Challenging markets

Following the recent trading update, we have revised our forecasts (FY24e EBITDA cut by14%) consistent with guidance as well as prudently reducing our FY25e and FY26e numbers by a similar quantum. Reflecting these forecast changes our target price is also revised lower, from 685p to 335p but we recognise that patience may be required for this view of value to be realised. Management are highly focussed on improving margins, cash generation and debt repayment. As and when markets recover, the bus

In-line H1, but a more challenging H2

The Group has delivered a first half performance that is in-line with management expectations. Despite softer market demand, underlying EBITDA emerged at £95.8m (H1 FY23 £100.1m) with the margin improving strongly to 14.9% from 13%, due in large part to productivity gains and increased operational efficiencies stemming from significant restructuring. The outlook through the second half is more challenging with lower demand affecting sales and inflation edging up raw material inputs. As a result,

In-line FY23 trading update, positive on outlook

Victoria has issued a positive trading update for FY23, confirming revenues and adjusted EBITDA in-line with market expectations. Revenues of at least £1.45bn are ahead by over 40% with significant impacts from acquisitions, namely the Balta carpet and rugs business, and inflationary price increases. FY23 has also seen management protecting cash margins and market share with the added benefit of targeted synergies, hedging and product re-engineering. Despite challenging macro-economic conditions

In-line interims, guidance unchanged

Victoria has reported underlying EBITDA of £100.1m that is in-line with October’s trading update. Revenues of £776m were ahead 59% (7.7% like-for-like organic growth) with significant impacts from acquisitions, namely the Balta carpets and rugs businesses, and inflationary price increases. Underlying PBT and diluted EPS were down 3.1% and 26% respectively. Despite on-going macro challenges, the Board has reaffirmed that it continues to be confident that synergy gains and other management actions

Acquisition of IWT

Victoria has announced the acquisition of International Wholesale Tile LLC (‘IWT’), a Florida based flooring distributor for $28.5m with an undisclosed conditional payment payable over the 4 years post acquisition. The acquisition is expected to be immediately earnings and cash flow accretive, bringing historic revenues and EBITDA of $63.2m and $7m respectively in the year ended 31st March 2022. The business, based in Florida, has delivered a revenue CAGR of 11.6% over the last 10 years and is h

Hybridan Small Cap Feast 10/08/22

Status of this Note and Disclaimer This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment objectives, financial situation or

Well positioned in a tightening environment

Victoria has delivered record FY22 revenues and EBITDA, exceeding the minimum £970m and £155m indicated in April’s trading update. L4L revenue growth, against a Covid weakened comparative, was 19.2%, split equally between volume and price. Given the inflationary cost environment and supply chain constraints this is a highly creditable performance that demonstrates both pricing power and operational strength. The Group also made a number of enhancing acquisitions in FY22 (including the Rugs and U

Attractive long-term fundamentals

We publish our more detailed forecasts for Victoria following the FY trading update and completion of the carve-out and acquisition of the Rugs and UK Carpets division of Balta Group NV. FY2022E has been flagged with revenues in excess of £970m, underlying EBITDA in excess of £155m and underlying EBIT in excess of £100m. For FY2023E, management expect EBITDA in excess of £200m. Whilst demand into FY2023E has remained strong, the shares have weakened on thoughts of tightening consumer expenditure

Completion

Victoria has announced the completion of the acquisition of the highly complementary rugs and UK carpet divisions of Balta Group NV for a cash consideration of approximately £139m. The rugs business is a well-established operation and is the no.1 producer in Europe and the no.2 globally. The carpets activities increase the scale of Victoria’s UK carpet business and add non-wovens. As previously announced in November 2021, the acquisition will be immediately earnings accretive, on an historic c.6

Acquiring Rugs & UK Carpet Divisions of Balta

Victoria has announced the accretive acquisition of the highly complementary rugs and UK carpets divisions of Balta Group NV for a cash consideration of approximately £117m. The acquisition is subject to the conclusion of the carve out of the divisions from Balta and is expected to complete in April 2022. The rugs business is a well-established operation and is the No.1 producer in Europe and the No.2 globally. The carpets activities increase the scale of Victoria’s UK carpet business and add no

Strong interim results, forecasts upgraded

Victoria has reported record first half results that capture the benefits of strong consumer demand, operational efficiencies and acquisitions that provide on-going opportunities for additional synergies. There is a compelling organic and inorganic investment case that supports our expectation of share price outperformance. We introduce a PT of 1325p.

Hybridan Small Cap Feast 10/11/2021

Joiners ProCook, the UK's leading direct-to-consumer specialist kitchenware brand has joined the Main Market (Premium). ProCook's revenue grew by 37% to £53.4m in FY21 (ending 4 April 2021), with Adjusted EBITDA growing by 246% to £13.3m in the same period. Offer size £39.7m. Mkt cap £158m. Leavers No Leavers Today. What’s cooking in the IPO kitchen? Ashtead Tech, subsea equipment rental and solutions provider for the global offshore energy sector to join AIM. The Directors have a high degree of

Positive H1 trading update

Victoria has issued a positive half-year trading update that confirms underlying profit before tax for FY2022E will be ahead of consensus market expectations. Against a background of strong consumer demand for its flooring products, the first half has seen record operating earnings. Management expect this demand picture to continue into next year and beyond with the added support from the high level of housing transactions which is a good lead indicator of future refurbishment activity. Septembe

Strong growth continues

Victoria has issued a positive AGM update supporting upgrades made at the time of the final results in July. Given the substantial COVID lockdown effects experienced in early FY2021, year to date trading is noted to be c.70%+ ahead of the same period a year ago and c.50%+ up on a like-for-like basis excluding acquisitions. More importantly, Victoria confirms the trading outturn to be over 50% ahead of the comparable period in 2019, including acquisition benefits but despite some material impacts

Record year despite Covid impacts

Despite the adverse effects of Covid lockdowns significantly impacting Q1 FY2021, Victoria has delivered record FY2021 revenues and adjusted EBITDA, respectively c.3% and c.6% ahead of expectations set by its June trading update. The outlook for revenue and margins in FY2022E is encouraging with the Group continuing to experience strong on-going demand in its key markets, having captured structural margin uplift from targeted productivity and operational initiatives. Whilst traditional lead indi

Surface Transforms - New guidance – forecasts under review

Surface Transforms has issued new revenue guidance for FY24, with the company now expecting revenues in the range £17.5-22m. We are withdrawing our previous forecasts for FY24 and withdrawing our price target while we review the impact of the new guidance.

Surface Transforms plc (SCE LN) - Forecasts and valuation withdrawn

We note the regulatory announcement this morning from Surface Transforms and withdraw our estimates and valuation, pending conversations with management.

Morning Note – 16 April 2024

Robust margin and cash performance

Surface Transforms (SCE LN) - Obstacles removed for higher production

Surface has issued a brief Q1 update. Production will ramp-up this year as final new equipment is installed, and manufacturing teething problems recede.

Initial Equity Trading Comments - 19 February 2024

Hybridan Small Cap Feast - 16/04/2024

16th 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: Electric Guitar (ELEG.L) Concurrent with its Admission to trading on AIM, Electric Guitar is proposing to acquire the entire issued share capital of 3radical Limited for

Dowlais Group - Motoring forward

Dowlais Group’s first set of results were ahead of our expectations, with positive cash generation a highlight despite restructuring and demerger costs. Softer automotive markets will limit margin progress in FY24 towards the double-digit target. Despite this, margins of c 6.5% are still ahead of automotive peers, although the shares trade at a significant discount to our implied generic peer-based valuation.

Morning Note – 9 April 2024

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

Morning Note – 4 April 2024

LIBERUM: New Energy Nuggets: Hydrogen - the future is green

Hybridan Small Cap Feast - 17 April 24

17th 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

Gooch & Housego (GHH LN) - A chink of light

Gooch has issued a positive update for H1. Trading has started to recover with stocking levels normalising at industrial and medical devices customers. The outlook is positive with growth returning, and management has confirmed our full year estimates (adjusted for the disposal of EM4). The order book and order flow appear healthy, and net debt is comfortable. Gooch clearly still has plenty to do to lift operating margins from a lacklustre 8.1%, but the transformation plan appears to be back on

Nexteq - FY23 adj EBITDA +4% ahead, FY24E upgrades of +1-10%

Nexteq’s FY23 results show adjusted EBITDA +4% ahead of the +6% upgrade at the January trading update, record FY23 EFCF of $17.4m, and a confident outlook that leads us to reiterate our FY24E revenue and upgrade FY24E gross profit, adj EBITDA, and EFCF by +1-10%. The strategic focus on higher-margin products and customers reducing elevated inventory levels led FY23 group revenue -5% yoy to $114.3m, with Quixant 6% lower at $69.3m and Densitron 2% lower at $45.1m. Effective supply-chain managemen