WHI Morning Comment: Walker Greenbank (WGB)
Full year results slightly ahead; improving trend in trading since April Walker Greenbank is a higher end interior furnishings business with well-established global brand names and manufacturing facilities in the UK. The Group has this morning released full year results to 31 January 2020, slightly ahead of our forecasts at the PBT and EPS levels. During the year, and against what was already a challenging wider market backdrop, brands such as Morris & Co as well as the group's core licensing revenue stream largely offset wider weakness in the UK and US markets. As would be expected, trading since year-end has been extremely difficult, with product sales c.35% down in the first five months of the current financial year. Encouragingly, product sales in the last four weeks are reported to have been 31% below the comparative period, reflecting a steadily improving trend since the beginning of April. At this stage we leave our forecasts under review but it is encouraging to see the more recent improvement in trading patterns, whilst internal actions and the refocused strategy continue to improve the outlook for the group.
30 Jun 20
Walker Greenbank - Production restarted
The phased reopening of Walker Greenbank’s two manufacturing facilities (both in the UK) is underway with Standfast & Barracks already operational and Anstey restarting this week. The company’s business model is such that near-term activity levels can be rebuilt gradually. It may also support new business development in the UK in due course compared to overseas supply sources. No new financial information was provided ahead of the company’s scheduled FY20 results announcement on 30 June, at which point activity levels during FY21 to date should also be disclosed. Our estimates remain suspended at this time.
28 May 20
Walker Greenbank - Taking appropriate steps
Walker Greenbank’s FY20 results date has been reset to 30 June (and complies with updated FCA policy guidance). Its latest update provides no new financial information though orders continue to be received despite lockdown conditions. Operational steps already taken appear to be appropriate, retaining sufficient infrastructure to service prevailing sales demand levels while additional actions aimed at preserving business liquidity are referenced, consistent with those seen elsewhere in the quoted sector. Taken together, the company appears to have quickly adjusted its business model to meet current market challenges in FY21.
16 Apr 20
WHI First Light: Walker Greenbank, Parity Group & Dillistone Group
Walker Greenbank is a higher-end interior furnishings business with well-established global brand names and manufacturing facilities in the UK. This morning, the group has provided a further update on the business in relation to COVID-19 following its previous announcement on 25 March. In addition, and in line with recent FCA/FRC guidance, full year results to 31 January 2020 have been rescheduled to 30 June (previously expected 23 April). With cash ahead of expectation in a year of transformation, PTY has reported inline results for the year to December 2019, with revenues standing at £80.4m and £0.1m adj. PBT. Net cash at £0.9m is ahead of our expectation prior to the company's pre-close update by some £1.9m, a significant beat. Dillistone's update this morning is, on the whole, reassuring. Although the economic implications of COVID-19 will likely materially affect FY2020E results, as with many businesses seeing a significant reduction in demand for products and services, it is too early to determine the quantum. As such, we remove our FY2020 estimates that previously looked for an EBITDA contribution of £1.6m and adjusted PBT to £0.1m.
WGB DSG PTY
16 Apr 20
Walker Greenbank - Business response to COVID-19
The coronavirus pandemic is having wide-ranging effects on the general trading environment and Walker Greenbank has announced the steps it is taking in response. Manufacturing facilities are temporarily being closed, but the company is still currently able to support customers and sales through carried inventory levels. Consistent with others, actions being taken to preserve business cash and operate within existing banking facilities look sensible. The company has withdrawn financial guidance and, apart from FY20, our estimates have been removed.
26 Mar 20
Walker Greenbank - Estimates maintained at FY20 year end
A reassuring year-end update confirms Walker Greenbank’s FY20 ended in line with management expectations. There do not appear to have been any major changes in market conditions in H2 for each of the three reporting regions. Going into FY21, a progressive strategy roll-out by the new management team will set the scene for future growth aspirations. Our estimates are unchanged and the company’s P/E remains below 10x.
12 Feb 20
WHI Morning Comment: Walker Greenbank (WGB)
Full year trading update in line; strategic progress emerging Walker Greenbank is a higher-end interior furnishings business with well-established global brand names and manufacturing facilities in the UK. The Group has this morning released a full year trading update, confirming that results for the year to 31 January 2020 will be in line with expectations. Against a challenging wider market backdrop, Morris & Co, Clarke & Clarke, core licensing and digital fabric printing have performed strongly, with the year-end net cash position standing at c.£1.0m (ex IFRS 16). Whilst the refreshed strategy under the new leadership team will take time to come through, this morning's update provides encouraging evidence of green shoots emerging and we leave our forecasts unchanged. After a difficult few years, the shares remain lowly rated and in our opinion have the potential to re-rate if the new management can continue to deliver on the refreshed strategy. A calendarised 2020 PER rating of c.13x, in line with the peer group, would imply fair value for the shares at 110p.
11 Feb 20
WHI First Light: Solid State, Walker Greenbank, Serinus Energy and Jersey Oil & Gas
Solid State (SOLI) – Corporate – Powering ahead from solid foundations Market Cap £53.7m Share Price 633p Solid State is a manufacturer of computing, power and communications products, and value added distributor of electronic components. This morning we have published a 24pp note setting out our investment thesis following a strong period for the group. Interim results in December demonstrated the strength of progress being delivered, putting the group well on track to meet our FY 2020E expectations and moving back into a net cash position for the first time since the acquisition of Pacer in 2018. Walker Greenbank (WGB) – Corporate – Full year trading update in line; strategic progress emerging Market Cap £50.4m Share Price 71p Walker Greenbank is a higher-end interior furnishings business with well-established global brand names and manufacturing facilities in the UK. The Group has this morning released a full year trading update, confirming that results for the year to 31 January 2020 will be in line with expectations. Against a challenging wider market backdrop, Morris & Co, Clarke & Clarke, core licensing and digital fabric printing have performed strongly, with the year-end net cash position standing at c.£1.0m (ex IFRS 16). Serinus Energy (SENX) – Corporate – Moftinu 1004 Well Successfully Tested at 6.0 mmcf/d Market Cap £24.5m Share Price 10.3p Serinus has announced that the Moftinu 1004 well produced on test at a maximum stable rate of 6.0 mmcf/d (1,000 boe/d) with no progressive pressure decrease throughout the test, which was undertaken with a 40/64” choke. Jersey Oil & Gas (JOG) – Corporate – Buchan Note Published by WHI Market Cap £21.8m Share Price 103p WHI view: Jersey supported by Rockflow Resources, petroleum consultants, has estimated that the development of the Buchan field has a potential to recover 58.5 mmb, 81.2 mmb and 99.3 mmb of oil under low, mid and high cases respectively. We met recently with Jersey and Rockflow to better understand the Buchan field and its forward looking production potential. We have gained confidence in the company's resource estimates and we have outlined our reasons for that in a note published today.
WGB SENX JOG SOLI
11 Feb 20
Walker Greenbank - Strategy refreshed, key estimates unchanged
A narrower focus on core business strengths driven with greater operational intensity is an appealing proposition under a revised strategy and new senior management team. More detail will emerge here, but an intention to regain revenue momentum will be a clear marker to watch. H120 results were in line with pre-close comments and our earnings estimates are unchanged at this stage. They – and we suspect the company valuation – have yet to fully factor in renewed strategic impetus.
09 Dec 19
Walker Greenbank is a higher-end interior furnishings business with well-established global brand names and manufacturing facilities in the UK. The Group has this morning released interim results, which whilst complicated by IFRS15, IFRS16 and change in US distribution model in the period, have come out in line with the Board’s expectations as indicated in August. Importantly, the strategy update post change of leadership in April points to much greater focus on the group’s core brand and product offering, where it has greatest customer and geographical penetration. Encouragingly, and although ahead of the group’s key autumn selling period, the expected out-turn for the full year remains in line and as such, we leave our earnings expectations unchanged. The current backdrop will take time to improve but it is encouraging to see Walker Greenbank holding its own; and with a new strategic focus in place, we believe that the group remains well positioned to grow in the years ahead in its core markets. The shares remain lowly rated and in our opinion have the potential to re-rate if new management can deliver on the refreshed strategy. A cal.2020 PER rating of 11x, in line with the peer group, would imply fair value for the shares at 95p.
15 Oct 19
Walker Greenbank - Maintained expectations, awaiting strategy update
Positive steps have been taken in the UK and US that will benefit Walker Greenbank in future periods and although the domestic market remains challenging, management’s full year expectations are unchanged. The upcoming strategic update may bring the prospects for re-building earnings and associated valuation metrics into sharper focus for investors.
09 Aug 19
Small Cap Feast
ReAssure Group plc - The Group is a leading closed book life insurance consolidator in the United Kingdom with 4.3m policies, £68.7 billion of assets under administration on a Post-L&G Illustrative Basis. It is considering a premium listing segment of the main market. Voyager AIR The Com pany w ill focus on the acquisition, leasing and m anagement of prim arily widebody aircraft, w ith asset management services to be provided by Amedeo Limited he IPO will comprise a Placing and Offer for Subscription of Shares to raise up to approximately US$200m· IMC Exploration Group (NEX: IMCP), focused on acquiring and exploring prospecting licence areas w hich have high potential for natural resource, is looking to admit its shares to the standard list and will withdraw for the NEX Exchange. TBC
WGB KMK RAI ECK GFIN GAN OKYO PRM LWRF RQIH
01 Jul 19
Walker Greenbank - Year to date trading as expected
An in line AGM update is to be welcomed after a tough trading year in FY19. Market conditions have yet to show any marked improvement, but UK cost savings and some international progress support our existing estimates. The new management team expects to deliver a strategy update in the Autumn and this should provide insight regarding future growth prospects. The rating has increased in recent months though FY20 should represent trough earnings in our view.
20 Jun 19
Walker Greenbank - Tough FY19, dividends rebased
A new CEO appointment follows other board changes; with tough UK conditions set to persist, operational improvements, international growth and brand development are all firmly on the agenda and a refreshed strategic update will come from the new team later in the year. With a broadly maintained payout ratio in FY19, lower earnings drove a similar reduction in dividends. With lower earnings anticipated in FY20, the company is trading on a prospective 3.8% dividend yield and a 7.8x P/E.
18 Apr 19
Spectra Systems (SPSY) – Corporate – Announces share buy-back programme | Walker Greenbank (WGB) – Corporate – Full year results in line; earnings expectations unchanged | FIH Group (FIH) – Corporate – Encouraging update, results to be significantly ahead | Petards (PEG) – Corporate – Full year results – good order book visibility for the year ahead
WGB SPSY FIH PEG
10 Apr 19
Walker Greenbank - Expectations met, tough UK conditions persist
Year-end comments confirm FY19 results are expected to be in line with management estimates. Strong Licensing performance is likely to have contributed meaningfully to this outcome and towards an ungeared balance sheet position. UK market trends remain weak and cause us to reduce our earnings estimates by 20–25% for FY20 and FY21 although, in the absence of fresh guidance, we have assumed that DPS is maintained at FY18 levels ahead of FY19 results, which are scheduled for 10 April.
26 Feb 19
Walker Greenbank is a higher end interior furnishings business with well-established global brand names and manufacturing facilities in the UK. The Group has this morning provided a year-end update confirming that results for the year to 31 January 2019 are anticipated to be in line with the Board’s revised expectations; these benefitting from significantly higher licensing income, including from a major contract with H&M. Underlying core trading, most notably in the UK, has continued to be challenging, a trend that in the near term shows little sign of abating. Reflecting these trends, whilst assuming that licensing income reverts to more normalised levels in the current financial year, leads us to reduce our FY 2020E earnings expectations by 25% this morning. Today’s update again illustrates the current market uncertainty and whilst this will take time to improve, we do believe that the Group remains strategically well positioned in its markets and should benefit from its overseas presence, further licensing opportunities and other initiatives in time.
19 Feb 19
Walker Greenbank - H1 dividend and full year guidance unchanged
Following H119 results, our full-year earnings estimates look attainable and are unchanged. Group strategy has been clearly stated, although a change in management may give rise to some shift of emphasis within Brands. Walker Greenbank’s share price is up from September lows, but has not really shown any appreciable recovery in a longer-term context and currently sits c 20% below our projected year-end NAV. The prospective dividend yield – heavily weighted towards final DPS – is now 5%.
18 Oct 18
Interims - FY outlook unchanged; CEO steps down
Walker Greenbank is a higher-end interior furnishings business with wellestablished global brand names and manufacturing facilities in the UK. This morning, the Group has released interim results to 31 July, which illustrate the previously flagged weaker trading performance, whilst net debt at period end moved lower to £3.4m and the interim dividend has been held. Separately, it has been announced that John Sach has today stepped down as Chief Executive and will leave the business at the end of the month. Importantly, a ‘modest improvement’ in trading is reported in the first nine weeks of H2 ahead of the key Autumn selling period and we leave our forecasts unchanged this morning. With the shares trading on a current year PER of just 7.0x, an EV/EBITDA multiple of 5.1x and a 5.9% dividend yield, investors clearly need to see a sustained period of stabilisation in trading. However, whilst the consumer environment in the UK is likely to remain challenging for some time, we believe that the Group remains strategically well positioned in its markets, and should benefit from its overseas presence, licensing opportunities and other initiatives over the coming years.
10 Oct 18
Gresham Technologies (GHT LN) Improving win-rate in H2 and pipeline underpins confidence in full year | Hargreaves Services (HSP LN)Wolf Minerals Update | Hollywood Bowl Group (BOWL LN) Robust YE update | Marston’s (MARS LN) Slightly soft end to the year | Miton Group (MGR LN) Flow momentum continues into Q3 | Sanderson Group (SND LN) Significant progress in FY18, full year revenue and profit slightly ahead | Scapa Group (SCPA LN) In line H1 trading update | Springfield Properties (SPR LN) Site visit highlights quality offering | The PRS REIT (PRSR LN) Strong deployment continues into Q1 | Walker Greenbank (WGB LN) On track to deliver revised forecasts. Search for new CEO started
WGB GHT HSP BOWL MARS SND SCPA SPR PMI
10 Oct 18
Walker Greenbank - Earnings pressure but asset backing
Management recently flagged licence and UK order book development below levels anticipated at the AGM and lowered FY19 PBT guidance to the £9.5–10m range. The share price is now at its lowest level for over five years and – trading below NAV – implicitly attributes no value to the brand portfolio. A dividend yield in excess of 5% could also be an attraction.
03 Aug 18
Seeing improving signs
Comments at the AGM point to lower headline sales ytd but underlying patterns and indications of further improvement in H2 offer encouragement. Our estimates are unchanged and at this level the share price appears to offer excellent value if the company can deliver against FY19 guidance.
28 Jun 18
AGM update; trading remains challenging but anticipated outturn unchanged
Walker Greenbank (WGB) – Corporate – AGM update; trading remains challenging but anticipated outturn unchanged | UK Oil & Gas (UKOG) – Corporate – HH-1 Testing to Commence | i3 Energy (I3E) – Corporate – Grant of exclusivity to a potential farminee | Cadence Minerals (KDNC) – Corporate – Earn in into advanced lithium project in Zimbabwe
WGB UKOG I3E KDNC
27 Jun 18
Leisure – Bowling Sector Two perfect strikes | Liontrust Asset Management (LIO LN) PBT in line, dividend beat, earnings forecasts unch | St Ives (SIV LN) CEO succession plan | Walker Greenbank (WGB LN) Reassuring update puts spotlight on valuation anomaly | Xaar (XAR LN) Ceramics below expectations; cost reduction plan
WGB LIO KCT XAR
27 Jun 18
Small Cap Breakfast
RA International is a leading provider of services to remote locations in Africa and the Middle East looking to join AIM raising £18.8m and 56p, market cap of £97.2m. Expected 29 June Mind Gym. Behavioural science business that uses scalable proprietary products to deliver human capital and business improvement solutions to large corporations. Offer secondary offering of £50.8m at 146p, market cap of £145.1m. Due 28 June Yellow Cake will use its expertise to generate value through the ownership of physical U3O8 (Uranium) together with a range of activities and opportunities connected with owning physical U3O8. Acquiring supply contract for up to $170m. Due Early July. Knights Group— UK regional legal and professional services businesses. FYApr18 rev £34.9m and adjusted operating profit was £6.8m excluding Turner Parkinson (acquiring on IPO). Offer raising £30m primary and £20m secondary at 145p with market cap of £103.5m, expected 29 June. TransGlobe Energy Corporation—an independent international upstream oil and gas company with headquarters in Calgary, Canada is looking to join AIM. No Capital to be raised, market cap of £131m. Expected 29 June Strongbow Exploration (TSX:SBW) intends to dual list on AIM. Holds rights to the South Crofty underground tin mine, a former producing tin mine located in the towns of Pool and Camborne, Cornwall . The project is estimated to require the Company to raise £25 million over the next 18 months to progress to a production decision. Offer TBS. Due June.
WGB TRAK VEL SIS PREM CRAW AVO ULS PTR NMRP
27 Jun 18
Accentuating the positives
There were a number of headwinds and tailwinds in FY18, in which good growth was delivered, but lower earnings expectations have dominated sentiment. Walker Greenbank has some strong and unique market positions and is becoming increasingly active in broadening its revenue mix into faster-growing segments. Success here and greater stability in UK demand will translate to rating expansion in our view.
13 Apr 18
FY results in line; challenging backdrop leads to further caution
Walker Greenbank is a higher end interior furnishings business with wellestablished global brand names and manufacturing facilities in the UK. The Group has this morning released full year results, in line or slightly better than our forecasts and the trading update provided in February. Since year-end, trading has remained challenging across the UK with LFLs in this core territory standing at - 8.3% for the first 9 weeks, whilst International LFLs moved -3.8% lower on a constant currency basis (-6.1% reportable). On the back of the results, we have reduced our FY 2019E earnings expectations by 4.6%, whilst taking the opportunity to adopt a more cautious approach to FY 2020E given the wider backdrop, leading to a 10.7% reduction in our EPS estimate. Whilst the consumer environment in the UK is likely to remain challenging for some time, we believe that Walker Greenbank remains strategically well positioned in its markets, and will benefit from its overseas presence, licensing opportunities and other growth initiatives. An in line 2018 PER rating to the peer group would imply fair value for the shares at 170p.
05 Apr 18
Management expectations met
FY18 closed in line with management expectations showing good top-line progress overall despite some UK market variability. The latter appears to have affected sentiment – as reflected in single-digit prospective P/E multiples – but there are positive mix effects also that should not be overlooked. A rising dividend provides an additional attraction.
07 Feb 18
In line update exposes oversold valuation on 40% discount to prior avg.
Today’s year end update felt binary to us. Either performance would fall shy of downgraded expectations, and the recent market sell-off would have been well founded, or it would meet downgraded expectations – which would highlight the shares being significantly oversold. Given it is the latter, the question becomes how quickly and by how much the shares can re-rate. The 8.5x P/E (5.5x EV/EBITDA) equates to a 40% discount versus the group’s 5 year historical average. Recent underperformance means some of this is warranted in the near term. Taking a 12-month view we feel a 12x P/E (7x EV/EBITDA) is justifiable, equivalent to a 20% discount. Without being overly ambitious this derives a 12 month target price of 200p, offering a TSR of 56%. We therefore upgrade to BUY.
06 Feb 18
Amino Technologies (AMO LN) Finals in line, FY’18 outlook positive | Mattioli Woods (MTW LN) Sustained positive performance in H1, confirming recent update | Tribal Group (TRB LN) Microsoft collaboration | Walker Greenbank (WGB LN) In line update exposes oversold valuation on 40% discount to prior avg
WGB AMO MTW TRB
06 Feb 18
Year-end update points to results in line with revised expectations
Walker Greenbank has this morning provided a year-end update confirming that results for the year are expected to be in line with the Board’s revised expectations. In November, the Group reported that Brand sales in the UK, excluding Clarke & Clarke, during the key autumn selling period had weakened significantly and in December a fire impacted a machine at Anstey, so it is encouraging to see that trading since then has been maintained. On the back of the update, our revenue, PBT and EPS expectations remain unchanged, whilst our year-end net debt forecast increases by £2.0m to £5.0m to reflect working capital movements in the year. Although the consumer environment in the UK is likely to remain challenging for some time, we believe that Walker Greenbank remains strategically well positioned in its markets, including Clarke & Clarke, overseas and in licensing. An in line 2018 PER rating to the peer group would imply fair value for the shares at 200p.
06 Feb 18
Trading in line with reduced forecasts; Anstey defers £0.4m profit to Q1
Walker Greenbank has confirmed that repairs to the Anstey factory printing machine that was affected by the fire 4 weeks ago are progressing, and it will be up and running again in early Q1 FY19. Insurance will cover the repair/replacement costs, and there will be no loss of profit (just a deferral from Q4 into Q1). The deferred printing revenue is expected to be of the order £1m and the profit shift will be about £0.4m. We have altered our forecasts accordingly, from £12.8m to £12.4m in Jan18 and from £13.5m to £13.9m in Jan19. The fact there is no further update on trading indicates performance since the warning 8 weeks ago has been in line with downgraded guidance. Given where the share price has dropped to after a 40% fall to 140p (vs 12% downgrade), the P/E is now sitting at just 9x. This looks to be significantly oversold and so today’s news ought to be well received and see the shares regain some ground. The FY pre-close will provide more details on subsequent UK and overseas trading in 4 weeks time.
04 Jan 18
N+1 Singer - Morning Song 04-01-2018
Be Heard (BHRD LN) Revenues ahead but costs timing mismatch | Cambria Automobiles (CAMB LN) Exciting new luxury brand makes 4 new franchise wins in just 2 months | Churchill China (CHH LN) Positive year-end trading update | Futura Medical (FUM LN) Additional positive data published on MED2002 | MJ Gleeson (GLE LN) Striking acceleration in Gleeson Homes completions | Vectura Group (VEC LN) Trading and strategy update | Walker Greenbank (WGB LN) Trading in line with reduced forecasts; Anstey defers £0.4m profit to Q1
WGB BHRD CAMB CHH FUM GLE VEC
04 Jan 18
Small Cap Breakfast
Cradle Arc—holding company of a group of companies focused on the exploration and development of precious and base metals projects in Africa. Offer raising £2.4m with market cap of £20.25m. Expected 10 Jan 2018 | Volex VLX.L—The global provider of cable assemblies is proposing to move from the main market to AIM on 19 January. £75m market cap. FYMar18E rev £241.5m and £7.19m PBT | OnTheMarket—Intention to float on AIM to raise c.£50m which will be used to fund the growth of the OnTheMarket.com portal, already the third biggest UK residential property portal provider. Expected valuation £200m to £250m.
WGB FUM SYM CHH SPE SRE CYAN SDX
04 Jan 18
Weaker order intake in Q4
Order variability was referenced in H1 results, but latterly intake patterns have weakened. This has affected UK premium brands, following through into manufacturing activity also. We have reflected this in lower earnings estimates (c 10% for this year and next, with a smaller reduction for FY20) ahead of greater clarity on consumer behaviour in this segment. This news has been received harshly – judging by a sharp negative share price reaction – but feels overdone in our view.
16 Nov 17
Maintaining a growth focus
Progress from organic and acquired operations was clearly visible in H118, slightly tempered by subdued UK Brands performance at the period end. Strong dividend growth, prospective cash generation and international developments all send positive signals for future prospects. Save for slightly improved dividend expectations, our headline estimates are unchanged and we believe Walker Greenbank offers investors above-average growth exposure.
13 Oct 17
N+1 Singer - Walker Greenbank - Encouraging autumn order intake trends underpin EPS forecasts
PBT growth of 56% in H1 is reflective of a number of positive growth dynamics in the business, including strong export and licensing growth and Clarke & Clarke, which was added to the portfolio in Oct16. There was also a final loss of profit insurance settlement relating to flood disruption at Standfast, which is now fully operational with volumes recovering. However, as flagged at both the AGM (June) and pre-close (Aug), Brands performance was weak in the UK in May and July. Given our prior assessment of forecast upside risk, FY18 estimates did not look at risk to us pending good autumn trading. Today’s outlook statement was key in this regard and, with Brands’ order intake growing and on an improving trend, our analysis looks to be underpinned with EPS forecasts maintained on a slightly lower revenue assumption. This ought to come as a relief, and underpin the recent share price increase. While we don’t see a major catalyst near term, we continue to believe the group’s international growth prospects and mix of unique brands & manufacturing capabilities are not yet adequately factored into WGB’s undemanding valuation.
04 Oct 17
Our estimates show a good step forward in expected FY18 earnings for Walker Greenbank and H117 pre-close statement comments are consistent with this. Underlying progress is being supplemented by acquisition and positive translation effects against the prior year. The rating has risen following recent share price moves but a premium rating is fully justified in our view.
02 Aug 17
Small Cap Breakfast
Andes Energia PLC—Sch1 on admission the Company will change its name to Phoenix Global Resources plc will be an Argentinian independent oil & gas exploration and production company, offer TBC but market cap to be £844m and admission date 10 August 2017 Verditek PLC—Sch1 update from holding company in the clean technology sector with subsidiaries operating within what it considers are emergent and fast growing sectors (industrial treatment of solids, air purification, water de-odourisation, zero emission, low cost energy), offer raising £2.75m at 9p with market cap of £16.9m. Admission 10 August 2017 Strix Group PLC—Sch1 from the Company involved with the design, manufacture and supply of kettle safety controls and other components and devices involving water heating and temperature control, steam management and water filtration. Offer raising £190m at 100p with market cap of £190m admission date 8 August 2017. Xpediator Plc—Sch 1 from the holding Company for an integrated freight management business operating in the supply chain logistics and fulfilment sector across the UK and Europe with a strong presence in Central and Eastern Europe. Offer details TBC, expected Admission early August 2017. GetBusy PLC—Sch1 from the holding Company of its subsidiary undertakings, which operates as a document management software business, headquartered in Cambridge, UK and operating across the UK, USA, Australia and New Zealand. Capital to be raised via a rights issues of up to £3m at 28.3p with anticipated market cap of £13.7m, Admission 4 August. Altus Strategies—African focused natural resource Company. Offer TBC. Expected early August. Hipgnosis Songs Fund investment Company offering pure-play exposure to Songs and associated musical intellectual property rights. Offer raising £200m at 100p. The Company has decided to extend the closing date for the Placing, Offer for Subscription and Intermediaries Offer to 1 August 2017. The Company may bring forward this closing date at any time. Admission 4 August 2017
WGB ADT VGAS PRIM NBI SOG BHRD ORR LGT
02 Aug 17
N+1 Singer - Walker Greenbank - Strong o/seas & manufacturing demand counter soft patch in UK in May
Walker Greenbank has traded in line with expectations so far in H1. Brand sales are +7-8% incl Clarke & Clarke which is performing to plan and which makes a full contribution this year. Possible upside identified at this early stage of the year has been undermined by a soft patch in the UK in May but, having rebounded in June, has not totally gone away. Strong international growth from Brands and Licensing and accelerating manufacturing demand, including new export customers, support attractive growth dynamics (13.5% 3-yr EPS CAGR). On just 8x EV/EBITDA (<13x P/E) though, we believe the group’s international growth prospects and mix of unique brands/manufacturing capabilities are inadequately valued. Whilst we don’t see a catalyst in this update, we maintain a 270p target price. Buy.
21 Jun 17
AGM comments were very much in line with those at the beginning of the year and our estimates are unchanged. Walker Greenbank is on track for a good profit uplift in FY18 derived from organic progress in both divisions and a full year contribution from Clarke & Clarke. Moreover, the business retains significant financial flexibility for further investment. We would expect the share price to regain or exceed the higher levels seen earlier this year in due course.
21 Jun 17
Small Cap Breakfast
GYG—Intention to float by the superyacht painting, supply and maintenance company. Due 5 July. Raising £6.9m new plus vendor sale of £21.5m at 100p. Mkt Cap c. £47m. Revenue of €54.6m in FY16 and adjusted EBITDA of €6.7m. | Greencoat Renewables - Schedule 1. Targeting a portfolio of operating renewable electricity generation assets, initially investing in wind generation assets in Ireland. Offer TBC. Due Mid July. | FFI Holdings— Specialist in the provision of completion contracts to the entertainment industry for films, television, miniseries and streaming product. Offer TBA. Expected 30 June. | QUIZ— Omni-channel fast fashion womenswear Company intention to float. Due July 2017. Offer TBA | Ethernity Networks—Schedule 1 from Israeli based specialist in data processing technology used in high end carrier ethernet applications across the telecom, mobile, security and data centre markets. Expected late June. Offer TBA. | Jangada Mines—Sch 1 advanced stage PGM exploration project containing what the Directors understand to be the largest PGM resource, and only pre-development PGM project, in South America. Offer TBA. Expected late June. | Phoenix Global Mining— US Brown field copper play. Expected late June. Offer TBA | Touchstone Exploration— Oil E&P company active in the Republic of Trinidad and Tobago. Interests of approximately 90k gross acres. Production c. 1.3k boepd. Raising £1.5m. Expected mkt cap £7.5m - 26 June. | I3 Energy –Schedule 1. Independent oil and gas company with assets and operations in the UK. Offer TBC, 7 June admission. | Verditek— Schedule 1 update. On Admission, the Company's subsidiaries will be involved in advanced solar photovoltaic, filtration and absorption technologies specialising in providing environmental services. Issue price 10p. Admission late June | Tiso Blackstar Group—Schedule 1 update. Media, entertainment and marketing solutions group/ £160m mkt cap. Admission only. Expected late June. | Rockpool Acquisitions—Northern Ireland based Company seeking strong NI acquisition with an international outlook. Raising £1.5m at 10p. Due 5 July. | Residential Secure Income - social housing REIT raising up to £300m Admission due c.12 July. | ScotGems—Admission due 26 June. Seeking £50-£100m. To investing in a diversified portfolio of Small Cap Companies listed on global stock markets | DP Eurasia—Intention to float from the exclusive master franchisee of the Domino's Pizza brand in Turkey, Russia,Azerbaijan and Georgia . £20m primary raise plus a partial vendor sale. | AIB—Intention to float from AIB, Ireland's leading retail and commercial bank. The Minister for Finance intends to sell approximately 25% of the Ordinary Shares of AIB. Valuation range €10.6-€13.3bn. Admission end June. | Curzon Energy—Report on Proactive Investors of intended LSE float this year with acquisition of coal bed methane assets in Oregon. Looking to raise £3m plus. | NLB Group—financial and banking institution based in Slovenia, with a network of 356 branches. Seeking Ljubliana Stock Exchange listing with GDRs on the LSE. Expected mid June. | Kuwait Energy— $150m raise plus vendor offer. Admission due June. 2p reserves 810.0 mmboe. | Supermarket Income REIT– Up to £200m raise to acquire a diversified portfolio of supermarket real estate assets in the UK, providing long-term RPI-linked income. Due 21 July.
WGB ORCP WYN LEK HRN FCR EZH MERC ECHO HALO
21 Jun 17
Branding strength, manufacturing restored
FY17 was a testing year but management emerges with credit, having restored and improved flood affected fabric printing operations and added another mid-market brand (Clarke & Clarke) to the portfolio. International exposure, acquisition effects and the absence of flood distractions mean that Walker Greenbank is well positioned for good earnings growth. We would expect this momentum to translate to share price performance.
10 May 17
N+1 Singer - Walker Greenbank - Momentum visibly rebuilding post floods and after investment in growth
Adjusted PBT increased 16.4% in FY17 to £10.4m (N+1E £10.3m). Net debt was also marginally better than expected at £5.3m. DPS increased 25% to 3.61p (N+1E 3.39p) reflecting positive current trading and outlook comments, and growing confidence in international growth initiatives. Forecasts are well underpinned as 1) the core business is visibly reverting to growth as flood effects fade, including with major UK customers like John Lewis, 2) investment made in prior periods starts to yield benefits, 3) licensing momentum builds, and 4) accretion from Clarke & Clarke is coming through as hoped. Our recent upgrade to Buy (Oct’16) therefore looks well supported with the stock on a P/E of 13.5x (8.7x EV/EBITDA) and cashflow generation increasing. Rolling forward to Jan19 estimates, leads to an 8% uplift in our 12 month target price to 270p, equivalent to a prospective EV/EBITDA multiple of 10x for this high quality growth stock.
26 Apr 17
Small Cap Breakfast
Global Ports Holding—Intention to float on Standard List. International cruise ports operator. Seeking $250m raise including $75m primary offer. Dorcaster—Schedule One Update. Admission now expected 3 May. RTO of Escape Hunt raising £14m at 135p Verditek— Intention to float on AIM. On Admission, the Company's subsidiaries will be involved in advanced solar photovoltaic, filtration and absorption technologies specialising in providing environmental services. Raising £3.5m. Admission in May. Eddie Stobart Logistics— Schedule 1 update. Admission expected 25 April raising £122m. ADES International Holding— Intends to join the Standard List in May raising up to $170m plus a vendor sale. Provider of offshore and onshore oil and gas drilling and production services in the Middle East and Africa. Admission expected in May. Tufton Oceanic Assets– Offer extended to 9 May to enable investors to complete further due diligence.
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20 Apr 17
Back on course
Walker Greenbank’s pre-close trading statement reinforces market estimates, puts its major flood largely into the history books and enables the market to concentrate on the future. April’s FY results announcement could signal the end of a prolonged period of consolidation for the shares.
07 Feb 17
Small Cap Breakfast
Arix Bioscience — Intention to float on the main market from the global healthcare and life science Company supporting medical innovation. Raised £52m in Feb 16 with investors including Woodford Investment Management Eco (Atlantic) Oil & Gas—Schedule One Update. Now expects admission ‘early February’. Ramsdens Holdings –Schedule One from the financial services provider and retailer, operating in the core business segments of foreign currency exchange, pawnbroking loans, precious metals buying and selling and retailing of second hand and new jewellery. Expected admission to AIM 15 Feb raising circa £15.6m. Expected mkt cap £26.5m.
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07 Feb 17
Big leap forward
The proposed acquisition of Clarke & Clarke (the first deal for more than 10 years) represents a big leap forward for the group, increasing our group 2018 PBT estimate by 45%. Moreover, the group’s fabric printing business is back in full production following the major flash flood last December. Despite the challenging trading climate, Walker Greenbank expresses its confident outlook with a 25% increase in the interim dividend.
12 Oct 16
Things are clearing: trading is in line with expectations; the Lancaster factory is almost back to full production and working on its order backlog; insurance payments are coming in; and new business streams are being established. The share price is justifiably holding up well.
03 Aug 16
N+1 Singer - Retail - Matthew - Brexit driven forecasts and valuation update
Prior to the EU vote, fears of Brexit undermined consumer confidence and spending patterns, and sterling weakened against the US$ and the €. Wider fears for employment, consumer spending and economic slow-down had hit Retail stocks significantly (-10% rel. YTD). Friday’s surprise Brexit vote has impacted Sterling again and will further knock confidence and spending too. The sector came under material further pressure as a result, falling 10% on the day vs the Allshare’s 3%. As noted on Friday, there are 4 stocks in our universe where forecasts are favourably exposed to FX upside risk (BCA, Boohoo, Swallowfield, Walker Greenbank), 5 stocks which we have downgraded (Debenhams, Findel, Halfords, N Brown, Howden Joinery) with the remainder left unchanged including Motor Retailers.
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27 Jun 16
Flood disruption as anticipated so far in H1, with full cover from insurer
As we anticipated, the moving parts are proving difficult to assess given the high level of disruption to the business caused by flooding at its fabric manufacturing facility, with sales in both fabric and wallpaper affected in current trading in both the UK and USA (where awareness is highest). However, the insurance claim period runs until Dec’17 and should therefore fully protect against both higher loss of profits and asset repair/replacement costs. Production is coming back on stream again as hoped and inventory should be rebuilt by the year end. We probably still have a further 6-9 months to wait therefore before we see increased growth rates emerge, a key catalyst for the stock.
15 Jun 16
Boohoo.com (BOO LN) Results preview – target price raised to 50p – re-iterate Buy | easyHotel (EZH LN) H1 trading ahead of expectations | Grainger (GRI LN) Disposal of last major tranche of German assets | Halfords Group (HFD LN) Solid Q4 ends tricky year with good momentum and initiatives for FY17 | Midatech Pharma (MTPH LN) FY results in line; Phase II insulin data remains expected in Q2 | Walker Greenbank (WGB LN) Near term disruption covered and strategic growth plans continue
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13 Apr 16
Near term disruption covered and strategic growth plans continue
The moving parts are proving difficult to assess given a higher than expected level of disruption to the business in the short term caused by flooding at its fabric manufacturing facility, with UK sales in both fabric and wallpaper affected in current trading. However, the insurance claim period runs until Dec’17 and it should therefore be fully protected against both higher loss of profits and asset repair/replacement costs. Strategic development continues mostly unaffected and, in the absence of the floods, FY17 ought to have been the year to see increased growth rates emerge. Optically this might not become evident for another 6-12 months now. However, confidence in FY’18 numbers is high, so any adverse reaction to current trading performance could therefore present an opportunity.
13 Apr 16
Estimates in line
Walker Greenbank’s trading statement indicates profits in line with market expectations. A likely interim insurance payment covering lost profits and asset damage, relating to the December 2015 flood, is expected in due course. We hope to restore our pre-flood profit estimates when the payment is confirmed.
03 Feb 16
Trading and flood recovery work on track, including insurer claim
Trading over the year has been in line with expectations and, as a result, PBT is expected to be in line with market forecasts. The loss of profit due to floods is expected to be fully covered, both in this period and in the new financial year when materiality will increase. An interim insurance payment is anticipated, which could be £5m+ in light of the costs/losses incurred to date. Their insurance cover should ensure that PBT projections for FY’17 also remain unchanged but we are mindful that conditions in some end markets look to be softening. The stock trades on an adj. cal’16 P/E of 16.3x or 10.9x EV/EBITDA. Given the in-line RNS, our previous target price reduction looks sufficient.
03 Feb 16
Covered by insurance
We consider the share price reaction (-7%) to the likely flood impact to be overdone. Losses are fully insured, with estimate reductions indicated to be recoverable when the claim is settled. With a negligible anticipated long-term impact, the weakness represents a buying opportunity.
16 Dec 15
Flood update, 15% PBT shortfall in FY16 and probably FY17
WGB has issued an RNS today updating for the floods that hit its factory in Lancaster two weekends ago. Management expects the facility to progressively be brought back on stream by the end of April 2016. The disruption is expected to impact current year PBT by around 15% and, although not quantified, we would expect the effect next year to be at least of that magnitude. However, with full insurance cover management are hopeful of fully recovering the shortfall. Having already reduced our target price 10% last week we are unlikely to make further adjustments today but will review this and our forecasts in due course.
14 Dec 15
Floods cause substantial damage at Lancaster factory
WGB has issued an RNS today indicating that its factory in Lancaster has suffered substantial flooding on the back of the weekend’s storms. Management expects there to be disruption to production as well potential damage to stock and machinery. The group has comprehensive insurance to cover this disaster and a claim has been logged. However, there can be no guarantee that the full extent of losses to assets and profits will be covered. From a relatively high premium rating we would expect some weakness in the shares today, pending clarity on the situation.
07 Dec 15
ENTERTAINMENT ONE LTD (ETO LN) Refinancing impacts FY17 and FY18 EPS by 8.6% | GRAINGER PLC (GRI LN) Progress in FY15, proactive PRS investment required | RENEURON GROUP (RENE LN) Interim results: 2016 an important year | WALKER GREENBANK (WGB LN) Floods cause substantial damage at Lancaster factory
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07 Dec 15
Walker Greenbank continues to deliver relentless progress, positively confronting the various challenges in its market place. Management has achieved consistent organic growth through investment in new collections and specialist skills. Today's strong interim results reinforce the conservative nature of current market estimates.
14 Oct 15
Strategy and performance on track to meet FY expectations
H1 results are a smidge ahead of our expectations and current trading is encouraging ahead of the autumn trading peak, including in the UK where background conditions have generally been a bit mixed. Management is confident of being able to meet FY expectations, and a 25.7% increase in the dividend marks another step towards improving the pay-out ratio (to >25% vs. <20% in FY’14). FX headwinds plus investment in resource and a number of new initiatives have recently been preventing EBIT margins from advancing (FYE 10%), but positive signs are beginning to emerge in areas of the business with profitable growth potential. As expected there are no upgrades today, but there may be scope for the forward EPS outlook to pick-up over the next 6-12 months (3-yr CAGR currently just 6%). If, and when, this happens the shares should be able to perform again. For now, though, we maintain a HOLD recommendation.
14 Oct 15
Walker Greenbank’s pre-close trading update confirms the group is on course to deliver further sound progress in the current year. The strong share price performance since the prelims in April (+ c 23%) demonstrates that the market is recognising the consistent trading performance over a number of years and the investment to continue growth into the future.
04 Aug 15
Sluggish June in UK not a major concern, overseas performing well
Brand sales are up 8.4% in H1 (+9.1% on a CCB), implying growth edged back to c7-8% over the final 8 weeks from c10% in the previous 8 weeks. This reflects a soft June in the UK but, with a bounce-back witnessed in July, we put this down to seasonal/contract fluctuations rather than anything of fundamental concern. As hoped, international Brand sales posted good growth, tracking the prior growth rate of 12% despite FX headwinds and tricky conditions in certain countries. With no forecast changes today though some of the recent rally (+16%, 8 weeks) will likely reverse. In the event of a strong autumn the next window for a revision will be interims, albeit reinvestment could be a limiting factor.
04 Aug 15
Applied Graphene Materials (AGM LN) First patent approval secured | Futura Medical (FUM LN) AGM statement shows continued progress | JD Sports Fashion (JD/ LN) Strong start to the year and confidence in meeting FY expectations | MJ Gleeson (GLE LN) FY15 results to be ahead of expectations following strategic land sale | Redcentric (RCN LN) Clean year showcases organic growth | Ten Alps (TAL LN) Extracting value and putting TAL on a growth path | The Innovation Group (TIG LN) £46m contract win with tier 1 UK insurer | Walker Greenbank (WGB LN) Sales momentum continues to build, suggesting forecast upside risk
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17 Jun 15