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Good H1 figures and the turnaround plan on track make the risk/reward tilt upwards given the recent underperformance against BAT. However, we continue to believe that IMB’s combustible focus strategy is not the right one and we see much more positive catalysts when looking at BAT.
Companies: Imperial Brands PLC
We continue to believe that IMB is not necessarily a short-term strategic investment given the fact that the company is entering the second year of its “strengthening phase” with further investments which should weigh on margins, so no major improvement in the shareholder return.
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.
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.
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) 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.
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.
Research Tree provides access to ongoing research coverage, media content and regulatory news on Imperial Brands PLC Sponsored ADR.
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Companies: Frontier Developments Plc
Today’s interims highlight a resilient performance, reflecting international diversification and self-help. The fact that good momentum has continued into Q3 is positive. As is reinstatement of the interim DPS (3.5p). PMP however makes the bulk of profits in Q4 and whilst the US order book is good, UK uncertainty and a higher cost outlook in some areas means we rein back our current year PBT by 20%. This still implies a credible flat H2 EBIT and y/y PBT growth of 11%. Prudence also means we lowe
Companies: Portmeirion Group PLC
Singer Capital Markets
Companies: Galliford Try Holdings PLC
Companies: Accrol Group Holdings plc
Companies: OSI TRAK TERN
Just over two months on from our “Sector Views” call to buy dollar earners on July 21th, this remains hugely topical with further significant £ weakness and the Bank of England at the time of writing on the back foot following last week's mini-budget. As the “world's currency”, the dollar remains at a multi-year high against a basket of major currencies and above parity with the euro. In terms of sterling, we recommended a selection of dollar buys two months ago when the sterling / dollar rat
Companies: SPSY FOUR WATR
Companies: Science In Sport Plc
Galliford Try has delivered strong financial and operational results in FY22, well ahead of consensus by most metrics including adj. PBT of £19.1m (+68%) and a divisional operating margin of 2.4%, well on its way to management's 3% target for 2026. It currently enjoys strong momentum, increased stability/much-reduced risk, and a strong balance sheet – this management team is delivering exactly what it has promised since joining. It also enjoys a favourable, inflation-protected outlook and is di
Capital Access Group
Seeing Machines has released a trading update for year-end 30 June 2022. Revenues are expected to be in line with market expectations (as per 23 February 2022 announcement A$55.6m) and cash position ahead of market expectations (FactSet A$40.4m). It notes that High margin Automotive royalty revenues are up 139% on the prior year with production vehicles on road now at 447,000. As a leading indicator it notes Non-Recurring Engineering (NRE) revenue is up 61% on prior year and that the cumulative
Companies: Seeing Machines Limited
Companies: CT Automotive Group Plc
What’s cooking in the IPO kitchen?
Lift Global Ventures plc to join AQSE Growth Market. The Company's investment strategy is to operate as an enterprise company seeking acquisition or investment opportunities within the financial media and technology industries. Within these broad industries, areas of focus may include: Financial news websites and other forms of “new media”, Investment research providers, Financial PR, IR, design and marketing agencies, Production studios and visual content prov
Companies: BSE CFX DPP EOG SEE SOLI SML
Dish of the day
While we were away:
Unigel Group (AQSE:UNX) joined the Access Segment of the Aquis Growth Market on 26, August 2022.
Zamaz plc (ZAMAZ.L) joined the Standard Segment of the Main Market via a direct listing on 2 September 2022.
Leavers: Scottish Investment Trust (SCIN.L) left the Main Market today.
What’s cooking in the IPO kitchen?**
Aurrigo Group plc, a international provider of transport technology solutions, intends to join AIM. The Group designs, engineers, manufactur
Companies: SCE SPA POW JNEO AVCT
Dish of the day
No joiners today.
Leavers: Stanley Gibbons Group has left AIM.
What’s cooking in the IPO kitchen?**
Critical Metals plc, a company established to acquire mining opportunities in the critical and strategic metals sector, is to be re-admitted onto the Main Market under the ticker “CRTM”, following the proposed acquisition of a 57% interest in Madini Occidental Limited, which holds an indirect 70% interest in the Molulu copper/cobalt project located in the Democratic Republ
Companies: VRCI ACSO AXL CRU DEST EQLS LOOP SOLI THR TRX
CAP-XX released Interim Results for the six months ended 31 December 2021. Revenues were up 14% on H1/FY21 driven by product sales which were up 40% YoY but offset by the absence of royalty or license revenue in the period. EBITDA loss and Adjusted EBITDA loss were A$0.7m and A$0.3m respectfully which were in line with expectations. The company finished the period with cash reserves as at 31 December 2021 of A$5.1m which was in line with our expectations after taking into account the repayment o
Companies: CAP-XX Limited