The world lusts for nitrogen-containing fertilisers as availability dominates pricing negotiations with ammonia prices flying up since the beginning of Q1. Being part of the story, Yara was one of the beneficiaries despite volume’s tiny performance. The higher sales prices could be introduced also because of the sharp (!) increase in natural gas prices yoy and sequentially. Our not too ambitious expectations were beaten, especially on the profitability level, but consensus was missed on all line
Companies: YARA INTERNATIONAL (YAR:STO)Yara International ASA (YAR:OSL)
Yara reported a good set of figures, beating our more moderate view in 2020 as we has factored in a stronger negative from higher energy prices. The latter has been counteracted by higher volumes and better pricing momentum in Q4. In the light of the fading effect from low energy prices, the provided outlook and already signed contracts will help profitability to be maintained in the first months of 2021, at a minimum.
Consensus was not met.
Companies: Yara International ASA
Yara will release its Q4 results on 9 February, and we expect an EBITDA (Yara definition) of USD 495m (499). We have implemented firmer European gas prices and updated FX assumptions, representing headwind for earnings. This has been partly offset by higher price assumptions. Following our estimate revisions, we see limited scope for raising our NOK TP, and we hence downgrade the stock to Hold (Buy).
Targets new USD 300-600m EBITDA by 2025
2020-21 CapEx unchanged, 2022 higher than expected
Unchanged financial targets
Plans for 500’t green ammonia plant in Norway
Yara reported an EBITDA (Yara def.) ex special items of USD 558m – in line with our expectations. The board proposed an extraordinary dividend of NOK 18 per share, reflecting the Qafco divestment and to be paid in Q4/20. We have kept our price assumptions unchanged in this update, and consequently, we have only fine-tuned our estimates. We still expect share buy-backs and EO dividends will provide downside support, and we reiterate our BUY rating and TP.
... Yara lifted FCF as well as ROIC to new levels. Operating figures were impacted by various effects, the most dominant one being lower sales prices. The impact of lower energy prices started to level out earlier than expected. This was not well explained as management shared future gas prices. Incidentally, AlphaValue had removed the share from the active portfolio just some days ago as investors had bought more into risk.
EBITDA (Yara def.) ex of USD 558m (Arctic: USD 541m, Cons.: USD 656m)
Proposes an additional NOK 18 per share in extraordinary dividend
Energy cost guiding broadly in line with expectations
Minor estimate changes expected, but EO dividend supportive
Yara will release its Q3/20 results on Tuesday 20 October. We have revised our Q3/20 estimates lower, mainly due to a stronger NOK as well as a weaker than previously expected CAN price. We have only fine-tuned our estimates for Q4/20 onwards, and stick to our Buy rating as well as our NOK 400 TP. The buy-back programme as well as extraordinary dividends should provide downside support, but an improved market balance is needed in order to raise our TP further.
Yara’s Q2/20 results and energy cost guiding were in line with expectations. The Qafco transaction is expected to close within 2-3 weeks, and upon completion of this transaction, Yara will initiate a 5% share buy-back. The company will also consider additional cash return during H2/20. We find this supportive and stick to our Buy rating as well as our NOK 400 target price.
Yara is a beneficiary of today’s low energy prices as the business was hit by the global economic shake-up. Despite providing no 2020 guidance, management gave some positive insights on spot-price gas costs for the coming months. From our point of view, this story could continue for the remainder of the year.
The Q2 figures confirmed our view on the company and profitability was above our expectations. Consensus was also beaten at this level.
EBITDA (Yara def.) of USD588m (Arctic: USD 593m, Cons.: USD 577m)
Initiates 5% share buy-back upon completion of Qafco transaction
Energy cost guiding in line with expectations
We only expect to fine-tune our estimates, cash return positive
Yara will release its Q2/20 results on Friday 17 June. We have lowered our estimates marginally ahead of the report, and we are currently a modest 1% above consensus. Urea prices have shown strength over the past two weeks and are set to improve further during H2/20. The combination with depressed gas prices will continue to support earnings, and will in our view continue to provide downside protection. We stick to our Buy rating and our NOK 400 TP.
Yara’s business model is highly dependent on energy prices, especially gas prices, as the company basically grabs gas from the air and puts it in the soil for vegetables. The key chemical reaction is extremely energy-intensive. The Q1 figures gave some first glimpse of the potential impact on 2020 as a whole, despite the negative top-line development. But profitability came in stronger than expected. Consensus was beaten on all levels.
Yara’s Q1/20 results exceeded our expectations, and the natural gas price and FX trends support our estimates. We have raised our EPS/20 and EPS/21 estimates by 2% and 6% respectively, and the forthcoming Qafco transaction should provide further support to the balance sheet as well as the likelihood of extraordinary dividends once the COVID-19 situation normalizes. We stick to our Buy rating as well as our NOK 400 target price.
Q1/20 EBITDA (Yara def.) of USD504m (Arctic: USD463m, Cons: USD443m)
Reiterates its NOK 15 per share dividend (still additional upside)
CapEx guiding unchanged
Yara will remain owner of Industrial segment going forward
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Seeing Machines has announced that it has been appointed by CAE Australia to integrate its precision eye-tracking technology, for an Australian defence industry customer. The engagement is valued at A$1m over five years and comes at the end of a successful direct engagement between Seeing Machines and an Australian defence industry innovation programme delivered over the past two years. This programme exceeded all stakeholder expectations and has opened several additional opportunities across th
Companies: Seeing Machines Limited
XPD increased profit by 40% last year and strong trading has continued through to the end of May. In 2020a growth was largely driven by the Freight Forwarding division. Now management reports that all three divisions – Freight Forwarding, Warehousing & Logistics and Transport Solutions - are growing. As with many logistics businesses, trading at XPD is seasonal with most profit made in H2, hence we have not lifted our estimates at this stage, but with this AGM statement today, risks are clearly
Companies: Xpediator Plc
Despite the challenges presented by Covid-19, TP Group was able to report organic revenue growth of 9% YoY in FY20A, and total revenue up 20% YoY. Aided by strategic acquisitions, non-core business disposals, and investments made within the group, the company should be well placed to benefit as trading conditions normalise. With visibility improving, we release new forecasts for FY21E and FY22E (Adj EBITDA of £4.2m and £5.1m respectively). Given the improving outlook, and a record order book (£6
Companies: TP Group Plc
Tern plc* (TERN.L, 23.75p/£78.5m) | CAP-XX Ltd* (CPX.L, 8.15p/£36.0m) | MTI Wireless Edge Ltd* (MWE.L, 64.5p/£57.1m) | Newmark Security plc* (NWT.L, 1.2p/£5.6m) | Blackbird plc* (BIRD.L, 32.0p/£107.9m)
Companies: TERN CPX MWE NWT BIRD
Staffline’s raise has generated £44m of net proceeds. The debt re-fi simplifies the bank lending and provides ample head-room. The circular points to FY results in line. Staffline has also reported a strong start to the year, with potential upside from Restart. FY 21 FD EPS increased by 57% and FY 22 reduced by 8% to reflect the mechanics of the re-fi and no tax. We expect the conversion rate to continue increasing. The B/S looks sound with expected FY 22 covenant net debt / EBITDA of 3.0x. We h
Companies: Staffline Group plc
We increased our forecasts on 3 June as SThree pre-announced the strength of Q2. Today’s full release shows Q2 NFI +22% y-o-y and H1 NFI +3% on H1 19. The contractor order book is up 33% and productivity +36%. We make no changes to forecasts today, but now expect H1 21 PBT of £27.4m, up 14% on H1 19. Our H2 estimates are cautiously set, reflecting more normalised contractor working hours and selective headcount investment. We see the risks to be on the upside. Maintain Buy.
Companies: SThree plc
Today's news & views, plus announcements from ICP, BATS, OXIG, PAG, NCC, OTMP, XPD, PPC
Companies: BATS OTMP XPD
As midsummer’s day looms (where has this year gone?), there is greater optimism, in general, than may have been anticipated a few months ago. A post-pandemic, ‘vaccine-driven’ recovery demonstrated by increased consumer spending as lockdown measures are lifted has been one of the catalysts. The FTSE 100 has been range-bound in the last month 6,900-7,100. We have seen a combination of broadly positive company results across a range of sectors, further examples of M&A activity and a sequence of ne
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The appointment of an engineering consultancy on the Polish project demonstrates progress. Powerhouse has said that it hopes to complete the project by Q1 2022, in line with development progress in the UK. We see Powerhouse as having considerable international opportunities for the deployment of its DMG technology.
Companies: Powerhouse Energy Group PLC
Last week Metalcraft (part of AVG’s PRSE division) and Sellafield mutually agreed to exercise the option to enter into the second phase of the contract to provide a total of 1,100 high integrity 3M3 stainless steel storage boxes for Sellafield. This is a significant milestone, following commencement in 2015 of prototyping and refinement, and the establishment of dedicated, state of the art 3M3 box production and supply. We think It clear that Metalcraft has now established the leading position i
Companies: Avingtrans plc
Despite an unparalleled disruption caused by Covid-19, Getech grew its subscription-based revenues and the order book remained strong. Despite a drop in revenue driven by Getech's customers reducing short-term project service work and related data sales, gross margins were protected by Getech's cost saving measures. Furthermore, the Services division swung back into operating profit. Following the Company's £6.25m equity raise, Getech is well positioned to grow and diversify its activities acros
Companies: GETECH Group plc
The robustness of the operating model and management's action to support customers and manage the cost base led to Vianet generating positive operating cash flow in FY21A. There is a strong pathway to recovery but the full extent is somewhat caveated on a full reopening profile that is yet to be confirmed. We are forecasting the Group to be free cash flow positive this year and see upside in the price as new order momentum returns.
Companies: Vianet Group plc
Epwin has entered FY21 with positive revenue momentum, having successfully navigated some extreme market conditions in the prior year. The company has built a solid base from which to grow volumes, and a positive cash generation profile provides headroom to invest organically and via acquisition as post-pandemic markets begin to normalise.
Companies: Epwin Group PLC
AVO’s goal is to deliver an affordable and novel PT system, called LIGHT, based on state-of-the-art technology developed originally at the world-renowned CERN. Over the past two years, important technical milestones have significantly derisked the project. Now, AVO is working on the verification and validation phase, prior to LIGHT being used on the first patients to support CE marking. In its recent technical update, the company highlighted progress made over the past three months towards a ful
Companies: AVO ARBB ARIX BBGI CLIG DNL FLTA ICGT OCI PCA PIN RECI STX SPO SCE TRX VTA
Power reliability and drilling tools specialist Northbridge has confirmed in today’s AGM update that it is “firmly on track to meet management expectations” for FY21F and indicated momentum is likely to continue beyond that, driven by growth in datacentres and renewables and a 50% enlargement of its UK factory. It has also announced a £10m refinancing, including the redemption of its convertible loan notes. Lower interest costs nudge up our FY21F adjusted PBT from £2.0m to £2.1m. Northbridge als
Companies: Northbridge Industrial Services plc