IPG - IPD Group

[Dona Ferentes]

one of my entries in 2024 FY competition

Market cap $480 million
PE of 25

 

[Dona Ferentes]

Retail Entitlement Offer closed on Thursday, 14 December 2023 and raised approximately $7.7 million at an issue price of $3.93 per New Share. Together with the Placement and Institutional Entitlement Offer, total amount raised was approx $65 million.

there was a 65 per cent participation and oversubscribed top ups were scaled back.

trading around $4.68

 

[Dona Ferentes]

in keeping with the spirit of the competition;
"don't forget to put in your reasons in each thread why you think the share price will increase in 2024";

... I'd like to think that money in the bank, buoyant markets, sectoral tailwinds, acquisitions, new projects will lead to conditions where profitable growth continues for IPG and the upward SP trajectory continues.

 

[Dona Ferentes]

IPG is one of my 4 entries in the CY2024 tipping comp. We await reporting season in Feb. So far, holding up well... XSO (Small Ords) for comparison

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[Dona Ferentes]

IPG is one of my 4 entries in the CY2024 tipping comp... reporting season in Feb.

a bit of interest today (when the rest of market turned S)

YTD:

@debtfree
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EDIT 3:12pm.... a developing story, as they say .. today's trading :

 

[Dona Ferentes]

down 5 per cent... $4.78

1H FY24 Results Highlights
• Record half-year revenues and earnings at the top end of the guidance range
• Revenue of $120.7 million representing 8.8% growth on pcp
• EBIT of $14.0 million representing 21.7% growth on pcp
• NPAT of $9.8 million representing 22.5% growth on pcp
• Fully franked interim dividend of 4.6 cents per share declared
• Strong balance sheet, with $142.7 million of net assets at period-end (net debt of $23.7 million as at 31 January 2024)
• Successful completion of the acquisition of EX Engineering Pty Ltd
• Announced acquisition of 100% of CMI Operations Limited, a leading distributor of electrical cables and manufacturer & distributor of plug brands in Australia, from ASX-listed Excelsior Capital Limited (ASX:ECL)
• Raised $65.0 million of new equity capital in December 2023
• Post financial year-end:
o Entered into new $40 million debt facility to partially fund acquisition of CMI Operations
o Completed acquisition of CMI Operations on 31 January 2024

 

[Dona Ferentes]

Dividend details

CY24 comp. @debtfree

 

[Dona Ferentes]

and then it turned south. Someone's made a decision to look elsewhere.

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take profits leading up to 26/2 half yearly, and reaffirm sell decision after

 

[Country Lad]

and then it turned south. Someone's made a decision to look elsewhere.

Yes, it was a nice run. I ignored the initial technical stop but not my later one.

 

[Dona Ferentes]

Comp update for April ... @debtfree

No business news or developments in March, apart from EGM approval for new shares associated with corporate activity.
Went Ex dividend late in month

 

[Dona Ferentes]

Comp update for May ... @debtfree

A significant holder / Director bought some last Dec and sold 5x as many in April

YTD:

 

[Dona Ferentes]

and then it turned south. Someone's made a decision to look elsewhere.

and up 5 per cent, to $4.65
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Guidance on the Group’s full year
earnings for the financial year ending 30 June 2024.

Based on unaudited results for the 10 months ending April 2024, and management forecasts for May and June, the Company provides the following earnings guidance range for the FY24 full year:

EBITDA
FY23 Statutory Result .... $27.7m
FY24 Statutory Guidance Range
(excl. M&A costs) ... $39.0m - $39.5m
EBIT
FY23 Statutory Result ... $23.4m
FY24 Statutory Guidance Range
(excl. M&A costs) ... $33.5m - $34.0m

Michael Sainsbury, IPD Group Limited CEO, said: “It has been a transformative year for IPD with the completion of two strategic acquisitions, EX Engineering and CMI Operations. Merging our Addelec and Gemtek businesses has significantly enhanced our EV infrastructure team and we are capitalising on the growth in the market by securing a number of major projects during the year, including the electrification of Australia’s largest bus depot.
We are excited by IPD’s evolution, with our extended product and service offering strengthening our overall value proposition to our existing customers and broadening our customer reach."

 

[Dona Ferentes]

Guidance on the Group’s full year earnings for the financial year ending 30 June 2024.

- the late May guidance didn't move the dial in any favourable sense... now $4.28

- early June, a director sale of 353k shares was made to fund purchase of a primary residence - retains approximately 75% of his shareholding and has advised the Board that he has no current intention to further sell shares.
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June update for tipping comp @debtfree

 

[finicky]

a director sale of 353k shares was made to fund purchase of a primary residence

Bitter laugh.

Still priced at ~5X book value.
Around 11X FY24 guided EBITDA .
PE = 23
Seems like paying top dollar
I compared IPG to SXE expecting to find big differences in valuation but pretty similar really. P/B is around half for SXE compared to IPG but so is ROE. PE sameish.

Chart looks like it's been in a distribution phase for around 8 months and director selling corroborates this imo. And wasn't there a big placement and entitlement raising 6 months ago @ 3.93? That might be being worked through.

Not Held
Would like to buy lower, say $3.50

WEEKLY All Data

 

[divs4ever]

Bell Potter likes this

Recommendation

Buy (unchanged)
Price$4.40 Target (12 months)$5.60 (previously $5.70)
Analyst Sam Brandwood 612 8224 2850
AuthorisationChris Savage 812 8224 2835
Sector Commercial Services and Suppliers
Expected Return Capital growth 27.3%
Dividend yield 3.3%
Total expected return 30.6%

FY24 guidance and commentary on outlook

IPD has provided FY24e guidance for EBITDA of $39.0m to $39.5m (vs. BPe prev. of$40.3m) and EBIT of $33.5m to $34.0m (BPe prev. $34.5m).

Although slightly below our expectations, overall we view the update as a solid announcement in context of there cent share price direction and implied uncertainty that had emerged vis-à-vis IPD’s execution on the near-term project pipeline.
Key commentary:
Growth composition: Management commented that IPD’s underlying product and service businesses have driven the bulk of growth in FY24e.
As such, the discrepancy in guidance versus our forecasts would implicitly appear to relate to CMI in its first few months of contribution to group.
Recent industry stocking trends continue to suggest a robust near-term outlook for cables (R3M to Mar’24 +18% QOQ and +9% YOY) and as such we continue to surmise that CMI is well set for a strong FY25e.
EV charging:
IPD’s integrated Addelec-Gemtek EV charging business has been awarded “a number” of major projects during the year.
Whilst details on scope and exact vendors were limited at this stage, we note a recent emergence of industry led charging projects (e.g. Europcar $110m, Aurizon $19m, ongoing NRMA $100m) in addition to those of state governments (e.g. WA and NSW bus depots).
These suggest to us that Australia’s ‘willingness to pay’ issue in EV may be reaching a tipping point.
Other markets:
We regard recent project awards of some of IPD’s customers,particularly in infrastructure, data centres and mining markets (e.g. EX Engineering),as positive read-throughs heading into FY25e.
ABS data potentially indicates some softening in commercial, with work volumes in the Mar’24 quarter flat YOY and down -7% QOQ.
Investment view:
Maintain Buy ratingEPS changes are -1% to -2% across FY24-26e and relate to CMI while we await further detail from IPD on acquisition run-rates at FY24e reporting.

We continue to view IPD as one of the most attractive ways to play electrification across multiple endmarkets, with the stock on a below peer average FY25e EV/EBITDA of ~9x.

i do not hold this share .. it is on my watch-list but low priority ( i already have SXE at a very nice profit )

 

[finicky]

Latest rec from Motley Fool Share Advisor.
Quite an in depth essay on the company which I'll never get around to reading. I'm already sold on the vibe anyway and it'll more be a charting decision if I buy at some time.

Not Held

A few snippets:

Why We Like It

Firstly, IPD operates within the electrical products and services industry, which represents a large and growing market opportunity. According to business consulting firm Frost & Sullivan, the total addressable market for IPD’s products segment is estimated to be around $15 billion, growing at a compounded annual growth rate (CAGR) of 3.9%. Even if IPD’s inventory covers only 50% of this product range, the potential annual revenue opportunity amounts to around $7.5 billion – a long runway for growth considering the company’s sales of $237 million in the trailing-twelve-months.

Secondly, we believe IPD is well-positioned for significant growth due to its exposure to several high-growth areas benefiting from industry tailwinds. Blah blah ..

Additionally, new requirements mandated by the National Construction Code (NCC) require new buildings to be ready for EV charging. Blah blah ... Moreover, IPD is actively involved in significant projects, including partnerships with NRMA for installing 284 high-powered EV chargers around Australia. ....

Thirdly, IPD maintains impressively long-standing relationships with both suppliers and customers. Currently, IPD distributes products for over 30 global OEM brands, with its top 10 supply partners averaging over 15 years of partnership. Similarly, its top 10 customers have an average tenure of 25 years with IPD ...

 

[Dona Ferentes]

My update for July ... @debtfree

IPG has recovered a bit since the 'half yearly' selloff, and has been pushing into the green for this CY.

The enthusiasm could possibly be due to being in a growth sector ... on which there was a 21 June update:

"Solution provider to the Australian electrical market"​

Data centre & EV charging electrical infrastructure insights

 

[Dona Ferentes]

SP still under start of CY24

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IPD Group Limited will release its Financial Report for the year ended 30 June 2024 on 30 August 2024.
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there hasn't been any news, other than that. IPG does get a mention as a poor cousin to Sthn Cross Electrical when insto's do their sectoral sweep/ "what's hot, what's not" bumph.

so this will have to be my Aug comp entry, @debtfree

 

[Dona Ferentes]

SP still under start of CY24.

not any more ... up 10 per cent to around $5.00

IPD Group will release its Financial Report for the year ended 30 June 2024 on 30 August 2024.

FY24 Results Highlights
• Record revenues and earnings above the top end of the guidance range
• Record Order Book
• Revenue of $290.4 million representing 28.0% growth on pcp
• Underlying EBIT of $34.3 million representing 46.6% growth on pcp
• Underlying NPAT of $23.3 million representing 44.7% growth on pcp
• Underlying EPS of 24.2 cents for FY24, up 30.1% on pcp
• Dividend of 6.2c, ff ; total fully franked dividends of 10.8 cents per share declared for FY24, up 16.1% on pcp
• Strong balance sheet, with $150.7 million of net assets at period-end (including net debt of $8.8 million and Net Debt /Underlying EBITDA of 0.2x)
• Raised $65.0 million of new equity capital in December 2023
• Successful completion of the acquisition of EX Engineering Pty Ltd on 21 July 2023
• Successful completion of the acquisition of CMI Operations Limited on 31 January 2024

 

[Value Hunter]

FY2024 they produced statutory EPS of 23.1 cents. So its trading at a p.e. of over 23. For a company with a roughly 15% return on equity and no sustainable competitive advantage it definitely looks overvalued to me. This is the type of business where lots of things can go wrong and it operates in competitive markets. The return on equity of roughly 15% and the NPAT margin of 8.4% are solid figures but nothing extraordinary and both figures when taken together signal that the company operates in competitive markets and lacks a sustainable competitive advantage which is also logically consistent given the size of the company and the sectors it operates in.

Its one to keep an eye on but not a stock I would be buying today, maybe worth taking a closer look during the next recession.