Read the Beforeitsnews.com story here. Advertise at Before It's News here.
Profile image
By Stockopedia (Reporter)
Contributor profile | More stories
Story Views
Now:
Last hour:
Last 24 hours:
Total:

Small Cap Value Report (Fri 11 Feb 20220 - ADF

% of readers think this story is Fact. Add your two cents.


Good morning, it’s Paul amp; Jack here with Friday’s SCVR.

Agenda –

Paul’s Section:

Facilities By Adf (LON:ADF) (I hold) – a positive trading update from this recent float, which finished 2021 about 17% ahead of market expectations. Looks like the float was under-priced, not something I find myself saying often!


Explanatory notes -

A quick reminder that we don’t recommend any stocks. We aim to review trading updates amp; results of the day and offer our opinions on them as possible candidates for further research if they interest you. Our opinions will sometimes turn out to be right, and sometimes wrong, because it’s anybody’s guess what direction market sentiment will take amp; nobody can predict the future with certainty. We are analysing the company fundamentals, not trying to predict market sentiment.

We stick to companies that have issued news on the day, with market caps up to about £700m. We avoid the smallest, and most speculative companies, and also avoid a few specialist sectors (e.g. natural resources, pharma/biotech).

A key assumption is that readers DYOR (do your own research), and make your own investment decisions. Reader comments are welcomed – please be civil, rational, and include the company name/ticker, otherwise people won’t necessarily know what company you are referring to.


Facilities By Adf (LON:ADF) (I hold)

83p (pre market open) – mkt cap £62m

Trading Update

Facilities by ADF, the leading provider of premium serviced production facilities to the UK film and high-end television industry, today announces a trading update for the year ended 31 December 2021 (“FY21″).

An excellent first trading update from this recent float on AIM (5 Jan 2022). Purely by luck (it was a quiet news day), I reviewed its Admission Document and came away impressed, here on 5 Jan 2022. So I hope some readers hopped on board at the time.

It’s become increasingly obvious that a lot of new floats over the last couple of years have been opportunistic (beneficiaries from lockdown) and over-priced, with the main purpose really being for an existing major shareholder to find a lucrative exit route.

However, ADF stands out because;

(a) the valuation was reasonable, cheap even.

(b) most of the money raised in the float was for expansion, rather than an exit for existing shareholder.

(c) growth tailwinds look long-term, not just a pandemic-related flash in the pan.

Today’s update for FY 12/2021 is positive (ahead of expectations) -

Main points -

  • Strong close to 2021
  • (Unaudited) revenues £27.8m, adj EBITDA at least £7.5m – ahead of expectations (no explanation provided as to what expectations are, so see Cenkos note)
  • Strong market dynamics
  • £15m raised (before fees) in AIM float
  • Deploying cash, with orders placed for new vehicles
  • Reviewing acquisition opportunities (this is the planned expansion route into Europe, currently ADF is UK-focused – so deal risk is a potential downside)
  • Strong visibility for both 2022 amp; 2023 (good, as it makes a profit warning less likely)

My opinion – I should disclose that I’ve part-sold at 83p earlier this week, because a 50% gain in a month seemed attractive. Also I noticed that the shares were being widely tipped in the press, a sign of an active PR, which can pull in short-term punters, who often over-pay, and have an attention span of about 2 weeks.

That said, with a positive trading update out today, I may end up kicking myself for having part-sold. Perhaps it would have been better to run the position? Anyway, that’s not important.

Cenkos put out a detailed note 45 page note (available on Research Tree) with interesting background information about the company. It’s a specialist hire business effectively. Quite interesting to see the equipment used in the TV/film industry, so this is quite a nice share to own, as it’s fun doing the research.

Cenkos had £6.4m adj EBITDA penciled in for FY 12/2021, so gt;£7.5m announced today is a good beat, about 17% ahead of expectations.

Looking forward, adj EPS for 2021 amp; 2022 looks to be something like 5-7p, so if we take the 6p middle point, I think a PER of 15-20 can be justified, so 90-120p looks reasonable as a share price target. Hire companies don’t tend to reach high PERs, but ADF is clearly in a growth phase, with strong sector tailwind – it’s great to hear that TV/film production is doing well in the UK, with the CEO of ADF sounding excited -

“I’m very pleased with the start we have made as a public company. We have an excellent customer base and a market backdrop which is seeing vast amounts of investment in the UK film and HETV industry. As we deploy the funds raised at IPO, we will continue to execute our ambitious, yet highly achievable growth strategy.”

I wish companies wouldn’t use industry jargon amp; abbreviations without an asterisk, telling us what they mean. I’ve got to google “HETV” now. It just means “high end TV” apparently.

Overall then, ADF looks a decent share, and still priced reasonably, despite being over 60% ahead of the IPO price, just 37 days after floating. That premium looks justified, and I suspect this share could rise more today. 100p looks a possibility, as a reasonable target in the coming weeks or months. I’m inclined to sit tight on my remaining position.

.

.


Stockopedia


Source: https://www.stockopedia.com/content/small-cap-value-report-fri-11-feb-20220-adf-941955/


Before It’s News® is a community of individuals who report on what’s going on around them, from all around the world.

Anyone can join.
Anyone can contribute.
Anyone can become informed about their world.

"United We Stand" Click Here To Create Your Personal Citizen Journalist Account Today, Be Sure To Invite Your Friends.

Please Help Support BeforeitsNews by trying our Natural Health Products below!


Order by Phone at 888-809-8385 or online at https://mitocopper.com M - F 9am to 5pm EST

Order by Phone at 866-388-7003 or online at https://www.herbanomic.com M - F 9am to 5pm EST

Order by Phone at 866-388-7003 or online at https://www.herbanomics.com M - F 9am to 5pm EST


Humic & Fulvic Trace Minerals Complex - Nature's most important supplement! Vivid Dreams again!

HNEX HydroNano EXtracellular Water - Improve immune system health and reduce inflammation.

Ultimate Clinical Potency Curcumin - Natural pain relief, reduce inflammation and so much more.

MitoCopper - Bioavailable Copper destroys pathogens and gives you more energy. (See Blood Video)

Oxy Powder - Natural Colon Cleanser!  Cleans out toxic buildup with oxygen!

Nascent Iodine - Promotes detoxification, mental focus and thyroid health.

Smart Meter Cover -  Reduces Smart Meter radiation by 96%! (See Video).

Report abuse

    Comments

    Your Comments
    Question   Razz  Sad   Evil  Exclaim  Smile  Redface  Biggrin  Surprised  Eek   Confused   Cool  LOL   Mad   Twisted  Rolleyes   Wink  Idea  Arrow  Neutral  Cry   Mr. Green

    MOST RECENT
    Load more ...

    SignUp

    Login

    Newsletter

    Email this story
    Email this story

    If you really want to ban this commenter, please write down the reason:

    If you really want to disable all recommended stories, click on OK button. After that, you will be redirect to your options page.