Benefiting from the strong market recovery, EssilorLuxottica witnessed an acceleration in sales in Q2 with optical growing faster than the sun category. Interestingly, the outperformance was led by the US-heavy retail business. Wholesale also witnessed a step-up, though it lagged due to its European exposure. Robust sales growth and strict cost management ensured a beat on profitability too. Given the sturdy results, the FY21 outlook has been raised. With GrandVision now in the bag and governanc
Companies: EssilorLuxottica SA
After two failed attempts, EssilorLuxottica has finally won the legal battle against GrandVision. While the French-Italian giant now has the option to pull the plug on the deal without paying any penalties, we believe it would instead go-ahead with the deal but at a lower price. Importantly, EssilorLuxottica now has an upper hand to renegotiate terms and, considering that GrandVision is no longer in a position to dictate the terms, it might agree a lower price.
2021 has got off to an encouraging start with the group capitalising on the rebound in the US and Chinese markets. Interestingly, strong momentum was visible in prescription lenses and optical retail and sun business was also back on track. Note that Q1 21 sales reported growth above Q1 19 levels and management is now confident to deliver a FY21 performance at least comparable to pre-pandemic levels. The integration process continued to gain momentum and full-year synergy targets were reiterated
Sales (at CER) were back in the black in Q4 20, driven by the resilience of the lenses segment and the acceleration in the retail segment, led by e-commerce. Management believes that the business environment will begin to normalise from Q2 21 and, combined with an innovative product pipeline, it has the ambition to deliver a performance comparable to pre-pandemic levels. Importantly, the governance structure is being overhauled and Del Vecchio is set to tighten his grip over the company.
The Q3 beat was driven by the ‘resilient’ lenses segment. Wholesale saw a significant improvement, led by the independent channel, and retail bounced back with optical banners and e-commerce leading the pack. Developed markets returned to positive growth while emerging markets remained a drag. A further acceleration was visible in October but, due to fresh lockdowns, the management remains prudently confident. With optical considered as an ‘essential’ category, the sales impact could be less sev
As expected, Q2 was worse than Q1 with sales plummeting 46.1%. However, revenue hit a trough in April, followed by a marked sequential recovery in May and June. Lenses saw almost flat sales in June, benefiting from pent-up in demand for prescription products and new product launches. Retail is approaching normalcy on the back of progressive improvements in traffic and higher conversion rates. Wholesale is a bit behind, though the progressive recovery of independents and key accounts should provi
Q1 was weak as the solid growth witnessed in January-February was offset by a material decline in March due to COVID-19. Despite the acceleration in online sales, Q2 should be worse. However, considering that c.70% of group sales are exposed to resilient optical prescription products, one could see a pent-up in demand when the situation normalises. Early signs from China have been encouraging and, if the recovery is solid, the board might consider a special dividend, though the FY19 dividend has
FY19 ended on a high with an acceleration in sales in Retail, Wholesale and Sunglasses and a steady show in Lenses in Q4. However, given the COVID-19 outbreak, momentum could lose pace in H1 20. Margins should also remain in check as the benefits of synergies would be reinvested into future growth opportunities. Unfortunately, a fraud at the Thailand plant has brought governance issues at the forefront once again. Nonetheless, a go-ahead for the GrandVision deal should come on time.
EssilorLuxottica witnessed a robust acceleration in sales in Q3 (+5.2% at CER), driven by new product launches in the lenses business, good dynamics in retail (both offline and online) and steady growth in fast-growing markets. However, the wholesale business lost pace due to softer demand in the Asia-Pacific region. Given 9M 19 sales of +4.3% and considering the ongoing launch of the next-gen Transitions lens in other countries, the FY19 sales growth target of +3.5-5% is comfortably within reac
EL is likely to outpace the eyewear/eyecare industry in the mid/long term, driven by a shift towards an integrated network business model and an increasing focus on innovation and digitalisation. Geographically, the fast-growing markets would be a key source of growth, benefiting from a growing middle class. Growth in profits would be higher than sales on the back of operational leverage, favourable product mix and synergies from the mega-merger.
Sales momentum accelerated in Q2 led by lenses, sunglasses and wholesale, though retail saw a deceleration. Given the new product launches, momentum is likely to accelerate further in H2 and thus the FY19 sales targets seem attainable. As anticipated, profitability slumped in H1, due to an increased marketing spend to support new product launches and, given the seasonality of the business, we foresee margin compression on a sequential basis. Note that the EssilorLuxottica integration process has
After putting lenses into frames, EL’s decision to augment the retail presence, particularly in Europe, looks like a strategic move. Given that EL and GV have limited business overlap, the antitrust approvals should be obtained in a timely fashion. Also, the integration process between the French and Italians is now in full swing and the amalgamation of GV should be smooth, given Luxottica has a history of incorporating retail networks. With so much on its plate, the appointment of a new CEO has
EssilorLuxottica is considering a takeover of Dutch eyewear retailer, GrandVision. Although the deal seems a good strategic fit, given GrandVision’s mass market business model and increasing focus on emerging markets, we have concerns with respect to the potential integration of the deal. Anti-trust authorities might also be a spoilsport once again.
A decent Q1 in which Luxottica witnessed acceleration in sales, driven by retail, while Essilor lost pace, due to unfavourable weather in the US. Given the new product launches, which are backed by effective marketing campaigns, Q2 has got off to a good start and we anticipate an acceleration in sales from hereon. Re-activation of the bolt-on acquisition strategy would provide a further push. With FY19 financial targets within reach and synergies now in execution mode, we eagerly await the upcom
As both the French and the Italian groups accused each other of trying to gain the upper hand at EssilorLuxottica’s leadership, the governance crisis has become uglier and the stock slumped c.6% on 21 March 2019 to hit a two-year low. The pain aggravated when the executive chairman of EssilorLuxottica, Leonardo Del Vecchio (also the biggest shareholder of EssilorLuxottica and founder of Luxottica), accused its deputy, Hubert Sagnieres (vice chairman of the new entity and ex-CEO of Essilor) of a
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Full-year results were in line with the trading update of 21 July, with revenues of £31m (-2%), reflecting the impact of COVID-19 on out-patient procedure rates, resulting in 14% and 24% declines in adjusted EBITDA and pre-tax profit, respectively. Lower than expected procedure growth rates and the decision to discontinue non-core (non-chlorine dioxide products) reduces forecast revenues by c.£3m to £33m in FY 2022. However, higher gross profit and tight control of costs (+6%) results in an unch
Companies: Tristel Plc
Recruitment resumed the Phase 2a trial of the lead programme hRPC in retinitis pigmentosa (RP) with the treatment of the first UK-patient in Oxford. The protocol gives greater infection control after the safety issue (a possible infection) in June. Five patients were treated up to mid-October and the remaining four could be treated by December 2021. By late March 2022, ReNeuron expects to give an interim update. The full data set should be available around mid-2022. This will enable regulatory d
Companies: ReNeuron Group plc
Joiners No Joiners Today. Leavers No Leavers Today. What’s cooking in the IPO kitchen? Devolver Digital to join AIM, an award-winning digital video games publisher and developer in the indie games space. Recently awarded indie 'Publisher of the Year 2021' by GamesIndustry.biz. Offer TBA. Due early Nov. Life Science REIT to join AIM raising up to £100m. This will be the first London listed real estate investment trust (REIT) focused on UK life science properties providing investors with exposure
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IXICO has provided an upgraded trading statement for FY21E following its previous update in August 2021. Revenues are now expected to be £9.2m (vs £8.7m previously), broadly in line with FY20A, which we see as a strong result given the pandemic and Huntington's Disease (HD) trials de-scope. EBITDA is expected to be materially ahead of FY20A's £1.3m, supported by strong Q4/21 trading, cost control and positive one-offs. The company has ended FY21 with a strong order book (£18.8m) and cash positio
Companies: IXICO Plc
CareTech is a specialist social care and educational services provider. This morning, the group has announced an update for the year to 30 September pointing to the fact that results will be in line with market expectations. The net debt position of £259m illustrates a further reduction since the end of H1 (31 March £263.1m) and implying a reduction to 2.7x adjusted EBITDA. During the year, seven new developments have opened, with a further eight properties purchased in H2. The group's freehold
Companies: CareTech Holdings PLC
IXICO has announced that one of its clients has put an indefinite halt on a clinical trial for which the company was providing its artificial intelligence medical image analysis. The halt is the result of unexpected preclinical data. IXICO had expected the contract to deliver £0.8m of revenues in FY22E and it represented £3.3m of the £18.8m order book as of the close September 2021. While this news is disappointing, clearly the trial halt has no reflection on the capability of IXICO's technology
Today’s prelims are in line with management’s expectations with losses before tax in the period of £30.3m (vs. £29.4m prior year). Post-merger, 4D pharma is clearly a different beast with access to the largest global capital market for Pharma/Biotech, and supported by £25.2m (net) proceeds from corporate activity. The company has cash runway until Q2 2022 and is well placed to successfully execute its clinical development strategy with multiple shots on goal. Primary focus is on MRx0518 with two
Companies: 4d Pharma PLC
Exactly one year ago, the FTSE 100 closed at 5,862, having fallen 100 points on the day, the lowest point since mid-May 2020, due in part, to the strength of sterling vs US$ at $1.34. One year on, the FTSE 100 has risen to 7,119, a rise of 21%, it remains 7% below the peak in January 2020. From an international viewpoint, US and European markets continue to trade at record highs. The US Federal Reserve is close to withdrawing some of its economic support this year as inflation picks up and the e
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SkinBioTherapeutics has announced it will launch its lead commercial product, AxisBiotix-Ps on World Psoriasis Day, 29 October 2021. To support the launch, the company has begun to receive, and store finished product in the Netherlands (close to its manufacturing partner) ahead of initial launches in the UK and US. Clearly the launch of its first product is a significant step for SkinBioTherapeutics, marking the transition from development company to commercial operation. We are encouraged by th
Companies: SkinBioTherapeutics Plc
Synairgen reported interim results to 30 June in which the adjusted net loss was £32.8m with period-end cash of £46.2m. Substantial pre-commercial progress and manufacturing activities have made in the half, although slower country approvals for trial sites will result in Phase III data readout slipping into Q1 2022. With increasing evidence of the need for a broad-spectrum antiviral delivered to the lungs and recognition that vaccines don’t provide complete protection against hospitalisations d
Companies: Synairgen plc
*A corporate client of Hybridan LLP Joiners No joiners today. Leavers Conduity Capital has left AIM. What’s cooking in the IPO kitchen? Softline the global solutions and services provider in digital transformation and cybersecurity, with its headquarters in London, is considering proceeding with a potential initial public offering of global depositary receipts representing its ordinary shares. The Company is considering applying for admission of the GDRs to the standard listing segm
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Joiners No Joiners Today. Leavers Cambria Autos has left the AIM following a takeover. What’s cooking in the IPO kitchen? Light Science Tech Holdings, the controlled environment agriculture technology and contract electronics manufacturing Group to join AIM. Raising £5m. Expected mkt cap £17.4m. Due 15 Oct. Harmony Energy Income Trust to join the Specialist Fund Segment of the Main Market raising up to £230m. The Company's investment objective is to provide investors with an attractive and susta
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The current situation in the CDMO arena looks a bit like an arms race and Lonza seems to have firm plans to be part of it. The recently updated mid-term guidance is the explanation to do so, in our view. Management is strongly dedicated to staying with the extraordinary high EBITDA margin for the coming years. Lonza’s hybrid investors day was well attended in Zurich, in which we participated.
Companies: Lonza Group (LONN:VTX)Lonza Group AG (LONN:SWX)
Joiners No Joiners Today Leavers No Leavers Today What’s cooking in the IPO kitchen? Arrow Exploration Corp. (AIM: AXL ; TSXV: AXL) , the oil and gas exploration and production company, has conditionally raised approximately £8.8m and is due to complete its dual listing on AIM on 25 Oct. Market cap c£13.1m. Devolver Digital to join AIM, an award-winning digital video games publisher and developer in the indie games space. Recently awarded indie 'Publisher of the Year 2021' by GamesIndustry.biz.
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