The H1 results (in line with expectations) were led by New Category growth (up by +50%) and the partial recovery from the pandemic impact. We see the outlook as good, with annual sales revised upwards and even though margins may be challenged by increased New Category investments. This is definitely good for the long term, but could be (unfairly) misinterpreted by the market at the moment.
Companies: British American Tobacco p.l.c.
Today's news & views, plus announcements from ICP, BATS, OXIG, PAG, NCC, OTMP, XPD, PPC
Companies: BATS OTMP XPD
Strong trading update with upgraded FY21 revenue growth target (+5% vs. +3-5% previously) and strong confidence in the New Generation Products development.
Good full-year results, which beat top- and bottom-line expectations. However, the FY21 cautious guidance weighs on the stock today.
H1 combustible resilience and surprising improvement in the New Categories unit (vapour, THP, modern oral). We continue to be positive on the stock.
FY20 guidance cut mainly due to a slowdown in emerging markets. This is rather disappointing as we were more confident in the operational resilience of the group.
In an industry that remains resilient during the COVID-19 crisis, BAT joins the virus vaccine race, (paradoxally) boosting its ESG credentials.
BAT held its CMD on 18/03/2020. No change in our confidence following the event. The company continues to show strength in its combustible activity vs. the industry and, while the New Categories business has been showing some weaknesses lately (US slowdown, regulations), we still believe that it will be the growth driver in the future. At the moment, it seems that BAT is succeeding in offsetting the vapour slowdown with its ability to transfer smokers to premium cigarettes. The FY20 outlook is u
BAT reported FY19 results close to the consensus and our estimates given it had provided an update in late November. No surprises in the FY20 outlook either, while FCF remains resilient. No change in the New Category products revenue target (£5bn in 2023/24), which is quite reassuring in the current destabilised environment.
Despite the warning of a slowdown in the New Category products, the company has continued to show strength in its combustible activity (highly positive in the US too). The “warning” concerning the FY New Category sales doesn’t imply a significant revision in our estimates. All the group level guidance was reiterated. It seems that BAT is succeeding in offsetting the vapour slowdown with its ability to transfer smokers to premium cigarettes. Our Buy recommendation is maintained.
While Altria’s results at the beginning of the week did not reassure, BAT reported pleasing H1 results. The numbers were in line with the group’s guidance and beat consensus estimates on the major metrics. While the cigarette volume fell, the strong pricing drove up the top-line and profitability.
Satisfying FY18 results for a company in a decreasing industry. The FY18 numbers were actually much helped by the total inclusion of Reynolds American. However, the lack of details concerning the FY19 guidance failed to stem our concerns on the medium-long term outlook.
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Surface Transforms has made significant strides to becoming a volume producer to global automakers. The Group has secured major multi-year orders, successfully raised funds for growth, refreshed its Board and wider management team, and announced a new more efficient manufacturing strategy. That said, as we discussed recently, 2021e is a transitional year and there is risk of delays to the drawdown of discs by OEMs. Surface has flagged that £2m of revenue, out of a £27.5m contract with OEM 8, may
Companies: Surface Transforms plc
Tandem Group plc is a leading provider of sports, leisure and mobility products in the UK, with a valuable collection of licenses (eg Disney, Warner Bros and Mattel) and its own brands. The group is aligned with key structural growth trends such as rising demand for e-mobility products (e-bikes and e-scooters), boosted by a desire for less polluting forms of transport. Trading on a T+2 Adj P/E of only 6.8x, we believe Tandem is significantly undervalued, and see upside of c64% to the current sha
Companies: Tandem Group plc
Interim results show strong operational progress and commercial traction, with the scale up of operations progressing and the kit-out of the new Stonehouse site still on track for completion in early 2022, in time for the scheduled production ramp up for its EV customer. The outlook comment points to some continuing pandemic-related supply chain delays and inflation, but nevertheless it remains on track to meet FY expectations. No change to forecasts. We believe the next year will see a major tr
Companies: Trackwise Designs Plc
An excellent set of interim results with trading comfortably back above pre pandemic levels and a strong start to H2. Significant investment remains underway to support sustained sales growth and mid-teens margins, with good progress YTD. Prudence / wider supply chain risks means we make no forecast changes, but the risk remains on the upside. Overall, Portmeirion is firmly moving in the right direction and the shares are attractively valued on a FY22 P/E of 11x and 6x EV/EBITDA with a strong ba
Companies: Portmeirion Group PLC
A positive trading update this morning signals that Zytronic is trading ahead of expectations. The recovery in sales (of which there were tentative signs at the time of the interims) has now taken hold convincingly. H2 sales are currently running some 30% ahead of H1 and therefore also ahead of our previous cautious forecast of a balanced H1:H2 split. This has enabled a faster return to profitability than expected and a reversal of the H1 loss. This is clearly good news and we look forward to up
Companies: Zytronic plc
Companies: Science In Sport Plc
SCE has announced interim results to end June 2021 which are very much in line with expectations. Revenue increased +33% H1-on-H1 largely due to an increasing flow of prototype parts to prospective OEMs. The order book currently stands at £67m, while the current cash position of £17.2m leaves the business in a strong position to execute on its capacity plans. Apart from a little slippage with OEM 8 SOP, the business remains on track. TP remains 69p/share.
Games Workshop’s (GAW’s) trading update indicates sales growth for Q122 (three months to 29 August 2021) is in line with management expectations. Management has highlighted pressure on freight costs and currency exchange rates given GAW’s high international exposure. The declared dividend of 25p per share brings the year-to-date total to 65p. Our forecasts for FY22 and FY23 are unchanged. Our DCF-based valuation remains £129 per share.
Companies: Games Workshop Group PLC
Blackbird plc* (BIRD.L, 38.0p/£128.1m) First OEM licensing deal (07.09.21) | CAP-XX Ltd* (CPX.L, 6.15p/£31.3m) Contract win: Selected for Spire's Health Tag (07.09.21) | Newmark Security plc* (NWT.L, 21.75p/£76.5m) Finals: Resilient performance; positive outlook (10.09.21)
Companies: BIRD CPX NWT
Companies: Made.com Group PLC
The Character Group (Character) has informed the market that while sales and trading remain very strong, the logistical challenges facing many companies in terms of ongoing delays at ports, shipping and container shortages and a rise in freight rates, mean that underlying profits for the year to August 2021 will be slightly lower than market consensus. We have therefore reduced our 2021 PBT forecast by 8% from £12m to £11m. Cash forecasts remain unchanged and on the assumption that this is a cha
Companies: Character Group plc
Undoubtedly, renewable energy is a growth sector, albeit one where public subsidies are pivotal. Approximately 40% of UK electricity demand is now met by renewable energy, a figure that is set to rise further as coal-fired stations are decommissioned and nuclear power capacity, despite the Hinkley Point C project, falls.
Of the privatised electricity companies, SSE, by some way, is the key renewables player: it owns more than 3.8GW of renewables generation capacity. However, there are now
Companies: AVO ARBB ARIX BBGI DNL FAS FJV FSV FLTA ICGT OCI PCA PIN RECI STX SPO SCE VTA
Springfield has delivered record results for FY21. Whilst the headline numbers were largely flagged in July’s trading update, we note the strategic progress that is being made (development of Villages, sustainability initiatives, ongoing investment in land pipeline). Profit growth (+81%) and cash generation (+£50m) are clear highlights, paving the way for a step change in the dividend (FY21 DPS 5.8p versus 4.0p forecast). We are forecasting underlying double digit profit growth throughout the fo
Companies: Springfield Properties PLC
discoverIE announced two acquisitions for a total cost of £77m cash and a placing to raise £55m at the beginning of September. We have upgraded FY 2022E EPS by 4.5% and FY 2023E EPS by 8.0%. The acquisitions fit entirely with the long-established growth strategy, create further organic growth opportunities in the Group’s target markets (particularly medical and industrial & connectivity), significantly increase the footprint in North America and enhance margins by c.0.8ppts on a proforma basis.
Companies: discoverIE Group PLC
MAST Energy Developments (MED) is to IPO on the Standard List on 14th April 2021 under the ticker MAST. The company has raised £5m giving a market capitalisation on listing of c. £23m. MED is currently a 100% subsidiary company of AIM quoted, Kibo Energy*. MED was established to acquire and develop a portfolio of flexible power plants in the UK and become a multi-asset operator in the rapidly growing Reserve Power market. PensionBee has confirmed its intention to float on the High Growth Se
Companies: SYM CGNR EKF KBT GGP VLS TMO ECK B90 MDZ