Hardman Talks | Real Estate Credit Investments live webinar
Real Estate Credit Investments presentation and Q&A
Filta Group (Filta) announced FY’20 results in line with expectations. We are not changing the forecasts we published last month. What is clear is that the business has performed robustly during COVID-19, adding new clients and becoming an important part of its clients’ processes. With business levels back to 70% of preCOVID-19 levels and with its largest clients yet to reopen, Filta is emerging from this fog stronger than ever. Assuming there is no reversion to widescale lockdowns, our forecasts should prove conservative.
Trading remains uncertain, and cost-reduction measures continue to be implemented. Chamberlin is repositioning itself strategically, and will continue to develop its product offering into a wider range of industries. The group has been financially de-risked, but the shares are likely to tread water in the near term, given low earnings visibility.
BBGI is a diversified social infrastructure investment company, registered in Luxembourg, and a FTSE-250 constituent. Its portfolio consists of long-term and low-risk essential infrastructure investments, which deliver stable, predictable cashflows, with progressive dividend growth and attractive, sustainable returns. It focuses on enhancing the value of its investments, which are globally diversified within highly rated investment-grade countries. Most of its investments are via Public, Private Partnerships (PPPs) or derivatives thereof. All of its investments are availability-based, not demand-based, supported by governmentbacked revenues; hence,the cashflow line is very reliable.
The key highlights from the FY’20 results were a small loss (as expected), with breakeven excluding deal costs. Margin pressure (from base-rate cuts) and a £2m rise in impairments, despite there being zero higher-risk Stage 2/3 property exposures over 80% LTV (2019 over £30m), were the main drivers. The 2021 outlook is for i) a strong recovery, driven by loan volume growth, ii) less pain from excess liquidity, iii) profits generated by Asset Alliance after acquisition (completed end-March, which will also see a £10m equity uplift, as it is being bought below book), iv) a gain on the sale of Tay mortgages, v) forecast lower impairments, and vi) a dividend from STB.
The key interim results message is the spectacular operational outperformance that PIP has achieved through the COVID-19 crisis so far. PIP's sample of buyout companies (two thirds of that portfolio) reported weighted average revenue and EBITDA growth of 17% and 15%. The MSCI World Index reported falls of 17% and 31%, respectively, for the same period. PIP’s investee companies normally outperform (EBITDA growth 2013-19 average 11% higher than the index), but, through COVID-19 to November, it was 4x this level. EV/EBITDA ratings on PIP’s book are, despite this sharp outperformance, at a 1% discount to this index.
Sportech (SPO) has contracted to sell its largest business, Global Tote, its Bump 50:50 raffle business and a freehold property in Connecticut (CT) for a combined net ca.£36m. All the transactions are expected to complete in the first half of 2021, leaving SPO with the venues business and a lottery franchise, as well as a £33m pile of cash net of other financial liabilities. The final piece of the jigsaw is its role in the deregulation of sports betting in CT, which is uncertain but could provide significant further upside. SPO is indicating a significant return of surplus cash once it has all been collected.
Research Tree offers Hardman & Co research, providing ongoing coverage of 171 shares , as well as macro-economic categories including: Commodities - Metals & Mining, Economic Data, Housing Market, and Indices and Markets. We offer 736 reports from Hardman & Co on Research Tree.