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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May 13, 2024

IPOs ahoy!

Macro

This week, the focus is primarily on the US inflation data (PPI tomorrow and CPI on Wednesday), which is expected to remain unchanged (sticky), a crucial factor that can significantly influence rate expectations.  

Fed Chair Powell will speak on Wednesday, and investors will seek further clues as the recent survey data out on Friday continue to suggest a slowdown in US growth. 

We also get UK unemployment (no real change expected) and China retail sales and industrial production data (steady recovery in manufacturing but cautious consumers).

Japan’s bond yields jumped overnight, with the 10-year rate approaching the 1% level last observed in 2012 after the BoJ indicated it was buying fewer longer-dated bonds than expected. 

UK Companies

Reports of the UK IPO market opening up with Chinese online fashion company Shein and UK technology company Raspberry Pi were both mentioned as being in the later stages of their IPO processes, with London as their favoured venue.

Cerillion, the telco software provider, reported that H1 revenue increased by 10% to £22.5m. Its gross margin was 80.4% (H1 2023: 81.5%), resulting from payroll inflation. Profit before tax rose by 14% to £10.5m, and cash generated from operations in the period was £5.3m (H1 2023: £6.6m). It sees clear commercial and operational advantages for its ‘productised’ and ‘as-a-service’ approach. It also announced a significant new contract, worth an initial $11.1 million, with a leading provider of connectivity solutions in Southern Africa.

Diploma, the acquisitive holding company, reported H1 results and upgraded guidance for revenue growth of ca. 16%, up 5ppts from previous guidance, and operating margin of ca. 20.5%, up 80bps from prior guidance. EPS growth of ca. 15%, with 90% fcf conversion.  

Kistos reported that despite the sharp decline in commodity prices in the previous year and the increasingly restrictive fiscal regime in the UK, it continues exploring value-accretive opportunities in the traditional energy sector and the energy transition space. It made significant progress in diversifying its asset base to mitigate against the barriers to further investment in the UK North Sea imposed by the UK Government buying certain gas storage assets from EDF. 

Trufin said its 2024 trading performance will be significantly ahead of market expectations and be EBITDA positive.

Victrex H1 results reported that its volumes were down 11%, revenue down 14% and PBT down 34%. Its new China facilities will be operational in H2, concluding a significant capital investment phase. 

Zoo Digital indicated EBITDA at break-even in Q1 with renewed debt facilities. It sees opportunities to rebuild revenues following the significant industry disruptions and is confident of meeting FY24 market expectations. Progressive note here

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