A G Barr (BAG LN) Weak H1 update. We move to Sell | BBA Aviation (BBA LN) Signature outperforming; ERO still challenging | Dialight (DIA LN) Sales decline and high non u/l costs, but strong cash-flow | Elementis (ELM LN) Challenging H1, well positioned for future recovery | Greggs (GRG LN) A successful first half and a reassuring start to H2 | RhythmOne (RTHM LN) Another positive step | SDL (SDL LN) Building confidence in strategy execution | Spirent Communications (SPT LN) Headwinds mask underlying progress | T. Clarke (CTO LN) Solid H1 performance and confident outlook
Companies: SDL SPT GRG DIA BAG CTO ELM BBA RTHM
As we said in March, this promises to be a big year and, on balance, we continue to feel that a group intently focused on business and general aviation will ultimately be a more valuable one. Trading is in line with expectations and the integration of Landmark is progressing as planned. Landmark integration and debt reduction remain the keys in FY16 and we await further information on the future of ASIG. We remain at Hold.
Companies: BBA Aviation
During FY16 BBA will integrate the transformational acquisition of Landmark, look to restructure ERO, work to reduce debt levels and also hope that the US economy remains positive enough to help bizjet activity. It promises to be a big year and, on balance, we continue to feel that a group intently focused on business and general aviation will ultimately be a more valuable one. We have prudently reduced forecasts (see below) but nudge up our target price to 204p (14x FY16 EPS) reflecting underlying Signature strength. We remain at Hold. Forecasts updated
BBA Aviation (BBA LN) Amended forecasts; important year ahead | Craneware (CRW LN) In line interims. Value cycle gaining momentum? | Dialight (DIA LN)
Underlying EBIT and EPS in line but non-underlying costs continue | Eckoh (ECK LN) New 5-yr contract with Ideal Shopping Direct | Gresham Computing (GHT LN)
CTC-led strategy provides LT platform for growth | John Menzies (MNZS LN) Tough year for aviation; structure being evaluated | St Ives (SIV LN) Interims – 16% organic growth from strategic marketing
Companies: CRW DIA ECK GHT MNZS KCT BBA
The Group is to be transformed by the acquisition of Landmark which will cement the FBO business as the key driver of profitability within the Group. It would not surprise us to see future disposals from the other business areas, perhaps eventually delivering a 100% FBO focused Group, and the first sign of that is given today with a comment that approaches have been made for ASIG. Landmark integration and debt reduction are key in FY16, we await the analyst presentation but expect to remain at Hold.
As we said last week, we expected Aftermarket to be subdued following recent peer updates, but see a positive medium term future for the transformed Group assuming that US bizjet traffic remains robust. We expect to make little change to our numbers and remain at Hold.
BBA Aviation (BBA LN) Signature solid; ERO subdued | Ground Rents Income Fund (GRIO LN) Revaluations drive NAV higher | Sigma Capital Group (SGM LN) Gatehouse Phase 2 begins: 900 new PRS homes | Sinclair IS Pharma (SPH LN) Rejuvenated growth | Vectura Group (VEC LN) Phase III start for triple therapy programme QVM149
Companies: GRIO SGM SPH BBA VEC
The Group is to be transformed by the acquisition of Landmark which will cement the FBO business as the key driver of profitability within the Group. It would not surprise us to see future disposals from the other business areas, perhaps eventually delivering a 100% FBO focused Group. In the short term, we expect Aftermarket to be subdued following recent peer updates, but see a positive medium term future for the Group assuming that US bizjet traffic remains robust. As the acquisition process etc. plays out and the aftermarket challenges remain, we stay at Hold with a post rights issue target price of 186p.
AMINO TECHNOLOGIES (AMO LN) Trading update reassures | BARR(A.G.) (BAG LN) Q3 in-line but trading environment remains tough | BBA AVIATION PLC Reshaped Group; Aftermarket Caution | CONSORT MEDICAL PLC (CSRT LN) Interims on track | SUMMIT THERAPEUTICS PLC (SUMM LN) First research milestone achieved in strategic alliance | WYG PLC (WYG LN)Interims in line, substantial growth in order book
Companies: BAG AMO CSRT SUMM WYG BBA
The $2,065m purchase of Landmark Aviation is a transformational deal for BBA Aviation, extending its leadership in the global airport fixed-base operation (FBO) market, especially in the US. The clear focus on the Flight Support business confirms the future strategic direction at BBA’s core. While near-term debt metrics are stretched (despite the rights issue), the acquisition potentially unlocks BBA as a growth vehicle via both enhanced organic development and longer-term deals around the world.
The US bizjet market continues to improve slowly but Aftermarket has had a disappointing H1. Underlying PBT was 42% of our full year forecast but we expect Aftermarket to improve in H2. We await the presentation but anticipate reducing our forecasts by up to 5% and expect to retain our Hold recommendation.
ATTRAQT Group (ATQT LN) First technology partnership should open up opportunities | BBA Aviation (BBA LN) Mixed H1 | Latchways (LTC LN) Full year expectations unchanged | Lookers (LOOK LN) Preview – buy Lookers ahead of interims on 12 August | Restore (RST LN) Small bolt-on acquisition | Sinclair IS Pharma (SPH LN) Full year trading update | Synairgen (SNG LN) Research collaboration with Pharmaxis | Tetragon Financial Group Ltd (TFG NA) Taking volatility in its stride
Companies: ATQT LOOK RST SPH SNG TFG BBA
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Seeing Machines has released a trading update demonstrating the business is performing better than expected on key metrics: Revenues of A$39.7m were 13% ahead of our expectations of $35.1m and cash of A$38.7m was 21% ahead of our expectations of A$32.0m. We believe this strong end to the financial year reflects the continued demand for the company's Fleet product by sophisticated fleet owners and that the key home markets of Australia and New Zealand have been less affected by COVID than feared. We believe this strong cash performance should reduce the perceived funding risk weighting and help the valuation recover towards previous levels. We iterate our Buy recommendation and 7.2p price target.
Companies: Seeing Machines Ltd.
While Ince's FY20 results are complex given the various movements in reported figures associated with accounting for the Ince International consolidation, our assessment is that there are emerging signs of increasing operational effectiveness and reasons for optimism for investors. The operating environment and outlook remains opaque and thus we keep our forecasts and recommendation for the Group withdrawn at this time.
Companies: The Ince Group plc
Byotrol released a further positive trading on the back of a strong Q1 FY 2021, citing product sales in excess of £3.4m in the quarter and for the business to significantly exceed full-year market forecasts. With the order book at the end of June still being c.£2m (similar to at 30 April) and continued improving supply chain management for biocidal ingredients, we have upgraded forecasts to reflect this outlook. We increase FY 2021 revenues, adjusted EBITDA and EPS by 15%, 38% and 55%, respectively. Consequently, we upgrade our target price to 10p, at which level the stock would trade on 3.7x sales. As previously indicated, we think the pandemic should result in a secular shift towards improved disinfection prevention, reducing the prospect of FY 2021 being a one-off exceptional performance. The prospect for further upgrades should current monthly revenues extend for longer than anticipated and additional IP monetisation events should not be discounted, in our view, either.
Companies: Byotrol Plc
The successful delivery of reactors to the Red Rock Biofuels project demonstrates the company’s ability to manufacture to specification and on time in our view. Progress on this project represents a key milestone and, with commissioning expected next year, will provide further evidence of the ability to create sustainable road and aviation fuel from biomass using Velocys technology.
Companies: Velocys Plc
XPP announced interim results for the period ended 30 June 2020 with record order intake, strong revenue growth and a stable financial position. XPP has reinstated its dividend for Q220 of 180 per share. The Company has available resources of ~GBP61m through bank facilities and cash balances should it be required.
Companies: XP Power Ltd.
XP Power reported a strong performance in H1 considering the challenges presented by COVID-19 and a material uplift in orders provides a record backlog at the start of H2. With its diversified production capacity, a focus on higher complexity product targeted at growth markets and the ability to provide customer support globally, XP believes it will be in a stronger position post-COVID-19 than before. We have revised our forecasts to reflect the strong order intake, higher operating costs and higher share count.
Trading in both divisions has clearly improved post the COVID-19 lockdown and Norcros’s robust liquidity position has been maintained. Equally, the focus on cash/cost management, new product innovation and taking market share is undiminished, leaving the company well placed to navigate market conditions. Our estimates remain suspended pending further normalisation of market conditions.
Companies: Norcros Plc
In a trading update, SMS confirmed that revenue and underlying profitability to 30 June 2020 are in line with earlier expectations demonstrating the resilience of meter related ILARR and business model. FY20 underlying profitability remains in line with prior expectations. H1/20 net cash was £45m. Meter installations recommenced on 1 June 2020 and are expected to return to normal run rates by the beginning of 2021. We believe SMS presents a compelling investment proposition with a strong balance sheet, underlying profitability in line with expectations prior to Covid-19 uncertainty and a rebased, index linked dividend yield of 4.2%. In our 21 July 2020 report (download) we highlighted our base DDM valuation of 1164p (potential upside of 87%), supported by the 16.4x net ILARR asset sale completed in April 2020 and favourable positioning versus other listed infrastructure development companies where SMS provides comparable and visible growth but with a yield premium.
Companies: Smart Metering Systems Plc
Journeo is a specialist provider of both on and off-vehicle tailored solutions to the transport community. This morning, the group has announced a three year framework renewal with Abellio bus London for the provision of CCTV and associated equipment. The contract is expected to be worth c.£2m over the course of the three year period, with the potential for additional orders of on-vehicle technology solutions worth up to £1.2m over this time.
Companies: Journeo Plc
Whilst it is still premature to re-introduce meaningful forecasts for Breedon, investors should certainly be encouraged by the fact that: (i) June revenues recovered to 99% (or 91% LFL) of comparable 2019 levels and July is showing further improvement, and (ii) the company has made no cuts to its operational capabilities or productive capacity suggesting that it sees the medium-term prospects for growth undaunted by post-COVID economic and/or industry output reassessment. The Cemex acquisition should complete in days, giving management new assets and operations to rationalise, improve and grow whilst the strong cash and liquidity performance through H1 eases fears over balance sheet stretch. Through the challenges posed by COVID management has demonstrated that it is adept at deploying both defensive and offensive strategies; hopefully with the accent switching back to the latter as we look into 2021 and beyond. Driven by more self-help initiatives, accretive acquisitions, rising spend on UK infrastructure and the relative growth in Irish markets, Breedon has appealing investment qualities that go beyond the current standard sector mantra of ‘recovery' value. We maintain a Buy recommendation.
Companies: Breedon Group Plc
The ‘Moving Forward Act', the strongest automotive safety bill in decades, has now been passed in the House of Representatives. The bill is focused on advancing safety technologies proven to reduce crash and harm and to make sure strong safety standards are in place to save lives. The bill, which now needs to be passed in the Senate, will mandate automatic braking, lane-keeping, blind-spot detection, event data recorders as well as DMS in all cars and trucks sold in the US from 2024. This aligns with the European General Safety Regulation, which passed into law in November 2019.
However, in the EU, the European Association of Automobile Manufacturers (ACEA) has requested a 2‐year delay for the introduction of the 2022 Euro-NCAP protocols due to the projected lengthy time that will be needed to recover from the effects of COVID-19. Euro NCAP has agreed, and a delay is now expected to the 2022 and 2024 rating. The new dates will give automakers and Tier 1 suppliers more time to incorporate the necessary changes given the events of recent months with a number of manufacturers announcing 12 month delays to new models.
COVID-19 update – continuing to operate, div. suspended
Companies: Scapa Group Plc
The Group has delivered an FY2020 adjusted operating profit performance that is modestly ahead of our expectation and strong cash generation, with net cash of $32m, excluding $10.9m of IFRS16 lease liabilities. The business has benefited from its diverse customer base, products and operating geographies, and exposure to medical devices, EV charge cables and high speed datacentre products. Good progress has also been made with operational efficiencies, lowering product costs and with selective acquisitions. Whilst revenues in the 4 months to May 2020 are up 4% to $126.2m on the comparable period, the Group is seeing weakness, primarily in medical equipment installations and delays in the EV sector. With a broader range of potential outturns in FY2021E, the Group has withdrawn financial guidance. We have recast our forecasts to reflect an expectation of broadly flat revenues with a recovery into FY2022E as customer stock levels normalise and impacts from Covid-19 diminish.
Companies: Volex Plc
A strong second-half performance in the UK (plus an acquisition) and good progress in India (including capacity expansion) were the FY20 trading highlights, although near-term COVID-19 sentiment is overshadowing these achievements. A decision on the FY20 final dividend is pending; we have assumed one is not declared and our estimates remain suspended. Severfield’s liquidity and order book positions suggest the company is well placed to service current business levels and compete for new work as opportunities arise.
Companies: Severfield Plc
Today's news & views, plus announcements from VOD, POLY, SMDS, BLND, BYG, WEIR, DC, SNR, SHI, INTU, IHR, CNC, ARE, INCE
Companies: INTU SHI INCE