Trading continues to prove to be more robust than expected - upgrades

Sales miss mid-single digit % downgrade

B&M has reported in-disappointing UK B&M sales growth and we expect market consensus PBT of £247m (IAS 17) to reduce by around £10-15m (mid single digit %). There is no update on Germany. We expect the share price to reflect lower forecasts and some de-rating.

Greater management caution

Although we remain sellers of B&M it is hard not to be impressed with its ambition and the pace at which it moves. Two recent acquisitions, management change in Germany and pushing through a major warehouse investment in Bedford, as well as opening midhigh single digit percentage new space in the core B&M chain all attest to this.

Numbers slip exposes premium valuation

B&M has reported 3Q UK B&M stores LFL of -1.6% against our expectation of +2% and total UK sales growth of +4.4% (WH +9.5%). This is worse than expectation in our view and compares with underlying +3.6% in 1Q and -1.6% in 2Q, and comparatives 1-3Q 2017/18 of +6.3%, +7.7% and +3.9% (1Q figures in each year adjusted to exclude Easter timing differences). The company points to the exit rate of UK LFL being better at +1.2% and continuation of this rate into 4Q (where the comparative will weaken over

In line Christmas trading

BME has reported 3Q UK LFL sales growth of 3.9% v consensus of around +4% and a tough comparative of +7.2%. Growth has come in lower margin food and FMCG which we believe continues to be vulnerable to price competition for food retailer own brands and in any event dilutes the benefit of sales growth at the bottom line. Germany sales rate declined from +11% 1H to +8% 3Q perhaps indicating negative LFL getting worse in short term. Management is happy with existing EBITDA consensus. The only price

B&M – 1H Results

Full year consensus forecasts likely to hold as UK B&M sales UK LFL was +7.7% in 2Q – however, this was achieved with a 80bps decline in gross margin. Overall PBT of £86.8m (+17.8%) was slightly below consensus despite a £2.4m EBITDA contribution from newly acquired Heron Foods. The next key test 3Q trading against start of marketing-driven sales acceleration of 2016/17. Germany had a difficult 1H with EBITDA down 22.5% - this casts doubt on B&M’s ability to manage acquisitions. The company is m

In line but driven by the equity business

BME released this morning its earnings for Q1 17. Total income at €81.5m is in line with consensus’ expectations and our expectations. Total expenses were in line as well, hence an EBITDA at €53.77m in line with expectations (and 1.5% below our expectations). Starting now, BME is simplifying its disclosures by merging its Information and IT services businesses.

An ephemeral sunbeam?

Total revenues were 4% higher than expectations and our own expectations driven by cash equity trading which remained relatively strong despite the continuing loss in its market share. Total expenses were, however, 4% higher than the consensus forecast, leading to a total EBITDA still 5% ahead of expectations.

Topps Group (TPT LN) - Initiation: Market leader trading at cyclical lows

Topps Group is the UK’s largest specialist supplier and distributor of tiles and associated products to the UK’s domestic and commercial markets. Each of the last three years the Group has successfully achieved record revenue in a market that’s seen recent volume declines and regional peers enter administration. Following the right sizing of its business, Topps Group is now well positioned to capitalise on the economic recovery and continue taking share from competitors, supported by its global

HeiQ - Forecast update and Ecolab contract

HeiQ reported its interim results for the 12-months to December 2023, a period characterised by challenging conditions in the markets in which the company currently operates. In-line with the recent trading update, the company reported revenues of $41.7m for FY23 and closed the period with a cash balance of c$10m and a net debt position of $2.2m. We have updated our forecasts to reflect the FY23 results and HeiQ’s outlook in 2024, leaving our revenue forecast unchanged but adjusting gross margin

Morning Note – 24 April 2024

Pinewood Technologies (PINE LN) - Strong results, growth ahead

Pinewood Technologies’ results for the 13 months to 31 January 2024 confirmed good growth in user numbers, revenue and operating profit for the continuing automotive software business. Our unchanged forecasts (see 6 March research) show strong revenue growth, high margins, and good cash generation over the period to FY26 as the Group executes its accelerated growth plan. As of Tuesday this week, Pinewood’s shares are ex-dividend and a 1-for-20 share consolidation is effective, meaning our discou

LIBERUM: Tortilla Mexican Grill: Prioritising profitability over roll-out

PROGRESSIVE: Gear4music: FY24 trading in-line and debt reduction ahead of market expectations

At its FY23 results in June 2023, G4M announced its intention to focus on product margins, overhead cost reduction, and efficiency ahead of revenue growth, along with further net debt reduction, in FY24. The FY24 year-end trading update confirms G4M has delivered on these rebalanced priorities, with gross margin rising and net debt almost halving compared with FY23. Cost savings achieved in FY24 and the continued development of higher-margin categories should deliver further upside in FY25E.

Hybridan Small Cap Feast - 24 April 24

24th 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

React Group H1 Trading Update

React Group has released a positive update that has confirmed that the strong 2H 2023A momentum has continued into 1H 2024E, with what was described as a ‘record trading performance'.

LIBERUM: The Liberum Leisure Digest: NLW increase - pricing power is key

Pinewood Technologies (PINE LN) - Driving growth in automotive software

Pinewood’s transition to a pure-play automotive SaaS business is now largely complete. Today we introduce summary forecasts out to FY26 and reiterate the investment case. We see significant opportunity for Pinewood to grow its user base in the UK and internationally whilst generating high EBITDA margins and cash conversion. With a 24.5p special dividend embedded in the current price (payable Q1/Q2), the effective price today is 12.3p. Based on the Group’s FY27 target of £27m EBITDA, we estimate

PROGRESSIVE: Vertu Motors: Traction control

Vertu is the fourth largest automotive retailer in the UK, with 188 sales outlets and a track record of cross-cycle growth, principally through businesses it has acquired, funded by equity, debt and most importantly cash generation. Vertu operates across the entire vehicle lifecycle, including new and used vehicle sales, and vehicle servicing, repair and parts. Service and repair is a 40+% gross margin repeating business. With economic headwinds, the transition to electric vehicles, recent overs

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

PPHE Hotel Group Limited

PPHE has released its usual Q1 trading update (31 March period-end) which reads reassuringly. The outlook says that “the Board remains confident in delivering full year performance in line with market expectations”. Revenue rose by 11.9%, from £68.8m to £77.0m. Growth was 11.0% on a Like-for-like (LFL) basis excluding the first three months of operation from art’otel Zagreb, Croatia. Revenue growth was driven by a rise in occupancy as room rates continued to normalise across both leisure, corpo

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

Domino's Pizza - Growing the base

Domino’s Pizza Group’s (DOM’s) new CEO has set an ambitious long-term growth target, including an acceleration in its net store opening programme. With better alignment between the company and its franchisees, management believes DOM should be capable of generating improved profit growth, versus that achieved in recent years, and potential higher returns.