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A reassuring update from St Ives provides confidence on delivering to our reduced FY17 forecasts as Strategic Marketing returns to good like for like growth and margins recover to targeted levels around 14%. Net debt is now coming down with property disposals thereby further distancing the balance sheet from covenant levels. Whilst the structural decline inherent in two of the three businesses ultimately requires a corporate solution, our numbers factor minimal returns from these businesses in FY18. On an FY17 PE of 2.9x, the shares now appear oversold; an FY18 rating 6x should be achievable suggesting the scope for the shares to double. Consequently, given scope for a recovery bounce short term, the shares represent a trading Buy.
14 Jun 17
Solid results against a challenging backdrop
Castings, the UK’s leading iron castings business, announced FY17 PTP down 19% to £15.9m but ahead of our £15.4m estimate. Softening demand resulted in lower foundry volume which was compounded by the previously announced ending of a major contract at its machining business. The statement indicates that customer requirements are “forecast to remain steady” and the key focus currently is on improving productivity including through investment in automation.
14 Jun 17
We anticipate earnings growth will accelerate in FY18 as Park Group progressively benefits from the product initiatives which have generated a strong pipeline within the Corporate division. Profit momentum will also be supported by encouraging progress for the 2017 marketing campaign, with order books up over 5% in the current year indicating improved momentum. New product developments – such as Love2Shop Worldwide – are tangibly generating improved growth prospects for Park building a strong investment case.
13 Jun 17
28% earnings growth in FY17 reflects organic growth of 5.2% alongside incremental acquisition uplift and a meaningful tailwind from FX. Trifast is evidently performing well into emerging macroeconomic trends as the Group benefits from a broad spread of geographies with 74% of FY18 Arden Partners’ forecast EBIT generated outside the UK, including exposure to the manufacturing sector in the eurozone. The pound depreciation is also beneficial to exports from the UK including the automotive OEMs, the largest sector exposure domestically. The shares fully justify the growth rating and positive momentum into FY18 provides scope for progressive upgrades over the year subject to recent FX trends not reversing.
13 Jun 17
Brighton Pier Group
Recent share price weakness overdone
Brighton Pier shares have fallen nearly 30% from last year’s high of 134p as sentiment has been affected by several profit warnings in the leisure sector, most recently from Comptois Libanais and Revolution Bars and prior to that Tasty and Restaurant Group. This has now been exacerbated by heightened concerns over the potential impact of terrorism on tourism.
08 Jun 17
Hardy Oil & Gas
FY 2017 results
holding of US$14.5m (debt is zero). The company’s focus remains pursuit of the arbitration award won on CY-OS/2, via both the Indian courts and also the US courts. The award is currently worth US$64.5m net to Hardy, and could hence result in a very large cash injection into the company on success in the legal proceedings, which would provide a spread of portfolio options for the company. Elsewhere, service company Samson Maritime has been won a US$4.9m arbitration award against Hardy’s subsidiary that operates in India in respect of past costs on PY-3 (previously provisioned in the FY 2016 accounts). Hardy’s net share of this is US$0.9m, and the company is pursuing its JV partners for outstanding payments. This is all discussed further below. Overall, the company remains well funded from its cash pile, and the focus remains grinding out a result on the CY-OS/2 arbitration award, receipt of which would be truly exciting for the shares.
08 Jun 17
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