Currency in GBP
Last close As at 17/03/2023
GBP42.90
▲ −190.00 (−4.24%)
Market capitalisation
GBP1,258m
Research: TMT
4imprint’s update shows the group continuing to trade strongly through Q422 and we again upgrade estimates. FY22 revenue will be $1.14bn, or 3% ahead of our earlier modelling, and 45% ahead of the prior year. An 8.8% adjusted operating margin compares with our earlier assumption of 8.2%. We edge our revenue forecasts up by 3% for FY23 and FY24, but assume some modest settling back in margin to reflect additional operating costs to support the increased scale of the business. As before, we suggest management may propose an FY22 special dividend, given net cash of $86.7m at the year-end.
4imprint Group |
Strong finish to FY22 prompts further upgrade |
Trading update |
Media |
20 January 2023 |
Share price performance
Business description
Next events
Analysts
4imprint Group is a research client of Edison Investment Research Limited |
4imprint’s update shows the group continuing to trade strongly through Q422 and we again upgrade estimates. FY22 revenue will be $1.14bn, or 3% ahead of our earlier modelling, and 45% ahead of the prior year. An 8.8% adjusted operating margin compares with our earlier assumption of 8.2%. We edge our revenue forecasts up by 3% for FY23 and FY24, but assume some modest settling back in margin to reflect additional operating costs to support the increased scale of the business. As before, we suggest management may propose an FY22 special dividend, given net cash of $86.7m at the year-end.
Year end |
Revenue |
PBT* |
EPS* |
DPS** |
P/E |
Yield |
12/20 |
560.0 |
3.8 |
11.0 |
0.0 |
504.7 |
N/A |
12/21 |
787.3 |
30.2 |
80.3 |
45.0 |
69.1 |
0.8 |
12/22e |
1,140.0 |
100.7 |
272.0 |
150.0 |
20.4 |
2.7 |
12/23e |
1,250.0 |
106.0 |
286.0 |
160.0 |
19.4 |
2.9 |
12/24e |
1,375.0 |
116.7 |
314.8 |
175.0 |
17.6 |
3.2 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles and exceptional items. ** excluding special dividends
Margin benefit from marketing efficiency and volume
With marketing budgets pretty much set, the strong demand experienced in the final weeks of the year largely dropped through to the bottom line, bolstering operating margins. We therefore think it sensible to assume that Q422 delivered a level of marketing efficiency that is unlikely to be sustainable in full. There will also need to be some increase in overhead to ensure that customer service standards can be maintained with the higher volumes. We are therefore now assuming that adjusted operating margin settles back to 8.5% for FY23 and FY24, ahead of the 8.0% in both years that we modelled previously.
Additional distribution likely
4imprint is inherently cash generative, with limited capital investment requirements. End October net cash was $79m, and this had climbed to $87m at the year-end (excluding lease liabilities). With this level of cash resource, we expect management to be considering paying a special dividend for FY22 alongside the final dividend. As before, our modelling for now assumes the additional payment to be $1/share, payable in H123, bringing our expected FY23 year-end cash figure broadly in line with that of end FY22.
Valuation: DCF suggests meaningful upside
The share price responded very positively to the July and November trading updates, with the result that the share price has effectively doubled from its June 2022 low. Our November update showed a discounted cash flow (DCF) indicating a value of £66.01 per share. The relative weakness of the US dollar since has offset the improvement in the underlying value, with the result that a DCF (WACC of 8.0%; terminal growth of 3%, as before) now suggests an implied value of £65.73, still well ahead of the current share price.
Exhibit 1: Financial summary |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Source: company accounts, Edison Investment Research |
|
|
Research: Healthcare
Nicox has provided a preliminary Q422 update, reporting a c 38% y-o-y increase in FY22 net royalty payments to €3.3m, including a c 100% y-o-y elevation in Q422 net royalties to €1.0m. Nicox receives recurring royalty revenue from the sales of two out-licensed commercial-stage products, Vyzulta (latanoprostene bunod) and Zerviate (topical cetirizine), and we believe this yearly increase is largely due to strengthened Vyzulta-related revenue, as total US Vyzulta prescriptions grew 25% in Q422 (vs 37% in Q322 and c 40% in H122). Nicox also reiterated that it expects to report top-line results in 2025 for Denali, its second Phase III study of lead candidate NCX-470 in patients with open-angle glaucoma or ocular hypertension, and to start two Phase IIIb studies in H123, including one assessing the drug’s possible retinal health benefits. The company continues to expect that funds on hand (€27.7m at end FY22) will be sufficient to maintain operations into Q224, based on the development of NCX-470 alone.
Get access to the very latest content matched to your personal investment style.