Accsys Technologies — Upgrading guidance for the full year

Accsys Technologies (AIM: AXS)

Last close As at 03/12/2024

GBP0.47

0.60 (1.28%)

Market capitalisation

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Research: Industrials

Accsys Technologies — Upgrading guidance for the full year

Accsys Technologies had a strong H125 with a return to revenue growth and gross margin exceeding its target of 30%. Adjusted EBITDA improved on the back of better than expected volume growth from the plant in Arnhem. The company has simplified and de-risked the group through the successful start-up of the plant in the United States and the decision to discontinue the project in Hull. After the good start of the year, Accsys increased guidance for the full year, with underlying profitability expected to improve in H2 as Accoya USA continues to ramp up.

Johan van den Hooven

Written by

Johan van den Hooven

Analyst

Industrials

Accsys Technologies

Upgrading guidance for the full year

H125 results

Reason for publishing

General industries

26 November 2024

Price

43p/€0.54

Market cap

£103m/€130m

€1.20/£

Net debt (€m) at 30 September 2024

40.2

Shares in issue

240.4m

Free float

60%

Code

AXS

Primary exchange

LSE

Secondary exchange

Euronext Amsterdam

Share price performance

Business description

Accsys Technologies is a chemical technology company focused on the development and commercialisation of a range of transformational technologies based on the acetylation of solid wood and wood elements for use as high-performance, environmentally sustainable construction materials.

Analyst

Johan van den Hooven

+44 (0)20 3077 5700

Accsys Technologiesis a research client of Edison Investment Research Limited

Accsys Technologies had a strong H125 with a return to revenue growth and gross margin exceeding its target of 30%. Adjusted EBITDA improved on the back of better than expected volume growth from the plant in Arnhem. The company has simplified and de-risked the group through the successful start-up of the plant in the United States and the decision to discontinue the project in Hull. After the good start of the year, Accsys increased guidance for the full year, with underlying profitability expected to improve in H2 as Accoya USA continues to ramp up.

Year end

Revenue
(€m)

EBITDA*
(€m)

Net profit*
(€m)

EPS*
(€)

EV/sales
(x)

EV/EBITDA
(x)

03/23

162.0

22.9

9.5

0.05

1.1

7.6

03/24

136.2

4.8

(10.2)

(0.04)

1.3

20.8

03/25e

137.4

10.0

(4.8)

(0.02)

1.0

10.4

03/26e

152.4

18.3

5.3

0.02

0.8

6.1

Note: *EBITDA, net profit and EPS are normalised, excluding amortisation of acquired intangibles and exceptional items. EBITDA includes 60% share Accoya USA JV.

Trading improved throughout the first half (ending 30 September), despite continued challenging market conditions in the global construction market. Group revenues increased 1% y-o-y to €72.2m, with stronger than expected volume growth in the Arnhem plant of 5% to 30,372m³. Including sales volumes from the new plant in the US, which started in September, total volumes reached 31,553m³, reflecting growth of 10% y-o-y, with strong growth of 18% y-o-y in the large American market, which the company has started serving directly from the JV plant in Kingsport. Accsys is operating in the US via the 60%/40% JV with Eastman, which will be equity accounted, but the company provides combined sales volumes and aggregated revenues (€74.1m in H1).

Following the decision to discontinue the Tricoya project in Hull, England at the end of the first half, Accsys wrote off the remaining book value of €18m and incurred a one-off charge of €3.9m for the discontinuation and winding up of the plant.

Gross margin recovered from last year’s decline and was up 210bp y-o-y to 30.7%, driven by increased sales volumes and optimisation of wood procurement. Adjusted EBITDA improved from €1.6m to €4.0m, mainly driven by higher sales volumes. It was supported by the realisation of €2.5m in cost savings from the business transformation programme and €1.4m lower opex in Hull, while absorbing the €3.3m higher loss from the US JV, which has just started commercial operations. Net debt increased to €40.2m from €37.1m at the end of FY24, mainly due to investments of €7.2m into the US JV.

After a strong start to the year, Accsys expects FY25 results to be significantly ahead of market consensus (adjusted EBITDA of €7.6m). Despite ongoing difficult market conditions, the company expects volumes to maintain momentum. Accelerating sales and marketing activities should support volume growth. The operational turnaround is in progress, which should deliver the full €3m in planned cost savings, while the closure of the Hull project delivers €3m in savings. Accsys remains committed to reach around 100,000m³ in volumes across Arnhem and Kingsport by the end of FY27. It also announced an investor strategy day in Arnhem on 30 January 2025.

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This report has been commissioned by Accsys Technologies and prepared and issued by Edison, in consideration of a fee payable by Accsys Technologies. 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.

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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.

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United Kingdom

General disclaimer and copyright

This report has been commissioned by Accsys Technologies and prepared and issued by Edison, in consideration of a fee payable by Accsys Technologies. 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

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