Ig Design Share Discussion Threads

[masurenguy] 26/6/2024 07:25

‘Buy’ IG Design, says Liberum

The investment case for gift wrap and Christmas cracker designer and manufacturer IG Design Group (IGR) is entering a ‘new phase’, according to Liberum. Analyst Wayne Brown retained his ‘buy’ recommendation and target price of 345p stock, which softened 1% to 227p on Tuesday. The full-year 2024 results provided ‘confidence that the turnaround is progressing well’, said Brown.

He said it also confirmed the group is ‘pivoting towards sustainable growth’ and the investment case is entering a ‘new phase’. ‘The balance sheet is rock solid. With $95m [£80.2m] of net cash, profits could exceed peak full-year 2019 this year, and with sustainable revenue growth now firmly a target, dividends could be a feature in full-year 2025.’ Brown added that there were ‘many reasons to be confident’, including an order book running at 69% of budget versus 62% at the same point last year, self-help measures and cost efficiencies that will drive margins in full-year 2025, and the fact a consumer recovery is not needed for IG Design to hit numbers. ‘Even though the shares have done well of late, they are cheap,’ he said.

[time 2 retire] 25/6/2024 14:42

It would be nice to see a few directors buying at these prices before the next leg up which is no doubt coming given the next 3 years forecasts...

[hastings] 25/6/2024 11:12

I see Liberum has a £3.45p target price

[aishah] 25/6/2024 10:27

Top sliced a few. Had an overweight position from 120p so happy to take some off the table

[hamhamham1] 25/6/2024 08:38

Think 219p/220p is a pretty solid floor. Consolidation and uplift now IMO.

[masurenguy] 25/6/2024 08:33

There could be some top up opportunities after todays profit taking!

[hamhamham1] 25/6/2024 07:59

Yep, but if can get $50m pbt, then at a 12x - 14x PE, that would be €600 - $700m market cap.
And adjusted is at 2/3 pbt of that target currently.

[masurenguy] 25/6/2024 07:55

Quite possibly although the timeframe is inevitably speculative.

[hamhamham1] 25/6/2024 07:52

Share price should double over the next year or two IMO.

[masurenguy] 25/6/2024 07:51

As at last nights close, the shareprice was already up by 90% since the year end trading update was issued at the end of April. Hopefully we will see some positive uplift this morning but since results confirmed what was largely expected I would anticipate that any further price rise today will be modest and we could even see some profit taking. I'm invested in IGR for the longer haul so short term price fluctuations don't really concern me too much.

[johnrxx99] 25/6/2024 07:50

t2r, I think 5.935 penciled in for '25, not sure if pence or cents.

[bigbigdave] 25/6/2024 07:33

IGR Canaccord note... The current valuation looks anomalous & compelling given the improving margins, combined with forecast cash generation and a strengthening balance sheet. BUY" TP of 325p

[time 2 retire] 25/6/2024 07:33

Nothing new in the results that was not mentioned in the previous update, was hoping for maybe a token special divi or at least a mention of when they're likely to recommence.

Hastings, thank you, could you ask the question about future dividends please.

[tonytyke2] 25/6/2024 07:30

Excellent to see adj operating profits margins still rising since reported on the 30/04 at 3.8% now at 3.9%. Great stuff!Looking to add more here very soon.

[bigbigdave] 25/6/2024 07:29

Thanks Martin :o)

[johnrxx99] 25/6/2024 07:28

The US still holding it back but in general a very good year. Pleasing to see the International division with a 10% margin.

I hope the market will respond postively today.

PS many thanks Hastings

[masurenguy] 25/6/2024 07:21

Cheers Martin - be interested to know what further information they might add.

[hastings] 25/6/2024 07:17

Agreed Mas, happy with that. Speaking with the CEO and CFO again this morning, so will look to add something, although plenty of detail already there!

[masurenguy] 25/6/2024 07:07

Excellent, as expected after the y/e Trading Update 7 weeks ago.

Results for the year ended 31 March 2024

Second successful year in the three-year turnaround journey, with improving operational efficiency and simplification of the business

This is the second year in our three-year turnaround journey. We have continued to improve margins, delivered significant profit growth, and generated more cash than we had expected. Adjusted profit before tax is up 183% to $25.9 million (FY2023: $9.2 million). Margin recovery remains a key focus, and the 94% increase in adjusted operating profit to $31.1 million (FY2023: $16.1 million) translated into a 210 basis point rise in adjusted operating profit margin to 3.9% (FY2023: 1.8%). We therefore remain confident that we will restore, by 31 March 2025, the Group's adjusted operating profit margin to at least the 4.5% that was the proforma pre-Covid-19 margin following the acquisition of CSS Industries Inc. ('CSS') in March 2020.

I am pleased to report that both divisions contributed to the increased profits. The two main drivers behind this result remain the continued positive momentum in DG International, and the benefits coming from the turnaround initiatives that are continuing in the DG Americas division. The achievement is all the more greater as our teams have had to overcome some significant challenges in the second half of the year that were on top of the weaker consumer sentiment in a number of our key markets. First, disruption to shipping routes, both in the Middle East and around Panama, and the consequential spiking of freight costs. And secondly, managing credit risk in the increasingly competitive US retail environment.

Revenue was impacted by continued soft demand in a number of key markets, with continental Europe proving the exception. As a result, Group revenue at $800.1 million was 10% lower at reported exchange rates, or 11% lower in constant currency terms. Almost all of the decline was experienced in the DG Americas division. Another strong year of cash generation resulted in the Group ending the year with a net cash balance of $95.2 million (FY2023: $50.5 million). This improvement stems from continued progress in better managing working capital levels, especially inventory. Following the FY2024 re-financing, there is sufficient funding for our requirements.

Two years into the Group's three-year turnaround, we remain confident that we will restore, by 31 March 2025, the Group's adjusted operating profit margin to at least the 4.5% that was the proforma pre-Covid-19 margin following the acquisition of CSS in March 2020. Our actual aspiration is to deliver 5.0% by March 2025, and this should return the Group to its historic highest level of profit delivery, which was an adjusted profit before tax of c$35.8 million delivered in FY2019. Furthermore, we hope to see the Group return to profitable revenue growth during FY2025 as the restructured DG Americas division emerges stronger, and better equipped with the capabilities required to build a more sustainable, growing and profitable business.

[hamhamham1] 25/6/2024 07:05

Solid result confirmation with good outlook.
260p+ today defo.

[hamhamham1] 25/6/2024 07:04

Nice target in the Outlook section...

"Looking further ahead, the financial impact from the successful execution of the new strategy suggests that by 31 March 2027, the Group should have delivered three consecutive years of profitable sales growth, with targeted annual sales around $900 million by that time; whilst delivering an adjusted operating profit margin of over 6%. This translates to an adjusted profit before tax exceeding $50 million. We also expect strong cash conversion to continue, with average annual leverage being no more than 1.0x under normal conditions. These aspirations will be further defined as we make progress with the new strategy"

[hamhamham1] 25/6/2024 06:30

That's what I meant, after the spike on initial expectations recently with the prelims, any conformation with a couple of sweetners will send this to 250p+ hopefully.

[time 2 retire] 24/6/2024 19:22

No, full year results tomorrow.

[hamhamham1] 24/6/2024 19:11

Is it an update tomorrow?
Would be nice to get a 10% bounce if so ;)

[bigbigdave] 21/6/2024 14:04

Decent buying but refuses to budge