Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on DX (GROUP) PLC. We currently have 23 research reports from 3 professional analysts.
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DX (GROUP) PLC
DX (GROUP) PLC
Central hub planning approval declined
01 Mar 17
DX has announced that planning approval for its intended new hub at Essington in the West Midlands has been declined for a second time. With the initial planning proposal having been declined last year (18th May 2016) the company had resubmitted an updated proposal. That this new planning application has also been declined is disappointing. However, management had planned for such an eventuality and has a contingency plan in place relating to other suitable and available sites near to the original. The new hub remains central to the One DX strategy and we do not see today’s announcement as fundamentally undermining the potential financial and operational benefits that will be derived. There could be a timing impact but we would hope that this is limited. An alternative site is likely to already have significant infrastructure in place while the proposed site had little. No material change to forecasts on today’s statement as synergies and development costs of the new site had not been included in forecasts.
Mix impact of new business wins leads to downgrades and dividend cut
07 Feb 17
DX has announced that tough trading, cost and pricing pressures will significantly impact FY17 profitability. As a consequence, EBITDA is cut by 53% to £9.0m (previously £19.0m) leading to earnings declining 84%. As a result, the business has suspended the dividend, forecasts had previously assumed 2.5p in each year of the forecast period. Net debt increases to c. £21.0m from £5.7m previously. Today’s warning is particularly disappointing coming shortly after the announcement that DX had won the retendering of the HMPO contract. On FY18 earnings, which factor in a degree of recovery in profitability, DX is trading on 10.8x.
Successful HMPO tender improves forecast certainty
22 Nov 16
DX has confirmed that it has won the retendering of the HMPO contract. We understand that it was a highly competitive process so retaining the contract is especially pleasing and provides greater confidence looking forward. We leave forecasts unchanged but with materially increased certainty on being achieved. The successful retender highlights that the quality of service DX has delivered over the previous contract periods has been respected. The only disappointment in today’s statement is the announcement that the decision on the resubmission of planning permission for the central hub has been delayed until mid-February. Today’s announcement de-risks FY17 and FY18 earnings and net debt forecasts and highlights the attractiveness of the prospective 2.5p dividend in each year. We leave forecasts unchanged meaning DX is trading on just 3.6x FY17 earnings and yielding c.14% on last night’s 17.75p closing price. A conservative 7x short term recovery multiple would equate to a 35p share price offering 97% upside, this would still only equate to 4.0x EV/EBITDA.
Positive conclusion to the CMA investigation
21 Oct 16
DX has confirmed that the UK Competition and Market Authority’s (CMA) review in to the acquisition of The Legal Post (Scotland) Limited and First Post Limited is now closed and no further action will be taken. This follows the announcement on the 16th September that the Initial Enforcement Order, put in place on the announcement of the investigation (5th July), had been revoked. The announcement had been perceived as a precursor to today’s positive conclusion and DX had already resumed integration of the acquired assets. Confirmation that no further action will be taken draws a line under the process. Forecasts remain unchanged as the positive impact to FY17 and FY18 numbers had been factored into estimates at the time of the initial acquisition announcement in May and were not changed on the announcement of the CMA investigation. DX potentially offers deep value trading on sub 4x PER, on current year earnings, and yielding 13% with just c. £6m net debt forecast for FY17.
Deutsche Post DHL to acquire UK Mail for a 43% premium
28 Sep 16
UK Mail has announced a recommended cash offer by Deutsche Post valuing the business at c. £243m equating to 440p a share. This is a 43% premium to last night’s closing price of 307.5p and a 43.2% premium to the weighted average price over the previous three months. The offer assumes UK Mail shareholders will receive the interim dividend of 5.5p. Deutsche Post DHL has received irrevocable undertakings of c. 60% from shareholders and UK Mail management. On current year consensus UK Mail forecasts, the 440p offer price equates to a PER of c.20x earnings and c.10x EV/EBITDA. This compares with Deutsche Post trading on c. 13.5x PER and 7.7x EV/EBITDA
N+1 Singer - Morning Song 21-03-2017
21 Mar 17
accesso Technology (ACSO LN) Full year results in line, but key trading months still ahead | Augean (AUG LN) Double digit growth in ’16, good start to ‘17 | Earthport (EPO LN) Interims show continued top line strength | Goals Soccer Centres (GOAL LN) Good momentum under new team. It’s now all about delivery | IQE (IQE LN) FY’16 results prompt further upgrades | Microsaic Systems (MSYS LN) Challenges in 2016, strategy remains in place | mporium Group (MPM LN) Funds raised to help execute strategy | RhythmOne (RTHM LN) Dawn of the independents | ScS Group (SCS LN) Strong progress on key growth initiatives albeit comps now toughen | Sinclair Pharma (SPH LN) FY results: EBITDA ahead, Instalift™ gaining pace | Vectura Group (VEC LN) FY (9-month) results
N+1 Singer - Augean - Double digit growth in ’16, good start to ‘17
21 Mar 17
Augean reported another year of double digit growth for 2016, with profits in line with our forecasts. Sales grew by 21% excluding landfill tax, while adjusted PBT grew by 18% to £7.1m before amortisation of acquired intangibles. DPS was increased by 54% to 1.0p, 25% ahead of our estimate. The business units made further strategic progress, with revenues from their top 20 customers increasing from 42% to 43% of the total, of which 88% was under contract or a framework agreement, increasing forward visibility. There has been an encouraging start to 2017 and management is confident of delivering another year of profits growth. The shares trade on undemanding single digit multiples, offering good value.