Rentokil bounced back strongly in Q3 FY20, supported by a strong recovery in demand for its core pest control and hygiene services, and the ongoing need for disinfection solutions amidst the COVID-19 pandemic. Moreover, management sounded confident about the positive momentum to be sustained in Q4 FY20 and, hence, expects to meet full-year expectations and to announce a dividend during the preliminary results.
Companies: Rentokil Initial plc
Rentokil’s top-line declined by just 4.4% yoy in Q2 FY20, as the surge in hygiene demand compensated for the soft pest control and workwear businesses. However, the group’s profitability suffered from lower volume and higher bad-debt provisions. In H2 FY20, management expects a much better performance and has also resumed M&A activity. But, the interim dividend remains suspended for the time being.
Rentokil started Q1 FY20 well but got infected by Coronavirus in the last two weeks. As numerous economies remain locked-down for some time to come (biting into the pest control and hygiene activities), the Q2 FY20 performance is likely to deteriorate. However, a strong rebound is expected when customers resume their operations gradually. Until that time, management has arranged adequate liquidity to sail through the COVID-19 crisis.
Rentokil remained on a solid footing in FY19, and once again outpaced its mid-term targets. Besides the healthy Pest Control and Hygiene businesses, the recovery in the Protect & Enhance segment was a shot in the arm. While management anticipates the Coronavirus will inflict some pain in Q1 FY20, it remains confident about a strong show in FY20. All the mid-term targets have been reiterated.
Another robust quarter by Rentokil, as the healthy Pest control business continued to be supported by flourishing Hygiene solutions. On the back of a strong ytd performance, its full-year revenue growth targets (on both organic and CER basis) look easily achievable. We will revise our estimates slightly upwards.
A strong all-round H1 19 performance from Rentokil, driven by contributions came from all regions and core businesses – the accelerated top-line growth in hygiene was quite positive. Management has maintained the full-year guidance. We will revise our estimates upwards, incorporating the strong momentum and value-accretive CWS deal.
A strong set of Q1 results from Rentokil. The top-line was led by a sound organic performance (a resilient Pest Control business and improved Hygiene proposition) and the continued M&A activity by the company. The strong momentum should continue throughout the year. We will tweak our estimates slightly but the stock recommendation might remain unchanged.
Rentokil reported strong FY18 results, surpassing its annual targets of revenue, profitability and free cash flow conversion. All the regions clocked profitable growth, including France which rebounded after a few years. The company seems all set to continue the M&A spree in FY19, across the pest control and hygiene business globally. We will revise our estimates upwards.
The company surpassed our estimates as well as market consensus in Q3. Pest control remained the star performer, once again supported by the Hygiene business, whereas Protect and Enhance continued to drag. Despite reporting a strong quarter for the North America Pest Control business, the company needs to do more to meet its 2020 revenue target. In the UK, CMA announced its provisional finding against the Cannon acquisition. We have revised our estimates slightly upwards. No change in the stock recommendation.
The company reported its Q2 results below our estimates, primarily led by the continuous slowing of the pest control division, partially offset by the hygiene division. In the Protect & Enhance segment, France reported an uptick in its workwear business, where the UK property business continues to struggle. Moving forward, the company’s £1.5bn revenue and 18% operating margin target (by FY20) for North America looks daunting. We have revised our estimates slightly. No change in the stock recommendation.
Rentokil reported a Q1 18 trading update which was below our estimate as well as the market consensus. Q1 performance was downplayed by natural forces, such as: 1) the negative impact of last September’s hurricane in Puerto Rico (~0.5ppt), and 2) unseasonably cold weather in the US in the month of March. Segment-wise, both Pest Control and Hygiene recorded positive growth, marginally offset by a sluggish Protect & Enhance segment (which again turned negative). We will tweak our estimates slightly. No change in our stock recommendation.
Even-though Rentokil reported upbeat full-year (FY17) results, on a quarterly basis both Pest Control and Hygiene businesses (forming the centrepiece of management’s ‘The Right Way’ strategy) registered the weakest growth in past four quarters. Although, the entry of Terminix in the US commercial pest control market poses a threat to Rentokil’s biggest revenue-generating region, we believe that the fragmented nature of the market will provide enough space for both the companies to grow without hurting each other.
Rentokil reported mixed results in the Q3 FY17 trading update (organic growth was weak but acquisitive growth surpassed our expectations). All revenue numbers are on an organic basis unless specified otherwise. Despite a positive momentum in the core businesses (pest control and hygiene; jointly contributed 83% of ongoing revenue), the ongoing revenue grew by only 3.7% (vs. our estimate: 5.0%). This was largely due to ongoing market weakness in the UK property care business, resulting in a 1.7% revenue decline in the Protect & Enhance segment (contributed c.17% of ongoing revenue). Pest control clocked 5.6% growth (vs. Q2: +7.4% and Q1: +5.6%), once again riding on the consumer demand in North America. The Hygiene business also continued with its growth momentum (Q3: +2.6% vs. Q2: +2.9% and Q1: +3.1%) during the quarter.
The company acquired six businesses in Q3 (Pest Control: 5, Hygiene: 1), with combined annual revenues of £4m, primarily in Emerging and Growth markets. On a ytd basis, Rentokil acquired 34 businesses (Pest Control: 26, Hygiene: 7) with a combined total revenue of £184m. Management has already surpassed its earlier capex guidance and expects to continue its shopping spree going forward.
Rentokil reported Q1 FY17 trading numbers ahead of our estimates. Organic revenue increased by 3.5% (vs FY16: +3.0%, our estimate: +4.2%; excludes the businesses transferred to the Haniel JV), on the back of strong growth in the Pest control and Hygiene business (+5.6% and +3.1, respectively; jointly contributing c.75% of group revenue). The company once again clocked a healthy performance in the major operating regions (North America, Latin America, the UK and APAC), while France remained broadly flat yoy. Reported revenue was up 23.8% (vs our estimate: +12.9%), led by a 6.9% positive scope impact and FX tailwinds (+13.8% yoy; depreciation of GBP vs USD and EUR).
During the quarter, the company acquired 12 businesses (ten in Pest Control and one each in Hygiene and Property Care; annualised revenue of £101.7m), principally in the Emerging and Growth markets.
Rentokil reported Q3 FY16 results slightly ahead of our estimates as well as market consensus. The lfl revenue increased by 3.1% (our estimate: +2.0%), once again driven by the Pest Control (+5.9% vs our estimate: +5%) and the Hygiene businesses (+3.2% vs our estimate: +2%). All operating regions registered strong organic revenue growth except for France and the Benelux, which continued to suffer due to challenging macro-economic conditions and a sluggish Workwear business. Total reported revenue was up 33.1%, driven by a positive scope impact (13.3% yoy) and FX tailwinds (16.5% yoy; largely due to the depreciation of GBP vs USD and EUR).
The company acquired 13 businesses (annualised revenue of £88m) in the Pest Control and Hygiene businesses (33 acquisitions in the current financial year with combined annualised revenue of £109m). Management has kept full-year guidance unchanged.
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An H1 trading update to December confirms a strong start to FY21, with sales growth accelerating to 22% y/y – a material rebound from a Covid impacted 2H20 (+9% y/y) and +15% achieved prior to this. KPI‘s are strong across the piece, for instance every Geo grew >20%, Connector revenue grew +20% (Shopify: +115%) and ‘enhanced functionality‘ revs grew +20% also. It‘s genuinely hard to find fault with this performance. To us, this evidences how DOTD is executing on its strategy (around products, partners and Geo‘s) while also benefitting from strong thematic tailwinds benefitting its sector and end-markets. We leave recently upgraded FY21 forecasts unchanged, though note the strong H1 sales performance now requires an undemanding +14% y/y growth to hit N+1 estimates, so see upgrade/ outperformance potential. As well as DOTD‘s clear organic growth opportunities, we also highlight how cash continues to accumulate (now £27.6m) and could be deployed in a number of vectors.
Companies: dotDigital Group plc
Although 2020 will probably go down in history as one of the most challenging years experienced during our lifetime, it will also likely be chronicled as one of the best years for the recognition and appreciation of science. As we entered 2020, the COVID-19 pandemic was in its infancy. However, it rapidly evolved through the exponential rise in infections and mortality globally. Much has been achieved during the past 12 months in the fight against COVID-19, but, as we enter 2021, there are considerable concerns about the emergence of a mutant version of the virus and the second wave that we are now facing.
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Time has produced robust interim results, slightly ahead of its earlier trading update, reflecting the gradual recovery of trading from a COVID-19 impacted March to June 2020, which saw a low in the lending book. With own-book origination holding up and arrears/forbearance falling, we view H2/21E positively but note the current UK lockdown presents uncertainty. Still trading at 20% below tangible book value, despite improved macro conditions, we see upside ahead and maintain a “BUY”.
Companies: Time Finance plc
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Ahead of the FY Trading Update at the end of January, we revisit RBG’s investment case, and respond to investor concerns over Convex’s M&A pipeline and the short term cash requirements of Litigation Financing. Outperformance of the UK legal industry vs UK GDP over 2020 validates RBL’s continued performance. M&A market data shows an encouraging recovery in deal completions which looks set to continue into 2021, and we anticipate Convex to be well placed to convert its pipeline of >20 deals (c.£18m) into revenues, underpinning forecasts. LionFish is now well seeded, and the Group’s early cash realisations of cases ensure cashflows for the business are broadly neutral. Whilst case outcomes are binary, the de-risked option value here is a compelling addition to the investment case. We see intrinsic value as c.100p; highlighting the breakout potential in these shares.
Companies: RBG Holdings Plc
Results for H1 to end Nov ‘20 show Time’s recovery is well underway from an industry-wide, Covid-induced slump in good quality lending demand and spike in bad debt provisions. This coincides with a Group rebrand, which consolidates 5 years of buy-&-build success and offers a range of new competitive advantages. The share price of 25p is 30% off pre-pandemic levels with valuation multiples suggesting Time looks significantly undervalued in relation to peers.
Today's update from WEY reveals the strong trading momentum within the business which is said to be trading “significantly ahead of budget and market expectations”. We have put in place a new FY22E forecast showing revenues and PBT rising 27% and 82% YoY respectively, highlighting both the very strong underlying growth as student numbers expand rapidly in response to successful marketing campaigns plus significant structural drivers, and the operational gearing effect, given that few extra costs are required operationally as major increases take place in student numbers. At the same time, our FY2021E revenue forecast is raised by 23% and, allowing for extra investment, forecast PBT is raised by 10%. Based on today's announcement and our new forecasts, we feel that WEY has already achieved its target of reaching the size of a Multi-Academy Trust, while also generating healthy gross margins, good levels of cash and a highly sustainable business growth model with much further to run.
Companies: Wey Education PLC
Foresight Group , the award-winning infrastructure and private equity investment manager to IPO on the Main Market (premium). The Offer will primarily comprise a sale of shares by existing shareholders (c.80% of the Offer) with a smaller offering of new shares (c.20% of the Offer) to be issued by the Company. Details TBA. Cornish Metals (TSX-V: CUSN) intends to list on AIM. The Company is proposing to raise £5 million by way of private placement of new Common Shares (the "Fundraising") to advance the United Downs copper-tin project. The Company expects that Admission will become effective in February 2021. The Company's Common Shares will continue to be listed and trade on the TSX-V in Canada. VH Global Sustainable Energy Opportunities plc, a closed-ended investment Company focused on making sustainable energy infrastructure investments, today announces intends to launch an initial public offering of shares on the Official List (Premium) of the Main Market of the London Stock Exchange. Due by Early Feb.
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Appreciate has reported a very strong quarter – not just given the circumstances, but on its own merits. Indeed December saw the highest monthly billings in Appreciate's history.
Q3 delivered on the early promise we noted in November, with Corporate & HSV billings up 13.1% YoY to £96.3m, driven heavily by 42% YoY growth in December.
Companies: Appreciate Group plc
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Full year results were well trailed in the Group’s trading update in November and are in-line with expectations. December 2020 saw the Group raise £7.1m (net) to strengthen the balance sheet and to provide the resources to capitalise on the building opportunity for hydrogen storage solutions and to accelerate growth in Integrity Management services. The Group has entered FY2021 with a strong and growing order book for defence, nuclear and hydrogen customers that underpins management’s confidence in the outlook, despite still challenging conditions in the oil & gas market. Trading in the first quarter is noted to be inline with expectation and five hydrogen refuelling station contracts worth £0.5m were secured in December alone in this rapidly developing sector. There is a strong pipeline of hydrogen refuelling opportunities, supported by ongoing development of products and services, and the Group’s long-standing presence and reputation in gas storage and safety.
Companies: Pressure Technologies plc
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Boku continued to see strong demand after its early December trading update, finishing the year with revenue and EBITDA ahead of consensus expectations. The Payments business was the driver of revenue upside, and lower costs in both businesses contributed further to EBITDA upside. We have revised our forecasts to reflect the strong H220 performance, upgrading FY20 normalised EPS by 15.5%. We maintain our FY21/22 forecasts as we expect the company to revert to pre-COVID-19 spending behaviour when lockdown restrictions are removed.
Companies: BOKU, Inc.
Further media reports that Dr Martens, the British Boot brand is planning an IPO on the LSE. It is currently owned by PE group, Permira who is expected to sell down its stake at the IPO. March 2020 YE the group had revenues of £672m and EBITDA of £184m. Deal size TBC. Upon Admission to AIM, Nightcap will acquire The London Cocktail Club Limited (the "London Cocktail Club"), which is an award winning independent operator of ten individually themed cocktail bars in nine London locations and one location in Bristol. Offer TBC Due mid Jan. HSS Hire Group, HSS.L transfer from Main to Aim. Mkt Cap c. £70m. Recently raised £52.6m. Leading supplier of tool and equipment for hire in the United Kingdom and Ireland and has provided equipment hire services in the United Kingdom for more than 60 years, primarily focusing on the B2B market. Due 14 Jan. VH Global Sustainable Energy Opportunities plc, a closed-ended investment Company focused on making sustainable energy infrastructure investments, today announces intends to launch an initial public offering of shares on the Official List (Premium) of the Main Market of the London Stock Exchange. Due by Early Feb.
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