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Northland Capital Partners View on the City - Latham (James); W Resources

Northland Capital Partners View on the City - Latham (James); W Resources

SECTOR:SUPPORT SERVICES; MINING

LATHAM (JAMES) (LTHM.L)

SECTOR – SUPPORT SERVICES

RATING – BUY*

MARKET CAP – £132m

CURRENT PRICE – 670p#

TARGET PRICE – 980p

ANALYST – MIKE JEREMY

 

Year-end March

2015A

2016A

2017A

2018A

 

Revenue (£m)

185.9

198.8

214.9

228.0

EBITDA (£m)

14.8

16.1

16.4

17.1

Adj. pre-tax Profit (£m)

12.9

13.9

14.0

14.6

Adj. EPS (p)

53.5

56.1

58.1

59.4

DPS (p)

14.3

15.4

16.6

17.6

Net Cash/(Debt) (£m)

15.8

16.3

13.0

17.9

P/E (x)

12.5

11.9

11.5

11.3

Dividend yield (%)

2.1

2.3

2.5

2.6

EV/EBITDA (x)

7.8

7.2

7.0

6.7

 

SOURCE: Northland Capital Partners Limited estimates. #Priced at prior trading day close. *Northland Capital Partners Limited acts as Nomad and Broker to James Latham, and therefore this information should be viewed as a Marketing Communication.

 

Board changes.  F18 demand and efficiency measures offset margin pressure

(note attached)

 

 

NORTHLAND VIEW

  • James Latham announced today that Chris Sutton, Executive Director and Managing Director of the trading subsidiary Lathams Limited, will retire on 31 March 2019.  Executive Director and plc board member Andrew Wright will become MD of Lathams Limited from April 2019.
  • On 28 June James Latham reported F18 revenue of £214.9m, +8.1% YoY (NCPE: £210.7m), with growth in own-warehouse volume of 4.5% YoY, and profit before tax of £15.2m. This included a one-time £1.28m profit from a sale of the Wigston site, indicating an adjusted PBT of £14.0m (NCPE £13.2m). Adjusted EBITDA was £16.4m (7.6% margin) compared to NCPE of £15.7m (7.5% margin). Gross profitability (£37.8m) declined from 18.2% to 17.6%, although H2 gross profit improved to 17.9% (H117: 17.3%) with 11% YoY growth implied. Product prices increased due to a combination of Sterling-Euro weakness and increased manufacturers’ prices. The company declared a final dividend of 12.1p/share (payable on 24th August) taking the full year total to 16.6p (NCPE 16.5p), indicating a 2.5% yield. 

Firm top-line growth defines these results, with revenue 2.0% ahead of our outlook. Pressure on gross margins, which had been noted at H1, was offset by the planned improvements in operational efficiency, which James Latham instituted a year earlier. The company noted that F2019 has “started well” with sales per working day in April and May growing by +9.8%. Our outlook for F2019 looks for continued top-line growth driven by demand for construction timber. Profitability reflects the impact of increased volume, offset by the efficiencies introduced from new warehousing investment, and continued overall vigilance on administrative costs.  We expect stable growth to drive share performance higher through F2019 and continue to rate the company a BUY with a price target of 980p.

COMPANY DESCRIPTION

Founded in the late eighteenth century, the Group specialises in import and distribution of wood-based sheet materials and joinery quality hardwoods and softwoods and other products, with national coverage from ten locations.

 

 

W RESOURCES (WRES.L)

SECTOR – MINING

RATING – CORP*

MARKET CAP – £23m

CURRENT PRICE – 0.42p#

ANALYST – DR RYAN D. LONG

 

Year-end Dec

2016A

2017A

 

 

 

Revenue (£m)

0.1

-

No forecasts provided

EBITDA (£m)

(0.6)

(0.5)

Adj. pre-tax Profit (£m)

(0.9)

(0.7)

Adj. EPS (p)

(0.0)

(0.0)

DPS (p)

-

-

Net Cash/(Debt) (£m)

(0.7)

(0.8)

P/E (x)

n.a.

n.a.

Dividend yield (%)

-

-

EV/EBITDA (x)

(29.4)

(45.8)

 

SOURCE: Northland Capital Partners Limited estimates. #Priced at prior trading day close. *Northland Capital Partners Limited provides commissioned research coverage to W Resources and therefore this information should be viewed as a Marketing Communication.

 

Positive gold assay results from São Martinho

NORTHLAND VIEW

  • W Resources has reported the gold assay results from the first seven holes of its reverse circulation drill programme at the São Martinho Gold Project, which is part of the CAA/Portalegre Licence, located in Portugal.
  • Results include: 8.49m at a grade of 2.68g/t Au from 9m, including 4.24m at a grade of 4.09g/t Au from 12m (SMRC036); and 17.68m at a grade of 0.85g/t from 11m, including 2.12m at a grade of 3.35g/t Au from 23m (SMRC035).
  • The Company has now completed 2,000m of drilling at the Project and additional results will be reported once the assay results are received.

W Resources designed this drill programme to expand the current JORC Compliant Mineral Resource Estimate (Indicated) of 111,987oz Au at a grade of 1.04g/t Au and also test the Company hypothesis that there were additional zones of high-grade gold mineralisation. Importantly, these drill results appear to have confirmed the Company’s exploration concept by demonstrating the presence of significant intercepts of high-grade gold in the near surface.

 

COMPANY DESCRIPTION

W Resources is in the process of constructing the La Parrilla Tungsten Mine, located in Spain.

 

 

1. Northland Capital Partners Limited (“Northland”) acts as Nominated Advisor and/or Broker to the company.

2. Northland) and/or its affiliates companies do beneficially own 1% or more of any class of the issuer’s equity securities, as of the end of the month immediately preceding the date of issuance of the research report or the end of the second most recent month if the issue date is less than 10 calendar days after the end of the most recent month. 

3. The authoring analyst or any associate of the authoring analyst does maintain a long or short position in any of the issuer’s securities directly or through derivatives, including options or futures positions.

4. Northland, its affiliated companies, partners, officers, directors or any authoring analyst of Northland has provided services to the issuer for remuneration during the preceding 12 months other than investment advisory or trading services.

5. Northland or any of its affiliated companies has performed investment banking services for the issuer during the 12 months preceding the date of issuance of the report.  

6. A partner, director, officer, employee or agent of Northland or any of its affiliated companies is an officer, director, employee or advisor of the issuer.  Disclosures are applicable for all companies

7. The authoring analyst, or any associate of the authoring analyst, has viewed the material operations of the issuer. 

8. The authoring analyst, or any associate of the authoring analyst, received reimbursement for travel expenses.

9. Northland makes a market in the securities of this company.

 

 

DISCLAIMER

This document is provided solely to enable clients to make their own investment decisions. It may therefore not be suitable for all recipients and does not constitute a personal recommendation to invest. It does not constitute an offer or solicitation to buy or sell securities or instruments of any kind. If you have any doubts about the suitability of this service, you should seek advice from your investment adviser. This document is produced in accordance with UK laws and regulations. It is not intended for any person whose nationality or residential circumstances may render its receipt unlawful.

The past is not necessarily a guide to future performance. The value of shares and the income arising from them can fall as well as rise and investors may get back less than they originally invested. The information contained in this document has been obtained from sources which Northland Capital Partners Limited believes to be re¬li¬able. The Com¬pany does not warrant that such information is accurate or complete. All estimates and prospective figures quoted in this report are forecasts and not guaranteed. Opinions included in this report reflect the Company’s judgement at the date of publication and are subject to change without notice. If the investment(s) mentioned in this report are denominated in a currency different from the currency of the country in which the recipient is a resident, the recipient should be aware that fluctuations in exchange rates may have an adverse effect on the value of the investment(s). The listing requirements for securities listed on AIM or PLUS markets are less demanding, also trading in them may be less liquid than main markets.

Northland Capital Partners Limited and/or its officers, as¬sociated entities or clients may have a position, or other material interest, in any securities men¬tioned in this report. Northland Capital Partners Limited does not provide recommendations on securities of firms with which it has a corporate relationship. More information about our management of Conflicts of Interest, Investment Research Methodology & Definition of Recommendations can be found at www.northlandcp.co.uk 

Northland Capital Partners Limited is authorised and regulated by the Financial Conduct Authority and a Member of the London Stock Exchange.

Published by/copyright: Northland Capital Partners Limited, 2013. All rights reserved

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