Reaction – small upgrade, fully valued

PET has reported good progress at Underlying PBT level driven by 7.6% Group LFL growth. 1H PBT growth of 18.9% will moderate in 2H as the full effect of changes in billing Joint Venture Vets impacts the business. But this, like the resetting of food prices over the last two years, is by way of a one-time adjustment. Full year PBT guidance has been raised by 3-4% on the back of the better than expected Retail performance. Overall we believe the shares already discount successful implementation of

Pets at Home

After consensus-beating Prelims we present revised numbers and our updated view of the risk/reward position here. The trajectory of our forecasts has gone from down to flat over the next three years. The swing back into more positive profit delivery in Retail needs in our view to be gauged for longevity as delivery on the services side is likely to be constrained by re-setting the JV part of the business. Buying on Retail prospects is effectively partly a bet against Amazon it should be remember

Store experimentation and vet progress

PET is doing an IR-Sell-side round up. Our view of our meeting was broadly positive but with little of significance news-wise likely to emerge at the Prelims. There were some interesting insights into in-store experimentation. Our view is that the financials are still vulnerable to downward pressure in the short term but that new senior management will start to pivot the story here back towards the fundamentals and away from financial engineering in due course – which is encouraging.

In-line performance along same shape as recently, no change to estimates, no big news

Company has reported LFL sales change of +4.7% in Retail (WHE +3%) and +9.1% in the Vet Group (WHE +10%) resulting in a Group 3Q LFL of +5.1%. Full year 2018/19 PBT guidance has been re-confirmed in the £80-85m range previously guided. There has been no update on previous guidance of a slight decline in 2019/20. Omni-channel revenues grew by 41.5% to 9% of retail revenues.

Vet practice reorganisation

While full year profit guidance has been held broadly in line with consensus (adjusted for lost Vet JV fees) at £80-85m the decisions on restructuring the Vet Practice business mean a fundamental re-balancing of the investment characteristics here, with online pressure on pet food pricing set to continues but without as much offset from growth of the Vet business. This is clearly an unfavourable combination but one which is already reflected to some extent in the de-rating of the shares to aroun

Small Cap Breakfast

Jadestone Energy (JSE.TO)—an independent oil and gas production and development company focused on the Asia-Pacific region. Pro-forma production of 13.9 mboe/d, 2P reserves of 45.3 MMboe, and a 2P NPV10 of US$563.7 million . Offer TBA. Current mkt cap C$135m. Due early August. Ovoca Gold (to be renamed Ovoca Bio PLC) - RTO of IVIX, a Russian company developing a drug candidate for the treatment of female sexual dysfunctions. No monies to be raised, market cap of £8.5m, due 30 July Kropz PLC-I

Unsettling signs in the Vet Business

PET may be characterised as a Service and Merchandise business. Merchandise is predominantly Food (mainly Dog and Cat, within that mainly Dog) and Accessories while the most important part of the Service business is its various Veterinary Surgeon activities. These are mainly First Opinion Practices which are owned by Joint Ventures between PET and the practitioner. In the enhanced disclosures provided with these Prelims PET showed that they accounted for around one third of EBIT in 2017/18.

Encouraging on sales as price re-positioning (down) spreads

Merchandise LFLs of +6.8% slightly ahead of 2Q rate against weaker comparative benefiting from price investment and 77% growth of online (c half of the merchandise LFL), Services LFL +10.1%. Full year guidance elements unchanged. We expect small (1-2%) upward revisions to 3/18E PBT consensus today.

Running Hard to Stand Still

PAH has a variety of strategies which were discussed at the September Capital Markets Day. We believe that the most significant for investors are its current re-pricing actions in the Pet Food markets (seen as negative) and the economics of its largely Joint Venture Vets operation (seen as positive). This note looks at the pricing strategy in some depth.

Interims beat slightly

Interims beat slightly, FY guidance held, some major compositional changes, retirement of Group CEO.

N+1 Singer - All creatures great and small - An overview of the animal health sector

Animal Health is a vast market with multiple long-term growth characteristics and opportunities. In this report we have outlined valuations, M&A activity and the key growth drivers in two animal health subsectors: companion animal health and livestock health. Although the commercial positioning of the eight companies covered in this report (Animalcare, Anpario, Benchmark Holdings, CVS Group, Dechra, ECO Animal Health, Genus and Pets at Home) differ significantly, all have exposure to positive ma

LIBERUM: Loungers: LFLs consistent as ever, on the path to pre-Covid margins

PROGRESSIVE: Zoo Digital: H1 24 – positive news, short and long term

ZOO has announced H1 24 results in line with guidance at the recent AGM. We welcome the news earlier this month that the US actors’ strike has ended. This suggests that revenues could return to historical levels in the relatively near term, and that ZOO was correct to maintain capacity and capability to deliver during the recent hiatus. Subdued workflows have led to a significant EBITDA loss in H1 on revenue of $21m; but given the sequential month-on-month improvement expected, we maintain reven

easyJet remains optimistic about the new FY, despite the Q1 challenges

easyJet’s FY23 results were broadly in line with the preliminary figures and the market’s expectations. The group is resuming a regular dividend distribution and expects to raise the pay-out next year. It continues to believe in a positive outlook for the FY, despite the Q1 net loss affected by the conflicts in the Middle East. No major changes are expected to our current estimates.

LIBERUM: Topps Tiles: Strong year, but lowering forecasts on tough outlook

Initial Equity Trading Comments - 1 December 2023

HeiQ - Reorganising, right sizing and re-focusing

HeiQ has published its FY22 and H1/23 accounts, noting difficult market conditions for its revenue generating businesses, which has impacted revenue growth in these periods. In light of the market deterioration, the company has taken steps to restructure the group to be more efficient, while implementing expense containment measures. The sudden market disruption in H1/23A saw HeiQ move into a net debt position of $2.1m. While we model the company becoming operating cash flow positive in FY24E, o

ME Group - Price rises and increased usage driving growth

ME Group has reported a strong set of H1 results with sales up +25%, adj. PBT +68%, adj. EPS +60% and ongoing DPS +14%. The strongest performances were in photobooths in Europe, which benefited from price rises and increased volumes, and laundry in the UK, where there was a +11% increase in the number of machines. This progress was achieved despite a near flat installed base in photobooths, with the anticipated roll-out of next generation photobooths delayed due to supply delays, and a steady in

Focus on ‘sound’ long-term strategy overshadows in-line Q323

Entain reported largely in-line Q3 23 trading numbers, accompanied by an implied FY23 EBITDA downgrade. The latter was a result of unfavourable sports results as well as persistent regulatory headwinds. However, the bigger news was the update provided on the firm’s strategy and longer-term targets. While this means the near-term growth and margin trajectory will be slower than previously anticipated, the longer-term targets offer strong upside potential considering the currently-beaten-down valu

Assessing the key investment & valuation dynamics

We view XP Factory as a genuine growth stock. In this detailed note we show how it is capitalising on the secular themes driving the competitive socialising sector and generating superior site returns, organic growth and customer reviews. This is further enhanced by a strong set of interims, with an acceleration of LFL over the summer and no change to FY Dec’23 expectations. Prospects of a healthy future is backed by our base case 3-year EBITDA CAGR of 44% on steady state expansion, which rises

Topps Tiles - Early delivery

Topps Tiles’ (TPT’s) FY23 results confirm the strong progress made, with its focus on growing profitable market share by developing and diversifying its operations. The success is shown in record revenue for the Topps Tiles branded stores and the group as a whole, aided by the achievement of its ‘1 in 5 by 2025’ market share goal two years earlier than predicted. An improving cost environment has translated into an underlying improvement in gross margin through the year, as expected by manageme

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

A stronger close to FY22/23, but investors remain unconvinced

M&B’s FY22/23 performance was slightly stronger than AV and the market’s expectations. Adjusted operating profit and EPS were ahead by c.2.5% and c.11%, respectively. While the publican sustained lfl momentum during the FY23/24, the stock price is down 8% as we write. Investors may have been spooked due to stronger cost headwinds for the FY23/24 and the £131m impairment on properties during the FY22/23. We see today’s share price decline as an over-reaction. We will improve the financial estimat

SSP Group+ (SSPG, House Stock at 208p) - FY23F results preview

LIBERUM: Loungers: Going from strength to strength

LIBERUM: DP Eurasia: A very strong acceleration in the last four months