Tough FY23 but light at the end of the tunnel

FY23 was a challenging year for Zytronic, the specialist manufacturer of touch sensors. Sales declined 30% to £8.6m and an adj EBITDA loss of £0.4m was recorded. Trading YTD remains tough with sales lower YoY. This said there is cause for cautious optimism. There has been a sustained improvement in the opportunities log which should support improved sales activity in 2H. There is also good visibility on the cost base following restructuring activity. Net cash of £4.7m provides a strong footing a

FY22: improving profitability, rebuilding the pipeline

FY22 was a year of progress for Zytronic as revenue increased by 5.6% and PBT improved to £0.7m (ahead of our £0.5m f/c) as a result of careful cost control and improving product mix (higher volumes of larger touch sensor units). Whilst market challenges remain, there are encouraging signs in the return of face to face business development and a sustained recovery in the opportunities pipeline. We upgrade FY23 PBT/EPS (+45% from a low base) to assume sustained profitability this year and note th

Challenging backdrop but recovery potential remains

Last week’s trading update highlighted ongoing challenges relating to the uncertain economic and inflationary environment. Nevertheless, FY22 is still expected to be a year of revenue and profit growth. Our FY22 PBT forecast reduces to £0.5m (from £1.0m) and we assume a consistent performance (£0.5m PBT) in our newly introduced FY23 forecast. The balance sheet is robust (net cash c.£6m), the opportunities log is improving and a recovery towards pre-COVID levels of profitability (PBT >£3m in FY19

Hybridan Small Cap Feast 18/08/22

Dish of the day Joiners: No joiners today. Leavers: No leavers today. What’s cooking in the IPO kitchen?** Unigel Group, intends to join the Aquis Growth Market. Unigel Group is a pioneer in the field of thixotropic gels for the fibre optic cable industry. The Company is also a supplier of laminated steel tapes to the fibre optic cable industry in the US. Thixotropic gels and laminated steel tapes are essential components to the rapidly growing global fibre optic cable market. The Group exports

Recovery continues despite industry headwinds

Zytronic’s interims confirm a continuing improvement in demand, driven by the Gaming and Vending sectors. This has driven a 24% increase in H1 revenue and a profitable outturn (PBT of £0.4m), on track for our full year forecast (SCMe: £1.0m) despite ongoing and well publicised supply chain challenges. Longer term recovery potential remains substantial and the Group is in excellent financial shape (net cash £7.5m post recent share buy-back programme).

Hybridan Small Cap Feast 03/03/2022

Dish of the day Joiners: No Joiners Today. Leavers: No Leavers Today. What’s cooking in the IPO kitchen? Cordiant Global Agricultural Income plc intends to float on the Main Market (Premium). The Company's investment objective will be to seek to provide an attractive yield, with potential capital growth, by providing secured medium-term finance to the global agricultural sector. The Company will seek to promote more sustainable crop production and help address a capital solutions gap which exist

Positive AGM Update

Zytronic has issued a positive AGM update, confirming a continuation of the more positive trends reported at December’s prelims. Revenues for the first five months are c.25% ahead year-on-year and operating margins have been maintained at the improved levels of last year. The order book is 45% ahead, providing visibility for the coming months. We make no changes to forecasts this morning and continue to see further recovery potential beyond the forecast period. We reiterate our 250p TP and Buy r

Sustained recovery prompts return to dividend list

Zytronic has reported positive full year results, confirming a sustained recovery in demand. Headline financials were disclosed in the pre-close update, including the return to profitability on a reported basis (£0.5m PBT). Strong cash generation (£9.2m net cash even after the tender offer) has supported a positive surprise in the resumption of dividends (1.5p final). Recent trading and order intake have been very encouraging and the ongoing recovery remains well on track. We introduce a Buy rec

Hybridan Small Cap Feast 22/10/2021

Joiners No Joiners Today Leavers No Leavers Today What’s cooking in the IPO kitchen? Arrow Exploration Corp. (AIM: AXL ; TSXV: AXL) , the oil and gas exploration and production company, has conditionally raised approximately £8.8m and is due to complete its dual listing on AIM on 25 Oct. Market cap c£13.1m. Devolver Digital to join AIM, an award-winning digital video games publisher and developer in the indie games space. Recently awarded indie 'Publisher of the Year 2021' by GamesIndustry.biz.

Impressive H2 turnaround confirmed

Zytronic’s pre-close update confirms a considerable turnaround in performance in H2. Whilst partially flagged in the September update, the full year outturn is better than expected, driven by a significant improvement in sales (+44% H2 versus H1) and careful cost control. Operating profit of £0.5m is comfortably ahead of our break-even forecast and net cash of £9.2m is £1m ahead. Although mindful of industry supply chain issues, we consider the recent run rate a sensible guide for FY22 and intro

Recovery coming through ahead of expectations

A positive trading update this morning signals that Zytronic is trading ahead of expectations. The recovery in sales (of which there were tentative signs at the time of the interims) has now taken hold convincingly. H2 sales are currently running some 30% ahead of H1 and therefore also ahead of our previous cautious forecast of a balanced H1:H2 split. This has enabled a faster return to profitability than expected and a reversal of the H1 loss. This is clearly good news and we look forward to up

Improving trends prompt revenue upgrade

Whilst today’s interims reflect the ongoing impact of the pandemic, order intake has been on an improving trend since January, prompting a full year revenue upgrade (from £8m to £10m) within this note. The cost base has been well managed and the Group is well placed to return to profitability as trading patterns normalise post COVID. Following the Tender Offer towards the end of the period, the net cash balance remains a strong £7.8m.

Updating forecasts post Tender Offer

We update our forecasts within this note to reflect the impact of the recent Tender Offer. A total of 4.6m shares were validly tendered and these have subsequently been purchased by the Company and cancelled, reducing the issued ordinary share capital by c.29%. Our revised year end net cash forecast is £6.7m. Whilst we forecast a loss before tax for the current year, an Enterprise Value of £13m looks very modest indeed relative to previous levels of profitability.

Introducing FY21 forecasts

We introduce FY21 forecasts this morning, cautiously assuming a continuation of current activity levels. As indicated in last Friday’s trading update, revenue stabilised at £2m per quarter in Q4’20 and Q1’21, reflecting current lower levels of demand caused by the COVID pandemic. We assume that EBITDA remains positive for the balance of the year, benefitting from the reorganisation and cost reduction measures implemented by management last year. This has served to protect the balance sheet with

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.

Surface Transforms plc (SCE LN) - Forecasts and valuation withdrawn

We note the regulatory announcement this morning from Surface Transforms and withdraw our estimates and valuation, pending conversations with management.

Morning Note – 16 April 2024

Robust margin and cash performance

Surface Transforms (SCE LN) - Obstacles removed for higher production

Surface has issued a brief Q1 update. Production will ramp-up this year as final new equipment is installed, and manufacturing teething problems recede.

Initial Equity Trading Comments - 19 February 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

Dowlais Group - Motoring forward

Dowlais Group’s first set of results were ahead of our expectations, with positive cash generation a highlight despite restructuring and demerger costs. Softer automotive markets will limit margin progress in FY24 towards the double-digit target. Despite this, margins of c 6.5% are still ahead of automotive peers, although the shares trade at a significant discount to our implied generic peer-based valuation.

Morning Note – 9 April 2024

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

Morning Note – 4 April 2024

LIBERUM: New Energy Nuggets: Hydrogen - the future is green

Hybridan Small Cap Feast - 17 April 24

17th 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: 16 April 2024: Electric Guitar (ELEG.L) Concurrent with its Admission to trading on AIM, Electric Guitar is proposing to acquire the entire issued share capital of 3radi

Nexteq - FY23 adj EBITDA +4% ahead, FY24E upgrades of +1-10%

Nexteq’s FY23 results show adjusted EBITDA +4% ahead of the +6% upgrade at the January trading update, record FY23 EFCF of $17.4m, and a confident outlook that leads us to reiterate our FY24E revenue and upgrade FY24E gross profit, adj EBITDA, and EFCF by +1-10%. The strategic focus on higher-margin products and customers reducing elevated inventory levels led FY23 group revenue -5% yoy to $114.3m, with Quixant 6% lower at $69.3m and Densitron 2% lower at $45.1m. Effective supply-chain managemen

Morning Note – 25 March 2024