Target Healthcare REIT — Rent cover at a high and fully covered DPS

Target Healthcare REIT (LSE: THRL)

Last close As at 22/02/2024

GBP0.79

0.00 (0.00%)

Market capitalisation

GBP490m

More on this equity

Research: Real Estate

Target Healthcare REIT — Rent cover at a high and fully covered DPS

Target Healthcare REIT’s Q224 update shows indexed rent reviews driving increased earnings and property values. Tenant profitability continues to strengthen, reflected in a new high level of rent cover and a continuing high level of rent collection. Quarterly DPS, increased by 2% at the start of FY24, is now well covered by adjusted earnings.

Martyn King

Written by

Martyn King

Director, Financials

Elderly care image

Real Estate

Target Healthcare REIT

Rent cover at a high and fully covered DPS

Q224 update

Real estate

6 February 2024

Price

81.5p

Market cap

£509m

Net debt (£m) at 31 December 2023

234.9

Net LTV at 31 December 2023

25.8%

Shares in issue

620.2m

Free float

100%

Code

THRL

Primary exchange

LSE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(5.9)

(0.9)

(3.7)

Rel (local)

(4.9)

(3.9)

0.6

52-week high/low

88p

66.5p

Business description

Target Healthcare REIT invests in modern, purpose-built residential care homes in the UK let on long leases to high-quality care providers. It selects assets according to local demographics and intends to pay increasing dividends underpinned by structural growth in demand for care.

Next events

H124 results

March 2024

Analyst

Martyn King

+44 (0)20 3077 5700

Target Healthcare REIT is a research client of Edison Investment Research Limited

Target Healthcare REIT’s Q224 update shows indexed rent reviews driving increased earnings and property values. Tenant profitability continues to strengthen, reflected in a new high level of rent cover and a continuing high level of rent collection. Quarterly DPS, increased by 2% at the start of FY24, is now well covered by adjusted earnings.

Year end

Rental
income (£m)

Adjusted earnings* (£m)

Adjusted
EPS* (p)

NAV**/
share (p)

DPS
(p)

P/NAV
(x)

Yield
(%)

06/22

63.9

30.2

5.0

112.3

6.76

0.73

8.2

06/23

67.7

37.2

6.0

104.5

6.18

0.78

7.5

06/24e

69.0

37.2

6.0

107.9

5.71

0.76

7.0

06/25e

73.8

39.3

6.3

111.5

5.84

0.74

7.1

Note: *Adjusted earnings exclude revaluation movements, non-cash income arising from the accounting treatment of lease incentives and guaranteed rent review uplifts and acquisition costs, and include development interest under forward fund agreements. **NAV is net tangible assets (NTA) throughout this report.

Gains in earnings and asset values

Q224 rent collection remained strong at 99% while the data collected for the September quarter showed a further increase in rent cover to a new high level of 1.9x, the result of active asset management and improved trading conditions for tenants, with fee growth and rising occupancy offsetting inflationary cost pressures. Inflation-indexed rent reviews continue to deliver income growth and, with property valuations broadly stable (Q2 EPRA topped-up net initial yield of 6.25% vs 6.22% in Q1), valuation uplifts. The Q224 DPS declared of 1.428p takes the total year to date to 2.856p, covered 1.07x by aggregate adjusted EPRA earnings. EPRA NTA per share increased 1.0% to 106.7p during the quarter and including dividends paid the accounting total return was 2.4%. The H124 accounting total return was 4.8%. We view the Q224 performance positively and will review our forecast with the interim results in March.

Profitably meeting a social need

Target operates in a structurally supported market with a growing elderly population and the need to improve the existing estate driving demand for modern, high-quality residential facilities. 98% of the homes are EPC rated A or B (100% EPC C and above) and compliant with the minimum energy efficiency standards anticipated to apply from 2030. With its unwavering focus on asset quality, these are the homes in which Target invests. Not only are they appealing to residents (two-thirds private pay), but they also support operators in providing better, more efficient and more effective care. When let at sustainable rent levels in well-located areas, with strong supply/demand characteristics, such properties have proven to be attractive to tenants, existing and alternative, which is key to providing sustainable, long-duration, inflation-linked income.

Valuation: Attractive yield with DPS growing again

The 5.71p FY24 DPS target represents an attractive yield of 7% and we expect further growth on a fully covered basis. Meanwhile, the shares trade at a 24% discount to the December EPRA NTA per share.

Additional details on the NAV and trading update

While Target is primarily focused on income returns, capital returns have also contributed materially in H124, accounting for 44% of total return. This reflects both a contribution to retained earnings from the fully covered DPS as well as the stabilisation in property yields, allowing rental growth to feed through to valuations.

Exhibit 1: Quarterly NAV total return

Q124

Q224

H124

Pence per share unless stated otherwise

September 2023

December 2023

Opening NAV

104.5

105.6

104.5

Closing NAV

105.6

106.7

106.7

DPS paid

1.4

1.4

2.8

Dividend return

1.3%

1.4%

2.7%

Capital return

1.1%

1.0%

2.1%

NAV total return

2.4%

2.4%

4.8%

Source: Target Healthcare REIT data, Edison Investment Research

Dividend return has been consistently positive since listing, contributing more than 90% of the average total return of 5.4% pa. Capital returns have also been positive in each year, with the exception of 2023 when property values across the broad property sector negatively adjusted to higher bond yields. Backed by strong fundamentals, including very long-term indexed rental income, care home properties were nonetheless relatively robust, with Target’s portfolio further benefiting from the quality of its assets.

Exhibit 2: Consistent long-term return

Pence per share

FY14*

FY15

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

H124

FY14–H124

Opening NAV

98.0**

94.7

97.9

100.6

101.9

105.7

107.5

108.1

110.4

112.3

104.5

98.0

Closing NAV

94.7

97.9

100.6

101.9

105.7

107.5

108.1

110.4

112.3

104.5

106.7

106.7

DPS paid

6.5

6.1

6.2

6.3

6.4

6.5

6.7

6.7

6.8

6.5

2.8

67.4

Dividend return

6.6%

6.4%

6.3%

6.2%

6.3%

6.2%

6.2%

6.2%

6.1%

5.8%

2.7%

68.8%

Capital return

-3.3%

3.3%

2.7%

1.3%

3.8%

1.6%

0.6%

2.2%

1.7%

-7.0%

2.1%

8.9%

NAV total return

3.3%

9.7%

9.0%

7.5%

10.1%

7.8%

6.8%

8.4%

7.8%

-1.2%

4.8%

77.6%

Total return pa

5.4%

Source: Target Healthcare REIT, Edison Investment Research. Note: *22 January 2013 to 30 June 2014. **Adjusted for IPO costs.

Tenant profitability continues to strengthen

Based on data gathered from its tenants, underlying resident occupancy in Target’s mature homes has continued to increase. At end-Q224 it was 87%, compared with 86% at end-Q1 and 85% at end-FY23 in June 2023. Occupancy has recovered from the COVID-19 pandemic low of c 74%, but upside potential remains to pre-pandemic levels of c 90%.

Average weekly resident fees have continued to outstrip inflation, and data collected from the company’s tenants for the year to June 2023 showed average growth of 13%. Target notes that fees for privately funded residents (two-thirds of the total across its tenants) have exceeded inflation over the past 25 years.

In addition to higher occupancy and strong fee growth, the caps on rent increases have also protected tenants against the pressures of elevated inflation, just as they are designed to do. Similarly, over previous periods of low inflation, the floors on rent increases (typically c 2%) have worked to the company’s advantage.

Rent cover1 for mature homes2 in the quarter that ended in September (full data for the December quarter is yet to be collated) showed a further increase to 1.9x, a new high and well above the 1.6x that Target has historically indicated to be a realistic level for a typical mature home.

  Rent cover is a key measure of the underlying profitability of tenants and the sustainability of rents. The ratio tracks operational cash earnings at the home level (before rent), or EBITDARM, with the agreed rent and is presented both on a quarterly ‘spot’ basis and on a rolling 12-month basis. On a 12-month basis, rent cover was 1.6x in June and we estimate it would have reached c 1.7x in September, tracking monthly cover upwards.

  A mature home is one that has been in operation for more than three years. Mature homes make up c 90% of the portfolio.

Exhibit 3: Rent cover on a quarterly basis

Source: Target Healthcare REIT

Exhibit 4: Financial summary

Year to 30 June (£m)

2021

2022

2023

2024e

2025e

INCOME STATEMENT

Rental income excluding guaranteed uplift

41.2

48.8

56.4

58.2

62.6

IFRS adjustment for guaranteed uplifts

8.7

10.2

11.3

10.8

11.2

Other income

0.1

4.8

0.1

0.0

0.0

Total revenue

50.0

63.9

67.7

69.0

73.8

Gains/(losses) on revaluation

9.4

5.5

(53.4)

9.7

7.7

Realised gains/(losses) on disposal

1.3

0.0

0.0

0.0

0.0

Management fee

(5.8)

(7.3)

(7.4)

(7.4)

(7.6)

Credit loss allowance & bad debts

(2.7)

(3.2)

(0.3)

(0.6)

(0.6)

Other expenses

(2.6)

(3.2)

(3.0)

(3.2)

(3.4)

Operating profit

49.6

55.7

3.6

67.5

69.9

Net finance cost

(5.7)

(6.6)

(10.1)

(11.4)

(12.5)

IFRS net result

43.9

49.1

(6.6)

56.1

57.4

Adjust for:

Gains/(losses) on revaluation

(9.5)

(5.6)

54.0

(9.7)

(7.7)

Other EPRA adjustments

(0.3)

(3.9)

0.1

0.8

0.8

EPRA earnings

34.0

39.7

47.6

47.2

50.5

Adjust for fixed/guaranteed rent reviews

(8.7)

(10.2)

(11.3)

(10.8)

(11.2)

Adjust for development interest under forward fund agreements

0.6

0.8

1.0

0.8

0.0

Group adjusted earnings

26.0

30.2

37.2

37.2

39.3

Average number of shares in issue (m)

475.4

599.1

620.2

620.2

620.2

IFRS EPS (p)

9.23

8.20

(1.06)

9.05

9.25

EPRA EPS (p)

7.2

6.6

7.7

7.6

8.1

Adjusted EPS (p)

5.5

5.0

6.0

6.0

6.3

Dividend per share (declared)

6.72

6.76

6.18

5.71

5.84

Dividend cover (EPRA earnings)

1.05

0.95

1.24

1.33

1.39

Dividend cover (Adjusted earnings)

0.80

0.72

0.97

1.05

1.09

BALANCE SHEET

Investment properties

631.2

857.7

800.2

852.0

867.4

Other non-current assets

54.8

65.9

83.3

93.3

103.7

Non-current assets

686.0

923.6

883.4

945.3

971.1

Cash and equivalents

21.1

34.5

15.4

12.8

14.9

Other current assets

11.3

5.5

9.5

5.3

5.6

Current assets

32.4

40.0

24.8

18.0

20.6

Bank loan

(127.9)

(231.4)

(227.1)

(260.7)

(266.3)

Other non-current liabilities

(6.8)

(7.1)

(8.1)

(8.1)

(8.1)

Non-current liabilities

(134.7)

(238.5)

(235.1)

(268.8)

(274.4)

Trade and other payables

(18.5)

(26.4)

(18.3)

(18.9)

(20.3)

Current Liabilities

(18.5)

(26.4)

(18.3)

(18.9)

(20.3)

Net assets

565.2

698.8

654.8

675.7

697.0

Adjust for derivative financial liability

(0.3)

(2.3)

(6.9)

(6.1)

(5.3)

EPRA net assets

564.9

696.5

647.9

669.6

691.7

Period end shares (m)

511.5

620.2

620.2

620.2

620.2

IFRS NAV per share (p)

110.5

112.7

105.6

108.9

112.4

EPRA NTA per share (p)

110.4

112.3

104.5

108.0

111.5

EPRA NTA total return

8.4%

7.8%

-1.2%

8.8%

8.7%

CASH FLOW

Cash flow from operations

29.2

35.6

40.8

51.9

52.0

Premium paid for interest rate cap

(2.6)

0.0

0.0

Net interest paid

(4.2)

(5.2)

(8.6)

(10.0)

(11.1)

Tax paid

(0.0)

(0.0)

0.0

0.0

0.0

Net cash flow from operating activities

25.0

30.4

29.7

41.8

40.9

Purchase of investment properties

(51.4)

(207.0)

(29.3)

(42.2)

(7.7)

Disposal of investment properties

7.8

4.4

25.8

0.0

0.0

Net cash flow from investing activities

(43.6)

(202.6)

(3.6)

(42.2)

(7.7)

Issue of ordinary share capital (net of expenses)

58.3

122.5

0.0

0.0

0.0

(Repayment)/drawdown of loans

(22.0)

104.8

(4.8)

33.0

5.0

Dividends paid

(31.5)

(39.8)

(40.3)

(35.3)

(36.0)

Other

(1.5)

(1.8)

(0.2)

0.0

0.0

Net cash flow from financing activities

3.3

185.6

(45.2)

(2.3)

(31.0)

Net change in cash and equivalents

(15.3)

13.4

(19.1)

(2.6)

2.2

Opening cash and equivalents

36.4

21.1

34.5

15.4

12.8

Closing cash and equivalents

21.1

34.5

15.4

12.8

14.9

Balance sheet debt

(127.9)

(231.4)

(227.1)

(260.7)

(266.3)

Unamortised loan arrangement costs

(2.1)

(3.4)

(2.9)

(2.3)

(1.7)

Drawn debt

(130.0)

(234.8)

(230.0)

(263.0)

(268.0)

Net cash/(debt)

(108.9)

(200.3)

(214.6)

(250.2)

(253.1)

Gross LTV

19.2%

25.8%

26.5%

28.2%

28.0%

Net LTV

16.1%

22.0%

24.7%

26.9%

26.4%

Source: Target Healthcare REIT historical data, Edison Investment Research forecasts


General disclaimer and copyright

This report has been commissioned by Target Healthcare REIT and prepared and issued by Edison, in consideration of a fee payable by Target Healthcare REIT. 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 Target Healthcare REIT and prepared and issued by Edison, in consideration of a fee payable by Target Healthcare REIT. 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 Target Healthcare REIT

View All

Latest from the Real Estate sector

View All Real Estate content

Research: TMT

Filtronic — Backlog supports strong growth from H224

Filtronic’s recent investment and focus on high-performance radio frequency (RF) design and manufacturing is starting to pay off, with recent new customer wins, development contracts and volume production orders boosting the order backlog. H124 results do not reflect this recent success: revenue was essentially flat and investment in sales and engineering reduced EBITDA. However, the strong backlog gives management confidence that revenue and profit will exceed consensus estimates for FY24 and FY25 and we have upgraded our EPS forecasts by 234% in FY24 and 96% in FY25.

Continue Reading

Subscribe to Edison

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

Sign up for free