IMB unveiled a five-year transformation plan that would see it increase investments in its top five cigarette markets, bolster its sales force, and take a more “disciplined” investment approach with its fledgling vaping venture. Overall, the announcements have improved the group’s credibility, but the lack of upcoming catalysts slightly disappoint. Not to mention, the disappointment also around the lack of an immediate share buy-back. The re-rating vs. tobacco peers in not for now.
Companies: Imperial Brands PLC
Mixed feelings: the NGP beat should be welcome, as well as the transparency about FY21, but we believe that the decline in NGP investments should be a brake in the future and we are still concerned about the lower price/mix at IMB’s level.
Disappointing H1 driven by NGP. Reducing investments in this category was the company’s choice, but we believe it is a bad mid-term strategy. The dividend cut has finally shown increasing weaknesses vs. peers during the crisis.
Troubles remain during the CEO transition process, with FY20 guidance revised downwards, due mainly to the US vaping crackdown. With low visibility on future earnings, cash flow and return to shareholders, stay away from IMB for now.
Within this challenging year, the group reported a mixed set of FY19 results. While Tobacco remained resilient, the NGP disappointed as the category delivered lower than expected results, despite the group investing a lot in its development. It negatively weighed on operating profitability, which was actually -1.6% below consensus (but higher than our estimates). We see the more cautious guidance as more realistic, which is not a bad thing. The ambitions were previously too high on the NGP categ
The challenging NGP market in the USA and change in expectations of the results in Africa, Asia and Australia (AAA) has pushed IMB to warn on its next FY results. This is no major surprise, as we were already aware of the regularity issues in the US. While NGP products currently represent a small proportion of sales (between 5-10%), it is in this area that IMB focuses all its investments and sees its next growth driver.
The company posted strong H2 results with a better than expected operating margin. The results were reassuring and suggest that the company has a clear view about possible threats and opportunities in the troubled tobacco space and how to navigate round them.
The numbers are slightly better than expected. We believe that the divestment announcement will particularly please investors, as it represents a significant capital to be redeployed to maximise the company’s value.
Imperial Brands (IMB LN, BUY, T/P 5100p) announced a solid set of FY2017 results. Tobacco volume fell -4.1% less than the forecast -4.8%, total adjusted operating profit was in line with consensus at £3.8bn and adjusted EPS was 267p slightly below the 271p consensus estimate. Share momentum in priority markets drove H2 volumes.
FY update: tobacco’s net revenue was down 2.6% at constant currency (cons.-3.3%, H2: +0.1%) and +8.2% on a reported basis (FX: +10.8%) with volumes down 4.1% (cons. -4.8%, H2: -2.6%) and the price/mix +1.5% (in H2, industry volumes were down 4.5%).
Growth Brands’ volume rose by +5.5% and gained an 80bp market share.
By market and at constant FX, Growth Markets’ net revenue was flat at -0.2% (weaker H2 in Russia), whereas Return Markets recorded -4.5% (impacted by EU TPD and investments). The U
Imperial Brands (IMB LN, BUY, T/P 5100p) released a trading statement this morning, which confirmed market expectations of around £8½bn for full year sales revenue. The company is due to release preliminary FY2017 results on 7th November 2017.
Imperial Brands (IMB LN, BUY, T/P 5100p), whose flagship next generation product and e-cigarette brand is BLU, should receive some encouragement from today’s NHS Scotland release. NHS Scotland appears overall in favour of ecigarettes being used as a cessation product – i.e. an alternative to combustibles. NHS Scotland’s comments echo those recently made by Public Health England that e-cigarettes are up to 95% less harmful than combustibles.
Having presented at the Barclays Back to School Conference in Boston on 5th September, Imperial Brands’ (IMB LN, BUY, T/P 5100p) will update investors further on 28th September with a trading update ahead of its 30th September 2017 year-end. In our view, the core business is still robust, next generation products have momentum and key cash conversion metrics remain attractive.
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The trading update confirms H2 trading and the FY outlook is in line with expectations, with a good first-half performance and significant investment in new facilities and capabilities. Revenue growth was constrained by continuing pandemic, supply chain and Brexit effects, though with some recent signs of improvement. IHT opportunities are progressing well, including with its EV OEM, with APCBs seeing solid growth but with an increase in demand and order book, it plans to introduce a second shif
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Trackwise Designs expects H121 group revenues to increase 71% year-on-year to £4.1m, reflecting the acquisition of Stevenage Circuits (SCL) in March 2020 and a 130% jump in IHT revenues to £0.6m. Management expects adjusted EBITDA to quadruple to £0.45m and adjusted operating loss to narrow from £0.4m to £0.1m. We leave our estimates unchanged.
Companies: Joules Group Plc
James Halstead is a manufacturer and international distributor of commercial floor coverings. The group has this morning released a highly creditable full year trading update to 30th June 2021, reflecting another record revenue and PBT performance, notwithstanding the various challenges faced in the last 12 months. While H2 2021E demand remained strong, input pricing, stock availability and self-isolation of employees all had to be extremely carefully managed in order to achieve this outcome. On
Companies: James Halstead plc
In a positive Q1 trading update discoverIE has confirmed that the strong order growth reported in H2 2021 has continued. The order book at June 2021 was £220m, 50% higher organically than last year and 30% higher organically than two years ago. Q1 was ahead of the Board’s expectations with sales +21% ahead of Q1 2021 at CER (+16% yoy organically and +10% organically compared with two years ago). By region, China and Germany have produced the strongest growth. Organic growth was similar in both d
Companies: discoverIE Group PLC
A new partnership with Alshaya Group in the Middle East, building on Debenhams established store presence in the region, the launch of a new local Debenhams eCommerce platform and providing a new route to market for the Group’s existing portfolio of brands.
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Today’s H1 update makes positive reading. Since the AGM update, strong trading continued into May and June and the Group exits H1 with a strong global order book. Overall, 34% y/y sales growth / 6% LFL (vs H1-19) is a highly impressive outcome against the backdrop of UK lockdown 3.0 and ongoing CV19 related global shipping and supply chain delays. All this reflects favourably on the strategic progress under the new leadership team and supportive of the double-digit sales / margin recovery thesis
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Reckitt Q2/H1 21 numbers missed estimates. Q2 sales declined 1%, hurt by slowing Hygiene growth (+7.8%) and weaknesses in Health (-5.6%) and Nutrition (-9.7%). H1 sales were up 1.5%, driven by Hygiene (+18.1%). The adjusted operating profit margin (-290bp to 21.6%) was hurt by steep rise in input prices.
FY 21 guidance (0-2% growth, 40-90bp margin contraction) was re-iterated (ex-IFCN China incremental margin offset by cost inflation). We will cut our estimates to factor in the soft growth/marg
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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.
L’Oréal has released its H1 21 results, very slightly above (+1.5%) consensus expectations. All divisions experienced double-digit growth except for Consumer Product. The heavier exposure to the make-up business has slowed the recovery pace of the division.
The healthy profitability driven by the rapid margin recovery in the Professional Product and L’Oréal Luxe was encouraging.
With several smashing forecasts publications seen this week, the moderate beat is not enough to comfort the market.
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In our second edition of “Trend spotting” we note how in the last three weeks the defensive rotation trend has gathered pace and further evidence has emerged of the “relative fading” in the UK economy. However we now see early signs of the “risk on” trend starting to reassert itself in equity markets and we look at small cap laggards plus European exposure as ways to play this.
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Due to a change in Analyst role, Cenkos Securities plc has suspended coverage of the following stocks (see table 1). Our previous recommendation and forecasts can no longer be relied upon.
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Airbus secures €15bn credit facility but partially restarts production in France & Spain, Cummins suspends production and FY20 guidance as customers shutdown
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AMTE Power, a developer and manufacturer of lithium-ion battery cells for specialist markets, announced its intention to seek admission to trading on AIM. Admission is expected to take place during March 2021. The Company intends to raise approximately £7 million by way of a placing of new ordinary shares in the capital of the Company. Timing TBC. Samarkand Group Limited, the cross-border eCommerce technology and retail group opening up the world's largest market for brands and retailers, intend
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