Braemar — On track to achieve FY25 targets

Braemar (LSE: BMS)

Last close As at 20/11/2024

GBP2.62

−1.00 (−0.38%)

Market capitalisation

GBP89m

More on this equity

Research: Industrials

Braemar — On track to achieve FY25 targets

Braemar’s H125 results were in line with expectations, with modest revenue growth and some operational gearing evident in operating profit. The underlying activities continue to expand and diversify and Braemar remains well-positioned to drive its growth strategy. The trading outlook for FY25 is promising and we expect the company to be able to leverage its strong balance sheet in pursuit of strategic growth in a fragmented market. We maintain our underlying revenue and operating profit estimates for FY25 and FY26, as well as our 535p valuation, although EPS is affected by a reassessment of the number of shares in issue. Estimated end-FY25 net cash improves to £2.5m from a more modest net cash position.

Andy Murphy

Written by

Andy Murphy

Director, Financials & Industrials

Industrials

Braemar

On track to achieve FY25 targets

H125 results

General industrials

14 November 2024

Price

266p

Market cap

£88m

US$1.27/£

Net cash at 31 August 2024

£3.3m

Shares in issue

32.9m

Free float

85%

Code

BMS

Primary exchange

LSE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

1.5

(10.3)

13.7

Rel (local)

4.3

(8.1)

4.3

52-week high/low

313p

233p

Business description

Braemar is the second largest shipbroker in the world, providing broking services to the dry cargo, deep sea tanker, specialised tanker and sale and purchase markets. It also addresses the fast-growing areas of offshore and renewables, securities and financial markets.

Next events

FY25 trading update

March 2025

FY25 results

May 2025

Analyst

Andy Murphy

+44 (0)20 3077 5700

Braemar is a research client of Edison Investment Research Limited

Braemar’s H125 results were in line with expectations, with modest revenue growth and some operational gearing evident in operating profit. The underlying activities continue to expand and diversify and Braemar remains well-positioned to drive its growth strategy. The trading outlook for FY25 is promising and we expect the company to be able to leverage its strong balance sheet in pursuit of strategic growth in a fragmented market. We maintain our underlying revenue and operating profit estimates for FY25 and FY26, as well as our 535p valuation, although EPS is affected by a reassessment of the number of shares in issue. Estimated end-FY25 net cash improves to £2.5m from a more modest net cash position.

Year end

Revenue (£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

02/23

152.9

18.0

45.5

12.0

5.8

4.5

02/24

152.8

14.6

39.6

13.0

6.7

4.9

02/25e

152.5

14.8

39.7

14.0

6.7

5.3

02/26e

152.5

15.3

38.6

16.0

6.9

6.0

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Benefits of diversification seen in H125 results

Braemar reported H125 revenue of £76.0m, up 1.4% in sterling terms and 3% in US dollar terms. The company opened a new office in South Korea and investors can expect further geographic diversification. In the period, average revenue per head remained strong at £181k (H124: £184k), which in US dollar terms was $227k, down slightly from $228k. Underlying operating profit, including acquisition-related expenditure, was up 9.2% to £7.3m (H124: £6.7m), highlighting the operational leverage within the business. As a result of the group’s trading performance and management’s increased confidence, the interim dividend was raised by 12.5% to 4.5p (H124: 4.0p). Braemar ended the period with net cash of £3.3m, up 5.5% on the previous year, highlighting the company’s cash-generative nature.

FY25 profit target expected to be achieved

In FY23 and FY24, Braemar achieved its medium-term target of achieving a sustainable doubling of FY21’s underlying operating profit of £8.9m by FY25 and it is confident that the same can be achieved this year. We remain confident that the company can grow further, given the growth strategy, ungeared balance sheet and fragmented markets. The acquisitions made over the last two years are good examples of expansion, as are the new desks opened in South Korea and Singapore, with others set to follow.

Unchanged valuation offers material upside

The outlook for the group is encouraging, underpinned by the forward order book, which stood at $80.9m at the end of August and had risen to $85.8m by 30 September 2024. Furthermore, the global fleet continues to age, implying that pent-up renewal demand will need to be addressed in the foreseeable future. Our PBT forecasts are largely unchanged, but FY25 and FY26 EPS are reduced due to changes in the forecast number of shares outstanding and we retain our 535p dividend discount model (DDM) based valuation.

Diversification delivers in tough markets

Braemar’s interim results highlight the benefit of both the increased geographic diversification of its operations and the expansion of its activities over the last few years in tough markets. H125 revenue increased by c 1% and operating profit rose by c 9%, demonstrating attractive operational gearing. The interims imply that the company is on course to deliver on its target of doubling FY21 underlying adjusted operating profit by FY25, as it did in FY23 and FY24. We believe the results confirm that Braemar’s growth strategy is working well and is likely to result in continued investment in organic growth and new desks, potential M&A in a fragmented global market and higher dividend payouts for shareholders. Braemar trades on a P/E of just 6.7x in FY25e and yields 5.3% on a well-covered dividend. Our DDM valuation is unchanged at 535p/share.

Mixed revenue performance, profits up

Braemar reported H125 revenue of £76.0m, up 1.4% in sterling terms and 3% in US dollar terms, the latter being a better measure of the group’s underlying performance, as a majority of revenue is generated in US dollars. The company opened a new office in South Korea, which, although small, highlights the ongoing geographic diversification strategy; investors can expect further diversification. In the period, average revenue per head remained strong at £181k (H124: £184k), which in US dollar terms was $227k, down slightly from $228k, and costs remained under control, rising by just 1% despite an inflationary environment.

Underlying operating profit, including acquisition-related expenditure, was up 9.2% to £7.3m (H124: £6.7m), highlighting the operational leverage within the business. Underlying operating profit excluding acquisition-related expenditure, which is a better measure of the underlying performance of the business, was £7.9m compared to £7.6m in the previous year. This implies that the business is well positioned to meet its FY25 target of doubling FY21 operating profit of £8.9m.

Exhibit 1: H122 to H125 results summary

£m

H122

H123

% change

H124

% change

H125

% change

Chartering

26.8

44.9

67.7%

52.6

17.1%

49.8

-5.3%

Investment Advisory

15.1

16.3

8.4%

12.4

-23.8%

14.8

18.5%

Risk Advisory

5.6

8.2

47.5%

9.9

20.6%

11.5

15.7%

Revenue

47.4

69.4

46.5%

74.9

7.9%

76.0

1.4%

Chartering

2.5

6.9

176.9%

6.4

-7.9%

6.1

-3.8%

Investment Advisory

4.2

3.7

-11.5%

1.7

-55.3%

2.4

44.1%

Risk Advisory

1.0

1.5

52.7%

1.4

-5.4%

1.5

12.0%

Operating profit

7.7

12.1

58.1%

9.4

-22.1%

10.1

7.0%

Central costs

(2.1)

(1.2)

-41.2%

(2.7)

124.8%

(2.8)

1.4%

Underlying operating profit

5.6

10.9

94.6%

6.7

-38.4%

7.3

9.2%

Chartering

9.3%

15.4%

-

12.1%

-

12.3%

-

Investment Advisory

27.9%

22.8%

-

13.4%

-

16.2%

-

Risk Advisory

17.1%

17.7%

-

13.9%

-

13.5%

-

Underlying operating margin

11.8%

15.7%

-

9.0%

-

9.6%

-

PBT

4.8

10.1

109.0%

1.9

-81.2%

3.6

88.7%

EPS – continuing, diluted (p)

11.2

24.4

117.8%

14.2

-41.9%

12.8

-9.6%

DPS (p)

2.0

4.0

100.0%

4.0

0.0%

4.5

12.5%

Net cash/(debt)

(12.4)

1.8

-114.3%

3.1

76.4%

3.3

5.5%

Source: Braemar, Edison Investment Research

The diversification strategy is now well-established within the business and the benefits are evident. In Chartering (65% of group revenue), revenue declined 5.3% to £49.8m and operating profit slipped 3.8% to £6.1m. The decline was largely driven by a 10% decline in deep sea tanker revenue to £25.7m. Chartering revenue was negatively affected by a fall in project revenue and in the number of tanker fixtures, although this was offset by longer voyage times due to geopolitical events and higher commissions. The acquired tanker desks in the United States and Spain continued to perform strongly. Overall, tanker rates remained robust in the period and this is expected to continue. Chartering revenue from specialised tankers was marginally lower at £9.1m. Desk capacity was expanded and rates remained strong, generating higher average commission from a reduced number of fixtures.

In offshore energy services, revenue grew 16% to £4.4m, driven by a strong oil and gas market, as well as growth in the renewables sector and constrained vessel supply. In dry cargo, chartering revenue slipped 3% to £10.6m as better rates were offset by a reduced number of fixtures and brokers on the Handy and Panamax desks.

Q. Why was the number of brokers down?

However, despite this weakness in Chartering, Investment Advisory’s revenue (c 19% of revenue) increased by 18.5% to £14.8m and underlying operating profit by 44.1% to £2.4m. The key driver was sale and purchase, which grew revenue by 25% to £14.0m, driven by strong second-hand asset values, the availability of a wide range of vessels and high interest in newbuilds. As a result of the higher asset values, demolition activity was lower. Corporate finance revenue fell 40% to £0.7m as the size and number of mandates declined. Behind the scenes, Braemar continues to work on a number of transactions that may complete in H2, which may potentially improve performance.

In Risk Advisory (16% of revenue), revenue increased by 15.7% to £11.5m as market participants looked to hedge exposure and there was heightened interest from financial participants. Operating profit edged up to £1.5m. The Dry Forward Freight Agreements (FFAs) desk benefited from robust market conditions and increased interest from financial clients as geopolitical tensions continue to create market uncertainty and clients looked to hedge exposure. Braemar’s Tanker FFA desk grew for similar reasons and its Natural Gas desk continued to grow in its second year of existence.

As a result of the group’s trading performance and management’s increased confidence, the interim dividend was raised by 12.5% to 4.5p (H124: 4.0p). Braemar ended the period with net cash of £3.3m, up 5% on the previous year highlighting the company’s cash-generative nature. The outlook for the group is encouraging, underpinned by the forward order book, which stood at $80.9m at end August (29 February 2024: $82.6m, 31 August 2023: $67.2m) and had risen to $85.8m at end September 2024.

Key assumptions unchanged; share issuance updated

Following the interims results, we maintain our underlying assumptions for revenue and margins, implying no material change to either. However, we have updated our FY25 and FY26 estimated average number of shares in issue from 27.2m and 24.9m, to 30.5m and 31.7m, which better reflects the net effect of ESOP share purchases, deferred bonus plan share issues, share issues as consideration for M&A and underlying share issuance. Previously we had overestimated the net effect of the ESOP, which reduces the number of shares outstanding, and underestimated the share issuance from the other factors mentioned. The modest increase in PBT is more than offset by this and results in the reduction in diluted, normalised EPS, from 35.5p and 37.4p in FY25 and FY26 to 34.6p and 34.7p, respectively.

Net debt/cash also moves in a positive direction, mainly due to working capital swings, which also reduce finance charges and contribute to an improvement in PBT. Our dividend forecasts are unchanged despite the increase in the payout ratio, as is our 535p valuation. Dividend cover remains comfortably more than 2x at 2.2x in FY26e.

Exhibit 2: Revised forecast table

FY24

FY25e

FY26e

£m

Old

New

% change

Old

New

% change

Revenue

152.8

152.5

152.5

0.0%

152.5

152.5

0.0%

y-o-y % change

-0.1%

0.0%

-0.2%

-

0.0%

0.0%

-

Underlying operating profit

 

16.5

16.6

16.6

0.0%

16.5

16.5

0.1%

y-o-y % change

 

-17.6%

2.4%

0.3%

-

-0.6%

-0.5%

-

PBT (reported, pre-exceptionals)

7.5

10.7

10.8

1.2%

11.6

12.3

6.3%

y-o-y % change

-20.4%

46.5%

43.9%

-

8.4%

13.9%

-

EPS (p) diluted, normalised

32.4

35.5

34.6

-2.6%

37.4

34.7

-7.1%

y-o-y % change

-14.3%

9.4%

6.6%

-

5.3%

0.5%

-

DPS (p)

13.0

14.0

14.0

0.0%

16.0

16.0

0.0%

y-o-y % change

8.3%

7.7%

7.7%

-

14.3%

14.3%

-

Net (debt)/cash (pre IFRS 16)

1.0

(0.4)

2.5

N/A

1.5

12.7

735.5%

y-o-y % change

-84.6%

N/A

152.3%

-

-472.4%

412.1%

-

Source: Braemar, Edison Investment Research


Exhibit 3: Financial summary

£m

2019

2020

2021

2022

2023

2024

2025e

2026e

2027e

Year end 28 February

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

117.9

117.7

83.7

101.3

152.9

152.8

152.5

152.5

152.5

EBITDA

 

 

10.4

14.4

11.4

13.5

23.4

20.4

20.4

20.3

20.1

Normalised operating profit

 

 

9.1

11.0

7.7

10.1

20.1

16.5

16.6

16.5

16.3

Amortisation of acquired intangibles

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Exceptionals

(12.5)

(3.8)

(1.5)

(0.3)

(2.5)

(7.2)

(4.0)

(3.0)

0.0

Share-based payments

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Impairment

0.0

0.0

0.0

0.0

(9.1)

0.0

0.0

0.0

0.0

Other

0.5

0.7

0.0

0.0

3.0

0.1

0.0

0.0

0.0

Reported operating profit

(2.9)

7.9

6.2

9.7

11.5

9.4

12.6

13.5

16.3

Net Interest

(0.2)

(1.4)

(1.1)

(1.2)

(2.0)

(2.0)

(1.8)

(1.178)

(0.5)

Joint ventures & associates (post tax)

0.0

(0.3)

0.0

(0.0)

(0.0)

0.0

0.0

0.0

0.0

Exceptionals

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Profit Before Tax (norm)

 

 

8.9

9.4

6.7

8.9

18.0

14.6

14.8

15.3

15.8

Profit Before Tax (reported)

 

 

(3.1)

6.3

5.1

8.5

9.5

7.5

10.8

12.3

15.8

Reported tax

(1.5)

0.0

(1.6)

(1.8)

(4.9)

(2.9)

(2.7)

(3.084)

(4.0)

Profit After Tax (norm)

7.3

9.4

5.1

7.0

13.2

11.7

12.1

12.3

11.9

Profit After Tax (reported)

(4.7)

6.3

3.6

6.7

4.6

4.6

8.1

9.3

11.9

Minority interests

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Discontinued operations

(22.7)

(2.3)

1.0

7.2

0.0

0.0

0.0

0.0

0.0

Net income (normalised)

7.3

9.4

5.1

7.0

13.2

11.7

12.1

12.3

11.9

Net income (reported)

(27.4)

4.0

4.5

13.9

4.6

4.6

8.1

9.3

11.9

Basic average number of shares outstanding (m)

31

31

31

31

29

30

31

32

31

EPS - basic normalised (p)

 

 

23.78

30.19

16.23

23.06

45.48

39.63

39.71

38.63

38.25

EPS - diluted normalised (p)

 

 

21.79

27.28

13.43

18.79

37.85

32.42

34.55

34.71

34.44

EPS - basic reported (p)

 

 

(88.63)

12.88

14.45

45.56

15.85

15.65

26.60

29.17

38.25

Dividend (p)

5.00

5.00

5.00

9.00

12.00

13.00

14.00

16.00

18.00

Revenue growth (%)

14.4

(0.2)

(28.9)

21.0

50.9

(0.1)

0.0

0.0

0.0

EBITDA Margin (%)

8.8

12.3

13.6

13.4

15.3

13.3

13.4

13.3

13.2

Normalised Operating Margin (%)

7.7

9.4

9.2

9.9

13.1

10.8

10.9

10.8

10.7

BALANCE SHEET

Fixed Assets

 

 

91.7

114.7

106.6

99.8

97.7

91.7

86.7

80.9

78.1

Intangible Assets

86.0

86.2

86.1

80.9

75.4

74.5

72.4

69.4

69.4

Tangible Assets

2.0

11.9

9.8

7.1

5.3

5.6

2.8

(0.0)

(2.8)

Investments & other

3.7

16.5

10.7

11.9

17.0

11.6

11.6

11.6

11.6

Current Assets

 

 

71.9

68.3

50.3

49.8

80.3

69.9

71.8

82.0

85.9

Debtors

37.1

39.5

33.4

35.8

43.3

37.7

38.1

38.1

38.1

Cash & cash equivalents

24.1

28.7

16.4

14.0

36.0

29.2

30.7

41.0

44.9

Other

10.6

0.0

0.4

0.0

1.0

2.9

2.9

2.9

2.9

Current Liabilities

 

 

92.0

78.9

54.0

43.4

65.8

49.1

44.9

49.7

50.4

Creditors

44.9

47.6

47.8

39.9

58.4

43.8

41.4

45.9

45.9

Tax and social security

1.4

1.3

1.3

1.6

4.1

1.6

(0.1)

0.3

1.2

Short term borrowings

35.8

25.1

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Other

9.8

4.8

4.9

1.9

3.3

3.7

3.6

3.4

3.3

Long-term liabilities

 

 

13.2

44.9

39.9

34.8

35.4

32.8

32.8

32.8

32.8

Long-term borrowings

4.6

2.6

2.7

2.8

2.9

2.3

2.3

2.3

2.3

Other long-term liabilities

8.6

42.2

37.3

32.0

32.6

30.5

30.5

30.5

30.5

Net Assets

 

 

58.4

59.2

62.9

71.5

76.7

79.6

80.8

80.4

80.8

Shareholders' equity

 

 

58.4

59.2

62.9

71.5

76.7

79.6

80.8

80.4

80.8

CASH FLOW

Op Cash Flow before WC and tax

(1.8)

9.7

8.8

12.0

12.8

11.3

14.6

16.1

19.6

Working capital

4.6

(0.4)

4.1

5.2

4.1

(6.0)

(3.0)

4.4

(0.1)

Tax

(1.1)

1.2

(0.8)

(2.2)

(4.4)

(6.5)

(4.4)

(2.7)

(3.1)

Other

6.1

1.4

1.8

6.2

11.4

8.5

7.9

7.7

4.0

Net operating cash flow

 

 

7.8

11.8

13.9

21.3

23.9

7.4

15.2

25.6

20.4

Capex

(2.4)

(1.7)

(1.1)

(1.2)

(0.8)

(0.5)

(1.6)

(1.6)

(1.6)

Acquisitions/disposals

(1.7)

(6.3)

3.7

(8.1)

5.4

0.8

1.3

1.3

0.0

Net interest

(0.9)

(1.5)

(1.2)

(0.8)

(1.8)

(2.2)

(1.8)

(1.2)

(0.5)

Equity financing

23.0

3.9

(28.9)

(2.5)

1.4

(3.1)

(3.1)

(3.1)

(3.1)

Dividends

(4.6)

(4.6)

0.6

(2.1)

(3.2)

(2.4)

(5.5)

(4.5)

(5.2)

Other

(2.4)

0.0

(0.9)

(7.0)

(6.8)

(5.3)

(3.0)

(6.1)

(6.1)

Net Cash Flow

18.7

1.6

(13.9)

(0.5)

18.1

(5.4)

1.5

10.2

3.9

Opening net debt/(cash)

 

 

2.4

11.7

20.0

8.8

9.3

(6.9)

(1.0)

(2.5)

(12.7)

FX

(1.1)

(0.8)

(0.7)

0.3

2.6

(1.4)

0.0

0.0

0.0

Other non-cash movements

(26.9)

(9.0)

25.8

(0.3)

(4.5)

0.8

0.0

0.0

0.0

Closing net debt/(cash)

 

 

11.7

20.0

8.8

9.3

(6.9)

(1.0)

(2.5)

(12.7)

(16.6)

Source: Braemar accounts, Edison Investment Research

General disclaimer and copyright

This report has been commissioned by Braemar and prepared and issued by Edison, in consideration of a fee payable by Braemar. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

General disclaimer and copyright

This report has been commissioned by Braemar and prepared and issued by Edison, in consideration of a fee payable by Braemar. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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Tinexta’s weak Q324 results from its Cyber Security (CS) and Business Innovation (BI) divisions have prompted management to downgrade financial guidance for FY24 for the second time this year. We also take a more cautious stance on expected growth in FY25 and FY26. The c 60% decline in the share price in 2024, versus cumulative underlying downgrades of 16% to FY24e adjusted EBITDA, reflects investor concerns about two of Tinexta’s most significant acquisitions in recent years, the CS division and ABF Groupe. An improvement in performance from either would be helpful for sentiment, which appears overly pessimistic.

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