Morning Note – 13 May 2024

SP Angel Morning View: Gold pushes higher as rate cut optimism resurfaces as labour market cools

SP Angel Spec Sits HERC.LN: Positive trading update

Hercules is likely to report growth in H1E of over 27% YoY. H1E is the seasonally weaker half and the reported likely outcome for revenues in H1E represents half of our FY24E revenue forecast. As the seasonally stronger half of the year progresses, upwards pressure could materialise on our forecasts. Together with a prospective lower interest rate environment and a potential re-rating of the infrastructure sector, we see share price upside ahead.

Ultimate Products - Q3 trading update: tougher short-term, better longer-term

Ultimate Products’ Q3 trading update reveals that tougher short-term trading trends are now likely to persist into Q4, but the longer-term trends are now more positive due to growing order visibility from its bigger customers. We are downgrading our EPS (Dil. Adj.) forecasts by 22% to 12.5p from 16.0p for FY24E, by 15.3% to 14.8p from 17.4p in FY25E and by 12.6% to 16.6p from 19.0p for FY26E. We reduce our target price to 185p (was 210p) to reflect the new forecasts. Shorter-term issues should r

Hardman & Co Insight: 2023 was an annus horribilis for Quoted UK Infrastructure and Renewable Energy

The focus of Hardman & Co Research is on the nine quoted Infrastructure Investment Companies (IICs) and on the 22 Renewable Energy Infrastructure Funds (REIFs): the stocks analysed are all members of the Association of Investment Companies (AIC). We are updating our publication of January 2023, assessing both the lacklustre share price performances during 2023 and the key issues, including interest rates, inflation and power prices. As a 31-strong group, its combined market capitalisation is no

Hercules Site Services - Trading in-line with expectations

Hercules has released a positive H1 trading update, with revenue up 27% YoY to c.£47m and growth delivered across all three of the group’s divisions (Labour Supply, Civil Projects, Specialist Plant Services). Trading remains in-line with expectations for the full year as demand for infrastructure remains robust. We leave our forecasts unchanged, but note that Hercules has already achieved 49% of our FY24E revenue projections (vs an average of 42%/58% H1/H2 split over the past three years), which

Further good growth in H1, in line with expectations

Hercules’ H1 trading update confirms another period of strong growth, in line with expectations. Revenue in H1’24 is expected to be over £47m, an increase of c.27% over H1’23. This represents c.50% of our FY’24 forecast (£94.7m), suggesting the Group is well on track at the half year stage. All income streams grew, underpinned by substantial demand from the infrastructure sector, as well as the Group’s own growth initiatives. Contract momentum remains positive, and we note an encouraging trend

LIBERUM: Ilika: Proposed placing to drive Goliath roadmap

Near term disruption, but growth case remains strong

Ultimate Products announces today that sales revenue fell by 7% in its FY2024 third quarter and is anticipated to remain in negative territory in Q4. As a result, the company believes that EBITDA will now be in the range of £17.5m to £18.5m compared with a current market consensus figure of £21.5m. Given the 17% cut in current year EBITDA expectations it seems prudent to adjust our fair value / share figure by a similar amount. So, we reduce it by 20% from 250p to 200p. However, current sales s

Zeus Industrials Round-Up - 9 May 2024

Economic and industrial data has started the second quarter on slightly weaker grounds than Q1 as Manufacturing PMI in the UK, Eurozone and US all reported April indexes below March levels. Cracks seem to be appearing as recent drops in new orders and rising input costs are quickly dampening confidence. Inflation did, however, fall MoM across the board with the exception of the US, where volatile energy prices caused a modest MoM increase in the inflation rate.

Norcros (NXR LN) - Capital Markets Day – taking the next step

Norcros recently hosted a Capital Markets Day (CMD) signalling a change in how the business communicates with the market. In recent history it has focused on growing its share of the highly fragmented bathroom and kitchen product markets organically and through acquisition. This has resulted in a portfolio of businesses with varying degrees of capital intensity and profitability but created a Group of scale (c. £450m revenue) with strong positions in its end markets. Last week’s CMD was evidence

Morning Note – 10 May 2024

Eden Research - Fruitful year

Eden Research has reported its interim results for the 12 months to December 2023. The company generated revenues of £3.2m, slightly ahead of the January trading updated expectation of £3.1m and c15% ahead of our forecast. We note the company generated strong gross profits and an adjusted EBITA ahead of our forecast, both of which we believe were supported by the first commercial sale of Ecovelex. The company closed FY23 with cash slightly below our forecast, which we believe was impacted by the

Judges Scientific+ (JDG, House Stock at 8,900p) - HY; strong order book, FY23F unchanged

Invinity Energy Systems - Funded to Cash Generation and More

Re-issued to correct for typographical errors.Invinity’s major equity fundraising is targeting a minimum of £56m with £25m already committed by the UK Infrastructure Bank (UKIB). A second strategic investment of £3m has been committed by Korean Investment Partners.  The raise will see Invinity to net cash generation, with over £30m of the raise supporting the company’s scale up ahead of this year’s launch of the next generation Mistral flow battery. The raise will boost the balance sheet, reduci