BAE released a sound set of figures for FY20, beating the consensus and shining with its strong cash generation. The company remains poised for groth in FY21 thanks to its defensive backlog and high exposure to strategic contracts.
Companies: BAE Systems plc
Looking Ahead At The Next Week
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BAE released a trading update for the third quarter, which was fairly reassuring. Demand remained high across all major markets, fuelling the backlog. Operationally, programme ramp-ups and good execution across divisions maintained earnings, with potential for raising the EPS for 2020.
BAE released a sound H1 set of results, beating consensus at revenue, profitability and cash generation levels. The company’s business model proved to be very resilient and displayed encouraging prospects for the remainder of the year. We maintain our Buy recommendation on the stock.
BAE has issued a pre-close trading update ahead of the H1 publication in July, highlighting a positive and reassuring operational performance across all sectors despite the pandemic. Overall, the impact is mainly on the profitability side, while both top-line and cash generation have turned more resilient. Productivity accelerated through June, near normal, boding well for the expected rebound in the second half of the year.
BAE reported sound results today, roughly in line or above estimates, as well as for guidance. The company recorded operational improvements in a number of programmes, which, combined with ongoing contracts that are maturing, lead us to expect a further improvement at the cash level.
BAE Systems has entered into an agreement to buy Collins Aerospace’s Military Global Positioning System business (GPS) and Raytheon’s Airborne Tactical Radios business. We expect the acquisition (fully financed by additional debt) to be both EPS and cash flow accretive while maintaining a healthy balance sheet for further potential acquisitions.
BAE has released its Q3 trading update, bringing qualitative comments to the market. Overall, no major news nor surprises were released. The company is delivering according to expectations and the guidance for 2019 is maintained.
BAE reported results roughly in line with expectations, with a slight profitability expansion. However, due to the ramp-up of a low margin programme, this performance might not be repeatable in H2. The company has maintained its FY19 guidance despite the current German ban on sales to Saudi Arabia.
Financial overview Sales were £18.4bn, flat yoy and in line with the expectations Revenues were down 2% yoy Underlying EBITA was down 2% while operating profit (IFRS measure) grew by 13% to £1.6bn, in line with expectations Operating business cash flow was down by 43% while the IFRS measure of net cash flow from operating activities was £1.2bn, down by 37% EPS came at 42.9p, in line with both expectation and guidance Order intake grew by +40% to £28.2bn Order backlog reached £48.4bn vs. £38.7bn in 2017 (IFRS restated) For FY19 BAE sees its EPS growing by a mid-single digit range compare to FY18 and expected to reach more than £3bn over the next three years
BAE Systems issued today a trading update. This comes with only qualitative comments on the advancement of its commercial programmes. As a summary, BAE’s FY18 outlook remained unchanged and the company sees its EPS in line with 2017. The company sees strong commitments in defence budgets in both the UK and the US which will support its activities in these countries. Also, BAE reminded that Brexit would only have a limited impact on its activities as there is a relatively limited UK-EU trading movement of EU nationals into and out of BAE Systems’ UK businesses. In terms of specific programmes, the F-35 one is well on track and the UK-managed Applied Intelligence business will achieve its breakeven by year-end. As for the international markets, the company remains active in the big Typhoon and Hawk contract won with Qatar which enables an extension to the Hawk programme and gives great visibility for the Typhoon over the next decade. For the latter, BAE indicated that there is still some opportunities for this programme in both partners’ countries and through exports. Negotiations are continuing with Australia and Canada in the Maritime segments. The next interim dividend of 9p will be paid on 30 November.
BAE Systems reported mixed FY result figures with slightly increasing sales thanks to all divisions except for UK Platform & Services. The EBITA margin also slightly increased to 10.4%. However, the operating profit has been strongly impacted by the impairment of some intangible assets, leading profit for the year to decrease by almost 6%. The dividend is almost flat yoy as is the order backlog.
BAE Systems reported a good looking set of H1 results, showing an improvement in revenues and EBITA margin (and the IFRS accounted operating profit margin), but also a modest increase in the order backlog versus FY16. Growth came from all divisions not only in terms of sales, but also EBITA. With increased operating cash flow in a usually-seasonally-weak half-year and higher EPS (+13.8% yoy), the group was able to increase the distributed interim dividend and has confirmed the FY guidance in an improving market environment.
BAE Systems reported quite strong FY results with growing sales, operating profit, cash flow from operations and dividend, but a stable EPS. The group remains confident for 2017 with growing margin expectations, as was the case in 2016. BAE Systems has shown resilience in 2016 in a difficult environment while sales have been supported by exchange translations.
Steve “Woz” Wozniak, infamous co-founder of Apple, was the latest culprit to send shivers across the tech world by claiming Cybersecurity is the greatest threat the world has faced since the atom bomb. Mr Wozniak was alluding to the heightened sense of fear that recent high profile breaches have caused Cybersecurity to be put at the forefront of political, corporate and now it would appear, investor agendas. As the topic gains increasing awareness, it gives rise to a number of companies claiming to be a “thought leader” in the Cybersecurity space, holding the best IP and the best routes to market. With many companies singing from the same loss making hymn sheet it is making it ever difficult to spot the true “Spartacus” from the crowd.
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Research Tree provides access to ongoing research coverage, media content and regulatory news on BAE Systems plc. We currently have 32 research reports from 6 professional analysts.
Final results from AFC are very close to our projections, with net cash slightly ahead of our expectations. There is no new news in this announcement, and we marginally edge up the losses in 2021E and 2022E due to increased activity levels as the Group looks to capitalise on the vast opportunities available. We remain excited about the long-term investment thesis we set out recently and maintain our target valuation of 191.5p per share. As we have previously highlighted, our valuation excludes what we consider to be significant growth opportunities highlighted in the note.
Companies: AFC Energy plc
AFC Energy's Final Results for the year ended 31 October 2020 indicate the company is in a position of strength and at inflection point of sales growth. Results were better than we had forecast with a reported loss of £4.2M (WHIe £4.5M) and cash flow from operations of £4.3M (WHIe £4.2M). Most importantly, the company ended the period with a stronger cash balance than we had expected of £31.6M (WHIe £29.9M) reflecting the capital light strategy the company is applying. The year-end confirmed order book of £1.1M indicates that AFC Energy, after decades of investment, is past the inflection point that is translating its globally unique technology into a highly-compelling, long-term commercial growth opportunity.
Results were well trailed in January’s trading update. In the event, adjusted PBT emerged marginally ahead of FY2020, despite material impacts from Covid-19 and a depressed oil price. Although biomass incinerators were closed for much of the second quarter, the Group grew sales from residues from Energy from Waste (‘EfW’) by 15% and signed a further 6 new contracts, maintaining its high win rate. The outlook for EfW remains very strong with c.40 plants in planning or construction that provides the opportunity for Augean to double its current EfW revenues and profits of c.£20m and c.£14m over the longer term. Group operating margins are forecast to reach 25% and cash generation is strong, supporting a 3.5% yield on a resumed forecast dividend. EV/EBITDA multiples for FY2021E, FY2022E and FY2023E are 6.2x, 5.3x and 4.3x, which are well below established industrial sector metrics.
Companies: Augean PLC
Proposed move to AIM from the main market (standard) by Emmerson (EML.L) to provide Emmerson with access to a market and environment which is more suited, in the Board's view, to the Company's current size and strategy ahead of pivotal period for the Company with the commencement of mine construction at the Khemisset Potash Project expected by end of 2021. Follows recent award of Mining Licence granting Emmerson exclusive right to develop and mine the potash deposit and £5.5m raise to fund ongoing project development work. Subject to EGM on 21st March. Rogue Baron plc have announced its application for admission to the AQSE growth market. Rogue Baron owns five subsidiaries, namely: Shinju Spirits, Inc., Shinju Whiskey LLC, Mazeray Corporation, STI Signature Spirits Group LLC and Legacy Retail Group LLC. The Company’s goal is to build each of its brands that makes them a buyout target. Deal size TBC an expected admission date 12th March 2021. Global review platform, Trustpilot has announced its intention to float on the premium list of the LSE. Trustpilot provides an open platform, which creates a place where businesses and consumers can gain actionable insights and collaborate. Consumers are able to share feedback, at any time, about any business with a website and review feedback left by other consumers. Total revenues were US$64.3 million, US$81.9 million and US$102.0 million for the years ended 31 December 2018, 2019 and 2020, respectively. The Offer would comprise new Shares to be issued by the Company (raising gross proceeds of approximately US$50 million to support Trustpilot's growth plans and repay indebtedness) and an offer of existing Shares to be sold by certain existing shareholders, directors and employees. Timing TBC. In The Style, the e-commerce womenswear fashion brand with an influencer collaboration model, announces their intention to float on AIM. In The Style is a pure-play e-commerce fashion brand with a l customer base of women predominantly aged between 16 and 35. Founded in 2013, the group has delivered £35.4 million net sales and £3.6 million Adjusted EBITDA in the nine months to 31 December 2020, with sales up 159% from £13.7 million for the nine months to 31 December 2019. Admission is expected to take place on or around 17 March 2021. Deal size TBC. Media reports video game firm, Catalis is mulling a London IPO, just over a year after being bought by a private equity firm. Catalis’s accounts are reportedly expected to show revenues increasing to £60m in 2020, up from £43m, with adjusted earnings of £15m. Deal details and timing TBC. tinyBuild— a leading video games publisher and developer with global operations. tinyBuild's strategic focus is in creating longlasting IP by partnering with video games developers, establishing a stable platform on which to build multi-game and multimedia franchises is to join AIM. Offer details TBC. Due mid-March. AMTE Power, a developer and manufacturer of lithium-ion battery cells for specialist markets, announced its intention to seek admission to trading on AIM. Admission is expected to take place during March 2021. The Company intends to raise approximately £7m by way of a placing of new ordinary shares in the capital of the Company. Timing TBC. Samarkand Group Limited, the cross-border eCommerce technology and retail group opening up the world's largest market for brands and retailers, intends to IPO on the Apex Segment Aquis Stock Exchange Growth Market. Admission is targeted for March 2021. NextEnergy Renewables to launch an IPO on the Main Market. NREN is a differentiated renewables investment Company that aims to capture the most attractive private renewables and energy transition infrastructure investment opportunities globally. Targeting a £300m raise. NREN is targeting total returns of 9-11 per cent. per annum (net of all fees and expenses but including the Target Dividend and capital appreciation) . The Company's target dividend yield for the first full financial year to 31 December 2022 is 5.5 pence. Due Early March 2021. Digital 9 Infrastructure launch an initial public offering on the Specialist Fund Segment of the Main Market of the London Stock Exchange, by way of an initial placing and offer for subscription for a target issue £400m. Digital 9 Infrastructure plc is a newly established, externally managed investment trust. The Company will invest in a range of digital infrastructure assets which deliver a reliable, functioning internet. The IPO Prospectus is expected to be published in March 2021. Team PLC announced their plans for an AIM IPO. Team owns Theta Enhanced Asset Management Ltd, trading as Team Asset Management. This is a Jersey-based active fund manager providing discretionary and advisory portfolio management services to private clients, trusts and charities. Assets under management were GBP291m in November, up from GBP140m in December 2019 . The Company is seeking to raise no less than £5m. The Placing will be priced on a pre-money valuation for the Company of £7m. Targeting March Admission. Fix Price announces its intention to float on the Main Market of the London Stock Exchange. Fix Price is one of the leading variety value retailers globally and the largest in Russia, with more than 4,200 stores. Fix Price has revenues of RUB 190.1bn, RUB 142.9bn and RUB 108.7bn for 2020, 2019 and 2018, respectively. Adjusted EBITDA for the same years was RUB 36.8bn, RUB 27.2bn and RUB 14.2bn, respectively. The Offer would consist of an offering of GDRs by certain existing shareholders of the Company. Great Point Entertainment Income Trust PLC announced its prospectus has been approved by the FCA. Great Point Entertainment Income Trust PLC is a newly established, externally managed closed-ended investment company. The Company will provide project finance to content makers and commissioners in the global television and film production industry via senior loans secured against pre-sold intellectual property (IP) rights. GPEIT's investment objective is to provide Shareholders with dividend income and modest capital growth through exposure to media content finance. According to media reports, Deliveroo is expecting to release its IPO plans on 8th March. The company raised more than $180m in January with a valuation of more than $7bn.
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UK railway privatisation, which was launched in the mid-1990s, has finally turned full circle: the Department of Transport has recently confirmed that its controversial railway franchise system will be scrapped. In this month's feature article, Nigel Hawkins, the Infrastructure analyst at Hardman & Co, examines the 25-year history of railway privatisation and chronicles its ups and its downs. The successes of railway privatisation, such as new rolling stock, are addressed, along with the many shortcomings, which included minimal vertical integration. With the winding up of the franchise system, the UK railway sector is effectively reverting to its former status as a nationalised industry, a shift started with the renationalisation of the collapsed Railtrack – later re-badged as Network Rail – in 2001.
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Bacanora Lithium (BNC LN) has fulfilled its funding requirements for the Sonora project in Mexico and is on its way to being a major lithium producer. With equity raises totalling US$96m in the form of a placing after which BCN’s strategic partner opted to exercise its pre-emptive rights and then increase its stake to 28.8%. The support from investors and Ganfeng Lithium, one of the world’s top lithium producers, is a major validation of the project and confirms our long-held view that Sonora would be built.
Companies: Bacanora Lithium Plc
SMS has announced new contract wins with two of the fastest growing independent energy suppliers in the UK to provide meter installation and Meter Asset Provider (MAP) services. Minimum contracted order commitments will see the SMS contracted pipeline increase to 2.5m (December 2020: 2.0m), indicating an addition of at least 500k smart meters. SMS has also announced the acquisition of a portfolio of 15,000 I&C electricity meters and 20,000 meter point data collection contracts, adding £3.1m ILARR for a cash consideration of £8.25m.
Companies: Smart Metering Systems PLC
DX has reported a strong H1, building on the return to profit last year. High service levels and improved operational efficiency have enabled continued volume growth at DX Freight, which has supported H1 group sales growth of 7.4% and an increase in adjusted operating profits from £0.4m to £5.9m − all achieved despite Covid. We have left our FY 2021 EPS unchanged (maintaining some caution on the impact of the lockdown) but upgrade FY 2022 by 11% (which assumes the share price exceeds 40p and consequently maximum dilution from option schemes). With the £10m capital investment programme providing support for continued strong long-term growth, the June 2023 PER of 12.4x and free cash flow yield of 7.4% offer significant share price upside (our new target is 42p).
Companies: DX (Group) Plc
XP Power reacted quickly to pandemic-related disruption early in 2020, so well positioned to benefit from a sustained uptick in orders as COVID-19 generated demand for critical care equipment and semiconductors. The company reported a record year for revenue and earnings while reducing net debt; the dividend was reinstated from Q220 as visibility improved. Despite expecting demand to normalise, XP still expects growth in underlying revenues in FY21.
Companies: XP Power Ltd.
Today's news & views, plus announcements from RIO, TW, CRDA, TPK, PHP, MGGT, SHI, WHR
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Further media reports that Dr Martens, the British Boot brand is planning an IPO on the LSE. It is currently owned by PE group, Permira who is expected to sell down its stake at the IPO. March 2020 YE the group had revenues of £672m and EBITDA of £184m. Deal size TBC. Upon Admission to AIM, Nightcap will acquire The London Cocktail Club Limited (the "London Cocktail Club"), which is an award winning independent operator of ten individually themed cocktail bars in nine London locations and one location in Bristol. Offer TBC Due mid Jan. HSS Hire Group, HSS.L transfer from Main to Aim. Mkt Cap c. £70m. Recently raised £52.6m. Leading supplier of tool and equipment for hire in the United Kingdom and Ireland and has provided equipment hire services in the United Kingdom for more than 60 years, primarily focusing on the B2B market. Due 14 Jan. VH Global Sustainable Energy Opportunities plc, a closed-ended investment Company focused on making sustainable energy infrastructure investments, today announces intends to launch an initial public offering of shares on the Official List (Premium) of the Main Market of the London Stock Exchange. Due by Early Feb.
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Accrol Group Holdings plc (ACRL LN) Bango plc (BGO LN) Brickability Group plc (BRCK LN) Norcros plc (NXR LN) OnTheMarket (OTMP LN) Ricardo (RCDO LN) UP Global Sourcing Holdings (UPGS LN) Watkin Jones (WJG LN) Xpediator (XPD LN) ZOO Digital (ZOO LN)
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tinyBuild— a leading video games publisher and developer with global operations. tinyBuild's strategic focus is in creating longlasting IP by partnering with video games developers, establishing a stable platform on which to build multi-game and multimedia franchises is to join AIM. Offer details TBC. Due mid-March. AMTE Power, a developer and manufacturer of lithium-ion battery cells for specialist markets, announced its intention to seek admission to trading on AIM. Admission is expected to take place during March 2021. The Company intends to raise approximately £7m by way of a placing of new ordinary shares in the capital of the Company. Timing TBC. Samarkand Group Limited, the cross-border eCommerce technology and retail group opening up the world's largest market for brands and retailers, intends to IPO on the Apex Segment Aquis Stock Exchange Growth Market. Admission is targeted for March 2021. Cellular Goods a UK-based provider of premium consumer products based on biosynthetic cannabinoids announced its intention to join the main market (standard). Has raised £13M in an oversubscribed placing. £25m mkt cap. Due 26 Feb. NextEnergy Renewables to launch an IPO on the Main Market. NREN is a differentiated renewables investment Company that aims to capture the most attractive private renewables and energy transition infrastructure investment opportunities globally. Targeting a £300m raise. NREN is targeting total returns of 9-11 per cent. per annum (net of all fees and expenses but including the Target Dividend and capital appreciation) . The Company's target dividend yield for the first full financial year to 31 December 2022 is 5.5 pence. Due Early March 2021. Digital 9 Infrastructure launch an initial public offering on the Specialist Fund Segment of the Main Market of the London Stock Exchange, by way of an initial placing and offer for subscription for a target issue £400m. Digital 9 Infrastructure plc is a newly established, externally managed investment trust. The Company will invest in a range of digital infrastructure assets which deliver a reliable, functioning internet. The IPO Prospectus is expected to be published in March 2021. Team PLC announced their plans for an AIM IPO. Team owns Theta Enhanced Asset Management Ltd, trading as Team Asset Management. This is a Jersey-based active fund manager providing discretionary and advisory portfolio management services to private clients, trusts and charities. Assets under management were GBP291m in November, up from GBP140m in December 2019 . The Company is seeking to raise no less than £5m. The Placing will be priced on a pre-money valuation for the Company of £7m. Targeting March Admission. Virgin Wines UK Plc has out their plans for an AIM IPO. Virgin Wines is a direct-to-consumer online wine retailer that sells products to retail customers in the UK through two subscription schemes and a pay-as-you-go offering. The Group also sells a range of beers and spirits and operates a B2B sales channel for corporates. Anticipated mkt cap £110m. Raising £13m in new money and vendor sale of £34.9m . Due 2nd March. Fix Price announces its intention to float on the Main Market of the London Stock Exchange. Fix Price is one of the leading variety value retailers globally and the largest in Russia, with more than 4,200 stores. Fix Price has revenues of RUB 190.1bn, RUB 142.9bn and RUB 108.7bn for 2020, 2019 and 2018, respectively. Adjusted EBITDA for the same years was RUB 36.8bn, RUB 27.2bn and RUB 14.2bn, respectively. The Offer would consist of an offering of GDRs by certain existing shareholders of the Company. Great Point Entertainment Income Trust PLC announced its prospectus has been approved by the FCA. Great Point Entertainment Income Trust PLC is a newly established, externally managed closed-ended investment company. The Company will provide project finance to content makers and commissioners in the global television and film production industry via senior loans secured against pre-sold intellectual property (IP) rights. GPEIT's investment objective is to provide Shareholders with dividend income and modest capital growth through exposure to media content finance. According to media reports, Deliveroo, are expecting to release their IPO plans on 8th March. The company raised more than $180m in January with a valuation of more than $7bn.
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Xeros has raised £8m (gross) to productise the extremely promising XFiltra product and to assist with some pandemic-induced licence slippage.
Companies: Xeros Technology Group (XSG:LON)Xeros Technology Group Plc (XSG:LON)
An upbeat trading statement (for the four months to 7 February) points to very strong like-for-like revenue growth in both the UK and South Africa. Higher volumes and revenues most likely with an improving mix are all supportive of rising profitability and margins. Our FY21 PBT estimate is now c 16% higher and consistent with updated guidance. We have also increased subsequent years modestly. Gaining market share and virtually de-gearing the business in the last year are notable group achievements.
Companies: Norcros plc
