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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October 2, 2023

XPP powered down

Macro & Overnight

This week’s macro data include:

  • September US manufacturing and services PMI.
  • JOLTs US jobs data for August.
  • The September US non-farm payrolls and unemployment rate on Friday.  

 

Some UK Company News

Beeks Financial Cloud reported FY revenue was up 22% to £22.36m. Full details are here

Peel Hunt updated that H1 revenue is in line with market expectations. Costs have increased broadly in line with inflation over the period. Its balance sheet strength and regulatory capital should enable it to weather the remainder of this cyclical downturn, and it is well positioned to benefit as market conditions normalise.

All of this is true unless we are in a new normal. Is this time different? Probably not; therefore, PH should emerge as a dominant UK midcap corporate broker. 

Thruvision, the provider of walk-through security technology, updated. See note here

XP Power warned that its Q3 trading is below expectations and down around 2% year-on-year, as weaker end-market demand resulted in some customers deferring shipments into 2024. Uncertainty in China has also led to a reduction in demand in that market. It continues to comply with its banking covenants but is now expecting net debt / Adjusted EBITDA to be close to or above current covenant limits in the near term. The Group is initiating dialogue with its lenders to seek covenant and liquidity flexibility through the year-end and 2024. It is also exploring other near-term options to strengthen the balance sheet. It has also suspended the dividend. 

XP Power products are designed into a broad array of electronic devices. It is yet to be determined if this warning reflects specific issues of XPP or a broader sector problem. Either way, running up against borrowing limits will be punished by investors in a higher for longer world.     

Prognosticator 

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