Foxtons Group - New CEO targets recurring income streams

Foxtons’ new CEO has identified historical failings that are expected to be addressed by upgrades to data infrastructure, investment in staff and a reinvigoration of the Foxtons brand. If successful, over the medium term Foxtons expects margins to expand 500bp and hopes that operating profit will more than double. Importantly, it aims to increase the proportion of recurring income from c 65% currently, thereby reducing cyclical income and increasing the quality of income. We have raised our FY23

Ambitious strategy set to accelerate earnings growth

FY22 results were well flagged in the January update. Adj. operating profit of £13.9m (2021: £8.9m) is slightly ahead of our £13.5m forecast. New CEO Guy Gittins operational review is complete, concluding that Foxtons has strong foundations to build from, though operational failings have led to significant unfulfilled potential. Improvements are well underway to rebuild its competitive advantage and managements medium term ambition is to deliver operating profit of £25m-£30m (double the FY22 out

Acquisition reinforces leading market position

Foxtons has announced the acquisition of Atkinson McLeod, a London focused lettings and estate agency that generates c.90% of its revenues from lettings across c.1,100 tenancies. It is paying a consideration of £7.4m, which represents a multiple of 8.2x Mar. 22 operating profit (£0.9m). The acquisition is expected to be earnings enhancing in FY23 (the FY22 outturn represents c.7% of our FY23 Group operating profit forecast). However, we would expect synergies to enhance the acquisitions profits

Foxtons Group - Growth-oriented review poised to be announced

FY22 was a robust year for Foxtons with revenue up 11%, but the short-term outlook is less certain for recessionary reasons. However, the outlook remains encouraging with the new CEO on the cusp of announcing a growth-oriented operational review. 65% of revenue is now generated from the resilient Lettings and Financial Services divisions, a proportion that is likely to increase over time. Our ‘base’ case valuation gives a value of 53p/share, but ignores the potential of M&A expansion in particul

Prudently rebasing forecasts given market challenges

Following last weeks update, we rebase our forecasts to take account of a more challenging Sales market outlook in FY23. Our FY22 adj. PBT forecast increases by 4% but we reduce our FY23/FY24 forecasts by 25%/8%. We believe we have taken a prudent approach when rebasing our forecasts, assuming FY23 Sales market volumes fall by 20% to the record low of 2009 (credit crunch) and 2020 (COVID-19 impact). Whilst it is difficult to gauge the likely pace of recovery, there are some tentatively positive

Subdued sales backdrop weighs on FY23 outlook

Foxtons year end update follows recent commentary from peers in highlighting the impact of market volatility on house buyer confidence. Whilst the conclusion to FY22 is strong and ahead of expectations (revenue +11% to c.£140m vs. our forecast of £135m), investors are likely to focus on a more subdued current year outlook. Management expects a challenging H123, expecting a significant reduction in sales volumes and, to a lesser extent, sales prices. There are however some tentatively positive si

Foxtons Group - Strong markets and strategic initiatives shine

The tight London lettings market has resulted in a significant increase in rental rates to values that exceed pre-pandemic levels, which has further benefited Foxtons as it has concentrated M&A activity in this area. It has also witnessed positive trends from strategic initiatives to focus on higher-value properties in both the Lettings and Sales divisions, as well as investment in Financial Services. We have raised our FY22 estimates, but have retained FY23 and FY24 forecasts, given the economi

Strong Q3 prompts FY22 earnings upgrade

Foxtons’ Q3 update highlights revenue growth of 25% to £43.8m (Q3’21: £35.1m) and 11% to £108.9m in the first 9m of the year (9m’21: £98.5m). Momentum was positive across all three areas of the business, with Lettings growing by 18%, Sales by 44% and Financial Services by 37% in Q3. The Group enters Q4 with a less certain Sales market backdrop, but the strength of the Q3 performance, the cost action taken in H1 and the resilience of both the Lettings and Financial Services businesses give manage

Foxtons Group - M&A contribution and potential overlooked

H1 revenue grew 3% against tough comparators and operating profit increased by 13% y-o-y, reflecting good underlying markets and M&A in lettings. The announcement also highlighted the strong contribution from M&A, where we expect Douglas & Gordon (D&G) alone to contribute c 45% of FY22 profit, an aspect we believe is overlooked by the market. We retain our underlying assumptions and our 128p per share valuation.

Viewing recommended

Foxtons is the best known estate and lettings agent in London. Whilst its track record since the 2013 IPO has been turbulent, the turnaround is well underway, with a return to profitability delivered in 2021 and today’s interims confirming continued momentum (PBT +16%; guidance unchanged). We believe the Group has very strong foundations to build from in terms of its brand and infrastructure and we expect strong earnings growth across the forecast period. We believe the strategy to expand the Le

Foxtons Group - Strong performance and market share gains

Q1 revenue growth of 8% reflects good underlying growth and M&A in lettings, as well as robust sales and mortgage markets. In sales, Foxtons has taken market share despite the y-o-y decline in revenue and Q2 has started well, with an 8% increase in the under-offer pipeline. Furthermore, additional income streams are developing well and Foxtons has identified c £8m of M&A investment so far this year, highlighting strategic progress. We retain our underlying assumptions and our 128p per share valu

Foxtons Group - FY21 profit growth highlights strategic progress

Foxtons preliminary results highlighted that FY21 was a good year. 2022 has also started well, with rents continuing to increase and the sales market remaining at buoyant levels, according to management. Furthermore, additional income streams are developing well and amounted to £9m in the period, while the company has identified c £8m of M&A investment so far this year, highlighting strategic progress. We retain our underlying assumptions and our 128p per share valuation.

Foxtons Group - Robust Q4 and strength into 2022

Foxtons traded well in all divisions in Q4 and generated revenue for the year of c £133m. The company benefited not only from the implementation of its strategy, but also from a robust sales market, which saw a 22% increase in the number of properties under offer in Q4 compared to the long-run average. The letting market also improved, with rental rates recovering sharply and now c 3% ahead of pre-pandemic levels. Foxtons entered 2022 with a sales pipeline similar in size year-on-year.

Foxtons Group - Progress evident in Q3/ytd revenue growth

Foxtons has traded well ytd, with total revenue exceeding £100m and only c £3m short of the £106.9m reported for the whole of FY19. The company has not only benefited from the implementation of its strategy, but also from a recovering sales market and improving lettings market where rental rates recovered sharply during the quarter. It enters the final quarter with a sales pipeline of properties ‘under offer’, which is 20% higher than at the same point in 2019. We value the shares at 128p, sligh

Uncertain outlook comes as no surprise

We take a positive view of Legal & General’s FY 22 results. Despite the tough environment, the Group managed to outperform expectations – something which was hardly a given for such a large asset manager. With L&G being widely exposed to the UK economy, it might be a call one does not want to make but the firm’s business remains one of spreads – as long as a default does not occur. We remain positive but concede that L&G embeds more risk than we had assumed.

Cooled by the distribution policy

Strong FY 22 results reported by Aviva, and another layer of distribution, but doubts around the soft guidance provided. We confirm our case that Aviva is an M&A opportunity to offer scale while having a much less complex structure.

Ambitious winds of change

M&G’s FY 22 results were strong. It was also the opportunity for new CEO Andrea Rossi to depict clearly his strategy for the upcoming months. While the impetus is clear and the objectives are ambitious, we rather believe in a structural improvement of the business (driven by the higher rates environment) than a commercial one.

Sentiment is changing

Interims show continued progress, as Made Tech has built on its FY22 break-out performance (sales: +120%) by growing sales a further 75% in 1H23. An exceptional feat, achieved through a strong b/f backlog (+133% y/y) and excellent sales execution in 1H23. This second point is pertinent, as it highlights how (notwithstanding macro headwinds) Made Tech has been able to land nine new customers in H1 (and more in Q3) such achieving >£60m bookings YTD. This achievement materially de-risks FY23&24 exp

Hybridan Small Cap Feast - 06 Mar 23

6 March 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 objective

Cenkos: Time Finance plc -- A New Quarter, a New Upgrade

Time Finance has released a positive Q3/23A update for the period ending 28 February 2023. It follows a strong first half and shows continued momentum in the business. We are upgrading our FY23E revenue forecasts from £25.7m to £26m and FY23E PBT from £3.2m to £3.6m. Time's valuation looks deeply discounted on an FY24E P/E ratio of 5.8x and P/TNAV of 0.6x. We expect a material re-rating as management continue to deliver profitable growth and we believe upside risks to forecasts remain dominant.

TVL highlighted as strategic component of the UK’s critical minerals sector

Alkemy and its 100%-owned subsidiary Tees Valley Lithium (TVL) report that TVL’s planned lithium hydroxide refining facility at the Teesside Freeport, UK has been featured extensively in a new paper entitled “Midstream Processing and Refining: Unlocking Security of Supply”. The paper was published by the Critical Minerals Association United Kingdom (CMA UK) which aims to support the development of critical mineral supply chains in the UK.

Hybridan Small Cap Feast - 07 Mar 23

7 March 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 objective

Hybridan Small Cap Feast - 09 Mar 23

9 March 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 objective

LIBERUM: Harworth* - Resilient performance in a rapidly changing property market

Hybridan Small Cap Feast - 14 Mar 23

14 March 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 objectiv

Hybridan Small Cap Feast - 01 Mar 23

01 March 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 objectiv

PCI Pal - 1H sees accelerating revenue growth as TACV builds

The interims confirm acceleration in the already rapid revenue growth (+29% yoy in 1Q and now +33% yoy across 1H23), keeping the LBITDA in line with last year despite increased investment in product development and sales and marketing to seize new market opportunities (notably in Canada and Australia). PCIP remains on track for FY forecasts, which remain unchanged. Investment in the channel sales strategy is paying off with continued strong new customer sales; a record number of new contracts we

H&T (initiation of coverage): Pawnbroking royalty, with strong, profitable growth

Founded in 1897, H&T is the UK’s leading pawnbroker, with 269 stores, and it has gained a strong pawnbroking market share in recent years. While it is growing ancillary gold buying and forex products, its core is pawnbroking and related retail services. As other small-sum, short-term lenders have withdrawn, H&T’s well-capitalised, low-risk proposition has unique growth opportunities, with the pledge book up over 50% in 2022. The lessening of legitimate competition at a time of heightened demand

FLASH: Pre-close update indicates a beat to our forecasts