finnCap Research Company Notes - 10 July 2018

Jul 10, 2018 / Research Notes

Read our regular company notes featuring updates from the finnCap Research team's sector experts.

Sector: Consumer & Other

Photo-Me (PHTM): Investing for the long term

Key data                              

  • Share price (p): 109.4
  • Target price (p): 183.0
  • Market cap (£m): 411.5
  • Enterprise value (£m): 390.2

FY 2018 results are in line with the recent trading statement except for a lower tax charge. Sales are up +5.9% at constant currency driven by rapid expansion in Laundry and growth in Kiosks. EBITDA is up a slightly more subdued +2.8% as Japan dragged. As promised, the dividend has been raised by +20% and net cash was £26.7m. Laundry now accounts for 16% of group sales (up from 10%) and is expected to continue to grow in importance. Management has stated that FY 2019E reported PBT is expected to be at least £44m, which is in line with our forecasts. Similarly, this year’s dividend will be held flat. Slightly better cash flow and lower tax, which we assume continues, enables us to raise our target price from 163p to 183p based on a 5% FY 2019E free cash flow yield.

Guy Hewett | ghewett@finncap.com

Sector: Industrials

Capital Drilling (CAPD): H1 trading update – H2 rig utilisation set to improve

Key data                              

  • Share price (p): 41.0
  • Target price (p): 85.0
  • Market cap (£m): 55.5
  • Enterprise value (£m): 51.8

The group has announced its H1 trading update, providing evidence of improving Q2 utilisation rates and revenue growth, as rigs transferred to West Africa are deployed. Tendering and drilling activity is increasing in this high growth area. Additional exploration contracts in West Africa are set to deliver a stronger H2 performance and help underpin the increase in guidance made in June. As such, we retain our recently raised forecasts and 85p price target, which highlights that the shares are currently attractively rated, with significant upside.

David Buxton | dbuxton@finncap.com