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First Bus demand continues to recover, benefitting from the £2 price cap, and the company expects further progress in FY24. Demand for open-access rail is also robust, and the company expects profit from non-management-fee-based operations to be ahead of our forecasts. We reiterate our Buy rating.
FirstGroup plc
Given the limited time to the FY23 results, we are not changing our forecasts for these developments. However, we trim our valuation by 3p to 140p to reflect the non-renewal of the TPE franchise. With a robust balance sheet and significant growth opportunities, we reiterate our Buy rating.
The government decision to not exercise the two-year extension option in FirstGroup’s TransPennine Express (TPE) rail contract is disappointing. The move comes despite the government acknowledging that many of the operational problems stem from factors outside of FirstGroup’s control, and that transferring TPE to the state-backed operator will not fix them. The impact on our earnings estimates is modest, with negligible implications for value. Our recommendation remains BUY with an unchanged SOTP-based target price of 165p.
Our valuation falls to 143p from 153p due to the lower margins but we retain our Buy rating given 37% upside and the c.3% dividend yield.
UK Bus passenger volumes have continued to recover, helped by the government-funded £2 fare cap. The driver shortage has also moderated. The group’s open access rail operations have experienced stronger than anticipated passenger demand in H2. As a result, management sees profits for the current year ahead of previous expectations, but with an unchanged outlook for next year. We raise our March 2023E EPS forecast by 23% accordingly. Our recommendation remains BUY with an unchanged SOTP-based target price of 165p.
Successful applications for government funding have allowed FirstGroup to accelerate its investment in electric buses and associated infrastructure. FirstGroup is using its balance sheet flexibility to make the most of government financial support for the transition to zero emissions buses while it is available. Our recommendation remains BUY, with an unchanged SOTP-based target price of 165p.
The Department for Transport has exercised the extension option within FirstGroup’s existing contract to operate South Western Railway services. FirstGroup will remain the operator until May 2025 on the existing contract terms. While this is already reflected in our estimates and valuation, we nevertheless view the confirmation as positive. Our recommendation remains BUY with an unchanged SOTP-based target price of 165p.
FirstGroup is to acquire Ensign Bus, a local bus operator in Essex. The business also has a B2B contract unit and a bus refurbishment operation. Ensign Bus has a fleet of 55 buses and a high value depot. Consideration has not been disclosed but we expect this to be modest. We see the deal as a complementary bolt-on acquisition. Our recommendation remains BUY with an unchanged SOTP-based target price of 165p.
FirstGroup: Recovery, growth and attractive returns In the latest Transport podcast we talk to CEO, Graham Sutherland and CFO, Ryan Mangold of FirstGroup. We discuss (1) the investment case; (2) why Graham joined FirstGroup; (3) bus passenger journey recovery and growth; (4) management-fee rail; (5) open access rail; (6) other rail businesses; (7) growth opportunities and M&A; and (8) disposal proceeds and capital allocation. Alexander.Paterson@peelhunt.com Click below to listen to our podcast.
We downgrade FY23E PBT by 4%, with upside from First Rail insufficient to offset lower First Bus margins. However, we upgrade subsequent years. Our SOTP remains unchanged at 153p and we reiterate our Buy recommendation.
Benefiting from being able to focus on the UK operations following the disposals of recent years, FirstGroup has delivered a decent performance despite tough conditions. Open access rail and the other non-franchised rail operations have delivered a particularly good performance. We do not expect to change our group forecasts particularly and reiterate our Buy rating and 153p TP.
The interim results were in line with our forecasts overall. Bus showed a YoY fall in operating profit, reflecting cost pressures and weaker government pandemic support. Passenger volumes have continued to recover, with fare increases coming through, so revenue was above our forecasts. A more robust approach to underperforming capacity should see margins improve, although the full effects will not be evident until next year. We cut current year estimates, mainly for the slower Bus recovery. Our recommendation remains BUY, with an unchanged SOTP-based target price of 165p.
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Anticipated proceeds from the Transit earnout of c.$85m (c.£74m) fell well short of our admittedly bullish assumption, but were even below book value. Attention now shifts to the pandemic recovery in Bus, the completion of the transition to NRCs in Rail, and the allocation of the proceeds from the earnout and the Greyhound balance sheet unwind. We continue to see upside, especially if the government’s commitment to the National Bus Strategy is confirmed. We reduce our SOTP-based target price to 165p from 180p, but our recommendation remains BUY.
We valued the earnout at US$240m and so the likely shortfall of US$155m reduces our target price by 17p, from 170p to 153p. Given c.40% upside, we reiterate our Buy rating. We expect to hear more about the use of the proceeds from the earnout and better than expected net Greyhound property disposals of US$160m since the start of FY23 at the interim results in November.
FirstGroup has reached agreement on the sale of almost all of the remaining legacy Greyhound real estate assets for net proceeds of $140m. Completion and the receipt of proceeds is expected to occur in December 2022. There remain some other assets and liabilities that have yet to be fully crystallised, but the anticipated net proceeds from the residual Greyhound balance sheet are now expected to be in excess of $160m, ahead of the previous target of $155m.
The DfT has announced a further extension to its COVID financial support for the bus industry. Regional bus services in England will benefit from a further £130m of funding, with the end date of the current scheme extended from October 2022 to March 2023. We see this as a clear positive, smoothing the transition back to commercial operations and giving more time for passenger volumes to recover fully. Even then, the industry funding that was available pre-pandemic will still be enhanced, by the £3bn of National Bus Strategy funding through till 2025.
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Prospective bidder I Squared will not make an offer for FirstGroup having had its final indicative terms rejected. It appears these terms offered a modest reduction in uncertainty, but no meaningful improvement in aggregate consideration. We see clear upside potential in FirstGroup from crystallising incremental sources of value, completing the turnaround in UK Bus, and demonstrating reliable earnings from new-style Rail contracts. We trim our SOTP-based target price to 180p from 190p but reiterate our BUY recommendation.
Successive extensions to the PUSU deadline suggest that FirstGroup’s board see a potential path to an acceptable takeover offer from I Squared. We see the crystallisation of the residual Greyhound balance sheet and the Transit earnout as offering a potential route to bridging the value gap. We shift our valuation focus to a takeout basis, raising our SOTP-based target price to 190p from 160p, and reiterate our BUY recommendation.
Primed for recovery and growth FY22 results were ahead of our forecasts. The disposal of the North American businesses leaves the group as a focused UK bus and rail operator, with the GWR franchise awarded for a further six years and some exciting growth businesses. The maximum earnout of First Transit has increased by US$50m and the group now expects to exceed US$155m in value realised from Greyhound. We update our forecasts, trimming First Bus FY23E but increasing FY24E and we now assume that rail franchises are held for their full term and do not expire at the earliest point. We reiterate our 170p TP and Buy recommendation. Alexander.Paterson@peelhunt.com 2-page note
The recent results showed progress in the recovery from the pandemic, improved confidence and upside potential in crystallising value from residual North American assets, and further evidence of low risk long-term earnings streams in Rail. We see significant long-term opportunities and the potential to return cash to shareholders that is not reflected in the current valuation. We raise our SOTP-based target price to 160p from 135p, but even this level is still conservative, in our view. We reiterate our BUY recommendation.
The results were inevitably complex as a result of the North American disposals. The continuing performance appeared to be ahead of our forecasts, and the 1.1p dividend is the first payout in a decade. Current trading is in line, although there is understandable uncertainty over the pace of pandemic recovery and the macroeconomic environment. A new three-year contract for GWR extends the group’s visibility of earnings in Rail, and highlights the favourable asymmetric profile of the potential income streams.
An unsolicited approach from an infrastructure investment manager highlights the value in FirstGroup. We consider the level and structure of the indicative proposal to be unattractive (118p per share in cash, plus contingent value of up to 45.6p depending on the Transit earnout and Greyhound value realisation). We see a minimal premium being offered for the business, while the contingent value rights do not reflect the full potential of FirstGroup’s incremental sources of value and leave shareholders exposed to ongoing downside risk.
A potential bid, and we ascribe more contingent value I Squared Capital Advisors has made a series of unsolicited, conditional proposals, with the latest providing 118p of cash per share and a contingent right of 45.6p, based on the outcome of the First Transit earn-out and net proceeds from Greyhound. FirstGroup strongly advises shareholders take no action. We do not see the offer as compelling, and increase our target price from 125p to 170p to reflect a higher probability of retaining the UK rail franchises for longer and a greater proportion of the contingent value release. We reiterate our Buy recommendation and outline our views in the attached podcast. Alexander.Paterson@peelhunt.com To listen to Alex’s podcast, click the image below 2-page note
The Department for Transport has announced the regions and cities that are to receive funding for their Bus Service Improvement Plans. This funding forms part of the £3bn committed under the National Bus Strategy. The list appears to be biased towards larger towns and cities, probably reflecting a desire to maximise the number of people who can potentially benefit. Of course, such areas are more naturally supportive of bus usage. The effectiveness of BSIPs remains to be seen, but having pro-bus policies implemented by national government and local councils, and an unprecedented boost to funding, can only be positive for the industry’s growth prospects.
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Public transport services offer governments quick wins on GHG emissions, road congestion and a range of other high-priority policies. These can be delivered before the industry transitions its own fleet to zero-emissions vehicles. The imperative to drive growth in public transport usage is increasingly reflected in government policies and funding. However, neither the recovery from the pandemic nor the pivot to sustained industry growth is reflected in valuations.
The recent trading update provided reassurance that Omicron has not had a lasting impact on bus volumes. However, it does appear to have delayed the return to normal trading. Our forecasts for March 2023E appear over-optimistic and we adjust them accordingly. We remain positive on the long-term opportunity from supportive government funding and policies. Also, opportunities to crystallise incremental value are not fully reflected in the current valuation. We raise our SOTP-based target price to 135p from 123p and reiterate our BUY recommendation.
Focused, undervalued, with upside emerging in rail 1H results were slightly better than anticipated and the group remains on track to deliver its objectives of a 10% bus margin and, following the disposal of the North American businesses, significantly reduced group costs and leverage. Plan B causes us to trim 1H forecasts, but we see this as a temporary issue and expect bus passenger volumes and revenues to resume their recovery shortly. We see considerable opportunities for the group in rail, particularly outside of operating contracts through affiliates, open access and technology. We upgrade our TP from 107p to 125p and reiterate our Buy recommendation. Alexander.Paterson@peelhunt.com 2-page note
We update our forecasts to reflect the reduced share count from the full take up of the £500m tender offer. There is some risk that the Omicron variant may lead to more cautious travel behaviour and delay the recovery in passenger volumes, but we remain confident in the eventual recovery. Beyond this, FirstGroup has the opportunity to crystallise multiple sources of value over the medium term. We raise our SOTP-based target price to 123p from 115p as a result of the accretion from the tender offer. Our recommendation remains BUY.
Value release, UK focus, significant upside potential Greyhound has been sold to a FlixMobility subsidiary for $172m in cash, leaving the group as a pure UK bus and rail operator. Property with a net market value of $176m has been retained, and will be initially leased back at market rates and sold over the next five years. The $348m and $197m of proceeds from the sale of First Student and First Transit, held to cover legacy net liabilities and other items, exceed this $367m net liability value by $178m (£128m), £77m more than we had expected. We raise our TP to 107p, reiterate our Buy rating and see significant upside potential to our valuation. Alexander.Paterson@peelhunt.com 2-page note
FirstGroup has sold Greyhound to FlixMobility for cash consideration of $172m. FirstGroup will be retaining various Greyhound properties, as well as legacy liabilities against which it had previously earmarked a portion of the proceeds from the Student/Transit sale. The net proceeds are above our assumed value. This completes the portfolio rationalisation process, leaving the group focussed on the UK. Current trading for the continuing group is in line, but the year-end net debt outlook has improved by £80m-£90m. We raised our SOTP-based TP to 115p from 105p. Our recommendation remains BUY.
The results were inevitably complicated by the North American disposals. These, along with start-up costs for new rail operations, masked an encouraging improvement in Bus. While there are potential downside risks to estimates in the short term if COVID restrictions continue to tighten, the most recent changes do not materially impact the most important reasons to travel by bus (education, leisure, shopping). We leave our forecasts unchanged. Our recommendation remains BUY with an unchanged SOTP-based target price of 123p.
How would you like the cash? FirstGroup has completed the sale of First Student and First Transit and will use the proceeds to reduce debt and other liabilities, returning £500m of cash to shareholders. We assume that this will be through a share buyback programme at 100p and update our forecasts to show the continuing parts of the group only. The FY21 results were slightly better than we had assumed across all continuing divisions, particularly at Greyhound and First Rail. We increase our target price from 90p to 100p to reflect the increased distribution to shareholders and raise our recommendation from Hold to Buy. Alexander.Paterson@peelhunt.com
The FY results contained no surprises. The headline figures were ahead of our forecasts, but benefitted from a revised presentation of higher self-insurance provisions (now classed as exceptional). A respectable performance on support from governments and customers that reflected the essential services provided by the group. CEO Matthew Gregory is to leave, with the bulk of the portfolio rationalisation done. The recovery from the pandemic is on track, but neither this nor the growth potential from the National Bus Strategy is reflected in the valuation. Our recommendation remains BUY with a SOTP-based TP of 105p.
The UK government has announced a £226.5m funding package to support local bus services in the English regions. This will follow on from the CBSSG scheme that has supported operations at breakeven levels during the worst periods of the pandemic. Further financial support for the industry as it transitions out of emergency support is welcome. However, full details of how the funding will be allocated are still awaited.
FirstGroup has been awarded new National Rail Contracts for its South Western Railway and TransPenninne Express operations. The terms are largely as expected, with no revenue risk and minimal cost risk. The annual management fees are more heavily skewed towards performance incentive fees than we had assumed. However, our forecasts can be met with less than the maximum bonus payout. A clear step towards delivering more stable and sustainable earnings in UK rail.
Social distancing requirements on buses are to be modified from next week. The key change will be to allow adjacent forward facing seats to be occupied by passengers. This restores capacity to close to normal levels. However, the CBSSG government funding remains available. We see this as a clear positive for bus operators. The removal of capacity restrictions is crucial to commercial bus operations returning to profitability, but the CBSSG safety net remains in place, guaranteeing breakeven at worst.
FirstGroup’s exit fee agreement for the TransPennine Express franchise was better than we had assumed. It releases capital that could be used to enhance the planned return of cash to shareholders. There is scope for further cash to be released as other liabilities are settled. We raise our SOTP-based target price to 105p from 100p. We believe the market continues to overlook the long-term importance of resetting the group’s balance sheet and the growth potential in UK public transport. Our recommendation remains BUY.
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The sale of the Student and Transit divisions will transform the business mix and financial position of FirstGroup. While attractive businesses are being sold, the outlook for the ongoing UK bus and rail businesses is improving. Crucially, the disposal proceeds allow the group to reset its balance sheet, dealing with legacy liabilities while giving headroom to deal with short-term pandemic uncertainty and invest for future growth. Our recommendation remains BUY, and we raise our SOTP-based target price to 100p from 80p.
Time and risk value for returns, but now a solid base FirstGroup has announced the disposal to EQT of First Student and First Transit for $4,315m, plus a $240m earnout for First Transit. We see this as a good price. However, whilst the group’s liabilities were similar to what we expected at the end of FY21, and net debt slightly lower, the group is using more of the proceeds to pay down these liabilities than we expected. Whilst shareholders may receive much more than the £365m proposed, it will be over time and with some risk factors. We update FY21E forecasts for better trading than we expected but cut our target price to 90p from 115p and our rating to Hold from Buy. Alexander.Paterson@peelhunt.com 3-page note
The sale of First Student and First Transit to EQT Infrastructure has been agreed for a headline EV of $4.6bn (£3.3bn). On a cash plus debt transferred basis, the £2.4bn consideration is in line with our assumption with our SOTP valuation. Management anticipates applying the proceeds to address legacy liabilities, to reduce debt and to fund a 30p per share (£365m) return of value to shareholders. We see the disposal as a clear positive, allowing the group to be simplified, with reduced leverage and legacy liabilities addressed.
The government’s first ever National Bus Strategy highlights the industry’s importance to key policy priorities, including decarbonisation. Partnerships between bus operators and local councils are to be mandatory. Implemented well, and backed by a £3bn funding pot, these have the potential to reverse the long-term decline in passenger volumes. However, the franchising alternative creates theoretical local market exclusion risk. This is a potential huge positive for the UK bus industry, but much depends on the local implementation detail.
We revise our forecasts to reflect a slower and delayed return to normality. We still see a full recovery in activity and earnings from the pandemic impact, underpinned by the deployment of a vaccine. Although the valuation is now less extreme, we still see upside potential even without including probable additional rail contracts, or a knockout disposal valuation for North America. Our recommendation remains BUY with an unchanged target price of 80p, based on our SOTP valuation.
UK rail a positive value driver The interim results were better than we expected, with group underlying operating profit (UOP) of £10.4m compared to our £2.3m forecast. First Transit, First Bus and First Rail trading was robust and ahead of our forecasts, and more than offset higher losses than we had assumed from First Student. The agreement relating to the termination of previous rail franchises has also progressed better than we had expected and the likely sums to settle are lower than we had forecast. Discussions with credible buyers continue over First Student and First Transport. We reiterate our 115p target price and Buy recommendation. Alexander.Paterson@peelhunt.com 2-page note
The interim results showed a loss, reflecting the impact of the pandemic on passenger demand and the group’s operations. A deal on the exit fees for the SWR and West Coast franchises is positive, bringing further clarity on the balance sheet and removing potential risks. Although the outlook is uncertain, we expect a better H2 with a higher level of operations. We believe the recovery potential and improving rail situation is not reflected in the valuation.
The COVID-19 crisis has had a dramatic impact on public transport usage. The groups have remained cash generative to date, albeit with external assistance. The transition to normality is taking longer than we had originally expected. We adjust our short-term forecasts accordingly. However, we still see demand reverting to pre-crisis levels within 12-24 months of the start of the pandemic. Current valuations imply a significantly worse outturn that we consider improbable. We see buying opportunities all round.
The DfT has replaced the EMAs with less generous ERMA terms that ensure the continued operation of train services by incumbent operators at low levels of financial risk. The duration of the ERMAs varies, but the intent appears to be to pave the way for a transition to non-revenue risk concessions to be negotiated with incumbent operators.
We revise our forecasts to reflect a slower recovery from the pandemic, offset by better short-term support from customers and government. Liquidity remains strong and stable, and management anticipates significant headroom to the leverage covenant at the September 2020 test.
FirstGroup is dependent upon ongoing government and customer support to see it through the current crisis. We see the continuation of this support as highly probable, but not guaranteed.
A bigger and earlier impact from COVID-19 challenges than anticipated saw the results fall well short of expectations. Exceptional items were substantial, including further impairments for Greyhound and additional North American insurance provisions.
In the face of shutdowns, lockdowns and social distancing, contractual revenues have been more resilient, and cost bases proven more flexible than expected. This reflects self-help measures, customer help and government assistance.
Trading in line overall, with strength at GWR offsetting weakness at Greyhound. No Coronavirus impact to date, but there are downside risks to varying degrees across the business.
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The DfT has awarded the West Coast Partnership rail franchise to First Trenitalia, a 70/30 JV between FirstGroup and Trenitalia. While the revenue growth assumptions in the bid do not appear stretching (mid-single digit CAGR), and management expects margins to be at the upper end of recent awards (implying 3-4%), the group's recent poor track record in rail franchising may see a sceptical reaction by investors.
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FirstGroup has defeated the EGM resolutions proposed by its largest shareholder. Nonetheless, the Chairman is to step down at the AGM next month amid material minority support for the activist's proposed board changes.
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The strategic pivot to portfolio rationalisation is welcome and overdue. Exiting Greyhound and UK Bus may realise sub-optimal value on a standalone basis, but refocussing resources improves the chances of maximising value in the remainder of the group.
FY headline figures were ahead of expectations, but flattered by Rail with non-rail divisions light of our estimates. Substantial exceptionals included provisions for the SWR franchise and historic North American insurance liabilities.
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An inline trading update supporting an unchanged outlook should reassure. First Student was the only division where performance was good in absolute terms.
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An encouraging H1 performance, albeit in the seasonally weaker period. There were good improvements in margins and profits at First Student and UK Bus, and progress at Transit. UK Rail posted lower profits as expected, and we see the outlook as challenging. However, Greyhound continued to deteriorate and the outcome of the strategic review may disappoint, with a continued focus on organic turnaround rather than anything more radical. Overall, there was some evidence of progress in the figures, but we see organic turnarounds at the divisional level as carrying high execution risk in aggregate, but more radical action on the portfolio appears to not be forthcoming.
Bloomberg News has reported that FirstGroup has attracted interest from private equity groups. Such interest seems inevitable in the wake of prior interest from Apollo private equity funds and hints of a more rigorous review of the business by management. It remains to be seen whether this translates into anything formal, either for parts of the business or for the group as a whole. We see an opportunity to bridge the gap between FirstGroup’s market-leading positions and its sub-par financial performance. Obstacles remain, notably the pension deficit and UK rail franchises, but none are insurmountable.
The planned restructuring at Greyhound Canada hints at a more radical approach by management. Management has announced the complete withdrawal from four provinces, leaving Greyhound Canada focussed on more densely populated areas in two provinces. We are hopeful that this might be indicative of a bolder approach being implemented more widely across the group. Challenges are widespread, so shrinking the number of problems to be dealt with must be a priority. The valuation reflects past disappointments, giving little credit for realising value from the group's market leading positions or delivering a turnaround. Our recommendation remains BUY with a 110p SOTP-based target price.
The provision for the TPE rail franchise and a subdued trading outlook are disappointing. The CEO's departure brings an opportunity for a fresh approach. The attempt to execute multiple multi-year organic turnarounds has failed. The biggest opportunity, First Student, has been delivered and leverage reduced, but UK Bus remains challenged and new problems have emerged at Greyhound, Transit and UK Rail. Shrinking the number of problems should be a priority. Upside potential in part of the portfolio may need to be sacrificed to improve the chances of delivering the recovery elsewhere. Both value and risks remain substantial. We cut our SOTPbased TP to 110p from 125p but retain our BUY recommendation.
Results broadly in line with downgraded expectations, with a shortfall in First Student largely balanced on the central cost and interest lines. The CEO's departure should be viewed as an opportunity to pursue a different approach, although there is a lack of clarity as to what that might be at this stage. The provision against future losses at the TransPennine franchise was a surprise, although there had been concerns about the outlook. The failure to restore the dividend is disappointing, but not surprising given the TransPennine provision and the ongoing pressure on current trading in some divisions. Value remains, but realising it remains a challenge.
FirstGroup has rejected a potential all-cash offer from Apollo, describing the approach as opportunistic and fundamentally undervaluing the group. We have long considered FirstGroup to be undervalued as recent poor performance has caused the market to overlook its leading or near-leading positions in all of its main markets. A takeover of the group would be far from straightforward, with UK government approval required for change of control of rail franchises and pension deficits to navigate around. Nonetheless, the approach ought to act as a catalyst for more urgent action by the board to crystallise value and/or for more credit for the potential value of the group being reflected in the share price. Our recommendation remains BUY with a SOTP-based TP of 125p.
We cut forecasts after the recent disappointing update. EPS cuts of up to 8% are shielded by a lower tax rate, with PBT cuts of up to 17% more representative of the underlying challenges. Significantly weaker performance at Greyhound was concerning and disappointing, with no clear path to recovery. US dollar weakness adds a translation headwind for 70% of earnings. The recent share price weakness is understandable from a rail sentiment and earnings momentum perspective, but we believe value is being overlooked even with the challenges at Greyhound. We cut our SOTP-based TP to 125p from 165p, but our recommendation remains BUY.
Management is cutting its outlook for March 2018E “slightly” but is still expecting substantial cash generation. Most divisions saw similar trading trends as in H1, but Greyhound experienced a marked deterioration in its long haul business in the key holiday season. All three North American divisions were disrupted by severe weather conditions in January. Refinancing to deliver annual interest savings of £14m from next year and a one-off charge of £11m this year. The US tax changes are expected to reduce the group’s effective tax rate from the low 30s to the mid-20s from the current year. Given that this should have led to a c.9% uplift to EPS, the apparent reduction in the FY outlook despite this is especially disappointing. We still see value in FirstGroup, but the short-term challenges are disappointing.
Trading challenges (UK Bus) and costs pressure (Student) in Q3 means that management's outlook for group operating profit in the current financial year is slightly lowered. Medium term objectives remain intact.
Even though significant challenges remain, the company appears to have broken the back of its restructuring and margin enhancement programmes in the UK and North America. There are encouraging signs that meaningful margin improvements are underway. We upgrade our recommendation from Hold to Buy with a 120p target price.
Underlying interim earnings in 2014/15 fell short of our expectations, with UK bus margins down to 3.5%. Underlying EPS fell 33.3% to 1.2p per share. We see few catalysts in the near term and maintain our Hold recommendation and 120p target price.
Few surprises in today's pre-close update. Mixed performances in North America and ongoing progress in UK Bus. While the valuation looks attractive, we see few catalysts in the near term.
Trading is in line with management's expectations, with attractive price increases in North American school bus and further progress in UK bus. Nevertheless, given the lack of short-term earnings momentum we retain our Hold recommendation.
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