What a difference a year makes - 12 months ago, the focus, quite understandably, was on the course of the pandemic and the lifting of the Lockdown (1) measures. For investors, it was the sustainability of the rally in markets seen since March 2020. Today, while we are still thinking about the lifting of lockdown measures, we are also concerned about two “old favourites” from previous decades. Inflation and the parlous state of public finances. The BoE has said that although CPI inflation rose to
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Escape Hunt (ESC) released 2020 results this morning. The company made strong strategic progress despite a difficult market. Escape Hunt almost doubled its portfolio of owner-operated sites, introduced successful digital and remote-play products and restructured its franchise business for scalable growth. As a result, we see the potential for run-rate Adjusted EBITDA to reach £0.5m based on the company’s current estate and franchises. Going forward, we expect site additions and potential new fra
Companies: Escape Hunt Plc
The Budget offered a clear picture of the state of the economy. Put simply, the economy will be 3% smaller in three years’ time than it would have been without the impact of the pandemic. However, it is forecast to return to pre-pandemic levels by mid-2022, six months earlier than previously thought. The OBR forecasts that the UK economy will grow by 4.1% in 2021, (lower than the 5.5% outlined in November 2020). It has set its GDP forecasts in 2022, 2023 and 2024 at 7.3%, 1.7% and 1.6%. Positive
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Escape Hunt (ESC) provided an in line trading update with EBITDA in 2020 better than in 2019, despite the impact of the pandemic. The company has ample resources to continue investing in its UK sites with cash outflows tightly controlled. The company remains optimistic that it should have sufficient scale and site maturity to reach positive cash flow after trading conditions normalise. As part of its expansion, Escape Hunt announced that it had exchanged contracts on the acquisition of its Frenc
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 ta
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Escape Hunt (ESC) has conditionally agreed to acquire its French master franchise partner, BGP Escape (BGP). Together with UK sites currently in build, ESC expects BGP to add enough scale for the group to reach positive EBITDA when conditions normalise and new sites have matured. The acquisition is attractively priced at only 1x EBITDA before earnout payments.
We highlighted last month the (first) Santa Rally arrived early (unlike some other festive gifts). The second Claus(e) relief rally was prompted by the agreement between the European Commission and the UK on its future cooperation with the EU. Markets also reacted positively to the $900bn stimulus package agreed in the US. While the FTSE 100 and FTSE 250 indices rose by 1.6% and 1.7% respectively on the first trading day after the holiday and the FTSE 100 has recovered 28% from its low point in
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Escape Hunt’s digital and remote offerings have experienced stronger than expected demand, particularly from corporates restricted from physical events, including multi-nationals looking to bring teams together in different parts of the world. These new products are making a significant contribution to the impact of regulated site closures and restrictions on household mixing. The success of the company’s digital and remote strategy has led management to position these high margin products as a
Recent trading indicates that market demand for escape rooms is strong. To meet this demand, the company is building out sites on schedule and does not see buildout targets being impacted by the lockdown. As a result, we believe Escape Hunt is well-positioned to deliver high returns to investors post lockdown. During lockdown, we see cash management being supported by remote game sales, the government’s furlough scheme and effective cost control measures.
Escape Hunt announced the acquisition of its Middle East master franchise partner, Escape Hunt Entertainment LLC (“EHE”). The operation offers high potential returns at modest cost and risk to Escape Hunt. The transaction also pushes the company’s rollout ahead of our forecasts. Such acquisition opportunities, combined with attractive new lease terms and rebounding early demand, position the company for strong return potential.
Escape Hunt has seen a recovery of revenue levels that indicates to us that fundamental consumer demand for escape rooms remains solid. The company appears on track to expand its portfolio of sites to reach breakeven in the UK. Continued recovery and growth partly depends on government lockdown measures, but we take comfort in the company's increasing efficiency and flexibility on costs and its new remote and digital games.
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easyJet’s released its Q3 results, which were in line with management’s expectations. However, the Q4 performance is now expected to be limited further by the new waves of the pandemic and the increasing travel restrictions in Europe. The hope of a meaningful summer rebound is fading away for the whole intra-European travel sector.
Companies: easyJet plc
Companies: Loungers Plc
Next’s share jumped 9% on the back of the impressive Q2 21 performance. The encouraging improvement in retail sales as a result of gradually eased social restrictions in the UK alongside the continued strong momentum in online sales have led the group to finish the quarter with 18.6% sales growth vs. the same period in 2019 (vs. guidance of 3% previously).
The better-than-expected trading performance has enabled the group to raise again its FY21 guidance and to declare a special dividend.
Companies: Next plc
Various Eateries (VE) continues to deliver on its Q320 IPO aspirations with ‘extremely strong’ trading since reopening in April and confirmation of prime site expansion on advantageous terms. In particular, its main brand Coppa Club grew like-for-like sales by 28% on 2019 in its first five weeks of indoor and outdoor dining from 17 May (UK restaurant market like-for-like sales up 8% in June, per Coffer CGA Business Tracker). Similarly, in the half to March 2021, business was encouraging when all
Companies: Various Eateries Plc
Unprecedented times over the past 12 months have seen ScS Group deliver an exceptional set of H1 2021 results, dominated by the surge in orders post Lockdown 1.0. Group revenue grew 14.4%, with an incremental gross margin, tight cost control and UK government support (£6.6m) underpinning EBITDA* of £19.5m (£3.8m in H1 2020). We believe the average net cash through the period was c£97m (c£60m excluding customer balances). H2 2021 visibility remains low, with post Lockdown 3.0 demand uncertain, th
Companies: ScS Group plc
In this note we focus on five key themes that we believe will shape the motor retail sector in the short-to-medium term. These are digital sales trends, electrification, the agency model, vehicle supply, and the economic outlook. The dealer groups have shown a great deal of resilience and flexibility throughout the Covid-19 pandemic – we expect them to continue to adapt and work closely with OEMs as the industry evolves.
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Shore Capital met with the senior management of Marks & Spencer (M&S) to catch up on business development following its recent AGM. We find a management pressing on with workstreams in still uncertain times and upbeat in mood across the business. We are nervous about this next sentence, but M&S could genuinely be at a positive inflection point, which if so, augurs well for future business performance and so earnings trajectory. In this note we do not adjust our financial forecasts, as may be exp
Companies: Marks and Spencer Group plc
Catena Group (CTNA.L) to complete reverse takeover and be renamed Insig AI and is acquiring the remaining shares of Insight Capital Partners. Insight, which is based in the UK, is a data science and machine learning solutions company that provides bespoke web-based applications, advanced analytical tools and modern technology infrastructure to make machine learning accessible to investment professionals. Insight has developed five products specifically aimed at accelerating an asset manager's d
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Companies: Vertu Motors PLC
Kingfisher’s Q2 FY21/22 trading update came in ahead of market expectations. Following an impressive c.64% lfl sales growth in Q1, the momentum finally receded with Q2 registering a sales decline of >1% so far, as DIY spend tailwinds unwind. On the back of the better-than-expected performance, management upgraded its sales and profitability outlook for H1 FY21/22. Although we will raise the estimates and target price, ‘Reduce’ recommendation is re-affirmed as DIY spend normalises and the limited
Companies: Kingfisher Plc
The final results revealed adjusted PBT up 99% year-on-year, which was 10% better than forecast despite four upgrades during the financial year. This strong performance reflects the financial benefits that have accrued following the shift in the business model to online only, as well as management’s strategic decision to significantly increase marketing spend. A second special dividend for the 2020 financial year has also been announced, reflecting the strong cash flow characteristics of the bus
Companies: Best of the Best plc
easyJet’s Q1 performance was largely hit by travel restrictions in Europe and the situation is expected to be worse in the next quarter. Nevertheless, the market was persuaded by the airline’s current liquidity position which could allow a survival of more than 14 months even in a fully-grounded scenario.
Entain reported a largely in line top line but above consensus profit numbers, driven by the solid showing in online, which offset the retail weakness. The board has suspended the dividend, in order to preserve liquidity, for what could be an heavy M&A year in 2021 (net debt/EBITDA at 2.1x).
Importantly, BetMGM has made considerable progress (+59% revenue, +7pp market share) across the all-important US market and could be in for another blockbuster year in 2021.
Companies: Entain PLC
The UK market showed a continued recovery in the first quarter albeit the indices are still well short of their all-time peaks, unlike many of their international peers. The FTSE 100 has risen by 1,186 points (21.4%) since the end of October and the FTSE 250 by 4,304 points (25.0%). The comparable performance since the start of the year is less spectacular- the FTSE 100 has risen by 253 points (3.9%) and the FTSE 250 has risen by 1,070 points (5.0%). The factors behind the sustained rally are fa
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Semper Fortis Esports* recently announced its intention to IPO onto the Access Segment of the Aquis Stock Exchange Growth Market. Semper is a multi-operational Esports organisation focusing on gaming technology solutions, brand enhancement and high growth team infrastructures. The company plans to raise £2.5m to develop their three core areas of establishing an esports team, forming partnerships with brands for sponsorship and B2B consultancy services. The Board are highly experienced in spor
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