LIBERUM: UK SMID Monthly - Testing new lows
With the extent of the COVID-19 sell-off having surpassed the 2008 crash, markets are looking out for new market lows. Losses sustained in March were sufficient to eliminate all returns since Johnson’s October election (Fig 1).
FOUR MOTR LOOK PDG VTU HAS STEM RWA PAGE SHB HMSO NRR INTU SGRO GPOR PCA SAND KNEBV SU BOY WEIR ATCOA ERICB NOKIA SPT CER STM ASML RIO ASCL SNN XPS ORCH NSF EQN PLUS AFHP PMI BRW FDEV KWS SUMO MTO MGNS MER BBY KLR PAY HSV
09 Apr 20
Well placed to emerge stronger
In previous downturns, 4imprint’s financial strength and marketing skills have enabled the group to take share and exit in a stronger position. The competition is largely significantly smaller, more local operators that do not have the same financial reserves or marketing expertise. The speed and scale of the COVID-19 downturn is likely to see this trend to an even greater degree. 4imprint has detailed that the lockdown directives in the US and UK have resulted in orders running at c.20% of 2019, and this limited level of activity is likely to continue. Marketing costs typically account for c.75% of operating costs, meaning the cost base can be quickly aligned to market conditions and management has stated the marketing portfolio has been radically re-shaped in a very short space of time, resulting in a mix that is appropriate to current circumstances in terms of both type and cost but equally provides a firm platform to take full advantage of improving conditions when they occur. At the end of Q1, the group had cash of over $50m and no debt; it will also not pay the final dividend, which would have cost $16m. The Board has not fundamentally changed its dividend policy, and it will reassess its position in coming months as the situation becomes clearer. No forward guidance is provided at this stage, and we consequently place our forecasts and target price under review for the time being. However, we maintain our view that 4imprint has the financial strength and proven market-leading business model to exit the current downturn in a stronger market position, providing the basis for the shares to regain previous highs.
07 Apr 20
LIBERUM: 4imprint* - Safer at Home hits trading further – but well positioned for recovery
Previously management had indicated order counts down by 60%. Daily order counts are now running 80% below the 2019 comparative. We now assume a 50% reduction in sales in FY 2020, assuming gradual progress from Q3.
07 Apr 20
4imprint Group - COVID-19 update
4imprint has updated the market for the current impact of COVID-19 on its business, which has changed markedly in the last few days. When we reported on the FY19 results on 3 March, order intake was up 13% y-o-y. Since 10 March, the disruption to the US economy has started to take hold and order levels have dropped significantly. The extent and duration of this phase is uncertain, and we have therefore withdrawn our forecasts for now. The group has a high degree of control over its variable costs in marketing spend and an exceptionally strong balance sheet, with cash of $51m at the end of February and no debt.
19 Mar 20
LIBERUM: 4imprint Group* - Strong momentum, but short-term risks
FY19 results were strong and in line, with 17% organic revenue growth. The yield on marketing investment nudged down from 5.63 to 5.58 dollars of revenue per dollar of marketing spend, despite an 18% yoy increase in marketing costs.
09 Mar 20
4imprint Group - Another year of strong growth
4imprint’s consistent approach of investing in marketing to grow its revenue base continues to produce results well in excess of the market growth. FY19 results are as indicated in January’s update, with the top line up 17%, from new and returning customers. 4imprint is the largest distributor of promotional products in the US, yet its market share is under 4%. The key unknown for FY20 is the coronavirus, although the supply chain is well stocked. Our revenue and earnings forecasts are broadly unchanged. There is potential for expansion of 4imprint’s valuation multiples once current global health uncertainties are resolved.
03 Mar 20
WHI Morning Comment: 4imprint (FOUR)
Results ahead; year started well, monitoring COVID-19 FOUR has produced another set of excellent results today, with PBTA up by an impressive 20% YoY - ahead of our expectations (which were upgraded in January). Net cash was strong at $41m as foreshadowed in January. The positive results follow on from a decade-plus in which a strong model and a big market opportunity ($US20bn) have driven double-digit sales and profit CAGR for this company. The model combines highly effective data analytics and low error rates - leading to strong client retention, - and has also seen the benefit of new initiatives, such as the brand marketing techniques initiated in ‘19, resulting in a strong growth platform. Revisiting the outlook in the light of this morning's update, we leave our CY forecasts unchanged for the present, while adding a new set of '21E forecasts which see FOUR meet its $US1bn sales target a year early. In the past few days, the shares have come off by some 18% on the back of COVID-19-related market falls. However with inventories full ahead of the Chinese New Year, no impact has been suffered yet, and none is anticipated during the current quarter. FOUR is monitoring the situation closely, while expressing cautious optimism. We continue to see this stock as an essential part of the portfolio.
03 Mar 20
LIBERUM: Strategy & Stock Selection - The coronavirus effect
Investor sentiment has continued to wane as markets try to quantify the economic implications of the coronavirus. Global equities and commodities have faced continued downward pressure, while haven assets have ticked higher (Figs 1 & 2 ).
FOUR GNS CWK HWDN TYMN FAN LUCE KNEBV OR NESN ULVR DGE BOO ASC TED SDRY JOUL BME PETS CARD HFD DC/ WTB OTB SHB CAPC UMI IAG AF LHA ABDP ECM RWA HAS PAGE SSPG
12 Feb 20
LIBERUM: Support Services & Special Situations - The Outliers – Charts that speak a 1,000 words
For our coverage we have compiled a chart book to help investors identify companies for which the share price performance diverges from the main factors that influence the stock. To help us identify these opportunities, we have created a composite index, or basket, for each company.
FOUR BBY COST KLR KIE MGNS RNWH BAB MER MTO SRP ECM HSV PAY MIND RPS SMS STAF AA/ AHT HSS SDY GATC HAS PAGE RWA STEM FERG GFTU HWDN SHI TPK
04 Feb 20
4imprint Group - Self-promotion pays
4imprint’s pre-close update indicates trading in the later weeks of the full year continued strong, with FY19 results set to be at the higher end of the market forecast range. Revenue (+17%) was slightly above our estimate, which we raised by $10m at the November trading update. The $41.0m net cash at the year end was also a little ahead of our forecast of $39.5m. We have initiated FY21 forecasts, which show the group exceeding management’s $1bn revenue target a year earlier than originally anticipated. The large scale of the addressable market leaves plenty of opportunity for growth, with potential for further share price appreciation.
16 Jan 20
WHI Morning Comment: 4imprint (FOUR) - Outperforms again; positive FY update confirms strong H2
4imprint continues to make its mark with excellent results, the latest being anticipated in this morning's trading update as the company lowers the blinds on FY2019E. Growth rates of c.16% in H1 accelerated to c.17% in H2, generating results ahead of expectation across all of the sales, PBTA and cash categories. This is particularly pleasing given the contribution of the brand initiative (new sales methods) started early last year – a new departure which has proved highly effective. Over a decade-plus of double digit CAGR, FOUR has made this sort of success look easy; however the model involves a complex combination of techniques, including notably the highly effective use of data analytics, while FOUR fulfils significant multiples of sensitive individual orders, with very low error rates leading to very high rates of client retention. Significant entry barriers remain as the company continues to dig into a large ($US20bn-plus) and profitable market of which it still has a relatively small share. Our forecasts for the current year are tweaked slightly upwards in line with this morning's update; our forward forecasts are left unchanged for now; but the outlook will be revisited when FY results are reported on 03/03. Our current fair value estimate of 3750p equates to a forward PE in the early 20s.
16 Jan 20
LIBERUM: UK Small & Mid Cap Dispatches
Consumer Discretionary Sector In-Depth, Strategy Quarterly Style Review, Alternative Funds Portfolio 2020, Big Yellow, Clinigen, 4imprint, Judges Scientific, Ten Entertainment, Vertu Motors, Kier Group, Non Standard Finan...
FOUR ABF ASC BME BOO CARD DC/ DPEU FRAS HFD HOTC JOUL MKS MCLS WINE NXT PETS SIS SDRY TED TPT ZAL ZO1 RECI SONG HVPD OCI PSHD VOF CLIN JDG TEG VTU KIE NSF BYG WKP HAS PRTC SPI CLL
16 Jan 20
LIBERUM: The 4S’s: Support Services & Special Situations - Loosening the purse strings
The UK election on 12th December could result in a Conservative majority, a Corbyn government or something in between. Voters cannot claim a lack of choice, with the Conservative manifesto offering One Nation Conservatism and Labour offering to ‘rewrite the rules of the economy’.
FOUR BAB MER MTO SRP BBY COST KLR KIE MGNS RNWH AA/ ECM HSV MIND PAY RPS SMS STAF GATC HAS PAGE RWA STEM AHT HSS SDY GFTU HWDN SHI TPK
29 Nov 19
Sector Note -
Topic of the quarter. While the forthcoming election has created a significant level of uncertainty, the direction of travel on infrastructure spend seems certain. Both main parties have promised a significant increase. The Conservatives (currently favourite to win) have promised a £20bn p.a. increase to £67bn. Labour has promised to more than double net capital spending to £102bn, which would make the UK’s capital spending amongst the highest in the world. In addition, CP6 (which promises a 25% increase in renewal and maintenance spend in rail) and HS2 (where a leaked document has supported the project continuing) should move from early stages into more meaningful spend. Latest estimates detail HS2 will cost £88bn, with the pressure upwards. We make no predictions as to the election winner or the exact level of infrastructure spend that will eventually occur, but there is mounting evidence that we are about to see significantly improved market conditions for those companies involved in UK infrastructure. Of the companies we follow, we highlight Renew (perfectly positioned to see the benefit of increased renewal and maintenance spend in rail) and Van Elle (which we expect to see both the benefit of higher rail spend and the competition being lured off onto HS2). There is likely another round of downbeat trading statements to clear before spending filters through to improved company trading (excluding Renew whose recent results impressed), but the outlook is brightening and valuations are not stretched.
FOUR DSCV CLL CONN LOK PHTM PPH RNWH STAF VANL NAH GTLY FRAN BLV BMS
28 Nov 19
4imprint Group - Demand remains robust
Having delivered 16% top-line growth in H119, 4imprint’s trading update indicates similar progress is likely for the full year. We previously assumed some slight tailing off in H2, so have now edged up our FY19 revenue estimate by $10m, lifting EBITDA by $0.6m. Management’s revenue target of $1bn by FY22e looks likely to be achieved well ahead of schedule. The extension to the Oshkosh distribution centre was completed on time and within the $5m budget, facilitating that forecast revenue growth. We regard the current share price as well underpinned, with further potential upside.
04 Nov 19
Another good update from FOUR highlights strong revenue growth during the second half so far. With growth in new and existing customer orders consistent with H1, when 14% growth in individual orders generated c.16% sales growth, this paints a very positive picture of the second half. In particular, the impressive growth in what might have been a quieter period reflects well on the comparatively recent new brand marketing model, which draws on a range of marketing techniques alongside the company’s highly effective use of data analytics. We view the success in the new marketing initiative as very creditable, and also note from today’s update that the onbudget completion of the expansion of the company’s distribution centre means that FOUR will have 40% more capacity going into the New Year. FOUR’s £1bn sales target is set to be reached in 2021, a year early. With revenues growing strongly, our forecasts are tweaked upwards, and as previously we continue to see upside to the shares.
04 Nov 19
LIBERUM: 4imprint* - Strong revenue growth underpinned by effective brand marketing
4imprint’s trading statement guides to revenue growth slightly ahead of expectations for FY19. We increase our revenue growth estimate from 15% to 16% for FY19, but prudently leave our EBIT and FD EPS estimates unchanged.
04 Nov 19
Double digit CAGR rolls on – model and fundamentals continue to shine
With the share price standing now just above £30, investors who followed our Buy recommendation on FOUR as recently as August 2016 would have seen strong revenue and profit growth and outstanding cash generation – and would have doubled their money over two years. Additionally, they could expect to be beneficiaries of regular dividend payments set to rise upwards of 30% at the current exchange rate, in real terms, assuming no £ recovery. While still small relative to its $20bn-plus addressable market, FOUR is a leading player in the US promotional products market, and generating mid to high teens % CAGR during the past fifteen years, it has demonstrated the success of its powerful proprietary customer analytics and marketing tools. H1-19 results published at the end of July showed 16% sales growth (as ever, all organic) feeding through to PBTA up 21%. Net cash rose by 61% to $US42.7m. With the ongoing erosion of sterling, the rating is little changed at the higher share price levels, suggesting that there is further potential upside even after the strong showing by the shares in recent weeks and months, while the shares have receded marginally in recent weeks.
03 Oct 19
LIBERUM: Morning Comment
GetBusy CEO Video, Capital Goods vs Semiconductors Video, L'Oreal, Infineon, Next, Umicore, Air France KLM, BBA Aviation, Ontex, Keywords, Mitie Group, 4imprint Group, Serco, Market Highlights
FOUR OR IFX NXT UMI AF BBA ONTEX KWS MTO SRP WKL STM TW/ JE/ AMS OSR MELE MAB INTU RCDO SLP DFCH TPK GETB
31 Jul 19
Increased marketing supporting strong growth
4imprint has reported a strong set of H1 results with sales +16% (all organic) on the prior period, adj. PBT +21% as investment in the brand yielded value quickly and EPS +22%, DPS +20%. As ever, this growth was supported by strong cash flow and the outlook remains positive reflecting the continued opportunity to gain market share. We have upgraded our FY 2019E EPS by 5% and reiterate our view that 4imprint will continue to take market share in its large end market, driving double-digit growth in sales and earnings, with excess cash generated set to be returned to shareholders.
31 Jul 19
4imprint Group - Self-promotion boost to strong organic growth
4imprint’s interims show revenue growth of 16% (all organic) and a further small tick up in underlying operating margin to 4.8% (H118: 4.7%). The brand promotion initiative, launched in H118, is delivering online traffic and conversion better than initial expectations. We have again lifted our FY19 revenue and EPS forecasts, by 4% and 3% respectively. For FY20e the EPS uplift is 5%. Management’s revenue target of $1bn by FY22e looks likely to be achieved ahead of schedule. The group has five-year average cash conversion of 103% and a cash-rich balance sheet and we regard the current share price as well underpinned, with further potential upside.
31 Jul 19
Morning Note – 31 July 2019
ANGLE (AGL): Corp FY 2019 results: reiterating FDA submission in Q4 | dotDigital (DOTD): Corp Joining the dots – an industry update | Nasstar (NASA): Corp Positive trading update in line with expectations | 4imprint (FOUR): Corp Increased marketing supporting strong growth
FOUR DOTD NASA AGL
31 Jul 19
LIBERUM: Morning Comment
Support Services - The 4 S's Video, Origin Enterprises, Asiamet Resources, Futura Medical, Nokia, Whitbread, Berkeley, CapCo, Market Highlights
FOUR OGN ARS FUM NOKIA WTB BKG CAPC AA/ AHT BAB BBY COST CPP CTR ECM EQN GFTU HAS HSS HSV HWDN KIE KLR MER MGNS MIND MTO PAGE PAY RPS RWA SHI SMS STAF STEM TPK XPS SDY SRP
19 Jun 19
LIBERUM: UK Small & Mid Cap Dispatches
Support Services - The 4 S's Video, Asiamet Resources, Futura Medical, Berkeley, CapCo, SMID Market Highlights
FOUR ARS FUM BKG CAPC BAB MER MTO SRP BBY COST KLR KIE MGNS RPS AA/ HSV MIND PAY SMS STAF ECM HAS PAGE RWA STEM CTR CPP EQN SNN XPS GFTU HWDN SHI TPK AHT HSS SDY
19 Jun 19
LIBERUM: VIDEO: The 4 S’s: Support Services & Special Situations - Diamonds in the rough
In these three short videos, Support Services & Special Situations Analyst, Joe Brent, discusses the in depth research piece - The 4 S’s: Support Services & Special Situations Diamonds in the rough. With a particular focus on the big themes, which stocks have been performing and stock recommendations.
FOUR BAB MER MTO SRP BBY COST KLR KIE MGNS RPS AA/ HSV MIND PAY SMS STAF ECM HAS PAGE RWA STEM CTR CPP EQN SNN XPS GFTU HWDN SHI TPK AHT HSS SDY
18 Jun 19
LIBERUM: UK Small & Mid Cap Dispatches
Support Services - The 4 S's, DMGT, Galliford Try, CapCo, Spirent, Lookers, Equiniti, SMID Market Highlights
FOUR CAPC SPT LOOK AA/ BAB BBY COST CPP EQN GFTU HSS HSV HWDN KIE KLR MGNS MIND MTO PAGE PAY RPS SMS STAF STEM TPK XPS AHT ECM HAS RWA SRP SHI SDY SNN DMGT GFRD
31 May 19
LIBERUM: Morning Comment
Support Services - The 4 S's, Outdoor Agencies Video, DMGT, Galliford Try, Mining Update, CapCo, Spirent, Lookers, Equiniti, Market Highlights
FOUR DEC SAX CAPC SPT LOOK EQN AA/ BAB BBY COST CPP GFTU HSS HSV HWDN KIE KLR MGNS MIND MTO PAGE PAY RPS SMS STAF STEM TPK XPS AHT ECM HAS RWA SRP SHI SDY SNN DMGT GFRD
31 May 19
LIBERUM: The 4 S’s: Support Services & Special Situations - Diamonds in the rough
These have been challenging times for many companies in Support Services & Special Situations (The 4Ss), with Contractors, Financial Services and Constructors down 17%, 20% and 35% over the last twelve months. Ongoing Brexit uncertainty is making for a difficult environment where the private sector is not making investments and the public sector is not making decisions.
FOUR BAB MER MTO SRP BBY COST KLR KIE MGNS RPS AA/ HSV MIND PAY SMS STAF ECM HAS PAGE RWA STEM CTR CPP EQN SNN XPS
31 May 19
LIBERUM: 4imprint* - AGM: Continued progress on sales and orders
Trading for the first four months of 2018 is ‘in line’ with expectations, although Q1 sales growth is ahead our expectations for the year. The brand awareness project continues to deliver impressive organic sales growth, up 16% in Q1.
07 May 19
Sector Note -
Topic of the quarter. The housebuilding sector has been a bright spot in the construction and support services sectors. The outlook for volumes remains good but concerns over quality and build costs suggest margins could come under pressure. Supported by the Government’s Help to Buy scheme and the continued undersupply of housing in the UK, housebuilders and suppliers in the sector continue to report positive outlooks. Most recently, Bellway reported a 8% rise in EPS, pre-tax ROCE of 24.2% and gearing of <1%, and it said that trading in the first six weeks of the new year had been strong. These are familiar themes in the sector. Henry Boot announced that it had invested in its management team to support the anticipated growth in its small housebuilding business and that its larger land promotion business had traded strongly as its housebuilder customers achieved strong sales and replenished their land banks (a sure sign of confidence). Fulcrum (utility connections) said that a relatively buoyant housing market had led to a large volume of housing projects secured and delivered in H2. There is change coming though. The Times has reported that the government is reviewing Persimmon’s participation in the scheme due to claims of poor quality and unfair lease clauses. Persimmon recently launched a ‘Customer Care Improvement Plan’. The Secretary for State for Housing, Communities and Local Government has stated that he will be considering carefully how the developers who work with the Government meet the standards and quality that customers expect and deserve. So while the outlook for volumes remains good given the importance of government support (since 2013 0.5m completions have used one or more Help to Buy schemes), there must be a question mark over industry margins. For some housebuilders, there will be an additional cost for improved quality and, separately, Taylor Wimpey has highlighted higher than expected cost inflation. This may in turn put pressure on the wider supply chain. We are about to find out which suppliers can hold their prices based on strong market positions, differentiation and (most of all) quality of service or product.
FOUR DSCV CLL CNCT LOK PHTM PPH RNWH STAF VANL WYG NAH GTLY FRAN DX/
30 Apr 19
4imprint (FOUR) – Corporate – Progressing well; a core holding | Caspian Sunrise (CASP) – Corporate – Operational Update | Spectra Systems (SPSY) – Corporate – Announces updates to employment agreements | Sanderson Group (SND) – Corporate – H1 Trading Update – Strong progress | Jersey Oil & Gas (JOG) – Corporate – Verbier Appraisal well results | Ascent Resources (AST) – Corporate – IPPC Permit Confirmed as Valid
FOUR CASP SPSY SND JOG AST
15 Apr 19
4imprint Group - US growth promoters
4imprint’s results show continued strong progress, with FY18 revenues up 18% on the prior year, coming in just ahead of our forecasts. The growth was supported by additional brand awareness spend, with revenue per marketing dollar holding up very well at $5.63 (FY17: $5.67). The group continues to be well placed to carry on growing its market share in the substantial and fragmented promotional goods sector, on margins that should edge ahead. Our FY19 revenue forecast is lifted 2%, with a slightly lower increase in earnings reflecting further brand support marketing. The group has strong cash conversion (100%) and a cash rich balance sheet. We consider that there is further potential upside to the share price.
05 Mar 19
Morning Note – 5 March 2019
DX (DX): Corp Turning around with a healthy set of opportunities | Minds + Machines (MMX): Corp ICM registrations and renewals drive FY 2019 growth | Netcall (NET): Corp Interims – quality and growth | Pelatro (PTRO): Corp A beachhead in the Maldives | 4imprint (FOUR): Corp Market opportunity remains substantial
FOUR MMX NET PTRO DX/
05 Mar 19
4imprint Group - Boxing clever
4imprint’s year-end update indicates another very strong performance, with FY18 revenues ahead 18% – all organic. PBT will be at the top end of the market range with net cash $2.5m ahead of our modelled number at $27.5m. Our forecasts will be formally reviewed with the prelims in March, but we note that management’s revenue goal of $1bn by FY22 now requires a CAGR of 7.9% over the intervening period, well below historical levels. The brand awareness programme implemented in FY18 has clearly helped stimulate growth and the group is accelerating investment in support. The organic growth record, high cash conversion and cash-rich balance sheet all support the current rating, with further upside potential.
24 Jan 19
Morning Note – 17 January 2019
Avesoro Resources (ASO): Corp Q4 and 2018 operating results | Iofina (IOF): Corp Market update | Kingswood Holdings (KWG): Corp Ex-CEO builds solid foundation, new CEO to execute | Synairgen (SNG): Corp Phase 2-ready asset | Taptica (TAP): Corp FY 2018 in line and awaiting acquisition news | 4imprint (FOUR): Corp At least at the upper end of the range
FOUR IOF SNG TRMR KWG ASO
17 Jan 19
Good momentum highlighted in FOUR’s November 1st update continued in the closing months of the year – and, significantly, good progress with the new brand marketing initiative started in March 2018, vindicating the strategy again. FY revenue growth of 18% implies average growth in H2 of closer to 19% reflecting the impetus of the marketing programme as well as the ongoing and well-established strengths of the underlying model. Raising our FY18E revenue growth forecast from our previous 16% estimate, we also modestly increase PBT forecasts for last year and the current one. As FOUR is attacking a market valued at $US20bn or more, and has shown it can forcefully lift market share, we remain confident in its ability to continue to grow sales by organic means. The shares topped out at 2,250p in September 2018, and since then have retreated by c.17% to 1,875p on Jan. 16th. Doubtless this should be seen against a backdrop of falling equity markets; however FOUR’s track record is testimony to the enduring growth qualities of its model through-cycle and our fair value at 2,370p suggests meaningful upside.
17 Jan 19
4imprint (FOUR) – Corporate - Ahead of schedule, encouraging update, upgrades | Judges Scientific (JDG) – Corporate – Trading Update – FY2018 further upgrade to EPS +6% | Caspian Sunrise (CASP) – Corporate – Shallow and Deep Operational Update | Jersey Oil & Gas (JOG) – Corporate – Operational Update
FOUR JDG CASP JOG
17 Jan 19
Sector Note - Support Group
Topic of the quarter: Since our first quarterly at the end of 2015, 14 of the 59 companies we included in our valuation tables have been bid for (one delisted and one rather high-profile company has gone bust) and there have been other bids outside of our watch list. Given that those tables were simply designed to show the range of companies present within the sector – not a hit-list of undervalued opportunities – the fact that 24% of them have been taken over is worth revisiting. The demise of Carillion, severe financial pressure at Interserve and warnings from the likes of MITIE, Capita and Serco have dominated news flow but it should be remembered that the sector is broad and highly varied both in terms of business model and performance. If the troubles of a minority of the sector drag down wider valuations, then there is evidence that there is an army of potential bidders (possibly reinforced by further weakness of sterling) ready to take advantage
FOUR DSCV BOOT CLL CNCT LOK PHTM PPH RNWH STAF UTW VANL WATR WYG NAH
20 Dec 18
Towards the upper end of the range
4imprint has detailed that the good momentum seen in H1 has continued into H2, producing overall demand consistent with the growth percentages experienced in H1 and maintaining a healthy balance between new and existing customer orders. Consequently, the Board now expects that full‐year sales and underlying* operating profit will both be towards the upper end of the range of current market forecasts. We have upgraded our EPS forecasts by +2% in each year (FY 2018E EPS growth now +19%) and reiterate our view that 4imprint will continue to take market share in its large end market, driving double-digit growth in sales and earnings, with excess cash generated set to be returned to shareholders.
01 Nov 18
4imprint Group - Branding awareness
4imprint’s trading update shows the spring 2018 brand marketing campaign continuing to generate supplementary revenues, as was the case at the interims. We have again edged our forecasts ahead (around 1% at both the revenue and earnings levels), to the higher end of the previous range of market estimates. There is still a substantial opportunity to exploit, given the market size (estimated by ASI at US$23.6bn) and the group’s leading position. While the group trades at a premium to the UK marketing sector, the drift in the share price has made the valuation more attractive, particularly on a DCF basis. The group remains highly cash-generative, with funding growth and a progressive dividend.
01 Nov 18
Core holding progressing well; upgrades and investing opportunity
This morning’s update from FOUR shows how the company has continued to build on the strong momentum of the first half. Demand growth in H2 equalled H1, resulting in expectations rising to the top end of the range. The underlying model remains very effective and it is evident that the new sales initiative undertaken earlier in the year has topped the company’s hopes and those of followers of the stock by the speed with which it has registered meaningful success. With the second half said to have been aligned with overall H1 growth, we raise our full year revenue expectation to +16% and add $0.5m to our PBTA forecast. As always, we believe that FOUR’s model retains the ability to penetrate significantly further in a market worth many billions of dollars, and we also note that the shares have tumbled by as much as 20% since the start of September while the business itself has done nothing but progress strongly. We retain our fair value assessment unchanged at 2,370p for this stock, which is viewed as a core holding.
01 Nov 18
Brand marketing results ahead of expectations
4imprint has reported a strong set of H1 results with sales +17% on the prior period, PBT +1% reflecting the previously announced investment in marketing and EPS +13% benefiting from US tax reductions. The initial results from the investment in brand marketing have exceeded management expectations, boding very well for continued growth. We have upgraded FY 2018E EPS by 3% and FY 2019E by 4% and reiterate our view that 4imprint will continue to take market share in its large end market, driving double-digit growth in sales and earnings with excess cash generated set to be returned to shareholders.
31 Jul 18
4imprint Group - Market leader
4imprint’s interim results show that its recently-adopted strategy of additional investment in brand awareness is recruiting new customers even better than initial trials had indicated. The investment is holding back FY18e operating margin (already built into forecasts), but underpins our market-beating growth expectations. The ambition to reach US$1bn of revenue by FY22 looks increasingly achievable. Our FY18e and FY19e revenue numbers rise by 2%, with consequent uplift to operating profit. A lower anticipated tax charge further lifts projected EPS. The group is highly cash generative, funding growth and a progressive dividend.
31 Jul 18
Revenues sprint as sales initiative succeeds, upside potential
FOUR’s H1 results this morning reveal just how successful the new sales initiative launched at the start of the year has been. Revenue growth through the year to date has been a tale of unstinting acceleration, with exit rates, we estimate, just shy of 20% in the half year. Up from the already strong 15.5% rate seen in the first four months, this reward for FOUR’s new brand awareness programme has the capacity to detonate significant extra profits in the years to come. Conservatively, we are making only very modest adjustments to forecasts right now, but we believe that in a multi-billion dollar market, FOUR’s model clearly has the ability to take significant further share. We retain our fair value assessment unchanged at 2,370p, while highlighting the importance of today’s announcement in signposting future growth.
31 Jul 18
Sales and profit ahead of expectations
4imprint has confirmed that trading in the first four months of the year has been ahead of expectations, with sales growth +16% on last year (our full-year forecast was +10%) and order intake +15%. While the comparatives will get harder as the year progresses, we have upgraded our FY 2018E sales forecasts by +2.2% (to give FY 2018E growth of 12.5%) and upgraded EPS and DPS by 3.8%. We reiterate that 4imprint operates in a large, fragmented market and with its proven marketing techniques, reinforced by growing brand awareness, has the opportunity to continue to generate double-digit growth in sales and earnings, with excess cash generated set to be returned to shareholders.
08 May 18
An upbeat AGM statement indicates good momentum continuing through the early weeks of the new financial year. We have edged up our forecasts to reflect revenues to date running ahead of budget at +16% year-on-year. It is still too early to assess the impact of the additional marketing spend on brand awareness that was factored in at the time of the finals. Even without any benefit from this initiative, earnings are set to increase by a CAGR of over 12% for FY18-19e. Strong cash generation is funding the brand and marketing investment, as well as paying out a progressive dividend, on top of the supplementary payment made for FY17.
08 May 18
Early CY upgrades on back of strong update, FY1E EPS +13% YoY
Illustrating the strength in its competitive situation, FOUR has put in a strong sprint in the first four months of 2018, with sales growing at 16%, further acceleration from the already strong ‘17A exit rate of 14%. The evidence suggests that the company remains strongly embedded in the existing client base, while, encouragingly, the brand awareness programme which is deepening FOUR’s reach into the online world, among other things, is off to a good start, with positive early indications. This morning’s update also reflects the strength of the model, which through deepening penetration of a very sizeable market has the ability to continue its impressive decade-long double-digit CAGR growth record. FOUR operates a blended model combining analytics and client-facing designers. This is difficult to replicate, and popular with clients, to whom it is tailored, hence we do not see large, screen-based retail businesses which don’t share these characteristics as a threat.
08 May 18
Share price remains an opportunity, competitive situation good
Shares in FOUR have fallen from 1940p at the time of the March results to below 1700p (-13%). This represents a modest recovery from the floor (1580p), but still puts the stock on a significant PE discount to its typical forward PE over the past ten years. Even allowing for investment in marketing causing PBT forecasts to tread water for CY18E, the business will easily maintain its decade-long double digit earnings CAGR achievement, we believe. Sales exited 2017 at +14%, reflecting good momentum in the business, which is investing in the future. Key to this investment is FOUR’s blend of skill-sets between analytics and people/design skills. Hence FOUR’s very strong client retention rate (’17 saw +16% orders from existing clients) benefiting from long-term competitive advantages which remain unchanged, in our view. On this score, we do not consider large, screen-based retail businesses as providing daunting competition to a specialist business like FOUR, which knows its client base exceptionally well. Our fair value computation remains unchanged.
26 Apr 18
4imprint has announced another set of strong results, accompanied by a supplementary dividend of $0.60 to be paid alongside the final. It has also outlined a programme to build a more substantial longer-term business through adding brand awareness campaigns to the existing marketing spend. Revenues have grown at a CAGR of 18.1% over the last six years. Guidance for the next five years is for double-digit growth to reach the $1bn level by FY22 and we have lifted our forecasts to reflect this. Profit growth is restrained in the near term by the additional marketing spend, but should move on faster in FY19, with EPS further boosted by a lower US tax charge.
09 Mar 18
Next growth phase
4imprint reported another strong set of results in FY 2017 with EPS up +9%, 99% operating profit conversion into cash and the ongoing full-year dividend raised 11% in US$ terms. With $31m net cash and continued strong prospects and cash characteristics, an additional 43.2p supplementary DPS will be paid on top of the 42.6p ongoing DPS. In FY 2018, additional investment will made into different marketing techniques to drive brand awareness. This will support the new strategic goal of achieving $1bn in sales in 2022 (+10% CAGR). We have reduced our forecasts to include this investment in operating costs and expect the yield to build over the next three years. 4imprint operates in a large, fragmented market and with its proven marketing techniques, reinforced by growing brand awareness, has the opportunity to continue to generate double-digit growth in sales and earnings, with excess cash generated set to be returned to shareholders.
08 Mar 18
Rewarding shareholders handsomely and investing in the future
4imprint has marked a strong set of results this morning with a generous 60c dividend, over and above the proposed 40c final, resulting in a May 2018 final DPS anticipated pay-out of $1 per share (equating to a 4.8% yield). At the same time the company has announced a $1bn revenue target by 2022, signalling FOUR’s confidence in being able to maintain the double digit CAGR which has become a 10- year-plus hallmark of its business model. Total orders and revenue are up 12% and the $US42.5m PBT is slightly ahead of expectations, while net cash is a creditable $US30.8m. Investment in new initiatives further to heighten market awareness of FOUR’s product base causes us modestly to shave our FY 2018E PBT forecast, while retaining c.10% YoY growth in our EPS forecast, which benefits from US tax changes due to take effect in the current year. Our new FY 2019E forecast sees further double digit growth on FY 2018E. Taking into account the different elements of today’s announcement, there is no change to our fair value calculation.
07 Mar 18
Strong Q4, US tax change gains
A continued strong performance in Q417 delivered 12% revenue growth in FY17 vs FY16, a shade ahead of our previous forecast. We see good top-line momentum into FY18e as the group takes further share in its large and fragmented market, benefiting from its targeted marketing. US taxation reforms will kick in for FY18 and our EPS forecast is lifted by 10%. Cash resource of $30.7m at end FY17 allows for an increased dividend with plenty of scope for additional investment as the business continues to scale. Our new FY19e numbers show further good earnings progress, with the valuation rating coming in to more attractive levels.
17 Jan 18
Setting a strong pace – organic growth model continues to deliver
This morning’s brief but encouraging update from FOUR highlights strong organic sales growth in the year just concluded, at 12% slightly ahead of our expectations, leading us to raise our FY2017E profit forecasts slightly. This morning’s reported ‘17E revenue growth rates imply meaningful acceleration in H2, given that H1 sales growth was c.10%, and this in turn is well aligned to the group’s organic growth model which is partly driven by powerful analytics. This is a strong performance from FOUR yet again, burnishing its credentials further as a core holding and adding yet another year to the decade-plus of double digit CAGR. Net cash at $30.7m is in line with forecasts, in turn reflecting good cash conversion within the business while begging the question of how the cash is likely to be utilised given that organic growth is the mantra of the business and that FOUR is already clearly investing appropriately in its tech and other capabilities. A good problem to have. We continue to rate the FOUR team highly and retain our existing fair value analysis which provides us with further encouragement.
17 Jan 18
LIBERUM: 4imprint* - FY 2018 FD EPS increased 13% for US tax reform
No change to FY 2017. FY 2018 EPS increased 13% to 125.8p. FY 2019 EPS increased 14% to 134.1p. Expect trading statement on 17th January. CY 18 P/E of 20.2x, is more than justified by the growth; TP to 2100p from 2050p.
09 Jan 18
Topic of the quarter: It’s alive! Infrastructure and assets in general have traditionally been built to provide a fixed service and are maintained and renovated to a fixed schedule – dead and dumb. Technology will completely change this. Sensors and wireless networks have the potential to allow assets to ‘talk’ to us. These living, smart assets will be able to tell us when they need maintenance, how efficient they are being and provide the data that will directly influence their construction, availability and use. The implications for construction costs through to operating costs and the ability to service changing user needs are very significant. The Support Services, Construction and Technology sectors need to work together to maximise this potential, recognise and harness the power of data, and invest in and embrace change. These are daunting challenges in highly competitive markets where politics play a role, different skill sets (that are currently in short supply) are needed and shareholders are looking over management's shoulders. However, the prize for those companies who get it right is significant, and the risk from not changing much greater. There are positive early signs with Crossrail providing tangible examples of Smart Infrastructure using innovative sensors.
FOUR DSCV BOOT CLL CNCT FCRM LOK PPH RNWH STAF UTW WATR VANL WYG
04 Dec 17
Since our first quarterly at the end of 2015, 12 of the 59 companies we included in our valuation tables have been bid for. Given those tables were simply designed to show the range of companies present within the sector, not a hit-list of undervalued opportunities, the fact that 20% of them have been taken over is worth looking at in more detail. At a time when warnings and share price collapses from the likes of Interserve, Carillion, MITIE, DX and Capita and Serco have dominated newsflow, it should be remembered that the sector is broad and highly varied both in terms of business model and performance. If the troubles of a minority of the sector drag down wider valuations then the evidence is that there is an army of potential bidders (reinforced by the weakness of sterling) ready to take advantage.
FOUR DSCV BOOT CLL CMS CNCT FCRM LOK PPH RNWH STAF UTW WATR VANL WYG SVCA
26 Sep 17
LIBERUM: 4imprint* - Interim results: strong Q2 increases confidence on FY
H1 results 5% ahead of expectations. FY 2017 and 2018 FD EPS increased by 0.7% and 1.5%, with better sales in May and June. H1 net cash higher than expected but we maintain our FY 17 net cash estimate at $32m. The gradual unwinding of Sterling weakness could impact future Sterling dividends.
01 Aug 17
11% H1 growth expected to improve in H2
4imprint has reported a strong set of interim results with Sales, EPS and DPS up 11% and net cash increased from $22m at December 2016 to $33m. The planned phasing of marketing spend means stronger growth is expected in H2 and we maintain our full year forecasts. With net cash continuing to build, we anticipate increased cash returns to shareholders (in addition to the core dividend that we forecast) with the year-end being the most likely date for an announcement. We reiterate our Buy and 2060p price target.
01 Aug 17
Market share gains continue
4imprint’s interim results show that it continues to make steady progress building market share in the large and fragmented US market for promotional goods. H117 revenue growth of 11% compares to a market estimated to be growing in line with GDP at 2-3%, with the increase coming from both existing and newly recruited customers. Marketing spend, the key growth lever, is more heavily weighted to H2 this year and our revenue forecast is edged up, with a slightly higher tax charge leaving EPS unchanged. The group has good cash generation, a net cash position on the balance sheet and a growing dividend, underpinning the rating.
01 Aug 17
In light of the UK election, we highlight our favoured overseas earners, operators in defensive markets and those capable of taking market share, but our main topic is the structure of the UK employment market. The UK has the lowest unemployment rate since 1975 at 4.6%, and there are, consequently, fewer and fewer candidates to fill vacancies. This suggests recruitment companies may struggle to grow, but there are structural changes in the UK labour force that offer growth opportunities. Temporary labour continues to expand relative to the point in the economic cycle, its importance accelerating since 2008, and part-time labour has grown at twice the rate of full-time labour throughout both the last cycle and over the long term. There are, of course, specialist temporary recruiters, but the part-time market appears relatively untapped (at least by the quoted companies) despite being c.5x the size of the temporary segment in terms of numbers.
FOUR DSCV BOOT CLL CMS CNCT FCRM LOK PPH RNWH STAF UTW WATR SVCA
19 Jun 17
Alliance Pharma (APH): Diclectin to drive double-digit growth (BUY) | OptiBiotix* (OPTI): LP-LDL European licence agreement (CORP) | Intercede* (IGP): Contract wins (CORP) | Cello (CLL): Trading well, enhancement to come (BUY) | 4imprint (FOUR): Encouraging start to the year (BUY)
FOUR APH OPTI IGP CLL
09 May 17
6% dividend yield for a growth stock?
4imprint’s proven operating model continues to steadily gain market share from a low base. Capital requirements are low, acquisitions unlikely, pension risk significantly reduced and, hence, future cash flow is likely to be returned to shareholders. We expect the current $22m net cash balance to be retained, providing a cushion against any macro downturns, and dividend growth to continue to match EPS, supplemented by special dividends when net cash builds (possibly every other year). As such, the free cash flow yield, 5.1% in FY2018E 5.8% in FY 2019E, is a proxy for the dividend yield, highly attractive in our view for a proven growth stock.
16 Mar 17
4imprint (FOUR): 6% dividend yield for a growth stock? (BUY) | Cambridge Cognition* (COG): Amgen uses CANTAB technology in trial (CORP) | Seeing Machines* (SEE): H1 results show steady operational progress (CORP) | Allergy Therapeutics (AGY): Pollinex Quattro Birch Ph III EU trial starts (BUY) | Capital Drilling* (CAPD): FY results in line, with turnaround in exploration activity (CORP)
FOUR COG SEE AGY CAPD
16 Mar 17
We have run our new quantitative Slide Rule over the Support Services sector. Of the c.500 stocks we have ranked on a Quality, Value, Growth and Momentum basis in the small to mid-cap space, 21 Support Services stocks appear in the top 100. Fulcrum leads the pack, ranked no. 6 out of 500 (and not coincidentally our top pick for the year), closely followed by Brainjuicer (no.7), Sanne (no.8), Learning Technologies (no. 12) and Next Fifteen (no.16). These stocks have high ROCE on both an EBIT and cash basis, strong growth prospects, earnings and share price momentum and valuations that, in this context, remain attractive. At the other end of the spectrum, HSS, Management Consulting, Serco, Mitie and Lakehouse appear towards the bottom of the rankings. Strong returns could, of course, be made if any of these turn their fortunes around, and management has been changed at Lakehouse, Serco and Mitie.
FOUR DSCV CLL CMS CNCT FCRM LOK PPH RNWH STAF UTW WATR SVCA
10 Mar 17
Online catalogue of success
4imprint has again posted strong results, with FY16 revenue increase well ahead of the market growth of 2-3% and a tick up in operating margin. Second half performance was good, with revenues up 8%, which would have been higher but for market uncertainty around the US presidential elections. December returned to normal trading patterns. As indicated at the interims, there has been a 35% uplift in the dividend, reflecting the de-risking of the pension position and marketing spend at appropriate levels. With strong cash generation, a cash positive balance sheet and good earnings and dividend growth, the premium rating is clearly merited.
10 Mar 17
LIBERUM: 4imprint* - FY slightly ahead and EPS increased 1%
FY 16 FD EPS 2% ahead. Headline estimates nudged up 1% due to a lower share count. Net cash increased to £21.7m, with $6m working capital inflow and 113% conversion. Order intake up 12%, but with existing strong but slower growth with new customers.
08 Mar 17
LIBERUM: 4imprint* - 2016 EPS up 1% with lower sales and higher margins
FY sales worse but margins better. PBT towards the top of the range; our EPS increased 1% for 2016. 2017 FD EPS unchanged suggesting a slightly slower growth rate. Trump may result in reflation and lower taxes but higher tariffs.
19 Jan 17
Premium growth continues
4imprint continues to deliver premium growth as it builds market share across its large and fragmented market, estimated to be worth around $25bn. The group’s data-driven marketing investment approach and efficient fulfilment are supporting this profitable (and organically scalable) growth, while the strong cash generation has allowed the historic pension issues to be fully addressed with a one-off contribution of $14.5m in the period. The group ended the year with net cash of $21.5m, up from $18.4m at end FY15. With our 35% forecast increase in the FY16 dividend (in line with the interim), the valuation premium continues to look well supported.
19 Jan 17
Aggregated Micro Power* (AMPH): Funding for first peaking power plant project (CORP) | The Mission Marketing Group* (TMMG): Positive trading update (CORP) | Cello (CLL): Increasingly backed by, and leveraging, technology (BUY) | 4imprint (FOUR): Growth backed by strong cash flow continues (BUY) | Allergy Therapeutics (AGY): Positive trading update and market share gains drive upgrades (BUY) | Shanta Gold (SHG): Q4 operating results (BUY) | Sound Energy (SOU): Tendrara extended well test result (BUY) | Revolution Bars (RBG): Price target increase (BUY)
FOUR AMPH TMG CLL AGY SHG SOU RBG
19 Jan 17
Following on from our last quarterly we have delved further into the potential and challenges that the Internet of Things present the sector. Having spoken to a wide variety of companies from the sector (large and small, UK and overseas) it is apparent that there is going to be a very significant increase in the amount of data either generated by or available to Support Service companies. The key to generating value from this change will be breaking down the silos in which data is currently held, attracting and investing in the right skills and talent, seeing beyond the short-term investment that is likely to be needed and engaging with clients on a higher, more strategic level. If the sector doesn’t react, then the door is wide open for the Technology sector.
FOUR DSCV CLL CMS CNCT CHT FCRM LOK PPH STAF UTW
17 Nov 16
LIBERUM: 4imprint* - Statement guides to in-line as FOUR grows ahead of softer market
Re-assuring trading update confirms continued organic revenue growth. We expect FY net cash of $16m despite pension payment due to impressive working capital. Brexit risks minimal, US recession risk receding, but industry data slowing.
02 Nov 16
LIBERUM: 4imprint Group* – Strong growth and cash generation
4imprint delivered an excellent H1 and a surprise 35% DPS increase (59% in £). The pension is being significantly de-risked, although there is residual risk on the 24% uninsured liabilities. At H1, we increased FD EPS by 2% and 3% for 2016 & 17, given higher sales expectations.
03 Aug 16
Interims and dividend increase
4imprint continues to grow its top line well ahead of US GDP and market, driven by ongoing investment in marketing, people and systems. Like-for-like H116 revenues were up over 15%, compared with our unchanged FY16 forecast of +13%. The large but fragmented market, estimated at over US$25bn, gives a substantial further opportunity, with organic growth the preferred (and proven) route. With the pension situation addressed and marketing spend well supported, the interim dividend has been lifted 35%.
02 Aug 16
Flowtech Fluidpower (FLO): Pre-close trading update, bolt-on acquisition (BUY) | Avingtrans^ (AVG): EDF contract (BUY) | 4imprint (FOUR): Valuing the cash flow (BUY) | Europa Oil & Gas* (EOG): FEL licence extensions (CORP) | Ithaca Energy (IAE): Vorlich and Austen acquisitions (BUY) | LSL Property Services (LSL): Impaired vision (U/R)
FOUR FLO AVG EOG IAE LSL
02 Aug 16
A significant proportion of the Support Services industry is characterised by regular, scheduled visits driven by fear that something might be about to go wrong. Maintenance schedules by Facilities Managers or visits by Home Carers for example. An entire cost base dedicated to continuously rotating skills around a client base (preventative) sits alongside another cost base focused on fixing a problem when the safety net fails (reactive). But what if you could tell that a part is about to fail or a particular service is about to be needed (predictive)? The Internet of Things holds enormous potential for the Support Services sector. Those fleets of white vans that currently monotonously tour clients will only be seen when they are on-route to a specific need, laden with precisely the right part.
FOUR DSCV CMS CNCT CHT LOK PPH STAF UTW
02 Jun 16
4imprint’s AGM statement confirms its growth continues to outstrip that of the promotional products market by a substantial margin, with underlying order intake and revenues ahead by 15% year to date. The US market is very large and growing, yet remains dominated by small suppliers and distributors, giving ample scope for an efficient player such as 4imprint to build at a good pace for some years. With the legacy pension issues now largely resolved and a strong, cash-positive balance sheet, the premium rating is readily justified.
12 May 16
Accelerated cash returns on the horizon
The ability of 4imprint’s model to generate strong earnings growth is well known and to some extent reflected in the P/Es. However, the cashgeneration potential has been masked by the risk-reduction project in the pension scheme. This will finish in 2016, and we expect surplus cash to then be progressively returned to shareholders, driving the shares higher. 4imprint is potentially valued on a FY 2017E dividend yield of 5.5%, with net cash of $17m and on-going sales and average profit growth potential of 12- 15%+ p.a. into the long term. We raise our target price by 13% to 1540p.
11 Apr 16
Impressive organic growth continues
FY 15 results ahead with impressive 20% EPS growth. Net cash stable despite $9m investment in Oshkosh and working capital outflow. Estimates unchanged despite $4m of lost sales from the 53rd week. US recession worries, a key risk to 4imprint, seem to have reduced. Further pension de-risking has been agreed. The valuation is justified by the strong growth/cash generation and remains attractive so long as the US economy holds up. BUY.
10 Mar 16
FY results demonstrate 20% EPS growth
FY 15 results ahead with impressive 20% EPS and CC DPS growth. Estimates unchanged despite $4m of lost sales from the 53rd week. Expect normal 35% weighting of EPS to H1 but unusually high revenue in H1. US recession worries seem to have reduced. Net cash stable despite $9m investment in Oshkosh and working capital outflow. Order intake up 20%, with usual weighting to existing customers maintained. Continued impressive organic revenue growth of 20%. Underlying EBIT increased 21% with margins stable as marketing spend increases. Further de-risking of pension with agreed buy-out and £10m payment. Valuation is justified by the growth and is attractive so long as the US economy holds up. BUY.
09 Mar 16
This quarter’s topic: Is the model good enough? Growth in the current low-growth environment is hard fought but the Support Services sector contains a range of innovative business models that are enabling strong progress against a continued difficult backdrop. Having looked at the level of value-add (and ability to raise margins) in the last quarterly, we now look at EPS forecast trends. Innovative models that separate a company from the competition, support market share gains and drive growth are evidenced by forecast upgrades that are likely to repeat as the model continues to deliver.
FOUR DSCV CMS CONN CHT LOK PNA PPH STAF
24 Feb 16
FY pre close guides to slightly ahead
Positive trading update confirms continued strong organic revenue growth. FY net cash of $18m after Oshkosh investment and pension payments in H2. We expect marketing spend to increase ahead of revenue. Order intake has increased in line with sales and customer retention remains solid. We continue to expect the pension buy out to take place FY 16. Strong growth justifies premium rating, BUY TP 1350p.
21 Jan 16
Finncap Research Monthly Book 2015-11-26T07:58:30+00:00
Are you adding enough value?’ With the rise in costs that some companies will see from the Living Wage, we look at the trend in value-add across the sector via an analysis of operating margin performance. A proven ability to grow margins is a good guide to increasing value-add, maximising the potential to pass on external cost rises such as the Living Wage.
26 Nov 15
Putting the M in TMT
When certain investor groups focus on ‘tech’ stocks it is easy to forget that Media forms part of the wider TMT sector. Media (mass communication) companies have a wide range of activities. But as the public consumes media through an ever broader choice of devices and channels, media and technology have become inextricably linked. This can be related to how we consume media, with innovative music streaming platforms from the likes of 7digital (7DIG), to how corporates monitor the efficacy of their marketing dollar with Big Data analytics platforms such as that provided by Ebiquity (EBQ).
FOUR CRE EBQ NFC MDZ SYS1 HNG GFIN PWS 7DIG BMY ELE HYNS TMT RTHM MIRA
10 Nov 15
Trading statement guides to in line with high teens organic growth
Trading update guides to in line and we leave our estimates unchanged. FY net cash estimate held at $16m. Order intake weighted to old customers as normal. Marketing spend increases ahead of revenue as expected. Oshkosh investment was on track with no operational disruption. Management continue to de-risk the pension deficit. CY 2016 P/E of 21.6x justified by strong growth and cash generation, BUY, TP 1280p.
21 Oct 15
Strong cash in 2017
Following strong interims we increase our FY 15 EPS estimates by 5%, more than we originally thought. Order intake is up 21% as customer retention remains solid. We now expect FY 15 net cash of $16m. The Oshkosh development will be completed in H2 with increased capacity. The pension buy-out should now happen in FY 16. Free cash flow should accelerate in 2017. Strong growth and cash generation justifies premium, BUY.
30 Jul 15
Strong H1 and estimates up, mindful of tough comps in H2
17% underlying EPS growth in $ and 25% DPS increase in pence. FY 2015 EPS increased 2% and DPS increased 3%. Net cash nudged up $2m. Order intake increased 21% whilst customer retention stays solid. Impressive organic revenue growth of 20%. Underlying operating profit increased 26% to $12.2m. Financial position remains robust, but buy-out slips a year. Premium rating justified by strong growth and cash generation, BUY, TP 1220p
29 Jul 15
Hybridan - Small Cap Wrap
FOUR Final results, BNK Settlement of Lawsuit, BDI Contract Win, CAZA $4m Convertible Loan, CGNR* Interims, CHAR 2D Seismic Programme , CLIN Adds New Program, CNC Product Launch, FITB* Appeal and Integration with Samsung, IMTK Contracts win, Herschel heaters connected by LWRF, MARL* Equity Raising, Conversion and Drilling Update, MWE Financial Results, OPTI* Board Appointment, PEG* Contract Win, ROL Acquisition, RTC Network Rail award, SAR* Interims and Research Update, SND AGM Statement, TPET Placement
FOUR BNK BDI CHAR CLIN CNC LWRF MWE OPTI PEG ROL RTC SND SAR 88E CGNR MARL BIDS ABAL
04 Mar 15