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City Of London Investment Group

Pre-close nudges forecasts up

CLIG unaudited pre-close statement confirms its Funds under Management (FuM) on 30 June 2019 was US$5,389m (see our note of 8 July 2019, which increased our forecast 3.6%).

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  • 16 Jul 19
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Flowtech Fluidpower

Q2 trading update indicates a positive H1 performance

Trading remains in line with FY19 expectations with Group revenue increasing 5.7% to £59.6m (HY18: £56.4m) in H1 19. This consisted of 6.5% in Components to £50.0m (HY18: £46.9m) and 1.4% in Services to £9.6m (HY18: £9.5m). Group organic growth of 2.9% was supplemented by the acquisition of Beaumanor and Derek Lane in March of last year. The slight slowdown in organic growth from the 4% reported in Q1 is not a surprise and the Q2 like for like performance is in line with FY expectations. The net debt position of £18.8m is encouraging showing a decline of £1.1m from the £19.9m reported at the end of FY18, despite £1.6m deferred consideration in the period. We leave forecasts unchanged, awaiting interim results for further guidance on the improved cash position. Flowtech is undervalued relative to peers, trading on 8.0x FY19 earnings forecasts.

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  • 12 Jul 19
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Lookers

Tougher trading in Q2

Lookers have released a trading statement this morning essentially confirming that trading has deteriorated during Q2, which is consistent with our current sector thesis. As a result, we are downgrading our forecasts to reflect this. While Lookers no doubt has issues to deal with, we do believe there is significant value at current levels trading on 6.0x downgraded 2019E EPS, a dividend yield of 8.8% with cover still at 1.9x based on our revised EPS, property assets at 78p per share and net tangible assets at 45p per share, demonstrating the deep value we believe exists.

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  • 12 Jul 19
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Marshall Motor

Solid outperformance and cash improvements

We note the announcement released this morning by Marshall Motor Holdings (MMH) confirming that the group has outperformed the broader market in both retail and fleet new vehicle sales. The strong H1 performance is encouraging in the context of a challenging market and a record prior year comparative. We are leaving full year trading assumptions unchanged but update our net debt forecasts to reflect the cash outperformance driven by lower capex for 2019E. The shares are trading at a clear EV/EBITDA discount to the sector. MMH has a robust balance sheet with £125m freehold and long leasehold assets as at the time of the 2018 results (160p per share) underpinning the valuation.

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  • 11 Jul 19
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City Of London Investment Group

June FuM exceeds forecast

CLIG’s website reveals that its Funds under Management (FuM) on 30 June 2019 was US$5,396m: this is 3.6% above our forecast of $5,207m. In 4Q CLIG’s FuM rose 2.4% while MSCI Emerging Market Total Return Index rose only 0.6%. On 16 April CLIG’s 3Q IMS revealed 13.9% rise in FuM to US$5,268m (MSCI Emerging Market Total Return Index rose 9.9%) and reminded investors: CLIG has an active pipeline across all major CEF offerings, with increased interest continuing to be seen in the non-Emerging Market CEF strategies (i.e. Developed, Opportunistic Value). Current run-rate for operating profit per month of £1.5m, before profit-share of 30% and an estimated EIP charge of 5%, based upon current FuM and a US$/£ exchange rate of US$1.30

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  • 08 Jul 19
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Sumo Group

Institutional Investor visit

Sumo held an institutional investor site visit on Tuesday 2nd July providing a detailed look at the full game development process. Investors were given an insight into the technology the group uses in creating new games, the art design process, game balancing and the project management methods employed by the group. The day highlighted the highly entrenched relationships with video game publishers, built on Sumo’s expertise in creating both technical and creative content across platforms and genres, utilising both proprietary technology and a variety of 3rd party engines to provide a versatile high-quality service. Sumo has an enviable position in the market with significant barriers to meaningful competition. At last nights close Sumo trades on an FY19 PE of 25.2x falling to 21.6x in FY20.

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  • 08 Jul 19
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