AUG: Cometh the hour, cometh the counter-bid
CRH: Interims
GRP: The wind in Spain (and Portugal) blows mainly on the plain
IR5B: Interims
MKS: Shore Capital note
SPDI: Arcona interims
AUG: Cometh the hour, cometh the counter-bid
Late on Tuesday it was announced that Eleia Limited, a Bidco established by Ancala and Fiera Infrastructure, had submitted a 325p recommended cash offer for Augean, trumping the previous Morgan Stanley Infrastructure bid (pitched at 280p in cash plus up to a further 20p in contingent value rights linked to the outcome of litigation). The shares traded above 325p in the wake of this announcement, so at least some investors are banking on a further counter-bid. Late on Friday Morgan Stanley Infrastructure said it was “considering its options”. The Eleia bid is a very welcome development, particularly as 300p looked a little skinny (in my view) for AUG.
IR5B: Interims
Irish Continental Group reported its H1 results on Thursday. This is usually the seasonally quieter time of the year. The Group reported revenues and EBITDA of €142m and €13m, which were up 8% and 27% respectively. There was no interim dividend, unsurprisingly, given ongoing COVID impacts, while the net debt (on a pre-IFRS 16 basis) stood at €62m at period end (-€10m y/y). The Group has strong liquidity, with gross cash of €131m at end-June, €76m of which was used to extinguish one of the Group’s term loans in July. Due to ongoing COVID-19 restrictions, car travel was muted (-47% y/y) while RoRo (trucks) were also impacted by Brexit-inspired supply chain recalibrations, -15% y/y (although RoRo revenues rose, as more trucks used the more expensive direct route from Ireland to France). There was better news from containers shipped (+14% y/y) while LoLo (lift-on lift-off) was +17% y/y). One highlight of the period was the commencement of a new service on the Dover-Calais route on 29 June (so not reflected in the revenue and profit line). This must be going well as the Group announced alongside the results that it will add a second vessel to the route later this year. French media reports say that DFDS has sold its 29 year old CALAIS SEAWAYS vessel to ICG. Staying with strategic developments, the Group has ordered five electrically powered rubber-tyred gantries (RTGs) at Dublin Ferryport, which will replace diesel powered units over 2022/23, while the Group will relocate its empty container storage depot from Dublin Port to the new Dublin Inland Port (which ICG has the contract to manager in H2 2022). In Belfast Port the Group will commission the final three (of eight) RTGs previously ordered in Q4 2021. Turning to recent trading, in the period between 1 July and 21 August, car carryings of 38,000 are +30% y/y (but -66% versus the same period in 2019), RoRo freight carryings were -21% y/y (likely reflecting Brexit effects), containers shipped are +11% y/y and Port Lifts are +21% y/y. This improved performance points to a positive outlook for ICG, with the introduction of the EU Digital COVID-19 Certificate set to facilitate the ongoing rebuild of non-essential passenger travel. I do have a sense that additional capex on fleet renewal will be needed – the CALAIS SEAWAYS is about to turn 30 and there are two charter vessels (BLUE STAR 1 and EPSILON) in the ferries fleet. However, a return to strong free cash flow generation will solve for this (if a leasing solution isn’t identified). Bloomberg has ICG trading on 16.5x FY 2022 earnings and 9.5x FY 2022 EV/EBITDA – cheap for a firm like this.
CRH: Interims
CRH released its H1 results on Thursday. The results came in ahead of consensus expectations, and the metrics are impressive – sales +15% y/y, EBITDA +25% y/y and record cash generation. Management has hiked the dividend by 4.5% (and is conducting ongoing buybacks). A stronger performance is signposted for H2. On development, CRH invested $1.1bn in the year to date on acquisitions and expansionary capex. Net debt was just $6.0bn at end-H1, -$1.8bn y/y. CRH trades on 16.8x 2022 earnings and 9.1x EV/EBITDA – undemanding multiples for a top company.
SPDI: Arcona interims
Arcona, the Dutch quoted property group that SPDI is in the process of completing an all-share merger with, released its interims on Tuesday. The results revealed a return to profitability, with NRI +0.9% and NAV increasing by 0.6%. Net income was €97k, modest, but a big improvement on the €777k loss in H120. Occupancy across the portfolio increased from 83.6% at end-2020 to 86.9%. The LTV continued to trend lower, now standing at 46.3% at end-June versus 47.0% at end-2020. Management has successfully refinanced many of ARCPF’s borrowings so far this year, which will have ongoing lower interest cost benefits. The Group expects to meet near-term maturities through disposal proceeds. Beyond that, management is seeking shareholder approval in October for buybacks – this seems a sensible use of funds given both: (i) the flexibility to mop up any potential selling pressure as SPDI shareholders receive their stock in the enlarged group; and (ii) ARCPF’s current share price of €6.56 is well below the end-June NAV of €11.91 a share. Overall, the read-through to SPDI from this is positive.
GRP: The wind in Spain (and Portugal) blows mainly on the plain
Greencoat Renewables announced on Wednesday that it is calling an EGM on 17 September to seek shareholder approval to amend the investment policy to allow it to invest in renewable projects in Spain and Portugal. At present, GRP has interests in Ireland, France and Finland and there are obvious benefits to geographic diversity for the Group. GRP says it has “an active near term pipeline” of opportunities in the Iberian peninsula.
MKS: Shore Capital note
Shore published a piece on Marks & Spencer this week: “Marks and Spencer’s (M&S’s) recent trading update (20 August) made for very pleasant reading and represented the first positive unscheduled statement in many years, with company guidance raised – we set our initial expectation for a FY22F CPTP upgrade of c.13%. Today, we confirm our forecasts, which see both short- and medium-term upgrades, noting that greater granularity on trading through the important Q3 period will be provided in the forthcoming interim results (10 November 2021). On our revised forecasts, M&S’ stock is trading on a FY22F PER of 11.4x and an EV/EBITDA multiple of just 6.2x. Increasing self-confidence is clearly evident across the M&S group, and we see the growing potential for a sustained upgrade cycle as years of hard work, accelerated through the COVID crisis, begin to bear fruit. HOUSE STOCK.”
Theodosian Capital 