UK Nov GDP and industrial output misses but construction output beats, China's Dec exports rise ahead of expectations
Companies: Elementis plc
Melrose (MRO LN, £10.8bn) | Trifast (TRI LN, £201m) | Spectris (SXS LN, £3.0bn) | Elementis (ELM LN, £994m) | TT Electronics (TTG LN, £401m) | Renishaw (RSW LN, £2.8bn) | Oxford Instruments (OXIG LN, £904m) | Gooch & Housego (GHH LN, £295m) | Scapa (SCPA LN, £358m) | Trifast# (TRI LN, £201m) | Dialight (DIA LN, £88m)
Companies: MRO SXS ELM TTG RSW OXIG GHH SCPA TRI DIA
Following continued delays of a Brexit agreement, few sectors within the UK market have remained attractive to investors despite low valuations. One sector which has continued to outperform despite the political drama has been the UK video gaming sector (henceforth UK gaming), which we are fans of. We believe a combination of sector-leading growth, strong cash conversion and timely cyclical positioning support our positive view on the UK video gaming sector.
Companies: ABBY AMS ANX ARS ATYM AVON BLVN PIER BUR CGS CAML CDM CSRT TIDE CYAN JET2 DEMG ELM EMR FPO FDEV GTLY GENL GHH GRI GEEC GKP HMI HAYD HEAD HILS HTG HUR IBPO IOG INDI JHD JOG KAPE KEYS KWS KCT KGH LAM LIT LOK MACF MANO MOD OXIG PCA PANR APP SRE PHC PMO RBW RMM RBGP RSW RNO ROR SUS SCPA SEN SHG SOLG SOM SUMO TM17 INCE TWD TRAK TRI VNET VTC ZOO ZTF
In January, we provided a list of 11 stocks for 2019 that we believed would perform strongly with attractive catalysts that could lead to material outperformance. In this Quarterly Research Outlook, we revisit these views, analysing what has happened and how the remaining six months of the year could play out.
Companies: AMS ANX ARS ATYM AVON BLVN PIER BUR CGS CAML CALL CSRT TIDE CYAN JET2 DEMG ELM EMR FPO FST GTLY GENL GRI GEEC GKP HMI HAYD HEAD HILS HTG HUR HYR IBPO IOG INDI JHD JOG KAPE KEYS KCT KGH LAM LIT LOK MACF MANO PCA PANR PXC PHC PMO RBW RMM RSW RNO RKH RBGP ROR SUS SCPA SHG SOLG SOM TWD TRAK TSG TRI VNET VTC ZOO ZTF
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The market has not faced quite so many conflicting challenges for a number of years, whether related to global geopolitics, trade wars, ongoing Eurozone issues or the “will they, won’t they” saga of Brexit. In our Best Ideas, we sought to highlight stocks that present investors with interesting opportunities following recent market moves. Those stocks, we believe, warrant investor attention, in many cases for uncorrelated or stockspecific reasons, regardless of the near-to-medium term market direction. These stocks, in general, represent attractive and well-managed businesses or assets, with share price catalysts and where valuations or recent stock performance provide investors with a good entry point.
Companies: 7DIG ABBY AMS ANX ARS ATYM AVON BLVN PIER CGS CAML CALL CSRT TIDE JET2 DEMG ELM EMR FPO FST GTLY GENL GRI GEEC HDY HMI HAYD HEAD HILS HTG HUR IBPO IOG INDI JHD JOG KEYS KCT KGH LAM MACF MOD MKLW OXIG PCA APP PMO RBW RMM RSW RNO RKH RBGP ROR SUS SCPA SHG SOLG TWD TRAK TRI VNET VTC ZTF
The June IPO of Knights Group Holdings, a Top-100 regional law firm, marked the fifth entrant to the burgeoning UK-listed legal sector. Following recent expansion of our coverage across all five listed legal firms, complemented by coverage of three broader support services peers with exposure to the sector, we revisit and build upon our views on this rapidly evolving sector.
Companies: ARS GTLY GENL KEYS KGH MNO RBGP TWD 7DIG ABBY AMS AMER ANX ATYM AVON BLVN PIER CGS CAML CALL CSRT TIDE JET2 DEMG ELM EMR FPM FPO FST GRI GEEC HDY HMI HAYD HEAD HILS HTG HUR IBPO IOG INDI JHD JOG LAM MACF MKLW NAH OXIG PCA APP CAKE PDG RBW RMM RSW RNO RKH ROR SUS SCPA SHG SOLG TRAK TRI VNET VTC ZTF
Elementis (ELM LN) Interims confirm FY guidance, Mondo acquisition under review | Infrastructure India (IIP LN) Proposed financing to generate $125m
Companies: Elementis plc (ELM:LON)Infrastructure India (IIP:LON)
In Q2, UK equities regained some of their poise after the draw down in Q1, although uncertainty around Brexit continued to grab the headlines. On the back of this, investor concern about the UK economy has been understandable in recent months given a number of negative data points. However, we see reasons for optimism for UK Plc with wage growth supporting an improving outlook for the consumer and business investment holding up. That said, continuing UK political disruption clearly remains a risk going forward.
Companies: AMER EMR HMI JOG PDG ABBY AMS AVON BLVN PIER CGS CALL CSRT TIDE JET2 DEMG ELM FPM FPO GTLY GENL INCE GEEC HDY HAYD HEAD HILS HTG HUR IBPO IOG INDI JHD LAM MACF MKLW NAH OXIG PCA APP CAKE RBW RSW RNO RKH ROR SUS SCPA SHG KCT TRAK TRI VTC ZTF
Elementis (ELM LN) Solid Q1 update and confident outlook | Futura Medical (FUM LN) MED2002 (Eroxon®) Phase III design unveiled | N Brown Group (BWNG LN) Business plans remain on track and rating offers scope for bounce | Redde (REDD LN) Positive momentum continues, forecasts unch | SDL (SDL LN) Q1 in line and vast majority of slipped deals, by value, now signed | Senior (SNR LN) Trading in line
Companies: ELM FUM BWNG SNR
Elementis’ full year results confirm a year of significant strategic progress and earnings growth, a touch ahead of expectations. The outlook for the new year is promising and, as the portfolio transformation continues, it is striking to read that Personal Care is now the largest profit contributor in the Group. We retain our P&L forecasts whilst edging up our dividend expectations alongside a newly defined dividend policy. We expect another year of good progress in FY18 and, in our view, the shares should rerate alongside the continued delivery of the new strategy.
We anticipate a positive year for Elementis in 2018. This is the first year to benefit fully from SummitReheis, last year’s transformational acquisition. Meanwhile macroeconomic and peer group-specific indicators look positive. PPG last week reporting their strongest quarterly volume growth for three years. In our view, recent strategic progress is not yet reflected in the share price, which lagged the peer group last year. We continue to see intrinsic value in excess of 330p (14x FY18 EV/EBITDA).
boohoo.com (BOO LN) Buy into derating as brand momentum increases | Carador Income Fund (CIFU LN) Q4 dividend of 2.25c, total of 9c for full year | ECO Animal Health Group (EAH LN) Marketing authorisations for Aivlosin® in Ukraine | Elementis (ELM LN) Strategic progress not yet reflected in share price | Goals Soccer Centres (GOAL LN) 2017 falls short of expectations but turnaround green-shoots in evidence
Companies: BOO EAH ELM GOAL
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Treatt has once again delivered an exceptional performance in the first four months of FY21, with strong momentum across multiple categories contributing to growth. Operating margins have benefited from the improved product mix as Treatt continues to move up the value chain and partners with its customers to develop new products. Despite only being four months into the new financial year, the board is cautiously optimistic about continued growth and exceeding current market expectations. We raise our sales forecasts by 7–10% over the next three years and our operating profit and earnings forecasts by 20–32%. Our fair value also moves up to 870p.
Companies: Treatt plc
Anglo Asian Mining* (AAZ LN) – STRONG BUY – Update on Restored Contract Areas
Chaarat Gold* (CGH LN) – Kapan production beats guidance and delivers $19m EBITDA
Sunstone Metals (STM AU) – Drilling results from the Espiritu gold-silver prospect in Ecuador
Tertiary Minerals* (TYM LN) – Sale of data on Finnish project
Versarien* (VRS LN) – Interim results
W Resources (WRES LN) – La Parilla Q4 production
Companies: AAZ CGH WRES TYM VRS STM
AGM’s prelims confirm a solid year of progress with customer engagement and technology development continuing despite the challenges of COVID from early 2020. The results are in line with expectations, with the benefits of last year’s cost realignment being seen in reduced losses and effective cash management. The market opportunity remains significant, as reflected by continued growth in the pipeline. Commercial highlights include the promising partnership with Blocksil, which should support revenue growth over coming periods, as should the recent expansion of the distribution network.
Companies: Applied Graphene Materials Plc
Applied Graphene Material’s (AGM’s) FY20 results show the beneficial impact of management’s decision in October 2019 to focus on dispersion and application technology to better support product development with those customers presenting the nearest-term revenue opportunities. Revenues increased by 66% year-on-year in FY20 to £83k and adjusted EBITDA losses narrowed by £1.5m to £3.1m. With three new customer products launched in FY20 and three launched so far in FY21, progress looks set to continue.
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.
Companies: SAR CREO VRS JDG CCT MPAC ALS AVCT EAH GCM
A number of REITs have the ability to thrive in current market conditions and thereafter. Not only do they hold assets that will remain in strong demand, but they have focus and transparency. The leases and underlying rents are structured in a manner to provide long visibility, growth and security. Hardman & Co defined an investment universe of REITs that we considered provided security and “safer harbours”. We introduced this universe with our report published in March 2019: “Secure income” REITs – Safe Harbour Available. Here, we take forward the investment case and story. We point to six REITs, in particular, where we believe the risk/reward is the most attractive.
Companies: AGY ARBB ARIX BUR CMH CLIG DNL HAYD NSF PCA PIN PXC PHP RE/ RECI SCE SHED VTA
Treatt has performed well during FY20 despite the pandemic. There was strong momentum across the tea, health & wellness, and fruit & vegetables categories, and citrus markets recovered as expected. The strong growth across the non-citrus segments is resulting in a slightly reduced dependence on citrus (now 50% of sales). The UK relocation was slowed down as a result of the first lockdown, but the building work is now complete and the move will begin in mid-2021. While management report a strong start to the new financial year, the outlook is understandably uncertain: demand is not expected to return to normal levels before the end of FY21 or into FY22, though management is confident the business is in the best possible shape to face the uncertainty. The FY20 results demonstrate this, with a good cash performance and a 9% increase in dividends implying management’s confidence in the year ahead.