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Strix Group

FY18 profitability in line with expectations, net debt ahead

Strix has confirmed that it expects to report FY18 results in line with market expectations. ZC forecast constant currency revenue of £96.1m, adj operating profit of £30.8m and PBT of £29.1m, in line with consensus expectations. The global kettle market continued to grow strongly at an estimated 7%. Strix states it has maintained its market share by volume at c.38%, indicating that it has also seen good underlying growth. Albeit, the mix of growth has shifted towards less regulated markets and the US and away from China. We view this positively in terms of margin outlook and potential to increase global market share. The only change to numbers today relates to lower net debt, ZC reduces its FY18 forecast from £30.8m to £28.0m, as stated in the trading update. This flows through into FY19 and FY20 estimates, however, forecasts currently assume no impact from the investment into the new factory. The shares trade on 9.6x FY19e earnings and yield 5.3% on the 7.7p dividend committed to by management.

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  • 22 Jan 19
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GYG

Trading update

GYG has released a trading update this morning, confirming that trading in the last two months of the year, since the trading update released on the 31st October, has improved slightly. The group now expects revenue to be marginally ahead of current market expectations with an adj. EBITDA loss of no more the €0.95m (vs our forecast of a €1.2m loss). The order book now stands at €33.9m (up 61% v the same point in the previous year). We update 2018E forecasts to reflect this new guidance but leave our assumptions for 2019E and 2020E unchanged for now.

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  • 22 Jan 19
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Accrol Group

Progress made

Accrol has delivered H1 results that shows good progress since the turnaround programme commenced in February 2018. The financial results also show good progress vs. H2 2018. We are maintaining our forecasts following revised 2019E guidance on 8 January, given the dramatic transformation undertaken in 2018 which has now been executed, we anticipate the benefits of such actions to be seen during the months ahead.

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  • 22 Jan 19
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Sumo Group

Positioned strongly for FY19

Sumo is a market leading, independent global video games co-developer which has deep, long-term relationships with the world’s largest publishers providing full turnkey solutions. Today’s trading statement revealed that FY18 results are “at least in line with management expectations” which mean no change to our estimates (which in turn are in line with consensus). Additionally, we make no changes to our FY19 forecasts, which are marginally above consensus. Staff utilisation rates in H2 ’18, we estimate, remained around mid-nineties percent for direct UK FTE’s and we foresee no material change to this going forward. This is backed by stable, long-term contracts with current visibility for FY19 which we believe are at least in line with historical levels, and therefore represent 75% or more of Zeus FY19 forecast third party development fees. The shares currently trade on an EV/EBITDA of 12.0x and P/E of 19.0x to December 2019, a 8% and 21% discount to the UK peers respectively. This is in our view an attractive valuation given the positive games market outlook and Sumo’s differentiated market positioning.

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  • 21 Jan 19
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City Of London Investment Group

Tough 1H trading update

CLIG’s 1H trading update released this morning reveals details of lower Group Funds under Management (FuM) and reduced operating profitability: In 1H to Dec, FuM fell 9.4% to US$4,625m, with the MXEF Index down 9.7%; Year-on-Year FUM fell 12.5%, while the MXEF Index fell 16.6%; 1H flows were $42m negative: $136m of net inflows to the Developed and Opportunistic Value strategies (1Q $124m; 2Q $12m), and $157m net outflow from Emerging Market (1Q $95m; 2Q $62m) and $21m of net outflow from Frontier (1Q $21m; 2Q none) strategies. 1H investment performance was negative: the statement echoes the 1Q statement which referred to “underlying close-end fund manager underperformance” and “widening discounts”. Unaudited 1H PBT of £5.2m is 21% below 1H18 PBT: £6.6m. The run rate for operating profit before profit share of 30% and estimated EIP charge of 5% is now approximately £1.2m per month (1Q19: £1.4m a month); The statement includes a graph based on assumptions, which compares an illustrated profit after tax to an estimated quarterly cost of a maintained dividend.

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  • 16 Jan 19
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Boohoo.Com

Revenue +44%, Gross margin +170bps, FY19 Guidance upgraded

The boohoo Group has announced a 44% YOY increase in revenue for the four months to 31 December 2018 and upgraded full year revenue guidance for FY19. Trading over the key Christmas period has seen growth across all divisions and regions, bucking the trend of downbeat trading results seen across the wider retail sector. Of particular note, is this top-line progress has been delivered alongside a +170 basis-point expansion in Group gross margin YOY to 54.2%, at a time when heavy discounting has seen many of its peers’ profitability decline. This impressive gross margin performance YTD reflects the strengths of boohoo’s brand led model, giving it the ability to be more aggressive in its price positioning as and when the market demands. We believe the Group’s well invested model creates significant potential for further operational leverage as it builds towards its ambitious £3bn mediumterm revenue target. The business is backed by a solid balance sheet with net cash of £189m at 31 December 2018, reflecting the strongly cash generative nature of the Group. The shares currently trade on an FY19 PE of 48.1x, falling to 41.1x in FY20. When taking into account forecast earnings growth the shares trade on 2.1x, a notable discount to ASOS and Zalando.

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  • 15 Jan 19
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