Main menu
Edison Group
  • Home
  • Sparks
  • Equities

    Equities

    View All Equities

    Equities by Sector

    YXT.com

    MCap

    USD127m

    Last close

    USD23.43

    ▲ 20.23 (632.19%)

    Northern Data Group

    MCap

    EUR486m

    Last close

    EUR6.28

    ▲ −1.28 (−16.88%)

    Bodycote

    MCap

    GBP1,572m

    Last close

    GBP9.14

    ▲ −9.00 (−0.98%)

  • Sectors

    Sectors

  • Megatrends

    Megatrends

  • Thematics

    Thematics

    View All Thematics

    Latest

  • Audiovisual

    Audiovisual

    View All Audiovisual

    Latest

Gear4music Holdings — On song

Gear4music Holdings — On song

Gear4music (G4M) has ended the year with 58% revenue growth, slightly ahead of expectations, and has also guided to profit performance marginally ahead. Driven by European sales growth, this shows continuing development of its international presence, as does the opening of (now) two distribution centres on the mainland. Sales growth is now building against strong growth last year, and the strategic argument for medium-term investment continues to strengthen.

Analyst avatar placeholder

Written by

Gear4music Holdings

On song

Pre-close statement

Retail

3 March 2017

Price

675.00p

Market cap

£136m

Net cash (£m) at 31 August 2016

0.9

Shares in issue

20.2m

Free float

42%

Code

G4M

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

12.5

61.3

413.3

Rel (local)

8.8

47.3

331.5

52-week high/low

688.5p

99.5p

Business description

Gear4music is the largest dedicated, UK-based online retailer of musical instruments and music equipment. It sells branded instruments and equipment, alongside its own brand products, to customers ranging from beginners to professionals, in the UK and into Europe and the rest of the world.

Next events

Final results

9 May 2017

Analysts

Paul Hickman

+44 (0)20 3681 2501

David Stoddart

+44 (0)20 3077 5700

Gear4music Holdings is a research client of Edison Investment Research Limited

Gear4music (G4M) has ended the year with 58% revenue growth, slightly ahead of expectations, and has also guided to profit performance marginally ahead. Driven by European sales growth, this shows continuing development of its international presence, as does the opening of (now) two distribution centres on the mainland. Sales growth is now building against strong growth last year, and the strategic argument for medium-term investment continues to strengthen.

Year
end

Revenue (£m)

EBITDA
(£m)

PBT*
(£m)

EPS*
(p)

P/E
(x)

EV/EBITDA
(x)

02/15

24.2

0.8

(0.6)

(4.1)

N/A

N/A

02/16

35.5

1.7

0.6

3.1

N/A

79.1

02/17e

56.0

3.2

2.4

9.3

72.6

41.6

02/18e

79.1

4.1

2.9

11.5

58.7

32.7

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

A strong finish in line with our expectations

G4M has reported full-year revenue of £56.1m, growth of 58%, marginally ahead of our expectation of £56.0m. The last two post-Christmas months continued to move ahead strongly and in line with our upgraded forecast. Active customers were strongly up by 49% to 324,000, and have risen 5% since December.

European focus develops

In support of its Europe-focused strategy, G4M has opened its distribution centre in Germany in addition to the centre opened in Sweden in November 2016. That centre is performing strongly and Scandinavian sales are up 186% since it opened.

Profit expectations marginally raised

Despite investment both in the UK and Europe, costs have been controlled within the company’s plans. As a result, management is guiding to profit expectations marginally ahead for FY17. We are leaving our forecasts unchanged.

Valuation: Share price discounting over-performance

The share price is now nearly five times its 139p IPO level in June 2015. Profit expectations have themselves increased – our earnings per share estimate for FY17 is 42% higher than when we initiated in May 2016. The calendar 2017 P/E of 56x is at a discount of 15% to ASOS and Boohoo, which we would regard as appropriate. It is on a narrower P/E discount for 2018, and also for both years on EV/EBITDA measures. On a reverse DCF basis, the share price is discounting either (i) a medium-term revenue growth rate some 5% higher than our assumption of 22% in 2020, or (ii) a 13% terminal EBITDA margin, outside a peer range of 7-11%, or a combination of the two.

A strong finish to the year

G4M has finished the year marginally ahead of our expectation of £56.0m total revenue, with £56.1m, growth of 58%, after the last two months continued to move ahead strongly and in line with our upgraded forecast.

Exhibit 1: Geographic sales

£'000

H1

Sept-Dec

Sept-Dec

Sept-Dec

Jan-
Feb

Jan-Feb

Jan-Feb

Full year

Full year

Full year

FY16

FY17

Gth %

FY16

FY17

Gth %

FY16

FY17

Gth %

FY16

FY17

Gth %

UK

9,584

13,784

43.8

11,608

15,019

29.4

4,824

6,062

25.7

26,016

34,865

34.0

European

2,909

7,825

169.0

4,082

9,365

129.4

2,482

4,073

64.1

9,473

21,263

124.5

Total

12,493

21,609

73.0

15,690

24,384

55.4

7,306

10,135

38.7

35,489

56,128

58.2

Sales pm

2,082

3,602

3,923

6,096

3,653

5,068

2,957

4,677

% UK rev.

77

64

74

62

66

60

73

62

% Euro. rev.

23

36

26

38

34

40

27

38

Source: Gear4music Holdings

Growth continues to be strongly powered by Europe, which is now a much more significant element of the total, at 38% compared with 23% in H116. As we also show in Exhibit 1, average sales per month have continued to develop, so that for instance sales per month in the final two months of FY17 were 140% higher than in the first half of 2016.

Actives and transaction values up

Active customer numbers are 324,000, up 49% across the year. The numbers have risen 5% since December, and in comparison with revenue growth of 58%, suggest that transaction values are continuing on an upward path.

European bases operational

The company’s strategy has a strong focus on developing the European opportunity, in a market that management has estimated is six times larger than the UK. In support of that strategy and to improve the delivery service to European customers, G4M opened a distribution in Sweden in November, and now has one in Mulheim, in a densely populated region of north Germany. Revenue growth in Scandinavia since November has been spectacular at 186%, although that was of course from a low base.

Profit guidance positive

Investment in the business continues in line with strategy, but the company reports that with costs being closely managed, FY17 profits expectations are likely to be marginally ahead of upgraded expectations. We are not changing our forecasts, which we upgraded 20% at EPS level in January.


Valuation

We have updated our valuation work from our last note on 6 January 2017. G4M’s share price has risen by 35% since then and is now nearly five times its 139p IPO price in June 2015.

Peer comparison on earnings multiples

Exhibit 2: Significant discount to pure-play online retailers

Share
price

Market cap

P/E (x)

EV/Sales (x)

EV/EBITDA (x)

Calendarised

p

£m

2016

2017e

2018e

2016

2017e

2018e

2016

2017e

2018e

G4M

688.5

138.8

49.0

56.1

48.9

4.1

2.6

1.8

46.0

34.6

27.5

ASOS

5,539.0

4,624.5

85.5

65.5

51.0

2.9

2.2

1.8

43.2

32.1

25.0

Boohoo

155.3

1,743.9

83.9

66.5

49.3

6.2

4.2

3.3

53.0

40.8

30.5

AO World

150.3

631.6

N/A

N/A

77.9*

0.9

0.7

0.6

N/A

75.6*

31.1

Average

84.7

66.0

50.1

3.3

2.4

1.9

48.1

36.5

28.9

Discount

-42.2%

-15.0%

-2.5%

22.9%

6.8%

-6.3%

-4.3%

-5.2%

-4.6%

N Brown

199.9

566.6

8.7

8.9

8.6

0.0

0.9

0.9

N/A

7.2

6.7

Findel

199.4

174.4

8.9

8.3

7.6

0.9

0.8

0.8

8.8

8.3

6.9

Average of whole group

46.8

37.3

29.1

2.2

1.8

1.5

35.0

22.1

20.0

Premium/(discount)

4.8%

50.3%

67.9%

87.8%

42.9%

21.2%

31.5%

56.5%

37.4%

Source: Bloomberg, Edison Investment Research. Note: *Outlier, excluded. Prices as at 2 March 2017.

For calendar 2017, G4M trades at a 15% P/E discount to the more established e-retailers ASOS and Boohoo. A discount to those peers is appropriate for this much smaller and younger company; however, as its credibility and results delivery increases, that discount will justifiably reduce. It is significant that the company has guided that it will complete its first full year on the market ahead of expectations, which have themselves been materially increased – our earnings per share estimate for FY17 is 42% higher than when we initiated in May 2016. As a result, we now see the appropriate discount as 10-15%. Whereas the 2017e P/E discount of 15% is in line with this, the discount for 2018 is below it, as are the discounts for both years on EV/EBITDA measures.

Clearly when other small-cap online retailers N Brown and Findel are included, G4M trades at a significant premium to the wider group. However, as we explained in January, we do not see those companies as close comparators.

Reverse DCF valuation

We model DCF valuation on a reverse basis to examine the assumptions that the current market price is currently discounting in relation to the scale and shape of the long-term cash flow.

Our DCF model fades revenue growth from FY19e (+24.3%) by 3% in FY20e and then by c 2% each year to terminal growth of +2%. This puts revenue at £230m by FY26.

In the table below we show the effect of a faster or slower step-down in FY20e, given that our model reduces the revenue growth rate over subsequent years to achieve the terminal growth of +2%.

Exhibit 3: Scenarios for terminal EBITDA margin and revenue growth fade

Step-down in growth rate, FY19-20

Terminal EBITDA margin

0.0%

1.0%

2.0%

3.0%

4.0%

15.0%

898

870

842

816

789

13.0%

744

720

697

675

654

11.0%

589

570

553

535

518

9.0%

434

421

408

395

383

7.0%

279

271

263

255

247

Source: Edison Investment Research

Using our base assumption of a 2% reduction in the rate of revenue growth in Year 4 of our projection (2020), which would be 21.5%, then fading to our terminal rate of 2% over the next seven years, the current share price would approximate to an assumption of 13% terminal EBITDA margin. This lies outside the range of 7-11% that we defined in January as typical for peers. If instead we assume no reduction in the rate of growth at that time, the share price would approximate to a 12% terminal margin.

We do not show it in Exhibit 3, but if terminal EBITDA margin were 11% and thus within the range we defined as reasonable to expect, that would imply a 2020 revenue growth rate some 5% higher than we assume. That is clearly not outside the bounds of possibility. However, it appears the market is discounting either a higher growth rate or higher terminal margin than we currently model, or a combination of the two.


Exhibit 4: Financial summary

£'000s

2015

2016

2017e

2018e

2019e

Year end: February

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

24,240

35,489

56,040

79,083

98,312

Cost of Sales

(17,483)

(26,303)

(41,059)

(58,294)

(72,428)

Gross Profit

6,757

9,186

14,981

20,788

25,884

EBITDA

 

 

842

1,688

3,213

4,062

5,091

Normalised operating profit

 

 

376

903

2,310

2,905

3,684

Amortisation of acquired intangibles

0

0

0

0

0

Exceptionals

(165)

(606)

0

0

0

Share-based payments

0

(8)

(92)

(116)

(137)

Reported operating profit

211

289

2,218

2,789

3,546

Net Interest

(1,008)

(283)

78

(1)

(4)

Joint ventures & associates (post tax)

0

0

0

0

0

Exceptionals

0

0

0

0

0

Profit Before Tax (norm)

 

 

(632)

620

2,388

2,904

3,680

Profit Before Tax (reported)

 

 

(797)

6

2,296

2,788

3,543

Reported tax

111

(49)

(519)

(581)

(736)

Profit After Tax (norm)

(521)

571

1,869

2,323

2,944

Profit After Tax (reported)

(686)

(43)

1,777

2,207

2,807

Minority interests

0

0

0

0

0

Discontinued operations

0

0

0

0

0

Net income (normalised)

(521)

571

1,869

2,323

2,944

Net income (reported)

(686)

(43)

1,777

2,207

2,807

Basic average number of shares outstanding (m)

12.7

18.2

20.2

20.2

20.2

EPS - basic normalised (p)

 

 

(4.1)

3.1

9.3

11.5

14.6

EPS - diluted normalised (p)

 

 

(4.1)

3.1

9.2

11.5

14.5

EPS - basic reported (p)

 

 

(5.4)

(0.2)

8.8

11.0

13.9

Dividend (p)

0.00

0.00

0.00

0.00

0.00

Revenue growth (%)

37.1

46.4

57.9

41.1

24.3

Gross Margin (%)

27.9

25.9

26.7

26.3

26.3

EBITDA Margin (%)

3.5

4.8

5.7

5.1

5.2

Normalised Operating Margin

1.6

2.5

4.1

3.7

3.7

BALANCE SHEET

Fixed Assets

 

 

3,755

4,477

5,450

6,087

6,724

Intangible Assets

2,764

3,238

3,977

4,556

5,095

Tangible Assets

991

1,239

1,473

1,531

1,629

Investments & other

0

0

0

0

0

Current Assets

 

 

6,458

11,194

15,817

20,817

25,754

Stocks

5,326

6,906

10,948

15,604

19,360

Debtors

216

740

1,169

1,649

2,050

Cash & cash equivalents

916

3,548

3,700

3,564

4,344

Other

0

0

0

0

0

Current Liabilities

 

 

(5,842)

(6,022)

(8,999)

(12,429)

(15,196)

Creditors

(4,522)

(5,188)

(8,065)

(11,495)

(14,262)

Tax and social security

0

0

0

0

0

Short term borrowings

(1,320)

(834)

(934)

(934)

(934)

Other

0

0

0

0

0

Long Term Liabilities

 

 

(4,660)

(290)

(90)

(90)

(90)

Long term borrowings

(4,570)

(127)

0

0

0

Other long term liabilities

(90)

(163)

(90)

(90)

(90)

Net Assets

 

 

(289)

9,359

12,177

14,384

17,191

Minority interests

0

0

0

0

0

Shareholders' equity

 

 

(289)

9,359

12,177

14,384

17,191

CASH FLOW

Op Cash Flow before WC and tax

842

1,688

3,213

4,062

5,091

Working capital

1,012

(1,416)

(1,300)

(1,706)

(1,390)

Exceptional & other

(304)

(607)

14

(116)

(137)

Tax

0

0

0

(581)

(736)

Net operating cash flow

 

 

1,550

(335)

1,927

1,659

2,828

Capex

(953)

(1,509)

(1,900)

(1,794)

(2,044)

Acquisitions/disposals

0

0

0

0

0

Net interest

(185)

(130)

78

(1)

(4)

Equity financing

0

9,535

0

0

0

Dividends

0

0

0

0

0

Other

(377)

0

0

0

0

Net Cash Flow

35

7,561

105

(136)

780

Opening net debt/(cash)

 

 

4,694

4,974

(2,587)

(2,692)

(2,556)

FX

0

0

0

0

0

Other non-cash movements

(315)

0

0

0

0

Closing net debt/(cash)

 

 

4,974

(2,587)

(2,692)

(2,556)

(3,336)

Source: Company accounts, Edison Investment Research

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Gear4music Holdings and prepared and issued by Edison for publication globally. 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. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US 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. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and 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 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. This document is provided 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. Edison has a restrictive policy relating to personal dealing. 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. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. 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. 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 (ie 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. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205, 95 Pitt Street,

Sydney NSW 2000

Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205, 95 Pitt Street,

Sydney NSW 2000

Australia

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Gear4music Holdings and prepared and issued by Edison for publication globally. 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. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US 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. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and 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 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. This document is provided 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. Edison has a restrictive policy relating to personal dealing. 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. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. 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. 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 (ie 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. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205, 95 Pitt Street,

Sydney NSW 2000

Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205, 95 Pitt Street,

Sydney NSW 2000

Australia

Research: Industrials

Jersey Electricity — Stable returns and improving cash flow

Jersey Electricity (JEL) is delivering attractive and stable returns for its shareholders and secure, affordable, low-carbon electricity for its customers. We forecast a continuation of the favourable returns and an improving cash flow profile, which should underpin attractive dividend growth. At its current share price JEL is trading at a significant discount to both its sum-of-the-parts (SOTP) and peer group valuation multiples.

Continue Reading
Cookie Policy Overview
Edison Group

This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping us understand which section of the website you find more interesting and useful. See our Cookie Policy for more information.

Strictly necessary and functional

These cookies are used to deliver our website and content. Strictly necessary cookies relate to our hosting environment, and functional cookies are used to facilitate social logins, social sharing and rich-media content embeds.

Advertising

Advertising Cookies collect information about your browsing habits such as the pages you visit and links you follow. These audience insights are used to make our website more relevant.

Performance

Performance Cookies collect anonymous information designed to help us improve the site and respond to the needs of our audiences. We use this information to make our site faster, more relevant and improve the navigation for all users.