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GBP45.55
▲ 40.00 (0.89%)
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GBP1,279m
Research: TMT
4imprint has announced that trading over the first four months of the year was stronger than anticipated. Both order volumes and average order values are up double digits over the same period in 2019, resulting in revenues up 27% on the pre-COVID comparison. The group is now back on track to reach its long-held FY22 target of $1bn revenue and we have upgraded our forecast accordingly. Our new forecasts show a more robust recovery in operating margin, despite the economic uncertainty and inflation impact. 4imprint is a high-quality business in a large and growing market, underpinned by marketing expertise and a strong balance sheet.
4imprint Group |
Back on track for $1bn revenue |
Trading update |
Media |
9 May 2022 |
Share price performance
Business description
Next events
Analyst
4imprint Group is a research client of Edison Investment Research Limited |
4imprint has announced that trading over the first four months of the year was stronger than anticipated. Both order volumes and average order values are up double digits over the same period in 2019, resulting in revenues up 27% on the pre-COVID comparison. The group is now back on track to reach its long-held FY22 target of $1bn revenue and we have upgraded our forecast accordingly. Our new forecasts show a more robust recovery in operating margin, despite the economic uncertainty and inflation impact. 4imprint is a high-quality business in a large and growing market, underpinned by marketing expertise and a strong balance sheet.
Year end |
Revenue ($m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/20 |
560.0 |
3.8 |
11.0 |
0.0 |
N/A |
N/A |
12/21 |
787.3 |
30.2 |
80.3 |
45.0 |
44.6 |
1.3 |
12/22e |
1,000.0 |
53.5 |
144.8 |
80.0 |
24.8 |
2.2 |
12/23e |
1,125.0 |
64.8 |
172.8 |
95.0 |
20.8 |
2.7 |
Note: *PBT and EPS (fully diluted) are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Recovery in operating margin
We were previously at the lower end of the forecast range, building in caution over the pace of recovery in the US economy. The strength of these indicated numbers lead us to increase our revenue forecasts from $900m to $1bn for the current year and from $1bn to $1.2bn for FY23, roughly where we expected the business to be trading at this point before the onset of the pandemic. Management is now guiding to an FY22 operating profit figure above the highest current market forecast, which we believe to be $52m. With the momentum from these early weeks, we lift our operating profit forecast from $40.5m to $53.9m, representing an operating margin of 5.4% and flowing through to a year-end forecast net cash figure of $64.25m. We envisage a further margin uplift to 5.8% in FY23 with greater fixed cost recovery.
Some market uncertainties built in
As we have pointed out in previous reports, in some ways 4imprint’s trading reflects the health of the US economy. In its guidance, management acknowledges there will be increasing attention paid to the impact of inflation on customer budgets and the threat of recession, on top of ongoing concerns regarding stock availability and cost inflation for both stock and staff. However, these are factored into the numbers (as much as is sensible at this stage) and it is the exceptionally strong rebound in customer activity over these early weeks of the year that has led to this update ahead of the AGM scheduled for 24 May 2022.
Valuation: Upgrade and sterling weakness lift DCF
The share price has responded well to the update, recovering to the broad levels of March and April, before the more recent setback. At the time of our last note in March, our DCF suggested a value of £34.01 per share. The upgrade to forecasts would take this to £39.27 per share and adding in the significant weakening of sterling, the implied value rises to £43.10 per share.
Exhibit 1: Financial summary
$000s |
2019 |
2020 |
2021 |
2022e |
2023e |
||
Year end 31 December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
|||||||
Revenue |
|
|
860,844 |
560,040 |
787,322 |
1,000,000 |
1,125,000 |
Cost of Sales |
(585,543) |
(402,100) |
(561,306) |
(710,000) |
(798,750) |
||
Gross Profit |
275,301 |
157,940 |
226,016 |
290,000 |
326,250 |
||
EBITDA |
|
|
57,904 |
8,905 |
35,660 |
59,250 |
70,500 |
Operating profit (before amort. and excepts.) |
|
|
53,620 |
3,972 |
30,646 |
53,850 |
65,100 |
Intangible Amortisation |
0 |
0 |
0 |
0 |
0 |
||
Operating profit (before amort. and excepts.) |
|
|
53,620 |
3,972 |
30,646 |
53,850 |
65,100 |
Exceptionals |
0 |
0 |
0 |
0 |
0 |
||
Impairment |
0 |
0 |
0 |
0 |
0 |
||
Operating Profit |
53,620 |
3,972 |
30,646 |
53,850 |
65,100 |
||
Net Interest |
373 |
(129) |
(417) |
(350) |
(350) |
||
Profit Before Tax (norm) |
|
|
53,993 |
3,843 |
30,229 |
53,500 |
64,750 |
Profit Before Tax (IFRS) |
|
|
53,993 |
3,843 |
30,229 |
53,500 |
64,750 |
Tax |
(11,276) |
(753) |
(7,643) |
(13,375) |
(16,188) |
||
Profit After Tax (norm) |
42,717 |
3,090 |
22,586 |
40,125 |
48,563 |
||
Profit After Tax (IFRS) |
42,717 |
3,090 |
22,586 |
40,125 |
48,563 |
||
Discontinued businesses |
0 |
0 |
0 |
0 |
0 |
||
Net income (norm) |
|
|
42,717 |
3,090 |
22,586 |
40,660 |
48,563 |
Net income (IFRS) |
|
|
42,717 |
3,090 |
22,586 |
40,125 |
48,563 |
Average Number of Shares Outstanding (m) |
28.0 |
28.0 |
28.1 |
28.1 |
28.1 |
||
EPS - normalised fully diluted (c) |
|
|
152.4 |
11.0 |
80.3 |
144.8 |
172.8 |
EPS - (IFRS) (c) |
|
|
152.4 |
11.0 |
80.2 |
142.9 |
172.7 |
Dividend per share (c) |
84.0 |
0.0 |
45.0 |
80.0 |
95.0 |
||
Gross Margin (%) |
32.0 |
28.2 |
28.7 |
29.0 |
29.0 |
||
EBITDA Margin (%) |
6.7 |
1.6 |
4.5 |
5.9 |
6.3 |
||
Operating Margin (before GW and except.) (%) |
6.2 |
0.7 |
3.9 |
5.4 |
5.8 |
||
BALANCE SHEET |
|||||||
Fixed Assets |
|
|
31,844 |
43,269 |
38,037 |
37,797 |
35,557 |
Intangible Assets |
0 |
0 |
0 |
0 |
0 |
||
Other intangible assets |
1,152 |
1,100 |
1,045 |
1,045 |
1,045 |
||
Tangible Assets |
24,369 |
24,832 |
24,667 |
25,767 |
24,867 |
||
Right of use assets |
1,985 |
13,065 |
11,725 |
10,385 |
9,045 |
||
Deferred tax assets |
4,338 |
4,272 |
600 |
600 |
600 |
||
Current Assets |
|
|
105,631 |
89,812 |
127,771 |
165,147 |
198,167 |
Stocks |
11,456 |
11,271 |
20,559 |
24,154 |
27,445 |
||
Debtors |
53,039 |
38,775 |
63,589 |
74,709 |
84,888 |
||
Cash |
41,136 |
39,766 |
41,589 |
64,250 |
83,800 |
||
Other |
0 |
0 |
2,034 |
2,034 |
2,034 |
||
Current Liabilities |
|
|
(60,839) |
(51,118) |
(73,027) |
(94,725) |
(106,422) |
Creditors |
(59,209) |
(50,001) |
(71,877) |
(93,575) |
(105,272) |
||
Short term borrowings |
0 |
0 |
0 |
0 |
0 |
||
Lease liabilities |
(1,630) |
(1,117) |
(1,150) |
(1,150) |
(1,150) |
||
Long Term Liabilities |
|
|
(13,688) |
(16,592) |
(11,789) |
(10,589) |
(9,506) |
Long term borrowings |
0 |
0 |
0 |
0 |
0 |
||
Lease liabilities |
(415) |
(12,089) |
(10,939) |
(9,739) |
(8,539) |
||
Other long term liabilities |
(13,273) |
(4,503) |
(850) |
(850) |
(967) |
||
Net Assets |
|
|
62,948 |
65,371 |
80,992 |
97,630 |
117,796 |
CASH FLOW |
|||||||
Operating Cash Flow |
|
|
59,841 |
16,462 |
22,846 |
60,500 |
67,850 |
Net Interest |
751 |
(13) |
(417) |
(350) |
(350) |
||
Tax |
(10,318) |
(507) |
(6,414) |
(9,240) |
(13,688) |
||
Capex |
(8,178) |
(3,724) |
(3,465) |
(6,500) |
(4,500) |
||
Acquisitions/disposals |
0 |
0 |
0 |
0 |
0 |
||
Pension contributions |
(3,593) |
(13,278) |
(4,589) |
(4,000) |
(4,000) |
||
Financing |
(2,567) |
941 |
(843) |
(800) |
(800) |
||
Dividends |
(20,659) |
0 |
(4,134) |
(15,879) |
(23,854) |
||
Other |
(1,687) |
(1,418) |
(1,109) |
(1,100) |
(1,100) |
||
Net Cash Flow |
13,590 |
(1,537) |
1,875 |
22,631 |
19,559 |
||
Opening net debt/(cash) |
|
|
(27,484) |
(41,136) |
(39,766) |
(41,590) |
(64,250) |
Net impact of disposals etc |
0 |
0 |
0 |
0 |
0 |
||
Other |
62 |
167 |
(52) |
29 |
0 |
||
Closing net debt/(cash) |
|
|
(41,136) |
(39,766) |
(41,590) |
(64,250) |
(83,809) |
Source: Company accounts, Edison Investment Research
|
|
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