Watkin Jones: RICS survey highlights strong rental market

Today’s RICS housing market survey, in our view, paints a much brighter picture of Watkin Jones’s rental sector than that in the sales market. Surveyors expect strong growth in rents to continue, driven by strong tenant demand and constricted supply. We believe that part of the reason for the arguably excessive reaction of the share price to last week’s trading update may be the weakness of the national housebuilders, but they operate in the currently more challenged sales market.

Watkin Jones: Board’s share purchases highlight confidence

We note that the Chairman and CEO of Watkin Jones yesterday purchased over 72,000 shares between them after a large fall in the price following that morning’s trading update. We believe this demonstrates management’s view that the market had overreacted to the announcement and that, despite guidance being lowered, they remain confident in the long-term prospects for the residential-for-rent developer and manager. We continue to believe that these prospects will be driven by strong demand from te

Hybridan Small Cap Feast 04/10/22

Dish of the day Joiners: Milton Capital plc (MII.L) has joined the Main Market. Leavers: No leavers today. What’s cooking in the IPO kitchen?** TECC Capital plc, to be renamed EDX Medical Group, intends to join the AQSE Growth Market. EDX operates a molecular biology and diagnostics laboratory in Cambridge, UK, from which it performs research & development, provides Polymerase Chain Reaction (PCR) testing and genomic sequencing services, undertakes quality assurance and has established expertise

Watkin Jones: Strong rental market offset by margin pressure

Residential-for-rent developer and manager Watkin Jones has confirmed in today’s trading statement a strong operational performance in the second half of the year to 30 September 2022, with investor demand for rental assets remaining strong and good visibility going into FY23E. However, the group said it had encountered some pricing and margin softness as its institutional investors faced increased funding costs. We have reduced our estimates for FY22E and FY23E but remain confident in the

On track for FY forecasts driven by rush to rent

Residential-for-rent developer and manager Watkin Jones has confirmed it is on track to meet FY2022E expectations of rising profits in today’s interim results, which showed an 8% rise in revenue and a temporary decline in adjusted PBT, reflecting previously signalled timing and mix of sales. We are maintaining our estimates for FY2022E-23E, which show 21% compound growth in PBT. Longer term, we expect further growth fuelled by increasing demand for rental property from tenants and internat

FY outlook confirmed with growing pipeline

Residential-for-rent developer and manager Watkin Jones confirms in today's trading statement for the six months to 31 March that it remains confident in its performance for FY2022E, stating that there will be more of a second-half weighting due to weighting of project deliveries. We maintain our estimates for both FY2022E and FY2023E, and also highlight growing investor demand for the group's student and build-to-rent developments.

Earnings beat estimates, driven by BTR hunger

Residential-for-rent developer and manager Watkin Jones today delivered an 11% rise in PBT to £51.1m for FY2021, beating our estimate of £50.0m by 2.2%. There were similar ‘beats’ in EPS and dividend, at 16.3p and 8.2p, respectively, driven by strong operational delivery and cost control. We have maintained our earnings and dividend estimates for FY2022E, growing at over 6%. We have also introduced forecasts for FY2023E, which assume accelerated earnings growth of 31% as the strong development p

Profit ‘in-line’ and cash ‘beat’ in FY21E update

Residential-for-rent developer and manager Watkin Jones has confirmed in today’s trading update that operating profit for the year to September 2021 will be in line with expectations, but that year-end net cash of £125m is £40m ahead of our estimates. We are not changing our FY22E P&L estimates but have increased our net cash in line with the ‘beat’ for FY21E. The statement precedes today’s Capital Markets Day at which WJG will highlight its sustainability and affordable homes strategies against

Demand grows in rental and student markets

Residential-for-rent developer and manager Watkin Jones will next week release a trading update and host a Capital Markets Day to highlight its ESG strategy and affordable homes opportunity. Ahead of that, we focus on what we see as encouraging data and research on its two largest divisions: Build-to-rent, where tenant demand and rents have been recovering strongly, and Student Accommodation, with robust demand from overseas students, especially for purpose-built housing, and strong institutiona

Market progress highlights target growth areas

Residential for rent developer and manager Watkin Jones has reported encouraging progress in homes delivery, institutional investor demand and in growing its future development pipeline a month ahead of its year end. WJ has also highlighted progress in its targeted growth areas of affordable housing, co-living and accommodation management. We are not changing our estimates at this stage, but the strong execution in the financial year to date and enhanced pipeline reinforce our confidence in our

Momentum building with investor confidence

Residential for rent developer and manager Watkin Jones reports increasing investor confidence in today’s HY 2021 results, which show recovery in demand and development activity continuing to build momentum from the second half of FY 2020. Highlights include build-to-rent (BTR) growing to a third of revenue and an encouraging first step into ‘co-living’. For now we are maintaining our estimates for profitability and cash, but now consider the risk has moved more to the upside if this momentum is

Growing H1 pipeline supports our FY estimates

Residential for rent developer and manager Watkin Jones has signalled “maintained momentum” during H1 in today’s trading statement, which showed new forward sales and further additions to the development pipeline, highlighting the continuing demand from institutional investors for build-to-rent (BTR) and purpose-built student accommodation (PBSA) assets. Fresh property management sales were resilient, despite disruption in higher education, while the reconfigured residential unit delivered robus

Leaner, lighter strategy as investment revives

Residential for rent developer and manager Watkin Jones today posted FY 2020 results, in which profits, cash and dividend beat our estimates by c. 4 - 5%. We have maintained our FY 2021E forecasts and introduced estimates for FY 2022E. Our growth assumptions are supported by further evidence in the statement of a revival in forward funding by institutional investors for both the Group’s build-to-rent and student accommodation developments. A new strategy is aimed to trial the private residential

Cenkos: Seeing Machines Ltd -- A tech unicorn its share price belies

We view Seeing Machines's recent deal with Magna as a game changing moment that signals the start of a period of significant value creation, cashing in on more than 20-years of technology development. The Magna deal takes away the balance sheet risk but also provides a highly motivated global Tier-1 partner with a track record in securing significant market shares. In our view its DMS/OMS rear-view mirror is the most competitive solution in the market and one that has been selected by VW and Hon

Surface Transforms (SCE LN) - £100m contract win vs. near-term headwinds

Surface Transforms has announced a £100m contract with OEM 10, a major global automaker. The Group will be the sole supplier for two model variants, and discs will replace those of a key competitor on an earlier model variant, providing validation of Surface’s superior technology. Revenue from this contract will flow in 2025e. In contrast, current trading has been hit by production delays at OEM 8. Production is now restored but Surface has struggled to provide enough discs in a shortened period

WH Ireland: Solid State (SOLI) - £7.3m NATO contract win highly supportive of full year expectations

Solid State is a specialist value added component supplier and design-in manufacturer of computing, power and communications products. This morning, the group has announced via RNS Reach a contract to supply communications equipment by the NATO Support and Procurement Agency (NSPA) through its Systems division, with the contract value of £7.3m expected to be delivered within the current financial year (to 31 March 2023).

Surface Transforms - Trading update and OEM 10 contract win worth £100m

The group has announced the award of possibly its most significant contract to date worth £100m over six years for OEM 10, which takes its total contract value to £290m, and is an important validation by a leading automotive OEM that supplants its rival ceramic disc competitor. Its trading update highlights a recent short halt in production for OEM 8, with production now resumed and ramping up, reducing forecast FY22 revenues by £6.5m, with profits reduced by £3.6m. FY23 and FY24 forecasts are u

Accrol Group Holdings (ACRL LN) - Volume growth, market share gains

Market share gains delivering substantial growth in volume, revenue, and profit, in the face of unprecedented input cost challenges with FY23 results to be “at least” in line with expectations.

LIBERUM: Accrol Group Holdings Plc* - Very strong first half

Prudently rebasing forecasts given market challenges

Today’s AGM update follows recent commentary from peers in highlighting the impact of market volatility on buyer confidence. There has been a significant slowdown in demand over the past six weeks, as evidenced by a reduction in reservation rates to 0.26 (prior year equivalent: 0.42) and an increase in cancellation rates to 41% (from 20% in the first ten weeks of the year). This period covers the eye of the storm of the mini-budget and it is therefore difficult to gauge the likely pace of recove

Hybridan Small Cap Feast 23/11/2022

Dish of the day Joiners: No joiners today. Leavers: No leavers today. What’s cooking in the IPO kitchen?** Kistos Holdings plc, intends to join AIM. The Company was incorporated to act as a new holding company for the group companies 0f Kistos plc (KIST), a holding company with the objective of creating value for its investors through the acquisition and management of companies or businesses in the energy sector. Anticipated Market Cap £327m. Expected 22 Dec 2022. AT85 Global Mid-Market Infrastr

WH Ireland: Solid State (SOLI) - Follow on £9.8m NATO Defence Contract provides further order coverage for FY 2024E

Solid State is a specialist value added component supplier and design-in manufacturer of computing, power and communications products. Following on from last week's announcement of a £7.3m contract through the NATO Support and Procurement Agency to supply communications equipment to a defence customer (expected to be delivered in the current financial year), this morning, the group has announced a follow on contract worth £9.8m due for delivery in the year to 31 March 2024.

Morning Note – 22 November 2022

discoverIE - Well positioned for further growth in a changing world

Strong H1 results from discoverIE provide further evidence of the value of the group’s focus on the structurally growing markets of renewables, medical, transport and industrial & connectivity. H1 2023 sales were up +26% (+23% CER, +14% organic) and adj. EPS up +37%. Operating margins rose from 10.3% to 11.7%, evidencing rising value-add and the group’s ability to pass on the impact of inflation and supply chain issues. discoverIE’s components are essential to client projects but generally only

Cenkos: CAP-XX Ltd -- A$2.05m R&D rebate received

CAP-XX has announced that it has received a A$2.05m R&D tax rebate from the Australian Tax Office.

Morning Note – 23 November 2022

Cenkos: Seeing Machines Ltd -- First quarterly KPIs

Seeing Machines has published quarterly Key Performance Indicators for its quarter ended 30 September 2022. Cars on the road with its DMS technology were 559,302, representing an increase of 112,077 over the prior quarter. Guardian connections were 41,415 at the period end representing growth 1,523 units over the end of the prior quarter, with 9,698 units sold that have yet to be connected.

Q3 22 beat fails to impress

Reckitt reported strong Q3 22 trading numbers (+7.4% LFL growth), beating estimates. However, the beat wasn’t enough to impress investors, who took note of the 4.6% volume drop and marked the stock price down by 4% during the session following the announcement. Although the FY22 growth outlook was upgraded to 6-8%, this implies a weak Q4, validating investors’ caution. We will upgrade our estimates marginally (1-3%), to reflect the strong Q3 performance.