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  • 19 Nov 19
Weak health leads to FY19 guidance cut

Reckitt Benckiser’s Q3 19 revenue came in at £3.29bn, up 1.6% lfl, largely in line with street estimates but marginally above our estimates. The growth in IFCN (+7%) and HygieneHome (+4.5%) was offset by weakness in OTC (-6.8%) and ‘Other Health’ (-2.5%). The management cut its FY 19 guidance to 0-2% growth (vs 2-3% earlier) and an operating margin decline (vs flat earlier) compared to FY 18. Given the slower than expected recovery in Health, we will trim our estimates marginally.

Companies: Reckitt Benckiser Group Plc
  • 19 Nov 19
Weak health leads to FY19 guidance cut

Reckitt Benckiser’s Q3 19 revenue came in at £3.29bn, up 1.6% lfl, largely in line with street estimates but marginally above our estimates. The growth in IFCN (+7%) and HygieneHome (+4.5%) was offset by weakness in OTC (-6.8%) and ‘Other Health’ (-2.5%). The management cut its FY 19 guidance to 0-2% growth (vs 2-3% earlier) and an operating margin decline (vs flat earlier) compared to FY 18. Given the slower than expected recovery in Health, we will trim our estimates marginally.

Companies: Reckitt Benckiser Group Plc
  • 05 Aug 19
Weak Health outweighs HyHo strength

Reckitt Benckiser reported a mixed set of H1 19 numbers – the top line missed while profits beat estimates. Revenue came in at £6.24bn, up 1% lfl – led by HygieneHome (+3%) which offset weak health (-1%). Adjusted operating profit came in at £1.48bn, with the associated margin at 23.6%. Q2 top-line numbers also missed expectations. Looking ahead, management cut its top-line guidance (+2-3% vs +3-4% earlier) while re-iterating margin guidance. Factoring in the weak performance, we will be reducing our estimates.

Companies: Reckitt Benckiser Group Plc
  • 05 Aug 19
Weak Health outweighs HyHo strength

Reckitt Benckiser reported a mixed set of H1 19 numbers – the top line missed while profits beat estimates. Revenue came in at £6.24bn, up 1% lfl – led by HygieneHome (+3%) which offset weak health (-1%). Adjusted operating profit came in at £1.48bn, with the associated margin at 23.6%. Q2 top-line numbers also missed expectations. Looking ahead, management cut its top-line guidance (+2-3% vs +3-4% earlier) while re-iterating margin guidance. Factoring in the weak performance, we will be reducing our estimates.

Companies: Reckitt Benckiser Group Plc
  • 07 May 19
Weak Q1, in line with expectations

Reckitt Benckiser’s Q1 19 revenue missed the street’s estimates but was in line with our expectations. Revenue was up by 1% on a lfl basis – driven by strong growth in IFCN/baby food and HygieneHome, which was partly offset by weakness in OTC. Management reiterated its FY 19 guidance (3-4% lfl growth and operating margin – of 26.7% – similar to FY 18). Given the in line numbers, we do not expect any major change in our estimates or recommendation.

Companies: Reckitt Benckiser Group Plc
  • 07 May 19
Weak Q1, in line with expectations

Reckitt Benckiser’s Q1 19 revenue missed the street’s estimates but was in line with our expectations. Revenue was up by 1% on a lfl basis – driven by strong growth in IFCN/baby food and HygieneHome, which was partly offset by weakness in OTC. Management reiterated its FY 19 guidance (3-4% lfl growth and operating margin – of 26.7% – similar to FY 18). Given the in line numbers, we do not expect any major change in our estimates or recommendation.

Companies: Reckitt Benckiser Group Plc
  • 19 Feb 19
Good finish to 2018

RB reported strong Q4/FY 18 numbers, trumping ours as well as street estimates. Q4 revenue grew by 4% lfl to £3.34bn. IFCN (baby food) was the standout, rebounding strongly from production disruptions in Q3. FY 18 revenue was up by 3% lfl to £12.6bn while operating income grew by 12% to £3.36bn. Full year dividend was raised by 4% to 170.7p per share. Management expects FY 19 growth of +3-4% and adjusted operating margin to remain similar to FY 18.

Companies: Reckitt Benckiser Group Plc
  • 19 Feb 19
Good finish to 2018

RB reported strong Q4/FY 18 numbers, trumping ours as well as street estimates. Q4 revenue grew by 4% lfl to £3.34bn. IFCN (baby food) was the standout, rebounding strongly from production disruptions in Q3. FY 18 revenue was up by 3% lfl to £12.6bn while operating income grew by 12% to £3.36bn. Full year dividend was raised by 4% to 170.7p per share. Management expects FY 19 growth of +3-4% and adjusted operating margin to remain similar to FY 18.

Companies: Reckitt Benckiser Group Plc
  • 05 Feb 19
Consumer Staples: Our Best Ideas We expect sector rotation into defensives: Buy ABI, Imperial, Reckitt

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  • 05 Feb 19
Consumer Staples: Our Best Ideas We expect sector rotation into defensives: Buy ABI, Imperial, Reckitt

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  • 31 Oct 18
Production disruption in baby formula negatively impacts Q3

Manufacturing disruption in the infant nutrition business (IFCN/Mead Johnson;-6%) business lacerated 2pp (£70m) from Reckitt Benckiser’s Q3 numbers, which fell short of market expectations. Lfl sales growth came in at 2%, which was further clobbered by a negative FX impact of 4%. In effect, reported sales declined by 2% to £3.12bn. All top-line growth numbers in lfl, unless specified otherwise. The rest of the health business proved resilient at +4%, fully offsetting the weakness in the IFCN business – the overall health business came in flat, reaching £1.89bn. Hygiene also held steady at 4% growth to £1.23bn during the quarter. Guidance for the year – lfl revenue growth at the upper end of 2%-3% – has been maintained (9M lfl growth came in at 2%).

Companies: Reckitt Benckiser Group Plc
  • 31 Oct 18
Production disruption in baby formula negatively impacts Q3

Manufacturing disruption in the infant nutrition business (IFCN/Mead Johnson;-6%) business lacerated 2pp (£70m) from Reckitt Benckiser’s Q3 numbers, which fell short of market expectations. Lfl sales growth came in at 2%, which was further clobbered by a negative FX impact of 4%. In effect, reported sales declined by 2% to £3.12bn. All top-line growth numbers in lfl, unless specified otherwise. The rest of the health business proved resilient at +4%, fully offsetting the weakness in the IFCN business – the overall health business came in flat, reaching £1.89bn. Hygiene also held steady at 4% growth to £1.23bn during the quarter. Guidance for the year – lfl revenue growth at the upper end of 2%-3% – has been maintained (9M lfl growth came in at 2%).

Companies: Reckitt Benckiser Group Plc
  • 20 Aug 18
Mead ignites a solid performance as corporate signals turn positive

Q2 ended on a good note for RB. The biggest relief was the Mead Johnson business demonstrating a turnaround. Also, management is actively investing in the right places, including on re-scripting (partly) the Scholl failures. The infant formula nutrition business is registering a solid growth and we expect it to be a potential catalyst not only for China but the US as well. At the same time, however, we believe that management needs to show that it is able to maintain this momentum.

Companies: Reckitt Benckiser Group Plc
  • 20 Aug 18
Mead ignites a solid performance as corporate signals turn positive

Q2 ended on a good note for RB. The biggest relief was the Mead Johnson business demonstrating a turnaround. Also, management is actively investing in the right places, including on re-scripting (partly) the Scholl failures. The infant formula nutrition business is registering a solid growth and we expect it to be a potential catalyst not only for China but the US as well. At the same time, however, we believe that management needs to show that it is able to maintain this momentum.

Companies: Reckitt Benckiser Group Plc
  • 25 Apr 18
Not a good start to the year

Reckitt’s first quarter results did not offer anything to be excited about in the near term. The results reflected a worrying state of the Scholl portfolio, underperformance of Dettol in the Middle East, weak pricing in the household business (even though volume has been able to more than compensate for now) and a broader market slowdown. While hope was seen in some pockets, such as Mead, the following quarters are likely to remain subdued.

Companies: Reckitt Benckiser Group Plc
  • 25 Apr 18
Not a good start to the year

Reckitt’s first quarter results did not offer anything to be excited about in the near term. The results reflected a worrying state of the Scholl portfolio, underperformance of Dettol in the Middle East, weak pricing in the household business (even though volume has been able to more than compensate for now) and a broader market slowdown. While hope was seen in some pockets, such as Mead, the following quarters are likely to remain subdued.

Companies: Reckitt Benckiser Group Plc
  • 03 Dec 17
Multiple ailments undermining RB’s Health

Reckitt Benckiser (RB)’s disappointing run continued unabated into Q3 17 (trading update), with the company reporting its second successive sales contraction (-1% lfl in the RB base business, Q2 17: -2%, Q3 16: +2%), albeit a tad healthier than the previous quarter’s near carnage (at -2% lfl, the worst quarter ever for the staples behemoth). The key culprit was the July 2017 cyberattack (Petya, lopping off a good c.2ppt from the top-line), with the situation getting exacerbated by the lingering impact of on-going internal issues (Scholl / Amope impact) as well as adverse market developments (GST in India, the weakness in Latin America markets). At the segment level, Health continued to suffer (-2% lfl), although management maintained that underlying growth was in line with the somewhat muted market return (3% vs. long-term category growth expectation of 4-6%). Durex, Gaviscon and Mucinex were the key growth drivers for the segment. After a poor Q2, Hygiene recovered sequentially (+1% lfl vs. -1% in Q2 17) driven by the strong performance of Finish cleaners. However, this was offset by the protracted weakness in Dettol, in its largest market, India (a combination of fiscal reforms as well as the cyberattacks). While Home remained soft (-4% lfl, -2% in Q2 17) on increased competition and pricing pressure for Vanish, Portfolio Brands saw an uptick (+8% vs. -8% in Q2 17) due to one-off phasing benefits from institutional customers. Reported revenue grew c.30% to £3.2bn, benefiting from the incorporation of Mead Johnson ‘MJN’ (acquisition completed on 15 June, £720m revenue contribution in the quarter) as well as a 2ppt forex benefit. After a shaky start, Mead Johnson positively surprised during the quarter, reporting a +1% lfl growth, ahead of the full year expectation of -2 to 0% growth. Factoring in the soft Q3 results, management again downgraded its full-year guidance (for the second successive time) and now expects the legacy RB (ex-MJN) sales to be ‘flat’ vs. a +2% growth expectation previously. Sales forecast for MJN remains unchanged. From a geographical viewpoint, ENA contracted (-3% vs. 0% in Q3 16, lfl basis) due to continued weakness in Scholl across markets as well as the cyberattack, with North America (supply constraints in Mucinex distribution), the UK and ANZ being the worst hit. On the other hand, DvM expanded, albeit at a slower rate (+3% lfl vs. 7% in Q2 16) as China, Turkey, Indonesia and Pakistan performed strongly while India (GST implementation, flat growth), the Middle East (market weakness) and Brazil (increased competition) remained subdued. The other key highlight of the update was the management’s announcement of the reorganisation of its operations into two separate business units, effective Q1 18 – RB Health (c.60% of sales) and RB Hygiene Home (c.40% of sales). RB Health will be headed by Rakesh Kapoor and will incorporate the current Health segment, MJN and the brands Dettol, Veet and Clearasil from the erstwhile Hygiene segment. RB Hygiene Home will be steered by Rob De Groot (current head of ENA operations) and will include the remaining Hygiene and Home brands (he will report to CEO Rakesh Kapoor). As a reminder, RB completed the divestment of its food business in August (after putting it on the block in April) to McCormick (a US based spices and herbs company) for $4.2bn (c.£3.2bn), much ahead of previous market expectations of c.£2-2.4bn. The sales proceeds will be used to deleverage the balance sheet (debt being the primary mode of funding for the massive $16.6bn Mead Johnson deal). The company also announced the departure of four senior executives in September 2017 (Darrell Stein, SVP, information services; Roberto Funari, EVP, category development; Frederic Larmuseau, Head, developing markets; Deborah Yates, SVP, human resources), a likely fallout of the recent weakness. Moreover, Chairman Adrian Bellamy will be stepping down from the Board (effective at the 2018 AGM) and will be succeeded by Christopher Sinclair (board member since 2015, currently Chairman and former CEO of Mattel Inc.). Additionally, RB incurred a £318m charge in Q2 17 related to its spun-off drug business – Indivior (demerged in 2014) following allegations of illegally impeding generic introductions (related to its Suboxone drug) back in 2013. With discussions still ongoing with the US Department of Justice (DoJ), management has hinted at the possibility of additional charges in the future. More recently, RB has been in the news for being one of the primary bidders for Pfizer’s consumer health business (strategic review commenced in October 2017).

Companies: Reckitt Benckiser Group Plc
  • 03 Dec 17
Multiple ailments undermining RB’s Health

Reckitt Benckiser (RB)’s disappointing run continued unabated into Q3 17 (trading update), with the company reporting its second successive sales contraction (-1% lfl in the RB base business, Q2 17: -2%, Q3 16: +2%), albeit a tad healthier than the previous quarter’s near carnage (at -2% lfl, the worst quarter ever for the staples behemoth). The key culprit was the July 2017 cyberattack (Petya, lopping off a good c.2ppt from the top-line), with the situation getting exacerbated by the lingering impact of on-going internal issues (Scholl / Amope impact) as well as adverse market developments (GST in India, the weakness in Latin America markets). At the segment level, Health continued to suffer (-2% lfl), although management maintained that underlying growth was in line with the somewhat muted market return (3% vs. long-term category growth expectation of 4-6%). Durex, Gaviscon and Mucinex were the key growth drivers for the segment. After a poor Q2, Hygiene recovered sequentially (+1% lfl vs. -1% in Q2 17) driven by the strong performance of Finish cleaners. However, this was offset by the protracted weakness in Dettol, in its largest market, India (a combination of fiscal reforms as well as the cyberattacks). While Home remained soft (-4% lfl, -2% in Q2 17) on increased competition and pricing pressure for Vanish, Portfolio Brands saw an uptick (+8% vs. -8% in Q2 17) due to one-off phasing benefits from institutional customers. Reported revenue grew c.30% to £3.2bn, benefiting from the incorporation of Mead Johnson ‘MJN’ (acquisition completed on 15 June, £720m revenue contribution in the quarter) as well as a 2ppt forex benefit. After a shaky start, Mead Johnson positively surprised during the quarter, reporting a +1% lfl growth, ahead of the full year expectation of -2 to 0% growth. Factoring in the soft Q3 results, management again downgraded its full-year guidance (for the second successive time) and now expects the legacy RB (ex-MJN) sales to be ‘flat’ vs. a +2% growth expectation previously. Sales forecast for MJN remains unchanged. From a geographical viewpoint, ENA contracted (-3% vs. 0% in Q3 16, lfl basis) due to continued weakness in Scholl across markets as well as the cyberattack, with North America (supply constraints in Mucinex distribution), the UK and ANZ being the worst hit. On the other hand, DvM expanded, albeit at a slower rate (+3% lfl vs. 7% in Q2 16) as China, Turkey, Indonesia and Pakistan performed strongly while India (GST implementation, flat growth), the Middle East (market weakness) and Brazil (increased competition) remained subdued. The other key highlight of the update was the management’s announcement of the reorganisation of its operations into two separate business units, effective Q1 18 – RB Health (c.60% of sales) and RB Hygiene Home (c.40% of sales). RB Health will be headed by Rakesh Kapoor and will incorporate the current Health segment, MJN and the brands Dettol, Veet and Clearasil from the erstwhile Hygiene segment. RB Hygiene Home will be steered by Rob De Groot (current head of ENA operations) and will include the remaining Hygiene and Home brands (he will report to CEO Rakesh Kapoor). As a reminder, RB completed the divestment of its food business in August (after putting it on the block in April) to McCormick (a US based spices and herbs company) for $4.2bn (c.£3.2bn), much ahead of previous market expectations of c.£2-2.4bn. The sales proceeds will be used to deleverage the balance sheet (debt being the primary mode of funding for the massive $16.6bn Mead Johnson deal). The company also announced the departure of four senior executives in September 2017 (Darrell Stein, SVP, information services; Roberto Funari, EVP, category development; Frederic Larmuseau, Head, developing markets; Deborah Yates, SVP, human resources), a likely fallout of the recent weakness. Moreover, Chairman Adrian Bellamy will be stepping down from the Board (effective at the 2018 AGM) and will be succeeded by Christopher Sinclair (board member since 2015, currently Chairman and former CEO of Mattel Inc.). Additionally, RB incurred a £318m charge in Q2 17 related to its spun-off drug business – Indivior (demerged in 2014) following allegations of illegally impeding generic introductions (related to its Suboxone drug) back in 2013. With discussions still ongoing with the US Department of Justice (DoJ), management has hinted at the possibility of additional charges in the future. More recently, RB has been in the news for being one of the primary bidders for Pfizer’s consumer health business (strategic review commenced in October 2017).

Companies: Reckitt Benckiser Group Plc
  • 18 Oct 17
Disappointing Q3

Reckitt Benckiser’s (RB/ LN, BUY, T/P 9000p) Q3 trading statement reported -1% growth, which was 1% below expectations. The outlook statement is now for flat full year LFL net revenue, which implies around 3% LFL growth in Q4.

Companies: Reckitt Benckiser Group Plc
  • 18 Oct 17
Disappointing Q3

Reckitt Benckiser’s (RB/ LN, BUY, T/P 9000p) Q3 trading statement reported -1% growth, which was 1% below expectations. The outlook statement is now for flat full year LFL net revenue, which implies around 3% LFL growth in Q4.

Companies: Reckitt Benckiser Group Plc
  • 16 Oct 17
Doing the Right Thing

Reckitt Benckiser (RB/ LN, BUY, T/P 9000p) appears due to show quarter of slow organic sales growth when it releases its Q3 trading statement numbers on Wednesday this week. More importantly, a Sunday Times (15th October 2017) article reports Reckitt Benckiser as a front-runner to acquire Phizer’s (PFE US, N/R) consumer health business. In our view, consumer health M&A remains central to the BUY case for Reckitt Benckiser.

Companies: Reckitt Benckiser Group Plc
  • 16 Oct 17
Doing the Right Thing

Reckitt Benckiser (RB/ LN, BUY, T/P 9000p) appears due to show quarter of slow organic sales growth when it releases its Q3 trading statement numbers on Wednesday this week. More importantly, a Sunday Times (15th October 2017) article reports Reckitt Benckiser as a front-runner to acquire Phizer’s (PFE US, N/R) consumer health business. In our view, consumer health M&A remains central to the BUY case for Reckitt Benckiser.

Companies: Reckitt Benckiser Group Plc
  • 26 Sep 17
Cyber Bytes

Welcome to Cyber Bytes – our new Flash Note where we will update on newsflow pertinent to the cyber insurance market. Recent news items have highlighted both the ongoing growth potential in cyber insurance but also the failure of many businesses to properly protect personal data from attack, highlighting the potential negative PBT impact eg Equifax, Fedex and Maersk. This is especially concerning for investors given GDPR comes fully into effect by end of May 2018, bringing with it potentially much more punitive fines.

Companies: RB/ MDLZ MRK MAERSKB FDX BEZ

  • 26 Sep 17
Cyber Bytes

Welcome to Cyber Bytes – our new Flash Note where we will update on newsflow pertinent to the cyber insurance market. Recent news items have highlighted both the ongoing growth potential in cyber insurance but also the failure of many businesses to properly protect personal data from attack, highlighting the potential negative PBT impact eg Equifax, Fedex and Maersk. This is especially concerning for investors given GDPR comes fully into effect by end of May 2018, bringing with it potentially much more punitive fines.

Companies: RB/ MDLZ MRK MAERSKB FDX BEZ

  • 24 Jul 17
H2 to Accelerate Sharply as M&A Seriously Kicks In

Reckitt Benckiser’s (RB/ LN, BUY, T/P 9000p) interim results showed a like-forlike revenue declined -2% in Q2 as flagged in Reckitt’s 6th July announcement. Half year revenue of £5.0bn (+14% from last year) with £2.5bn coming in Q2. Like-for-like sales growth in the half year was down 1% in line with consensus estimates. An H2 sales growth recovery remains on track.

Companies: Reckitt Benckiser Group Plc
  • 24 Jul 17
H2 to Accelerate Sharply as M&A Seriously Kicks In

Reckitt Benckiser’s (RB/ LN, BUY, T/P 9000p) interim results showed a like-forlike revenue declined -2% in Q2 as flagged in Reckitt’s 6th July announcement. Half year revenue of £5.0bn (+14% from last year) with £2.5bn coming in Q2. Like-for-like sales growth in the half year was down 1% in line with consensus estimates. An H2 sales growth recovery remains on track.

Companies: Reckitt Benckiser Group Plc
  • 21 Jul 17
Heavy results week – combating sluggishness

Next week includes a busy reporting schedule for the UK FMCG sector with 7 names in our coverage universe due to release either a trading statement or results. So far, we infer that Q2 2017 included sustained slowing in emerging markets for the larger operators and continued sluggishness in mature markets, notably Western Europe. However, for the small and mid-cap soft drinks companies, which include Britvic (BVIC LN, BUY, T/P 800p) the UK weather was clearly helpful. This should have had a positive impact also on domestic Food to Go.

Companies: RB/ CWK FEVR BATS BVIC DGE GNC

  • 21 Jul 17
Heavy results week – combating sluggishness

Next week includes a busy reporting schedule for the UK FMCG sector with 7 names in our coverage universe due to release either a trading statement or results. So far, we infer that Q2 2017 included sustained slowing in emerging markets for the larger operators and continued sluggishness in mature markets, notably Western Europe. However, for the small and mid-cap soft drinks companies, which include Britvic (BVIC LN, BUY, T/P 800p) the UK weather was clearly helpful. This should have had a positive impact also on domestic Food to Go.

Companies: RB/ CWK FEVR BATS BVIC DGE GNC

  • 20 Jul 17
RB’s ‘Food’ consumed at a healthy premium

Having been on the block since April 2017, RB has zeroed in on the right suitor for its much-in-demand ‘non-core’ food business (includes the top-selling mustard brand, French’s, as well as the Frank’s range of sauces). The winning bid has come from US-based spices and herbs company, McCormick, valuing RB’s food business at $4.2bn (c.£3.2bn), much ahead of the market’s expectations of c.£2-2.4bn (£2.7bn in our NAV estimation). Based on the food segment’s FY 16 sales of £411m (c.4% of group sales) and EBIT of £118m, the deal translates into a whopping 7.9x EV/sales and 27.4x EV/EBIT multiples, respectively. RB intends to use the proceeds to reduce its debt burden (primary mode of funding for the massive $16.6bn Mead Johnson deal, completed last month). The deal marks another leap forward for RB’s continued transformation towards a pure play consumer health and hygiene business. We won’t be surprised if its Home segment is put up for sale next.

Companies: Reckitt Benckiser Group Plc
  • 20 Jul 17
RB’s ‘Food’ consumed at a healthy premium

Having been on the block since April 2017, RB has zeroed in on the right suitor for its much-in-demand ‘non-core’ food business (includes the top-selling mustard brand, French’s, as well as the Frank’s range of sauces). The winning bid has come from US-based spices and herbs company, McCormick, valuing RB’s food business at $4.2bn (c.£3.2bn), much ahead of the market’s expectations of c.£2-2.4bn (£2.7bn in our NAV estimation). Based on the food segment’s FY 16 sales of £411m (c.4% of group sales) and EBIT of £118m, the deal translates into a whopping 7.9x EV/sales and 27.4x EV/EBIT multiples, respectively. RB intends to use the proceeds to reduce its debt burden (primary mode of funding for the massive $16.6bn Mead Johnson deal, completed last month). The deal marks another leap forward for RB’s continued transformation towards a pure play consumer health and hygiene business. We won’t be surprised if its Home segment is put up for sale next.

Companies: Reckitt Benckiser Group Plc

Research, Charts & Company Announcements

Research Tree provides access to ongoing research coverage, media content and regulatory news on Reckitt Benckiser Group Plc. We currently have 95 research reports from 7 professional analysts.

Open
6403p
Range Today
6378/6453p
52 Week
5767/6688p
Daily Volume
144.5k
# Shares
709.8m
Daily Liquidity
(0.02%)
Pension Liability
£362.1m
Enterprise Value
£55,941m
Market Cap
£45,722m
Latest PE (hist)
18.80
Div Yield
2.65

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  • 10 Feb 20
EBITDA margin sustains profit growth

Despite slower than expected sales growth, UPGS reconfirmed FY2020 profit guidance in a trading statement released today. Other features of H1 included extension of UPGS’s bank facilities and a 10-year addition to the Manor Mill lease. The company continues to monitor the effect of coronavirus closely, and its potential impact on sourcing from China. The central long-term growth message remains in place.

Companies: Up Global Sourcing
  • 13 Feb 20
LIBERUM: MJ Gleeson* - Rapid growth of Homes continues

Gleeson’s low cost homes division continues to see strong demand and faces very limited competition. In the first half of its 2020 year it has sold 17% more units, driving operating profit up 13%, in line with our expectations.

Companies: MJ Gleeson
  • 13 Feb 20
Anticipating another year of strong progress

Gleeson’s interims are in line with our expectations, comprising another period of strong progress within Gleeson Homes set against a temporary hiatus within Gleeson Strategic Land, partly impacted by the timing of the General Election. This was well flagged in January’s pre close and FY expectations are unchanged. In H2, we look forward to more of the same from Gleeson Homes and a pick-up in activity in Strategic Land (three sites now sold and four being progressed for sale). In our view, Gleeson is a high quality business with a first rate management team and exciting medium term growth prospects. It is one of our Best Ideas for 2020.

Companies: MJ Gleeson
  • 08 Jan 20
UK Housebuilding Sector: 2020 vision: Sharpness and clarity for industry prospects

For fighter pilots, it is a minimum requirement. But having 20/20 ‘visual acuity’ (correct term) does not necessarily mean you have perfect vision (as convention assumes); instead, it indicates sharpness and clarity of vision at a distance. It is measured by a Snellen Chart, which displays letters of progressively smaller size and whereby 20/20 means that the test subject sees the same line of letters at 20 feet that a person with normal vision sees at 20 feet (or 6 metres; but 6/6 simply didn’t catch on).

Companies: ABBY BDEV BWY BKG VTY CRN CSP CRST GLE GLV INL MCS PSN RDW SPR TW/ WJG

  • 12 Feb 20
Walker Greenbank - Estimates maintained at FY20 year end

A reassuring year-end update confirms Walker Greenbank’s FY20 ended in line with management expectations. There do not appear to have been any major changes in market conditions in H2 for each of the three reporting regions. Going into FY21, a progressive strategy roll-out by the new management team will set the scene for future growth aspirations. Our estimates are unchanged and the company’s P/E remains below 10x.

Companies: Walker Greenbank
  • 21 Oct 19
Quarterly Research Outlook Autumn 2019

Following continued delays of a Brexit agreement, few sectors within the UK market have remained attractive to investors despite low valuations. One sector which has continued to outperform despite the political drama has been the UK video gaming sector (henceforth UK gaming), which we are fans of. We believe a combination of sector-leading growth, strong cash conversion and timely cyclical positioning support our positive view on the UK video gaming sector.

Companies: ABBY AMS ANX ARS ATYM AVON BLVN PIER BUR CGS CAML CDM CSRT TIDE CYAN DTG DEMG ELM EMR FPO FDEV GTLY GENL GHH GRI GEEC GKP HMI HAYD HEAD HILS HTG HUR IBPO IOG INDI JHD JOG KAPE KEYS KWS KCT KGH LAM LIT LOK MACF MANO MOD OXIG PCA PANR APP SRE PHC PMO RBW RMM RBGP REDD RSW RNO ROR SUS SCPA SEN SHG SOLG SOM SUMO TM17 INCE TWD TRAK TRI VNET VTC ZOO ZTF

  • 13 Dec 19
LIBERUM: Codemasters* - Major movie franchise: Fast & Furious

Codemasters has proven its standing as a leading developer in the racing genre, a position which has been bolstered in recent weeks through the acquisition of award-winning Slightly Mad Studios. Today’s news confirms that the list of global partners now includes Universal Studios, through the launch of Fast & Furious Crossroads in May 2020. The game represents Codemasters’ second license-IP franchise, and will be released across PC, PlayStation 4 and Xbox One. Owing to the widespread success of the Fast & Furious franchise, we believe this new game could bring both global appeal and major revenue potential. This morning’s announcement underpins our forecast of 36% revenue growth for the combined group in FY21, as well as our expectation for the stock to re-rate from the current 12m forward P/E of 17.9x towards its UK games developer peers on 24.5x. We reiterate our Target Price of 370p.

Companies: Codemasters
  • 03 Feb 20
Hardman & Co Monthly: February 2020

We recently published a paper, Share ownership: For the many, not the few, based on a statistical survey of share ownership, produced jointly with Argus Vickers, the share analysis service. The Office for National Statistics (ONS) has now issued its equivalent survey. This paper compares its results with ours. Although there are, inevitably, differences in the detail, the two surveys reach the same conclusions.

Companies: AVO AGY ARBB CLIG DNL FLTA GDR MCL NSF PCA PIN PXC PHP RECI RMDL STX SCE TON VTA

  • 17 Jan 20
H1 weaker than expected, strong H2 still on track

Character Group has issued an AGM statement highlighting the continuing weakness in the UK toy market and the effect this has had on its trading, particularly over the important Christmas period which will inevitably have an adverse impact on the Group’s first half to 29 February 2020. Although we continue to anticipate a substantial rebound in the second half of the financial year, management is of the view that Group PBT for the year will now be lower than consensus at around £10m compared to our forecast of £11.6m. Consequently, we are reducing our PBT forecast for FY2020 by 14% to £10m putting the shares at 335p on a still undemanding PER of 9.0x, falling to 8.5x in FY2021. The Group remains well funded, is cash generative and dividend forecasts are unchanged, thus offering a very attractive, covered, yield. Given the expected strength of H2 trading and a further carry-over into 2021 we retain fair value at 470p.

Companies: Character Group
  • 20 Nov 19
Well placed to navigate and grow despite challenging market

In a brief statement issued alongside the AGM today, the board confirms that it is making good operational progress positioning the brands business as a stand-alone entity, and expects to deliver positive progress for the full year. A small decline in UK and international sales has been seen year to date, but a return to growth is anticipated in H2 underpinned by the increased management focus on the portfolio of brands, which is under-potentialised, new product developments, and improved UK distribution of its key ‘drive’ brands. Excluding the cash pile after the manufacturing disposal (>80% of the market cap), the stock trades on an underlying P/E of only 3.5x.

Companies: Brand Architekts Group
  • 31 Jul 19
Cenkos: Building & Construction

Due to a change in Analyst role, Cenkos Securities plc has suspended coverage of the following stocks (see table 1). Our previous recommendation and forecasts can no longer be relied upon.

Companies: BDEV BWY BKG VTY COST CRST BBY FERG GFRD GLE KLR KIE MSLH MER MTO NXR PSN RDW RNWH SFR SHI MGNS TW/ CTO TEF TPK

  • 04 Nov 19
THE MONTHLY November 2019

The trade-off in the risk/reward for gold and gold mining equities is improving, as central banks push the current iteration of the post-World War II Bretton Woods financial order towards its limits.

Companies: AVO AJB AGY ARBB BUR CLIG DNL DPP FLTA GTLY GDR MCL MUR NSF PCA PIN SRE PHP RE/ RECI RMDL STX SCE TON SHED VTA W7L

  • 20 Dec 19
Focusrite - Another sensible acquisition

Focusrite has announced its largest ever acquisition, Martin Audio, for c £35.2m net, following the announcement of the acquisition of ADAM Audio in July 2019 for £16.2m. The acquisition diversifies Focusrite into a complementary market that is growing, is profitable and cash generative. The AGM trading statement indicates that Q1 trading is line with expectations. Our forecasts remain unchanged until the acquisition, stated to be earnings accretive by management, completes.

Companies: Focusrite
  • 10 Jan 20
THE MONTHLY January 2020

The Office for National Statistics (ONS) is due to publish its most up-to-date survey on share ownership in mid-January, which identifies the beneficial owners and decision- makers of the stock market. Hardman & Co has worked together with the share analysis service, Argus Vickers, to jointly produce its own survey, which anticipates the conclusions of the ONS survey but goes into much greater detail. Our work does not use a sample of 200 quoted companies as the ONS historically has, but rather includes everyUK quoted company. The ONS samples share registers every two years; our study uses six-monthly data points. Our survey also extends to shareholders on NEX; the ONS does not.

Companies: AVO AGY ARBB BUR CMH CLIG DNL FLTA GDR MCL NSF PCA PIN PHP RECI RMDL SCE SIXH SHED VTA

  • 23 Jan 20
Transforming the high performance brake market

SCE has developed carbon-ceramic brake discs for the high performance vehicle market that have significant technical and performance advantages over the existing (near monopoly supply) product from Brembo. SCE has now won milestone OEM production contracts, proving the commercial case and providing revenue visibility. We believe that FY2020E is likely to bring a stream of new OEM production contracts, providing further support to our investment case.

Companies: Surface Transforms