Full Article at IIR has reaffirmed its Recommended rating for PIA after undertaking a review post the appointment of a new Portfolio Manager, Harding Loevner. The full report can be found on the IIR website. On 26 July 2021, Pengana International Equities Limited (PIA) announced a fully franked dividend of 1.35 cents per share for the June quarter. This represents an 8% increase on the March quarter dividend and takes the total dividends declared for FY21 of 5.1 cents per share, fully franked....
WYG faced a number of challenges in FY18 but ended the year with an improved market backdrop, higher divisional order books and benefits from management actions starting to come through. Guidance and our profit estimates are unchanged. With greater business stability and a focus on margins and cash generation (plus receding legacy issues) investors will be able to concentrate on the earnings recovery story. This may be partly discounted following a recent share price pick up, but in the context ...
A more settled trading period saw WYG end FY18 in line with market estimates. Management continues to work on improving organisational efficiency and structure including exiting unprofitable business. We have lowered the rate of expected progress beyond the current year – in line with guidance – pending more detailed order book and revenue run rate information with FY18 results, which are scheduled for 5 June.
H118 results quantified the adverse effects of the slower development of revenues highlighted in earlier updates, but also provided more clarity on near-term trading visibility. Converting improved order positions to rebuild earnings and meet market expectations is necessary to underpin valuation metrics, which, in turn, will help to regain investor attention over time. In the short term, a 4.7% dividend yield offers income attraction.
UK workflow in some Consultancy Services lines is not coming through as quickly as anticipated in the August trading update, though international performance has shown more stability. FY18 guidance is now for £3.5m to £4m group EBIT and, pending an update with H118 results (5 December), we have elected to reflect the lower revenue run rate in future periods also. A period of consistent earnings delivery is required to improve sentiment.
In recent weeks, trading performance has been softer than anticipated, leading to revised expectations. There is no suggestion that funding programmes will be pared back, but we have taken a more conservative position on the rate at which this workflow builds across the business. We have lowered EBIT estimates by around one-third and now project a dip in earnings this year and, for now, a more gradual increase thereafter.
FY17 results were broadly in line with year-end guidance. UK activity is increasing but, for now, we have reduced its expected contribution to our estimates. Organisational change under an updated strategy should improve the quality of earnings and, following Paul Hamer’s departure, a new management team is in place to execute this. Earnings growth prospects are somewhat greater than the current rating appears to suggest.
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A slower end to FY17 for UK operations has lowered market guidance to c £9m EBIT for the year, c 12% below our previous estimate (but still c 23% above FY16) and we have adjusted our model accordingly. By the FY17 results announcement (on 6 June), we will have more visibility on run rates and order intake, and will naturally review estimates for FY18 and beyond at that time. Forward P/Es are now on single-digit multiples.
The latest contract win announcements continue the order momentum seen at the time of H117 results. The significance of new international workflow will serve to underpin our expectation of an improving overseas contribution and, at the same time, provide post-Brexit reassurance for investors. We expect this will translate to further share price progress.
H117 results showed good progress with unchanged full year guidance. Rising order books and confident management messaging support expectations of a good H2 profit uplift and healthy momentum going into FY18. These prospects are not fully reflected in WYG’s rating in our view.
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WYG hit our FY16 expectations and ended the year strongly. All three regions are now profitable and have positive trading momentum and order books coming into FY17. We have maintained our recently raised EPS estimates with a 13% CAGR now to FY19. We see upside bias if the company successfully converts a good level of pipeline opportunities.
The FY16 update contained a bullish tone based on order book development and we increased estimates for both FY17 and FY18. This impression was reinforced at the company’s recent capital markets event, which explained the rising international opportunities for WYG. We expect momentum here to be a key highlight in the FY16 results announcement, which is scheduled for 7 June.
Signet Planning is WYG’s third UK acquisition in FY16, adding to company momentum in good sector conditions. It enhances WYG’s regional planning consulting network and also strengthens its presence in other areas. On our estimates, the deal enhances FY17 and FY18 fully diluted EPS by over 8% in each year. On top of existing growth expectations, this brings WYG’s valuation multiples down rapidly over our estimate horizon.
In the last year, WYG has completed a strategic review, put a new incentive scheme in place and refreshed the board composition. This has not distracted from the ongoing delivery of profit progress. In H116, UK operations moved strongly ahead and the order position both here and in international regions is improving. Hence, medium-term prospects appear to be encouraging and translating them into results that allow a narrowing of the gap between market estimates and management aspirations is like...
A confident AGM/H115 trading update indicated that WYG has good business momentum in the UK, and increasingly, in international regions. Consequently, a strong H2 PBT uplift is in prospect and this should serve to bring management’s longer-term profit aspirations into sharper focus. For now, the company is trading on a current year P/E of 13.0x, which based on our estimates, reduces to 9.8x by FY18.
Management has mapped out a clear strategy to deliver a significant increase in profitability over the next three years as a standalone company. Regional results were mixed last year, but new business indicators appear to be positive in all areas now and the rising order book trend looks set to continue. Ahead of this, our estimates have increased modestly, with an improved UK mix. The rating looks undemanding on this basis, more so if management’s medium-term targets are met.
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