Facilities By Adf Share Discussion Threads

[disc0dave45] 23/9/2022 19:32

Poor sentiment not specific to here.

[masurenguy] 22/9/2022 07:18

Why sentiment towards Netflix shares is starting to improve

Sentiment towards Netflix is starting to improve after various analysts upgraded their ratings on the shares. Netflix’s new advertising-supported cheaper subscriber tier, combined with efforts to clamp down on password sharing, represent ‘catalysts that can drive a material re-acceleration in revenue growth’ according to Evercore ISI analyst Mark Mahaney, who has upgraded his rating on the stock from ‘in-line’ to ‘outperform’.

With the planned launch of the advertising tier later this year, ‘there is a clear catalyst on the horizon, and valuation is intrinsically attractive,’ argues the analyst. Meanwhile, JPMorgan sees investor sentiment towards Netflix picking up, and Macquarie and Oppenheimer have also upgraded their ratings on the stock. Netflix is embracing advertising after struggling to hold on to the supernormal subscriber gains generated during the lockdowns necessitated by the Covid pandemic. The Wall Street Journal recently reported that Netflix projects the cheaper, advertising-supported tier could reach about 40m viewers by the third quarter of 2023. This new subscription package will suit consumers struggling to pay for standard Netflix subscriptions as the cost of living soars around the globe.

Shares Magazine 22/9/22

[disc0dave45] 15/9/2022 15:11

Must be the low volumes lol, or does that only work on results day?.

[rivaldo] 15/9/2022 13:38

Nice bounce yesterday and today. Hopefully just the start given the confidence in meeting forecasts and the bullish multi-year outlook for the sector.

[disc0dave45] 14/9/2022 10:18

Still don't get this issue with mobilisation for shorter duration hires - why are they bearing the costs and not the client, should be all part of the hire cost and embedded in the contracts. They recovered the cost of having to hire agency staff but don't / didn't cover the cost of moving vehicles between different clients production sites - why?. Are smaller competitors providing cheaper services for shorter term productions and ADF are happy to maintain plant utilisation at a loss (or reduced profit)?.As they say though, they have budgeted for these type of contracts, so perhaps they will hit forecasts?.

[disc0dave45] 13/9/2022 13:09

From todays numbers I just can’t see them hitting forecasts. It’s not unheard of for companys to say they are in line then a few months later issue a profit warning. If they do (edit: meet expectations) then it might restore my confidence in the management. But from everything they’ve said since IPO I have little faith in them.

[yasx] 13/9/2022 12:12

Disco,

Although it seems a tough ask, the Co. broker maintains forecasts and so with only a few months to go one expects they will meet or get very close to expected numbers. Otherwise it would be deliberately misleading on the part of the Co.

Agree re margins.

[doobz] 13/9/2022 11:54

It's a little confusing that despite the negative points highlighted above. The management seems totally happy and confident in the performance and outlook.?

[nakedmolerat] 13/9/2022 11:39

in an nutshell profits have been hit by higher costs... not good

[disc0dave45] 13/9/2022 11:38

Forgot to mention, last year their income was ramped up due to back orders associated with C19. Even going on last years H2 heavily weighted income, then revenue for this year will fall below their forecasts of £31.8m at £30.4m.

[rivaldo] 13/9/2022 11:32

I haven't addressed you at all, so I assume you mean Mas's comments rather than me :o))

[disc0dave45] 13/9/2022 11:12

Would focus more on your investment if I were you rather than making childish comments :).The realities are that they are incapable of managing their income streams which are 99.9% contract based - they are clearly incapable of adequately pricing up contracts. Would also question their pricing power, gross margin was previously quite decent (44%), but has crashed, and it's all down to very poor contract management IMO. There must be contracts that are now loss making, that's their bread and butter ffs.If folks want to believe that a 50% drop in bottom line profit will lead to them hitting forecasts by year end then so be it, it's their choice, but my concern originally was all about trust in the management (particularly their bull about their order book), going on todays results nothings changed and I'm going to stay clear. If they do hit forecasts at year end then I would be impressed - so all the best to investors, and see you on finals day.

[rivaldo] 13/9/2022 11:06

Only around £150k traded today, so the 10% markdown appears somewhat exaggerated - presumably the short-term traders on results have exited.

Anyone invested here should have realised following the H1 trading statement that the H1 numbers weren't going to be exciting. There is indeed ground to make up in H2, which is never ideal.

However, we are now in mid-September, and the company have reiterated their confidence in meeting expectations of 4.6p EPS. I'd assume they've also guided the house broker in that respect. They would have to be pretty naive (or misleading!) if such confidence were not the case with only 3.5 months to go to the year end.

If they do indeed achieve expectations - or make acquisitions - then the current share price will look very cheap, particularly given the long-term visibility and projections for filming in the UK.

[rp19] 13/9/2022 10:40

I'd rather they present the EPS info in the headline info. Seems like a lot to achieve in H2.

[disc0dave45] 13/9/2022 10:20

House broker, what do you expect.So they have £16m cash, but hang on, they have committed £16m to fleet and £11.7m outflow to come. Then there's additional Capex for their new workshop, then working capital, increased Opex costs etc, so not much left for acquisitions is there.Wouldn't be surprised to see the begging bowl being handed out sometime next year.

[rivaldo] 13/9/2022 10:06

Cenkos retain their forecasts today:

this year - 4.6p EPS
next year 5.9p EPS

They state ADF are "materially undervalued". ADF should be trading on a P/E of 15, which would give a share price of around 89p looking forward.

That of course also excludes the impact of any earnings-enhancing acquisitions from the £16m of available cash.

They summarise (extracts):

"Facilities by ADF have released interim results for the period ending 30 June 2022 and in-line with their prior trading update. ADF achieved record revenues in H1/22A and has continued to grow their fleet to support future growth. The current trading and outlook remain in-line with our expectations, and we leave forecasts unchanged. The valuation remains attractive with an FY23E P/E ratio of 10.1x and a normalised FCF yield of c15%."

"Valuation – We believe ADF is materially undervalued for a number of reasons. Following a successful IPO and a strong FY21A, there is currently c£16m of cash on the balance sheet that could be deployed into potential acquisitions or investment opportunities, none of which are included in our current forecasts and therefore presents significant upside potential.

ADF currently trades on an FY23E P/E ratio of 10.1x; we believe they should trade
closer to 15x, which is at the top end of the equipment hire peers and more in-line with streaming peers given it has superior earnings growth and higher net margins. Furthermore, the normalised discretionary FCF yield is a healthy c15%."

[eezymunny] 13/9/2022 08:55

I see the bulls are cherry picking the more rosy stuff for their comments... Nothing new here.

[eezymunny] 13/9/2022 08:54

Indeed Yasrub. Nothing much in there to excite me. Margins down, precious little free cash flow, lease costs to ballon(?) with rising interest rates.

Maybe H2 will be better with bigger projects....

[melody9999] 13/9/2022 08:46

The cost of moving vehicles between productions is significant. Suspect our management need to look at that in terms of costing shorter jobs. But the good news is that they confirm thay have a full order book for the next 6 months involving larger jobs than this 6 months. So looking good going forward.

[adamb1978] 13/9/2022 08:45

I'm not sure this is the sort of business which can exert substantial pricing power given the size of their customers. However the shortage of capacity helps balance that off and I'd have thought that EBITDA margins in the 25%-30% range should be the norm

The key thing for me is that society isnt suddenly going to ween itself off the sort of content which these guys produce and the asset base is something of a barrier to entry....so I see the revenue growth and profitability as relatively secure

[yasrub] 13/9/2022 08:38

I do not currently hold and was waiting to see the half year results. Whilst top line seems in order is it not a concern that perhaps margin is showing that there is not really pricing power for ADF?

[masurenguy] 13/9/2022 07:32

Good summary Riv. The comment from the CEO was also significant:

"Following a strong end to FY-21, we have continued to trade positively in the new financial year demonstrated by high levels of fleet utilisation. Funds provided at IPO have allowed the Company to increase the size of our fleet to ensure that we meet the robust demand for film and HETV in the UK. The overall landscape has not changed, our order book is now filled for 2022, market dynamics have remained strong, and we are confident that we shall see continued success going forward into the second half and beyond." Marsden Proctor, CEO