Research that is free to access for all investors. Companies commission these providers to write research about them.
Brokers who write research on their corporate clients and make it available through our main bundle offering.
Research that is paid for directly by asset managers. Only accessible to institutional investors permissioned for access.
Event in Progress:
View the latest research on other companies in the sector.
Market weakness. Uncertainties in shipping and offshore markets have increased in recent months, following the recent changes in US government policy (incl. tariffs and port fees on Chinese tonnage). Concerns about a global trade war have increased and Clarksons reported that US dollar spot negotiations in broking are running c.7% below the levels previously anticipated by the Board. Furthermore, industry S&P volumes and newbuilding contracting values in Q1 2025 are also considerably down yoy. US dollar weakness. The weakening US dollar is creating a significant financial headwind. The majority of CKN’s revenues are in US dollars while many of its costs are in non-dollar denominated currencies. Since the start of 2025, the USD/GBP rate has increased from 1.22 to 1.33 (+9%). If the current exchange rate persists during the remainder of 2025, profit would be reduced by c.£9.5m compared to the Board’s previous expectation. Underlying PBT guidance reduced. Even though the adverse impact of macroeconomic uncertainty could be reversed once normality returns to the markets, at this stage the Board expects the recent change in US government policy to weigh on 2025 results. It now expects underlying PBT of £85-95m for 2025 (2024: £115.3m). New numbers and price target. We have reduced our estimates to reflect the more challenging market backdrop. Underlying PBT and dil. EPS forecasts have been reduced by c.18%, c.14% and c.13% for 2025E, 2026E and 2027E respectively. We retain our Buy recommendation with a revised price target of 4,000p (from 4,884p).
Clarkson PLC
We cut forecasts following the AGM statement profit warning. Our estimates already indicated falling profit this year but clearly market conditions have worsened. For prudence, we cut numbers across our 2025-2027E forecasting period; on average, revenue is reduced by 5.5% and PBT by 21.4%. Our target price is cut to 4,000p from 4,500p. Cuts are focused on Broking, but we also assume Financial will remain subdued, and with a weaker USD overlay. Clarkson has a strong net cash balance and free cash generation, but we trim dividend growth with anticipated reduced earnings. Global shipping is clearly challenged on multiple fronts, but we maintain our BUY rating: Why? Clarkson holds leading market positions across all shipping segments, still has a healthy forward orderbook, an asset-light and flexible cost base, and a strong balance sheet. Downturns in shipping often see a flight-to-quality, seeking reduced counterparty risk. Clarkson also has an opportunity to further consolidate the market. With the share price fall, and on our adjusted numbers the stock is trading on a 2026E PE of 13.8x vs. an historic average forward metric of 16.3x. In the wider sector, we expect Braemar (BMS, HOLD) to cut guidance too; Zeus’ last note: Braemar.
Clarkson believes that the current uncertainty can be reversed once normality returns to the markets. We downgrade our 2025E PBT forecasts by 20% to the mid-point of the new range and cautiously trim future years. We cut our TP to 4,250p (was 4,925p) and reiterate our Buy rating.
Heightened levels of uncertainty have risen further In today’s AGM trading statement, the company notes that the uncertainty arising from a range of factors, including political events, conflicts, trade tariffs, sanctions, inflation, monetary policy, which was flagged at the time of the 2024 full year results (10 March) has worsened. Extensive global tariffs were announced by the US government in early April, with a 90 day pause on reciprocal tariffs above 10% a week later. In addition, there has been a further announcement relating to Chinese vessels entering US ports. Uncertainty regarding the potential of a global trade war has increased and YTD US dollar spot negotiations are running c.7% lower than anticipated un 10 March 2025. US dollar weakness The US dollar, in which the majority of the Group’s revenues are generated, has weakened significantly against Sterling. If the exchange rate remains at current levels for the remainder of 2025, profits would be reduced by c.£9.5m compared to the Board’s previous expectations. Adj. PBT range £85-95m Even though earnings are typically H2 weighted, the Group now expects adj. PBT for 2025E to be £85m-95m vs. £115.3m in 2024. We place out forecasts, TP and recommendation under review.
The AGM trading update has warned of an adverse impact from ongoing macro uncertainty, along with headwinds from a weaker US dollar. YTD spot negotiations are running 7% lower than previously anticipated. The group is guiding to PBT between £85m and £95m, with the midpoint 17% below current consensus. Given the extreme level of uncertainty, we have positioned our revised forecasts towards the lower end of this range. We cut our DCF-based target price to 3800p from 5100p, but our recommendation remains BUY.
Another record year. As previously flagged, 2024 results were slightly ahead of market expectations with solid performances across Broking, Support and Research. Only Finance reported a decline in earnings (-21%), reflecting reduced investor risk appetite and geopolitical uncertainty. Highlights included the record US$231m (+6%) forward order book for invoicing in 2025 which provides a good element of visibility for current year revenues, ongoing impressive cash generation, an exceptionally strong balance sheet, and declaring a 22nd consecutive annual dividend increase. Softer markets reflect considerable uncertainty. Political change, regional conflicts, trade tensions, tariffs, sanctions, and inflation have created a highly uncertain environment, resulting in market softness with charter rates -8% YTD (Clarksea Index). Despite a record forward order book for 2025, our new forecasts reflect weaker revenues and earnings this year. Buying opportunity. The share price decline last Monday was excessive in our view, considering that the weaker rate environment and uncertainties outlined above should have been known and understood by the market. There will always be an element of near-term volatility in shipping markets, but fundamentals remain attractive. Forecasts and valuation. We have reduced our earnings forecast for FY25E on weaker Broking revenues, with a knock-on effect for FY26E. We also publish our maiden FY27E numbers. We value Clarksons on a P/E of 17x FY25E, a 10% discount to its 10-year average. It has a good financial track record, a strong balance sheet with consistent cash generation, and its digital Sea platform could become a highly valuable asset over the medium term. We retain our Buy with a PT of 4,884p (from 5,076p).
We maintain our BUY rating and 4,500p target price; c.20% potential upside to the current share price. Maritime markets are likely to be choppy in the near term with slowing demand and trade dislocation, but chronic capacity shortages underpin strong medium-term market dynamics. Prompted by Clarkson’s cautious outlook statement earlier this week we now assume a small decline in revenue and profit this year with growth resuming in 2026E. Our PBT is unchanged in 2026E. The main cut is applied to the Broking unit. Mitigating this likely dip in earnings in 2025E, free cash resources are at record levels (£216.3m, +23.3% y-o-y); hence our valuation is unchanged. The shares have sold off sharply, and we believe now fully price-in any major slowdown in activity. Clarkson is the clear market leader in shipbroking, maritime finance, research and technical services; and the order book is healthy. The stock is attractively valued on a 2025E PE of 13.9x vs. an historic average forward metric of 17x. A good time to BUY a quality midcap name.
Spot rates are gradually firming, and turbulent times create opportunities for Clarkson. We downgrade our 2025-27E PBT and EPS forecasts by c.2-4%, mainly due to FX impacts. We trim our TP from 5,000p to 4,925p, still based on c.16x 2025E free cash-adjusted PE, and reiterate our Buy rating.
Financial highlights As indicated in the January 2025 trading update, the financial results for 2024 were slightly ahead of market expectations with revenues of £661.4m (+3%), underlying PBT of £115.3m (+6%), underlying EPS of 286.9p (+4%) and a full year dividend of 109p, up 7% (the 22nd consecutive year of dividend growth). Net cash, before bonus accruals, rose to £243.7m (from £201.1m). Segmental highlights Broking profits were £122.6m (+1%) with overall trends consistent with the prior year. Financial had another challenging year partly due to weakness in the investor confidence caused by geopolitical tensions, with profits of £5.2m (-21%). Support and Research both performed well with profits of £7.7m (+20%) and £9.5m (+13%) respectively. Encouragingly the forward order book (2025 revenues only) rose 6% to a US$231m. The Sea platform continues to make progress in digitising and managing chartering workflows from pre-fixture negotiation to at-fixture documentation, and has seen continued growth in its client base. Outlook and view The Board remains cautious about the near-term outlook for Clarksons given near-term uncertainties that may impact operational and financial performance (incl. shipping rates, trade volumes, forex). Markets have softened as economies grapple with the immediate impact of the geopolitical change. We place our forecasts under review as we process the full year results. As first glance we don’t see anything that would be of significant concern, so we retain our Buy recommendation and price target of 5,076p.
Record FY results were in line with our forecasts and management’s guidance. Management’s outlook statement highlights elevated uncertainty, which has resulted in softer charter rates and asset values. We expect asset transaction activity to be more muted until either economic and trade uncertainty fades, or market participants learn to live with it. We have reduced our EPS estimates by 6% for 2025E and by 5% for 2026E as a result. We have cut our DCF-based target price to 5100p from 5200p but our recommendation remains BUY.
Key Stocks Clarkson (CKN LN) (Buy, TP 5,000p) - Newbuilds power revenue and FOB growth (Monday 10 March, FY results) Domino's Pizza (DOM LN) (Buy, TP 425.0p) - The dominoids are aligned (Tuesday 11 March, FY results) Kier # (KIE LN) (Buy, TP 200.0p) - Continuing to deliver profit and cash (Tuesday 11 March, 1H results) Persimmon (PSN LN) (Buy, TP 1,300p) - Better placed than most (Tuesday 11 March, FY results) Rotork (ROR LN) (Buy, TP 380.0p) - Order intake underpinning visibility (Tuesday 11 March, FY results) The Craneware Group # (CRW LN) (Buy, TP 2,871p) - Earnings momentum to continue (Tuesday 11 March, 1H results) 4imprint # (FOUR LN) (Buy, TP 7,500p) - Tough backdrop impacting trading (Wednesday 12 March, FY results) Stocks Previewed 4imprint #, Alfa Financial Software Holdings, Alpha Group #, Balfour Beatty, Berkeley Group, Big Technologies, Bodycote, Boku #, Bytes, CAB Payments, Clarkson, Computacenter, Costain, Devolver Digital, Domino's Pizza, Empiric Student Property #, Essentra #, everplay group #, Fintel, Forterra, Gamma Communications #, Genuit, GlobalData, Headlam #, Hill & Smith, J D Wetherspoon, James Fisher #, Kier #, Ocean Wilsons #, OneSavings Bank, Persimmon, Phoenix Group Holdings, Restore, Rotork, S4 Capital, Saga, Savills, Seeing Machines, Softcat, Spirax Group, Synthomer, The Craneware Group #, The Gym Group #, Town Centre Securities, Trainline, Travis Perkins, Trustpilot, Wickes #, YouGov
CKN DATA COST DOM GEN HEAD KIE PSN ROR SPX SYNT CRW FOUR BBY FORT HILS GYM CABP ESP OSB RST SVS TRN BKG BOY ALFA PHNX BOKU BOKUS CCC FNTL TPK TRST ALPH ESNT SCT FSJ OCN WIX JDW SFOR GAMA EVPL YOU SAGA BIG BYIT TOWN
Following positive trading and newsflow, we increase underlying PBT forecasts by between 3-8% for 2024-26E. Consequently, we raise our TP from 4,850p to 5,000p, and reiterate our Buy rating.
This marks another excellent year of growth for the group. The strength of the US Dollar towards the end of last year, continuing into 2025, along with further hires, is helpful. We expect low to mid-single digit EPS upgrades. We maintain our TP of 4,850p and Buy recommendation.
Slightly ahead. The maritime consultancy and shipping services company expects to report full year results for 2024 slightly ahead of market expectations. Underlying profit before tax is expected to be no less than £115m (Investec forecast £111.9m). Strong fundamentals. Although shipping rates have weakened a little in recent weeks, mainly for tankers and dry bulk, we believe trading conditions remain relatively strong. Industry S&P transaction values are solid and industry newbuilding activity is very strong. It is also important to note that near term revenues should be supported by a strong order book. Near-term uncertainties. Despite excellent long-term fundamentals and growth drivers, there are near term uncertainties that may impact operational and financial performance, including those associated with a Trump presidency, forex rates, changing global trade flows and volumes. We are therefore keeping our forecasts for 2025E and 2026E unchanged. Buy recommendation and PT unchanged. The company has a strong financial track record, with consistent cash generation and average EPS CAGR over the past 12 years of 7.1% despite some significant industry turbulence during this period. It also has increased its DPS for 21 years consecutive years. The market backdrop for shipping remains favourable and while near-term earnings growth may decelerate a little, longer term growth should benefit from good demand/ supply dynamics, the need for long-term investment in new vessels with lower emission profiles, increased capital markets activity, and the growing Sea platform. We retain our Buy recommendation and 5,076p price target.
Trading slightly ahead of expectations Trading in Q4 (Oct-Dec 2024) has been slightly ahead of current market expectations. Underlying profit before tax for 2024 is expected to be no less than £115m (Investec forecast £111.9m). FY results in March Results for the 12 months to December 2024 will be reported on 10 March 2025. Under review We are placing our forecasts and price target under review.
A characteristically concise trading update has indicated that 2024 results are seen slightly ahead of current market expectations. Management anticipated underlying PBT of not less than £115m. We have raised our 2024E estimates by 3%, having already been at the top end of the consensus range. Clarkson remains strongly positioned at the leader in a global market with structural growth. Our recommendation remains BUY with an unchanged DCF-based target price of 5200p.
The short-term outlook remains encouraging. Charter rates have been broadly stable, asset transaction volumes remain buoyant, and there is strong underpinning from the Forward Order Book. Long-term growth is underpinned by international trade. Full shipyards and lengthy order backlogs should support rates and second-hand asset transaction volumes for the medium term. We reiterate our BUY recommendation with an unchanged DCF-based target price of 5200p.
We initiate coverage with a BUY rating and a target price of 4,500p. Clarkson has been transformed in recent years to become the global leader in providing broking, finance, research and technical services to the global maritime and offshore industries. Depth and breadth have helped to accelerate earnings growth and bring stability; cash conversion is strong, supporting a progressive dividend. The macro backdrop for shipbrokers remains largely positive, with elevated tonne-miles and vessel values due to ongoing trade lane disruption and a shortage of fleet. Clarkson is also a leader in responding to the energy transition, the need for enhanced compliance monitoring in a world of shadow fleets, and in developing digital chartering services through its Sea platform. We believe our estimates are prudent with comparatively modest growth assumed at this stage; upside may come from, for example, a more rapid pick-up in financial services activity. The healthy unrestricted net cash balance (‘24E c.£140m) can be used to accelerate earnings growth. With the recent pull-back in the shares, Clarkson looks attractively valued on a 2025E PE of 13.1x vs. an historic average forward metric of 18.6x.
Calmer waters. After a decade of challenging market conditions in the shipping industry, with overcapacity weighing heavily on charter rates and asset values, market conditions over the past few years have improved significantly. Clarksons’ earnings have bounced strongly and given the stable demand/supply balance, we expect solid profit generation going forwards. The record order book, which typically represents over 30% of the next year’s revenue, provides a good element of visibility. Sustained market growth. Growth in shipping is fundamentally driven by global trade volumes, which are typically expected to rise by around 3% p.a., fuelled by population growth, industrialisation, urbanisation and the growth of the middle classes (e.g. in India). Clarksons, the global market leader in shipbroking with superior research and data intelligence, should continue to enhance its market share. Cash machine. From Dec 2016 to Dec 2023, Clarksons increased its net available cash (after deduction of bonus payables) by £126m from £74.8m to £201m, after spending £188m on dividends and £35m on acquisitions, clearly demonstrating the cash generative nature of the business. Valuation. We value Clarksons on a prospective P/E of 18x, in line with its 10-year average. The market backdrop for shipping remains favourable and while near-term earnings growth may decelerate a little, there are several reasons why medium to longer-term profit growth could surprise on the upside, including potentially using its cash for EPS-enhancing opportunities, strong market dynamics for tankers and offshore, a likely recovery in capital markets activity and the growing Sea platform, which could become an increasingly valuable asset. We initiate at Buy with a 5,076p TP.
Clarkson is well capitalised with own cash of £178.4m at the end of June, c.15% of the group’s market capitalisation, and an excellent opportunity to invest for growth. We reiterate our Buy rating and 4,850p TP.
We do not expect to make major changes to forecasts and reiterate our Buy rating and 4,850p TP. We see stock weakness as a buying opportunity.
The interim results were in line with our forecasts. The modest decline in profits was against the tough comparative of a record H1. Management’s outlook for the FY is unchanged, with a weighting towards H2 as is usually the case. We have made minimal changes to our estimates, but see the balance of risks biased towards the upside. Our recommendation remains BUY with an unchanged 5200p DCF-based target price.
Clarkson is the global market leader in a structural growth industry. However, the business is poorly understood by non-holders. We counter five common misperceptions about the group, detail how the business makes sustainably strong returns, and attempt to value Maritech, the group’s digital business. We also highlight the importance of buoyant sale & purchase activity to the group’s recent earnings strength. We reiterate our BUY recommendation and 5200p DCF-based target price.
We are encouraged by the positive trading and not surprised by the market conditions for the Financials division. We continue to anticipate a long period of constrained shipping capacity supporting charter rates. We make no changes to our forecasts, and reiterate our Buy rating and 4,850p TP.
The AGM trading update highlighted unchanged expectations for this year and an overall positive outlook. Spot activity in Broking has been in line with last year, as expected. The anticipated H2 weighting would be consistent with the historical trend. We make no changes to our estimates, although we remain hopeful that the balance of risks remains to the upside. Our recommendation remains BUY with an unchanged 5200p DCF-based target price.
We anticipate a protracted period of constrained capacity in most verticals. We raise 2024E EPS c.7%, raise our TP from 4,500p to 4,850p, based on a free cash-adjusted 2024E PE of c.16x, and reiterate our Buy rating.
Despite weak shipping rates in a number of verticals, the group delivered another record year. The outlook is positive – beyond the high level of fleet replacement required to meet environmental regulations, Clarkson clearly has irreplaceable expertise, data and relationships. We reiterate our Buy rating and 4,500p TP.
Clarkson's FY23 results are modestly ahead of the upgraded guidance from the pre-close trading update, with the dividend 5% ahead of our expectation and a significant (>35%) beat on net cash post-accrued bonuses. Reflecting what we see as a generally supportive supply-side backdrop as well as on
The results were in line with consensus and our forecasts at the PBT level and modestly ahead at the EPS level. Although the record results showed slower growth than in the prior year, the continued progress with less help from the rate environment in shipping markets highlighted the underlying strength of the business. The 10% dividend increase was larger than expected and indicative to the group’s confidence in the outlook. We make minimal changes to our estimates. Our recommendation remains BUY with an increased DCF-based target price of 5200p (previously 5100p).
Key Stocks Clarkson (CKN LN) (Buy, TP 4,500p) - Set fair (Monday 4 March, FY) Ashtead (AHT LN) (Add, TP 5,000p) - Robust outlook expected (Tuesday 5 March, 3Q) Bakkavor# (BAKK LN) (Buy, TP 130p) - Confidence growing (Tuesday 5 March, FY) Hiscox# (HSX LN) (Buy, TP 1,340p) - Harvesting the cycle (Tuesday 5 March, FY) Inchcape (INCH LN) (Buy, TP 1,200p) - Reassurance expected (Tuesday 5 March, FY) Keller# (KLR LN) (Buy, TP 1,170p) - Momentum still looks good while valuation remains too cheap (Tuesday 5 March, FY) Ibstock# (IBST LN) (Buy, TP 150p) - Past the worst (Wednesday 6 March, FY) Rathbones Group# (RAT LN) (Buy, TP 2,360p) - Focus on delivering expected synergies (Wednesday 6 March, FY) Coats# (COA LN) (Buy, TP 103p) - Impressive margin performance (Thursday 7 March, FY) Kier# (KIE LN) (Buy, TP 180p) - Growth and deleveraging (Thursday 7 March, 1H) Melrose (MRO LN) (Buy, TP 620p) - Upgrade momentum (Thursday 7 March, FY) Stocks Previewed 4imprint#, Ashtead, Bakkavor#, Balfour Beatty, Beazley, Breedon, Brooks Macdonald, Capita, Clarkson, CLS Holdings, Coats#, Costain, Domino's Pizza, dotdigital, Empiric Student Property#, Entain, Foxtons, Galliford Try#, Genuit, Grafton, Greggs, Headlam#, Hiscox#, Ibstock#, Inchcape, International Personal Finance#, Johnson Service Group, Keller#, Keywords Studios, Kier#, Lancashire, Melrose, Moonpig, Nichols, Persimmon, Rathbones Group#, Rentokil Initial, Restore, Ricardo, Rotork, SIG#, Stelrad Group, The Gym Group#, TP ICAP#, Travis Perkins, TT Electronics, Tyman, Vistry#, Zotefoams#
CKN AHT BAKK DOTD FOXT GRG HEAD HSX INCH JSG KLR ROR SHI TPK CPI CLI GFRD IBST LRE NICL RAT RCDO BEZ BRK COA ENT GFTU KIE MRO MELR RTO TTG TYMN SRAD COST DOM GEN PSN TCAP FOUR BBY GYM ESP MOON RST VTY ZTF IPF KYYWY
4 - 8 March 2024
CKN DATA SNR AHT BAKK DOTD FOXT GRG HSX INCH IWG JSG KLR ROR SHI XPP BREE CPI CTEC SMDS LRE NICL PAG QLT RAT SPT BEZ BRK COA DARK ELM FCH GFTU KIE MRO MELR PAGE RCH RWA SPX TTG TYMN XPS INF DRKTY
The rising number of attacks on shipping in the Red Sea, although mostly unsuccessful, has resulted in many ships being diverted. The alternative routing via the Cape of Good Hope results in delays and additional costs, with the latter evident in a spike in container rates (more than double over the past three months in some cases). However, excess capacity in the container shipping market should mitigate the impact and we see limited prospects for this impacting inflation at the economy level.
We upgrade FY23E PBT 5% to £108.3m, and 2024/25E by c.3-4%. We are extremely positive about the longer-term trends, given the lack of supply growth and the green transition, and the group’s growth potential. We reiterate our Buy rating and increase our TP from 4,400p to 4,500p.
Clarkson's year-end trading update confirms a strong finish to 2023, particularly in Broking, with management expecting to deliver PBT of at least £108m, 9% ahead of our prior forecast. In our view this is further evidence of strong execution combined with ongoing favourable supply-side conditions
Strong trading in the final quarter of 2023 has seen Clarkson guide to profit ahead of current market expectations. We raise our 2023E PBT forecast by 5%, although we were at the top end of the consensus range. This leaves Clarkson on course for another record result. Importantly, this is set to be achieved against a much tougher shipping rate backdrop. This provides clear evidence of Clarkson’s structural progress, which has previously been masked by shipping market tailwinds. Our recommendation remains BUY and we increase our DCF-based target price to 5100p from 5000p.
We update forecasts, with FX and higher central costs mitigated by higher net interest income and lower tax and minority interests, resulting in a 2.9% upgrade to FY23E EPS. We reiterate our Buy rating and 4,400p TP.
Clarkson's 1H23 results were comfortably ahead of our expectations, and evidence outperformance versus generally softer markets in FY22 driven in particular by the strength of the order book entering the year. We leave FY23 EBITA and PBT forecasts broadly unchanged, with H1 outperformance offset by
Record interim results came in ahead of our forecasts and were achieved despite toughening market conditions. Broking was the biggest driver of outperformance in absolute terms, while Support was furthest ahead in percentage terms. Although Clarkson is normally H2 weighted, management has cautioned that a more balanced outturn should be expected this year. We make no material changes to our overall forecasts. Our recommendation remains BUY with an unchanged DCF-based target price of 5000p.
7 - 11 August 2023
CKN PAGE IHG IWG QLT ROR SHI TIFS BWY CCH FLTR HILS HSX MXCT TCAP CAL ROO DLN ENT FGFH FRSX FSFL FTN FTF FTD FTSV FTV FSF FSG FGFH FELPU HSW LRE PSN SPX SVS OSB TUIN
We make no changes to our forecasts which assume 3.4% growth in 2023 pre-tax profits on 2022, which was itself a remarkable year. We believe that constrained supply will support rate recovery and that neither the net cash position nor digital opportunity is reflected in the stock price. We reiterate our Buy rating and 4,400p target price.
The successful execution of the strategy to be best-in-class across all segments of shipping, offshore and renewables, combined with free cash resources of £130.9m, leaves the group optimally positioned. We upgrade PBT by 5-8% and reiterate our 4,400p target price and Buy rating.
Clarkson has delivered FY22 Results slightly ahead of guidance that was significantly upgraded at the January pre-close update. The expectation of ongoing supply-side constraints across key shipping verticals and the strength of the order book gives us the confidence to upgrade our below-consensus
Record results came in 3% ahead of our forecasts at the PBT level. The 20th consecutive annual dividend increase was also higher than forecast. Shipping market conditions were supportive, but the strength of the results also reflects the group’s market leadership and strategic positioning. The medium-term demand/supply outlook remains supportive, underpinned by shipbuilding constraints and decarbonisation initiatives. We make minimal changes to our estimates. We raise our DCF-based TP to 5000p from 4800p and reiterate our BUY recommendation.
6 - 10 March 2023
CKN AHT DOTD ELM FOXT IWG JSG JUST KLR RCH ADM BAKK DEBS BREE CTEC DARK HILS HSX IBST IPO QLT SHI SPT RTN TTG DOM SMDS ENT FORT HMSO INF FSJ KIE PAGE SPX FAN BKG RWA DRKTY
We upgrade FY22E PBT forecasts by 18% to £98.3m but make small changes to subsequent years. We are extremely positive about the longer-term trends given the lack of supply growth, so remain Buy but expect near-term headwinds from dry bulk and some weakness in the stock.
SAS Multi-asset Chartbook, SAS UK SMID Sentiment and Screens, Housebuilders, Clarkson, SMID Market Highlights
Clarkson PLC PureTech Health PLC
Clarkson's brief pre-close trading update indicates that trading was strong throughout 4Q22, particularly within Broking, and management expects 2022E PBT of no less than £98m, c.20% ahead of our prior forecast. We view this as evidence of both strong execution in a toughening macro backdrop, and a
Clarkson experienced strong trading in the final quarter of 2022, particularly in the Broking division. 2022 results are expected to be ahead of current market expectations, with underlying PBT expected to be not less than £98m. We raise our 2022E EPS forecast by 19%. Clarkson appears to be making the most of supportive market conditions. Supply constraints seem likely to persist in the medium term, but there remains considerable macroeconomic uncertainty. Our recommendation remains BUY with a DCF-based target price of 4800p (previously 4750p).
Supply constraints extend cycle Buoyed by firm market conditions and a strong US$, Clarkson reported record 1H results, with all divisions expanding and delivering ahead of our expectations. The contraction in shipyard capacity and the availability of financing, combined with record port congestion, slower steaming speeds to reduce emissions, and geopolitical distortions, have restricted supply growth, meaning the cycle is likely to be much more protracted than historically. This should mitigate economic headwinds and support the Broking and Financial divisions. We make minor changes to forecasts and leave our 4,400p TP and Buy rating unchanged. Alexander.Paterson@peelhunt.com
Meeting Notes - Aug 08 2022
CKN QQ/ SPT BUR BWY IHG IWG JUST SHI TIFS 483 RG8
Having materially upgraded numbers at the 13-Jul trading update, Clarkson's interims evidence a business that is seizing its opportunity in strong markets. Although a global slowdown has the potential to impact demand in the shipping sector, we still think supply side dynamics are set to remain ext
Clarkson has delivered a record interim result, consistent with the positive trading update issued last month. All divisions delivered strong profit growth, but the performance was led by the Broking division. Clarkson has benefitted from a supportive shipping rate environment, with positive trends in nearly all market segments. However, this masks the structural improvement made to the group during tougher times, and the potentially persistent rebalancing of shipping industry supply and demand. Our recommendation remains BUY with an unchanged DCF-based target price of 4750p.
Click here to see the note Key Stocks XP Power (Buy, TP 5,000p): Coping with challenges (Monday 1 August, Interims) Coats# (Buy, TP 103p): Self-help to drive performance (Tuesday 2 August, 1H) Cranswick’s (Hold, 3,800p): Rising cost environment (Tuesday 2 August, 1Q) Domino’s Pizza (Buy, TP 375p): Focusing on driving volumes (Tuesday 2 August, Interim results) Travis Perkins (Buy, TP 1,850p): All eyes on renovation demand (Tuesday 2 August, Interims) Hill & Smith (Buy, TP 1,500p): An interim period? (Wednesday 3 August, Interims) Hargreaves Lansdown (Buy, TP 1,370p): Impact from weaker markets (Friday 5 August, Final results) Stocks Previewed 888 Holdings, Burford Capital, Capita, Capital & Regional, Clarkson, Coats#, Cranswick, Devro, Dialight#, Direct Line, Domino's Pizza, Empiric Student Property#, Entain, Flutter Entertainment, Hargreaves Lansdown, Hill & Smith, Hiscox, Hostelworld, InterContinental Hotels Group, IWG, Keller#, LSL Property Services, Marshalls#, Mears#, Morgan Sindall, MP Evans#, Ocean Wilsons#, Plus500, Redrow#, RPS, Savills, Secure Trust Bank, Serco Group, Spirax-Sarco, Taylor Wimpey, The Gym Group#, Travis Perkins, Tritax Big Box REIT, UK Commercial Property REIT, Van Elle#, Videndum, Virgin Money UK, XP Power, Zotefoams# Macro highlights Global markets interpreted the Fed’s messaging this week as slightly more dovish than expected; illustrated by 10 year Treasury yields now trading some -80bp below their June peak. The return to ‘data dependence’ may argue for a more cautious approach to tightening, if the weaker than expected US 2Q GDP data is a precursor to similar soft activity readings through the next few weeks. The change of tone is influencing expectations for next week’s Bank of England decision, with an even split between those expecting the MPC to vote in favour of another +25bp or +50bp. The squeeze on the UK consumer shows no sign of relenting; the final July PMI readings next week may show some relative resilience, as sentiment across the Eurozone economies is additionally afflicted by the concern about Russian gas supplies. Ian.williams@peelhunt.com 32-page note #Corporate client of Peel Hunt
CKN CWK DVO HILS KLR MER MPE SRP MGNS TW/ VID ZTF DIA OCN MSLH EVOK SVS UKCM LSL XPP CPI COA ENT STB PLUS VMUK BBOX IHG TPK CAL ESP HSX SPX FLTR DLG DOM IWG VANL HSW GYM RG8 RDWWF HRGLF
Trading materially ahead of expectations 1H trading has been strong across all divisions, with Broking performing particularly well, and the group now expects 1H PBT of not less than £42m, ahead of our £40.2m forecast. Whilst mindful of the economic conditions, the board is confident in the outlook for the business and expects 2022E results to be materially ahead of market expectations. Limited supply growth for bulk ships and tankers, the two largest broking markets for the group, means the cycle is likely to be protracted. We therefore raise our 2022E PBT forecasts 17% to £83.6m, reiterate our Buy rating and leave our 4,400p TP unchanged. Alexander.Paterson@peelhunt.com 2-page note
Clarkson's 1H22 pre-close update indicates that trading was strong through the period, and that management expects to report PBT of at least £42m (1H21 £27.5m). Management remains confident in the outlook for the business and now expects to report 2022E PBT significantly ahead of its prior expectat
Management expects H1 underlying PBT to be not less than £42m. That would be an increase of over 50% compared to H1 last year, which was a record H1 for the group. Management also expects the results for 2022E to be materially ahead of previous expectations. We raise our 2022E EPS forecast by 17% and increase our DCF-based target price to 4750p from 4650p. Our recommendation remains BUY.
Clarkson's AGM update highlights a good start to 2022 amid continued generally robust shipping market conditions. Recent GBP weakness leads us to upgrade 2022-24E PBT by 3-5%, and we think that upside risk remains if strength in shipping markets persists over the coming months. The shares trade on
Clarkson has experienced a good start to the year. Shipping market conditions have been broadly supportive, and the group continues to exploit its market-leading positions. Trading is in line with management’s expectations, and we leave our forecasts unchanged given the early stage of the year and despite a potential FX tailwind. We see Clarkson as a long-term winner from a better demand/supply balance and decarbonisation efforts in the shipping industry. Our recommendation remains BUY with an unchanged DCF-based target price of 4650p.
Stock markets have de-rated since the beginning of the year partly as a function of higher bond yields, partly as a reflection of growth fears. The influence of each of these factors cannot be measured exactly, but we estimate the fair value of stock markets given current interest rates. Any deviation from this fair value we call the “growth discount” reflecting lower growth expectations. The current growth discount of the FTSE 350 is 22%, more than twice that of the S&P 500. The last time we had such a high growth discount was in August 2019 when recession fears were also prominent, and the Gilt yield curve inverted. Over the next four months to the end of 2019, the UK FTSE 350 rallied 7%.
CKN FGP HWG TRIG STEM XPS MTRO WINE RNWH HMSO
CKN FGP GLEN HWG TRIG SGRO STEM XPS ZAL LHA MTRO WINE NOVOB RNWH HMSO 0QIU
We had quite a volatile quarter in stock markets but spare a moment of pity for bond investors. Gilts are supposed to be a safe asset that provides shelter in times of crisis. Unfortunately, that protection cannot be provided by bonds when rates and inflation rise. In Q1, UK equities were up 0.5%, while UK Gilts were down 2.7% (both total return). Even worse, over the last three years of pandemic, inflation and war, UK equities were up 16.8% while Gilts were down 1.6%. Meanwhile the volatility of UK 10Y Gilts was suddenly in double digits (12.3%) compared to the roughly 2% they showed historically.
CKN FGP HWG STEM MTRO WINE RNWH HMSO
Stronger for longer The contraction in shipyard capacity over the last decade and relative lack of new build orders mean supply growth will remain limited outside of container ships, which is a small market for the group. Regulatory changes to reduce emissions, combined with high iron ore prices, mean that vessel recycling rates are rising. At the current build rate, it would take considerably more than 25 years to replace existing fleet. With demand growth of 6% for dry bulk and up to 17.5% for LNG, charter rates will rise further in a protracted cycle for most segments. We raise estimates and reiterate our Buy rating and 4,400p target price. Alexander.Paterson@peelhunt.com 2-page note
Clarkson's 2021 results were in line with our expectations, albeit these were expectations that were upgraded significantly in both Dec-21 and Jan-22, and the material YoY revenue and profit growth evidence a business that has capitalised on its leading position across shipping markets in a year wh
Record FY results were in line with expectations, although this belies substantial upgrades to estimates over the past year. Shipping markets have been supportive, but the group’s exposure to spot markets is frequently overstated. Asset transactions have been a key source of recent strength, and the outlook remains positive. 2022E is underpinned by strong Forward Order Book. We raise our DCF-based target price to 4650p from 4600p and reiterate our BUY recommendation.
We have seen significant shifts in earnings expectations over the last three months. We compare shifts in FY1 EPS (i.e. 2022) vs. FY2 EPS (i.e. 2023). We find that investors have priced in higher EPS for financials in both FY1 and FY2, which could become a problem if central banks become less hawkish. Meanwhile, investors don’t expect high commodity prices to last into 2023. To correct the inconsistency, we would expect either downgrades in FY1 EPS in commodity sectors or upgrades to FY2 EPS. It will depend on the next couple of months to determine if FY1 EPS can be sustained at current high levels.
CKN FRAS HWG STEM AF AF EDV MTRO HMSO
7 - 11 March 2022
CKN AHT BAKK CAL CTH CTEC DLG DOM GLV IWG JSG KLR OXB RWA EVOK BIFF BREE COST IBST KIE QLT TTG CPI BBY SMDS FERG FORT HILS FSJ JUST SVS SPX SPT FAN BKG BOY SHI
Bulk has higher weighting The stock has fallen c.20% despite robust trading and upgrades in early FY22, providing a buying opportunity. The correlation between the stock price and the Clarksea Index is over 90% and we expect the latter to rise due to rate increases for dry bulk outweighing softer container rates. Ex-containers, we expect this cycle to be protracted given the low order books and strong demand. Stock price correlation should be lower with the index, and higher with profits, which can rise even when the index is falling due to term charters, market share gains and growth in other parts of the group. We make no changes to our forecasts. Alexander.Paterson@peelhunt.com 5-page note To listen to Alex discuss the report, please open the note and click on the image like the one below.
Recent share price weakness (-15% over the past three months, -21% since the peak in November 2021) is at odds with positive earnings momentum (our 2022E forecasts +21% over the same period). An excessive focus on shipping rates misses Clarkson’s broad market presence, and its exposure to aspects of the market other than spot charters. Asset transaction and capital markets activity remains buoyant. We see a clear buying opportunity with the forthcoming FY results likely to provide reassurance. Our recommendation remains BUY, with an unchanged DCF-based target price of 4600p.
Earnings yields of markets are often used as a comparison with bond market yields. But earnings yields are themselves influenced by the level of interest rates. Following recent modifications by Robert Shiller on his cyclically-adjusted PE-ratio (CAPE) we calculate the earnings yield adjusted for the level of real rates in bond markets. Currently, this adjusted earnings yield for the FTSE 350 is at a large 9.1% compared to 4.0% for the S&P 500 and 7.3% for the Stoxx Europe ex UK. The UK market is clearly cheap no matter how you adjust valuations and offers a large margin of safety for investors interested in escaping the current market turmoil.
CKN FRAS HWG STEM AF AF DPH MTRO HMSO
Robust trading continues Trading during December was stronger than expected, and the company now expects underlying PBT for FY21 to be not less than £69m, from not less than £65m previously, and ahead of our £65.3m forecast. The outperformance came from the Broking and Financial divisions. This is clearly positive, and the group starts FY22 with excellent momentum. New build ship order-books remain at historically low levels and there is a need to replace fleet to reduce carbon emissions. We forecast that the cycle has several more years to run, upgrade forecasts and our target price to 4,400p from 4,300p and reiterate our Buy rating. Alexander.Paterson@peelhunt.com 2-page note
Clarkson's pre-close trading update reports a stronger than expected December, with the result that 2021E PBT is now expected to be no less than £69m (previously no less than £65m), driving a 6-7% upgrade to our 2021E PBT and EPS forecasts. At this early stage, we make more modest upgrades (1%) to
A strong end to 2021 has allowed Clarkson to raise its guidance again. The outperformance in December came in the Broking and Financial divisions, helped by deals in the sale & purchase unit and the completion of a number of financing transactions. Management now expects underlying PBT to be not less than £69m. We raise our forecasts accordingly. We raise our DCF-based target price to 4600p from 4470p and reiterate our BUY recommendation.
Broking and Financials lift profits Clarkson has made a short trading announcement indicating that 2H trading has continued to be strong and that FY21 underlying PBT is expected to be not less than £65m. We were forecasting £57.5m and were higher than all but one outlying forecast. Performance was strong across all divisions, with Broking and Financials trading particularly well. The outlook for the business is extremely encouraging, with demand likely to continue recovering and very limited global fleet supply growth until 2024. We upgrade forecasts, increase our target price to 4,300p from 4,250p and reiterate our Buy recommendation. Alexander.Paterson@peelhunt.com 2-page note
Clarkson has issued an unscheduled trading update indicating a very strong performance in 2H21 to date, with management now expecting 2021E PBT to be no less than £65m, and as a result we upgrade 2021E PBT by 19%. We also increase our below-consensus 2022-23E PBT forecasts by 4-10%. The strong trad
Clarkson has seen strong trading in H2 across all divisions, with Broking and Financial performing particularly well. Management expects results for the current year to be ahead of current market expectations. Underlying PBT is seen not less than £65m (previous median consensus £56.1m). We raise our 2021E EPS forecast by 20%, increase our DCF-based TP to 4470p (from 3850p) and reiterate our BUY recommendation.
Excellent results, strong trading continues, upgraded outlook The results were significantly ahead of our expectations, with three of the four divisions outperforming, driven by a robust recovery in shipping markets. Client uptake at Sea/ is encouraging, with rapid growth in freight traded and good retention rates. All market sectors are seeing improving market conditions and order books remain at historically low levels of existing fleet, suggesting the cycle has two or more years to run for most sectors, and longer for tankers and offshore, with 2H starting strongly. We raise FY21E PBT by 11% and our TP from 4,000p to 4,250p. We reiterate our Buy recommendation. Alexander.Paterson@peelhunt.com 2-page note
Clarkson's H1 results point to a business benefitting from an upturn in trading conditions, particularly in the Broking and Financial divisions. Shipping indices have continued to be strong into H2, and with supply side conditions remaining supportive we upgrade 2021E PBT by 14%. The Group has also
Record H1 performances in the Broking and Financial divisions supported a 25% increase in EPS to the highest level in more than a decade. We are optimistic the positive momentum will continue, with charter rates and asset values in most shipping markets supported by recovering demand and constrained supply. We increase our current year EPS forecast by 18%. We raise our DCF-based target price to 3850p from 3200p and reiterate our BUY recommendation.
9 - 13 August 2021
CKN HAT PAGE TIFS ASC BWY DLN FLTR GYS IHG IWG ADM ROO HILS HSW VANQ QLT SPX ARW ENT JUST RG8 DQ6 TUIN TKWY HRGLF
Sea/ change Demand for Clarkson’s services is rising as global trade recovers from the pandemic and newbuild order books climb in response to higher charter rates, from the lowest level in decades. The shift to alternative technologies and mandatory emissions reporting should increase demand for the group’s services further and we believe there is potential to upgrade our forecasts if this recovery develops more robustly. We believe digital platform Sea/ gives competitive advantages to the group, reducing the risk of disintermediation, and we estimate a profit stream worth £200m. We initiate coverage with a Buy rating and a 4,000p TP. Alexander.Paterson@peelhunt.com 29-page note
Clarkson's Capital Markets Day offered an insight into its Sea/ technology platform, both from an operational standpoint and also in terms of user numbers and revenue model across each of the modules. Whilst it remains very early days in commercialising the proposition, the addressable market appea
A capital markets day presentation and demonstration highlighted the extensive capabilities of Sea/, the group’s modular SAAS offering for the shipping industry. Adoption by key clients should drive shipowners and other brokers to follow suit, allowing it to become the pre-eminent industry platform. Embedding into customers’ workflows, and a revenue model based on annual subscriptions and transaction fees, point towards high quality recurring revenues protected by barriers to entry. Our recommendation remains BUY, with an unchanged DCF-based target price of 3200p.
Meeting Notes - Mar 15 2021
CKN MOON BOWL IBST FAN SPT VANQ BAKK PRSM BOKU CCR CBG COST ELM FERG JUST GEN SBRE EVPL TIFS UTG AIAPF
Clarkson occupies an interesting niche in the Support Services sector, being one of the few listed shipping services businesses and also one of the few UK listed companies with a genuine global market leadership position and significant scale relative to peers. Shipbroking continues to largely driv
A respectable performance with profits ahead of consensus against a backdrop of volatile markets and operational challenges created by the pandemic. An improved forward order book gives some support for the outlook, but general pandemic uncertainty persists. Our overall forecasts are unchanged, which is an underlying upgrade given the FX headwinds. We raise our DCF-based target price to 3200p from 3100p and our recommendation remains BUY.
Management expects 2020E underlying operating profit to be between £42m and £45m, ahead of our forecast. We increase our estimates accordingly. Goodwill impairment has been flagged as a risk, given the uncertain macro environment. Nonetheless, we continue to see Clarkson well-positioned for the long term. We raise our DCF-based target price to 3100p from 3000p. Our recommendation remains BUY.
ESG Quarterly - Carbon beta, Clarkson, Frasers Group, Vertu Motors, SMID Market Highlights
CKN FRAS VTU
ESG Quarterly - Carbon beta, Clarkson, Frasers Group, Antofagasta, Vertu Motors, Market Highlights
CKN FRAS ANTO VTU
A surprisingly strong H1 leaves the company with a molehill rather than a mountain to climb in H2. Nothing can be taken for granted in the current uncertain environment. However, Clarkson has demonstrated its resilience in challenging market conditions, underpinned by its strengths in research and its emerging digital platform. The resumption of dividends reflects the strength of a cash-rich balance sheet and management's confidence in the long-term outlook. Our recommendation remains BUY with an unchanged DCF-based target price of 3000p.
The strong interim results showed little sign of impact from COVID-19 at first glance. A record H1 performance in Broking reflected both the group
Q1 trading was broadly reassuring with no surprises to us. The Broking division performed well, with oil market volatility supportive for tanker activity.
In light of the current COVID-19 uncertainty, Clarkson has decided to withdraw the AGM resolution for its previously-declared final dividend. A decision on the amount and timing of the dividend will be deferred until later in the year, when the outlook is clearer.
Short-term uncertainty driven by the Coronavirus outbreak should not impact the attractive long-term fundamentals. Market leadership should see the group exploit an improving shipping demand/supply balance.
In line results with strong growth in Broking, double-digit EPS growth overall and the 17th consecutive annual dividend. Investment in the group’s digital offering has continued, underpinned by the core business performance and a cash-rich balance sheet.
CLS Holdings, Clarkson, Non-Standard Finance, Greene King, IMI, Primary Health Properties, SMID Market Highlights
CKN NSF GNK IMI PHP CLI
The deployment of new digital platforms creates an additional layer of barriers to entry, with the long-term potential to put Clarkson's technology at the heart of all shipping transactions. Nearer term, the new IMO sulphur rules are likely to squeeze supply in markets where the demand/supply balance is already becoming more favourable.
Clarkson, On the Beach, Coffer Peach Business Tracker, Unite Group, Lok'nStore, SMID Market Highlights
CKN OTB UTG
In line results and 5% growth at the PBT level masks a strong performance in Broking with 37% YoY divisional profit growth coming despite unhelpful shipping market conditions. There was some help from a weak comparative and a currency tailwind, but the underlying performance was encouraging.
Research with unrivalled breadth, depth and resources has been a key part of what differentiates Clarkson from its competitors. It has also been a key part of the barriers to entry protecting the group.
Slightly better than expected results comprised a much better than expected performance in Broking, which ended flat having been sharply lower in H1, offset by further weakness in the Financial division and higher central costs on elevated IT spending. The latter reflects efforts to begin offering new digital services to clients, although we have not assumed material incremental revenue at this stage.
Clarkson's year end update has confirmed that trading for 2018 has remained in line with expectations. Consequently, we leave our forecasts unchanged.
Improved activity levels in Q2 give us confidence in the current year outlook, while not being enough to offset the weak Q1. Attention should shift back to the long-term, where Clarkson continues to strengthen its market leadership with further investments in research and technology to position itself for the anticipated structural recovery in shipping market levels.
The interim results showed a sharp fall in profits, as expected, reflecting the soft market conditions in Q1 in asset broking markets. There are signs of activity levels in those markets having recovered through Q2.
Clarkson has warned that it expects current year earnings to be materially below last year’s level and current expectations. Volatility in financial markets and concerns about a possible trade war have supressed activity in shipping asset transactions.
Clarkson continues to reinforce its market-leading positions, with investment in technology providing further differentiation. Better market conditions would be positive.
Results in line with expectations, with improvements at Broking and Financial reflecting a combination of stronger shipping markets and the fruits of past management initiatives to strengthen and broaden the group’s market-leading positions. Forecasts unchanged, despite a currency headwind and a smaller Forward Order Book.
Clarkson Flash : Pre-close update
Clarkson has confirmed that 2017 trading has been in line with expectations. Our PBT forecast of £48.9m has been unchanged since the last set of FY results in March 2017.
Recent H1 results showed a return to EPS growth, despite little help from shipping markets. Management’s actions are delivering profit growth regardless, positioning the group for the eventual recovery.
Results slightly ahead of our forecasts, showing respectable profit growth despite shipping markets remaining relatively lacklustre. Management continues to focus on reinforcing the group’s market leading positions, laying the ground for when market conditions improve.
Clarkson reported underlying EPS of 57.5p, up 9% YoY despite the challenging conditions in the shipping market. The interim dividend was increased by 1p to 23.0p per share and the final tranche of the Platou loan note was paid off. These results were in line with our forecasts, which we leave unchanged. However, now that the balance sheet is debt free and with cash generation at the pace we anticipated, we expect market attention to turn toward the potential for a very material increase in distribution, subject to growth investment, even ahead of a return to more benign market conditions which Clarkson should be fully able to leverage. We reiterate our Buy recommendation and 3,000p per share Target Price.
In connection with its AGM, Clarkson has issued an update highlighting an encouraging start to the year. While charter rates are similar to last year, broking has seen increased business with a general upturn in activity. The improvement in Financial in 2H16 has continued into 2017, Research continues to grow and port services is trading as expected. Overall, Clarkson notes an encouraging start to the year with trading in line with the Board’s expectations. While overall conditions remain challenging Clarkson’s strategy continues to deliver and we anticipate a return to profit growth this year ahead of the potential for a material increase in distributions from next, once the balance of the Platou loan note has been repaid. We reiterate our Buy recommendation and 3,000p per share Target Price.
Clarkson’s AGM trading update has highlighted an encouraging start to the year, with trading in line with management's expectations. Shipping markets have been mixed so far this year, and the anticipated swing towards more spot business has occurred.
Clarkson remains materially profitable and cash generative, despite the most challenging shipping market conditions for 20 years. Management has focused on what it can deliver, exploiting market-leading research and cross-selling investment banking services to reinforce Clarkson's market leadership in shipbroking.
The FY results were as expected, despite shipping market conditions remaining challenging. Transaction volumes continued to grow, and market share continued to rise, but this was more than offset by lower freight rates and vessel values.
Clarkson reported underlying FY16 EPS of 105p and boosted the dividend by 5% to 65p, beating our forecasts for both. Net cash generation was exceptionally strong at £45.6m, particularly give the industry context. The positive contribution from Financial demonstrates the wisdom of the Platou acquisition. Once the second tranche of the Platou loan note has been repaid this year, we believe Clarkson has the potential to more than double current distributions to shareholders. Moreover, we believe the value potential in Clarkson’s unique shipping data analytics capability is only beginning to be recognized. We hike our Target Price to 3,000p per share (from 2,550p) and strongly reiterate our Buy recommendation.
Clarkson’s investor day provided further evidence of the group's competitive advantage. The group is exploiting its breadth of services, global reach and scale to deliver further market share gains and superior financial performance.
Clarkson held its presentation for analysts and investors today. In our view the principal objective was to emphasise Clarkson’s uniquely strong position as an information based provider of integrated services to shipping and offshore markets. We believe it also intended to more widely demonstrate the quality of its people and that the integration with Platou is complete. While there was no material new information, we believe it succeeded in those objectives. We reiterate our Buy recommendation and 2,550p per share Target Price.
Clarkson has released the briefest of pre-close updates indicating that FY16 results are expected to be in line with expectations. These are tightly grouped around 101p per share; our own forecast is 100.2p per share. Market conditions remain extremely challenging with the ClarkSea index down 34% YoY and the value of capital markets activity down over 60% YoY. However, tonne miles increased 2.7% YoY while sale and purchase activity is high with order books continuing to fall and recycling increasing. All this points to a market grinding through the low of the cycle. The perk up in rates toward the end of the year may indicate that the worst is nearly over. Clarkson will no doubt provide a clearer view with its full year results, scheduled for release on 13 March. We are Buyers with a 2,550p per share Target Price.
Clarkson is the world's leading shipbroker. Its unrivalled market positions and research capabilities support superior margins, productivity and returns. Market share gains have mitigated the worst effects of the shipping downturn, leaving the group well-positioned to exploit the eventual recovery.
Interim results showed a fall in profits, with tough shipping market conditions more than offsetting underlying strategic progress. A shakeout in the shipping market seems inevitable, to the group's eventual benefit, but timing remains uncertain.
Clarkson reported underlying profit before taxation for 1H16 of £21.8m on revenue of £147.2m generating underlying EPS of 52.9p. That result was 10% ahead of our 1H16 EPS forecast and within 3% of the 1H15 result. Given how challenging the industry background has been, we regard that as a very positive result. The interim dividend was unchanged at 22p, but we continue to anticipate that Clarkson will increase the FY16 dividend by 2p per share YoY to 64.0p. Net funds available to shareholders increased YoY to £46.7m (1H15 £41.3m) and Clarkson stands to receive approximately £12.6m in dividend and sale receipts from the disposal of its interest in the Baltic Exchange in 2H16. We reiterate our Buy recommendation and 2,550p target price.
Clarkson has issued a trading update highlighting the deteriorating business conditions it faces and anticipating materially weaker profits YoY in 2016. We now anticipate recovery to be delayed into 2017. We cut our FY16 clean PBT forecast by 21% to £43.1m and amend future forecasts; effectively our former FY17 forecast has become our FY18 forecast. We shade our 2016 dividend forecast by 2p per share but leave prospective dividend forecasts unchanged. We reduce our target price to 2,550p per share (from 2,800p). We believe Clarkson is well positioned to leverage the recovery when it comes. The company should have very substantial additional distribution potential from 2018, once the Platou loan note has been repaid. We remain Buyers.
We believe Clarkson has a uniquely strong market position in marine broking and investment banking and is taking advantage of current difficult industry conditions to leverage its position. We forecast strong growth in earnings and free cash flow from 2017 driven by achievable revenue and margin growth that could see the company trading at a 27% discount to its historic P/E by 2018 and potentially offering a yield of 5-6% on its full distribution potential. We reiterate our 2,800p target price and believe there is plenty of scope for upside assuming our forecasts are delivered. We remain buyers.
Clarkson reported underlying profit before tax of £50.5m, in line with guidance. The integration of Platou appears to have gone extremely well and the Company is leveraging its enhanced position; however, the maelstrom in its markets resulted in EPS slipping 9.2% to 121.9p. While current conditions will bring their own solution, 2016 is also set to be highly challenging and we are amending our forecasts, effectively slipping them a year. Clarkson’s financial position remains exceptionally strong and cash available for distribution could more than double by 2018. We firmly believe that the Platou acquisition has enhanced Clarkson’s business and we remain Buyers. However, we trim our 12 month Target Price to 2,800p (from 3,000p) to reflect the lengthened timeframe for results to be delivered, given market conditions.
Since the Group's most recent trading update (3 November 2015), trading has continued in line with the Board's expectations. As a result, the company continues to anticipate an adjusted PBT of around £50m for the year ending 31 December 2015. We remain positive on the group's longer term growth potential and retain our Buy recommendation.
Despite the challenges in banking and broking, the group expects a full year adjusted PBT of around £50m in the current year. While we have reduced our forecasts to reflect these challenges, we remain positive on the group's longer term growth potential and retain our Buy recommendation.
Clarksons delivered a robust set of interim results, characterised by strong Broking profits but a lower than expected contribution of the Financial division. While we recognise that, as previously indicated, the delivery (and earnings) profile of the group's activities in broking and financial is likely to be more H2 weighted, we have prudently trimmed our forecasts on the back of capital markets weakness and a higher Minorities line. As a leading shipbroker, Clarksons remains in an excellent position to capitalise on recovering shipping and capital markets in the medium to longer term. We retain our Buy recommendation.
Trading conditions have remained in line with management’s expectations. We retain our Buy recommendation and 3000p target price.
