News blog
AIM 50 Digest 8 September
- BY: Andrew Hore |
- POSTED: 11/09/2023 |
Shares in CVS Group (CVSG) slumped because of a CMA review of the veterinary market. It is assessing business practices for household pets because costs have risen faster than inflation. CVS says a shortage of vets is pushing up costs. The full year results will be published on 21 September.
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Ergomed (ERGO) is recommending a £700m takeover by Permira Advisers. The cash bid is 1350p/share. This is still below the high at the end of 2021. The pharmaceutical services provider says that the next phase of growth will require additional cash for expansion and acquisitions.
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Dotdigital (DOTD) is improving its personalisation capability through the acquisition of Fresh Relevance for £25m. This will add around £6m, mainly recurring, revenues and the two firms already have a relationship. The EBITDA margin is 10%, but the real benefits will show through in 2024-25 when earnings have been upgraded by around 5% to 4.6p. The consideration is partly shares issued at 88.7p each with cash of £18.9m. That does not put much of a dent in the cash pile, while adding earnings. Net cash should still be £38.9m at the end of June 2024.
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Canaccord Genuity has upgraded its Jet2 (JET2) 2022-23 pre-tax profit from £462.8m to £499.9m, with £487.9m expected next year. Summer trading is strong thanks to late bookings. Jet2 s also benefiting from higher interest income on its cash pile, including customer payments.
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Building materials supplier Sigmaroc (SRC) continued to trade strongly despite the weakening construction and housebuilding markets. Pre-tax profit improved 13% to £33m. Three disposals are expected to generate £11m, rather than the £9m anticipated. Acquisitions have been made to provide the promised £10m of annual EBITDA while spending £10m less than expected. Conditions remain tough, but the geographic spread of activities helps.
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Workwear and catering linen hirer Johnson Service Group (JSG) says that it expects its 2023 results will be slightly better than the forecasts previously upgraded in July. Interim revenues were 22% ahead at £215m and pre-tax profit jumped from £11.2m to £16.4m as margins continue to improve. Even so, there is some way to go to rebuild margins to past levels. JSG recently acquired Republic of Ireland-based healthcare and catering line hirer Celtic Linen. This increases the exposure to the healthcare linen market.
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Motor dealer Vertu Motors (VTU) says new vehicle supply is improving and costs are being controlled, so this year’s profit is expected to be in line with expectations. Used car prices have fallen 2% in August. Share buy backs will enhance earnings.
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Advanced Medical Solutions (AMS) has downgraded 2023 expectations. Revenues are expected to be £124m-£127m and underlying pre-tax profit of £25m-£27m. The wound care company says royalty revenues from Organogenesis are uncertain because of US government changes to reimbursement for diabetic foot ulcers. This could knock £2m off second half profit. AMS has also been hit by destocking of LiquiBand in the US as it tries to make new partnership agreements.
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Ashtead Technology (AT.) reported a 57% rise in interim revenues to £49.8m, while pre-tax profit is 88% higher at £14.3m. Acquisitions helped to boost the figures.
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Oil and gas company i3 Energy (I3E) announced better than expected interims. Production was around the level forecast, but lower costs meant that pre-tax profit improved from £9.9m to £14.5m. However, lower gas prices have led WH Ireland to reduce its fair value from 22.3p/share to 21.1p/share, although the broker believes that oil prices may rise over the next six months and that could reverse the fair value reduction.
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Audio visual products distributor Midwich Group (MIDW) increased interim revenues by 7% to £610.4m, while underlying pre-tax profit was 10% ahead at £21.8m. The interim dividend is 22% higher at 5.5p/share. Five acquisitions have been made in the US. UK and Spain since the end of June. They cost £18m. Trading is in line with expectations.
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EMIS (EMIS) is paying an interim dividend of 21.3p/share ahead of the completion of the bid for the healthcare IT company. Interim revenues rose 2% to £88.8m and operating profit improved.
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Gamma Communications (GAMA) improved revenues by 9% to £256.2m, while pre-tax profit was 12% higher at £48.3m. Growth is expected to continue in the second half and the full year outcome should be at the top of the range of market expectations.
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Pan African Resources (PAF) says headline earnings are expected to be between 2.95 cents/share and 3.35 cents/share. This is lower than last year because of currency movements.
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MP Evans (MPE) has acquired new planted land in East Kalimantan for $60m, or $9,000/hectare. The value should increase as productivity improves and fruit is sent for milling at the company’s mill.
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DBAY Advisers has increased its stake in Alliance Pharma (APH) from 18.5% to 21.1%, which includes 10.5% held by AIM-quoted Logistics Development Group (LDG).
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