No surprises in the FY performance

Kingfisher’s FY22 performance was a mixed bag. The Group’s lfl sales declined by 2.1% yoy, with no surprises in the UK and France businesses. The adjusted PBT of £758m (-20.2% yoy) was 2.3% ahead of the market expectations. The FCF softness was a one-off in our opinion. We expect kingfisher to continue to gain market share in the core segments. The strategy to roll out compact store formats and monetize retail media opportunities are steps in the right direction. No major changes expected in ou

Resilient performance in Q3!

Kingfisher Q3 trading witnessed all banners performing ahead of market expectations. While lfls declined in the UK, the group’s lfl sales (+0.2% yoy) were led by the French and Polish businesses (+0.6% and +7.6%, respectively). Despite overall market share gains and a strong showing during the initial three weeks of Q4 (+2.8% yoy), investors disliked the hair cut in the FY22 PBT guidance (£730-760m vs £730-770m earlier). This is not a big issue in our view. We will upgrade our financial estimate

Decent show in Q2; testing times ahead!

There were no major surprises in Kingfisher’s H1 FY22/23 performance. The group’s lfl sales came in at -4.1% yoy (vs consensus of -4.2%). Almost all banners performed in line with expectations. A good start to Q3 also bodes well for Kingfisher to achieve FY22/23 consensus. However, we expect the overall business performance (home improvement demand) to come under pressure during the forecast years as rising inflation and a fragile economic outlook dents consumer sentiment. We maintain a positive

Riding on solid Q1 momentum!

Kingfisher’s Q1 trading was stronger than market expectations. Lfl revenue was 1.4% ahead of the street’s estimates, with the momentum led by all business segments. Among the positives: 1) the DIY and DIFM demand remains strong and, hence, management was able to pass on the pricing pressure to customers, and 2) Q2 has started on a similar note, and the supply chain is not concerning, at the moment. Still, we expect consumer demand to slow from H2 onwards.

A softer end to FY21

Kingfisher’s FY21 performance was a mixed bag – lfl sales were stronger than expected but the adjusted earnings missed the consensus slightly. Investors seem to be panicking due to management’s commentary about heightened macro-economic and geopolitical uncertainties plus a softer start to Q1 FY22/23. We do not see this as a surprise (considering the tough comparable base) and expect the company to continue gaining market share in key operating regions. No change to the stock’s recommendation.

Decent Q3 performance; outlook below expectations

Kingfisher’s Q3 trading sales were slightly ahead of our estimates. The company continued to gain market share and has also made a promising start to Q4 (+0.4% lfl up to 13 November). However, the stock slipped post the results as the FY21/22 outlook upgrade was disappointing, considering the momentum of company’s ytd performance. We do not see any structural issue with the business model and maintain the stock recommendation.

Strong H1 showing; tougher times ahead

Kingfisher reported better-than-expected figures at its H1 FY21/22 results, with lfl sales and adjusted PBT coming in ahead of market expectations and management’s guidance. Lfl sales outlook for H2 has been raised, the share buy-back programme re-introduced and the interim dividend increased. However, the share price was down c.5% today, as investors worried about inflationary cost pressures and supply chain constraints which are expected to continue into 2022. We will update our estimates and

Outperformance continues; however, the tailwinds start easing

Kingfisher’s Q2 FY21/22 trading update came in ahead of market expectations. Following an impressive c.64% lfl sales growth in Q1, the momentum finally receded with Q2 registering a sales decline of >1% so far, as DIY spend tailwinds unwind. On the back of the better-than-expected performance, management upgraded its sales and profitability outlook for H1 FY21/22. Although we will raise the estimates and target price, ‘Reduce’ recommendation is re-affirmed as DIY spend normalises and the limited

Strong Q1 sales momentum + upgraded FY profit guidance

Q1 sales galloped c.64% yoy (in lfl terms) as consumers’ demand for DIY products sustained, besides favourable comparables. Given the strong sales trends in Q1 and early May, management revised upwards its sales and adjusted PBT guidance. We will raise our estimates, but are likely to maintain our cautious stance as the current DIY spend momentum seems unsustainable.

Ending the year on a high

Kingfisher delivered better-than-expected FY20/21 results. The group’s lfl sales grew >15% yoy in Q4, bringing the FY sales growth to c.7%, driven by higher DIY consumer demand. Cost control measures along with robust top-line growth aided the retail profit to come in >27% higher. Looking ahead, management expects growth momentum to continue in the near term, with tough comparable and moderating consumer demand to weigh in on the top line in H2. Management has also resumed the dividend pay-out.

DIY keeps up the momentum

Kingfisher continued to register strong sales growth in Q4 FY20/21, buoyed by the higher DIY spend by consumers since the onset of the pandemic. Management continues to refrain from providing full-year revenue guidance, citing the pandemic-related uncertainties and the impact of lockdown restrictions. We maintain a positive outlook on the stock.

Positive momentum maintained in Q3 FY20/21

In Q3 FY20/21, Kingfisher continued to benefit from the DIY-boosting pandemic – its lfl revenue increased 17.4% yoy with a massive 153% yoy growth in the e-commerce channel. Even during the first two weeks of November 2020, the momentum remained strong. However, management refrained from guiding for the full-year revenue and margin, as the second round of lockdowns in its key markets (France and the UK) and the Brexit scenario unfold uncertainties.

Riding high with the stay-at-home trend

Kingfisher was resilient during H1 20/21, as DIY demand recovered strongly during Q2 20/21 – the group’s operating cost management was also much better than our expectations. More importantly, the company’s robust trading backdrop has sustained during August and September so far (+16.6% yoy lfl sales). While the surge in DIY demand is an industry phenomenon (and still unclear how long will it last), we turn more positive on Kingfisher’s new trading strategy, which has shown initial green-shoots.

Moving back to basics

FY19/20 was another subdued year for Kingfisher, on both the revenue and profitability fronts. The road ahead also remains bumpy, as the Coronavirus- and Brexit-related uncertainties prevail. In such backdrops, the new CEO’s reasonable revival plan (which covers the retailer’s key pain-points) offers some relief. But, a faultless execution is a must, as investors would be less trusting now (considering the previous sour experience) even though management is new.

SHORE CAPITAL - ScS Group+ (SCS, House Stock at 180p)

LIBERUM: Tortilla Mexican Grill* - Costs under control, rollout on track

H1 performance below expectations; strong start to Q3

JDW’s H1 FY23 performance was below our expectations. Compared with FY19, the group’s lfl sales grew by 5% and the adjusted PBT was down 90.9%. Investors cheered the market outperformance during the initial seven weeks of Q3 (+14.9% yoy). The easing of supply chain issues is also a positive. However, the c.10% jump in the stock price jump seems something of an overreaction. Volumes remain under pressure and inflationary/macro-economic headwinds are here to stay, at least in the near-term. We mai

Hybridan Small Cap Feast - 27 Mar 23

27 March 2023 @HybridanLLP Status of this Note and Disclaimer This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment objectiv

Hybridan Small Cap Feast - 31 Mar 23

31 March 2023 @HybridanLLP Status of this Note and Disclaimer This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment objectiv

Hybridan Small Cap Feast - 22 Mar 23

22 March 2023 @HybridanLLP Status of this Note and Disclaimer This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment objectiv

Year-end trading ahead of expectation

Thanks to the better-than-expected trading performance during the Christmas period, Next reported an encouraging trading update for Q4 22/23. The group remain cautious for the year ahead. Next expects full-price sales to decrease 1.5% and profit before tax to be £795m, implying a contraction of 7.6% versus the FY22/23.

Hybridan Small Cap Feast - 01 Feb 23

01 February 2023 @HybridanLLP Status of this Note and Disclaimer This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment objec

Hybridan Small Cap Feast - 30 Mar 23

30 March 2023 @HybridanLLP Status of this Note and Disclaimer This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment objectiv

ME Group - Positive trading momentum has continued

ME Group has confirmed that the strong recovery seen across Continental Europe in H1 has continued throughout H2. Consumer demand has been stronger for all the Group’s services. The Asian market has remained more subdued due to pandemic restrictions remaining in place for longer than in the Group’s other regions. Updated guidance details revenue is now expected to be between £256m and £262m (our forecast £259m) and EBITDA between £82m and £85m (our forecast £84m). Hence, we make no changes to th

Inchcape (INCH LN) - FY22 results, strong execution

Inchcape’s FY22 results last week came in slightly ahead of our expectations on most headline measures. The Group continues to deliver on its strategy and is generating high returns and cash conversion. Due to acquisition related outflows, the Group’s net debt balance (£377.7m, 0.6x pro-forma EBITDA) was greater than we expected (£286.1m), but still well below the Group’s stated comfortable leverage level (1.0x EBITDA). We update forecasts for guidance on higher interest cost and tax rates, whic

Let the Party begin

GVC has now completed its game-changing acquisition of bwin.party, a deal designed to propel the company into the upper reaches of the online gambling industry in terms of size and profitability. The focus now turns to delivering the €125m of projected cost synergies and re-energising bwin’s sizable asset base to drive sustainable growth. We reintroduce our forecasts and expect GVC’s EBITDA to rise from €51m in 2015 to €236.5m in 2017, with strong underlying cash flows driving rapid debt reducti

Initiation of coverage - Follow the cash

Inchcape PLC is a unique global distributor operating in 32 markets globally across the automotive value chain. The group has a long track record in effective capital allocation, delivering shareholder value through share buybacks, an attractive dividend and a disciplined M&A strategy. The share price is currently at 2013 levels, which, in our view, ignores the track record of delivery on several fronts, representing a good entry point for investors.

U-turn on £2 FOBT stake and RGD effective date

Government will bring forward the timing of implementing the lower £2 limit on B2 machines (FOBTs), now effective April 2019. Simultaneously, Remote Gaming Duty (RGD) or Point of Consumption Tax on online gaming will increase to 21%, April 2019 (it excludes online sports betting and betting on racing online). It puts operators under pressure to bring forward their own rightsizing plans for their shop estates, with four and a half months remaining before the effective date. We adjust our forecast

In-line, very highly valued stock

Next has reported 3Q Full Price sales growth of +2.0% and repeated guidance given at its Interims for sales and PBT for the full year. 3Q suffered from stronger comparatives and weather while 4Q should benefit from weak comparatives. October full price sales growth of 5% supports this pattern.