LIBERUM: The Liberum Leisure Digest: NLW increase - pricing power is key

LIBERUM: The Liberum Leisure Digest: Festive cheer, optimistic new year

Q1 trading – the strong showing continues

There were no major surprises in JDW’s Q1 trading performance. Lfl sales increased by 9.5% yoy, with all segments clocking strong momentum. We expect the company to continue to perform ahead of the market average. However, we do not expect the inflationary headwinds to ease before the second half of FY23/24. The management seems comfortable with the consensus for the current financial year. We maintain our stock recommendation.

LIBERUM: The Liberum Leisure Digest: Encouraging updates, falling markets

FY22/23 performance: gaining strength in the UK

JDW’s FY22/23 performance was ahead of market expectations – although the EBIT was in line, the FCF was higher. The company continues to gain market share and is better placed vs most competitors, in our opinion. The strong start to Q1 FY23/24 (+9.9% lfl) is also a positive. However, the management’s FY23/24 guidance looks qualitative/open-ended, raising apprehensions among some investors. We will increase our TP by mid-single digits.

Strong end to FY22/23; guidance beat for H1 FY23/24!

JDW’s pre-close FY22/23 trading performance was slightly ahead of AV as well as the street’s expectations. Group’s lfl sales came in at +12.9% yoy. The management expects FY22/23 profit to be in-line with market expectations. The stock price is up 8% as investors have noted the step-up in Q4 lfl growth and the strong guidance for H1 FY23/24 – a performance expected to be in line with the second half of FY22/23. We will upgrade our financial estimates but maintain our cautious stock recommendat

Strong performance in Q3; momentum to moderate in future

JDW’s Q3 FY22/23 trading performance was below our estimates but stronger than the market’s expectations. The Group’s lfl sales grew by 12.2% yoy during the period. We expect the momentum to moderate gradually during the coming quarters. For FY22/23, the management expects sales to be at record levels and profit towards the top end of market expectations. We will tweak our financial estimates but maintain our cautious stance on the stock.

H1 performance below expectations; strong start to Q3

JDW’s H1 FY23 performance was below our expectations. Compared with FY19, the group’s lfl sales grew by 5% and the adjusted PBT was down 90.9%. Investors cheered the market outperformance during the initial seven weeks of Q3 (+14.9% yoy). The easing of supply chain issues is also a positive. However, the c.10% jump in the stock price jump seems something of an overreaction. Volumes remain under pressure and inflationary/macro-economic headwinds are here to stay, at least in the near-term. We mai

Weaker H1 trading; still lagging the close competitors

JDW’s trading performance for H1 FY22/23 was below our expectations. While the group’s lfl sales improved by 13.1% on a yoy basis, the figure remained in the red vs the pre-pandemic levels (-0.7%). JDW’s performance also looks weak when compared with close competitors like M&B and Marstons. We now see a worse-than-expected impact on the group’s profitability due to inflationary headwinds. We will revise our near-term EPS forecasts downwards. However, our positive stance on the stock is likely to

Decent Q1 lfl sales; investors concerned by weak October

JDW’s trading performance (for 14 weeks ended 6 November 2022) was in line with our expectations. Compared with 2019, lfl sales improved by 0.4%. However, the stock price slumped c.7% as investors are concerned about slowing trading momentum during October. Further closure of pubs is also not a favourable indication for punters. We expect sales and margin pressure to worsen during FY22/23. The stock’s valuation remains attractive at the current level.

A weaker end to FY21/22

JDW’s Q4 trading update was a disappointment. The lfl sales declined 0.4% (vs FY19) as price increases were not enough to offset the pressure on volumes. The management now expects a £30m loss for the current financial year (vs its previous guidance of break-even). We expect the FY22/23 performance to remain under pressure as inflationary headwinds and fragile consumer demand dent the EPS. We will trim the company’s valuation and expect the share price to remain under pressure for the remainder

Trying to find its feet in the post-pandemic world

JDW’s Q3 FY21/22 trading performance was slightly below our expectations. Although lfl sales declined by 4% (vs their pre-pandemic levels), the last two weeks of the quarter witnessed lfl growth. We expect the sector to remain battered by inflation-led headwinds (both on demand and profitability) but the publican is relatively better placed due to its cheaper prices and the gradual improvement in activity in/around the London/city centre. We shall need to trim of our financial estimates but main

Topps Group (TPT LN) - Initiation: Market leader trading at cyclical lows

Topps Group is the UK’s largest specialist supplier and distributor of tiles and associated products to the UK’s domestic and commercial markets. Each of the last three years the Group has successfully achieved record revenue in a market that’s seen recent volume declines and regional peers enter administration. Following the right sizing of its business, Topps Group is now well positioned to capitalise on the economic recovery and continue taking share from competitors, supported by its global

HeiQ - Forecast update and Ecolab contract

HeiQ reported its interim results for the 12-months to December 2023, a period characterised by challenging conditions in the markets in which the company currently operates. In-line with the recent trading update, the company reported revenues of $41.7m for FY23 and closed the period with a cash balance of c$10m and a net debt position of $2.2m. We have updated our forecasts to reflect the FY23 results and HeiQ’s outlook in 2024, leaving our revenue forecast unchanged but adjusting gross margin

Morning Note – 24 April 2024

LIBERUM: Tortilla Mexican Grill: Prioritising profitability over roll-out

Pinewood Technologies (PINE LN) - Strong results, growth ahead

Pinewood Technologies’ results for the 13 months to 31 January 2024 confirmed good growth in user numbers, revenue and operating profit for the continuing automotive software business. Our unchanged forecasts (see 6 March research) show strong revenue growth, high margins, and good cash generation over the period to FY26 as the Group executes its accelerated growth plan. As of Tuesday this week, Pinewood’s shares are ex-dividend and a 1-for-20 share consolidation is effective, meaning our discou

PROGRESSIVE: Gear4music: FY24 trading in-line and debt reduction ahead of market expectations

At its FY23 results in June 2023, G4M announced its intention to focus on product margins, overhead cost reduction, and efficiency ahead of revenue growth, along with further net debt reduction, in FY24. The FY24 year-end trading update confirms G4M has delivered on these rebalanced priorities, with gross margin rising and net debt almost halving compared with FY23. Cost savings achieved in FY24 and the continued development of higher-margin categories should deliver further upside in FY25E.

Hybridan Small Cap Feast - 24 April 24

24th April 2024 * A corporate client of Hybridan LLP ** Arranged by type of listing and date of announcement *** Alphabetically arranged **** Potential means Intention to Float (ITF) has been announced Dish of the day Admissions: Delistings: What’s baking in the oven? ** Potential**** Initial Public Offerings: Reverse Takeovers: 16 April 2024: Electric Guitar (ELEG.L) Concurrent with its Admission to trading on AIM, Electric Guitar is proposing to acquire the entire issued share capital of 3radi

React Group H1 Trading Update

React Group has released a positive update that has confirmed that the strong 2H 2023A momentum has continued into 1H 2024E, with what was described as a ‘record trading performance'.

Pinewood Technologies (PINE LN) - Driving growth in automotive software

Pinewood’s transition to a pure-play automotive SaaS business is now largely complete. Today we introduce summary forecasts out to FY26 and reiterate the investment case. We see significant opportunity for Pinewood to grow its user base in the UK and internationally whilst generating high EBITDA margins and cash conversion. With a 24.5p special dividend embedded in the current price (payable Q1/Q2), the effective price today is 12.3p. Based on the Group’s FY27 target of £27m EBITDA, we estimate

PROGRESSIVE: Vertu Motors: Traction control

Vertu is the fourth largest automotive retailer in the UK, with 188 sales outlets and a track record of cross-cycle growth, principally through businesses it has acquired, funded by equity, debt and most importantly cash generation. Vertu operates across the entire vehicle lifecycle, including new and used vehicle sales, and vehicle servicing, repair and parts. Service and repair is a 40+% gross margin repeating business. With economic headwinds, the transition to electric vehicles, recent overs

PPHE Hotel Group Limited

PPHE has released its usual Q1 trading update (31 March period-end) which reads reassuringly. The outlook says that “the Board remains confident in delivering full year performance in line with market expectations”. Revenue rose by 11.9%, from £68.8m to £77.0m. Growth was 11.0% on a Like-for-like (LFL) basis excluding the first three months of operation from art’otel Zagreb, Croatia. Revenue growth was driven by a rise in occupancy as room rates continued to normalise across both leisure, corpo

Zeus Top Picks for 2024 - 2023 review and outlook for 2024

On 9 January last year, we set out our ten top stock picks for 2023, for what turned out to be another relatively poor twelve months for UK equities due to two wars, stubbornly high inflation and further tightening of monetary policy. This was even as other major markets, such as the US, largely recovered in the year. In the 2023 calendar year, the AIM All-Share index fell 8.2% and is still 42% off its 2021 high. From the release of our 2023 top picks note, the average total return (assuming div

AKA: Initiating Coverage of a.k.a. Brands with Buy and $14 PT: Upside Ahead

We are initiating coverage of a.k.a. Brands Holding Corp. ("a.k.a. Brands" or the "company"), a leading owner of primarily online apparel-based brands focused on Generation Z and Millennial consumers, with a Buy rating and $14.00 price target, or 10.9X our 2025 EBITDA projection of $20.2 million. The company's brands include: 1) Princess Polly, focusing on 15 to 25 year-old women; 2) Petal & Pup, which offers feminine styles for 25 to 34 year-old women; 3) Culture Kings, a street wear destinatio

Domino's Pizza - Growing the base

Domino’s Pizza Group’s (DOM’s) new CEO has set an ambitious long-term growth target, including an acceleration in its net store opening programme. With better alignment between the company and its franchisees, management believes DOM should be capable of generating improved profit growth, versus that achieved in recent years, and potential higher returns.

HeiQ - Acquisition, placing and trading update

HeiQ has announced the acquisition of a site in Portugal where the company intends to build a HeiQ AeoniQ production facility with a 3,000 tonne per year capacity. To support the acquisition, the company intends to raise c£2.44m via an equity placing, supported by the issue of a c£1.7m (€1.97m) convertible loan note (largely to management) that will convert upon completion of the raise. We see this as an important step in the development programme for HeiQ AeoniQ. Additionally, HeiQ has provided