Good morning, it's Paul & Jack here with Wednesday's SCVR.
I'm pleased to see that, so far, we haven't got the year wrong. It's remarkable that I manage to remember that it's 2022, pre-caffeine at 07:00 every day. Even Jerome Powell, Chair of the Federal Reserve, got the year wrong in his Q&A session with Congress yesterday.
Agenda -
Paul's Section:
Portmeirion (LON:PMP) - an impressive FY 12/2021 year end trading update. Sales are well ahead of expectations, which has allowed the company to absorb cost increases and still deliver profit 9% above market expectations. The turnaround, and digital-focused growth strategy seem to be paying off. Looks good value to me, as future profits should rise once shipping costs normalise.
Accrol Group (LON:ACRL) - profit warning - repeated waves of input cost increases are running ahead of customer price rises. So guidance revised down. Not a disaster, the company is still profitable, but not by much when you account for heavy depreciation & finance costs. So valuing it on (much higher) EBITDA is erroneous I think. Strategic review has been launched - good, because the current business model results in unstable profitability, and repeated profit warnings. In my view, ACRL needs to move to open book contracts with customers, if they will stomach that.
Frontier Developments (LON:FDEV) - another profit warning, down about 26%. The interim results are poor, and the outlook glosses over the financial hit from delays to future games releases. It's left to Liberum to deliver the bad news - a 38% reduction in forecast profits for FY 5/2023. This is not a proper way to report to the market, as not everyone can get hold of broker notes. Despite the lack of visibility, and 2 profit warnings, I'm tempted to have a little punt.
Jack's section:
Gateley Holdings (LON:GTLY) - mgmt is confident of meeting FY expectations, which suggests the valuation is fairly modest for what appears to be an established, well run, and growing enterprise with a long operating history. We can expect salary costs to rise in H2 but the group has a solid balance sheet that should allow it to execute on its acquisition strategy.
Mpac (LON:MPAC) - strong order book recovery bodes well for the upcoming financial year, and the diversification into clean energy could…
