N+1 Singer - Morning Song 07-12-2016
07 Dec 16
SDL trades on 8.9x EV/EBITDA and 15.6x P/E for cal’17 – this is a c. 20% discount to UK peers and reflects a value rating rather than a growth rating. Everything we heard at the group’s Capital Markets Day yesterday pointed to a company that has high growth ambitions with a credible plan – both in terms of driving organic growth and margin expansion - and an impressive team to execute. We believe there is significant upside potential from here with strong execution.
N+1 Singer - Morning Song 06-12-2016
06 Dec 16
With FY16 volume and revenue already disclosed in the pre-close, the focus in today’s prelims is on PBT (£100.3m versus our £101m) and EPS (96.8p versus our 95.4p). No special dividend triggered this year (none forecast) and DPS is held at 46.8p (N1SE: 48.0p). On end markets, recent commentary is reiterated – the core business is growing, whilst consumer electronics will be subdued in the current year (competitive capacity from Solvay). On currency, there will be a material benefit in the current year (a little more than the £14m to £15m previously indicated), and a further tailwind next year if current rates are maintained (quantum TBC). There is also an investment of £10m today in a minority interest in Magma Global, Victrex’ oil and gas mega programme partner. Although the share price is now close to our TP of 1730p, we feel that there is enough in today’s announcement to retain a positive stance on medium term opportunities with strong cashflow and a special dividend potentially to look forward to in the current year.
N+1 Singer - Morning Song 05-12-2016
05 Dec 16
RTHM is acquiring a profitable Canadian listed mobile specialist for equivalent of US$42.5m consideration in shares (88.235m). This helps adds to two growth vectors RTHM is targeting; (i) adds unique exclusive audience (10m unique) and (ii) Exclusive demand Yahoo and Facebook. The business has 15 premium and owned and operated apps which provide users with rewards for activity. The business is expected to deliver c$9m of EBITDA in FY18 including $2m of cost synergies. This equates to just 4.7x EV/EBITDA. This marks what we see the first step in RTHM activity to scale the business and deliver on margin potential (see our initiation notes). Our initial estimates for EPS revisions are very significant - for FY18 are 2.3 cents (currently 0.6) and for FY19 4.3 (currently 2.5). There is a call at 830 for investors and we will revise post this.
N+1 Singer - Morning Song 02-12-2016
02 Dec 16
The return to profitability in H2 and for the year as a whole is encouraging, albeit activity levels have been lower than our expectations. We have reduced FY16 PBT from $2.0m to $0.3m but would note that the balance sheet remains very strong with net cash of c.$4.5m expected at the year end. We await more details of the outlook for the new product ranges and for FY17 in general with the final results in early 2017.
N+1 Singer - Morning Song 01-12-2016
01 Dec 16
WYG’s interims confirm a period of strong progress in the UK and MENA as well as significant growth in the order book. Market conditions in the UK look to be supportive, with further positive measures announced in the Autumn Statement. Meanwhile, WYG’s international businesses continue to access significant EU funds, particularly under accession assistance programmes. Current year forecasts look well underpinned (70% cover) and we see continued scope for organic growth to be augmented by earnings enhancing acquisitions. In our view, recent share price weakness (P/E rating of just 8x) is unjustified and overlooks WYG’s unique offering and growth ambitions.
N+1 Singer - Morning Song 30-11-2016
30 Nov 16
Sanderson has delivered full year results in line with expectations and the 19 October trading update after a strong finish to the year compensated for a slower start. A healthy level of pre-contracted recurring revenue (50%), incremental sales to existing customers and new customer wins at higher average order values helped deliver solid revenue growth in both the Digital Retail (+9%) and Enterprise (+12%) divisions. A decent order book and good sales momentum suggest that the company is on track to deliver on unchanged profit expectations for the current year. We continue to view the valuation (FY17 EV/EBITDA 8.6x) as undemanding given an attractive combination of accelerating growth potential, strong cash generation and growing dividends.