We had feared roaring raw material prices as well as energy costs might have strongly weighed on SGL’s Q3 figures, but we were wrong. The company dealt quite successfully with them by (partly) passing them on. But, we believe, this will become more difficult in Q4. Nevertheless, the reported figures were better than expected.
Luckily, SGL missed its ‘usual’ period for making impairments, which is positive in our view.
Companies: SGL Carbon SE
How can a guidance upgrade exclude higher raw material prices in a time of price inflation. Then, only some days later, price inflation was used partly to explain the held-back profitability development. This does not bode too well in our view.
The H1 report showed the expected business recovery in some parts of the company and a vibrant improvement in profitability, but not in all divisions.
SGL released preliminary figures, which are quite positive and made management so enthusiastic that it lifted the guidance. The top line is expected to be marginally up (+3%), but the EBITDA before one-offs target is lifted by +23% as well as a positive net result. This upgrade looks impressive and is a positive surprise. We are struggling a bit in understanding the stronger profit increase compared to the EBITDA one.
SGL benefited from its cost cutting programme, reporting higher profitability. What is helpful is the higher granularity of its businesses, but we believe management’s focus on the adjusted EBITDA as KPI puts a disadvantageous figure into the lime-light.
The reported figures were slightly ahead our expectations.
The FY figures were finally not too bad after the new management had surprisingly made another impairment, ending up at the upper end of its guidance.
In essence, there might be another loss-making year to come, which is already in our estimates, but even more meaningful to us is management’s commitment to deliver on its promises and it has to acquiesce to be tackled about its targets, which we see may not be quite so easy to reach.
...but there will not be much fun in Q4. The Q3 preliminary figures had already been released and the report was only an obligatory act as long as the updated five-year-plan is not published. What we have understood so far is that SGL will be in restructuring mode until 2022. We believe management should act faster (before the release of the annual report) as uncertainty is a slow poison.
The main question is, is this the final one? Under the former CFO who has since stepped down, the company booked a substantial impairment in CFM during 2019 and, precisely one year later, the new management has made a second substantial impairment for similar reasons. In our view, it is legitimate to ask whether the new view on the business is now realistic. Only the future will tell. The timing is well chosen.
It works! However, it will not play out for SGL, but we still see a tiny chance that the company jumps on our idea, Si4C, on which we have elaborated for quite a while. Currently, this could limit SGL’s future perspectives.
As we have seen many times in this crisis, a single segment or industry can not offset the weakness of a handful. This was also true for SGL’s Q2. Despite Digitization, customers from all other industries showed resistance to buying to different degrees with various (negative) impacts on sales and profitability.
As the company had already released some preliminary figures and had given a FY guidance, the report provided only more details, also regarding the guidance.
SGL’s new CEO took the helm in challenging times and he is known, as we also cover Lanxess, to be able to sort things out. But can he turn this tide? We do not think so as the issues come from outside and there are no internal ones like in 2019. Nevertheless, he made a strong statement by giving a FY guidance, where other (bigger) companies flinched.
SGL’s operations had been or are suffering from the ongoing restrictions. There is a long list of sites, where short-time work and other measures are currently implemented, which reduce personnel expenses. Having cancelled FY guidance in early April, things seem to be even more severe as the company already started to gather cash and management guides for a negative recurring EBIT in Q2 and said nothing about the rest of the year.
We hope management is still in the seat and can ‘translate’ the forward strategy into sustainable growth and earnings momentum. The provided information and the announced new mid-term targets give a first idea of the (positive?) future growth momentum. SGL highlights the stronger product pipeline, which is expected to foster the momentum. We see some disconnect between the new plan, which looks achievable, and efforts to change the mindset, which seems to have become a key component for future
As expected, SGL reported a mixed set of figures with lower profitability (a notch below our expectations). The changes of the sales to customer industries showed strong demand from digitalisation while good demand from Chemicals and Energy more than offset Mobility’s weaker demand.
Various effects impacted SGL’s Q1 figures with a good ending for GMS. CFM was also good news as it reported a black zero. All in all, everything is in line with expectations and nothing unusual popped up. After all the difficult times, the spectacular point is that Q1 was unspectacular.
SGL Carbon reported stronger than expected FY 2018 figures, but the given 2019 outlook fits better with our moderate expectations for the year due to planned investments. We value the latter as positive as the investments will be made in the right industries (e.g. LED, batteries) and in the transformation of the automotive industry.
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Companies: DX (Group) Plc
Seeing Machines has announced that it has been selected as the DMS supplier for automotive programmes through Magna International worth cA$120m and a fundraise of at least US$40m at 11p.
The funds will be used to accelerate growth in the rapidly expanding DMS technology market, across all transport sectors globally. This includes the acceleration of the development of new core software and system features, acquisition of additional specialised technology, expansion of sales channels and produc
Companies: Seeing Machines Limited
Seeing Machines has announced results for its financial year ended June 2021 and, after the 3 August 2021 trading update, there were few surprises in the numbers with the company trading ahead of expectations in terms of margins and cash. This reflects the successful focus by the management on reducing costs and conserving cash. However, with the conclusion of the recent fund raise, we expect the company to change gear to investing in the business and managing for longer term shareholder value.
Friday's market sell off saw some violent downward moves in many stocks with little initial differentiation between sectors or the key drivers of businesses, creating significant share price drops in a number of higher quality or uncorrelated names. We take a look at some stocks we believe have either seen an unwarranted sell-off, have seen weakness go under the radar or where there is now a more attractive opportunity.
Companies: ANX IBPO CYAN SOM EQT AFM
Whitelee windfarm hydrogen project funding
Companies: ITM Power PLC
The oversubscribed placing to raise £25m and £2m open offer leaves Velocys well placed to move forward on its reference projects and strengthens its ability to address further demand as airlines increasingly seek out sustainable fuelling solutions. We have updated our forecasts for the raise and after a review of project timings. These show that if the company can progress its projects, it is capable of being cashflow positive in FY 24 without recourse to further funding. Our DCF based central c
Companies: Velocys plc
The Whitelee project to which ITM is supplying its PEM electrolyser technology has won £9.4m of government funding. We see this project as a key demonstration of the value of co-locating hydrogen production with renewables and indicates a wide market for this key energy storage solution.
While there remains considerable uncertainty over the planning and permitting of the Uskmouth power station conversion there have been a couple of recent pieces of good news for SIMEC Atlantis in our view. Inclusion of waste-to-energy in the carbon capture support model is potentially positive for Uskmouth and may increase its political attractiveness to the Welsh Government as they consider permitting. The ring fencing of CfD support for tidal steam in the next allocation round opens up the pos
Companies: SIMEC Atlantis Energy Ltd.
Macfarlane Group, the leading protective packaging solutions specialist, servicing clients across the UK
and now emerging into Continental Europe, has issued a trading update this morning (25 November)
covering the period since end June and the year to date. Trading has continued to be robust in a difficult
supply chain environment and the Group now expects to exceed its previous expectations for the full
year. Sales growth for the year to date has accelerated through to October at rate of +2
Companies: Macfarlane Group PLC
The H1 results were a bit of a double check. First, how high hopes (battery materials) persist in a rapidly changing environment, something already communicated to the markets. The second, and a rather annoying one, was how to deal with the issues as management was not really transparent. This explains the strong miss in EBIT compared to the consensus. We were also wrong-footed as our impairment figure was far too low.
Companies: Johnson Matthey Plc
Like Taylor Maxwell before it, management's patience and persistence has landed another prized target, this one HBS NE Limited trading as HBS New Energies and UPOWA, giving Brickability a platform into the fast-growing renewables energy products market. It is Brickability's 13th acquisition in the past three years, will cost a maximum £5.5m and falls within the group's target 4-6x EV/EBITA purchase range thus enhancing earnings whilst broadening the product offering to its core housebuilder cust
Companies: Brickability Group PLC
Oil prices suffered one of the largest ever one-day plunges, crashing more than 11% on Black Friday as a new coronavirus strain sparked fears that renewed lockdowns will hurt global demand. The crash, the 7th largest ever for Brent crude, the global oil benchmark, may prompt the OPEC+ cartel to re-consider its policy when it meets next week, with the group increasingly leaning toward pausing its output hikes. The sell-off was amplified by low liquidity on a festive day in the US, the breach of s
Companies: FO 88E DEC EME GTC TRIN UOG WEN
The trading update confirms that TClarke is on track to meet FY21 expectations signalling a strong recovery from the pandemic-hit 2020 with revenues +47%, H2 margins back at 3%, underlying EPS +50% and net cash of c£5m in the year-end balance sheet. The highlight, in support of its target £500m turnover by 2023, is continued improvement in the order book, currently at £525m (end June £503m) including a record £320m (+25%) secured for a year out. This is not ‘being bought' but comes with a real s
Companies: TClarke plc
LTHM announced exceptional results for H1F22 ended 30 September 2021. H1F22 revenue reached £193.9m, +81.2% over H1F21 of £107m. This is notably a stellar first half driven by demand-supply imbalances in global markets that have resulted following the pandemic. Resulting PAT of £26.6m translates to EPS of £1.335 vs. £0.256 in H1F21.
Companies: James Latham Plc
Confirming a strong start to the year, with revenues and adjusted EBITDA up 30% and 43% respectively,
CML’s interims resultsfor H1 FY22A(six months to 30th September 2021)reflect a business with a bigger
spring in its step following on from the Hyperstone divestment earlier in 2021. Importantly, there are
pleasing signs that the new strategy of growing customer share and expanding the customer base is
already paying dividends, alongside recovery in existing markets. We are pleased to push th
Companies: CML Microsystems Plc