IR5B – Fleet reports
KMR – Production report
PMI – AUM update
PPA – Crane investment
RHM – German contract win
KMR – Production report
Kenmare Resources released its Q1 2024 Production Report on Thursday. This revealed an in-line performance, consistent with guidance for the FY, which sees production strengthening as we move through 2024, reflective of seasonal factors (weather and associated power interruptions) and expectations for the evolving grade profile. On a more positive note, KMR say: “the markets for our products were encouraging in Q1, with stronger than expected demand, particularly for ilmenite. This was driven by recovering titanium pigment demand and the continued growth of the titanium metal market”. Production of ilmenite was in-line y/y, with production of other products down y/y, reflecting significant maintenance work in the mineral separation plant during the quarter. Overall though, this looks like a very satisfactory production performance given that KMR says: “the cumulative impact of the power interruptions in Q1 2024 was greater than the downtime caused by the severe lightning strike in February 2023 and materially exceeded the average impact on operations experienced during the first quarter of the past five years”. Shipments were 243k tonnes in Q1, -11% y/y, but KMR notes that a further 34k tonnes were loaded in Q1 but shipped in Q2, so not a concern. KMR further notes that it “has a strong order book for Q2”. On the outlook, the Group says it is “on track to achieve its 2024 guidance on all stated metrics”. There was no material ‘new news’ on the Group’s capital projects, which will position it for the coming decades (the mine has a 100 year reserve life remaining). Kenmare is extremely cheap to my mind, trading on just 5.4x consensus 2025 earnings and yielding 7.5%.
PMI – AUM update
Premier Miton released its Q2 (end-March) AUM update earlier today. The Group finished the period with £10.7bn of AUM, +£0.9bn since the start of its financial year on 1 October helped by the addition of £560m of AUM from the previously announced acquisition of Tellworth Investments and investment manager appointment to GVQ. With £268m of net outflows in the quarter, market performance helped to drive the balance of the AUM growth for PMI. In this regard, it is reassuring to see a continued strong relative investment performance, with 68% of funds in the first or second quartile of their respective sectors since launch or fund manager tenure (69% over one year). Given the quasi-mechanical relationship between AUM and revenue, the growth is encouraging to see, albeit it is plainly flattered by M&A. The net outflows, while disappointing, are not unexpected given wider industry trends, but if risk-free rates do start to come down then I would expect to see more ‘risk-on’ behaviour and associated inflows to asset managers like PMI. Premier Miton trades on just 8.2x consensus FY 2025 earnings and yields an attractive 10.0%.
IR5B – Fleet reports
Mirroring recent social media speculation, last weekend’s Sunday Times reported that P&0 Ferries is “exploring a sale of its Spirit of Britain vessel, possibly to Irish Ferries”. This follows P&O’s acquisitions of the hybrid ferries Pioneer (in 2023) and Liberté (in 2024) and speculation that this would lead to the sale of one or the other / both of Spirit of Britain and Spirit of France. Spirit of Britain, which launched in June 2010, was purpose built for P&O for use on the Dover – Calais route, so it would be an excellent fit for Irish Ferries’ operations on that route. At 47,592 tons and with capacity for 2,000 passengers and 180 lorries or 1,059 cars, it would also represent a step up from ICG’s existing three vessels on the route (Isle of Inishmore 34,031 tons; Isle of Innisfree 28,833 tons; and Isle of Inisheer 22,152 tons). Adding Spirit of Britain would free up, post modifications to remove its ‘cow-catchers’, one of ICG’s three current ferries (social media suggests Isle of Inishmore is the likeliest candidate) for redeployment on Rosslare – Pembroke where ICG is short of capacity. If confirmed, this would seem to be an elegant solution for both P&O and ICG – capital recycling for the former; and a better fleet mix for the latter. The Spirit of Britain wouldn’t be cheap – it cost €180m at acquisition in 2010, although with depreciation that’s probably somewhere around half that level now. Nonetheless, ICG has the balance sheet for meaningful capex – it closed 2023 with net debt of €107m (pre-IFRS16 leases; €144m including leases) which compares to FY 2023 EBITDA of €133m. Regardless of how this story plays out, with the Inishmore and Innisfree having been built in the 1990s though, ICG seems likely to be writing meaningful cheques for fleet renewal in the near future. ICG is inexpensively rated on 11.9x consensus 2025 earnings and yields 3.1%.
RHM – German contract win
Rheinmetall said on Wednesday that it has secured an order from Germany for “more than 100” (of a production run of 123 units) Boxer HWC vehicles, which will be produced at its facility in Queensland, Australia. Deliveries will commence in 2025. No details on price were supplied, however this is another helpful reminder of the nature of RHM’s order book – mostly multi-year State contracts, providing strong revenue and earnings visibility from blue chip customers. RHM’s order backlog was a remarkable €38bn at end-FY 2023, a year in which RHM had sales and EBIT of €7bn and €1bn respectively. Rheinmetall trades on 19.6x consensus 2025 earnings and yields 1.9%. Not cheap, but at the same time not expensive for the strong growth it is delivering.
PPA – Crane Investment
Piraeus Port Authority announced on Tuesday that it has upgraded the Ship Repair Zone at the port with an €8m investment in two new shipbuilding cranes with a lifting capacity of 40 tons each. The new quayside cranes can accommodate vessels of up to 55m in height and represent an upgrade on the previous reliance on mobile cranes. While modest in a Group context, the investment is nonetheless a useful reminder of the capex programme that PPA is implementing under the terms of its concession agreement – as at the end of 2023 the Group had invested a cumulative €155m towards the expected €294m cost of the ‘mandatory’ investments it has to make (including €39m towards the expected €55m outlay on upgrading the Ship Repair Zone specifically). PPA trades on only 8.9x consensus 2025 earnings, which is very cheap for an infrastructure play (especially one with such a strong balance sheet).
Theodosian Capital 