Market Prognosis

A concise summary of the major macro events of the past 24 hours, and selected UK company-specific news.

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August 23, 2023

Angling Direct, a big fish in a small pond

Macro & Overnight

Increased coverage today of dead and near-death companies. The Bank of England highlights the likelihood of more corporate failures as higher rates bite. (Thanks for that, Andrew).

Meanwhile, the FT reports that PE managers are transitioning their distressed businesses to their creditors, often just a different department at the same institution or a rival PE house. Beware more zombie companies.

In its overnight results, Macy’s reported lower sales and higher credit card delinquencies.

Attention will focus on Nvidia results later today to gauge the ongoing AI bubble.

The DXY continues to rise ahead of the keynote Jackson Hole speech from Jay Powell on Friday, from which the market is keen to obtain clues over the direction of interest rates.

UK Company News

Angling Direct, the specialist fishing tackle and equipment retailer, reported revenue up 11.4%. European sales (online) were +40%. Net cash increased marginally to £17.6m. The trading environment in Europe is challenging, with more intense price competition. However, it sees a significant growth opportunity in Europe, with a particular emphasis on Germany. Overall, it expects to deliver revenue and profits in line with market expectations.

Angling Direct is a hidden gem. It has a strong UK omnichannel presence and a dominant market position in an obsessional hobby interest category with customer loyalty and high repeat business. However, this has been obscured and diluted by a subscale European presence in the transactional online-only channel, which is prone to pricing pressure. AO World has shown that if a lossmaking European management distraction can be closed down, good things can happen to the equity values of strong underlying domestic retailers.    

A UK Customer has awarded Cohort a £17.5 Million contract for an External Communications System (ECS) for a major defence programme that underpins its order book and enhances future revenue visibility.

Costain reported H1 revenue of £664.4m (H1 22: £665.2m) and operating profit that increased by 7.1% to £15.0m. It substantially reduced its pension contributions following a triennial review. It has good visibility for FY23, with 90% of revenue (£630m+) secured for H2. It is on track to meet adjusted operating margin milestones.

Tracsis updated that trading has been in line with the Board’s expectations. Group revenue should increase by c.19% to over £81.5m (2022: £68.7m), with solid growth in both Divisions. The Group expects adjusted EBITDA to be c.£16m (2022: £14.2m). All material earn-outs have now been paid. It saw a robust post-Covid lockdown recovery in the Events and Traffic Data businesses.


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