The company continues to deliver as if there is no pandemic.
All segments had a good to great Q3, but this was also in line with expectations. The full-year guidance did not change versus the one given at the time of the H1 results.
Companies: Koninklijke Boskalis Westminster N.V.
The company reported strong results despite the challenging conditions due to the pandemic. Revenue ended up flat versus last year (but +10% vs consensus) and cash-flow generation was very strong driven by an improved EBITDA and working capital.
Boskalis published its FY 2019 figures…and they are mixed
While we hoped for a revenue recovery in 2020, it has already occurred in 2019, making the balance sheet even better than before. On top of this, the outlook for 2020 is positive and this is reflected in a record order book. But, the margins went down substantially as well, mainly due to another provision on onerous contracts in Offshore and that’s more worrisome.
Boskalis posted a respectable set of results despite the difficult market conditions. The market is rewarding the company for its expectation of a strong recovery in Offshore Energy, the current main drag on the performance and what we consider to be a call option.
Following this earnings release, we expect to increase our target price by some 5-10% and to keep our Buy recommendation.
A significant provisioning impacted the results in H1 19. Offshore Energy remains spot market dependent, while the Dredging & Inland Infrastructure division remains the key contributor to the group’s performance. All in all, management gave a solid outlook for H2 19.
Following this earnings release, we will revise our EBITDA forecast downwards by some 9%. This should result in a decrease of our target price by more than 10%. Despite this downward revision, we should stick with our Buy recommendation.
Only the guidance is of importance in the Q1 19 trading update, and, to say the least, it is not shiny: management expects a stable EBITDA but a lower net income than in the previous year.
In view of our current low adjusted net income forecast of some €70m, we expect the consensus (currently some €120m) to converge towards our estimate. Hence, we don’t expect to change significantly our forecasts, or our target price.
The most important fact from this earnings result is that management expects that it will be difficult to exceed the FY18 net operating profit in FY19.
Overall, we expect to decrease our target price but to keep a positive recommendation.
Concerning guidance, net operating profit in H2 18 is expected to be sharply higher than in H1 18 (€34.5m). However, the net result is not expected to match the level achieved in H2 17 (€75m).
Following this earnings release, we expect to lower our EPS, but we will keep our current Buy recommendation unchanged.
The net operating results of Boskalis collapsed in H1 18 compared to H1 17. This decline was mainly due to the sharp collapse in the transport activities at the low end of the market/S-curve in particular which are now considerably loss-making.
Boskalis has decided to exit this market segment. Due in part to this decision, an extraordinary charge of €397m was recognised in H1 18, consisting mainly of a goodwill impairment and a writing-off vessels at scrap value.
Based on today’s knowledge, management does not expect that the 2017 net result will be matched in 2018.
Following this earnings release, we will update our model. As of now, we don’t expect a change in recommendation.
Following the weak bottom line and guidance (apparently it will be a challenge to match the 2017 net result), the stock is under pressure. What is particularly worrisome is the fact that the company burnt more than €800m of cash, leaving the net cash and cash equivalents below €200m versus almost €1bn at year-end 2016. Management emphasised during the conference call that the correlation between growing order book and growing net results will not hold in 2018.
• Persistently difficult market conditions characterised by low work volumes and pressure on utilisation rates and margins.
• Good revenue development during the quarter with a lower result.
• Compared to end-June, the order book declined by 4% to €3.1bn.
Key information (H1 figures):
• Revenue down by 6.8%.
• EBITDA decreased by 29.2%
• Net profit collapsed by 49.2%.
• Order book increased by 20.4%.
Key information :
• Lower revenue as a result of continued challenging market conditions in the offshore sector.
• Further pressure on profitability.
• Reasonable fleet utilisation at both Dredging and Offshore Energy.
• Increased order book.
• Revenue declined by 20% to €2.60bn.
• EBITDA decreased by 25% to €660m.
• Operating result decreased by 33% to €385m.
• Operating net profit: €276m.
• Impairment charges: €840m.
• Order book grew by 17% to €2.92bn.
• Proposed dividend: €1.00 per share, namely a 37.5% decrease.
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Capital Limited has released its Q4 and FY2020 trading statement this morning. Overall it shows 2020 was a strong year for the company with revenue growing 18% and most other operating metrics growing positively with it – see Fig 1. We have adjusted our forecasts accordingly and also to take into account the mining services contract for the Sukari Mine which the company won late last year. The latter is a game changer for Capital and its investment case in our view; turbo charging revenue growth, enhancing margins and diversifying cashflow all of which should lead to materially higher valuation multiples. We raise our PT to 127p.
Companies: Capital Limited
Although 2020 will probably go down in history as one of the most challenging years experienced during our lifetime, it will also likely be chronicled as one of the best years for the recognition and appreciation of science. As we entered 2020, the COVID-19 pandemic was in its infancy. However, it rapidly evolved through the exponential rise in infections and mortality globally. Much has been achieved during the past 12 months in the fight against COVID-19, but, as we enter 2021, there are considerable concerns about the emergence of a mutant version of the virus and the second wave that we are now facing.
Companies: AVO ARBB ARIX BBGI CLIG DNL FLTA ICGT OCI PCA PIN PHP RECI STX SCE TRX SHED VTA YEW
2020 ended with two positive moves for carbon capture and storage (CCS) which should benefit Velocys clients. In the US, the signing of the COVID 19 stimulus bill extends and adds support for CCS in the US where the Bayou project is working with CO2 offtaker Occidental to deliver a negative emissions project. The UK government has also published guidance on CCS funding making this option an additional opportunity for the Altalto project. Velocys remains one of the very few opportunities for investors to play negative emission technology. We see both these moves improving the operating environment for the company’s clients and their projects, stimulating demand for the Velocys technology.
Companies: Velocys plc
XP reported a strong finish to 2020, with Q4 revenues up 24% y-o-y and 4% ahead of our forecast, driving FY20 profitability ahead of expectations. Order intake has normalised to pre-COVID-19 levels, reflecting continued strong demand from the semiconductor sector. We have revised our estimates to reflect strong Q420 performance and the weaker dollar, driving a 3.0% increase in FY20 EPS and a 2.3% cut to our FY21 EPS.
Companies: XP Power Ltd.
Avingtrans has announced that it has continued to perform well in H1 FY2021 and is trading in line with market expectations. Our cautiously framed forecasts anticipate adjusted EPS growth of 17% in FY2021E and 10% in FY2022E, including the benefit of cost reduction measures. The Group confirmed high levels of order cover for FY2021E at 85% at the end of September and orders taken since then will have provided further comfort. The shares have given ground YTD and now trade on a forward EV/sales multiple of 0.9x and prospective PERs of 13.8x and 12.7x for FY2021E and FY2022E respectively which are well below sector metrics. Management is also making great progress within the medical division where the potential for its small scale MRI is substantial.
Companies: Avingtrans plc
Today’s update confirms a strong recovery in H2 FY2020E as expected and a full year adjusted PBT at least in line with FY2019, despite a material impact from Covid and the depressed oil price resulting in a decline in Augean’s North Sea Services business. The FY2020E outturn demonstrates the resilience of the Group and the strong attractions of its growing EfW activities that now account for c.70% of Group profit. Augean is very well positioned in the EfW residue market and with c.40% of the UK’s hazardous landfill capacity. We forecast Group earnings growth of 15% and 21% for FY2021E and FY2022E, and expect further strong cash generation. EV/EBITDAs for FY2021E and FY2022E are 5.7x and 4.5x respectively, substantially below sector constituents and transaction multiples.
Companies: Augean PLC
Like many awful dreams, the Covid19 nightmare hasn’t quite finished, recently mutating into an ultracontagious super-bug. The risk being global transmission and infection rates spiral out of control, swamping healthcare systems again. However this time there is an answer. Hunker down for a few months, and inoculate as many vulnerable people as possible to reduce fatalities/hospitalisations. Plus, the Oxford/AstraZeneca vaccine is relatively simple to distribute (re 2°C to 8°C). Making rapid nationwide rollouts feasible, alongside ultimately bringing the curtain down on this dreadful virus.
Companies: Mpac Group PLC
Augean has proven to be resilient throughout the pandemic. In particular, the growth in processing incinerator ash residues from energy from waste (EfW) facilities continues unabated and additional new contract wins should drive improved returns in FY21. Management expects FY20 adjusted PBT to be slightly ahead of last year and we have marginally reduced our FY20 adjusted PBT and EPS estimates by 1%. Our FY21 estimates are maintained. Cash flow has been stronger than we expected, underpinning the indication that dividends should resume in FY21.
Initiating with a Buy rating. We initiate our coverage of Proton Motor Power Systems (“Proton Motor”) with a BUY rating and a target price of 201p. Our valuation equates to a market capitalisation of £1.47bn, compared to a current share price of 65.5p and a market cap of £479m.
Companies: Proton Motor Power Systems Plc
A £10m fundraising expedites the Protos project and opens the way for the £10.2m Peel warrant exercise in the current year. The funding will also give the company additional resources to pursue international opportunities. Adjusting for the raise and some timing differences, our UK only base valuation rises from 5.0p to the raise price of 5.5p and we see existing international opportunities taking this to 7.5p (from 6.9p) and including opportunities in Europe this could rise to 12.1p (from 11.2p).
Companies: Powerhouse Energy Group PLC
Directa Plus has released a trading update guiding to revenue for FY20 of approximately €6.5m. This is 9% ahead of the €6.0m in the trading update from 3 December and 18% ahead of our expectations of €5.5m which were set on 24 September 2020. The strong trading performance has been primarily driven by the sales of G+ enhanced face masks, including Co-Masks, and the strengthening performance of Setcar in the Environmental Division.
Companies: Directa Plus Plc
Further media reports that Dr Martens, the British Boot brand is planning an IPO on the LSE. It is currently owned by PE group, Permira who is expected to sell down its stake at the IPO. March 2020 YE the group had revenues of £672m and EBITDA of £184m. Deal size TBC. Upon Admission to AIM, Nightcap will acquire The London Cocktail Club Limited (the "London Cocktail Club"), which is an award winning independent operator of ten individually themed cocktail bars in nine London locations and one location in Bristol. Offer TBC Due mid Jan. HSS Hire Group, HSS.L transfer from Main to Aim. Mkt Cap c. £70m. Recently raised £52.6m. Leading supplier of tool and equipment for hire in the United Kingdom and Ireland and has provided equipment hire services in the United Kingdom for more than 60 years, primarily focusing on the B2B market. Due 14 Jan. VH Global Sustainable Energy Opportunities plc, a closed-ended investment Company focused on making sustainable energy infrastructure investments, today announces intends to launch an initial public offering of shares on the Official List (Premium) of the Main Market of the London Stock Exchange. Due by Early Feb.
Companies: IUG CBP KAT APP RST DIS NICL BOKU CNIC HE1
AFC Energy (AFC) – Corporate – Strategic Partnership with Ricardo
Companies: AFC Energy plc
Today’s positive trading update provides further encouragement for investors. The shares have been appreciating steadily on the back of last month’s fund raise and acquisition, followed by a major contract win and the £2.5m sale of the remaining RTLS stake, which had previously been largely written off. Both FY20 revenue and adj. LBITDA are better than forecast and YE net cash is particularly healthy. The integration of OSPi is underway, with all staff already transferred. We adjust FY20 forecasts and reiterate future forecasts. Future cash expectations are lifted by the higher YE balance as well as the sale of the remaining RTLS holding.
Companies: IQGeo Group PLC
Seeing Machines has announced that it has licensed its Occula® Neural Processing Unit to OmniVision Technologies Inc. This advances the relationship from the MOU announced in September 2020 and builds on a relationship that is over five years old, with the two organisations having worked on multiple automotive programmes with a number of Tier 1 customers.
Companies: Seeing Machines Limited