Breedon has sustained its trajectory of recovery seen since July and August, when it started to outpace 2019 comparative levels of revenue and EBIT, through September and October to the extent that it is now able to issue modestly improved guidance for FY20. The stock has been a stellar performer rising c15% over the past month, is flat on the quarter but 36% higher over the past 12-months and we believe that the rating is not expensive (2022E EV/EBITDA c8x, PE 15.8x, dividend payments initiated and leverage closing in on 1x). Breedon has become one of the sector's most admired businesses, with a consistent record of delivery (proven again through COVID), offering a combination of organic development and acquisition driven growth, excellent free cash flow generation driving a phase of de-leverage and exposure to still positively expectant infrastructure markets in GB and Ireland. We retain a positive view on Breedon at this level.
Companies: Breedon Group PLC
Who would have thought when reporting pre-tax losses of £10m after the first half to end June that Breedon would emerge so strongly from lockdown to trade through July-August (and into September) with LFL revenues ahead of comparative 2019 and expected H2 EBIT broadly in line with the equivalent 2019, resulting in a reinstatement of guidance ahead of current FY20 consensus. That is a mark of confidence as much in the group's operating capabilities as market recovery itself – a feature of Breedon's management quality over a consistent period of time. Investors will be impressed by the short-term recovery but also encouraged that the longer-term outlook remains positive with an emphasis to infrastructure markets in GB and Ireland plus, of course, its unrivalled ability to utilise its asset base very efficiently and to add to that platform with accretive acquisitions. The shares hit a COVID ‘low' of 63p but were trading as high as 100p in February. We would see that upper level as the more likely direction of travel for the shares with 90p justified by a forward 2022E rating of 7.5x EV/EBITDA, c14x PE, commencement of dividends and significant deleveraging through high net cash flow generation.
What’s cooking in the IPO kitchen?
Guild Esports a UK-based owner and developer of esports teams, has announced its intention to seek a listing of its ordinary shares to the Standard Listing segment of the London Stock Exchange this autumn. its founding shareholders include David Beckham, former football player and captain of England, and now co-owner of new MLS team Inter Miami CF.
HOME REIT intends to float to the Main Market raising up to £250m. The Company will seek to contribute to the alleviation of homelessness in the UK, whilst targeting inflation-protected income and capital returns, by investing in a diversified portfolio of assets across the UK which will be dedicated to providing accommodation to the homeless. Due Mid October
S-VENTURES - The Company will look to identify investment opportunities in the wellness sector within the UK and Europe. Due 16 Sep on the Aquis Exchange.
Sativa Wellness Group—(Canadian Securities Exchange: STIL) renamed from Stillcanna Inc following the conditional acquisition of Sativa Group (AQSE:SATI) to list on the AQUIS Exchange. A fully integrated European seed to consumer CBD group with the pricing, products, and stability to meet the CBD market demand in the medium term. With world-class extraction and formulation experts, an agricultural team that has over 20 years’ experience farming hemp, along with laboratory testing capabilities, the group has established itself globally as a trusted source of high-grade, premium wholesale CBD brands and products.
Umuthi Healthcare Solutions Plc, the technology led healthcare business focused on the distribution of pharmaceuticals and the provision of medical facilities in remote areas, seeking admission to the Standard Listing segment of the Official List
The Hut Group. Expected intention to float on the Main Market. THG is a vertically integrated digital-first consumer brands group, retailing its own brands in beauty and nutrition plus third party brands, via its proprietary technology platform to an online and global customer base. For the year ended 31 December 2019, THG's revenue was £1.1 billion, up 24.5 per cent. year-on-year, and its Adjusted EBITDA was £111.3 million, representing an Adjusted EBITDA margin of 9.8 per cent . The Company has experienced an acceleration in growth during 2020, with revenue of £676 million, up 35.8 per cent. on the equivalent prior year period , achieved in the 6 months to 30 June 2020, which the Directors believe evidenced the non-discretionary nature of the nutrition and beauty categories .
Kibo Energy PLC, the multi-asset Africa focused energy company, is seeking admission for its 100% owned UK subsidiary Sloane Developments Ltd , which will be renamed Mast Energy Developments PLC (MED), to the Standard List of the London Stock Exchange plc . Targeted for Q4 2020. The MED business strategy is to acquire and develop a portfolio of flexible small-scale power generation assets, exploiting a growth niche market in the UK for Reserve Power generation to balance out the national grid at critical times.
Companies: MIRI VAST VCP AEO GFIN DX/ BREE CIN LOOP PALM
Whilst it is still premature to re-introduce meaningful forecasts for Breedon, investors should certainly be encouraged by the fact that: (i) June revenues recovered to 99% (or 91% LFL) of comparable 2019 levels and July is showing further improvement, and (ii) the company has made no cuts to its operational capabilities or productive capacity suggesting that it sees the medium-term prospects for growth undaunted by post-COVID economic and/or industry output reassessment. The Cemex acquisition should complete in days, giving management new assets and operations to rationalise, improve and grow whilst the strong cash and liquidity performance through H1 eases fears over balance sheet stretch. Through the challenges posed by COVID management has demonstrated that it is adept at deploying both defensive and offensive strategies; hopefully with the accent switching back to the latter as we look into 2021 and beyond. Driven by more self-help initiatives, accretive acquisitions, rising spend on UK infrastructure and the relative growth in Irish markets, Breedon has appealing investment qualities that go beyond the current standard sector mantra of ‘recovery' value. We maintain a Buy recommendation.
We know that the contracting end of the industry has continued to site operate in a very piecemeal fashion throughout this pandemic, with limited official guidance beyond acceptable safe working practises. As more and more sites become accessible the main contractors' return to work will be largely self-determined and appear to the outside world as somewhat seamless. The greatest challenge facing the contractors in my view is the inefficiency of working in this new environment and supply chain reliability.
Companies: BREE BRCK CTO
Breedon is effectively moving to a (temporary) lockdown position on all its sites save Hope cement plant (which will produce to storage) and those in the Republic of Ireland where the principal customer is central and local government and as such will continue to operate until directed otherwise. Crucially, the group is in a strong financial and liquidity position with undrawn facilities of £220m and £60m in cash whilst any unwind of working capital from here is likely to actually generate cash. Moreover, the planned £155m cash outlay on the Cemex assets to be acquired is almost certain to be delayed beyond the coronavirus period due to the associated stalling of the TUPE process and IT migration. This position seen against a cash ‘burn' of probably no more than £15m per month (gross of any government support schemes and noting employee cost is the largest single constituent of fixed overheads) is comfort indeed for shareholders. We are withdrawing our forecasts for 2020 (formerly £200.7m of EBITDA, £113m underlying PBT and 5.6p EPS) and beyond on the simple basis that we cannot predict either the depth or duration of the coronavirus impact. Nonetheless we are happy to retain a Buy on the basis that: (a) there will be no structural damage done to the group's operational, asset or financial base as a result of coronavirus, (b) it should see a rapid scale-up when normality returns and (c) management can be relied on to re-assert relative growth versus its peers which has been a hallmark of Breedon's history to date. For long term investors these are opportune times.
Breedon has once again proved its credentials and deserves to be the ‘go to' stock in the heavy building materials sector which is starting to have genuine cyclical appeal as government eyes a ‘generation' of enhanced infrastructure spend. The performance in 2019 was exemplary; this is a management that delivers regardless of market conditions and has a strategy that can sustain robust longer-term EPS and asset growth. A 2021E rating of 8x EV/EBITDA, PE of 14x and FCF yield of 7.5% alongside commencement of dividends is inexpensive and our model ‘fair value' of 96p conservatively excludes any future benefit of accretive acquisitions or re-rating prospect and scarcely reflects the new intent on income/dividends. From the dark days of Q3/19 when the price was driven down into the 60-70p range largely to facilitate a major re-composition of the shareholder base, subsequent recovery has seen the stock reach a 12-month, in fact all-time, high of 100p and now trades at 87p which is exactly double the price 5-years ago. We cannot promise another doubling over the next 5 years but do believe there is considerable long-term value in the shares.
The £178m cash acquisition of 100 active UK sites from Cemex is classic Breedon doing what it does best; buying good regional assets that currently yield poor returns that Breedon can restore to more appropriate and enhanced levels using a combination of operational, investment and strategic levers, alongside its more focussed and dedicated management supervision. It is not a ‘transformational' deal like Hope or Lagan, but is potentially more accretive long-term (especially versus the all cash consideration) and with less risk. First full year (2021E) EPS enhancement we conservatively estimate at c5% whilst by 2022E the transaction will cover its WACC and the group de-leverages to sub-1x. This ticks every box of Breedon's ‘buy & build consolidator' strategy and underpins the shares' attractiveness on value (pre-deal a 2021E EV/EBITDA of 7.5x and PER 13.8x) and strategic grounds. Acknowledging the recent strong performance of the shares, we continue to rate Breedon a Buy.
Breedon has readied fulfilment of its ambition to establish critical mass in the sizeable London ready-mix concrete market via a JV which ensures a lower risk (and cost) immediate presence alongside enhanced future expansion plans. Capital Concrete is an exciting bridgehead for Breedon in a key, under-represented regional market and one that has the potential to double its (pro-forma) scale in the medium-term. Whilst it will not move the dial on group numbers in the short term, it does reinforce our under-valuation arguments made in yesterday's post trading update report. We reiterate a Buy rating.
With the share price off 16.5% over the past month and virtually 25% of the company's equity having been ‘re-housed' over the past quarter, investors are probably craving a period of stability. In trading terms that's exactly what Breedon is delivering. The latest update (to end-October) is reassuring and firmly underpins valuation. As noted very recently (see ‘Stick with the fundamentals', 7 November 2019), Breedon shares have never been as cheaply rated in their entire history; the prospective 2020E EV/EBITDA being c6.4x, PE c11x and a healthy FCF yield of over 9% with nominal FCF sweating debt by over £90m per annum, or helping to support its proven accretive add-on acquisition strategy. In our view, this recent, technical, bout of price depression represents an excellent buying opportunity.
The Pebble Group, a provider of products, services and technology to the global promotional products industry, announces its intention to seek admission of its shares to trading on the AIM market of the London Stock Exchange, which is expected to take place in early December 2019.The Group delivered revenue of £99.8m in the year ended 31 December 2018.No mention of bottom line and a suggestion that funds raised would provide an exit to private equity shareholders and the repayment of debt. Offer TBA.
Longboat Energy raising £10m. Expected admission November 2019. The company has been established by the former management team of Faroe Petroleum to create a new full-cycle North Sea oil and gas company .The strategy to achieve this will initially be through the acquisition of assets where the management team can add value through subsurface and operational improvements, follow-up deal opportunities and nearfield exploration; and by value creation through the drill bit.
Companies: FO TPFG DNL FIF BREE GRL AVO EMH
Breedon again finds itself victim of the curse of ‘technicals' rather than ‘fundamentals'. After being caught in the Woodford maelstrom, this time the secondary placing of M1 Cement's 139.7m shares yesterday has de-coupled the price to almost a 12-month ‘low' (and 24% below its ‘high'), where, we believe, the shares are seriously undervalued. On broadly consensus numbers the stock now trades on a 2020E EV/EBITDA multiple of just over 6x and a PE of under 11x with strong FCF potentially paying down debt in excess of £90m per annum. These are ratios that are not only cheap in their own right but also by peer comparison. Once the dust settles on the placing, we believe this price level will prove to have been an excellent buying opportunity and have no hesitation in re-iterating our Buy recommendation.
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Volex’s y/e update points to revenue and adj. operating profit of over $440m and $41m, 9% and 5% ahead of our expectation. Results have benefited from 187% revenue growth in EVs and strong consumer electronics demand. Operating margins grew to 9.3% (FY20: 8.1%) and, absent higher margin acquisitions, we now expect gradual progress towards management’s 10% target, as an appropriate balance is struck between revenue growth and profitability. The drive to be the lowest cost producer of quality product, leveraging the Group’s global platform, is a core objective underpinning growth ambitions. Our updated adj. EPS growth - 14% for FY22E and 9% for FY23E - is cautiously framed in the context of the increased investment now being committed to drive revenue growth. The recent DE-KA acquisition is performing strongly and alongside further accretive moves, Volex should continue to deliver.
Companies: Volex plc
Capital Limited (LSE: CAPD) this morning provided its Q1 2021 trading update. Q1 revenue is the strongest since the company's inception and is in line with our estimates, as are the other operational metrics.
Companies: Capital Limited
Clean FY20 EPS beat our expectations by 5%, but the real story of these results is that EBITDA came in ahead of our November 2019 forecast. EBITDA rose 64% through acquisitions, but management has extended its record of improving the returns of acquired businesses. We raise our EBITDA forecasts by c.10% across the forecast period to reflect only the recent Belgian transactions. We raise our target price to 92p per share, set at 10x EV/EBITDA. With these acquisitions now in place, the group has reached critical mass with four platforms and strong enough cash flows to self-fund acquisitions and other opportunities.
Companies: SigmaRoc Plc
AFC Energy announced a fundraising of £36m consisting of an oversubscribed placing with institutional shareholders amounting to £31.2m and a £4.8m strategic investment from ABB (£3.25m) and Dutco (£1.50m). The equity capital raise was priced at 64.5p representing a modest discount of approximately 5% relative to the prior day's closing price. The robust support shown by the capital raise suggests, in our opinion, that the strengths of AFC Energy's technology, its commercial positioning and the growth opportunity afforded by each of AFC Energy's addressable markets have been recognised by the institutional market. The expansion of AFC Energy's strategic partnership with ABB, now a shareholder, into the data centre market is potentially transformative. We outline in this note the potential implications of that development, while deferring the implications of that development on our fair value estimate until we have undertaken more analysis. We place our fair value estimate under review for an upgrade.
Companies: AFC Energy plc
Semper Fortis Esports* recently announced its intention to IPO onto the Access Segment of the Aquis Stock Exchange Growth Market. Semper is a multi-operational Esports organisation focusing on gaming technology solutions, brand enhancement and high growth team infrastructures. The company plans to raise £2.5m to develop their three core areas of establishing an esports team, forming partnerships with brands for sponsorship and B2B consultancy services. The Board are highly experienced in sports and corporate deal making (Keith Harris, former Chairman of The Football League), technology and electronic gaming (Nolan Bushnell, founder of the pioneering company, Atari), esports and game tech (Kevin Soltani and Jassem Osseiran) and as FD Max Deeley. Target Admission Date of 26 April. Dispersion Holdings PLC, an investor in the high growth FinTech sector within the UK, the USA and Canada, has announced its intention to IPO on the Access Segment of the Aquis Stock Exchange Growth Market. The Board intends to deploy the majority of the Company’s cash resources in the acquisition of minority interests in a number of different, yet to be identified, companies in the broad FinTech sector, and to apply expertise to the business operations and strategic plans of these companies. Target Admission Date of 30 April. Darktrace plc. Intends to float on the main market of the London Stock Exchange (premium). Darktrace was founded in 2013 with a mission to fundamentally transform the ability of organisations to defend their most critical assets in the face of rising cyber threats. Darktrace is a world-leading provider of AI for the enterprise, with the first at-scale in-the-enterprise deployment of AI in cyber security Due early May, musicMagpie is a leader in re-commerce in the UK and US in the circular economy of consumer technology (including smartphones, tablets, consoles and personal computers), books and disc media (including CDs, DVDs and video games). Expected 28 April. Offer details TBA Wickes to demerge from Travis Perkins and list on the Main Market. Expected 28 April. Thor Explorations (TSXV:THX) seeking a secondary listing on AIM. The Company is targeting Admission during Q2 21. Segun Lawson, President & CEO, stated: “Thor Explorations has advanced significantly, in both project development and capitalisation since the acquisition of Segilola in 2016. This year, the Company is well positioned to achieve two major milestones with the commencement of gold production at Segilola in Nigeria and a maiden resource at Douta in Senegal, as well as continuing to progress our highly prospective Nigerian exploration portfolio on the Ilesha Schist belt.” PensionBee has confirmed its intention to float on the High Growth Segment of the Main Market of LSE. The online pension provider had approximately 130,000 Active Customers and £1.5bn of assets under administration as at 28 February 2021. The Offer will comprise new Shares raising gross proceeds of approximately £55m and existing Shares to be sold by certain existing small minority shareholders of up to £5m. None of the founders, directors or members of senior management of PensionBee are selling any existing Shares. Expected in April. Imperial X (AQSE:IMPP) to join the Main Market (standard). It is also proposed that on Admission to the Official List, the Company will change its name to Cloudbreak Discovery Plc. With effect from Admission, Imperial X will hold equity positions and royalties in a variety of projects in the natural resources sector across multiple jurisdictions, primarily in the Americas and Africa. The Company is proposing to raise up to £1.5m by way of placing of new Ordinary Shares to support further prospect acquisitions. Current Mkt cap £4.7m Expected April. Proposed move to AIM from the main market (standard) by Emmerson (EML.L) to provide Emmerson with access to a market and environment which is more suited, in the Board's view, to the Company's current size and strategy ahead of pivotal period for the Company with the commencement of mine construction at the Khemisset Potash Project expected by end of 2021. Follows recent award of Mining Licence granting Emmerson exclusive right to develop and mine the potash deposit and £5.5m raise to fund ongoing project development work. Due 27 April.
Companies: KIBO MTW GWI MTR DUKE ITM GDR MSMN CMCL PTRO
XPD is a profitable and well-established pan-European freight management and logistics operator. We selected the Group as one of our Top Picks for 20211. XPD has reported 2020a adjusted PBT up nearly 40% y-o-y. Margins expanded to 3.3% from 2.4%, driven by better trading, particularly in freight forwarding in Q4, and with cost savings from restructuring. XPD has rebuilt its senior management team, completed recently by Michael Williamson joining as CFO. The fundamentals are sound with £6.8m of net cash. Q1 2021e trading is reportedly ahead of management expectations but at this stage our estimates assume cautious growth through the year. More strategically, as Covid-19 disruption clears, we think UK and European customers will refocus on supply chain resilience, and Central & Eastern European (CEE) countries will become even more attractive as manufacturing venues. This strongly favours XPD’s capacity and expertise. Generally, as an experienced pan-European operator, XPD has plenty of opportunities to accelerate growth. Organically in forwarding, pallet networks and support services for haulage sub-contractors, and through selected acquisitions. Reflecting a more positive outlook for earnings, our valuation is lifted from 45p to 70p, c.20% upside to the current share price. XPD also offers an attractive dividend.
Companies: Xpediator Plc
Semper Fortis Esports* recently announced its intention to IPO onto the Access Segment of the Aquis Stock Exchange Growth Market. Semper is a multi-operational Esports organisation focusing on gaming technology solutions, brand enhancement and high growth team infrastructures. The company plans to raise £2.5m to develop their three core areas of establishing an esports team, forming partnerships with brands for sponsorship and B2B consultancy services. The Board are highly experienced in sports and corporate deal making (Keith Harris, former Chairman of The Football League), technology and electronic gaming (Nolan Bushnell, founder of the pioneering company, Atari), esports and game tech (Kevin Soltani and Jassem Osseiran) and as FD Max Deeley. Target Admission Date of 26 April. Darktrace plc. Announcement of Intention to Publish a Registration Document and Potential IPO on the main market of the London Stock Exchange. Darktrace was founded in 2013 with a mission to fundamentally transform the ability of organisations to defend their most critical assets in the face of rising cyber threats. Darktrace is a world-leading provider of AI for the enterprise, with the first at-scale in-the-enterprise deployment of AI in cyber security Timing TBA musicMagpie is a leader in re-commerce in the UK and US in the circular economy of consumer technology (including smartphones, tablets, consoles and personal computers), books and disc media (including CDs, DVDs and video games). Expected 28 April. Offer details TBA Wickes to demerge from Travis Perkins and list on the Main Market. Expected 28 April. Advance Energy to complete an RTO on AIM indirectly acquiring up to 50% of Carnarvon Petroleum Timor which holds a 100 per cent. working interest and is the contractor under the Buffalo PSC, offshore Timor-Leste. Carnarvon Petroleum Timor is a subsidiary of ASX listed company, Carnarvon Petroleum Limited. The net proceeds of the Placing of approximately £20.01m (approximately US$27.51m) will be used to fund the Acquisition. Due 19 April. Thor Explorations (TSXV:THX) seeking a secondary listing on AIM. The Company is targeting Admission during Q2 21. Segun Lawson, President & CEO, stated: “Thor Explorations has advanced significantly, in both project development and capitalisation since the acquisition of Segilola in 2016. This year, the Company is well positioned to achieve two major milestones with the commencement of gold production at Segilola in Nigeria and a maiden resource at Douta in Senegal, as well as continuing to progress our highly prospective Nigerian exploration portfolio on the Ilesha Schist belt.” PensionBee has confirmed its intention to float on the High Growth Segment of the Main Market of LSE. The online pension provider had approximately 130,000 Active Customers and £1.5bn of assets under administration as at 28 February 2021. The Offer will comprise new Shares raising gross proceeds of approximately £55m and existing Shares to be sold by certain existing small minority shareholders of up to £5m. None of the founders, directors or members of senior management of PensionBee are selling any existing Shares. Expected in April. Imperial X (AQSE:IMPP) to join the Main Market (standard). It is also proposed that on Admission to the Official List, the Company will change its name to Cloudbreak Discovery Plc. With effect from Admission, Imperial X will hold equity positions and royalties in a variety of projects in the natural resources sector across multiple jurisdictions, primarily in the Americas and Africa. The Company is proposing to raise up to £1.5m by way of placing of new Ordinary Shares to support further prospect acquisitions. Current Mkt cap £4.7m Expected April. Proposed move to AIM from the main market (standard) by Emmerson (EML.L) to provide Emmerson with access to a market and environment which is more suited, in the Board's view, to the Company's current size and strategy ahead of pivotal period for the Company with the commencement of mine construction at the Khemisset Potash Project expected by end of 2021. Follows recent award of Mining Licence granting Emmerson exclusive right to develop and mine the potash deposit and £5.5m raise to fund ongoing project development work. Due 27 April.
Companies: GAL AXS IDH GWMO AGL YEW INFA HE1 PPC CASP
AFC has announced a £36m equity issue with £3.3m from ABB, £1.5m from Dutco and £31.2m from institutional investors. It has also announced that its partnership with ABB will develop a new product offering to serve the data centre market. While the extra share count marginally dilutes our existing valuation (from 191p to 184p) we expect this to be more than offset by the profit opportunity in data centres and in the marine/rail markets that are being explored in conjunction with Ricardo. We will quantify these issues in a future report, but we are confident that the addressable markets for AFC are vast and it has a good chance of succeeding in them.
Recovery and outperformance have been hallmarks of the building materials and merchants sector since lockdown ended and whilst Brickability may not have been in the vanguard of this re-appraisal by investors it has certainly made up for it over recent months doubling in value since last November and rising over 20% in the past month to a new high. There will probably be few surprises that it is moving FY21 (to March) guidance up for a second time, nor that management is expecting to deliver growth in FY22 but we believe price upside exists from here based on the possibility of future upgrades driven by either continuing market trends, organic growth initiatives or acquisition accretion, of course coupled to its strong cash flow characteristics. A current year (conservative) rating of 14x PER, 10x EV/EBITDA and 2.5% yield remains undemanding in actual and sector relative terms.
Companies: Brickability Group PLC
The UK market showed a continued recovery in the first quarter albeit the indices are still well short of their all-time peaks, unlike many of their international peers. The FTSE 100 has risen by 1,186 points (21.4%) since the end of October and the FTSE 250 by 4,304 points (25.0%). The comparable performance since the start of the year is less spectacular- the FTSE 100 has risen by 253 points (3.9%) and the FTSE 250 has risen by 1,070 points (5.0%). The factors behind the sustained rally are familiar. The belief that the roll-out of the vaccine and some relaxation of lockdown limitations will lead to a significant economic recovery, compared to the collapse seen in the first half of 2020, due to lockdowns. Indeed, the recent economic picture is becoming more optimistic than previous expectations. According to the ONS, the economy grew a little more than initially estimated in Q4 last year. This means GDP for 2020 as a whole contracted by 9.8%, revised up marginally but still the worst contraction on record. Markets, in general, have focused upon the potential scope and extent of the recovery. The sectors and stocks that have outperformed have been seen as ‘recovery’ plays with a rotation from stocks seen as ‘lockdown’ winners into those set to benefit from the ‘unlocking of society’ and/or exposed to the consumer. We expect 2021 will continue to be a “stock-picker’s” market. The sharp increase in the household savings ratio in Q4 highlights the scope for a recovery driven by expenditure. As further lockdown limitations are lifted, evidence of this growth will help to underpin the more optimistic outlook for Q2 and beyond.
Companies: AMYT ARBB BPC BAG BVC BEG BONH BLVN BRSD CML CWK CRPR EYE ECHO FDM FAR FA/ GPH GSF HUW INSE JDG KAPE KP2 MACF MPAC MNZS NESF NBI OTMP OBD PREM QFI RUA SCS SEN SOS SUR TON TOU TXP TGL TCN UEM VLS WYN
Anglo Asian Mining* (AAZ LN) - STRONG BUY – Quarterly production update and CY21 guidance
Botswana Diamonds (BOD LN) – Moving to a further stage of drilling at Thorny River
Capital Limited (CAPD LN) – Q1 2021 delivers strongest ever quarterly revenue
GoldStone Resources* (GRL LN) – Update paves way for production ramp-up at Homase
Kenmare Resources (KMR LN) - Q1 production rises on higher grade and production despite Covid-19 isolation for management and staff
Rainbow Rare Earths* (RBW LN) – Temporary suspension of REE concentrate exports
Serabi Gold* (SRB LN) –– Grade improvements drive higher Q1 gold production
Companies: CAPD AAZ BOD GRL KMR RBW SRB
Despite the pandemic causing major disruption to many of the group's customers, Filta navigated FY20A well, generating positive Adj EBITDA (£1.1m) and FCF (£0.8m). Successful vaccination programmes in Filta's core USA and UK markets are enabling venues to steadily reopen. With consumers sitting on record levels of savings, and there being significant pent-up demand for leisure activities that Filta service (eg restaurants, sports venues etc), the outlook appears increasingly positive for the group. Filta enters FY21E with a stronger business profile, having launched new products and services, and expanded its customer list (c1700 added in FY20A). Given the improving prospects, we believe Filta remains attractively valued on a FY22E EV/EBITDA of 9.7x. We leave FY21E and FY22E forecasts unchanged and reaffirm our Buy rating.
Companies: Filta Group Holdings PLC
Billington provides structural steel and safety solutions to the construction industry. Against the backdrop of pandemic induced disruption through 2020, and set against the record performance of 2019, Billington has reported a solid and profitable performance in FY2020. Set against a record high comparative period, Group revenue decreased 37% to £66.0m with adj. profit before tax reducing to £1.7m (FY2019: £5.9m). Adj. EPS fell commensurately to 11.3p (FY2019: 39.8p) and, as a mark of confidence, Billington reintroduced a final dividend of 4.25p, covered 2.7x (in line with historic cover). Our newly introduced FY2021E estimates (adj. PBT £2.2m) reflect the duality of a relatively robust opening order book (75% higher YoY), but set against caution with respect to margin pressure given cost inflation in the supply chain. The medium term outlook is likely to be buoyed by infrastructure investment in key markets BILN serves, albeit pricing volatility is a key risk. Billington's cash rich balance sheet positions it well to weather potential future uncertainties, whilst others likely fall by the wayside. We see fair value at 375p.
Companies: Billington Holdings Plc
Brickability is a leading supplier of bricks and other building materials to the UK construction industry, and is well-positioned to consolidate the fragmented UK building products supplier space. The company has undertaken four acquisitions since its IPO in 2019, which adds to some twelve acquisit
Volex has reported interim results that are in-line with expectations following a strong trading update in mid-October. Of far greater significance is today’s announcement of the proposed acquisition of DEKA for a consideration of up to €61.8m on a debt free basis. DEKA is a leading and highly profitable power cord manufacturer, strategically located in Turkey, that serves leading European white goods manufacturers. The acquisition should close in early CY2021, subject to expected Turkish Competition Authority approval. We foresee 15% earnings enhancement in FY2022E with further opportunities for revenue synergies with Volex in the Far East as its operations also vertically integrate, production efficiencies increase and the cost of production falls. The statement highlights that pro forma net debt/EBITDA remains under 0.4x and this provides scope for further bolt-on acquisitions alongside a new $70m RCF and $30m accordion, also announced with the interims.