Morning Wrap

Morning Wrap Today ’s Newsflow Equity Research 11 Mar 2021 08:34 GMT Upcoming Events Select headline to navigate to article ICG FY20 Results – A challenging year on multiple fronts Company Events 11-Mar Derwent London; Full Year Results Playtech FY20 EBITDA 2% ahead of forecasts, FY21 Eurocell; FY20 Results numbers to remain unchanged 16-Mar ARYZTA; H121 results Ferguson; Q221 Results Derwent London FY20 Results – London market offering Greggs; FY20 results 18-Mar Fever-Tree Drinks; FY20 results “good value” SEGRO; Ex Div UK Economic View Widespread house price rises continue - RICS Irish Banks Central Banks stats show rates stable / Bank climate targets Economic Events Ireland 11-Mar CPI Feb21 15-Mar Trade Balance Jan21 United Kingdom 12-Mar Construction Output Jan21 GDP Jan21 Industrial Prod. Jan21 Manufacturing Prod. Jan21 Trade Balance Jan21 18-Mar BoE Offiical Bank Rate United States Europe This document is intended for the sole use of Goodbody Investment Banking and its affiliates Goodbody Capital Markets Equity Research +353 1 6419221 Equity Sales +353 1 6670222 Bloomberg GDSE<GO> Goodbody Stockbrokers UC, trading as “Goodbody”, is regulated by the Central Bank of Ireland. In the UK, Goodbody is authorised and subject to limited regulation by the Financial Conduct Authority. Goodbody is a member of Euronext Dublin and the London Stock Exchange. Goodbody is a member of the FEXCO group of companies. For the attention of US clients of Goodbody Securities Inc, this third-party research report has been produced by our affiliate, Goodbody Stockbrokers Goodbody Morning Wrap ICG FY20 Results – A challenging year on multiple fronts ICG published FY20 results this morning with Revenue of €277.1m, (22% down Recommendation: Buy y.o.y) and EBITDA of €42.1m (51% down y.o.y). The group had net debt of Closing Price: €4.35 €88.5m (€50m ex IFRS-16) down from €129m in 2020. Performance is ahead of our expectations of €35m EBITDA driven by a bumper end to the year on freight Patrick O'Donnell +353-1-641 6013 with stockpiling the key catalyst ahead of the end of the UK transition period. In [email protected] terms of outlook, the environment is uncertain, and we will be updating FY21 forecasts to reflect (i) a challenging environment for freight in 2021 discussed below; (ii) Higher fuel prices and (iii) a continued lack of visibility on peak season. In volume terms, the performance shows a mixed picture, as expected. RORO freight delivered 7.1% volume growth highlighting ICG’s status as a key mover of goods into and out of Ireland during the pandemic. Ecommerce growth has also benefitted freight performance. Furthermore, the benefit of stockpiling into year end ahead of Brexit deadlines benefitted the performance. Passenger numbers were down 66.3% driven by COVID-19 restrictions, which also affected car carryings, down c. 65.8%. The Container and terminal division had volume declines of 7.9% whilst port lifts were down 8.9%. ICG detail on YTD 2021 traffic shows freight down 30.2% in volume terms (8.1% revenue impact driven by shift of WB Yeats to direct France route. The key drivers of the fall are (i) the stockpiling into year-end reducing demand during January and February; and (ii) new customs requirements. Furthermore, the lack of checks in Northern Ireland is creating a competitive advantage for freight traffic on that route. Unsurprisingly, the car and passenger side are down 75.6% and 69.3% respectively whilst container traffic is up 11.1% with port lifts up 9.2%. The group has an agreement to transfer the liabilities related to pension in payment to a third party on payment of a premium of €160.6m. This led to a noncash settlement loss of €9.3m. The result means it significantly reduces the quantum of pension liabilities on the group balance sheet and associated volatility. Despite the constraints on growth principally outside of the management control (Customs and COVID-19 restrictions), our view remains that ICG is well positioned for stable growth over the medium term. With a strong balance sheet and limited net debt, this allows the group flexibility to add capacity as and when opportunities arise. Looking further out, a pent-up demand for travel is likely to boost group This document is intended for the sole use of Goodbody Investment Banking and its affiliates performance materially beyond the clouded uncertainty of FY21. Page 2 11 Mar. 21 Goodbody Morning Wrap Playtech FY20 EBITDA 2% ahead of forecasts, FY21 numbers to remain unchanged Group EBITDA came in at €310m, 2% ahead of our forecasts (which was in line with Recommendation: Buy guidance which was only revised upwards on January 12th). A better than expected profit Closing Price: £5.11 outcome in Snaitech and B2B Gambling more than offset Finalto and B2C coming in below our expectations. Net debt/EBITDA was 1.7x (1.6x FY19); which is a good outcome Gavin Kelleher +353-1-641 0423 considering the Covid challenges it faced. The sales process of Finalto is noted as ongoing [email protected] (now a discontinued item). On outlook, the group has seen a good start to 2021 in January and February in context of ongoing lockdowns in certain markets. The group expects its B2B & B2C online businesses to continue to perform strongly; but remains cautious on retail recovery due to lockdowns throughout Q1. The key positives during FY20 and in the year to date include: (i) resilient performance given Covid impact; (ii) continued progress in the US; (iii) very strong growth in Snaitech Online, with 58% revenue growth in FY20 (which is positive for the valuation multiple); and (iv) simplification of the group with disposal of casual; and financials to come. We do not expect to make any major changes to our FY21 forecasts, which currently set at €309m or €279m (excluding Finalto). Overall, a solid update from the group. Home… This document is intended for the sole use of Goodbody Investment Banking and its affiliates Page 3 11 Mar. 21 Goodbody Morning Wrap Derwent London FY20 Results – London market offering “good value” Derwent London (DLN:LN) released its FY20 numbers this morning closing out an Recommendation: Hold extraordinary year with a modest outperformance in both NAV and Earnings. Closing Price: £33.10 Capital values fell expectedly, but only by -33% whereas we had forecast declines of over - Colm Lauder +353-1-641 6042 4%. This results in a NAV (EPRA NTA) of 3,812p, 2% stronger than our 3,748p forecast. [email protected] Much of this outperformance was due to a strong year for DLN’s development properties (mostly 80 Charlotte Street) with a mark-up here of +5.3%. Net rent came in at £174m, down 2% from FY19, after a £14m impairment and write-offs, 4% below our £182m forecast. However, an outperformance on costs and a £5.2m profit on disposals, meant earnings were stronger than expected, with a net rental profit of £115m, marginally ahead of our forecasted £113m. This was aided by strong rent collection for 2020 of 92%. This resulted in underlying EPS of 99.2p, 4% ahead of our 96.3p but down 4% from FY19. This supported a final dividend of 74.5p, up 3% from FY19, 3% ahead of forecast. A robust performance from DLN’s developments, with values up 5.3% was a key NAV driver. But DLN also let 135k sq.ft of space in FY20, at an average of only -0.8% to FY19 ERV’s (this was 6% ahead when excluding short term lettings). A busy year of rent reviews, renewals and regears (724k sq.ft) delivered £3m of new income. Reviews, in particular, saw an average 9% uplift over the previous rent. Management frame a confident outlook, with an expectation that DLN’s high quality and differentiated product offering will make it stand out. Guidance has been reinstated, with average ERVs in its portfolio expected to move 0% to -5% in 2021. The investment market is viewed as strong, with a robust Q4, and DLN view London yields as “offering good value” for overseas investors. Overall, DLN results are modestly ahead of expectations, with valuations in its prime Central London portfolio more resilient than expected, and strong upside delivered from its developments. We expect some minor upgrades to our NAV outlook, but these will not be significant enough to change our fundamental valuation. Home… This document is intended for the sole use of Goodbody Investment Banking and its affiliates Page 4 11 Mar. 21 Goodbody Morning Wrap UK Economic View Widespread house price rises continue - RICS The latest housing market survey from RICS points to ongoing house price growth across the Dermot O’Leary UK as well as some improvement in demand, although, most of the survey responses were +353-1-641 9167 [email protected] taken prior to last week’s policy announcements in the budget. The headline price index rose to +52 in February (up from 49 in January), thus maintaining the high level that has been in place since August last year. Near-term price expectations also rose in the month (from -12 to +11) suggesting that the proposed ending of the stamp duty holiday at the end of March 2021 was going to have less of an impact than initially thought. All regions experienced price growth in February, according to the surveyors. London, which was the laggard in January, saw its price balance rise to +20, while the largest price increases were experienced in Wales (+82) and the North of England. Our preferred gauge of demand – new buyer enquiries – remained in negative territory in February (-9) but improved from January’s reading.

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