Weak sales mitigated by action on margins/costs

Interim results are in line with expectations. The key news today is the weaker than expected trading performance over the peak period, with LFL sales down 4.9%. This reflects not just the weak demand and promotional backdrop, but also some company specific factors. Ordinarily this would trigger downgrades but a range of margin/cost actions, alongside ongoing self-help, means EBITDA forecasts are being retained in both Apr’24 and Apr’25. The macro uncertainties and cost headwinds haven’t gone aw

Weak footfall affects October trading and guidance

Trading in October was below expectations and is weighing on the FY outlook and guidance. Unseasonal conditions look to have been a major factor behind the drop-off in high street footfall, as evidenced by online sales where declines moderated substantially. Strategic and operational initiatives continue to accumulate, including stock control, and WRKS looks well placed for a late Xmas, like last year. While a better outcome is still plausible, there is a high degree of uncertainty ahead of peak

Big upgrades a function of non-cash lease accounting

There were no surprises in terms of FY23 EBITDA and net cash, both pre-reported. Non-cash treatment after IFRS16 right-of-use asset impairments has led to a substantial PBT/EPS beat, though, much of which feeds into FY24/FY25 forecasts with 78%/33% upgrades. This disguises a drop in underlying DPS cover and, as part of a capital distribution policy update, the final is reduced to 1.6p. This may disappoint some but has nothing to do with confidence in future prospects, and current trading is posi

Wrks Becoming a better, not just bigger, business

WRKS is a profitable unlevered £280m revenue business which paid a 2.4p final dividend last year. It has navigated the pandemic challenges, and an extensive transformation is advancing under a strengthened team. Driven by share gains from an improving proposition with strong value credentials, it is positioned for growth, despite the cost of living crisis. On <1x EV/EBITDA, markets are not pricing this in. Using prudent forecasts and multiples (2.5x EV/EBITDA), our 60p 12-month target price offe

Topps Group (TPT LN) - Initiation: Market leader trading at cyclical lows

Topps Group is the UK’s largest specialist supplier and distributor of tiles and associated products to the UK’s domestic and commercial markets. Each of the last three years the Group has successfully achieved record revenue in a market that’s seen recent volume declines and regional peers enter administration. Following the right sizing of its business, Topps Group is now well positioned to capitalise on the economic recovery and continue taking share from competitors, supported by its global

LIBERUM: The Liberum Leisure Digest: NLW increase - pricing power is key

LIBERUM: Tortilla Mexican Grill: Prioritising profitability over roll-out

Pinewood Technologies (PINE LN) - Driving growth in automotive software

Pinewood’s transition to a pure-play automotive SaaS business is now largely complete. Today we introduce summary forecasts out to FY26 and reiterate the investment case. We see significant opportunity for Pinewood to grow its user base in the UK and internationally whilst generating high EBITDA margins and cash conversion. With a 24.5p special dividend embedded in the current price (payable Q1/Q2), the effective price today is 12.3p. Based on the Group’s FY27 target of £27m EBITDA, we estimate

Borussia Dortmund - Helping itself

Borussia Dortmund’s progress to the semi-final of the Champions League brings a further upgrade to profit guidance for FY24. In addition to helping the financial results of the current year, the relative success of German teams against those of other nations in European competitions this season may ensure the club qualifies for the Champions League next season despite currently being outside the top four of the Bundesliga.

Hybridan Small Cap Feast - 17 April 24

17th April 2024 * A corporate client of Hybridan LLP ** Arranged by type of listing and date of announcement *** Alphabetically arranged **** Potential means Intention to Float (ITF) has been announced Dish of the day Admissions: Delistings: What’s baking in the oven? ** Potential**** Initial Public Offerings: Reverse Takeovers: 16 April 2024: Electric Guitar (ELEG.L) Concurrent with its Admission to trading on AIM, Electric Guitar is proposing to acquire the entire issued share capital of 3radi

HeiQ - Acquisition, placing and trading update

HeiQ has announced the acquisition of a site in Portugal where the company intends to build a HeiQ AeoniQ production facility with a 3,000 tonne per year capacity. To support the acquisition, the company intends to raise c£2.44m via an equity placing, supported by the issue of a c£1.7m (€1.97m) convertible loan note (largely to management) that will convert upon completion of the raise. We see this as an important step in the development programme for HeiQ AeoniQ. Additionally, HeiQ has provided

Domino's Pizza - Growing the base

Domino’s Pizza Group’s (DOM’s) new CEO has set an ambitious long-term growth target, including an acceleration in its net store opening programme. With better alignment between the company and its franchisees, management believes DOM should be capable of generating improved profit growth, versus that achieved in recent years, and potential higher returns.

Zeus Top Picks for 2024 - 2023 review and outlook for 2024

On 9 January last year, we set out our ten top stock picks for 2023, for what turned out to be another relatively poor twelve months for UK equities due to two wars, stubbornly high inflation and further tightening of monetary policy. This was even as other major markets, such as the US, largely recovered in the year. In the 2023 calendar year, the AIM All-Share index fell 8.2% and is still 42% off its 2021 high. From the release of our 2023 top picks note, the average total return (assuming div

PROGRESSIVE: Vertu Motors: Traction control

Vertu is the fourth largest automotive retailer in the UK, with 188 sales outlets and a track record of cross-cycle growth, principally through businesses it has acquired, funded by equity, debt and most importantly cash generation. Vertu operates across the entire vehicle lifecycle, including new and used vehicle sales, and vehicle servicing, repair and parts. Service and repair is a 40+% gross margin repeating business. With economic headwinds, the transition to electric vehicles, recent overs

Brighton Pier Group - Interim Results

Bright Pier Group’s (BPG) H1 results reflect the highly challenging operating environment, with revenue -9% YoY to £16.2m and Adj EBITDA of £1.4m (H1/22A £3.0m). This decline was driven by weaker consumer demand (falling disposable incomes and low consumer confidence), train strikes and poor weather. Trading in H2 has remained relatively subdued, and as such, we lower our FY23E Adj EBITDA forecasts to £4.2m (from £5.5m). Whilst disappointing, we note that the group remains cash generative and co

Vertu Motors (VTU LN) - Market dynamics drive downgrade

An ongoing correction in used car prices has driven lower gross profit per unit for Vertu in recent months and this is expected to continue in the near term. There has been particular weakness in premium vehicle values. Additionally, higher stocking charges on increased new vehicle supply, has led to lower overall profitability. As a result, we have reduced forecast FY24 adjusted PBT by £8.0m (17%) to £39.3m and FY25 by £3.2m (6.2%) to £48.6m. This downgrade to expectations is indicative of mark

Initial Equity Trading Comments - 1 December 2023

Marks & Spencer+ (MKS, House Stock at 255p) - 7Y FS HSBC UK tie-up– another brick in the wall

HY results - strong growth continues