Equity markets calmer
Macro & Overnight
Some stability is returning to equity markets following the SVB saga.
The US CPI data didn’t cause much alarm despite showing evidence of “stickiness.”
Attention in the UK will now focus on the Budget statement later today.
We also get the ECB rate decision later too.
Oil prices weakened further overnight. Brent crude is trading well below its recent $80 floor price.
UK Company News
FY results from 4imprint, a marketer of promotional products, reported two strategic targets had been surpassed, $1bn in revenue and profit of $100m. With 307,000 new customers acquired in the year (2021: 263,000) and brand investment driving a step change in marketing productivity, 4imprint recorded record results and has announced a special dividend of $2 per share. It has cash of $86.8m and no debt. It enters 2023 with momentum and confidence. It sees opportunities to grow its market share. These results further endorse a disruptive player in a well-established but fragmented market. Its virtually inventory-free business model makes for an attractive return on investment.
Book publisher Bloomsbury updated with revenue now expected to be over £260m and profit of c.£30 million for the year. These are circa 7% and 11% above consensus expectations.
Centaur, the provider of business intelligence, learning and specialist consultancy, saw revenue grow by 6% and profits by 33%. Its strategic priority is to shift towards a more focused, customer-centric offering as it looks to gain a more significant share of repeatable, high-value revenue streams from a higher proportion of blue-chip customers. Trading has started the year in line with the Board’s expectations.
Dialight announced it will now rigorously pursue its claims to trial with its former manufacturing partner, Sanmina, concerning terminating its manufacturing services agreement. It said that the range of outcomes could include the payment by Sanmina to Dialight of between $0 and c. $220m. If Sanmina’s claim is successful at trial, the range of outcomes could include the payment by Dialight to Sanmina of between $0m and $8.3m. If they are correct in this assessment, these are attractive asymmetric odds.
Adtech company Dianomi announced that its cofounders (COO & CTO) would depart immediately.
IT professional services provider FDM reported FY results. Consultants assigned to clients stood at 4,905, up 22% from the prior year. The UK delivered an 8% increase in Consultant headcount with more challenging market conditions later in the year, following the September mini-budget and subsequent changes in government. It secured 74 new clients globally, with revenue increasing by 23%. FDM has a robust balance sheet, with £45.5 million of cash and 2023 has started positively, with encouraging levels of client engagement.
Providence Equity has made an agreed offer for Hyve Group at 108p per share, valuing the company at £320m. There is a trend developing for M&A of exhibition and conference organisers, with Informa buying Tarsus from PE last week.
IG Group, the spread betting and CFD provider, announced that active client numbers for Q3 YTD were down 5% on the prior year, reflecting quieter market conditions in the quarter. Interest income has been an important driver of revenue growth in the period. IG thinks FY23 revenue and profit before tax will align with current market expectations. Its medium-term revenue and profit margin guidance remains unchanged.
Keyword Studios FY results showed revenue up 35%, with organic revenue growth of 22%. Profit rose 30% with a cash conversion rate of 100%. Trading in the current year has started well, in line with the outlook for the year. The current industry backdrop is constructive to accelerate the trend to external service providers. It continues to pursue value accretive acquisitions, with many M&A opportunities in the pipeline.
Marshalls, the building products manufacturer, reported revenue growth of 22% and a PBT increase of 23%. Assuming progressive improvement in end markets during the year, the Board remains confident of delivering a result that aligns with its expectations.
Severfield, the structural steel specialist, has acquired Voortman Steel Construction, an innovative, market-leading European steel fabrication company, for Eur 24m. The consideration will be funded by a new amortising term loan (c.EUR21m) and cash reserves (c.EUR3m). The transaction is anticipated as earnings-enhancing in the year ending 31 March 2024.
Trainline, the digital train ticketer, updated that it made net ticket sales of £4.3 billion, +72% growth which generated revenue of £327 million, up +74%. Digitising the commuter ticketing experience in the UK has more than doubled its segment share versus three years ago while driving up customer transaction frequency. Considering the impact of lockdowns and then train strikes, Trainline is proving to have a resilient model.
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