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Centaur Media (CAU LN) AGM statement – trading in-line | Elektron Technology (EKT LN) Hidden value | GlobalData (DATA LN) Exploiting the GlobalData model |Horizon Discovery Group (HZD LN) Possible offer by Abcam illustrates attractive growth prospects | James Fisher & Sons (FSJ LN) Trading in line; good contract momentum | Springfield Properties (SPR LN) Acquisition of Dawn Homes to accelerate growth
Future (FUTR LN) Results underline change and opportunity | IndigoVision Group (IND LN) Trading behind expectations; Chief Exec leaves | James Fisher & Sons (FSJ LN) Outlook unchanged; Offshore Oil recovery delayed | Sanderson Group (SND LN) Scaling up the Enterprise division | Speedy Hire (SDY LN) Earnings enhancing acquisitions | Vernalis (VER LN) Reduction in cough cold forecasts | WYG (WYG LN) UK challenges prompt further downgrades
Fisher has reported an encouraging set of interims this morning, in line with our expectations. Revenue is +13%, PBT +6% and the interim dividend +10%. The outlook statement suggests the Group is well on track for the full year. Notably, the offshore oil business is seeing some improvement (“clear signs of recovery in orders for the Norwegian and downhole equipment businesses”). Stronger growth is anticipated in H2, which is consistent with our forecasts (9% PBT growth forecast for full year versus 6% reported for H1). We continue to feel that large project opportunities within defence and renewables remain and any newsflow in those areas would be likely to restart the share price progression. We remain supportive of the investment case, but remain at Hold for now with an unchanged target price of 1605p.
UK nuclear represents a huge and complex market offering significant long-term opportunities. New build nuclear is required to help meet rising UK power generation needs and replace generation capacity which is nearing end of life. Decommissioning is essential to clean up the UK’s legacy nuclear sites safely and securely, prioritising areas where deteriorating buildings present an unacceptable risk. The total budget for nuclear is estimated at c.£301bn, with a significant proportion of this spend expected to be with UK companies. The contracting opportunities are not without risks and uncertainties. However many companies are already generating revenues and profits from UK nuclear contracts, including a number from our small and mid cap universe. We expect these contributions to become more material over time, and for the experience gained in the UK market to leave companies well-positioned to pursue nuclear opportunities overseas. Our top picks are Severfield (Buy) and Augean (Corporate), but we are also positive on Redhall (Non-Rated).
Futura Medical (FUM LN) Multiple licensing discussions underway | Low & Bonar (LWB LN) Solid Q1, trading in line | Nuclear options Significant long-term opportunities for UK companies | RhythmOne (RTHM LN) Trading update – profit and cash ahead | Uncovered Gems - Speed Dating Lunch A Famous Five for the future?
Craneware (CRW LN) Interims to show momentum building | Elementis (ELM LN) Positioned to revive growth | James Fisher & Sons (FSJ LN) Solid results | MySale Group (MYSL LN) Growth platform established, momentum building | NCC Group (NCC LN) Rob Cotton steps down | Raven Russia Ltd (RUS LN) Short delay to St Petersburg portfolio acquisition
This is an interesting bolt on acquisition in a new area for the Group but adjacent to other services and servicing similar customers with cross selling opportunities. This is another example of a distressed situation (SeaEnergy plc administration) throwing up opportunities for James Fisher. We make no change to numbers at this stage. We also note the c.10% share price fall in recent weeks; given the strength of contract momentum and solidity in core operations, we feel that there are strong investment attractions at the current price.
Goals Soccer Centres (GOAL LN) Strategic review / Placing – our initial take is mixed | James Fisher & Sons (FSJ LN) Bolt-on acquisition | Oxford BioMedica (OXB LN) R&D collaboration with Green Cross LabCell | Sigma Capital Group (SGM LN) New strategic partnership with Keepmoat | Summit Therapeutics (SUMM LN) Q1 2017 results | Verona Pharma (VRP LN) Full year results highlight period of impressive development | Xaar (XAR LN) Launch of Thin Film/P4 and strategic partnership
There has been a number of significant contract wins at the start of FY16 which has confirmed James Fisher’s growing reputation in a number of different market sectors. Whilst Offshore Oil remains subdued, the other areas of the portfolio are performing extremely well; we retain FY16 forecasts and upgrade both FY17 and FY18 PBT by £0.5m to reflect the contract contribution. We expect the strength of recent contract momentum to continue to drive the re-rating of the shares.
accesso Technology (ACSO LN) Consistent growth, increasing margins and few risks | Earthport (EPO LN) Solving a $9.3bn+ problem | Gresham Computing (GHT LN) Positive AGM statement | Howden Joinery Group (HWDN LN) Strong trading in recent 8 weeks. Low end f/casts to edge up | James Fisher & Sons (FSJ LN) Trading in line | NCC Group (NCC LN) Strong revenue growth, margins lower | Oxford BioMedica (OXB LN) Final results and portfolio review | Redde (REDD LN) Strong trading continues in H2 | Sepura (SEPU LN) Financing resolution required to unlock potential | Synthomer (SYNT LN) Positive start to 2016 | Victrex (VCT LN) Resolution of US Federal Trade Commission Inquiry
This significant nuclear win confirms that the James Fisher Nuclear business is increasing in profile and importance within the sector. It is particularly good news in an area where many more opportunities of this ilk should be on the horizon. It. We expect a positive AGM update on 28th April.
BOOHOO.COM PLC (BOO LN) FY16 beat expectations, good start to FY17, and long term potential | FISHER(JAMES)& SONS PLC (FSJ LN) Contract win confirms increasing nuclear profile | HORIZON DISCOVERY GROUP PLC (HZD LN) FY results in line with expectations
This significant contract win is further confirmation of James Fisher’s global leadership in submarine rescue as well as in integrated marine services generally. It drives significant upgrades of 9.2% in FY17 (first full year) and 8.2% in FY18 and again emphasises the value of the breadth of the Group’s portfolio. We expect this to further drive the re-rating of the shares towards a P/E of 20x.
As we had anticipated, James Fisher’s portfolio of niche businesses has significantly mitigated the challenges faced by the Offshore Oil division. A strong end to the year means that FY15 results were 4% ahead of expectations and ongoing positive activity in Marine Support and Specialist Technical allows us to upgrade forecasts by 2%, despite an expectation of no oil related improvement. This is extremely encouraging and should reassure those who have considered FSJ as a standard oil services business. We see further upside potential given a strong contract pipeline, and expect the shares to start to rerate back towards a mid teens P/E (currently 13.6x).
Management has previously discussed significant contracts in the pipeline and today’s win is a demonstration of the breadth of the Group offering when sold as an integrated service. This is a large (£25m+) contract over c.2 years which could also be the precursor for more activity in this area. We await next week’s results and the outlook for Offshore Oil before amending our forecasts but would note the potential for more contract wins to offset the impact of the oil price.
It is not a surprise to us that conditions have remained challenging in Offshore Oil and we are encouraged that we do not have to move our forecasts. We await news of contract decisions which could still make a positive impact on forecasts before the end of the year.
The impact of the collapsing oil price has been more significant than originally anticipated on the Group’s Offshore Oil division. Customers are deferring essential expenditure and conserving cash as a number one priority. The timing of a change in this situation is difficult to gauge. However, the rest of the Group is performing well and significant contract awards are anticipated in the short term, whilst margins have remained strong, confirming the niche, non-commoditised nature of the Group’s services. These are challenging times, but the Group’s key attractions remain strong, with share price weakness giving an opportunity for long term investment.
