Thanks to the recently-boosted cash reserves, easyJet will be able to ride out a 9-month shutdown under its worst-case scenario. The enhanced financial position and flexibility, as well as the viable strategic plans, appear to be sufficient to cope with the COVID-19-led macro and industry headwinds.
Companies: easyJet Plc
EasyJet’s FY results met market expectations and guidance. The company is aiming to be a net-zero carbon airline and will build up the package holiday business from the UK to the rest of Europe.
easyJet has just announced very encouraging Q3 19 results.
Total revenue per seat has increased by 0.7% to £60.84, which is a positive sign as the industry’s average air fares have been under pressure due to the substantial seat-capacity growth in the European sky.
easyJet published an encouraging set of H1 19 results, in line with consensus expectations.
As expected, the lower air fares resulting from fierce industry competition and a higher cost environment deepened the operating loss in the first half.
However, despite the continuing challenging trading environment and macro-economic uncertainties in Europe, the FY19 guidance remains unchanged.
Q1 revenue was up 13.7% yoy to £1.3bn, broadly in line with the company’s initial expectations. The figures were mainly supported by the solid passenger numbers and growing ancillary revenue, despite the cancelled flights and lost revenue resulting from the drone issue at London Gatwick (c.£15m impact).
However, the non-repetition of one-off benefits (bankruptcies of Air Berlin/Monarch, Ryanair/SNCF cancellations) in the prior year, along with the Berlin-Tegel Airport still in the early stage of optimisation, have together brought the total revenue per seat down by 4.2% at constant currency, which is in line with the company’s expectations (the company had expected revenue per seat to decrease by a low-to-mid single-digit in H1 19).
EasyJet continues to be very active in preparing for Brexit. The company now has 130 aircraft registered in Austria and has increased its EU ownership to around 49% to mitigate the Brexit concern.
• EasyJet expects FY 19 capacity to increase by c.10% and sees H1 19 growth of c. 15%.
• Revenue per seat at constant currency for H1 19 is expected to be down by a mid-to-high single-digit.
easyJet reported unsurprising results for FY18, in line with our expectations and the consensus. The number of passengers was up by +10.2% yoy to 88.5m and the company showed a record load factor of 92.9% (vs. 92.6% in FY17). This pushed the revenue to rise by +16.8% yoy, while revenue per seat grew by +6.4% yoy to £61.94. Headline costs per seat were up by +5.3% to £43.43 and non-headline costs were £133m (£40m related to Tegel, £65m for IT development). This led to a profit before tax of £578m (+41.4% yoy), per seat: £6.07 (+28.7% yoy). The proposed dividend was higher than our expectations: 58.6p (vs. 40.9p in FY17).
EasyJet reported strong Q3 results thanks to its increasing customer demand and despite the growing number of flight cancellations, which affected mainly EasyJet’s costs in this quarter. This performance was supported by an important increase in ancillary revenues and favourable market dynamics.
EasyJet reported very strong H1 results in a usually weak period of the year. This performance was supported by its leading position at primary and constrained airports, but was also helped by a calendar effect linked to Easter. Its main operating lever in H2 18 is the integration of Berlin Tegel airport slots and former Air Berlin aircraft.
EasyJet reported bright Q1 figures with a load factor rising by 2.1pts in a seasonally weak period. Also, revenues per seat grew contrarily to costs per seat, which was supported by still declining fuel costs, however this situation should reverse quite soon. The airline expects a good orientation for Q2 but weaker growth in H2 than in H1 due to stronger competition from British Airways and Ryanair.
In a difficult period marked by high pressure on fares due not only to the strong increase in capacity in the market but also by a concentration phase with the disappearance of Monarch and Air Berlin. EasyJet reported its FY results, which showed resilience with quite a strong increase in revenues and helped by the still decreasing fuel costs. The upcoming up-gauging of its fleet will enable the airline to increase its capacity by 6% in FY18, while higher efficiency associated with flying a A320neo or A321neo compared to the CEO versions will help to maintain the cost per seat at a reasonable level.
The deal will see Easyjet lease up to 25 aircraft and take over the insolvent German airline's Tegel airport slots.
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Angling Direct has achieved scale over the last 5 years and proven its multi-channel credentials. Under new leadership it is now being professionalised, and margin/profit weakness (notably online) is a key focus. Early signs are encouraging. With a fishing renaissance post covid, ANG is very well placed to deliver profitable and sustained growth over the medium to long term in highly fragmented markets. For these traits, valuation is extremely undemanding, and upcoming results are a possible catalyst.
Companies: Angling Direct Plc
Buyout rumours pushed William Hill’s stock price up 43% on 25 September, driven by initial speculation, and later confirmation that the firm had received acquisition proposals involving cash deals from Apollo Management International and Caesars Entertainment. While we believed a price of 300p+ was unlikely, fresh details about Caesars’ bid validate our initial thoughts. Moreover, we believe Caesars will emerge as a successful bidder. Hence, we will raise our target price to converge to the potential deal price of 272p.
Companies: William Hill Plc
Dart Group has released an AGM statement this morning indicating satisfaction with load factors and financial performance achieved year-to-date in the context of the challenging operating environment. In addition, the Group has applied to change its name to Jet2 Plc in recognition of the recent sale of the Fowler Welch distribution business and the sole focus on leisure travel. We keep our forecasts withdrawn at this time.
Companies: Jet2 Plc
New management has put in place a strategy which the February interim results revealed was returning the group to growth with very encouraging LFL statistics and attractive returns on refurbished outlets. In March, however, in response to COVID-19 and following UK Government guidelines, all venues had to be closed.
Management initiatives have materially reduced the cash burn while the group is unable to trade, and the group’s lender has been very supportive in significantly increasing the borrowing facility.
Management is now proposing an equity issue, the rationale for which is to strengthen the leverage ratio to create a more appropriate capital structure moving forward, to allow an immediate return to the estate refurbishment programme and to be able to potentially take advantage of strategic opportunities as they arise as the sector emerges from the COVID-19 crisis.
Companies: Revolution Bars Group Plc
GVC reported H1 20 revenue of £1.62bn, in line with its earlier trading update, while EBITDA, at £348.6m, was at the higher end of the provided range. However, given the COVID-19 uncertainty, the board has decided to withhold an interim dividend. Looking forward, management now expects FY20 EBITDA of £720-740m, which is ahead of our estimates as well as consensus. We will upgrade our FY20 estimates, to reflect both the encouraging H1 performance as well as the improved outlook.
Companies: GVC Holdings Plc
Gear4music continued its recent run of positive news announcements yesterday with an upbeat AGM trading statement. Growth, following an exceptional first quarter in FY2021 (April to June), remained brisk in July and August. Moreover, the company’s strong sales momentum is more than matched by improvements on costs and margins.
Companies: Gear4music (Holdings) Plc
Dixons Carphone has announced a strong trading performance for the 17 weeks ended 29 August 2020. The momentum was led by the online format (+124% yoy) which accounted for c.40% of total electrical sales. We also note the company’s success in gaining market share in the operating geographies. We believe DC is well placed to maintain lfl growth in the remainder of the year. No change in the stock recommendation.
Companies: Dixons Carphone Plc
The continuing fast-growing online business and well-managed product mix have resulted in better than expected profitability for H1 20 and, with the rapid recovery in recent weeks, the group has upgraded again its guidance for FY 20.
The group is expecting adjusted pre-tax profit to be £300m for FY 20 vs. £195m (previously revised at the end of July).
Companies: Next Plc
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.
Companies: Escape Hunt Plc
Listed in April 2017 with a reorganized corporate structure, and led by a high-calibre operating team, Ten Entertainment Group (TEG) has developed a highly cash-generative business model that signals further growth prospects. By combining its operating formula with an integrated technology platform, TEG has set itself apart from competitors. With effective inward capital investment and its ‘Tenpinisation’ model, growth looks set to continue, and forecasts indicate a substantial increase in profit in FY17 and FY18.
Companies: Ten Entertainment Group Plc
Vertu has delivered a respectable set of FY2019A results, which are 7.3% ahead of our forecasts at the adjusted PBT level. We tweak our headline forecasts at this juncture, to reflect higher levels of revenue, with growth in gross profits despite margin pressure coming through in new and used and continued cost pressure across the business, albeit we expect these are beginning to stabilise. We also note the significant cash beat in 2019A and our net debt forecasts for 2020E and 2021E are lower as a result, with a cash pile building in 2021E. We believe the asset backing in this Group remains compelling (NAV per share 44.9p) and it remains well positioned to deliver strong levels of shareholder value across a number of different fronts.
Companies: Vertu Motors Plc
Government bans on new fossil fueled vehicles in many major economies are likely to drive significant growth in electric vehicles (“EVs”) over the next twenty years. This will create growth in electricity demand from EV charging. The volume of energy to be supplied creates opportunities for both supply companies and generators and the provision of charge points is already creating a new industry. However, the timing of this demand puts pressure on local distribution infrastructure. While smart charging and vehicle to grid technology offer solutions, we believe these will only be partial given likely charging behaviour and as a result there will be demand for additional grid capacity and for other solutions. These other solutions include charger located storage and distributed generation.
Companies: CNA NG/ YU/ DRX GOOD RED SMS IKA AFC
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.
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Disney+ hits 22m mobile users, SoftBank backed firm downsizes IPO, German mobile carrier selects Huawei
Companies: ENET 7DIG MVR ZOO ZOO AMO BOOM MIRA MWE
The Fulham Shore Plc (“FUL”) released interim results for the 6m period ended 29 September 2019 in-line with expectations as strength in the Franco Manca portfolio more than offset weather-related contraction at The Real Greek. We make minimal changes to our underlying forecasts and introduce a forecast for 2021. Nine restaurants have been opened so far in this financial year (year end March 2020) and the Company is now guiding a further eight to ten in the next financial year. We note that the financials now incorporate IFRS 16 for Leases which came into effect on January 1 2019. IFRS 16 does not impact cash balances but does lead to some material changes to the presentation of the financial statements.
Companies: The Fulham Shore Plc