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Last close As at 26/05/2023
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Research: Industrials
Ongoing strong demand remains encouraging for Accsys and investment to support future growth is also an indicator of confidence in the outlook, in our view. The broader strategic plan – including well-flagged and material capacity expansion – is intact and our earnings expectations are materially as before. Accsys is at a key business development stage and poised to enter a significant earnings growth phase.
Written by
Toby Thorrington
Accsys Technologies |
Growing and investing |
H122 results |
General industrials |
26 November 2021 |
Share price performance
Business description
Next event
Analyst
Accsys Technologies is a research client of Edison Investment Research Limited |
Ongoing strong demand remains encouraging for Accsys and investment to support future growth is also an indicator of confidence in the outlook, in our view. The broader strategic plan – including well-flagged and material capacity expansion – is intact and our earnings expectations are materially as before. Accsys is at a key business development stage and poised to enter a significant earnings growth phase.
Year end |
Revenue (€m) |
EBITDA* |
PBT* |
EPS* |
P/E |
EV/EBITDA |
03/20 |
90.9 |
5.9 |
(2.2) |
(0.01) |
N/M |
47.9 |
03/21 |
99.8 |
9.3 |
1.1 |
0.01 |
N/M |
30.1 |
03/22e |
114.0 |
10.4 |
0.3 |
0.00 |
N/M |
39.6 |
03/23e |
151.3 |
27.6 |
12.3 |
0.04 |
44.5 |
13.4 |
Note: *EBITDA (pre IFRS 16 from FY21), PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Controlled progress in H122
Accoya wood volumes rose by c 12% in H122 (against a COVID-dampened H121) and Arnhem effectively operated at full capacity throughout. The 31% group revenue uplift clearly benefited from firmer pricing, although the manufacturing margin (at 31%) was diluted by mix effects. The 20% uplift in gross profit was reinvested into opex – especially staff at all levels – with an eye on future growth leaving H1 EBIT unchanged y-o-y. Period-end net cash (pre IFRS 16) was c €8m after fresh net equity of c €35 and an investment-led underlying outflow of c €22m. The funds raised in May are largely for a new US JV investment while capex spend and working capital absorption are also to support business growth. Accsys held c €61m gross cash at the period end, providing liquidity to progress projects further, complemented by newly refinanced bank facilities, as announced in October.
Outlook confidence
Management expectations for FY21 are unchanged and the Arnhem expansion (fourth reactor) and Hull plant commissioning (new Tricoya facility) are on track for Q422 and July 2022 respectively. We also believe that the decision to proceed with a new US Accoya facility is imminent. Hence and as trailed in our September note, Accsys is well placed operationally and strategically to pursue its growth aspirations with a firm demand backdrop. While we expect net debt (pre IFRS16) to rise to c €46m by the end of FY22, the underlying assets created are to progressively feed into materially higher profitability, starting in FY23.
Valuation: Building momentum
Accsys’s share price has followed a steady upward trend in 2021 punctuated by periods of sharp outperformance/reversion to trend; it now stands c 15% up on the year (versus c 10% for the FTSE All-Share Index). Consistent with our previous note, we believe that the current share price can be justified by earnings and cash flows from the Arnhem/Accoya operations on a standalone basis. For the record, on our estimates (which include Arnhem and Hull profit contributions), Accsys is trading on FY24e P/E and EV/EBITDA multiples of 24.5x and 8.4x respectively.
Exhibit 1: Financial summary
€m |
2015 |
2016 |
2017 |
2018 |
2019 |
2020 |
2021 |
2022e |
2023e |
2024e |
|||
March |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
|||
PROFIT & LOSS |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
46.077 |
52.769 |
56.529 |
60.911 |
75.153 |
90.909 |
99.803 |
113.960 |
151.339 |
193.223 |
|
Cost of Sales |
|
|
(33.842) |
(34.597) |
(42.175) |
(47.270) |
(56.517) |
(63.402) |
(66.715) |
(77.034) |
(95.887) |
(122.105) |
|
Gross Profit |
|
|
12.235 |
18.172 |
14.354 |
13.641 |
18.636 |
27.507 |
33.089 |
36.927 |
55.451 |
71.118 |
|
EBITDA* |
|
|
(1.275) |
2.384 |
(1.484) |
(3.500) |
0.903 |
5.880 |
9.291 |
10.383 |
27.608 |
41.300 |
|
Operating Profit (before GW and except.) |
|
(3.750) |
(0.288) |
(4.197) |
(6.577) |
(3.063) |
1.364 |
4.530 |
4.149 |
17.166 |
29.945 |
||
Intangible Amortisation |
|
|
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
|
Exceptionals |
|
|
(2.670) |
0.000 |
0.033 |
(1.650) |
(1.440) |
3.661 |
(0.797) |
0.080 |
0.000 |
0.000 |
|
Other |
|
|
(1.098) |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
(0.144) |
(0.246) |
(0.364) |
(2.014) |
|
Operating Profit |
|
|
(7.518) |
(0.288) |
(4.164) |
(8.227) |
(4.503) |
5.025 |
3.589 |
3.983 |
16.802 |
27.932 |
|
Net Interest |
|
|
(0.135) |
(0.178) |
(0.300) |
(2.174) |
(3.117) |
(3.517) |
(3.249) |
(3.596) |
(4.546) |
(4.546) |
|
Profit Before Tax (norm) |
|
|
(3.885) |
(0.466) |
(4.497) |
(8.751) |
(6.180) |
(2.153) |
1.137 |
0.307 |
12.256 |
23.386 |
|
Profit Before Tax (statutory) |
|
|
(7.653) |
(0.466) |
(4.463) |
(10.401) |
(7.620) |
1.508 |
0.340 |
0.387 |
12.256 |
23.386 |
|
Tax |
|
|
(0.607) |
(0.402) |
(0.666) |
0.251 |
0.782 |
(0.631) |
(1.251) |
(1.554) |
(4.053) |
(6.445) |
|
Profit After Tax (norm) |
|
|
(5.590) |
(0.868) |
(5.163) |
(8.500) |
(5.397) |
(2.784) |
(0.114) |
(1.247) |
8.202 |
16.941 |
|
Profit After Tax (statutory) |
|
|
(8.260) |
(0.868) |
(5.129) |
(10.150) |
(6.837) |
0.877 |
(0.911) |
(1.167) |
8.202 |
16.941 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Number of Shares Outstanding (m) |
|
88.5 |
89.6 |
90.4 |
111.2 |
116.3 |
132.7 |
164.9 |
189.3 |
192.4 |
192.4 |
||
EPS - normalised (€) |
|
|
(0.06) |
(0.01) |
(0.05) |
(0.07) |
(0.04) |
(0.01) |
0.01 |
(0.00) |
0.04 |
0.08 |
|
EPS - statutory (€) |
|
|
(0.09) |
(0.01) |
(0.05) |
(0.08) |
(0.05) |
0.02 |
0.00 |
(0.00) |
0.04 |
0.08 |
|
Dividend per share (€) |
|
|
0.0 |
0.0 |
0.0 |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Margin (%) |
|
|
26.6 |
34.4 |
25.4 |
22.4 |
24.8 |
30.3 |
33.2 |
32.4 |
36.6 |
36.8 |
|
EBITDA Margin (%) |
|
|
-2.8 |
4.5 |
-2.6 |
-5.7 |
1.2 |
6.5 |
9.3 |
9.1 |
18.2 |
21.4 |
|
Operating Margin (before GW and except.) (%) |
|
-8.1 |
-0.5 |
-7.4 |
-10.8 |
-4.1 |
1.5 |
4.5 |
3.6 |
11.3 |
15.5 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE SHEET |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed Assets |
|
|
29.562 |
31.252 |
32.520 |
71.488 |
116.062 |
137.645 |
155.607 |
216.184 |
219.679 |
216.160 |
|
Intangible Assets |
|
|
10.014 |
10.980 |
10.839 |
10.657 |
10.790 |
10.986 |
10.865 |
10.697 |
10.289 |
9.881 |
|
Tangible Assets |
|
|
19.548 |
20.272 |
21.681 |
60.831 |
105.272 |
126.659 |
144.416 |
174.097 |
178.145 |
175.280 |
|
Investments |
|
|
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.326 |
31.390 |
31.246 |
31.000 |
|
Current Assets |
|
|
24.066 |
22.590 |
61.268 |
63.505 |
36.524 |
69.761 |
72.491 |
38.392 |
49.819 |
78.100 |
|
Stocks |
|
|
7.894 |
8.345 |
11.796 |
13.125 |
14.008 |
16.932 |
12.262 |
16.159 |
16.113 |
20.519 |
|
Debtors |
|
|
3.912 |
4.967 |
7.402 |
9.178 |
12.198 |
9.236 |
10.726 |
13.621 |
19.297 |
25.891 |
|
Cash |
|
|
10.786 |
8.186 |
41.173 |
39.698 |
8.857 |
37.238 |
47.598 |
6.494 |
10.484 |
27.632 |
|
Current Liabilities |
|
|
(10.701) |
(9.842) |
(14.599) |
(21.414) |
(26.419) |
(23.961) |
(42.285) |
(42.355) |
(49.074) |
(56.897) |
|
Creditors |
|
|
(10.437) |
(9.488) |
(14.144) |
(18.029) |
(19.997) |
(18.696) |
(32.621) |
(26.086) |
(32.805) |
(40.628) |
|
Short term borrowings |
|
|
(0.264) |
(0.354) |
(0.455) |
(3.385) |
(6.422) |
(5.265) |
(9.664) |
(16.269) |
(16.269) |
(16.269) |
|
Long Term Liabilities |
|
|
(1.799) |
(1.947) |
(22.718) |
(40.084) |
(52.508) |
(56.310) |
(49.210) |
(41.165) |
(41.165) |
(41.165) |
|
Long term borrowings |
|
|
(1.799) |
(1.947) |
(22.718) |
(40.084) |
(52.508) |
(52.048) |
(44.626) |
(36.535) |
(36.535) |
(36.535) |
|
Other long-term liabilities |
|
|
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
(4.262) |
(4.584) |
(4.630) |
(4.630) |
(4.630) |
|
Net Assets |
|
|
41.128 |
42.053 |
56.471 |
73.495 |
73.659 |
127.135 |
136.603 |
171.056 |
179.258 |
196.199 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOW |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Cash Flow |
|
|
(3.873) |
0.452 |
(1.304) |
(1.756) |
(1.374) |
2.213 |
20.130 |
6.326 |
26.271 |
35.821 |
|
Net Interest |
|
|
(0.138) |
(0.186) |
(0.248) |
(0.671) |
(1.180) |
(2.250) |
(4.380) |
(3.596) |
(4.546) |
(4.546) |
|
Tax |
|
|
0.263 |
0.229 |
(0.745) |
(2.013) |
1.674 |
0.165 |
0.071 |
(1.554) |
(4.053) |
(6.445) |
|
Capex |
|
|
(1.108) |
(4.052) |
(2.608) |
(29.895) |
(48.915) |
(22.901) |
(12.356) |
(43.682) |
(12.682) |
(6.682) |
|
Acquisitions/disposals |
|
|
0.000 |
0.956 |
18.317 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
|
Financing |
|
|
0.461 |
0.124 |
0.050 |
26.728 |
6.619 |
52.658 |
8.395 |
3.590 |
0.000 |
0.000 |
|
Dividends |
|
|
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
|
Net Cash Flow |
|
|
(4.395) |
(2.477) |
13.462 |
(7.607) |
(43.176) |
29.885 |
11.860 |
(38.916) |
4.990 |
18.148 |
|
Opening net debt/(cash) |
|
|
(13.050) |
(8.723) |
(5.885) |
(18.000) |
3.771 |
50.073 |
20.075 |
6.692 |
46.310 |
42.320 |
|
Finance leases |
|
|
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
0.000 |
(1.308) |
(1.000) |
(1.000) |
(1.000) |
|
Other |
|
|
0.068 |
(0.361) |
(1.347) |
(14.164) |
(3.126) |
0.113 |
2.831 |
0.298 |
(0.000) |
0.000 |
|
Closing net debt/(cash) |
|
|
(8.723) |
(5.885) |
(18.000) |
3.771 |
50.073 |
20.075 |
6.692 |
46.310 |
42.320 |
25.172 |
|
IFRS 16 Leases |
|
|
|
|
|
|
|
5.121 |
5.532 |
5.738 |
5.738 |
5.738 |
Source: Company accounts, Edison Investment Research. Note: *EBITDA is pre-IFRS 16. FY21 financing of €3.590m includes €34.590m receipts from new equity funding net of an expected €31.0m investment in a new US JV.
|
|
Research: Investment Companies
Princess Private Equity (PEY) reported a c 21% NAV TR from January to end-October 2021 driven by exits (most notably GlobalLogic in Q121) and revaluations of existing portfolio holdings. PEY’s realisations outpaced new private equity investments in the period, which has led to an increase in net current assets. That said, PEY has temporarily allocated part of them in senior loans to mitigate the risk of cash drag and announced several new direct private equity investments that are still in the closure period. PEY’s investment manager is confident in its investment pipeline and expects PEY to be close to fully invested in H222.
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