Rexel reported a lacklustre Q3 performance; FY23 outlook confirmed

Rexel’s Q3 trading update was largely in line with the consensus and our expectations. While the Q3 revenue benefited from volume and price increases on non-cable products, growth was weighed down by negative currency effects (USD and CAD). As a result, the share price is down by >5% (at the time of writing). Nevertheless, the management confirmed its full year guidance. We do not expect to change our estimates and retain our positive stock recommendation.

Better-than-expected H1 performance, but upgraded guidance fails to impress

Rexel reported better-than-expected H1 23 results. The group reported sales and profitability ahead of consensus and our expectations. Driven by the sustained demand for its products, the management upgraded its full-year guidance. However, given that consensus was already close to the lower end of the range, the new guidance appears unimpressive against the backdrop of the strong show in H1. No wonder the share price fell (-2.7% at the time of writing). We remain cautious on the stock.

Strong start to 2023; but the FY guidance remains unchanged

Rexel reported strong Q1 FY2023 sales figures, 5% ahead of the street’s expectations. The performance was driven by robust contributions from both price and volume as the group benefited from its ability to pass on price increases, as well as demand for its sustainable electrification products. Despite the strong Q1, the management reiterated the full year guidance. The share price reaction thus remained muted (+0.6% at the time of writing). We maintain our cautiously optimistic stance on the st

Strong end to FY22; Uninspiring outlook

Rexel reported strong FY22 results, with beats across sales, EBITA and net income. The management’s outlook for FY23 points to a moderation in the EBITA margin. The share price reaction has remained muted (-0.35% at the time of writing). We will increase our estimates to incorporate the robust performance in FY22 but are likely to maintain our cautious view on the stock.

Strong Q3 update; FY22 guidance again raised

Rexel gave a better-than-expected Q3 FY22 sales update. Same day sales came in ahead of consensus, driven by an acceleration in volume growth and pricing on non-cable products. Consequently, the management upgraded the FY22 guidance for the second time this year for same day sales and the adj. EBITA margin. We will revise our estimates slightly up and reiterate our positive stance on the stock’s valuation.

Strong H1 performance; guidance reiterated

Rexel reported Q2 and H1 22 results ahead of consensus, causing the share price to close up 4.4%. The inflationary environment continues to benefit the group’s sales and profitability, given its ability to pass on price increases. Despite the strong H1 performance, management reiterated the guidance that had been upgraded at the June CMD. We do not expect to make significant changes to our estimates and maintain our positive view on the stock.

CMD 2022: raised targets but outlook looks uncertain

Rexel hosted its Capital Markets Day 2022 on 16 June, at which it raised the guidance for FY22 and also provided a roadmap for the medium term (2022-25). While the upgraded guidance for FY22 is ahead of expectations, it is mostly driven by the non-recurring impact of higher prices given Rexel’s ability to pass on cost inflation. No wonder the share price closed down c.4%. Moreover, the 2022-25 profitability targets do not factor in a recessionary scenario. We remain cautious on the stock.

Rexel puts on a strong show in Q1

Rexel reported strong Q1 2022 sales figures, 8% ahead of market expectations. No wonder the share price has jumped 7.6% (at the time of writing). The company’s performance continued to benefit from growth momentum across all geographies, supported by a positive pricing environment. Going forward, while the tough comparable base is expected to reduce the carryover effect in pricing, the strong order backlog provides visibility on demand. We will revise our estimates upwards to accommodate the str

Strong Q4 and FY21 results

Rexel reported Q4 and FY21 results slightly above consensus and our estimates. For FY21, the same day sales grew 15.6% yoy, benefiting from an inflationary environment as well as economic recovery across all geographies. While the group’s 2022 outlook is not very exciting, it factors in the robust volume environment, reflecting the strength of the business model. We will raise our target price and estimates slightly upwards.

Better than expected FY21 trading update

Rexel announced a strong trading update on the FY21 outlook, beating street and our expectations. The company not only indicated strong top-line growth in 2021, but also lifted the guidance for the adjusted EBITA margin for FY21 to 6.2%, which, in spite of including 40bp one-off benefit, places the group to achieve its 2023 target of 6% a year ahead of schedule. We will tweak our estimates upwards, and maintain our positive stance on the stock.

Sell-off creates a buy opportunity for this compelling value proposition

Rexel’s share price slumped >9% yesterday after the Q3 sales came in slightly short of market expectations. The sales momentum moderated in Q3 vs Q2, as a result of a relatively tougher base effect and some impact from supply chain constraints. While the Q3 update was underwhelming, we view yesterday’s stock price movement as a market overreaction. Although we will be trimming our estimates post the Q3 results, we remain optimistic on Rexel on the back of structural growth drivers and the cheap

Results on expected lines; FY guidance re-confirmed

Rexel’s Q2 sales and H1 FY2021 results were largely in line with street expectations. Accelerating demand for electrical products, a favourable pricing environment, along with a soft base effect propelled the impressive sales growth. The profitability improvement was underpinned by the recovery in sales along with managing price increases and tight cost control. Overall, a strong set of results. No major changes expected on our estimates or target price. We re-affirm our positive stance on the s

Growth momentum accelerates amidst robust market trends

Rexel registered better-than-expected activity levels in H1 FY2021 with the group outpacing the market in an improving operating environment, across the regions and end-markets. Same-day sales growth improved sequentially in Q2, with H1 FY2021 expected to come in c.19% yoy higher, along with an adjusted EBITA margin of c.5.6%. Consequently, management raised its FY2021 outlook substantially. Unsurprisingly, the stock price reacted positively, closing >4% up yesterday. We will raise our estimates

Rexel returns to positive revenue growth

Rexel reported its Q1 sales update ahead of street expectations as the group returned to positive top-line growth, building on the momentum in recovery in H2 FY2020. The company’s performance was better than pre-COVID-19 levels for the first time in most regions. We expect the positive growth momentum to be maintained in the near term, due to the healthy demand for electrical products and soft comparables.

Structural demand trends and promising outlook point to brighter days

Rexel ended FY20 strongly with sales just down 0.7% in Q4, while clocking positive growth so far in Q1 FY2021. The group delivered results ahead of market expectations on most accounts including the resumption of a dividend at €0.46 per share. Credible growth strategy along with a promising medium-term outlook has sparked investor sentiment and strengthened confidence. We will raise our target price and estimates accordingly.

Renold - Strong end to FY24: EPS up 11%. Robust FY25: EPS up 27.6%

The FY24 year-end update is very upbeat signalling trading being materially ahead of expectations, with a better-than-expected profit out turn and stronger cash generation. It continues to strengthen margins through efficiencies and investment in modern equipment. The order book remains close to record levels providing a robust view of future forecasts. In FY24E we upgrade EPS by 11% and in FY25E a significant upgrade of 27.6%. It looks capable of declaring a dividend in FY25 as well as manageme

Morning Note – 16 April 2024

Q1 Operating Results

Another Good Year of Diversified Growth with More to Come in 2024 CCapital have released their Q1 operating results. Overall, revenue has come in slightly lower than expected at $80.2m vs TamE of $85.9m but is largely tracking in line with our FY24 annual estimate and we note the company has maintained guidance. Drilling revenue for this quarter was impacted by a fall in utilisaztion rates as well as general remobilisation geographically but we expect a strong recovery throughout the year as k

Billington Holdings - Record result boosts dividend; forecasts upgraded

FY23 results show very strong growth over FY22, driven by strong Structural Steel activity, with results slightly ahead of upgraded profit expectations, while stronger than expected cash flow resulted in an unexpectedly generous dividend of 33p (offering a FY23 yield of 7.0%). The group now has net cash of £22.1m and is debt free and is therefore in a strong position for potential M&A activity. Following the recent £90m of new orders to increase the order book to record levels we conservatively

Plant Health Care - China distribution with AMVAC

Plant Health Care announced it has signed a distribution agreement with AMVAC, an American Vanguard Company, to support commercialisation of novel fertiliser products incorporating Plant Health Care's Harpinαβ in China starting in 2024. The novel product combines Harpinαβ technology with an AMVAC fertiliser and is expected to help growers improve crop quality and yield as part of an integrated and environmentally responsible crop production programme. AMVAC continues to evaluate Plant Health Car

Morning Note – 15 April 2024

discoverIE - Back to organic growth

discoverIE’s March year-end update confirms a strong operational performance in challenging markets. Following two years when sales increased by +48%, FY 2024 Group sales were +1% ahead of 2023 at CER (reported -3%) driven by a +2% contribution from acquisitions and organic -1%. As expected, organic growth returned in the later part of the year (Q4 +2%, +11% sequentially) and the order book has reverted to normalised levels of c.4.5 months’ sales, which – combined with a continuing strong pipeli

Severfield - Multiple positives should excite investors

Severfield’s trading update indicates that FY23 results are expected to slightly exceed market expectations and the company ends the year with a record UK and Europe order book. Furthermore, with a positive trading outlook and net debt coming in lower than expected, Severfield has announced a £10m share buyback, highlighting the cash-generative nature of the company and management’s confidence in its position. The stock trades on an FY25 P/E of less than 6x and yields 7%, which we believe appear

Warns on brine supply costs

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PROGRESSIVE: Severfield: Targeted acquisition strategy aids growth path

Acquisitions have been an important element of Severfield management’s growth strategy, with the aim of adding new products, sectors and regions to what we have identified as exciting long-term organic opportunities. In this Spotlight report, we focus on the group’s targeted M&A approach, highlighting three significant deals.

LIBERUM: Severfield: Erratum: Better EPS and cashflow, and buyback

Invinity Energy Systems - Update on Strategic Investment

Invinity’s update on discussions with strategic investors reveals interest from multiple parties. While this has slightly delayed finalising an agreement it increases the potential for a better outcome. Although details are unknown at this stage, we think there is enough in the statement to be comfortable that any agreements will be consistent with the company’s strategy of growing market share in core markets and using a licencing and royalty model in other markets.

PROGRESSIVE: Severfield: Step change in European and Indian outlook

Severfield’s full-year results to March will be ‘slightly above’ the Board’s expectations, according to today’s trading update, with net debt significantly better. We maintain our PBT estimates for both forecast years, which are ahead of consensus, but reduce our net debt for FY24E. Record orders were boosted by the steel specialist’s European operations, after last year’s Voortman acquisition, while the Indian JV has seen ‘another step up in profitability’. The group has also launched its first

Clean and competitive fertiliser