Currency in GBP
Last close As at 30/01/2023
GBP0.96
▲ 2.00 (2.14%)
Market capitalisation
GBP155m
Research: TMT
The Pebble Group’s H122 figures are strong, as indicated in July’s trading update. Facilisgroup (the SaaS offering supporting promotional products for North American SMEs) grew recurring revenues 21% in US$ terms (£: +30%) and its new Commercio offering is making encouraging early progress. Brand Addition, supporting global brands with promotional products, lifted revenues 29% over H121, from both new and longer-established customers. Group FY22 consensus forecasts were raised in July and management indicates that these will be ‘at least’ met. Pebble has a strong balance sheet funding investment in technology and sustainability to drive future growth.
The Pebble Group |
Both businesses performing well
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6 September 2022 |
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Analysts
The Pebble Group is a research client of Edison Investment Research Limited |
The Pebble Group’s H122 figures are strong, as indicated in July’s trading update. Facilisgroup (the SaaS offering supporting promotional products for North American SMEs) grew recurring revenues 21% in US$ terms (£: +30%) and its new Commercio offering is making encouraging early progress. Brand Addition, supporting global brands with promotional products, lifted revenues 29% over H121, from both new and longer-established customers. Group FY22 consensus forecasts were raised in July and management indicates that these will be ‘at least’ met. Pebble has a strong balance sheet funding investment in technology and sustainability to drive future growth.
Commercio up and running
Facilisgroup (12% of group H122 revenue, 44% of adjusted EBITDA) grew its gross merchandise value (GMV) by 38% in H122 and put 54% more spend through its preferred suppliers. Commercio, its new all-in-one e-commerce offering enabling distributors to manage their own online stores, was launched in June 2022 and is now being rolled out, with 45 businesses contracted to date. It generates both a monthly fee and a fee per store, which should enable Commercio to target a larger percentage of the GMV transacted across the platform over time. The ambition is to build towards $50m of recurring revenues. At Brand Addition (H122: 88% of group revenue, 56% of adjusted EBITDA), revenues were 29% ahead of H121 and gross margins improved to 29.9%, (H121: 28.2%). The adjusted EBITDA margin was 8.3%, up from 6.1% in H121. Momentum at Brand Addition looks positive and if there is outperformance of FY22 consensus it is likely to come from this part of the group.
Balance sheet supports investment
Despite the seasonal H1 working capital outflow, net debt at end June was £0.1m, which reversed to a net cash position of £2.5m by 5 September. Consensus is for year-end net cash of £14.0m, ahead of last year’s closing balance of £12.1m. H122 capex was £3.6m, of which £1.4m was for Commercio. Investment, for now, takes priority over dividends.
Valuation: Discount narrowed
Other quoted B2B marketing services shares trade on an average EV/EBITDA of 10.3x for FY22e and 8.3x for FY23e, and at a P/E of 19.7x and 14.8x, respectively. Share prices year-to-date have been undermined by retreating confidence in the consumer outlook and hence that for advertising spend, with peers’, and Pebble’s, share prices down 23%, with Pebble’s shares on a 7% FY22 P/E discount to peers.
Consensus estimates
Source: company accounts, Refinitiv |
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Research: Oil & Gas
Canacol reported EBITDAX of US$55.2m for Q222, up 24% compared to Q221 due to a 29% increase in natural gas revenues as a result of both increased production and average sales prices. This resulted in strong operating cash flow, with funds from operations up 16% to US$39.1m (Q221: US$33.6m). A non-cash deferred tax expense led to a net loss of US$6.4m for the quarter due to the impact of the weakening Colombian peso on unused tax losses and cost pools. The 2022 drilling programme of up to 12 wells is progressing, with six wells successfully completed to date and the high-impact Pola-1 well to be spudded by year-end. Meanwhile, the new Colombian government is expected to change the country’s energy transition plans, having stood on a platform of ending new oil contracts. Finance Minister José Antonio Ocampo has, however, spoken of the importance of natural gas. In our view, the value of gas as a transition fuel increases with an accelerated shift away from oil and coal.
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