Morning Note – 10 January 2023

Shopping Trolley - finnCap Consumer quarterly sector note

Fulham Shore’s Franco Manca value-for-money brand is perfect for current market conditions in our view, despite pizza being a crowded segment. Pizza travels well, allowing the business to flex to delivery and take-out according to market conditions. The combination of high gross margins, net cash on the balance sheet and excellent FCF generation should allow it to cope with tougher market conditions AND still protect its expansion capex plans to increase EBITDA by +55% over the next three years.

Hostmore - Better than expected H1; cold reality on the menu

Hostmore delivered a marginally better than expected H1, but it’s not been a great start to H2 and the cold reality is that the consumer environment has worsened, putting pressure on revenue, with cost inflation – especially energy – also rippling through the P&L. Sensibly, Hostmore is slowing its opening programme to protect cash; it’s highly cash generative with plenty of financial headroom, and this should put it in a good position to exploit market opportunities when the time is right. We ar

Morning Note – 21 September 2022

Hostmore - Back on track

Hostmore has reassured with confirmation that, despite sector operating challenges, its like-for-like (l-f-l) revenues since 23 May are as expected in its May update, which assumed up to 8% lower l-f-l dine-in volumes on 2019 for the rest of 2022, mitigated by pricing. Organic expansion is also on track with the new 63rd+1st in Edinburgh part of five openings planned this year, while newly enhanced banking facilities reinforce a strong balance sheet. Despite the downward revision to our current

Morning Note – 11 July 2022

Morning Note – 22 June 2022

Hostmore - Recovery on the menu

We initiate coverage of Hostmore with a 125p share target price, implying 279% upside. Hostmore has been spun out of Electra Private Equity like an unwanted orphan into a market that’s not interested in consumer stocks at present. The PLC is unknown and unloved with a share register that is more reflective of its past rather than its future. Yet it has the exclusive UK franchise for one of the most iconic, well-known and loved restaurant brands in the UK – Fridays. Add to the recipe a capable ma

Hostmore - Ready to party

Hostmore has bucked concerns about the impact of the Omicron variant with its expectation of FY21 pre-IFRS 16 EBITDA ‘well ahead of £18.6m market consensus’. While buoyancy in October and November was the driver, December proved resilient with cancellations owing to COVID-19 concerns more than made up by walk-ins and new reservations. We are therefore raising our FY21 forecast of EBITDA (our key metric) by £2m and revenue by £10m. For the current year the newly confirmed imminent easing of COVID

Hostmore - Delivering on its plans

Notwithstanding the proposed tightening of restrictions amid concerns about the Omicron variant of COVID-19, Hostmore has accompanied news of continued buoyant trading with assurances of costs mitigation and further COVID-19 leasehold concessions this year and next. Confirmation of like-for-like EBITDA in October and November was up on 2019, and a positive response to Fridays’ Christmas promotions, reinforce our confidence in our current year forecasts. Meanwhile, expected growth opportunities i

Hostmore - Full menu!

The strategic transformation of the iconic Fridays brand operations in the UK provides Hostmore with not only the prospect of strong earnings generation but the model for future investments on the Hostmore platform. Fridays’ own resources (a coherent strategy, robust finances and experienced management with a record of delivery) should marry well with growth opportunities on COVID-19 fallout, notably an unusually favourable property market and material reduction in competition. An EV/EBITDA of 6

Hybridan Small Cap Feast - 21 Feb 23

21 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

Strong FY22 overshadowed by a soft margin outlook

Entain reported estimate-beating FY22 earnings. Net gaming revenue (NGR) increased by 12% in the year, driven by a 66% rise in retail. BetMGM performed strongly and is expected to be EBITDA positive in H2 2023. Entain completed five transactions during the year, further diversifying its revenue base. Underlying EBITDA was up 13%, and adjusted diluted EPS up 15%. However, the guidance was softer than expected and should result in a low single-digit cut to our FY23 estimates.

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

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

LIBERUM: Ten Entertainment Group* - Value pricing and innovation driving higher sales density

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 - 13 Mar 23

13 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

Inchcape PLC (INCH LN) - FY22 results – small beat to forecasts

Inchcape’s FY22 results are ahead of Zeus forecasts on most measures, with a strong performance across all regions. Underlying trading is said to be in line with expectations, and we don’t anticipate much change to headline forecasts. We remain comfortable with our medium-term SOTP valuation estimate of 1,436p.

BOTB - Beats forecasts, £6.275m return of capital announced

BOTB prelims were slightly ahead of our forecasts, which we recently raised post the May trading statement. Trading continues to normalise despite the uncertain consumer outlook, driven by constant fine-tuning to changing market conditions. BOTB also declared a 6p/share (£0.565k) final dividend and a £6.275m return of capital via tender offer, equivalent to 66.7p/share; and 72.7p and £6.84m combined. We have increased our EPS (Dil. Adj.) forecasts by 23% to 53.9p from 43.9p for FY23E, and by 21%

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

SHORE CAPITAL - Marks & Spencer+ (MKS) - House Stock at 142p - FY23 and FY24 upgrades!

Pendragon (PDG LN) - PBT slightly ahead, strategy progressing

Pendragon has released FY22 results slightly ahead of Zeus estimates set at the 25 January trading update. Underlying PBT (cont. ops) was £59.1m, ahead of our £57.0m forecast and ahead of the £55.3m we forecast at the release of FY21 results on 23 March 2022. This is despite headwinds from cost inflation and faster than expected interest rate rises. Through the year, the Group has made significant strategic progress in relaunching its omnichannel used car proposition, CarStore, and investing in

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

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

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