Most viewed research
The Quest for Dividends
01 Feb 17
The Dow Jones Index has just breached the 20,000 mark, the first time in its 131- year history that it has done so, whilst the FTSE-100 Index has also been at record levels in recent weeks. The election of the controversial Donald Trump as the new US President, and more specifically the impact of his planned expansionist economic policies, have boosted stock markets, both in the US and in the UK.
N+1 Singer - Gym Group - Not quite a lean, fit & healthy outlook
15 Feb 17
Gym Group has done an excellent job in successfully rolling out a disruptive business model in the health & fitness market. However, we think growth expectations are too high and the shares look expensive on a FY17 P/E of 27x. We expect initial signs of increased competition / cannibalisation and LFL pressure to increase over the next 2-3 years and the shares to de-rate. We pitch our forecasts 5%-14% below consensus and initiate with a Sell recommendation and a 145p target price.
12 Apr 16
Rigid-plastic-products manufacturer and waste-management services provider One51 is holding a general meeting on 21 April to gain the shareholder approvals required to issue shares for a potential flotation on AIM and the Enterprise Securities Market (ESM). In 2014, Ireland-based One51 paid 78p a share in cash for AIM-quoted Straight, which valued the wheeled-bins manufacturer at £10.7m. One51 subsequently bought a controlling stake in Canadian plasticproducts business IPL. A flotation would trigger a deal to swap One51 shares for the one-third of IPL that it does not currently own. The plastics division is the main focus of expansion. One51 is a substantial business. In 2015, revenues grew from €276.5m to €366m, while underlying profit almost doubled from €16.2m to €31.9m. A full 12-month contribution from IPL would have taken revenues to €473.5m and grown profit even more rapidly. Plastic products generate nearly two-thirds of revenues and a greater proportion of profit. Net debt was €120m at the end of 2015 and there is contingent consideration of more than €33m that could become payable. Numis and Davy have been appointed as advisers for the flotation, which is still dependent on market conditions. Although One51 is unlisted there has been regular trading in its shares since 2007 and by the end of March the shares were changing hands at €1.70 each.
New Screen – Consistent Growth + “11 with legs”
17 Dec 15
To represent the theme of “Consistent Growth”, we introduce our second basket of small-cap stocks selected by a screening process. This will sit alongside our first (deep value) basket introduced and described in our note dated 26th May 2015 (Our first screen – 10 deep value stocks to consider). The screening criteria address both the extent AND the quality of growth in EPS and sales, which we consider add a worthwhile additional element to stock selection. The process results in a basket of 25 stocks, the performance of which we will track over time, allowing comparison of investment styles, but also highlighting interesting companies. We have taken a closer look at 11 stocks “11 with legs” (see list on the right) in this screen.
N+1 Singer - Small-cap quantitative research - Consistent growth screen refresh + “11 with legs”
29 Sep 16
We have performed a second refresh of our consistent growth screen, first established with our research note of 17 December last year. As previously, the screen produces a basket of 25 stocks that exhibit not only good growth in EPS and sales, but also a consistency of growth in both measures each year. This basket, or style, has underperformed the small-cap benchmark by 9.1% since inception last December, and by 4.8% since the last refresh on 13 April. We highlight stocks leaving and joining the basket and take a closer look at 11 stocks “11 with legs” in the refreshed screen. We will continue to monitor performance of the basket and refresh it again in about 4 months’ time, but interestingly, consistent growth is beginning to look like consistent underperformance!
The Joy of Techs
15 Aug 16
Mobile money has been an awkward area for investors and industry alike. There have been too many new arrivals offering too many new solutions, leading to a confusing plethora of payment methods for both consumers and retailers, championed by varying stakeholders: banks, credit card suppliers or mobile network operators (MNOs). In this, the mobile money industry has ignored the key element of currency – that it is universally recognised and accepted. The confusion of competing payment methods inevitably led to numerous failures. The industry has promised much: a total technological revamping of the monetary systems in place since ancient times, in a short space of time, but has delivered little to date. However, that is not to say changes aren’t happening.
Videos and Podcasts
N+1 Singer - CORETX - Contract wins and new Lifestyle facility
22 Feb 17
CORETX has announced a number of significant new customer contracts for Lifecycle services, with a total contract value of £5.85m. The group is also making a £500k investment to establish a new facility in Dartford to enhance its full IT Lifecycle services and provide extra capacity to support future growth in this area. We are not making any changes to our forecasts on the back of this announcement but are encouraged by the strong start to 2017. The group’s FY’16 trading update earlier this month confirmed that the expected improved performance in H2’16 had occurred, and that the combined business was trading well under the new CORETX brand. We believe the group is well placed to deliver further cash generative growth in FY’17 and beyond.
Small Cap Breakfast
20 Feb 17
Anglo African Oil & Gas— Admission expected early March. Acquiring stake in producing near offshore field in the Republic of the Congo. Saffron Energy—Schedule One update. Raising £2.5m, expected Mkt Cap £7.7m. Admission due 24 Feb. Italian Oil & Gas Play Guinness Oil & Gas Exploration—Publication of prospectus. Seeking to raise £50m and invest in 15 exploration companies at launch, with plans to grow the portfolio to 30 positions during its lifetime. Issue closing 23 Feb.
Strong performance despite headwinds in France and a promising but uncertain future
17 Feb 17
Air France-KLM published very strong annual results, at a level not seen since 2007. Indeed, except for revenues which slightly declined (-3.3%), EBITDAR, EBITDA, operating income, net result and FCF are all growing quite strongly, bringing the lease adjusted operating margin to 5.7%, when it was only 4.4% a year ago. Moreover, the good FCF generation has enabled the group to reduce its debt to a reasonable level, lowering financial costs. The strict cost management coupled with a favourable fuel price environment have helped increase the group’s operating margin, despite the pressured demand. Finally, Transavia has, as expected, found a way to operate at breakeven, while the maintenance activity continues to bring satisfaction. For 2017, the company remains quite prudent on the back of expected increasing fuel costs, the uncertain geopolitical environment and negotiations with the unions for the creation of a new company (i.e. the Boost project).
Play your cards right
16 Feb 17
Rank has a unique opportunity to leverage leading UK high street casino and bingo brands online. With platform issues resolved, its digital casino is growing strongly and the introduction of a single wallet later this year could be a game changer. Economic pressures are weighing on venues’ results, but they are highly cash generative. An expected move into net cash by end FY18 underpins a progressive dividend policy and gives Rank plenty of firepower to participate in industry M&A as opportunities become available. The calendar 2017e EV/EBITDA of 6.6x looks very low.
Lufthansa and its pilots have settled the pay dispute, but nothing else
15 Feb 17
The two parties have agreed to the result of the mediation process which translates into a wage increase, in four steps, of 8.7%. In addition, a one-off payment of €30m has been agreed which gives each of the airlines 5,400 pilots another €5,000-6,000. However, the parties involved have not agreed on anything else, i.e. not on a new pension scheme and the early retirement scheme. According to management, the pay deal will cost the carrier some €85m annually and the contract expires at the end of 2019. As the pilots intend to negotiate each open point of discussion separately, they are likely to threaten with new strike action in the not too distant future. Management has reacted by announcing its intention to man 40 new aircraft with pilots who are not part of the Lufthansa contract. It is unclear whether these are new aircraft or whether these will replace old jets.