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GBP52m
Research: TMT
The MISSION Group’s interim announcement confirms July’s trading update, showing revenues up 17% and continuing sequential half-on-half recovery. An interim dividend of 0.8p is 4% ahead of that paid in FY19. Full year broker estimates are unchanged, implying H221 revenue growth of 14%. The group’s technology exposure has been a positive through the lockdown period, while the robust resurgence of property marketing in FY21 is driving good growth in specialist agency ThinkBDW. MISSION’s shares continue to trade at a discount to peers, despite the improving outlook and more coherent corporate strategy.
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22 September 2021 |
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The MISSION Group’s interim announcement confirms July’s trading update, showing revenues up 17% and continuing sequential half-on-half recovery. An interim dividend of 0.8p is 4% ahead of that paid in FY19. Full year broker estimates are unchanged, implying H221 revenue growth of 14%. The group’s technology exposure has been a positive through the lockdown period, while the robust resurgence of property marketing in FY21 is driving good growth in specialist agency ThinkBDW. MISSION’s shares continue to trade at a discount to peers, despite the improving outlook and more coherent corporate strategy.
New strategic focus areas
We documented client progress with our note following the July trading update and there is no significant further relevant news flow with the interim figures. There is, however, further iteration of the corporate strategy, identifying three areas of strategic focus which play into themes currently prevalent in the sector. The first is in data and analytics, where an appointment has been made to map out the opportunity and approach, including brand benchmarking that can be leveraged across group agencies and used in marketing efforts. Secondly, the group is to focus more on its customer experience (CX) capabilities, including its behavioural science agency, Innovation Bubble. Thirdly, the group will be building its ecommerce capabilities – increasingly integrated into clients’ marketing strategies
Healthy balance sheet
Management’s anticipated H221 cash outflow of £6.3m in deferred consideration should be met without undue strain on the balance sheet, with a further estimated £0.1m due in FY22 and £0.6m due between three and four years’ time. £0.3m is due to be settled in shares within the next year. Net debt at the half year was £3.9m, despite deferred HMRC payments of £3.1m and the deferred dividend from the prior year (£1.4m). The new three-year, £20m revolving credit facility (RCF) has an accordion option of up to £5m, giving the group the financial strength to make the needed investments and to make infill acquisitions to fit its strategic objectives
Valuation: Still well below peers
The MISSION Group’s share price has risen by 26% since the start of the year, compared with the median advertising sector gain of 41%. Averaging across FY21–22e to try to iron out some of the COVID-19-led inconsistencies, MISSION’s shares would be valued around 165p were they to trade at parity with advertising peers on P/E and EV/EBIT, up from 112p at the time of the Q2 trading update in July.
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Consensus estimates
Source: Refinitiv. Note: *Normalised. |
The MISSION Group is a research client of Edison Investment Research Limited
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Research: Investment Companies
European Assets Trust (EAT) aims to achieve long-term growth of capital through investments in smaller European companies (excluding the UK). EAT’s managers Sam Cosh and Lucy Morris believe such companies are often not well-researched or appreciated. This leads to market inefficiencies, which Cosh and Morris seek to exploit to deliver a superior long-term investment performance. The managers grasped the opportunities created by last year’s sharp market sell-off to add new names at attractive prices. These changes are now paying off. The trust has performed particularly strongly in absolute terms over the past year and outperformed the benchmark significantly over one, three and 10 years. The managers are confident that their approach is the best way to keep delivering attractive returns to shareholders, not just for now, but also over the long term. The trust has a high distribution policy that pays a dividend of 6% of NAV as at the end of the preceding financial year – by far the highest yield in its sector.
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