to growth and profit
Companies: BOY OXIG RTHM
Research Tree provides access to ongoing research coverage, media content and regulatory news on Bodycote plc.
We currently have 192 research reports from 7
While the pandemic continues to disrupt normal economic activity, the hazardous waste market has proved relatively resilient. Augean faces a shift in challenges in H220 as North Sea decommissioning activity declines and waste flows return towards more normal levels following H120 shutdowns. Encouragingly, cash flow remains strong and we anticipate a positive net cash balance at the year end.
Companies: Augean PLC
TP Group (TPG) has announced that it has completed the disposal of its loss-making Manchester-based subsidiary (TPG Engineering Ltd) for a nominal sum of £1 to private equity firm Rcapital. This disposal will improve the group's margins, and allow it focus on its core markets. Given the uncertainty caused by the pandemic, we continue to withhold forecasts from the market, and our rating remains Under Review.
Companies: TP Group Plc
H1’20 saw a step-up in revenue driven by successful customer product launches incorporating Itaconix’ sustainable ingredients. These tend to be consumable products (e.g. dishwasher tablets), representing a solid base of recurring revenues on which to build. Today’s statement again highlights the near term goal of sustaining revenue growth to reach profitability, which the recent $2.2m fundraise should help to support. Itaconix looks set to close out FY20 in a position of relative strength with revenue momentum going into FY21.
Companies: Itaconix plc
Spectra Systems Corporation, a leader in machine-readable high speed banknote authentication, brand protection technologies, and gaming security software, has announced that it has executed a comprehensive services contract with a ‘long standing' central bank customer for the development, manufacture and servicing of a sensor system. The initial development phases underpin our FY2021E estimates (with risk likely to the upside), but moreover, the balance of development work, comprising supply of sensors (estimated value up to $34m in 2024-25), servicing revenues ($7.5m) and resultant high margin material sales through to at least 2035, provides significant underpinning of future prospects. Our updated Sum-of-the-Parts valuation (reflecting higher than anticipated development revenues and margins) indicates a risked fair value of 240p (from 200p).
Companies: Spectra Systems Corporation
The Group has issued a trading update ahead of its interim results due on 12th November 2020. Overall, the first half has seen a strong recovery in activity and the Board now expects to report H1 revenues and operating profit of at least $200m and $20m respectively. This is materially ahead of market expectations and with a high degree of visibility through Q3 FY2021E we are upgrading our operating profit forecasts by 39% and 25% for FY2021E and FY2022E respectively. The Group is seeing strong growth in EV charging cables and bespoke high-performance cabling solutions, and consumer electronics demand has also remained robust. Together with investment in automation and cost efficiencies, the Group operating margin is now 10%, which is a testament to management’s operational and strategic focus. The shares trade on an FY2021E EV/sales multiple of 0.9x which compares to a sector based multiple of c.1.2x for companies with comparable operating margins and growth.
Companies: Volex plc
Inspiration Healthcare has announced its H1/21A results, reporting on a period in which the company completed the transformational acquisition of SLE, supported the NHS response to COVID-19 and moved forward on its development of Project Wave. Financial results were equally strong, with revenue growth of 77% based on 25% underlying growth, acquisition contribution and NHS orders completed in the period. Further, the company has announced its maiden interim dividend. We have introduced FY22E forecasts which we believe highlight the significant undervaluation of Inspiration Healthcare shares at this time. We reiterate our Buy recommendation.
Companies: Inspiration Healthcare Group PLC
We have today released a new note on The Ince Group plc - this is the first of a series of "explainer notes" that take an in-depth look at the various aspects of the Ince investment case our investors have told us require more clarification. This edition examines the partner remuneration model - the headline for which is that this isn't discretionary bonus, it's more of a revenue share that partners are given in lieu of pay. Thus their remuneration is entirely variable, rather than representing a fixed cost.
Companies: Ince Group plc
Seeing Machines has announced that it has signed a non-binding Memorandum of Understanding with global aerospace and defence technology company L3Harris Technologies. The MOU frames the intent to enter into a global non-exclusive license agreement to enhance pilot training technology with Seeing Machines's dedicated precision eye-tracking system for flight crew training in the full flight simulator (FFS) environment. A license arrangement is currently in advanced discussions between the parties and subject to the negotiation and execution of definitive, binding licensing and other legal agreements. Further announcements regarding the progress of the negotiations in relation to such binding documentation will be made when appropriate.
Companies: Seeing Machines Limited
As legendary investor Warren Buffet succinctly puts it: “it is better to buy great companies at fair prices, rather than fair companies at great prices”. Today, we think Mpac has done exactly that by acquiring Ohio based Switchback Group, Inc. for a maximum of $15m in cash (£11.4m). Equivalent to modest takeover multiples of 7.1x EV/EBIT and 1.1x EV/sales – with $13m of the consideration paid upfront, and the rest structured as a $2m earnout depending on EBITDA performance over the next 24 months.
Companies: Mpac Group PLC
XP Power’s Q3 trading update confirmed that production volumes grew rapidly in its Asian facilities, allowing the company to satisfy some of the orders placed in H120. As expected, bookings returned to a more normal level in Q3. XP reported 28% y-o-y growth in revenues for Q3, prompting upgrades to our FY20/21 revenue and EPS forecasts. The company also announced that CEO Duncan Penny will retire at the end of the year, to be replaced by current CFO Gavin Griggs from 1 January 2021.
Companies: XP Power Ltd.
OPG has produced a strong set of full year results. Revenue increased 9.5% YoY to £154.0m whilst strong free cash flow generation enabled material debt repayments. Post period end, the Group continued to make debt repayments and favourably refinanced a portion of its debt. Management swiftly implemented a COVID-19 cost reduction strategy and capitalised on financial stimulus provided by the Government and the Reserve Bank of India. Importantly, September 2020 showed signs of a recovery as Chennai plant load factors increased to 63% (H1/21A 46%). We believe the long-term structural growth dynamics in the Indian power production sector remain compelling.
Companies: OPG Power Ventures Plc
Rolls-Royce reported a better-than-expected set of FY19 results, beating expectations on the operating profit and FCF lines. The performance was largely driven by Aerospace. Management reaffirmed its £1bn FCF guidance for 2020. We were given litle detail about the 2019-nCoV outbreak, except an unquantified impact on air traffic growth in the near term. All in all, a good development in H2 19, but uncertainties remain in our view.
Companies: Rolls-Royce Holdings plc
OTAQ has reported impressive FY2020 results ahead of expectations, with revenue increasing +117% to £3.42m (2019: £1.58m) and +73% organically. Within this, Aquaculture continued its impressive growth at +43% with £1.9m from product rentals and a further £0.2m from product sales while the new divisions Offshore contributed £0.62m and Connectors £0.70m. The Group's Sealfence product increased its market-leading position in Scotland to a 40%+ share and has made inroads into the sizable Chilean market (c.6x the size of Scotland) with c.150 units on rental at year end. In Scotland, OTAQ has rapidly rolled out its Sealfence product with units deployed increasing from 12 in March 2016 to 1,014 at March 2020. The Group is focused on innovation and R&D to broaden the Company's reach through the development of an active biomass measurement system and a plankton/ algal bloom early detection system which would sit alongside Sealfence in a 'one-stop shop', cloud-based solution for farmers. We take confidence from the recurring revenue model of the Sealfence product and believe the Group can continue to win market share in the key Scottish (currently 40%+ share) and Chilean (currently 1.4% share) markets.
Companies: OTAQ plc
Strix has published reassuring interims and announced the acquisition of LAICA, conditional upon approval from the Council of Ministers in Italy. Against a backdrop of global disruption caused by COVID 19, Strix’s H1 performance is in line with expectations. Net sales down 21% YoY, with a much smaller impact on net profits on the back of strong cost management. Encouragingly, FY 20 profit expectations are now underpinned, at around £28.9m PAT. Taking into account the LAICA deal, we provisionally upgrade FY 21 PAT/EPS by 6%. The shares are already up materially YTD, but the Strix growth story remains compelling.
Companies: Strix Group PLC
Powerhouse Energy’s interim results reflect a period of major progress with the company now on a more stable financial footing and development of the company’s first DMG waste-to-hydrogen project now underway. Powerhouse has laid the foundations to take its technology to commercial reality in our view.
Companies: Powerhouse Energy Group PLC