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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 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
Elegant has this morning announced H1 results that should position it well to deliver market expectations. There was a marginal decline in ADR offset by slightly higher levels of occupancy, delivering a 1.0% increase in RevPAR. We are tweaking down our forecasts to move in line with the lower end of the consensus range to reflect a tougher rate environment driven by increased competition in the all-inclusive segment of the market as well as increased VAT. That said, we believe the shares represent good long-term value, trading at a 54% discount to NAV, with a yield of 5.7%.
Elegant has announced FY 2018 results that show good progress vs. last year and are within 3% of our forecasts at the adjusted EBITDA level, and ahead at the adjusted EPS level albeit due to lower tax. The Group is trading in line with expectations in FY 2019 with over 60% revenue visibility for 2019E. We increase our adj. EPS forecast by 12% and 13% in FY19 E and FY20E which is largely driven by changes to corporate tax rates in Barbados. We continue to believe the shares offer strong value.
Elegant has delivered a short but robust trading update, which confirms it continues to trade in line with expectations. Encouragingly, booking trends are also ahead of last year as we enter the peak trading period. We are maintaining our forecast assumptions on the back of this, and believe the valuation, asset backing, and yield look attractive.
We note the recent weakness in the company’s share price, which is down 18% since the interim results and now at the lowest point since December 2016 when the shares were recovering from a c.30% downgrade to forecasts as the company faced a variety of trading headwinds post Brexit. In our view, the market is beginning to stabilise and the current share price, which is significantly below the recently mooted bid price of 110p and at a large discount to the sector, represents significant value. In our view, trading patterns are now beginning to stabilise and we believe the shares offer good long-term value at this level given the NAV of 147p per share (GBP:USD of 1.35), attractive yield of 5.7% and undemanding multiples at a significant discount (c.50%) to the sector. We expect a trading update from the company in the first week of October.
Elegant has this morning announced H1 results that should position it well to deliver our FY expectations. YoY improvements have been delivered across most KPIs and the company has confirmed trading is in line with expectations, we are therefore leaving our full year forecasts. We believe the shares represent good long-term value, trading below IPO price and at a 41% discount to NAV, with a yield of 4.7% which remains ahead of the sector average with solid cover in excess of 2.3x.
We have completed another refresh of our value style screen, first established as of 12 May 2015. As usual the screen selected the 25 stocks exhibiting the most extreme value characteristics from our universe, and we have chosen 10 stocks to focus on. Since the last refresh, two days before the last general election, which resulted in a hung parliament, the screen has performed a little better than the small-cap index with our focus stocks outperforming by about 500bps. The weighting to UK consumer stocks noted last time detracted from performance, which came as little surprise given our cautious stance, much discussed in our other strategy work this year. One might have expected more consumer exposure in the refreshed screen given this year’s severe underperformance, but it appears forecasts have been similarly downgraded, keeping much of the sector outside our value criteria
Elegant has delivered solid final results, which are 2% ahead of our forecasts at the adjusted EPS level. We are lowering our forecasts to reflect recent investment. Despite the uptick in debt following this investment, the current NAV of 163p should give some support. The dividend has also been rebased to 4.0p per annum from 2018E, albeit the yield on this in excess of 4% remains ahead of the sector average with solid cover in excess of 2.3x.
Elegant has this morning released an encouraging trading update essentially confirming the company continues to trade in line with market expectations. The company has also confirmed that the Treasure Beach Hotel is on track to reopen for business at the start of the peak tourist season and that bookings for the current financial year are tracking ahead of last year. The Company intends to announce its full year results for the year ended 30 September 2017 on Tuesday 9 January 2018. We remain comfortable with our FY expectations and are therefore leaving these unchanged. We believe the shares represent good long-term value trading at a c.54% discount to NAV (175p).
Elegant has this morning announced H1 results that should position it well to deliver our FY expectations. The YOY movements on most metrics are down as anticipated, and is due to a deterioration of trading conditions which was well flagged last year. That said, we remain comfortable with our FY expectations and are therefore leaving these unchanged. We believe the shares represent good long term value trading at a c.50% discount to NAV with a sector leading 7.9% yield (1.2x dividend cover) at the current price.
Phoenix Global Mining— US Brown field copper play. Expected late June. Offer TBA Touchstone Exploration— Oil exploration and production company active in the Republic of Trinidad and Tobago. Interests of approximately 90,000 gross acres. Production c. 1,300 boepd. Raising £1.45m. Expected mkt cap £7.5m. Due 26 June. I3 Energy –Schedule 1. Independent oil and gas company with assets and operations in the UK. Offer TBC, 7 June admission. Verditek— Schedule 1 update. On Admission, the Company's subsidiaries will be involved in advanced solar photovoltaic, filtration and absorption technologies specialising in providing environmental services. Issue price 10p. Admission in late June Tiso Blackstar Group—Schedule 1 update. Media, entertainment and marketing solutions group/ £160m mkt cap. Admission only. Expected late June. Vordere—RTO targeting German Property. Raising £9m at 17p. Readmission c. 15 June. Residential Secure Income - social housing REIT raising up to £300m Admission due c.12 July. ScotGems—Admission due 26 June. Seeking £50-£100m. To investing in a diversified portfolio of Small Cap Companies listed on global stock markets DP Eurasia—Intention to float from the exclusive master franchisee of the Domino's Pizza brand in Turkey, Russia, Azerbaijan and Georgia . £20m primary raise plus a partial vendor sale. Film Finances—Sky News reports that ‘movie financing company with credits including the Hollywood hits La La Land and Nocturnal Animals is plotting a blockbuster premiere on the London stock market that will value it at several hundred million pounds.’ Expected ‘during the summer’. AIB—Intention to float from AIB, Ireland's leading retail and commercial bank . The Minister for Finance intends to sell approximately 25% of the Ordinary Shares of AIB. Valuation range €10.6-€13.3bn. Admission end June. Curzon Energy—Report on Proactive Investors of intended LSE float this year with acquisition of coal bed methane assets in Oregon. Looking to raise £3m plus. NLB Group—financial and banking institution based in Slovenia, with a network of 356 branches. Seeking Ljubliana Stock Exchange listing with GDRs on the LSE. Expected mid June. Flying Brands (FBDU.L)—Prospectus approved by FCA. RTO of Stone Checker Software, supplier of technology solutions in the field of kidney stone analysis and prevention. Has raised £550k at 3p. Subject to GM on 15 Jun. Kuwait Energy— $150m raise plus vendor offer. Admission due June. 2p reserves 810.0 mmboe
Opera Investments –Reverse Takeover of Kibo Mining’s subsidiary Kibo Gold. Raising £1.5m. Expected mkt Cap £6.5m. 23 May. Eve Sleep— Schedule 1 from the e-commerce focused, direct to consumer European sleep brand. Offer details TBC. Expected Mid May Velocity Composites—Schedule 1. Manufactures advanced carbon fibre and ancillary material kits (predominantly carbon fibre) for use in the production of aircraft. Mid May admission expected. Offer details TBC. Shearwater Group—Schedule 1. Acquiring SecureEnvoy for £20m in cash and shares—a provider of multifactor authentication enterprise software solutions. RTO under the AIM rules. Verditek— Schedule 1 update. On Admission, the Company's subsidiaries will be involved in advanced solar photovoltaic, filtration and absorption technologies specialising in providing environmental services. Issue price 10p. Admission in May. Kuwait Energy— $150m raise plus vendor offer. Admission due June. 2p reserves 810.0 mmboe ADES International— Provider of offshore and onshore oil and gas drilling and production services in the Middle East and Africa, seeking raise up to $170m plus vendor sale under a Standard Listing of the Main Market. Admission due May 2017. Global Ports Holding—Intention to float on Standard List of the Main Market. International cruise ports operator. Seeking $200m+ raise including $75m primary offer. Expected price range 735p to 875p. Mkt cap up to £539m. Tufton Oceanic Assets– Offer extended to 9 May on specialist funds segment of Main Market to enable investors to complete further due diligence.
Elegant has this morning announced it has entered into a conditional agreement to acquire the issued share capital of Treasure Beach Ltd, including the business, the freehold property and assets of Treasure Beach Hotel in Barbados. The company estimates the total consideration plus refurbishment costs will total $10.5m, implying a normalised ROCE on the new asset of 10.2% based on past tax earnings (12.8% pre-tax). We expect the acquisition to be marginally dilutive to earnings in 2017 (-2.1%) due to timing, before generating 4.3% and 7.2% uplifts in earnings in 2018E and 2019E respectively. The group now controls a continuous 300 metre stretch of the Barbados prestigious ‘Platinum Coast’.
Final results are broadly in line with our revised forecasts on most headline levels in what proved to be a difficult year for the Group. That said, it has significantly increased room capacity, which is now +40% ahead at the time of the IPO (+14.5% yoy), which improves its competitive position and offering. We are maintaining our headline forecasts, and with the dividend expected to be held for the foreseeable future producing an 8.7% yield with a NAV in excess of 180p, we continue to believe there is strong long term value offered at present.
Global Energy Development (GED.L) — To be renamed Nautilus Marine Services. Schedule 1 from developer and seller of hydrocarbons and related products. Reverse takeover. Raising $10.5m via a convertible. Expected 9 Feb. Eco (Atlantic) Oil & Gas—TSX-V listed oil and gas exploration has announced its intention to float on AIM. Assets in Guyana and Namibia. Proposed £2m-£3m fundraise. Diversified Gas & Oil—According to LSE website first day of trading on AIM now expected for 30 January.
As indicated in October Elegant Hotels has completed on a management contract with a prime property where we would expect them to put their unique stamp on. This is a positive strategic step that will expand the business in an asset light way and potentially improve the quality of earnings. We continue to believe the shares look attractive from a valuation, NAV and dividend yield perspective.
Elegant has released a trading update confirming that it is trading in line with 2016 expectations. The dividend has been maintained, which is currently yielding 11% (trough cover of 1.2x 2017). The NAV is 184p, which also provides significant freehold asset support. However, we are reducing our 2017 and 2018 forecasts, which drives an 6% reduction in REVPAR in 2017 vs. our previous assumptions and is largely occupancy driven. We also factor in additional corporate costs to support the growth with the room count +35% since IPO factoring in Waves and its latest management contract.
AMBRIAN PLC (AMBR LN) | BEOWULF MINING (BEM LN) | ELEGANT HOTELS GROUP PLC (EHG LN) | ERGOMED PLC (ERGO LN) | EU SUPPLY PLC (EUSP LN) | GRAFENIA PLC (GRA LN) | INLAND HOMES PLC (INL LN) | WEATHERLY INTERNATIONAL (WTI LN) | Milestone Group (MSG LN) | Inland Homes (INL LN)
Elegant Hotels have announced this morning the soft opening of the recently acquired Waves Hotel and Spa with full opening to follow in 2-3 months, which is in line with the original plan. This was the company’s first acquisition since listing in May 2015 and we think this will represent a good example of the company’s ability to enhance returns from assets by refurbishing, repositioning and repricing. At the current price the shares have significant asset backing with a NAV of 157p per share vs the current share price of 69p with a dividend yield of 10%, which management are committed to paying to September 2016.
FastForward Innovations (FFWD.L) | Elegant Hotels (EHG.L) | Nektan (NKTN.L) | Scancell Holdings (SCLP.L) | 4D Pharma (DDDD.L) | Safeland (SAF.L) | Palace Capital (PCA.L) | Image Scan Holdings (IGE.L) | MBL Group (MUBL.L) | 365Agile Group (365.L)
Elegant has shown modest YOY progress at its H1 results, albeit the trading environment has become more challenging and deteriorated further going into H2 2016. We have downgraded our forecasts accordingly, which is disappointing in the short term. However, we believe the Group has significant asset backing with an adjusted NAV of 157p, while management remain committed to the FY dividend of 7.0p, which is currently yielding 7.1%.
Elegant has announced the acquisition of Waves Hotel and Spa (Waves) in Barbados for a total consideration of $18m. This will be financed via debt, and we anticipate this to be EPS enhancing during the first full year of ownership post re-opening. This marks the first transaction of its consolidation strategy post IPO, and we believe this should mark the beginning of an exciting growth phase for the Group.
Elegant has delivered solid final results, which are some 4% ahead of our forecasts at the adjusted EPS level. We are maintaining our headline forecasts on the back of these results, but believe our average daily rate (ADR) assumptions remain highly conservative. At current levels the shares look highly attractive backed with a growing discount to NAV, a sector leading dividend yield and ambitious growth strategy.
Elegant has delivered a solid trading update and is trading in line with expectations at the PBT level as it enters into its key trading period. Airlift capacity from the US is increasing and is also steady from the UK, which should bode well for ADR growth further down the line. We believe the shares look good value and well underpinned as the share price discount to NAV continues to grow.
A leading luxury hotel owner and operator based in Barbados, Elegant Hotels is a unique investment opportunity, which gives investors the opportunity to purchase an asset backed growth story with an attractive dividend yield against a backdrop of improving market conditions. The assets are well invested following a significant capital expenditure refurbishment programme, and we anticipate high levels of cash conversion (c90% through to 2017E) backed with post tax ROCE of 13% (incorporating some build-up of cash) vs. its estimated WACC of 9%. Elegant is also backed by a talented and proven management team that has done a phenomenal job of driving EBITDA towards $20m as it benefits from highly effective systems and processes firmly embedded into the group. At current levels Elegant trades on an attractive 2015E P/E of 11.4x based on conservative forecasts using current FX rates and an EV/EBITDA of 9.0x. These multiples fall in future years as organic growth filters through and is underpinned by a dividend yield of 6%.
