ESG credentials spotlighted in industry awards

Springfield’s longstanding focus on sustainability, which it detailed along with social and governance commitments in its September ESG strategy report, was recognised last week in top housebuilding awards for two of its ‘Village’ developments – in our view, one of the multi-tenure developer’s key differentiators. Scotland’s only quoted housebuilder has, on these and other locations, provided a range of green energy, social initiatives and innovative approaches to construction.

ESG credentials spotlighted in industry awards

CML’s interim results for the six months ended 30 September 2022 have significantly exceeded management’s own expectations. We do not publish half-year forecasts, but with revenue in the first half 22% ahead of H1 FY22, the Reported PBT result (£1.8m) was not far from our forecast for the full year (£2.1m). We have therefore raised our forecasts significantly for FY23 and FY24. CML’s focus on wireless communications markets, working in non-consumer, high-performance applications where customer service allows it to differentiate, is clearly demonstrating its value.

Exceptionally strong results

Leading UK brick and concrete products manufacturer Forterra has confirmed FY22E guidance in today’s trading update, which highlighted ‘robust’ trading for the 10 months to 31 October. We have maintained our FY22E adjusted PBT at £69.1m. We believe that recent sales weakness highlighted by housebuilders could have only limited impact due to the ultra-low inventory levels in the UK brick industry.

Forecasts maintained amid ‘robust’ trading

We have kept our FY23E-25E PBT estimates for Severfield, Britain’s top steel construction specialist, as its FY23E interims maintained guidance amid ‘consistently high’ demand in the UK and Europe and strong growth in India. Inflationary pressures remain well-managed. We believe Chancellor Jeremy Hunt’s Autumn Statement confirms the strong long-term outlook for energy and infrastructure, as explored in our extensive recent report.

Interims confirm sustained infrastructure drive

Xaar announced on Wednesday the release of its Aquinox printhead for use with water-based inks. This is a major step forward for Xaar and for aqueous inkjet printing. Aquinox is the latest printhead to work on Xaar’s ImagineX platform and helps open up new markets, most notable packaging and textiles. It also enables Xaar to take advantage of increasing demands in other markets, notably ceramics.

Aquinox – a turning point in inkjet technology

Idox has today released a trading update for the year ended 31 October 2022. The statement reports a strong performance, with particularly encouraging news on order flow and sales of Idox Cloud. We have adjusted our forecasts for FY23 and FY24 to reflect new assumptions around cash payments and working capital. Management expectations for FY23 are maintained and the year has started well. The update reflects the progress over recent years and the strong position Idox holds, which should allow further organic and acquisition-driven growth.

Trading update shows strategy driving results

G4M’s interim results reflected the previously disclosed headline performance featured in last month’s AGM trading update. The improved H2 trading momentum highlighted in the AGM statement has pleasingly continued into November, with the company reiterating confidence that the full-year FY23E outturn will be in line with consensus market expectations. Future platform developments will focus not only on enhancements to customer service and experience, but also on evolution of the platform to support multiple channels and verticals between suppliers and customers.

Interim results in-line, with clear focus on future platform evolution

ZOO has announced an exceptionally strong H1 period (to end-September) with revenue almost doubling year on year and strong growth in both profitability and cash generation. The result is in line with September’s trading update, which prompted significant upgrades to estimates for this year and next. The business appears well positioned to benefit from ongoing growth in media content production, with the key streaming providers racing to deliver international (and therefore multi-language) content and ad-supported tiers. This represents a material opportunity for ZOO, underpinned by the well-timed roll-out of ZOO’s strategic geographic hubs and investment in capacity. The FY23E outlook remains in line with market expectations, and we look forward to further delivery in H2 and beyond.

Growth, cash and opportunity

Aferian has this morning given a trading update for the year to 30 November 2022. Revenue and profit will both be impacted by a shortfall within the devices business as customers reduce inventory levels, ironically due to an easing of concerns over supply chain logistics. We reduce our estimates for both FY22E and FY23E following the announcement. The group has also announced that it has been in discussions around a ‘significant acquisition opportunity’, which has been aborted.

Customer de-stocking hits device shipments

SDI Group has announced the acquisition of Fraser Anti-Static Techniques Limited (Fraser), a UK-based global leader in the manufacture of anti-static equipment. The estimated total consideration is £13m, net of approximately £3.9m excess cash acquired. The acquisition will be funded from SDI’s existing cash resources and revolving credit facility; as at 30 September the group had c.£3.3m of cash, £7.0m bank debt and £13.0m undrawn bank facility. Fraser represents a departure from SDI’s usual sub-£10m targets. The business is already highly profitable, with sales offices in China and Germany. A large proportion of revenue is to overseas customers, and we see good scope to increase global market share across the SDI Group. The acquisition is expected to be immediately earnings enhancing. We therefore increase our estimates for this year and next, with a 4.2% uplift to fully adjusted EBITDA for FY23E and 2.6% for FY24E (given our assumption of lower Atik revenues).

Acquisition to increase global presence

G4M reported H1 sales growth of 2% to 30 September, despite the trading challenges laid out in its September AGM trading update. The star of the show was Europe and Rest of the World, which delivered a sales uplift of 10%, reflecting the benefits of the additional Irish and Spanish hubs opened last year. The improved period-end trading momentum has continued into early October. Together with a return to a more normalised seasonal trading pattern, a number of website upgrades to be implemented in H2 and further productivity enhancement measures, the FY23E outlook remains in line with market consensus expectations following the September update.

Improved September momentum continuing into H2 – unchanged forecasts

IG Design Group has reported strong trading across both divisions for the H1 period ended 30 September. The primary driver is that the group’s retailer customers have brought forward their seasonal ordering to pre-empt a repeat of the supply chain challenges and disruptions that occurred in the run-up to Christmas 2021. The result of this reweighting towards H1 will be a significant improvement over last year’s difficult H1 period. As such, and mindful of the ongoing challenges of a difficult economic backdrop, there is no change to the Board’s expectations for FY23E’s full-year trading outturn. Our FY23E forecast is thus unchanged at this stage.