Equity Development

*** New video recording - Ultimate Products management investor presentation (FY Results) *** IAndrew Gossage (CEO) & Chris Dent (CFO) of Ultimate Products plc hosted an Investor Presentation following the release of their results for the financial year to 31st July 2024. They discussed their ambitions for European growth enhanced by their Paris showroom, countered by the the abating challenges of freight costs and UK consumer demand. Management provided a detailed run-though of financial performance figures, and answered a range of questions submitted by viewers. If you missed the live event, the full recording is available to view here: https://bit.ly/4ffPIWY

Ultimate Products released FY2024 results which confirmed the company’s August trading statement at the sales, EBITDA pre-tax profits and EPS levels. Detailed figures for sales by geographic region, brand, distribution channel and product category were published. Importantly, European sales advanced by 7%, moving to 34% of group sales from 30% in FY2023 as the company made significant advances with French and German discounters. This offset the negative impact of overstocking in the latter’s supermarket channels. ULTP’s sales outlook for FY2025 is a return to growth. First, we expect a home market rebound as the company no longer faces the air fryers comparison issue. Second, there are clear signs that the Salter re-brand is working well and there will probably be some early benefits from a similar uplift for Beldray. Third, Europe should see further advances arising from the Paris showroom’s stronger sales into European discounters and more normal German supermarkets trading. However, the pattern of order flows suggests growth will pivot significantly towards the second half of the year. We highlight UPs superior yield and attractive FY2025 0.8x EV/sales ratio. We continue to highlight potential for a material re-rating of the shares, driven partly by a return to positive sales momentum this year. We retain our 200p/share Fair Value. Link to research: https://bit.ly/4hl0zQT

Restore plc held a well-attended investor and analyst site visit last week near Doncaster, taking in the new Markham Vale Records Management facility and a state-of-the-art Datashred facility at South Kirkby. The visit provided a clear link between the previously stated Group growth and margin targets and the actions being taken at divisional level, with greater autonomy, to deliver against these stretching targets. FY24 is important as a first step in the medium-term profit recovery story. We are forecasting double-digit profit growth, following a challenging FY23. In our view, Restore’s share price does not yet reflect recent progress under the new management team or the upside potential of medium-term targets. We reiterate our 400p Fair Value estimate and look forward to a further update on progress in a scheduled trading update on 21st November. Read our research note here: https://bit.ly/3Ak3PeD

For Gattaca, FY24 was predominantly about self-help, ensuring that the business was in good shape to take maximum advantage once the market turns and to improve market share in the short term. The good news is that the FY24 results were in-line with revised expectations and there are positive signs in terms of initial recovery in fee income. Progress was made during what was a challenging year to meet many of the Board’s strategic goals. Progress was made in focusing staff numbers to align with the greatest opportunities, not least in Energy (renewables / transmission / distribution). As regards to improving NFI, good momentum was witnessed during H2 whereby fee income rose 3.8% on a half-yearly sequential basis and was at the highest level in three half-yearly periods. In our note we cite examples to confirm our view that the UK and contract markets are in the process of bottoming out. With no change to financial estimates and cash being 70% of market cap, we remain positive on Gattaca’s prospects and retain our 140p / share fair value. Link to latest research note: https://bit.ly/3BQ1V5N

#huntingplc #globalengineering #energytransition #offshoredrilling The latest update from Hunting was mostly encouraging, apart from the North American onshore market remaining weak. Near term guidance has been reduced, but the Group's 2030 Strategy led by CEO Jim Johnson and GFD Bruce Ferguson is unchanged. Analyst Toby Thorrington and Equity Development still expect good progress from the group, as detailed in a new research note. Fair value for shares in Hunting (LON:HTG) is seen at 397p, now well above current levels. As you can read/hear below: https://lnkd.in/eDYn6xGa

Tatton Asset Management plc has recorded an exceptionally strong start to the next leg of its growth journey: in June ’24 it set a target of reaching £30bn of Assets-Under-Management or Influence (AUI) by end-FY29, an 11% CAGR. But H1-25 (to 30 Sep 24) saw AUM jump 14% in just six months from £16.6bn to £18.9bn. Net inflows contributed £1,832m (22% p.a. inflow rate), and investment returns £534m (3.2% over 6m), in line with the MSCI PIMFA Private Investors Balanced Index. Including the AUM of 50%-owned 8AM Global, AUI totalled £19.9bn on 30 Sep 24.   With so much uncertainty around the UK budget (due 30 Oct 24), which could have implications for investors’ capital allocations and financial markets, we feel it prudent to wait a few weeks before updating forecasts, until Tatton’s interim results on 13 Nov. But we certainly see potential for a substantial upgrade if growth continues anywhere close to the current rate. Our June 24 note details our current valuation of 640p per share & Tatton’s growth opportunities in more detail. https://lnkd.in/eqsBEnWa Paul Edwards Paul Hogarth Lothar Mentel

Polar Capital's AUM increased 4% over H1-25 (1 Apr 24 – 30 Sep 24) to £22.7bn from £21.9bn on 31 Mar 24. It was a half-year of two quarters with Q1 AUM up by 7.4% (net inflows: +£644m, investment performance: +£978m), while a more challenging and volatile market environment saw Q2 AUM down 3.5% (net outflows: -£172m, investment performance: -£655m).   The marginally negative net flows of Q2 (0.7% of AUM) were not a surprise for a period of investor nervousness, with UK investors withdrawing from equity funds in the latter part of the quarter (see page 2). And the negative investment performance of Q2 occurred in a period which saw an equity sell-off and a significant currency headwind on those assets held in US$. Polar’s reporting currency, GBP, strengthened by 6% over the US$ in Q2 from 1.26 to 1.34.   Other than adjusting performance fees, forecasts are unchanged. We note our end-FY25 (31 Mar 25) AUM forecast is £23.5bn, only 3.5% above that of 30 Sep 24. Our fundamental valuation remains 650p, 22% above the share price. With its strong profit margins, balance sheet, and a dividend yield of 8.6%, we think Polar Capital should trade at a substantial premium to its PER of 12.6.  https://lnkd.in/eUZGEQ5w Gavin Rochussen Samir Ayub

Loungers plc H125 TU Loungers has achieved record 1H25 revenues of £178.3m, +19.2% on 1H24. 16 new Lounge bars and one new Cosy Club, together with last year’s new sites, contributed 14.5% whilst 4.7% LFL sales outperformed industry growth by over 3% due to Loungers’ all-day attractions. This growth is especially strong considering the unseasonal weather, the negative impact of the Euro 2024 football tournament and the fall in UK consumer confidence. Although our 2H25 estimates look cautiously set, inferring c.3% LFL and c.10% new site revenue growth, we make no changes to our FY25E forecasts at this stage, given the consumer uncertainty ahead of the Autumn Budget on 30 October. The 273-site group still has huge scope to grow towards its ambition of over 650 sites, driving 14% CAGR in Revenues, and 21% CAGR in Adj. EPS FY24-FY27E. We believe this high growth is not reflected in the group’s valuation and reiterate our Fair Value of 370p / share (8.0x cal. 2025 EV/Adj. EBITDA). Link to new research report from Equity Development here: https://bit.ly/3XZLcEq