Major licensing deal with J Sainsbury

Following the February announcement of a major extension of its licensing partnership with NEXT, Sanderson Design Group (SDG) has announced a new multi-year licensing agreement with J Sainsbury plc, marking the first collaboration between the companies. The agreement will see Sainsbury’s Habitat homewares brand and Tu clothing brand partnering with SDG’s Morris & Co and Scion brands to develop a broad range of products for omnichannel distribution to customers. This agreement is testament to both the strength of SDG’s brand portfolio and the strategic rationale of leveraging its unique archive through high-margin licensing agreements.

Major licensing deal with J Sainsbury

Xaar has delivered a strong FY22, in line with our expectations (or better) at all levels of profitability and with good cash generation. We make no changes to our FY23 revenue and profit estimates; a strong reopening of China could prompt upgrades but is likely to take time, and a general macro caution precludes our taking action at this point. We look forward to further positive developments as the year progresses, notably around the new Aquinox product, and hope to introduce FY24 estimates as global market conditions become more predictable in coming months.

Strong FY22 – solid footings for future growth

Severfield, the UK’s leading structural steel specialist, has signalled ahead of today’s Capital Markets Event that a strong second-half performance confirms that FY23 results should be in line with its previous expectations. The acquisition of Dutch fabricator Voortman Steel Construction Holding (VSCH), announced on 15 March, also prompted us to increase estimates for the following two years (see note). Today’s event will include a focus on opportunities in Europe, while the Indian JV continues its profitable growth.

Outlook confirmed ahead of investor teach-in

The trading update for the year ended 31 March, issued today, confirms that CML expects to report revenue and PBT in line with market expectations, and that, with a healthy order book, the group continues to look forward to more strong growth in FY24. US regulatory clearance for the Microwave Technology acquisition is progressing, and integration planning has begun. CML continues to deliver on all fronts, and we look forward to FY24 and beyond as it builds out its technology and market position in 5G and other next-generation wireless technologies.

Firing on all cylinders

Today’s FY22 results reflect a year of significant progress, with revenue and EBITDA coming in above the market expectations prior to the January update. Sopheon completed two acquisitions and launched three products, broadening its family of InnovationOps solutions and expanding the addressable market to $3bn. FY22 also saw Sopheon’s largest single deal to date: the $11m US Navy contract. Revenue of $36.8m was 7% ahead of $34.4m in FY21, or $38.1m on a constant currency basis, representing 10% organic growth. The outlook statement shows management as confident and on the front foot. As momentum builds for the twin-pronged approach for Acclaim and Accolade, revenue and profit could rise dramatically in FY25 and beyond. Enterprise value is currently only c.1.5x FY23E revenue and would appear to us to not yet reflect this potential.

A year of strategic and product progress

Today’s AGM trading update, covering the period from 1 November to date, confirms that Idox continues to perform well, having made an encouraging start to the financial year and with excellent visibility on revenues for FY23. The robust story and positive outlook we have seen growing in recent years looks set to continue.

Trading well, with no signs of turbulence

Following its recent acquisition of a 25-year lease on a greenfield site at Fisherstown Energy Park in County Longford, Ireland, Hydrogen Utopia International (HUI) yesterday announced that it had agreed payment and heads of terms with Powerhouse Energy Group (PHE) for a 50:50 joint venture to develop the Longford project. With this agreement, HUI has taken another important step towards building its first waste plastic to hydrogen facility.

Longford JV agreed with Powerhouse Energy

Gamma’s results for the year ended 31 December 2022, released today, are in line with expectations and guidance, and show a strong performance with 8% growth in revenue (£484.6m vs FY21 £447.7m), 10% improvement in adjusted EBITDA (£105.1m vs FY21 £95.4m) and 12% increase in adjusted diluted EPS (71.8p vs FY21 64.0p). Cash generated by operations was up by 10%, resulting in year-end net cash (pre-leases) of £92.5m (FY21 £49.5m). Trading in the UK, in both the Indirect and Direct businesses, was strong, with Germany leading the way in Europe. The impressive and consistent progress, and notable drive on investment in technology, suggest to us that Gamma’s recent derating is unjustified.

Continuing UK growth drives profit and cash

Severfield, the UK’s leading structural steel specialist, yesterday enhanced its strategic aim of expanding its presence in continental Europe by acquiring leading Dutch fabricator Voortman Steel Construction Holding (VSCH) for €24m. The deal, which Severfield expects to be earnings enhancing in FY24E, will reinforce the group’s presence in Europe as well as offering innovative production capabilities in its UK base. Severfield should also benefit from a range of investment pledges in yesterday’s Budget.

Dutch acquisition enhances Euro-vision

Hydrogen Utopia International (HUI), the waste plastic to hydrogen company, has announced that it has agreed and entered into an option to lease a 2.5-acre site in the Fisherstown Energy Park in County Longford, Ireland. The company had announced in November 2022 that it was starting discussions on this option. This is an important milestone as HUI can now move ahead with the planning and permitting that is expected to lead to its first full-scale commercial plant.

Longford lease option completed

Aferian on Friday provided an update on current trading, reaffirming the previous commentary around the FY22 outcome and describing strong early momentum in FY23 for the 24i (software) business. However, customer destocking in the Amino (devices) business has been more prolonged than previously expected and previously signalled. Management now expects FY23 revenue and adjusted EBITDA to be ‘substantially below its original expectations’. We withdraw our FY23 estimates in advance of further detail at the time of the FY22 results, which appear likely to be delayed as the group works with its banks to ensure compliance with future covenant tests. We note that the group ended FY22 with net cash of $4m, that cost savings of some $5m have been implemented, and that management still expects a ‘positive material adjusted EBITDA’ for FY23.

Hardware-related headwinds persist

Brick and concrete products group Forterra narrowly beat our estimates in yesterday’s FY22 results, which showed resilient trading despite the chaos following September’s ‘mini-budget’. We have introduced initial estimates for FY23E that assume lower volumes and profits. Our market view, however, suggests that our assumptions on demand may prove conservative, while we believe that the group will benefit from recent investments as the industry recovers from multi-decade lows in inventories.