Findel reports that its first 20 weeks, trading is in line with expectations in both businesses: Express Gifts and Findel Education. The pre-Christmas retail season and the new school year will respectively be the test for both divisions, but initial indications look strong. We retain our forecast 22% FY18 EPS growth and our 324p valuation with increased confidence.
Written by
Findel |
Well positioned going into the season |
AGM statement |
Retail |
29 August 2017 |
Share price performance
Business description
Analysts
Findel is a research client of Edison Investment Research Limited |
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Findel reports that its first 20 weeks, trading is in line with expectations in both businesses: Express Gifts and Findel Education. The pre-Christmas retail season and the new school year will respectively be the test for both divisions, but initial indications look strong. We retain our forecast 22% FY18 EPS growth and our 324p valuation with increased confidence.
Year end |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
03/16 |
410.6 |
24.8 |
23.0 |
0.0 |
8.0 |
0.0 |
03/17 |
457.0 |
22.2 |
20.4 |
0.0 |
9.0 |
0.0 |
03/18e |
485.2 |
26.0 |
24.9 |
0.0 |
7.3 |
0.0 |
03/19e |
507.6 |
28.5 |
27.3 |
0.0 |
6.7 |
0.0 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments
Express Gifts well positioned for the retail peak season
Encouragingly, in the 20 weeks to 18 August, Express saw customer and revenue growth above 10%, which is our FY18 revenue growth forecast. This provides a good starting point to the peak trading season, indicating that steps to promote the value offer are resonating with price-conscious customers. The digital transformation continues, a positive signal given that online sales grew from 56% to 63% of revenue in FY17 (see our July note), that management sees the figure “inevitably” approaching 100%, and has made that central to strategy.
Education division progress on pricing and cost initiatives
It is also reassuring that Findel Education reports that performance is responding to pricing and cost actions. Education’s strategy is focused on improving value and service, and opening up digital channels. Once more, though positive, the period includes the long summer break and sustaining the positive trading trend from the start of the school year in September will be key to the year’s result.
No change to our forecasts or valuation
We retain our FY18 forecast of 22% EPS growth with added confidence ahead of the significant upcoming trading periods for both businesses. In line with that, we retain our valuation of 324p which shows 77% share price headroom.
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Disclaimer
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Hybrigenics has raised €6.8m in gross proceeds through preferential subscription rights with new and existing investors. We believe the proceeds will provide funding into 2019 and enable Hybrigenics to expand the ongoing Phase II studies with inecalcitol in acute myeloid leukaemia (AML) and chronic myeloid leukaemia (CML). Additionally, the company will use the cash to continue the research in the field of inhibitors of ubiquitin-specific protease 7 (USP7) or 8 (USP8). Our valuation, which does not yet include the offering, stands at €141m.