discoverIE Group — Moving into the next growth phase

discoverIE Group (LSE: DSCV)

Last close As at 10/10/2024

GBP6.00

14.00 (2.39%)

Market capitalisation

GBP565m

More on this equity

Research: TMT

discoverIE Group — Moving into the next growth phase

discoverIE’s first capital markets day (CMD) in six years was an opportunity for the group to recap how via its buy-and-build strategy it has successfully grown the company from a market cap of £25m in 2009 to £592m today, while transforming the business from an electronics distributor to a pure-play specialist electronics design and manufacture company. Management also outlined how it expects to drive future growth and profitability. New at the CMD was the announcement of an additional target market, security. As the group has matured, it has put in place structures and processes to maximise revenue opportunities and optimise profitability and cash flow, while retaining the group’s essential DNA.

Katherine Thompson

Written by

Katherine Thompson

Director

TMT

discoverIE Group

Moving into the next growth phase

Capital markets day

Electrical components

18 September 2024

Price

614p

Market cap

£592m

€1.19/$1.31/£

Net debt (£m) at end FY24

104.0

Shares in issue

96.4m

Free float

96%

Code

DSCV

Primary exchange

LSE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(5.3)

(9.8)

(12.5)

Rel (local)

(5.2)

(11.9)

(19.3)

52-week high/low

790p

573p

Business description

discoverIE Group is a leading international designer and manufacturer of customised electronics to industry, supplying customer-specific electronic products and solutions to original equipment manufacturers.

Next events

H125 trading update

October 2024

Analyst

Katherine Thompson

+44 (0)20 3077 5700

discoverIE Group is a research client of Edison Investment Research Limited

discoverIE’s first capital markets day (CMD) in six years was an opportunity for the group to recap how via its buy-and-build strategy it has successfully grown the company from a market cap of £25m in 2009 to £592m today, while transforming the business from an electronics distributor to a pure-play specialist electronics design and manufacture company. Management also outlined how it expects to drive future growth and profitability. New at the CMD was the announcement of an additional target market, security. As the group has matured, it has put in place structures and processes to maximise revenue opportunities and optimise profitability and cash flow, while retaining the group’s essential DNA.

Year
end

Revenue
(£m)

PBT*
(£m)

Diluted EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

03/23

448.9

46.3

35.2

11.45

17.5

1.9

03/24

437.0

48.2

36.8

12.00

16.7

2.0

03/25e

453.1

49.9

37.3

12.50

16.5

2.0

03/26e

466.7

52.4

39.0

13.00

15.7

2.1

Note: *PBT and EPS as per discoverIE’s underlying metric (excludes amortisation of acquired intangibles and exceptional items).

Optimising organic growth and profitability

Management outlined how it expects to continue generating organic revenue growth ahead of GDP and showed that nearly half of operating margin expansion since FY18 has been from operational efficiencies, including optimising its manufacturing footprint. With an increased focus on collaboration, management is aiming to fully exploit the potential of the group through an increased level of cross-selling, operational efficiencies and technical collaboration.

Expect more M&A

The group was built through the 27 acquisitions made since 2011, with a decentralised business model that aims to retain the entrepreneurial mindset of business managers. The dedicated M&A team has an active pipeline of more than 250 targets and expects to continue consolidating the $30bn fragmented custom electronics market. As the group becomes more cash generative, this should help to fund more acquisitions while keeping gearing below 2x.

Valuation: Order growth to trigger upside

The stock trades at a 27% discount to its broader UK industrial technology peer group on FY25e P/E and at a larger discount to peers with a similar decentralised operating model (such as Halma and Spirax). Considering that the earnings outlook has been maintained and discoverIE continues to make excellent progress towards its margin targets, we believe this discount is overdone. The company has shown that focusing on strategic growth markets reduces cyclicality compared to the wider market and recent design win activity provides the foundations for revenue growth once larger industrial customers’ de-stocking is complete.

Capital markets day review

On 11 September, discoverIE hosted its first capital markets day in six years. Management took the opportunity to review the group’s performance since it entered the design and manufacturing market in 2011, revisit the group’s strategy and explain how it continues to execute on this. It also provided the opportunity for participants to see a variety of its bespoke-made products and meet the management of individual businesses.

Strategy recap: Evolution not revolution

discoverIE’s strategy has been broadly unchanged for many years, with net zero targets a more recent addition. The company aims to:

grow sales well ahead of GDP over the economic cycle by focusing on structural growth markets;

acquire highly differentiated businesses, with attractive growth prospects and strong operating margins;

improve operating margins by moving up the value chain into higher-margin products and generate strong cash flows from a capital-light model;

further internationalise the business by expanding operations in North America and Asia; and

reach net zero.

Its successful buy-and-build strategy has resulted in strong revenue growth and margin expansion, driving earnings at a CAGR of 19% between FY15 and FY24.

Exhibit 1: Financial performance from FY15 to FY24

Source: discoverIE. Note: (1) Scope 1 and 2 only. (2) ROCE in FY24.

Medium-term targets – a reminder

Exhibit 2 shows the company’s medium-term targets. It also estimates the potential growth in EPS based on different levels of organic revenue growth combined with varying levels of acquisition spend. For comparison, over the last five years, the company spent £288m on acquisitions, generated an organic revenue CAGR of 7% and EPS growth of 94% (CAGR 14%).

Exhibit 2: Medium-term growth plans

Source: discoverIE

With the group having achieved so much since the design and manufacturing strategy was launched more than 10 years ago, the question now is how this performance can be maintained over the next 10 years. The rest of the CMD was focused on explaining how management intends to maintain growth and drive profitability. This splits broadly into two areas: organic operational management and acquisition strategy.

Optimising organic performance

discoverIE operates a decentralised business model. The group splits its businesses into two divisions: Sensing & Connectivity (S&C) and Magnetics & Controls (M&C). Where appropriate, the company groups similar businesses together in clusters to achieve optimum benefits. Exhibits 3 and 4 show the constituents of each division and cluster.

Exhibit 3: Sensing & Connectivity

Exhibit 4: Magnetics & Controls

Source: discoverIE

Source: discoverIE

Exhibit 3: Sensing & Connectivity

Source: discoverIE

Exhibit 4: Magnetics & Controls

Source: discoverIE

Management discussed how it drives growth and profitability across the following four areas:

Product innovation – customer-driven

The company spends c 2% of revenue on R&D each year, with the focus on product development rather than research. Sales led by engineers with detailed knowledge of applications and design results in a unique understanding of customers’ needs. Solutions are then based on custom designs or engineered standard products to meet specific customer needs.

Commercial focus – targeting faster-growing markets

The group recorded a CAGR for organic revenue of 6% over the last 10 years and 7% over the last seven years. Revenue growth depends on two factors – the number of design wins and end market demand. The chart below shows the trend in revenue versus the estimated annual value of design wins. They tend to move in sync apart from during periods of stocking up and de-stocking (customers are currently in a de-stocking phase). The company has recently reported strong design win activity and noted that some of its largest de-stocking customers have recently awarded the company multiple design wins, which bodes well for future revenue growth.

Exhibit 5: Revenue and design win estimate annual value (EAV)

Source: discoverIE. Note: (1) EAV at peak demand. EAV scale removed as commercially sensitive.

End market demand is highly dependent on the verticals that the company supplies. As we have written before, the company’s target markets are renewable energy, transportation, industrial & connectivity and medical, and these made up 75% of FY24 revenue and 90% of FY24 design wins. These markets have been selected for their potential to grow ahead of GDP – revenue from target markets grew at a CAGR of 7% over the last seven years. At the CMD, the company announced that it had added a fifth target market – security – which covers areas such as access control, detection systems, surveillance systems, and aeronautics, space and defence. This market currently makes up c 9% of group sales (up from 2% in FY21), of which defence makes up 2%. Around half of security sales were previously reported in the transportation segment and the remainder in ‘other’. Examples of designs won in this segment include access control for datacentre cabinets and an X-ray detection and high-speed image processing unit for airport security.

Efficiencies: Pricing, manufacturing, operations

The group is able to price its solutions for value rather than on a cost-plus basis because of its differentiated products, ability to provide design support and bespoke solutions, and its ability to work to urgent timescales.

Many acquired businesses bring their own manufacturing facilities to the group. In recent years, the company has reduced the number of sites in similar locations (eg reducing from three to one site in Mexico) and developed shared production capacity in certain geographies, resulting in annual savings of c £4m. It has also relocated production, for example, from the UK and Western Europe to Hungary, resulting in lower labour costs, volume efficiencies and in some cases moving production closer to the customer. This has generated c £2.3m in annual cost savings.

The chart below shows how the group has increased operating profitability from FY18 to FY24. Improvements to the organic business were almost as big as the contribution from M&A (acquisition of higher-margin companies plus the benefit from selling lower-margin businesses). The company has a margin target of 15% by FY28 and expects to achieve this roughly 50/50 through organic development and acquisitions. We expect further operational efficiencies to be achieved through the collaboration programmes described in the next section.

Exhibit 6: Operating margin progress, FY18–24

Source: discoverIE

Collaboration – increasingly important as the group grows

This is an area that has recently been given more focus – while the creation of clusters has helped increase collaboration within a division, the group is keen to exploit synergies across the entire group. Neale Sutton, previously managing director of Cursor Controls, was appointed group development director in January 2023 and is responsible for identifying and developing technological and commercial synergy opportunities across the group. These fall into three broad areas:

Sales synergies: cross-selling and upselling (within clusters, within divisions and across divisions), customer and channel partner introductions, and joining forces at exhibitions.

Operational leverage: making use of certifications and accreditations across the group, leveraging operational capabilities (eg sharing best practice), leveraging supply chain efficiencies and making use of the global manufacturing footprint (eg intercompany production, in some cases in-sourcing production where this makes commercial sense).

Technical collaborations: combining engineering expertise, technologies and IP; supporting product innovation.

Acquisition strategy

Management has had the same approach to M&A since it made its first design and manufacturing acquisition (Hectronic) in 2011. It looks for the following in an acquisition target:

designs and manufactures electronic components, modules or systems;

products and solutions are differentiated;

supplies original equipment manufacturers (OEMs);

has long-life products with recurring revenues;

operates in growing markets with excellent growth prospects;

has strong cash generation and is capital-light; and

has ambitious, capable management with entrepreneurial spirit.

Acquisitions will either be bolt-ons, with attractive synergy potential, or platforms, which bring new capabilities and additional scale and have the potential to create a cluster. The company has no interest in buying companies that need restructuring or turning around.

From a valuation perspective, the group is disciplined, turning deals down if the pricing is too high. The price paid will reflect growth track record and potential, margins, scale and potential synergies. The charts below show the spread of EV/EBIT multiples paid and the average EBIT margins acquired each year since FY14, demonstrating how the company has sought out higher-margin companies since FY19.

Exhibit 7: Acquisition deal values and margins

Source: discoverIE. Note: (1) Multiples based on initial consideration excluding deal costs.

Integration-lite strategy

As described above, the group operates a decentralised business model. When a business is acquired, if appropriate it joins a cluster. It usually retains its own brand and management team and continues to operate as a standalone business. The main areas that the group will get involved in include:

jointly devising a growth plan, including attractive incentives; and

putting in place reporting, control and governance structures.

The business can take advantage of group services such as IT and, in the longer term, could make use of manufacturing facilities elsewhere in the group. This light-touch approach means that an acquired business can be integrated quickly with little disruption to operations. It is also an attractive selling point for potential targets as founders can feel confident that the business they have built up over years will not be subsumed into a larger entity but will continue to thrive as an independent business.

Once acquired, the business will be expected to take part in the collaboration efforts described above, to optimise revenue synergies, scale up efficiently and drive operational improvements in areas such as working capital and manufacturing.

Fragmented market continues to provide opportunities

Despite having made 27 acquisitions since 2011, management is confident that a wealth of acquisition targets remain in what is a very fragmented market, with many founder-run businesses operating in limited geographies. It estimates that its addressable market is worth c $30bn (a sub-set of the $300bn non-semiconductor electronics market). Currently, it has a market share of c 2% with ample room to grow this.

Exhibit 8: Financial summary

£m

2020

2021

2022

2023

2024

2025e

2026e

Year end 31 March

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

297.9

302.8

379.2

448.9

437.0

453.1

466.7

EBITDA

 

 

43.6

44.0

56.1

65.4

71.1

75.1

77.6

Normalised operating Profit (before am, SBP and except.)

31.6

31.9

44.8

54.3

59.5

63.4

65.8

Underlying operating Profit (before am. and except.)

29.8

30.8

41.4

51.8

57.2

61.0

63.4

Amortisation of acquired intangibles

(9.0)

(11.1)

(14.0)

(15.8)

(16.2)

(17.0)

(17.0)

Exceptionals

(4.3)

(2.6)

(6.5)

(1.4)

(9.8)

(3.0)

(3.0)

Share-based payments

(1.8)

(1.1)

(3.4)

(2.5)

(2.3)

(2.4)

(2.4)

Operating Profit

16.5

17.1

20.9

34.6

31.2

41.0

43.4

Net Interest

(4.3)

(3.6)

(3.8)

(5.5)

(9.0)

(11.1)

(11.0)

Profit Before Tax (norm)

 

 

27.3

28.3

41.0

48.8

50.5

52.3

54.8

Profit Before Tax (FRS 3)

 

 

12.2

13.5

17.1

29.1

22.2

29.9

32.4

Tax

(3.3)

(4.0)

(7.4)

(7.8)

(6.7)

(7.9)

(8.5)

Profit After Tax (norm)

21.8

21.6

30.8

36.1

37.9

38.5

40.4

Profit After Tax (FRS 3)

8.9

9.5

9.7

21.3

15.5

22.0

23.9

Discontinued operations

5.4

2.5

15.5

0.0

0.0

0.0

0.0

Net income (norm)

21.8

21.6

30.8

36.1

37.9

38.5

40.4

Net income (FRS 3)

14.3

12.0

25.2

21.3

15.5

22.0

23.9

Ave. Number of Shares Outstanding (m)

84.0

88.8

93.0

95.4

95.8

95.9

96.4

EPS - normalised & diluted (p)

 

 

25.1

23.4

32.1

36.7

38.5

39.1

40.8

EPS - underlying, diluted (p)

 

 

24.4

22.4

29.4

35.2

36.8

37.3

39.0

EPS - IFRS basic (p)

 

 

17.0

13.5

27.1

22.3

16.2

22.9

24.8

EPS - IFRS diluted (p)

 

 

16.5

13.0

26.3

21.7

15.8

22.3

24.1

Dividend per share (p)

2.97

10.15

10.80

11.45

12.00

12.50

13.00

EBITDA Margin (%)

14.6

14.5

14.8

14.6

16.3

16.6

16.6

Normalised operating margin (before am, SBP and except.) (%)

10.6

10.5

11.8

12.1

13.6

14.0

14.1

discoverIE underlying operating margin (%)

10.0

10.2

10.9

11.5

13.1

13.5

13.6

BALANCE SHEET

Fixed Assets

 

 

236.4

244.6

326.5

335.9

381.0

363.1

352.4

Intangible Assets

182.2

190.8

263.3

272.0

329.5

307.7

292.9

Tangible Assets

46.3

45.9

45.4

44.4

41.1

45.0

49.1

Deferred tax assets

7.9

7.9

17.8

19.5

10.4

10.4

10.4

Current Assets

 

 

197.4

183.6

266.2

249.8

287.7

298.0

313.2

Stocks

68.4

67.7

77.8

90.0

80.1

94.8

97.7

Debtors

90.1

84.9

78.0

74.6

88.8

81.4

83.8

Cash

36.8

29.2

108.8

83.9

110.8

120.8

130.7

Current Liabilities

 

 

(103.6)

(107.8)

(190.3)

(151.2)

(185.4)

(184.6)

(187.3)

Creditors

(94.0)

(102.2)

(114.2)

(107.3)

(101.0)

(100.2)

(102.9)

Lease liabilities

(5.3)

(4.8)

(4.7)

(4.0)

(5.7)

(5.7)

(5.7)

Short term borrowings

(4.3)

(0.8)

(71.4)

(39.9)

(78.7)

(78.7)

(78.7)

Long Term Liabilities

 

 

(129.7)

(112.0)

(112.0)

(130.9)

(181.7)

(170.8)

(159.9)

Long term borrowings

(93.8)

(75.6)

(67.6)

(86.7)

(136.1)

(131.1)

(126.1)

Lease liabilities

(14.7)

(16.7)

(16.4)

(14.8)

(14.4)

(14.4)

(14.4)

Other long term liabilities

(21.2)

(19.7)

(28.0)

(29.4)

(31.2)

(25.3)

(19.4)

Net Assets

 

 

200.5

208.4

290.4

303.6

301.6

305.7

318.4

CASH FLOW

Operating Cash Flow

 

 

48.0

56.8

42.5

52.1

66.0

61.9

70.1

Net Interest

(3.7)

(3.1)

(3.3)

(4.8)

(7.7)

(10.6)

(10.5)

Tax

(6.4)

(7.2)

(7.1)

(9.0)

(12.5)

(13.7)

(14.4)

Capex

(6.3)

(3.9)

(6.2)

(5.6)

(4.9)

(9.2)

(9.5)

Acquisitions/disposals

(73.6)

(20.5)

(46.8)

(25.1)

(82.8)

5.0

(2.0)

Financing

53.9

(6.6)

47.2

(7.5)

(9.3)

(6.6)

(6.6)

Dividends

(8.1)

(2.8)

(9.4)

(10.5)

(11.2)

(11.7)

(12.2)

Net Cash Flow

3.8

12.7

16.9

(10.4)

(62.4)

15.0

14.9

Opening net cash/(debt)

 

 

(63.3)

(61.3)

(47.2)

(30.2)

(42.7)

(104.0)

(89.0)

HP finance leases initiated

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Other

(1.8)

1.4

0.1

(2.1)

1.1

(0.0)

0.0

Closing net cash/(debt)

 

 

(61.3)

(47.2)

(30.2)

(42.7)

(104.0)

(89.0)

(74.1)

Source: discoverIE, Edison Investment Research


General disclaimer and copyright

This report has been commissioned by discoverIE Group and prepared and issued by Edison, in consideration of a fee payable by discoverIE Group. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

General disclaimer and copyright

This report has been commissioned by discoverIE Group and prepared and issued by Edison, in consideration of a fee payable by discoverIE Group. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

More on discoverIE Group

View All

Latest from the TMT sector

View All TMT content

Research: Real Estate

Triple Point Social Housing REIT — Improving rent collection and fully covered DPS

Triple Point Social Housing REIT (SOHO) returned to full dividend cover in H124, with EPRA earnings benefiting from inflation-linked, mostly uncapped rental growth and improving rent collection. Property valuations and NAV per share were lower, but progress with the two problem tenants and falling interest rates suggest this could reverse. Meanwhile, the shares yield more than 8% with the board targeting asset sales and share repurchases to address the discount to NAV.

Continue Reading

Subscribe to Edison

Get access to the very latest content matched to your personal investment style.

Sign up for free