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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September 19, 2023

OPEC+ the oil markets’ central bank

Macro & Overnight

Saudi Arabia’s oil minister has compared OPEC+ policy on managing the oil market to central banks’ control of interest rates. OPEC+, he said, will be data-driven in its approach to managing oil for the long-term benefit of producers and consumers. The offer of a seat on the Fed’s FOMC or the BoE monetary policy committee is in the post.

UK Company News

Accesso reported that H1 demand has stabilised following a period of accelerated growth. It said visitor demand has stabilised and reported revenue increased 3.2% to $65.8m, with EBITDA in line with expectations. It signed sixteen new venues across a broad range of target verticals during the period, including attractions, live entertainment, water parks, zoos and aquariums, and theme parks. It expects another profitable and cash-generative year in line with current FY expectations.

Accesso has rapidly recovered from the COVID lows and, under new management, has carved out an attractive niche vertical in IT systems and services that enable capacity management at visitor attractions. However, the super-normal recovery in the end market is over. Everyone who wanted to go to Orlando since being locked down has now done so and reminded themselves that despite the best efforts of Accesso’s technology, it can be a harrowing experience.  

Concurrent Technologies, the high-end embedded computer products supplier, reported a record H1 2023 revenue of £12.1m, order intake of £14.5m (H1 2022: £14.2m) and a record order backlog of £29m. It said ongoing challenges with component supply have eased and will ease further throughout the remainder of this year. Its product portfolio continues to strengthen with continued investment in R&D and sales, enabling a solid pipeline of opportunities and conversion of these to underpin future revenue growth. It is considering the re-introduction of a dividend at the year-end.

CEO Miles Adcock has taken a grip on this business and made it operate more efficiently, develop more lines of business and focus on its key strengths. Component shortages have slowed the returns to the bottom line, but these are now increasingly evident. The recent US acquisition hastens the move into becoming a systems supplier. Here is a podcast interview from earlier this year.  

Eagle Eye reported FY revenue up 36%, with profit and retained cash up more than 100%. It entered FY24 in a strong position, with a healthy new business pipeline and a growing international opportunity. The current year to date is in line with Board expectations.

Fintel reported H1 revenue of £27.6m, up 2%, with EBITDA up 8%. Trading continues to be in line with the Board’s expectations.

McBride reported FY revenue of £889.0m, up 31.1% and profit from continuing operations of £10.3m (2022: loss of £26.7m). It reports a surge in private label demand, a stabilisation of raw material prices and new contract wins. Its focus is reducing debt with tight control of costs, margins and operating capital. 

McBride is a classic commodity play with a high dependency on oil price-derived input costs. These figures illustrate the benefit of lower costs year on year. More recently, concerns on this front will rise as the oil price recovers strongly. 

Naked Wine reported FY sales of £354m, +1% year-on-year (down 8% on a 52-week comparable basis), with EBIT of £17.4m, or £16.3m on a 52-week comparable basis. It reported lower new customer investment, goodwill impairment, and inventory provision charges. It said its profitability is now sustainable. It expects material cash generation across H2 of FY24 and FY25 as excess stock unwinds in the “pivot to profit.” However, FY24 has started slower than expected, with Q1 revenue down 18% versus the prior year.

Safestyle updated that it achieved profit expectations in July and August. However, in its most crucial trading period of the year, order intake is currently down c.11%. The Board now expects the Group’s revenue for 2023 will be between £140m – £142m, and consequently, underlying loss will be in the range of £(9.5)m – £(10.5)m. It intends to engage with stakeholders to strengthen the balance sheet to support its recovery and help facilitate future growth.

Markets will not take well a thinly veiled request for further funding. 

Serica reported a solid H1 but with slightly lowered production guidance. 

Xaar’s H1 results showed strategic progress despite a challenging trading environment. Management is confident it is on track to meet FY23 guidance. Revenue in H1 23 was down 6% to £34.5m due to a combination of economic conditions and a strong comparative in the prior year. Adjusted profit before tax for the period was up 29% to £1.8m, benefitting from the sale of non-core IP, and the gross margin remained steady at 40%. (Note here). 

Prognosticator 

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