Morning Note – 25 March 2024

Tandem Group - Turning the Corner

2023 was a challenging year for Tandem, with cost-of-living pressures impacting demand for many of the group’s products. This led us to downgrade our forecasts several times during the year (including in December), and today’s results are largely in line with those revised projections – revenue -17% YoY to £22.2m and an adj. LAT of -£1.0m (our forecast of -£0.9m). FY24E looks more positive, however: economic pressures are easing for consumers (inflation is falling, interest rate cuts are expecte

Morning Note – 1 February 2024

Tandem Group - Trading update

As with many consumer businesses, 2023 has undoubtedly been a challenging year for Tandem, as consumers faced intense cost-of-living pressures. As a result, we lowered our FY23E and FY24E forecasts in December 2023, which Tandem today confirms it is trading in-line with (FY23E revenue -17% YoY to £22.2m; our forecast £22.0m). FY24E looks more promising, however (c20% revenue growth projected), with the group set to gain from multiple competitors having gone bankrupt (particularly within cycling)

Tandem Group - Trading Update

Tandem has announced that it expects report FY23E results below previous expectations, with revenue in the range of £22m to £23m (Cavendish forecast: £26.3m) and a statutory LBT of between £0.9m and £1.3m (Cavendish forecast PBT: £0.1m) – the guidance range is dependent on whether certain expected freight-on-board (FOB) orders are shipped before or after year-end. The weaker YoY performance has been driven primarily by lower demand for Toys (Tandem’s largest division), as consumers faced conside

Morning Note – 13 December 2023

Hybridan Small Cap Feast - 20 Sep 23

20th September 2023 @HybridanLLP Status of this Note and Disclaimer This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment ob

Morning Note – 20 September 2023

Tandem Group - Interim Results

Tandem has announced H1 results, which reflect a highly challenging market environment, with sales down c24% YoY, and a loss before tax of -£0.9m (H1/22A PAT £0.3m). Ongoing cost of living pressures have played a key part in this weaker performance, as has poor weather and a shift in the buying pattern of customers. Management now expects to be “approximately breakeven” for the year – we update our forecasts (FY23E Adj PAT reduced from £0.9m to £0.1m; FY24E cut from £1.3m to £0.7m as economic pr

Cenkos: Tandem Group Plc -- Trading in-line with expectations

Tandem's AGM statement confirms that the economic environment remains challenging (YTD sales -26% YoY) due to the widely reported cost of living pressures, management remains confident in achieving market expectations for the full year. This conviction is underpinned by planned new product launches, new customer relationships, an active film slate that should boost demand for licensed products, and a change in the buying habits of some national retailers (desire to hold less stock themselves and

Cenkos: Tandem Group Plc -- Moving in the right direction

After what has been a very challenging year, Tandem's has reported FY22A results largely in line with expectations. Group revenue fell 35% YoY, as the demand surge seen during COVID-19 lockdowns reversed, which was further compounded by intensifying cost-of-living pressures. Nevertheless, Tandem remained profitable (FY22A Adj PAT of £1.2m), cash generative, and has made good operational progress on multiple fronts, including consolidating its warehouse footprint, relaunching websites, adding cus

Cenkos: Tandem Group Plc -- In-line with expectations

-Tandem's FY22E trading update confirms revenue and PBT are in-line with expectations. This has been a challenging year for the business – demand for many of the group's categories surged during the pandemic (eg bicycles, e-scooters and various home and garden products), which when combined with the escalating cost-of-living pressures, resulted in a sharp drop in group revenue (-35% YoY). Nevertheless, Tandem has remained profitable (FY22E PBT of £0.9m) and has used the period to progress a seri

Cenkos: Consumer Q1/23

Key Observations Despite a second successive decline in CPI during the quarter, inflation remained at one of the highest levels in 40 years (10.5% in December) contributing to a winter of discontent, with each day in December facing some form of industrial action. The industrial action materially impacted the consumer sector and provided an insight into the simmering frustration around the decline in real wages of the UK population. There were multiple examples of consumer corporate failures d

Cenkos: Consumer Q3/22 Review

Third Quarter Key Observations  Escalating inflation continued to cut further into consumers' discretionary income, impacting demand across the consumer sector. The systemic rise in input costs significantly impacted companies' bottom lines, testing the resilience of even the strongest in the sector, as businesses balanced the long-term need to maintain relevance to their customer base (in terms of pricing & quality) whilst also seeking to navigate immediate economic challenges. The Gf

Cenkos: Tandem Group Plc -- A tough H1, but operational progress made

In the June trading update, Tandem flagged that this year's operating environment had been very challenging, with bicycle demand declining following unprecedented levels created by COVID-19 lockdowns, and other divisions being affected by the widely documented ‘cost-of-living crisis'. This backdrop leads us to lower our FY22E revenue forecasts by 10% to £27m. Adj EPS of 22.2p remains unchanged; however, aided by cost savings and reduced assumed tax expense (use of capital allowances). In the las

PROGRESSIVE: Watkin Jones: H1 in-line amid reviving investor appetite

Watkin Jones’s guidance for FY24E is unchanged in its trading update for the first half to 31 March. We maintain our forecasts for the full year and introduce half-year estimates, in line with reiterated guidance that performance will be significantly H2 weighted. The group confirms a continuing gradual recovery in appetite among institutional investors to forward fund its build-to-rent (BTR) and student developments. We believe this should gather pace as the direction of interest rates becomes

Ceres Power Holdings - Strategic partnerships powering growth

Ceres Power Holdings’ innovative technology uses electrolysis to produce green hydrogen and solid oxide fuel cells to generate power. In a year where it moved to the Main Market of the London Stock Exchange, it recorded revenue growth of 13% and gross margin expansion to 61% (the highest in the sector, according to management), but is yet to record an operating profit (FY23 operating loss of £59.4m versus £54.0m in FY22). Ceres continued its strategy to drive innovation and technology across sol

PROGRESSIVE: Sanderson Design Group: Strategic growth drivers show their value in challenging trading conditions

Sanderson Design Group (SDG) has announced its FY24 full-year results, which are in line with the headline figures from its February trading update. A record year for Licensing and a strong performance in the key North America market helped to offset a challenging consumer environment in other geographies, most notably the UK. While this backdrop is set to persist in FY25E, the group will continue to focus on its strategic growth drivers, notably North America and Licensing, to deliver sharehold

Surface Transforms - New guidance – forecasts under review

Surface Transforms has issued new revenue guidance for FY24, with the company now expecting revenues in the range £17.5-22m. We are withdrawing our previous forecasts for FY24 and withdrawing our price target while we review the impact of the new guidance.

Solid State - Anticipating record adjusted PBT in FY24

Solid State’s trading update affirms the sustained strength in demand throughout H224, resulting in record FY24 revenue and adjusted PBT ahead of prior consensus of £155m and £12.5m, respectively. This is attributable to the earlier-than-expected delivery of a NATO contract. As a result, consensus FY24 revenue and adjusted PBT estimates have been raised by c 6% and c 20%, with respective FY25 estimates declining commensurately.

Zeus: Video Games Sector Quarterly review - January 2024

Subsector price performance: In the fourth quarter to 29 December 2023 all but the AAA publishers and platform subsector saw share price declines. The UK PC and Console focused subsector was again the worst performing subsector (-26.2%) over the quarter and LTM (-70.1%).

Gooch & Housego (GHH LN) - A chink of light

Gooch has issued a positive update for H1. Trading has started to recover with stocking levels normalising at industrial and medical devices customers. The outlook is positive with growth returning, and management has confirmed our full year estimates (adjusted for the disposal of EM4). The order book and order flow appear healthy, and net debt is comfortable. Gooch clearly still has plenty to do to lift operating margins from a lacklustre 8.1%, but the transformation plan appears to be back on

Hybridan Small Cap Feast - 14 Mar 2024

Banquet Buffet*** Abingdon Health 9.25p £11.3m (ABDX.L) The lateral flow contract development and manufacturing organisation announces its unaudited interim results for the six months ended 31 December 2023. Revenue increased 117% to £2.4m (H1 2023: £1.1m). The Adjusted EBITDA loss decreased 47% to £1.2m (H1 2023: £2.2m). Furthermore, reduction in operating loss of 50% to £1.2m (H1 2023: £2.4m). The Board therefore expects that H2 2024 revenue will be significantly improved compared with H1 2024

AFC Energy (AFC LN) - First modular ammonia cracker system

AFC has unveiled a groundbreaking modular ammonia cracker system demonstrating viable and scaleable production of hydrogen in the UK using this method. The cracker system is designed to deliver 140 tonnes of fuel cell grade hydrogen each year. Hydrogen from the plant will initially be targeted for sale into AFC’s UK H-Power Generator deployments, including those with Speedy Hydrogen Solutions. Along with the recent purchase of the mobile storage and distribution assets of Octopus Hydrogen, AFC c

PROGRESSIVE: Sanderson Design Group: Delivering to strategy against an unhelpful global backdrop

Sanderson Design Group (SDG) continues to deliver on its key strategic initiatives and growth drivers despite a challenging global backdrop. The group’s FY23 performance showed flat revenue, with adjusted underlying PBT rising £0.1m to £12.6m. Net cash dropped back to £15.4m, with the total dividend maintained at 3.5p. The star performers were Licensing (reported revenue +25%), the Morris & Co brand (+16%) and the US market (+20%). Our forecast revisions assume more modest sales progression, wit

Hybridan Small Cap Feast - 17 April 24

17th 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

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

AFC Energy (AFC LN) - FY23a and outlook: good progress

AFC has made strong progress with products and its manufacturing strategy. Despite heavy investment, the cash position, at £27.4m, was slightly better than our estimate for £26.9m, demonstrating good discipline. The monthly cash burn rate (at c. £1.3m) is tracking in-line with our expectations. Generally, we maintain our estimates for significantly increased sales in FY24e and FY25e, with the cash position unchanged. Recent news on commercial progress has been positive. The 30kW H-Power Generato

Surface Transforms plc (SCE LN) - Forecasts and valuation withdrawn

We note the regulatory announcement this morning from Surface Transforms and withdraw our estimates and valuation, pending conversations with management.

Surface Transforms - Fund raise for the profitable growth phase

SCE is raising £16m through a placing (and up to a further £3m through open offer) to fund substantial expansion and additional working capital. This will enable the Group to grow to £75m revenue capacity in the near term, commence the build and equipping of a new factory and then (with internally generated free cash flow) scale to £150m revenue capacity and beyond. With a contracted order book of £190m and a prospective pipeline of £400m, this is clearly the time to seize the opportunity. The e