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Research: TMT
Today’s update from 4imprint shows that the positive trading environment experienced in the first half has continued through Q3. Management has (again) lifted guidance for the full year. It now indicates revenue of around $1.1bn, generating PBT of not less than $90m, and we have raised our forecasts accordingly, with uplifts also to FY23 and FY24 estimates. With the inherent strong cash generation and $79m of cash balances as at end October, we view it as increasingly likely that a special dividend may be declared for FY22 alongside regular payments.
4imprint Group |
Buoyant orders support further upgrades |
Trading update |
Media |
4 November 2022 |
Share price performance
Business description
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Analysts
4imprint Group is a research client of Edison Investment Research Limited |
Today’s update from 4imprint shows that the positive trading environment experienced in the first half has continued through Q3. Management has (again) lifted guidance for the full year. It now indicates revenue of around $1.1bn, generating PBT of not less than $90m, and we have raised our forecasts accordingly, with uplifts also to FY23 and FY24 estimates. With the inherent strong cash generation and $79m of cash balances as at end October, we view it as increasingly likely that a special dividend may be declared for FY22 alongside regular payments.
Year end |
Revenue |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/20 |
560.0 |
3.8 |
11.0 |
0.0 |
373.2 |
N/A |
12/21 |
787.3 |
30.2 |
80.3 |
45.0 |
51.1 |
1.1 |
12/22e |
1,102.3 |
90.1 |
243.4 |
130.0 |
16.9 |
3.2 |
12/23e |
1,215.0 |
97.2 |
262.2 |
145.0 |
15.7 |
3.5 |
12/24e |
1,336.5 |
106.7 |
287.9 |
160.0 |
14.3 |
3.9 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles and exceptional items.
Continued positive trading momentum
Revenues to end October were 40% ahead of the prior year, which is 35% up on FY19, showing that this is more than a simple post-lockdown rebound. Order counts were up 32% and average order values ahead by 6%, which will have been a combination of pricing and mix, with an increasing proportion of apparel. The success of the brand awareness campaign has increased the group’s overall marketing efficiency, giving a step change in operating margin to around 8% from the 6% achieved in FY14–19. Our modelling suggests a very small dip from 8.2% in FY22e to 8.0% in FY23e as the group continues to invest to support the growth. Overall, our FY22 PBT and EPS forecasts rise 13%, with an 8% uplift for FY23e and +7% for FY24e (August increases were of 49% for FY22e and 40% for FY23e).
Scope for additional distribution
4imprint is inherently cash generative, with limited capital investment requirements. End October cash was $79m, from $67m at end June, and our modelling suggests a balance of $83m at the FY22 year-end. At these levels of cash resources, we expect that management will be considering declaring a special dividend for FY22e alongside the final dividend. If that additional payment were to be $1/share, payable in H123, that would bring our expected FY23 year-end cash figure broadly in line with that of end FY22. Our financial summary reflects this assumption.
Valuation: DCF suggests meaningful upside
The share price responded very positively to July’s trading update, hitting an all-time high of over £40, before settling back to current levels. At the time of our August update, our DCF suggested a value of £54.58 per share. This subsequent upgrade to forecasts takes this figure to £63.26 per share, with (still) weaker sterling ($/£1.15 vs $/£1.20) boosting the implied value further to £66.01 per share, significantly ahead of the current share price.
Exhibit 1: Financial summary
$000s |
2019 |
2020 |
2021 |
2022e |
2023e |
2024e |
||
Year end 31 December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
||||||||
Revenue |
|
|
860,844 |
560,040 |
787,322 |
1,102,250 |
1,215,000 |
1,336,500 |
Cost of Sales |
(585,543) |
(402,100) |
(561,306) |
(787,098) |
(868,725) |
(955,597) |
||
Gross Profit |
275,301 |
157,940 |
226,016 |
315,152 |
346,275 |
380,902 |
||
EBITDA |
|
|
57,904 |
8,905 |
35,660 |
95,940 |
103,100 |
112,600 |
Operating profit (before amort. and excepts.) |
|
|
53,620 |
3,972 |
30,646 |
90,440 |
97,500 |
107,000 |
Intangible Amortisation |
0 |
0 |
0 |
0 |
0 |
0 |
||
Exceptionals |
0 |
0 |
0 |
0 |
0 |
0 |
||
Operating Profit |
53,620 |
3,972 |
30,646 |
90,440 |
97,500 |
107,000 |
||
Net Interest |
373 |
(129) |
(417) |
(300) |
(300) |
(300) |
||
Profit Before Tax (norm) |
|
|
53,993 |
3,843 |
30,229 |
90,140 |
97,200 |
106,700 |
Profit Before Tax (IFRS) |
|
|
53,993 |
3,843 |
30,229 |
90,140 |
97,200 |
106,700 |
Tax |
(11,276) |
(753) |
(7,643) |
(21,634) |
(23,328) |
(25,608) |
||
Profit After Tax (norm) |
42,717 |
3,090 |
22,586 |
68,506 |
73,872 |
81,092 |
||
Profit After Tax (IFRS) |
42,717 |
3,090 |
22,586 |
68,506 |
73,872 |
81,092 |
||
Discontinued businesses |
0 |
0 |
0 |
0 |
0 |
0 |
||
Net income (norm) |
|
|
42,717 |
3,090 |
22,586 |
68,506 |
73,872 |
81,092 |
Net income (IFRS) |
|
|
42,717 |
3,090 |
22,586 |
68,506 |
73,872 |
81,092 |
Average Number of Shares Outstanding (m) |
28.0 |
28.0 |
28.1 |
28.1 |
28.1 |
28.1 |
||
EPS - normalised fully diluted (c) |
|
|
151.9 |
11.0 |
80.3 |
243.4 |
262.2 |
287.9 |
EPS - (IFRS) (c) |
|
|
152.4 |
11.0 |
80.5 |
244.1 |
262.9 |
288.6 |
Dividend per share (c) |
25.0 |
0.0 |
45.0 |
130.0 |
145.0 |
160.0 |
||
Special dividend per share (c) |
0.0 |
0.0 |
0.0 |
100.0 |
0.0 |
0.0 |
||
Gross Margin (%) |
32.0 |
28.2 |
28.7 |
28.6 |
28.5 |
28.5 |
||
EBITDA Margin (%) |
6.7 |
1.6 |
4.5 |
8.7 |
8.5 |
8.4 |
||
Operating Margin (before GW and except.) (%) |
6.2 |
0.7 |
3.9 |
8.2 |
8.0 |
8.0 |
||
BALANCE SHEET |
||||||||
Fixed Assets |
|
|
31,844 |
43,269 |
40,011 |
47,296 |
49,856 |
52,416 |
Intangible Assets |
0 |
0 |
0 |
1,010 |
1,010 |
1,010 |
||
Other intangible assets |
1,152 |
1,100 |
1,045 |
1,045 |
1,045 |
1,045 |
||
Tangible Assets |
24,369 |
24,832 |
24,667 |
28,167 |
28,067 |
27,967 |
||
Right of use assets |
1,985 |
13,065 |
11,725 |
10,500 |
9,160 |
7,820 |
||
Deferred tax assets |
4,338 |
4,272 |
600 |
600 |
600 |
600 |
||
Retirement benefit asset |
|
|
0 |
0 |
1974 |
5974 |
9974 |
13974 |
Current Assets |
|
|
105,631 |
89,812 |
127,771 |
194,486 |
207,114 |
247,460 |
Stocks |
11,456 |
11,271 |
20,559 |
26,624 |
29,641 |
30,159 |
||
Debtors |
53,039 |
38,775 |
63,589 |
82,348 |
91,679 |
100,847 |
||
Cash |
41,136 |
39,766 |
41,589 |
83,480 |
83,760 |
114,420 |
||
Other |
0 |
0 |
2,034 |
2,034 |
2,034 |
2,034 |
||
Current Liabilities |
|
|
(60,839) |
(51,118) |
(73,027) |
(104,293) |
(114,844) |
(126,213) |
Creditors |
(59,209) |
(50,001) |
(71,877) |
(103,143) |
(113,694) |
(125,063) |
||
Short term borrowings |
0 |
0 |
0 |
0 |
0 |
0 |
||
Lease liabilities |
(1,630) |
(1,117) |
(1,150) |
(1,150) |
(1,150) |
(1,150) |
||
Long Term Liabilities |
|
|
(13,688) |
(16,592) |
(11,789) |
(10,911) |
(9,828) |
(8,628) |
Long term borrowings |
0 |
0 |
0 |
0 |
0 |
0 |
||
Lease liabilities |
(415) |
(12,089) |
(10,939) |
(10,061) |
(8,861) |
(7,661) |
||
Other long term liabilities |
(13,273) |
(4,503) |
(850) |
(850) |
(967) |
(967) |
||
Net Assets |
|
|
62,948 |
65,371 |
82,966 |
126,577 |
132,298 |
165,035 |
CASH FLOW |
||||||||
Operating Cash Flow |
|
|
59,841 |
16,462 |
22,846 |
97,500 |
99,000 |
106,650 |
Net Interest |
751 |
(13) |
(409) |
(300) |
(300) |
(300) |
||
Tax |
(10,318) |
(507) |
(6,414) |
(18,034) |
(20,828) |
(22,008) |
||
Capex |
(8,178) |
(3,724) |
(3,465) |
(9,000) |
(5,500) |
(5,500) |
||
Acquisitions/disposals |
0 |
0 |
0 |
(1,700) |
0 |
0 |
||
Pension contributions |
(3,593) |
(13,278) |
(4,589) |
(4,000) |
(4,000) |
(4,000) |
||
Financing |
(2,567) |
941 |
(843) |
(900) |
(900) |
(900) |
||
Dividends |
(20,659) |
0 |
(4,134) |
(20,512) |
(65,974) |
(42,106) |
||
Other/ Capital portion of lease repayments |
(1,687) |
(1,418) |
(1,117) |
(1,200) |
(1,200) |
(1,200) |
||
Net Cash Flow |
13,590 |
(1,537) |
1,875 |
41,854 |
298 |
30,636 |
||
Opening net debt/(cash) |
|
|
(27,484) |
(41,136) |
(39,766) |
(41,589) |
(83,480) |
(83,760) |
Net impact of disposals etc |
0 |
0 |
0 |
0 |
0 |
0 |
||
Other |
62 |
167 |
(53) |
36 |
(19) |
3 |
||
Closing net debt/(cash) |
|
|
(41,136) |
(39,766) |
(41,589) |
(83,480) |
(83,760) |
(114,400) |
Source: Company accounts, Edison Investment Research
|
|
Research: Healthcare
Molecure aims to discover and develop drugs that have novel mechanisms of action to address serious unmet medical needs. Its two lead assets, OATD-01 and OATD-02, are approaching important clinical development milestones. After a strategic decision by partner Galapagos (June 2022), the rights to OATD-01 were returned to the company. Molecure now plans to leverage newly collected data to commence a Phase II trial in sarcoidosis in mid-2023, with top-line results expected in Q125. In addition, management anticipates OATD-02 could enter Phase I trials in solid tumour indications in Q422, subject to regulatory approval. With a cash position of PLN80.7m at end-September 2022, the company guides that its current runway is into Q224.
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