Communications
Interim results looked good - revenue was up 11% with Insurance particularly strong. There was a sharp increase in margins and management guided to the top of the range. Analysts have put through some meaningful upgrades for Y1 and Y2, but the share price has fallen markedly since then. Willis Welby continues to be bullish. There is a decent growth model and a good financial model. The balance sheet is strong. The implied to Y3 EBITM ratio of just 50 is too low. They see MONY, along with Next 15 and Team17, as prime candidates to be taken over by Private Equity.
Edition: 167
- 18 August, 2023
Seriously cheap UK mid caps
The median implied to Y3 EBITM ratio for Willis Welby’s UK coverage is now 68 for which you get median consensus Y3 revenue growth of 5.4%. And over the last three months the median move in Y2 EBIT is still an UPGRADE of 0.8%. The Q2 reporting season could be a rude wake up call, but so far, they cannot see the huge economic downturn that is priced into this part of their coverage. And if it does not materialise, then UK mid cap shares are seriously cheap. Industrials (Manufacturing & Support Services) look particularly interesting - highlights Coats, Morgan Advanced, Qinetiq, Hays and Serco. They also see decent revisions and a compelling balance of growth and expectations across Technology names such as Team17, Moneysupermarket, Auction Technology and Kainos.
Edition: 165
- 21 July, 2023