LIBERUM: Support Services & Special Situations - The Outliers – Charts that speak a 1,000 words
For our coverage we have compiled a chart book to help investors identify companies for which the share price performance diverges from the main factors that influence the stock. To help us identify these opportunities, we have created a composite index, or basket, for each company.
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04 Feb 20
LIBERUM: Building Materials & Equipment Hire in 2020 - Chance of sunny spells
It is harder to find value in the sector after a year of strong performance and a rather dull outlook for economic growth. However, valuations are not stretched across the board and there is a chance of strengthening activity in a few bright spots: we highlight UK RMI (repair, maintenance and improvement), UK infrastructure and the US residential segment.
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21 Jan 20
LIBERUM: The 4S’s: Support Services & Special Situations - Loosening the purse strings
The UK election on 12th December could result in a Conservative majority, a Corbyn government or something in between. Voters cannot claim a lack of choice, with the Conservative manifesto offering One Nation Conservatism and Labour offering to ‘rewrite the rules of the economy’.
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29 Nov 19
LIBERUM: CEO Video: Russell Down, Speedy Hire*
In these five short videos, Speedy Hire's Chief Executive, Russell Down discusses the growing profits in spite of tough market conditions, how Speedy has become a more resilient business, strong balance sheet options, the continued digitisation benefits and which sort of infrastructure spending from a new government would be helpful.
14 Nov 19
LIBERUM: Speedy Hire* - Strategy delivering growth and increasing resilience
Speedy delivered a 20% increase in underlying H1 PBT; a 4% beat on our forecast basis. Revenue growth of 6% was driven by contributions from powered access and training acquisitions, market share gains among smaller customers (SMEs) and strong organic growth in services, offsetting lost sales to Carillion and some softness in the market.
13 Nov 19
LIBERUM: Speedy Hire* - Expo shows momentum behind winning team
At our visit to last week’s Expo we found an enthusiastic Speedy team which has bought into the group strategy of winning market share through superior service, and a renewed focus on smaller customers. We also saw strong relationships between Speedy, its suppliers and its customers.
08 Nov 19
LIBERUM: Speedy Hire* - Still on track, in spite of tough comps
Speedy Hire’s H1 trading update vindicates its strategy as management remains confident of hitting full year numbers, and growing profits this year, in spite of an uncertain market and tough comps. Underlying revenues have proved resilient, boosted by 25% revenue growth with SMEs, the result of successfully targeting this segment through improved service.
03 Oct 19
LIBERUM: Speedy Hire* - Strategy proven in resilience
Speedy Hire’s trading update vindicates its strategy as management anticipates hitting full year numbers in spite of an uncertain market. Underlying revenues have proved resilient, boosted by 27.5% revenue growth with SMEs, the result of a deliberate targeting of this segment through improved service.
11 Jul 19
LIBERUM: Speedy Hire* - Excellence in execution
Speedy's ROCE has been driven up to c.13% from 3% since 2016 through improved asset efficiency, market share gains and cost discipline. We see 20% upside to our 77p target price, and eventual upside to 90p as ROCE rises to 15% through more progress on all three of these fronts.
27 Jun 19
LIBERUM: UK Small & Mid Cap Dispatches
Support Services - The 4 S's, DMGT, Galliford Try, CapCo, Spirent, Lookers, Equiniti, SMID Market Highlights
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31 May 19
LIBERUM: Morning Comment
Support Services - The 4 S's, Outdoor Agencies Video, DMGT, Galliford Try, Mining Update, CapCo, Spirent, Lookers, Equiniti, Market Highlights
SDY DEC SAX GFRD CAPC SPT LOOK EQN AA/ BAB BBY COST CPP FOUR GFTU HSS HSV HWDN KIE KLR MGNS MIND MTO PAGE PAY RPS SMS STAF STEM TPK XPS AHT ECM HAS RWA SRP SHI SNN DMGT
31 May 19
LIBERUM: CEO Video - Russell Down, Speedy Hire*
In these four short videos Speedy Hire’s CEO, Russell Down, runs through the key points from their full year results, including the benefits from their investment in digital, how ROCE has improved from 8% to 15% and whether it can go higher, and the outlook for the business.
16 May 19
LIBERUM: Speedy Hire* - Excellence in execution
Speedy has reported strong results for 2019, posting a 19% increase in PBT, 3% better than we expected. We believe that these results demonstrate successful execution of Speedy's strategy, using improved information systems to drive growth with smaller customers, improve utilisation rates and with an improved service proposition also driving market share gains.
15 May 19
LIBERUM: Speedy Hire* - Trading on track and enhancing acquisition
Speedy has today announced the acquisition of a leading powered access hire company (Lifterz) for £21.5m enterprise value. This gives Speedy critical mass and nationwide coverage in powered access, where demand is growing and utilisation rates are high.
20 Mar 19
LIBERUM: Speedy Hire* - Acquisition of Geason scales up services and boosts EPS
Speedy has acquired Geason, a leading provider of construction and professional services training for an initial consideration of £9m and deferred payment of up to a further £26m over three years based on an ambitious earn-out schedule. The acquisition contributes to management’s strategy of improving the proportion of revenues from services and brings critical mass to training, allowing Speedy to better utilise spare training facilities with new training staff.
13 Dec 18
LIBERUM: Speedy Hire* - Expo strengthens customer relationships
Last week, we attended Speedy’s annual Expo in Liverpool. The event, which is the largest private hire show in the UK, brought together over 1,500 delegates including members of the Speedy team, its key suppliers and around 300 customers.
08 Nov 18
LIBERUM: Speedy Hire* - Strong delivery in the face of headwinds
Despite the headwinds created by the liquidation of one of its largest clients, Speedy has delivered impressive revenue growth in 1H19. This has been helped by a particularly strong performance in its SME business.
25 Sep 18
In line H1 update, with positive revenue and ROCE trend continuing
Today’s trading update confirms that the positive trend in both revenues and ROCE have continued throughout H1. Group revenues for the period to 30th September are anticipated to be c.6.5% ahead of the prior year, with services revenue growth of c.8.0%. UK and Ireland core hire LFL revenues are broadly flat, with strong growth in the higher margin SME market which has offset lost revenue following the liquidation of Carillion. Trading remains in line with expectations and we make no changes to our forecasts, with adj. PBT anticipated to increase by 17% in the current year. We believe that Speedy’s growth trajectory, upgrade momentum, its strong and improving balance sheet and its in line dividend yield justifies a sector EV/EBITDA rating (5.6x). We maintain our Buy recommendation and 70p TP.
25 Sep 18
Small Cap Breakfast
Green Man Gaming—pure play e-commerce and technology company in the digital video games industry. revenue CAGR growth of 26.7% in the last three years to £47.5m. Due 28 Sep. EBITDA Profitable. Offer TBA Crossword Cybersecurity PLC* (NEX:CCS)—the technology commercialisation company focusing exclusively on the cyber security sector is exploring its options in relation to a potential move to the AIM market of the London Stock Exchange which, if it were to proceed, would likely take place over the next few months. Path Investments—an oil and gas company focused on the acquisition of production, or near production, oil and gas assets looking to join AIM. Offer TBC, expected early October 2018.
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25 Sep 18
LIBERUM: Speedy Hire* - Encouraging start to FY19
We believe that the AGM statement provides further evidence that the group continues to successfully execute its strategy. As well as confirming that the robust revenue momentum experienced in 2H18 has continued into FY19, the company also continues to outperform in relation to working capital management.
19 Jul 18
Be Heard (BHRD LN) H1 shows strong revenue growth, but profit shortfall | dotdigital Group (DOTD LN) Another year of strong growth & cash generation | EKF Diagnostics (EKF LN) Manufacturing agreement with Oragenics Inc | Goals Soccer Centres (GOAL LN) Profit warning | LiDCO Group (LID LN) UK distribution deal with Maicuff Technology | Nichols (NICL LN) Solid interims with a 3% PBT beat | Speedy Hire (SDY LN) In line Q1 update, with ROCE continuing to move forwards |
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19 Jul 18
Recovery delivered; Returns improving
We update our forecasts for the recent FY18 results and introduce a new forecast year for FY21. We nudge our FY19 and FY20 EPS forecasts up by 1%, with growth of 18% and 11% expected in each year. Our FY21 EPS forecast implies growth of 14%. We do not assume significant end market growth and expect earnings growth and improvement in ROCE (towards the Group’s 15% target) to be primarily driven by management initiatives (margin improvement, asset efficiency and growth in Services revenue) and M&A. A change in the prospects of the construction market could present upside to our forecasts, with a number of large infrastructure projects in the pipeline. We have increased our target price to 70p (sector average cal. ’18 EV/EBITDA of 5.6x).
14 Jun 18
1Spatial (SPA LN) Capital markets day highlights growth potential | Abzena (ABZA LN) Monetising the Abzena Inside portfolio | Consort Medical (CSRT LN) Prelims in line – another setback with Mylan | Gym Group (GYM LN) Positive corporate and premium pricing newsflow | N Brown Group (BWNG LN) In line update but number of moving parts might leave investors cold | Rathbone Brothers (RAT LN) Acquisition of Speirs & Jeffrey, no EPS accretion until FY20e | RhythmOne (RTHM LN) FY18 results show execution, EBITDA to almost quadruple in FY19 | Speedy Hire (SDY LN) Recovery delivered; Returns improving
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14 Jun 18
LIBERUM: Speedy Hire* - Strategy continues to deliver returns
Speedy’s focus on fleet optimisation and improving its relationships with SME clients has seen it deliver financial returns that exceed its cost of capital for the first time in a decade. We have long argued that this cross-over should act as an important catalyst for the shares, and continue to believe that management remains well placed to add significant shareholder value in the coming years.
16 May 18
Augean (AUG LN) Consultation on Colt; group trading in line | Brewin Dolphin Holdings (BRW LN) Solid outturn, margin maintained in H1 | Itaconix (ITX LN) Joint marketing effort defined with AkzoNobel | LiDCO Group (LID LN) Trading update points to increased US traction | Marston’s (MARS LN) Broadly in line interims | Speedy Hire (SDY LN) Earnings momentum continues with results ahead of expectations | Zotefoams (ZTF LN) Placing to invest in (even more) new capacity
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16 May 18
Value screen refresh and 10 focus stocks
We have completed another refresh of our value style screen, first established as of 12 May 2015. As usual the screen selected the 25 stocks exhibiting the most extreme value characteristics from our universe, and we have chosen 10 stocks to focus on. Since the last refresh, two days before the last general election, which resulted in a hung parliament, the screen has performed a little better than the small-cap index with our focus stocks outperforming by about 500bps. The weighting to UK consumer stocks noted last time detracted from performance, which came as little surprise given our cautious stance, much discussed in our other strategy work this year. One might have expected more consumer exposure in the refreshed screen given this year’s severe underperformance, but it appears forecasts have been similarly downgraded, keeping much of the sector outside our value criteria
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23 Apr 18
LIBERUM: Speedy Hire* - Strategic execution continues to deliver ahead of expectations
Speedy’s more recent focus on fleet optimisation and improving its relationships with SME clients has seen it deliver financial returns that consistently exceed our expectations. Crucially, not only is the 11% RoCE expected in FY18 well ahead of our previous forecast of 9.9%, it also the first time in a decade that the group has generated a return at or above its cost of capital.
26 Mar 18
LIBERUM: Speedy Hire* - Exposure to Carillion less significant than estimated
Our initial assessment that Speedy’s share price had over reacted to the news that Carillion had entered into compulsory liquidation was confirmed by the press release issued yesterday afternoon. The company has not only confirmed that its short-term financial exposure is less significant than our previous estimates, but also that the ongoing impact is currently expected to be limited.
16 Jan 18
LIBERUM: Speedy Hire* - Carillion news unhelpful but not as bad as feared
As one of Speedy’s largest clients, the announcement by Carillion that it has entered into compulsory liquidation is a short-term headwind for the shares. However, despite the potential write-down of receivables that will result, we believe that the long-term impact on financials will be limited.
15 Jan 18
Confident of sustainable UK earnings growth
Speedy Hire has signalled that it is fully through a transformation process and clearly focused on profitable growth. H1 revenue (ex-disposals) was almost 7% higher, at £183m, and management flagged that it expects to exceed previous adjusted PBT expectations for the full year by c 6-7%, which will form the base for future years. The positive results, benefiting from the recent operational restructuring, two recent bolt-on acquisitions and positive demand, point to sustained investor support.
30 Nov 17
N+1 Singer - Speedy Hire - Earnings momentum continues
We are upgrading our forecasts for the recent acquisitions and for the underlying progress reported at the interims. Our adj. EPS forecasts increase by 8%, 18% and 14%. Since initiation, we have cumulatively upgraded our FY18 and 19 EPS forecasts by 84% and 59% respectively to reflect underlying recovery in the business. We upgrade by a further 2% and 8% for the recent acquisitions. Management has done a commendable job to turn the business around, not least strengthening the balance sheet. We expect trading to continue to improve against a positive market backdrop and potential for further self help, cross selling and M&A. We upgrade our target price from 63p to 68p and remain at Buy.
29 Nov 17
N+1 Singer - Morning Song 29-11-2017
Brewin Dolphin Holdings (BRW LN) Solid FY17 outturn, positive strategic progress | Cineworld Group (CINE LN) Joining the sector consolidation | Clinigen Group (CLIN LN) Quantum to add multiple growth opportunities | Findel (FDL LN) Digital transformation gaining momentum | Futura Medical (FUM LN) Good progress in Eroxon® licensing discussions; PK trial underway | Photo-Me International (PHTM LN) Snap it up | Raven Russia Ltd (RUS LN) Completion of Sever logistics park acquisition | Redcentric (RCN LN) Solid interim results | Speedy Hire (SDY LN) Earnings momentum continues | Wilmington (WIL LN) New CFO appointed
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29 Nov 17
LIBERUM: Speedy Hire - Attractive Powered Access acquisitions
Speedy has announced the acquisition of two regional Powered Access players, Prolift Access and Platform Sales & Hire, for a combined outlay of £21.1m. As well as a strong strategic rationale for the deals, we believe that they look attractive from a financial perspective.
24 Nov 17
N+1 Singer - Morning Song 24-11-2017
Future (FUTR LN) Results underline change and opportunity | IndigoVision Group (IND LN) Trading behind expectations; Chief Exec leaves | James Fisher & Sons (FSJ LN) Outlook unchanged; Offshore Oil recovery delayed | Sanderson Group (SND LN) Scaling up the Enterprise division | Speedy Hire (SDY LN) Earnings enhancing acquisitions | Vernalis (VER LN) Reduction in cough cold forecasts | WYG (WYG LN) UK challenges prompt further downgrades
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24 Nov 17
N+1 Singer - Speedy Hire - Delivering further upgrades in today’s interims
Interim results were well flagged in the H1 update on 19th September. We upgraded our PBT forecasts by 6%, 5% and 3% in each forecast year on 2nd October. Today’s results deliver further upgrades, with management confident of delivering a full year result ahead of expectations. We expect to upgrade our PBT forecast by around 6% in the current year, with outer years also moving up. The Group achieved PBT of £10.8m in H1, up 58.8% year on year. Speedy trades on an FY’18 EV/EBITDA multiple of 5.2x (c.4.9x after upgrades) vs. the peer group on 5.5x. Solid progress has been made to turn the business around and trading continues to improve. We see potential for continued earnings momentum as the strategy is executed and for further progress towards the Group’s 15% ROCE target (H1’18A: 9.4%). We remain at Buy and retain our 63p target price.
14 Nov 17
LIBERUM: Speedy Hire* - Building key relationships to create long-term value
Last week Speedy held its annual Expo in Liverpool. The event, which is the largest private hire show in the UK, brought together 1,500 delegates including members of the Speedy team, its key suppliers and largest clients.
07 Nov 17
N+1 Singer - Speedy Hire - Forecasts upgraded after solid H1 update
We are upgrading our forecasts after the recent H1 update. Our PBT forecasts increase by 6% to £21.7m in FY18, and by 5% and 3% in FY19 and FY20. Our dividend forecasts increase in line with the PBT upgrades. Upgrades reflect strong H1 revenue growth (up 7.5% YoY exc. disposals) and further cost saving initiatives. Revenue growth was primarily driven by the lower margin, non-hire business. With this in mind, we are leaving our target price unchanged, whilst acknowledging the solid progress management has made in turning the business around. We see potential for continued earnings momentum as the strategy is executed and for further progress towards the Group’s 15% ROCE target (FY17A: 8.0%, FY18E: 9.8%).
02 Oct 17
LIBERUM: Speedy Hire* - Strong sales growth drives upgrades
We believe that the 1H18 trading update provides confirmation that the group’s strategy remains on-track. As well as confirming that the strong revenue momentum established in 2H17 has continued into FY18, the company also continues to outperform in relation to operating costs and working capital management.
19 Sep 17
LIBERUM: Speedy Hire* - Encouraging start to FY18
We believe that the AGM statement provides further confirmation that the group’s strategy remains on-track. As well as suggesting that the strong revenue momentum established in 2H17 has continued into FY18, the company also continues to outperform in relation to working capital management.
12 Jul 17
N+1 Singer - Speedy Hire - Focused on restoring profitability
FY’17 was focused on stabilising the business after a difficult trading period. Trading has improved, with all metrics ahead of expectations in FY’17. Accordingly, we have upgraded our forecasts (PBT up 8% in FY’18 and 4% in FY’19). Now, the focus turns to the Group’s ability to drive sustainable, profitable growth. Our revenue forecasts imply growth of 2.0%-2.5% across the forecast period. Growth is already said to be coming through after a good start to the year. Management has introduced a mid-teens (c.15%) medium term ROCE target (FY’17: 7.7%), a sign of confidence in Speedy’s prospects. With net debt/EBITDA falling towards 1x, we expect earnings enhancing M&A opportunities to form part of the ongoing strategy. Overall, we believe the risk remain to the upside, with potential for further upgrades as the year progresses. We therefore move from Hold to Buy and increase our target price from 56p to 63p.
18 May 17
LIBERUM: Speedy Hire* - Delivering higher cash and financial returns
The FY17 results provide clear evidence of the virtues of Speedy’s self-help strategy. Improved efficiencies along with 6.7% underlying revenue growth have driven a material improvement in both RoCE and cash returns.
16 May 17
N+1 Singer - Speedy Hire - Solid performance in FY’17 confirms turnaround plan is complete
Today’s results confirm a solid performance in FY’17, with the Group outperforming on revenue, PBT, dividend and net debt. Adj. PBT was ahead of our expectations at £16.2m vs. our forecast of £14.4m and £5.0m last year. This was primarily driven by a better than expected revenue performance, with some margin improvement in core hire also contributing. This year has been focussed on stabilising the business and trading has successfully turned around. Now, focus will turn to the Group’s ability to drive sustainable profitable growth and its ability to win market share. We will review our forecasts and valuation after the analyst meeting this morning, but initially we anticipate upgrading our FY’18 PBT forecast to just over £20m vs. £19.1m currently.
16 May 17
N+1 Singer - Speedy Hire - Forecast upgrades after a solid Q3 update
Tuesday’s trading update was positive and confirmed solid progress in retaining key accounts, alongside growth in the SME customer segment. We have updated our forecasts as below, with PBT upgrades of 10%, 9% and 8% respectively in the three forecast years. Whilst the Group continues to make progress in delivering its recovery plan, returns in line with the sector are, in our view, a long way off for Speedy (current operating margin forecast of 5% -7% across the forecast period vs. a Cal. ‘17 peer group margin of c.14%). At present, we do not see operating margins exceeding single digits until c.FY’20. Given this, we believe that our 56p target price (5.6x FY’18 EV/EBITDA) implies fair value for the shares. However, for those who believe that Speedy will achieve superior margin enhancement within the forecast period, the shares look good value.
09 Feb 17
N+1 Singer - Speedy Hire - Trading update highlights further progress
Today’s trading update highlights further progress in the SME space, addressing one of our longstanding concerns. The update highlights that the revenue trend continues to improve with better operational efficiency and that, as a result of solid trading in Q3, full year PBT is expected to be ahead of expectations. We anticipate upgrading our current year revenue forecast by 10% to £14.3m (from £13.0m). Speedy still has a long way to go in terms of delivering profit margins in line with the sector (current operating margin forecast of 5% - 7% across the forecast period vs. a Cal. ‘17 peer group margin of c.14%). However, recent progress has strengthened the Group’s recovery potential. We therefore increase our target price to 56p (5.7x March ’18 EV/EBITDA, a c.10% discount to the peer group multiple), but keep our Hold recommendation unchanged.
07 Feb 17
N+1 Singer - Small-cap quantitative research - Momentum screen refresh + 10 focus stocks
We have refreshed our momentum style screen for the first time since inception on 26 July 2016. As before, the screen selects the 25 stocks exhibiting the most extreme momentum characteristics, according to our measurement method. From these we have selected 10 to focus on. Since inception the screen has underperformed both the main small-cap and micro-cap indices against a background of generally rising momentum. We have noted a subset of the basket, where decelerating momentum at the time of measurement appears correlated with significant share price falls since selection. We shall monitor this factor with the new screen, albeit there are only two such stocks showing this pattern, namely Lamprell (not rated) and Gear4music (not rated).
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12 Jan 17
LIBERUM: Speedy Hire* - A sensible acquisition on all fronts
The announcement of an opportunistic acquisition to bolster the group’s lifting offering should be seen as a positive for the shares. As well as supporting a 4% upgrade to medium term earnings forecasts, the purchase of Lloyds British Testing increases the group’s exposure to higher return operations.
19 Dec 16
LIBERUM: Speedy Hire* - Feedback from management meeting
Following on from a positive set of results, management presented to our sales force. During the meeting they reminded us of the progress that has already been made and provided a sense of what still needs to be addressed.
17 Nov 16
LIBERUM: Speedy Hire* - Self-help strategy paying dividends
A strong set of interim results provide evidence that the group’s self-help strategy is delivering ahead of expectations. Material cost savings and underlying revenue growth of 5.2% point to a positive outlook for FY17 and beyond.
16 Nov 16
LIBERUM: Speedy Hire* - Expecting positive 1H17 results
We expect the 1H17 results to provide further evidence that the group’s self-help strategy is on track. As well as announcing a more than doubling of underlying PBT we expect the company to declare a 10% increase in the interim dividend and deliver a material decline in net debt.
10 Nov 16
N+1 Singer - Speedy Hire - Further cost cuts and a better revenue performance drive upgrades
Today’s H1 pre-close statement highlights that after a slightly better revenue performance and further costs (>100 employees laid off), PBT is now expected to be ahead of full year expectations at c.£11.0m vs. our forecast of £9.8m. We will reflect this in our forecasts in due course. With a number of self help measures now executed, trading is continuing to stabilise. However, whilst Speedy’s revenue trend is positive, it is still undergoing significant operational changes, implying further exceptionals this year. The outcome of the recent EGM, with Jan Åstrand to remain as Chairman (63% in favour) and David Shearer to join the Board as a NED (53% in favour), may yet prove to be a difficult compromise. We remain at Hold, awaiting further clarity on the Group’s medium term strategy. The shares are optically expensive on a P/E basis and in line with the peer group on an EV/EBITDA basis. However, we believe a sensible price floor is Speedy’s 35p tangible book value where we have set our target price (unchanged).
30 Sep 16
LIBERUM: Speedy Hire* - Further evidence of the strategy in action
The recent announcement of the sale of its large mechanical plant fleet to Ardent for £14.4m is yet further evidence of the new strategy in action. We believe that the exit from such non-core activities will help accelerate management’s efforts to improve utilisation and returns.
30 Aug 16
LIBERUM: Speedy Hire* - Site visit highlights sources of upside
Our recent site visit provided valuable insights into the significant strategic and operational progress made to date by the new management team. Numerous examples of efficiency measures support our view that the company should continue to outperform in relation to both cost rationalisation and asset management. The likely improvements in asset availability alongside strengthened sales efforts should also support further increases in utilisation and returns.
10 Aug 16
LIBERUM: Speedy Hire - Self-help strategy on-track
We believe that the AGM statement provides further signs that the group’s self-help strategy remains on-track. As well as highlighting the crucial return to top-line growth, it appears that the company continues to outperform in relation to both cost rationalisation and working capital management.
13 Jul 16
N+1 Singer - Support Services - Week ahead – Caution ahead of updates from Lavendon and Speedy
We are expecting news from both Lavendon (half year trading update – 14th July) and Speedy (AGM statement – 13th July) next week. Having highlighted our concerns on 27th June regarding the outcome of the EU Referendum, we are cautious ahead of next week’s announcements. We expect both Speedy and Lavendon to signal that it is too early to predict the full repercussions of Brexit, in line with recent statements from many construction and housebuilding companies. Despite this, recent data suggests that the construction market is already beginning to feel the impact of Brexit uncertainty, with the Markit UK Construction PMI registering its weakest reading for seven years in June (46.0 vs. 50.7(F) and 51.2 last). The construction market accounts for c.49% of Lavendon’s sales and c.48% of Speedy’s. Both Lavendon and Speedy have customers across all tiers (major contractors down to SMEs). The outlook for both UK businesses is therefore highly uncertain and whilst we leave our forecasts unchanged, earnings risk is clearly to the downside. Negative sentiment towards both companies’ shares is likely to persist in the short term, but we believe that tangible book value should provide a sensible share price floor. We therefore set our price targets accordingly (FY1 tangible book values: Lavendon – 114p, Speedy Hire – 35p) and remain at Hold in both cases.
Speedy Hire Lavendon Group
08 Jul 16
N+1 Singer - MS - Support Services - Chaos and uncertainty cloud sector view
It is still clearly too early to predict the full repercussions of the vote to leave the EU. The events of the past couple of days have been seismic enough with the resignation of the Prime Minister, the prospect of another Scottish independence referendum and the disintegration of the Shadow Cabinet. There is no timetable for Brexit and there is speculation that a compromise deal may be sought or even that the Scottish Parliament could veto the whole thing. None of this is likely to be resolved quickly and there is a threat of UK recession. Some are even anticipating a structural rather than a cyclical downturn. We sincerely hope that these concerns are overdone but the current uncertainty does somewhat undermine our sector view of a benign economic backdrop. As a result, we retire our BUY recommendations on Speedy Hire and Northgate, given the historic cyclicality of both businesses. If we were to look for safer havens, we would highlight Restore and Vp, both of which we would expect to outperform peers.
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27 Jun 16
LIBERUM: Speedy Hire - Positive signs of recovery in progress
With an in line set of FY16 results, attention is likely to focus on the progress made by the new management team in turning around the business. Although still early days, we would point to the outperformance in both cost rationalisation and working capital management.
17 May 16
Reassuring numbers; strategy on track
As flagged in the pre-close update, Speedy’s full year results are in line with expectations, with PBT at £5.0m. The Company is beginning to see a positive impact from the actions taken by the new management team. It has successfully renewed its strategic accounts, with no major account losses throughout the year, and the SME accounts are starting to turnaround. The restructuring programme is now complete and no further exceptional charges are expected. The International division saw a return to profitability, with operating profit of £0.6m (2015: loss of £5.6m). This is an encouraging set of results and the business is now well placed for recovery. We continue to believe Speedy’s shares are undervalued, trading close to its tangible book value of 36p. We retain our Buy recommendation and 50p target price and expect to retain our PBT forecasts.
17 May 16
Chemicals Consumer and FX bright spots lifting the gloom | First Derivatives (FDP LN) Consensus beat highlights strength of sales momentum | Hill & Smith Holdings (HILS LN) Strong trading again; more upgrades | IDOX (IDOX LN) Strong trading update | Lookers (LOOK LN) Strong trading in all divisions and cashflow running ahead of budget | OMG (OMG LN) Record H1, strength on multiple fronts | Raven Russia Ltd (RUS LN) Conditional issue of convertible preference shares | Speedy Hire (SDY LN) Reassuring numbers; strategy on track | Ten Alps (TAL LN) Trading Update | Victrex (VCT LN) Restoring investor confidence | Zytronic (ZYT LN) Trading in line; Mix improving
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17 May 16
Anticipating reassuring numbers tomorrow
As flagged in the pre-close statement, tomorrow’s results (17th May) should be in line with expectations at the PBT level. We expect the commentary to focus on the strategic changes that have been made within the business and the operational improvements that these changes are delivering. In the current year (FY’17), we are forecasting PBT of £7.6m, assuming only marginal underlying growth plus the benefit of the identified cost savings. Speedy’s share price is trading close to its tangible book value of 36p. We believe that the following three factors should support a higher share price: top line stability, delivery of strategic improvements, and an end to exceptional restructuring costs. The prospect of consolidation within the equipment hire subsector should also provide support to the share price. We retain our Buy recommendation and 50p target price.
16 May 16
FY’16 concludes in line with expectations
Speedy’s pre-close trading update confirms that full year results are expected to be in line with expectations at the PBT level. The statement also highlights further strengthening of the Board. FY’16 marked a challenging year for Speedy, with two profits warnings, a management overhaul, and a large hit to the share price. However, the remedial actions put in place by the Group’s new CEO, Russell Down, are taking effect and trading appears to have stabilised. Our FY’17 PBT forecast of £7.6m assumes only marginal growth in PBT plus the benefit of the identified cost savings (c.£6m of people costs). The outlook for Speedy’s core end markets is supportive. We therefore remain confident in our forecasts. Trading close to its tangible book value of 36p, we continue to see value in Speedy’s shares. We reiterate our Buy recommendation and target price of 50p.
31 Mar 16
Bolt-on rail acquisition; trading in line with expectations
Speedy Hire has this morning announced a small bolt-on acquisition of OHP Limited, a specialist rail hire business, for an initial consideration of £1.5m, along with the assumption of net debt of c.£1.7m. The acquisition strengthens Speedy’s offering in rail and is expected to be slightly earnings enhancing in the first year following acquisition. Speedy has also confirmed it is trading in line with expectations. This is encouraging and suggests that the turnaround measures put in place by management are taking effect.
08 Feb 16
Interims confirm early signs of improvement from remedial measures
This morning’s interim results highlight a very challenging period for Speedy but confirm that the remedial actions taken by the company’s new CEO, Russell Down, are beginning to benefit the Group. Now, the company has a clearer understanding of the SME market and is putting in place more targeted initiatives to win business here. The network is increasingly better resourced with the correct types and quantities of assets. Cost cutting is on track to deliver the c.£13m reduction in administrative costs for FY’16. The results are in line with our forecasts and as expected, revenue declined 12.8% to £165.0m in the period. As we expected, PBT in the first half stood at £2.0m. Whilst the full benefit of remedial actions will be realised over the medium term, we continue to think Speedy Hire’s very significant discount to net assets (42p at the interim stage) is unwarranted.
10 Nov 15
Liontrust Asset Management (LIO LN) On track to hit FY expectations | Mobile Streams (MOS LN) Trading update | Oxford Instruments (OXIG LN) Guidance reiterated | Redcentric (RCN LN) Steady as she goes | Speedy Hire (SDY LN) Interims confirm early signs of improvement from remedial measures | Trifast (TRI LN) Strong H1 growth; guidance reiterated | UBM (UBM LN) Trading update
SDY LIO MOS OXIG RCN TRI UBM
10 Nov 15
Remedial actions underway; discount unwarranted
After two profit warnings this year, a management overhaul, and the share price falling below tangible book value, we believe that Speedy’s shares are undervalued. Speedy has a strong asset backing and a manageable debt position, and there are no imminent signs of a downturn in its core end markets. We set our target price at 50p based on an FY’17 price/book value of 1.1x. This is a 27% discount to the Group’s historic multiple and represents c.72% upside to the current price. A number of measures are now in place to drive improvements in performance. We expect the interim results on 10th November to confirm that the company has begun to see the benefit of these measures going into H2.
06 Nov 15
Equipment hire shakeout presents opportunities
It has been an exciting couple of weeks for the equipment hire subsector. Recent IPO HSS Hire warned, blaming the weather and the General Election. Northgate hit a wall of depreciation and currency headwinds while also flagging internal issues in its UK business. Worse still, Speedy Hire collapsed for multiple company-specific reasons, prompting the resignation of newish CEO Mark Rogerson. It is unlikely that recent profit warnings from Speedy and HSS are entirely unrelated but the common theme is most likely to be a temporary General Election effect. Despite the strong performance of the past few years, in our view the cycle has further to run with recent share price movements creating some attractive opportunities. We are strong supporters of Lavendon (Initiated as Buy), Northgate (Hold to Buy) and Vp (Corporate).
SDY LVD VP/ AHT HSS NTG
14 Jul 15