In line results. Well placed for bounce in better TAMs

Having issued a pre-close update in February, these prelims were well trailed. While accelerated licensing income flattered profits during the period, the number and scale of new agreements bodes well for future cash profits, as the size of the receivables asset clearly signals. With strategic growth continuing at pace in the US, green shoots in other markets, and actions taken to improve operational efficiency, SDG is confident it can navigate further end market uncertainties, and forecasts are

PROGRESSIVE: Sanderson Design Group: Strategic growth drivers show their value in challenging trading conditions

Sanderson Design Group (SDG) has announced its FY24 full-year results, which are in line with the headline figures from its February trading update. A record year for Licensing and a strong performance in the key North America market helped to offset a challenging consumer environment in other geographies, most notably the UK. While this backdrop is set to persist in FY25E, the group will continue to focus on its strategic growth drivers, notably North America and Licensing, to deliver sharehold

Blinds 2go Licence Renewed and Expanded

Sanderson Design has renewed and expanded its licence with Blinds 2go a core licensing partner that sells made-to-measure blinds, curtains and shutters online. This 3-year agreement crucially includes the USA, a key strategic focus for Sanderson Design. The £1.1m contribution to PBT this year, which is non-cash accelerated income, underpins current forecasts. As such, we make no changes to forecasts today pending FY results next week. However, we see this licensing agreement as having positive i

New HQ move to historic West London site

SDG has announced an exciting new HQ development. The group’s HQ will move in the summer to Chiswick (West London) to a listed building that first opened in 1902 as wallpaper factory for Arthur Sanderson & Sons, designed by celebrated architect and designer CFA Voysey. The new London HQ will include showroom space, a design hub, events location and house the Sanderson and Morris & Co. design archives. This move will be cost neutral on an annualised basis, and should drive a number of business be

New DTC site for Morris & Co to launch later in 2024

SDG has announced an exciting new e-commerce development for Morris & Co, one of its largest and most recognised brands globally. The new site will launch in H2 with a full range of core and licensed products, to become an online destination for the brand. It will be operated by its existing partner that successfully launched and runs its Scion Living site. We don’t expect any material contribution in FY Jan’25 but thereafter we see scope for the site to add meaningfully to profits and FCF. Give

PROGRESSIVE: Sanderson Design Group: Morris & Co to launch online store

Sanderson Design Group (SDG) has announced it is to launch a dedicated online store for its iconic and second largest brand, Morris & Co, in the second half of 2024. This marks a major step-up for the group in terms of e-commerce and the direct-to-consumer (DTC) channel, where its presence to date has been limited to the smaller Scion brand. While not anticipated to make a significant financial contribution in FY25E, this represents an important strategic initiative for SDG to exploit another ch

In-line FY24 update, but caution on cost mitigation

The Y/E update signals PBT will be in line with expectations at c£12m. This will come as a relief to investors, even if the underlying position is slightly flattered by accelerated Licensing income, as reflected in slightly lower net cash. What may disappoint is FY25 guidance being tempered 7%, due to cost inflation (mainly wages). However, this still assumes no better than flat volumes, a scenario which we argue holds upside if activity improves in H2. We stay at Buy.

PROGRESSIVE: Sanderson Design Group: Strategic growth pillars bolster results

Sanderson Design Group has delivered its full-year trading update to 31 January 2024. Group revenue has eased back 3.1% to £108.5m on a reported basis, following the 2% decline in H1. The strongest performances were delivered by the strategic growth cornerstones of Licensing and North America, offset by challenging market conditions in the UK, Europe and the Rest of the World. A strong balance sheet saw year-end cash rise to £16.2m, compared with £15.4m at year-end FY23. Having traded in line wi

Hybridan Small Cap Feast - 10 Jan 24

10th January 2024 @HybridanLLP Status of this Note and Disclaimer This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment obje

Further licensing development in the US

Morris & Co has signed a new licensing agreement in the US, the 3rd such deal in a key target market. Beyond the £0.7m contribution to PBT this year, which is non-cash accelerated income, the almost immediate timing of initial product launches means this deal will start generating profit/cash in H1 Jan’25. We make no changes to any forecasts today pending the full year update in 4 weeks, but see this deal as having positive implications for valuation, with the shares trading on a miserly P/E of

Hybridan Small Cap Feast - 30 Oct 23

30th October 2023 @HybridanLLP Status of this Note and Disclaimer This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment obje

New Sanderson licence with Habitat

Through its Sanderson brand, SDG has announced a new licensing agreement with Habitat which will launch a range of table/kitchenware based on Sanderson’s National Trust collection of fabrics (one of its best-selling collections since launch). The new products will launch in spr’25 and generate incremental royalty income for both SDG and the National Trust from FY26 onwards, in line with the group’s Live Beautiful strategy.

Reassuring update helped by licensing and margins

H1 PBT came in ahead of our expectations, with licensing income, product margins and interest income all contributing. Crucially, the board’s expectations for the full year remain unchanged as its international diversity (especially US growth), ongoing licensing momentum, and cost savings offset pressures elsewhere (namely UK sales and manufacturing). High levels of sampling requests from its most recent launches are also encouraging. We stay at Buy.

PROGRESSIVE: Watkin Jones: H1 in-line amid reviving investor appetite

Watkin Jones’s guidance for FY24E is unchanged in its trading update for the first half to 31 March. We maintain our forecasts for the full year and introduce half-year estimates, in line with reiterated guidance that performance will be significantly H2 weighted. The group confirms a continuing gradual recovery in appetite among institutional investors to forward fund its build-to-rent (BTR) and student developments. We believe this should gather pace as the direction of interest rates becomes

Ceres Power Holdings - Strategic partnerships powering growth

Ceres Power Holdings’ innovative technology uses electrolysis to produce green hydrogen and solid oxide fuel cells to generate power. In a year where it moved to the Main Market of the London Stock Exchange, it recorded revenue growth of 13% and gross margin expansion to 61% (the highest in the sector, according to management), but is yet to record an operating profit (FY23 operating loss of £59.4m versus £54.0m in FY22). Ceres continued its strategy to drive innovation and technology across sol

Hybridan Small Cap Feast - 25 April 2024

25th 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: Smart Metering Systems (SMS.L) has delisted from the AIM market 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

Surface Transforms - Fund raise for the profitable growth phase

SCE is raising £16m through a placing (and up to a further £3m through open offer) to fund substantial expansion and additional working capital. This will enable the Group to grow to £75m revenue capacity in the near term, commence the build and equipping of a new factory and then (with internally generated free cash flow) scale to £150m revenue capacity and beyond. With a contracted order book of £190m and a prospective pipeline of £400m, this is clearly the time to seize the opportunity. The e

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

Gooch & Housego (GHH LN) - A chink of light

Gooch has issued a positive update for H1. Trading has started to recover with stocking levels normalising at industrial and medical devices customers. The outlook is positive with growth returning, and management has confirmed our full year estimates (adjusted for the disposal of EM4). The order book and order flow appear healthy, and net debt is comfortable. Gooch clearly still has plenty to do to lift operating margins from a lacklustre 8.1%, but the transformation plan appears to be back on

Surface Transforms - New guidance – forecasts under review

Surface Transforms has issued new revenue guidance for FY24, with the company now expecting revenues in the range £17.5-22m. We are withdrawing our previous forecasts for FY24 and withdrawing our price target while we review the impact of the new guidance.

Solid State - Anticipating record adjusted PBT in FY24

Solid State’s trading update affirms the sustained strength in demand throughout H224, resulting in record FY24 revenue and adjusted PBT ahead of prior consensus of £155m and £12.5m, respectively. This is attributable to the earlier-than-expected delivery of a NATO contract. As a result, consensus FY24 revenue and adjusted PBT estimates have been raised by c 6% and c 20%, with respective FY25 estimates declining commensurately.

Zeus: Video Games Sector Quarterly review - January 2024

Subsector price performance: In the fourth quarter to 29 December 2023 all but the AAA publishers and platform subsector saw share price declines. The UK PC and Console focused subsector was again the worst performing subsector (-26.2%) over the quarter and LTM (-70.1%).

Time to focus on growth ambitions

AKA: Initiating Coverage of a.k.a. Brands with Buy and $14 PT: Upside Ahead

We are initiating coverage of a.k.a. Brands Holding Corp. ("a.k.a. Brands" or the "company"), a leading owner of primarily online apparel-based brands focused on Generation Z and Millennial consumers, with a Buy rating and $14.00 price target, or 10.9X our 2025 EBITDA projection of $20.2 million. The company's brands include: 1) Princess Polly, focusing on 15 to 25 year-old women; 2) Petal & Pup, which offers feminine styles for 25 to 34 year-old women; 3) Culture Kings, a street wear destinatio

Hybridan Small Cap Feast - 14 Mar 2024

Banquet Buffet*** Abingdon Health 9.25p £11.3m (ABDX.L) The lateral flow contract development and manufacturing organisation announces its unaudited interim results for the six months ended 31 December 2023. Revenue increased 117% to £2.4m (H1 2023: £1.1m). The Adjusted EBITDA loss decreased 47% to £1.2m (H1 2023: £2.2m). Furthermore, reduction in operating loss of 50% to £1.2m (H1 2023: £2.4m). The Board therefore expects that H2 2024 revenue will be significantly improved compared with H1 2024

Hybridan Small Cap Feast - 16/04/2024

16th 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: Electric Guitar (ELEG.L) Concurrent with its Admission to trading on AIM, Electric Guitar is proposing to acquire the entire issued share capital of 3radical Limited for

AFC Energy (AFC LN) - First modular ammonia cracker system

AFC has unveiled a groundbreaking modular ammonia cracker system demonstrating viable and scaleable production of hydrogen in the UK using this method. The cracker system is designed to deliver 140 tonnes of fuel cell grade hydrogen each year. Hydrogen from the plant will initially be targeted for sale into AFC’s UK H-Power Generator deployments, including those with Speedy Hydrogen Solutions. Along with the recent purchase of the mobile storage and distribution assets of Octopus Hydrogen, AFC c

Morning Note – 4 April 2024