Despite unprecedented disruption caused by CV19 lock-down, which government support only partially mitigated, ANG delivered £1.5m adj PBT in H1, a £1m YoY improvement. EBITDA margin improved by 330bps to 6.5% including some non-recurring factors and an immature store estate where future lifecycle growth/profitability can be unlocked. With clear evidence pivotal issues are being addressed (e.g. gross margin, online profitability, cash generation), guidance being reinstated and £21.0m net cash (31/7), valuation looks very undemanding.
Companies: Angling Direct Plc
Angling Direct has achieved scale over the last 5 years and proven its multi-channel credentials. Under new leadership it is now being professionalised, and margin/profit weakness (notably online) is a key focus. Early signs are encouraging. With a fishing renaissance post covid, ANG is very well placed to deliver profitable and sustained growth over the medium to long term in highly fragmented markets. For these traits, valuation is extremely undemanding, and upcoming results are a possible catalyst.
With sales growth of 21% in H1, and period end net cash of £21m (incl. c£5m placing proceeds), trading performance has been considerably more resilient and profitable than was feared at the outset of the pandemic. The newly strengthened management team have successfully controlled costs and protected cash in response to CV19, and begun to take quick and decisive action to address the operational and commercial issues that impacted margin and profitability in FY20. Angling Direct looks to be very well placed to continue strengthening its multi-channel platform to drive profitable future growth, in highly fragmented markets which should benefit long term post covid. With the shares trading on <0.4x historic EV/sales (vs peers on c1x), this update is likely to be well received. Results are due on 14 Oct.
Top line growth was 26.6% in FY20, despite a refocus away from unprofitable online regions (e.g. Russia) and a drag in Q4 from adverse weather/flooding. In highly fragmented UK/European markets, and potentially supported by accelerated structural change post CV19, there remains a significant growth opportunity both online and offline for the lead consolidator. Weak bottom line contribution highlights the benefit that changes being implemented under a strengthened management team should yield. These include improved stock management processes and a greater focus on gross margin and operating cashflows. With sufficient liquidity to navigate the crisis, a profitable/growing store estate and scope to realise scale economies online, ANG should be a long term winner.
Cenkos Securities plc has terminated coverage of Angling Direct Plc. Our previous recommendation (BUY) and forecasts can no longer be relied upon.
For further information please contact Cenkos.
Online sales (47% of total sales in FY20), have accelerated strongly since early April. This reflects the benefits of the channel shift as well as ANG’s enhanced online capabilities, including local language functionality and continuity of fulfilment from its Norwich DC. In particular, strengthening demand and improved conversion rates in its key European markets offer encouragement, given they form a central part of ANG’s future growth strategy. The UK government’s relaxation of angling restrictions in England tomorrow is also a positive, and likely to strengthen market demand both online, and offline where plans to re-open using strict distancing protocols are well advanced. With cash as it was at the end of January too (£6m), today’s update is clearly very reassuring and should be well received by the market.
Revenue growth at Angling Direct was broadly in line with our forecasts for FY20E, but Adj EBITDA is expected to be below our expectations (£0.6m vs £1.6m previously forecasted), due primarily to a negative mix effect. We lower our FY20E and FY21E forecasts to account for the reduction in expected margins.
Inspecs, a UK designer, manufacturer and distributor of eyewear frames to global retail chains announces its intention to IPO onto AIM raising £94m with a market cap of £138m. Admission expected 27th February. FY Dec 2018 numbers show revenue of $57m and underlying EBITDA of $11m Intention to float by Gemfields Group. No Capital Raise. Currently listed on JSE. (GML:JNB) at circa £122m. The Group's key producing assets, the Kagem emerald mine in Zambia (believed to be the world's single largest producing emerald mine) and the Montepuez ruby mine in Mozambique (one of the most significant recently discovered ruby deposits in the world), are both expected to have long mine-lives with potential for expansion. Also owns the Faberge brand. Due Valentines Day 2020.
Companies: ANIC DNL POLR LID FLTA TPFG ACSO ORPH ANG
MJ Hudson Group PLC, the financial services support provider to Alternatives fund managers and asset owners, is planning an AIM IPO. Deal details TBC but expected admission date mid-December. Octopus Renewables - Raising £350m. Will seek to provide investors with an attractive and sustainable level of income returns, with an element of capital growth by investing in a geographically and technologically diversified spread of renewable energy assets—Due 10 Dec. SulNOx Group - The Group has developed a methodology and process capable of emulsifying hydrocarbon fuels such as diesel and heavy fuel
oil . By January 2014, following preliminary laboratory testing, SulNOx was in a position to suggest that its products resulted in up to a 50%
reduction of Nitrogen Oxide (NOx) and a 90% reduction in particulate matter Due 17 Dec, mkt cap £42.3m.
Companies: CRU ANG ORPH FEN CNIC DCTA LND IRR TERN DMTR
Angling continues to gain momentum in H1/20A as they report substantial growth in all areas of the business. This progress is testament to the continued growth capital invested in the business that has driven sales both in the UK and abroad. We believe Angling is on track to meet our full year forecasts as they continue to outperform the retail sector, leverage their competitive advantage and grow their geographic presence in the UK and Europe.
AMRYT PHARMA PLC— a biopharmaceutical company focused on developing and delivering innovative new treatments to help improve the lives of patients with rare or orphan diseases have raised $60m before expenses and will relist on the AIM Market on the 25/09/2019. VAALCO Energy, Inc. (NYSE: EGY), an independent energy com pany focused on developm ent and production assets in West Africa, today announces its formal intention to seek a Standard Listing on the Main Market of London Stock Exchange ("LSE"), to complement its existing Listing on the New York Stock Exchange. Kaspi.kz, the largest Paym ents, Marketplace and Fintech Ecosystem in Kazakhstan w ith a leading m arket share in each of its key products and services, announces today the expected publication of a registration document that has been submitted for approval to the FCA and its potential intention, subject to market conditions, to undertake an initial public offering. Registration document approved for Helios Towers. The Group provides essential network services, flexible infrastructure solutions and reliable power supply to mobile network operators in five African growth economies. Revenue increased 7 per cent. year-on-year to US$191m (H1 2018: US$178m), with Adjusted EBITDA up 15 per cent. year-on-year at US$99m (H1 2018: US$86m) for the six months ended 30 June 2019.
Companies: ANG LSAI OVB ADAM OEX ODX MPE MWE SAV RBGP
Freyherr International Group PLC the Medicinal Cannabis holding com pany established in 2016, is planning to list on the NEX exchange on the 13 August.
Companies: PHE THR ANG TEK BMK MRL EOG COG SIM IRON
Alumasc Group plc, the prem ium building products, system s and solutions group, has announced its intention to m ove from the Premium Segment of the main market to AIM. Expected market cap of £33.4m. Expected 25 June 2019
Argentex a UK-based forex service provider founded in 2011 by its current management team which operates as a Riskless Principal for nonspeculative and forward foreign exchange as structured financial derivatives is looking to join AIM. Offer TBC, expected 25 June
Companies: EQLS FOX RBD UJO TSG IGP ASO ANG EMH AMER
FY19A has been a transformational year for Angling Direct as they continue to grow their business both in the UK and abroad. This set of strong numbers solidifies their position as the retailer of choice for anglers. We believe the Group has a sustainable competitive advantage through the loyalty of its niche customer base and is now able to improve margins through cost led initiatives and its increased pricing power. Buy
Induction Healthcare Group plc—a healthcare technology company focused on streamlining the delivery of care by Healthcare Professionals looking to join AIM. Expected raise of £14.58m at 115p, market cap of £34.07m. Expected 22 May 2019.
SDX Energy plc—a North Africa focused oil and gas company, announces its intention to complete a Canadian plan of arrangement under section 192 of the Canada Business Corporations Act and will have shares de-listed from the TSX-V and admitted to trading on AIM. Expected 28 May 2019, anticipated market cap of £76m
Renold plc—a leading international supplier of industrial chains and related power transmission products, announced that it will cancel the listing of the Company from the premium segment and apply for admission on AIM. Expected 06 June 2019.
Alumasc Group plc, the premium building products, systems and solutions group, has announced its intention to move from the Premium Segment of the main market to AIM. Expected market cap of £33.4m. Expected 25 June 2019
Companies: JSE HUR MIDW BAR SRE WEY POLX ANG SML MYX
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Marshall Motor Holdings (MMH) has delivered a stunning trading update, particularly in September, which sees 2020E increase from a break even position to £15.0m at the underlying PBT level. We believe this significant outperformance is testament to the quality platform it has developed over the years, and continue to see MMH as a sector winner.
Companies: Marshall Motor Holdings plc
Gear4music continued its recent run of positive news announcements yesterday with an upbeat AGM trading statement. Growth, following an exceptional first quarter in FY2021 (April to June), remained brisk in July and August. Moreover, the company’s strong sales momentum is more than matched by improvements on costs and margins.
Companies: Gear4music (Holdings) PLC
Guild Esports is positioned to become the leading global esports brand based in the UK. With strong support from David Beckham, the company plans to pioneer the UK Premier League academy model in esports, attract leading sponsors, build a loyal fan base and establish a premium line of merchandise. Within 12 months of the IPO, Guild plans to contract 19 esports staff, register 1m fans and generate £5m sponsorship revenue, £1m merchandise revenue and £0.6m media revenue. Today, Guild announced a £3.6m three-year sponsorship deal with a new European fintech company and appears well positioned to meet its sponsorship revenue target.
Companies: Guild Esports PLC
Gear4music reports that trading has remained strong in the 1st 2 months of Q2. Back in July it said it had achieved 68% sales growth in Q1 (to 30 June) along with improved gross margins and cost efficiency, notably in marketing. Today’s update says G4M is continuing to generate improved margins alongside proportionally lower marketing costs YoY, no doubt with additional operating leverage in other cost lines too. As a result, FY21 results “will be at least in line with recently upgraded expectations”. We make no changes today, pending an H1 trading update on 22 Oct, but highlight that forecast and valuation risk is very much to the upside. Time to take a look for those that haven’t yet.
A trading update from Marshall Motor Holdings (MMH) confirms very strong Q320 trading performance as activity bounced back after the lockdowns. All segments outperformed, beating management expectations and leading to an increase for FY20 PBT guidance to c £15m from break-even previously. Uncertainty remains about prospects for Q420 and FY21 as potential headwinds loom. A sustained recovery may be some way off, as reflected in the undemanding FY21e P/E rating of 8.6x.
The 2019/20 season was typically successful from a sporting perspective, which reaffirmed Borussia Dortmund’s position as one of the leading football teams in Germany and Europe. The coming year is likely to be more challenging financially due to the operating restrictions necessitated by COVID-19, but the company is well placed to deliver a strong recovery in earnings if restrictions ease, albeit visibility on these is limited. The valuation reflects the uncertain outlook as it is trading at a significant discount to our sum-of the-parts valuation, broadly in line with historic sales multiples, and at a discount to its peers.
Companies: Borussia Dortmund GmbH & Co. KGaA
So what is the profile of a typical AIM quoted company? The market’s detractors may argue that London’s junior market is peppered with cash consuming companies that are not sufficiently advanced in their route to profitability nor corporate governance regimes to justify their listing. Supporters of the London Stock Exchange’s growth market would say that the Alternative Investment Market is the world’s most successful market for growing companies rewarding investors prepared to brave the risks of earlier stage funding, and driving innovation and job creation. Neither view suggests that AIM would be a fertile hunting ground for income generating stocks. However a glance at the FTSE AIM All Share constituents (Source: Fidessa) suggests that over 250 of its members or circa a quarter of the market’s members pay dividends.
Companies: BVXP BOTB ITQ SHOE CGS DX/ HSP JIL IBEX PRP CAML GTC JIM CCAP ENTU FXI NAH ASY HGM PEN PEG AVG NXR
Listed in April 2017 with a reorganized corporate structure, and led by a high-calibre operating team, Ten Entertainment Group (TEG) has developed a highly cash-generative business model that signals further growth prospects. By combining its operating formula with an integrated technology platform, TEG has set itself apart from competitors. With effective inward capital investment and its ‘Tenpinisation’ model, growth looks set to continue, and forecasts indicate a substantial increase in profit in FY17 and FY18.
Companies: Ten Entertainment Group Plc
Dunelm has reported total sales growth of 6.2% and LFL of 5.0% for 2Q, comprising in-store LFL of 1.2% and online LFL of 32%. This compares with 2Q 2018/19 in-store and online LFLs of +5.7% and +37.9%. It has also reported Gross Margin up by 110bps against +190bps in the corresponding quarter.
Companies: Dunelm Group plc
In this note and following the SMMT June data released earlier this week, we look at the key dynamics of the sector during H1 2020, and the prospects for the rest of the calendar year. While no direct stimulus for the sector was announced in the recent summer statement, customers who were considering their purchasing options now have the clarity to move ahead with buying decisions that were potentially on hold.
Companies: CAMB LOOK MMH PDG VTU
Gear4music, which reported positively on FY2020 profits in its recent 23rd June 2020 results announcement, released further good news today. The company already stated that FY2021 had started on an exceptionally strong note for sales revenue. But profitability – an upgraded priority in the past 18 months – now looks to be ahead of expectations. We raise our forecasts on this report.
The leading network airlines group reported a heavy Q2 net loss and its H2 forecast has been revised downward. Nevertheless, IAG maintains its recovery expectations despite a more pessimistic market outlook.
The group will call for a €2.75bn fund raising to cope with the health crisis.
Companies: International Consolidated Airlines Group SA
One Media, subject to shareholder approval, raised gross proceeds of up to £6.0m in a VCT/EIS qualifying equity placing to support the launch of Harmony IP. We release a new FY21E forecast reflecting full deployment of capital and the subsequent superior revenue generation and margin profile. We believe One Media continues to trade at a discount relative to its peer group, our fair value per share analysis and DCF valuation. Buy
Companies: One Media iP Group PLC
Flutter reported strong H1 20 numbers – beating estimates on both the topline and earnings. Revenue (£1.52bn) was up 22%, while adjusted EBITDA (£342m) rose 35%, both on a pro forma basis.
Management now expects ex-US pro forma adjusted EBITDA of £1,175-1,325m, and a £140-160m loss in the US. Hence, aggregate FY20 EBITDA should come in at £1.02-1.19bn, well ahead of estimates.
Following the strong performance, we will upgrade our estimates as well as the target price.
Companies: Flutter Entertainment Plc
Although JDW is facing a lfl sales decline (-16.9% for the 44 days ended 16 August 2020), we believe the publican is better placed to see through the pandemic / softer consumer demand, largely due to its relatively cheaper / value for money offerings. The near-term hiccups are tough to avoid, which is likely to also put pressure on profit margins, in our opinion. However, management’s disclosure of an annual loss in FY19/20 is below our expectations.
Companies: J D Wetherspoon plc