For the record, SCSW updated briefly on IGR as follows in its May issue 9 days ago:
(Sharewatch) IGs update confirmed that H2 trading saw an acceleration over H1. Full year sales and profit are expected to be in line with estimates at +5% to £326m and +24% to £21m, respectively. Eps forecast is 21.4p.
A continued evolution in IGs sales mix towards higher margin product categories (eg. single greetings cards) together with a record level of capex/manufacturing synergies and commercial synergies has aided margin expansion. Having sold a surplus site during H2, it has moved to net cash and further acquisitions continue to be sought. Berenbergs forecast is eps of 23.2p for the current year to end March 19 and 24.9p next year.
As an example, the broker notes that if IG were to deploy £33m firepower on M&A at 6x EBITDA, next years eps would rise by 14%, relative to its base-case. Await results on 11 June."
IG Design Group plc, one of the world's leading designers, innovators and manufacturers of gift packaging, greetings, stationery, creative play products and giftware, announces a trading update in relation to the year ended 31 March 2018.
A nice clear summary at the start of the announcement. Please take note, other companies & advisers - this is the way it should be done;
The Group's trading accelerated in the second half of the year with all regions delivering strong revenue growth and increased profits.
As a result the Board anticipates a full year of overall progress and financial performance in line with management expectations.
More detail is given, with this comment on dividends catching my eye;
The Board remains committed to its progressive dividend policy and is considering increasing the Company's earnings pay-out ratio in future periods, to reflect both the improved financial performance of the Group and the positive outlook of the Directors.
That sounds encouraging, although note that the dividend yield of 1.5% is low. So it's good to hear the intention is to increase that.
Management comments all sound positive.
Valuation - as you can see below, it's not cheap, but good companies rarely are.
As you can see from the Stockopedia graphs below, this group has established an excellent track record of profits growth;
The big jump in revenues in graph no.1 suggests a large acquisition in 2017. So I would want to check the balance sheet, to ensure it's not too top-heavy with intangibles.
As you can see from graph no.4 above, the group's excellent performance has been rewarded with a re-rating upwards of the PER valuation. That's great for shareholders, but of course it does increase risk - if anything goes wrong, then highly rated shares have further to fall.
My opinion - I always write positively about this share, because it looks a very well managed company, performing consistently well.
The current valuation looks fully justified, in my view. So it gets a thumbs up from me.
'I suspect there is an element of "sell the news" after the rise this month.'
I've noticed stocks going down lately after beating expectations or a positive trading update, from Goldman Sachs down to the £32m cap Trakm8. Positive momentum is sometimes explained by investors taking months to fully realise how good good news is. IGR's trading update looks quite positive.
Introduction by Gareth Evans, Progressive Equity Research 00:20
Video intro to IGR 01:58
What IGR does Paul Fineman 05:30
Key facts 07:55
Diversity of the business 09:28
Who IGR sell to 11:35
What underpins IGR performance? 13:25
Barriers to entry 16:55
Achievements in 2017 17:35
A new initiative for 2018 21:05
Acquisition of Biscay Greetings 21:50
"The value of daily shares traded on the the Alternative Investment Market (AIM) soared by 64%Â in 2017. That huge increase in liquidity is an encouraging sign that investors are taking the UK's market for growth companies increasingly ..."
WHO IS IT? IG Design Group, formerly known as International Greetings, designs and makes gift packaging, cards, stationery and presents.
The Bedfordshire-based firm sells its products in more than 200,000 stores in 80 countries.
WHAT'S THE LATEST? Last month, IG bought Australian greeting card and paper product producer Biscay Greetings for £5.5million.
Biscay has nearly 2,000 customers in Australia and New Zealand. IG chief executive Paul Fineman said the deal would double its market share in Australia.
WHO BACKS IT? Fineman is the firm's fourth biggest shareholder, with nearly 4.5m shares. Fund managers Miton and Schroder are also among the top five shareholders.
WHY YOU SHOULD INVEST: Last month, IG announced it was on track to grow its profits and revenue this year.
Experts say its aggressive growth and acquisition strategy is stealing market share from rivals.
German bank Berenberg has given the firm a 'Buy' rating. Russ Mould, of stockbroker AJ Bell, said: 'It is a terrifically well-run business and it is really starting to eat the cake of some of its rivals.
'It has made great progress selling to the discount supermarkets and there is potential for the dividend to grow, too.'
With the benefit of the US tax cuts they see almost 25p EPS for the year starting 1st April. Given that IGR have plenty of Balance Sheet headroom for the acquisitions they've already flagged I'd say IGR are still pretty good value for such a high quality business.
My opinion - this share gets a firm thumbs up from me.
This share has been a long-standing favourite here, although sadly I baulked at the relatively high valuation some time ago, and sold mine very prematurely, missing out on a nice rise since. Never mind, can't win 'em all.
Based on today's announcement, and fairly attractive valuation, I think this looks a decent GARP share, and I'm tempted to revisit it in my portfolio. Another leg up looks possible. Although I would caution that the market as a whole for UK small caps feels a bit wobbly at the moment. Many momentum shares seem to be pausing, or selling off, even after issuing positive updates. That makes me a little wary of opening any new long positions at the moment. Although such negative market sentiment can sometimes provide good buying opportunities in the best quality companies.
Based on its performance in recent years, I would certainly regard IGR as a high quality share. So does Stockopedia - note the 93 quality score below. So a QARP stock, by the looks of it;
"we are therefore pleased to upgrade the Group's full year performance with diluted earnings per share1 expected to be ahead of current market expectations and delivering strong year-on-year growth. We continue to see strong cash conversion across the Group and expect average leverage for FY18 to follow the progress made in recent years and be significantly below an average of two times."
Plus the benefits of the Trump tax cuts.
Plus all the strong growth initiatives being undertaken.
Very happy to be invested in this ambitious and well-run company.
IG Design Group (LSE: IGR) has been one of the Londons poorest performers in Tuesday business.
Following the release of half-year numbers it was down 10% from Mondays close but, as you will see, there was little in the statement to prompt such a sudden drop.
Instead, todays mild sell-off can be attributed to profit booking on the back of recent share price strength. IG Designs market value swelled by almost a quarter in the month leading up to todays results, with the firm hitting a record of 435p per share just yesterday.
Todays release suggests to me that the Bedfordshire-based firm should resume its upward charge sooner rather than later.
In a sign of further progress, chief executive commented today that it had enjoyed yet another robust performance in the six months to September, a period in which it saw all regions trading profitably and growth being achieved both organically and through acquisition.
Revenues at IG Design which designs and manufacturers gift packaging, greetings, stationery and a variety of other giftware leapt 14% in the six months to £166.5m, with organic sales at constant currencies increasing 10% year-on-year. As a result, pre-tax profit at the firm ballooned 27% in the first half to £10.5m.
Buoyed by this impressive performance, IG Design decided to light a fire under the interim dividend, hiking the payment by 14% to 2p per share.
Its little surprise to see IG Design striking such an upbeat tone as its broad catalogue of products fly off the shelves across all major territories. In the Americas and the UK, IG Design saw revenues climb by 18% and 4%, respectively, in the period to September, to $91.3 and £57.5m. And sales are likely to continue booming Stateside thanks to the shrewd acquisition of US-based rival Lang last year.
As if this wasnt enough, IG Design also continues to make impressive progress in its other international markets; in Continental Europe and Australia sales advanced 19% and 13%, respectively, in the first half.
City analysts are expecting earnings at the business to rise 10% in the year to June 2018 and follow this with a 14% advance in fiscal 2019. And I reckon that these impressive projections could be subject to meaty upgrades in the weeks and months ahead.
With IG Designs improving balance sheet also raising, the possibility of additional earnings-boosting M&A (net debt fell £6.2m during the first half to £70.2m), I reckon the business is a brilliant growth share worthy of a premium forward P/E ratio of 19.5 times.
Usually, when a share price breaks out to new high it will come back to test the break out point ie (4.00) and then continue higher. As you say someone was quick to bank gains from 3.60 low early November.
Well the market does not seem to think much of the results. The drop this morning has wiped out most of the gains made over the past month. Hopefully just a transient over-reaction, and we can now resume the upward trend.
"For investors with an interest in small, speculative shares, this week's 40% price crash at angling supplies retailer LSE:FISH:Fishing Republic, will have come as a shock. It's a reminder of just how unpredictable small-cap growth companies can ..."
SHARE PUNT OF THE WEEK: Gift wrap firm IG Design distributes to more than 200,000 stores across the world.
What is it? You might not have heard of IG Design Group, but youve no doubt used some of the gift wrapping and celebratory products it makes, sells and distributes to more than 200,000 stores across the world.
The company, which changed its name from International Greetings last year, is the worlds biggest seller of Christmas crackers, producing 71m a year.
Whats the latest? After years as a basket case, it has soared 37 per cent since March, when it awoke from its slumber and upgraded profit expectations.
IG has enjoyed a significant boost in the US and has managed to offset currency headwinds in the UK with strong sales.
This week it announced that it had bought Australian card company Biscay Greetings for £5.5million to boost its presence in the country, sending shares even higher.
Who backs it? Miton Asset Management and Canaccord Genuity Wealth Management own respective stakes of 12 per cent and 5.2 per cent. Chief executive Paul Fineman owns a 7.1 per cent stake.
Why should you invest? IG is part-way through something of a renaissance period after years of being down in the dumps.
It seems to have indicated that acquisitions like the one this week could be more common as it looks to take advantage of its current strength.
Our View: This is a positive move for IG Design. The growth in its 50%-owned Australian JV (accounts for c.11% of Group revenue) has already seen some benefits of significant investment and turnaround as strategies to sell higher margin products to independent store sector turn out to be fruitful. Further to this, the Group has recently won a major new 3-year contract for the sole supply of single greetings cards range with Australia's largest discount chain, which the Group has now initiated national all store 'roll out'. Biscay is a profitable company who has strong established reputation in its product and customer service. This is highly complementary to the Group existing operation as it provides opportunities for cross selling as well as synergies arising from sourcing, design and logistics. The acquisition would strengthen the Group's presence in the New Zealand, while doubling its market share in the value channel of the greetings card market in Australia. The Group has confirmed that while the acquisition would have minimal impact to underlying earnings for FY2018, it will be earnings enhancing from FY2019 as synergies are began to materialise. A recent Q1 trading update provided on 29 August 2017 showed the Group continues to perform well, delivering trading in line with its management's optimistic expectation. In the Americas, the Group saw operating margins continuing to improve across its broadening customer base, supported by sales volume growth and product mix (including increased in own products sale). The region is also seeing "further significant synergies" from the acquisition of Lang, bringing with it improved purchasing power. In the UK, following the reorganisation of its domestic businesses under one leadership team, regional trading has met with management's best expectations. Management also noted Continental Europe remains on course to achieve record sales and production levels across its core gift packaging product categories. Having raised dividend by +80% in FY2017, Beaufort is confident that the Group has ability for future dividend growth at the same time as continuing its investment, while managing average leverage within target (long-term target: 2.0x-2.75x average net debt to EBITDA). The shares are valued at FY2018E and FY2019E P/E multiples of 18.0x and 16.0x with dividend yields of 1.5% and 1.8%, respectively. Considering continued expansion of its operation with Directors' confidence in the current year outcome, Beaufort reiterates its Speculative Buy rating on the Shares.
IG Design (IGR.L, 386.00p) - Speculative Buy
IG Design Group, a leading designers, manufacturers and distributors of gift packaging, greetings, stationary and play products, yesterday provided its trading update for the 3 months ended 30 June 2017 (Q1 FY2018). The Group has confirmed that trading for the first quarter is in line with management expectations, and the Directors are confident in the outcome for the full financial year. Operational highlights included; 1) unification of the Group's 3 UK businesses under a single leadership team; 2) the synergies resulting from the acquisition of Lang in the USA; and 3) National all store roll out of its single greeting card range with Australia's largest discounter. IG Designs CEO, Paul Fineman commented We are pleased with the progress made in the first quarter Organic growth opportunities exist in all regions, and our strong balance sheet is also providing the flexibility to continue to evaluate M&A opportunities.
Our View: IG Design continues to perform well, delivering trading in line with its managements optimistic expectation. In the Americas, the Group saw operating margins continuing to improve across its broadening customer base, supported by sales volume growth and product mix (including increased in own products sale). The region is also seeing further significant synergies from the acquisition of Lang, bringing with it improved purchasing power. In the UK, following the reorganisation of its domestic businesses under one leadership team, regional trading has met with managements best expectations. Management also noted Continental Europe remains on course to achieve record sales and production levels across its core gift packaging product categories. In Australia, the higher margin independent store sector enjoyed particularly strong growth during the period. Operationally, IG Design is already enjoying payback from past investment across its manufacturing facilities while also bringing enhanced capabilities to drive further growth. Management confirmed that its further investment initiatives across the regions are on schedule and on budget. Back in June 2017, it announced strong financial and operational results for the full year FY2017. The performance was supported organically (revenue +11%), by acquisition of Lang (revenue +8%) and translational benefit from weaker Sterling (revenue +12%), resulting in total revenue growth of +31%. Having raised dividend by +80% in FY2017, Beaufort is confident that the Group has a scope to increase the payout still further, considering its strong cash generation while having also achieved its average debt to EBITDA target of 2.5x. The Board noted at the time of the FY2017 results that such future dividend growth will be delivered at the same time as continuing its investment, while managing average leverage within target (long-term target: 2.0x-2.75x average net debt to EBITDA). The shares are valued at FY2017/18E and FY2018/19E P/E multiples of 19.0x and 17.2x with dividend yields of 1.4% and 1.7%, respectively. Considering Q1 has traded in line, while supporting a record order book and Directors confidence in the current year outcome, Beaufort reiterates its Speculative Buy rating on the Shares.
IG Design(LSE: IGR), formerly International Greetings plc is another small-cap with big potential. It flies under the radar of most investors because it's a relatively boring business that sells gift packaging and greetings cards, amongst other items, in over 150,000 stores around the world. This business, while boring compared to high growth tech firms, is lucrative. Pre-tax profits have jumped 220% since 2014. For the year ending 31 March 2017, earnings per share rose 25%.
Going forward, City analysts expect IG's rapid growth to continue. Analysts have pencilled in earnings per share growth of 11% for the financial year ending 31 March 2018, followed by growth of 11% for 2019. According to the first quarter trading update, the group is firmly on track to hit these targets having made a strong start to the year.
Unfortunately, thanks to the company's historical growth rate, shares in IG are not cheap. The shares currently trade at a forward earnings multiple of 18.9. Still, considering the group's past performance, I believe that this is a price worth paying.
The company is highly cash generative and was able to reduce net debt from £17.5m last year, to a net cash position of £3m at the end of fiscal 2017. Based on these figures, I wouldn't be surprised if management decides to start returning more cash to investors via special dividends going forward. The shares currently yield 1.4%.
Overall, based on IG's steady growth, cash rich balance sheet and dividend potential, I believe that the company has brilliant potential.
Manufacturing group IG Design (LSE: IGR) produces giftware, stationery and toys which are sold in more than 80 countries. For example, it sold more than 40m pens and pencils and 80m Christmas crackers last year.
Last years sales totalled £311m, and generated underlying earnings per share of 18.2p. Broker consensus forecasts suggest that sales this year will rise by 4.5% to £325m, while earnings are expected to rise by 11.5% to 20.3p.
Todays first-quarter trading update suggests to me that the groups management is confident of delivering on these forecasts. IG says that performance so far this year has been in line with expectations, while the groups order book is said to be at record levels.
IG Design is hoping to improve profit margins by tweaking product ranges and improving its manufacturing processes. Management is also on the lookout for acquisition opportunities. The groups return on capital employed has risen from 9.1% to 15.1% since 2014, suggesting these plans are working.
In my view, the wording of todays statement suggests that chief executive Paul Fineman and his team are very confident about the year ahead. If trading continues on this basis, I think theres a good chance that broker forecasts will be upgraded over the next six months.
The shares trade on a forecast P/E of 18 at todays price of 385p. But I think theres a good chance this valuation could end up looking cheap as IG continues to grow. In my view, the shares remain worth buying.
How is IG Design Group going to perform in the future?
IGR is covered by 2 analysts who by consensus are expecting positive earnings, estimated to rise from current levels of £0.16 to £0.21next year. This illustrates a relatively optimistic outlook in the near term, with a relatively solid earnings per share growth rate of 33.3% over the next 1-2 years.
wouldn't be surprised to see the same pattern continue. With that in mind, if I still held this share, I'd probably be inclined to hang on to it, for further potential gains. The narrative sounds upbeat about the future, and management really has executed well so far.
Although do bear in mind that they got a nice boost this year from the finance charge dropping (driven by movement in derivatives), which may not boost next year's results, or could swing the other way.
I would have thought 20p+ adjusted EPS should be on the cards (geddit?!!) for this year, so at 356p currently, that means a PER of 17.8 or lower. That looks about right to me, with potential upside from estimates being revised upwards as the year progresses, maybe.
Our View: IG Design greeted investors with strong FY2017 financial and operational results. Beside encouraging organic growth (revenue +11%), the Groups results were strengthened by the acquisition of Lang (revenue +8%) and as 73% of revenues being non-UK (FY2016: 63%), it further boosted by translational benefit from weaker Sterling (revenue +12%), marking total revenue growth of +31% which beats the consensus forecasts. The USA and Continental Europe showed excellent performance during the year. Europe saw record profitability, while in the USA, its strong organic growth of +27% was achieved across all channels of business. Lang contributed +8% to the Groups revenue and the Board said operating margin will improve going forward as synergies from acquisition (for buying) are expected to realise in FY2018 while the it will also change product mix to increase own products sale. Operationally, the Group are already enjoying the payback from years of investments in number of its manufacturing facilities which brought enhanced capabilities to drive further growth. Looking ahead, having raised dividend by +80% in FY2017, the Board confidently stated that there should be scope to increase dividend further, given strong cash generation and now that the Group achieved its average debt to EBITDA target of 2.5x two years ahead of the original plan. The management noted that such future dividend increase will be delivered at the same time as continuing its investment, while managing average leverage within target (long-term target: 2.0x-2.75x average net debt to EBITDA). The shares are valued at FY2018E and FY2019E P/E multiples of 17.8x and 16.0x with dividend yields of 1.5% and 1.9%, respectively. The Shares have performed extremely well with approximately +150% growth year-to-date. Considering the Group continuing to demonstrate strong LFL growth momentum with confident outlook statement, Beaufort reiterates its Speculative Buy rating on the Shares.
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