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18 May 2018
S & U Update: Reassuring AGM Statement
Today’s AGM statement from S & U supports our view that the Group has built a solid basis from which to deliver further growth in returns, earnings and dividends in the short to medium term. We are encouraged by the rate of growth in monthly applications, customers and collections. All point positively to the Group’s position in the market and the nature of its non-prime car finance loan book. The impairment to revenue charge has increased but we believe that this is due to transitional mix changes which are being addressed by a more selective approach to recent underwriting. As a result, we see no reason to change our forecasts on the back of this statement. However, we raise our theoretical value to reflect the recent share price performances and valuations of the non-standard lending peer group. On a range of comparative ratios, we derive a theoretical value of 3396p; 6% higher than previously and 22% above the current share price.
06 April 2018
S & U - Initiation Note: Playing to its Advantage
S & U is a testament to the fact that focused management, clear strategy and prudent accounting can produce superior returns in most markets. The company provides motor finance to the non-prime demographic in the UK. It has produced an unbroken record of profitability in this area for almost twenty years. As a result, S & U represents a pure play on non-standard finance and a potentially resilient segment of the UK car market; a near unique combination within the wider sector. Using an average of simple comparative valuation ratios, derived from the non-standard lending peer group, we believe that the shares have a theoretical value of 3218p or 39.9% higher than the current traded value
02 March 2018
GlobalData Update - Good Visibility
GlobalData’s 2017 final results highlighted three important elements which inform our positive view of its prospects; organic growth, acquisition integration and visibility of its revenues (c75%). In combination, this allows for upgrades to our 2018 and 2019 forecasts. GlobalData’s proprietary data and content, alongside its knowledge within each of its industries enables it to support clients. It has a large addressable market and is not limited by opportunity. Potentially adding further industries would further increase its footprint. We believe that the Group will make further progress in this regard during 2018. On valuation, our DCF model suggests a theoretical value more than 10.0% higher than the current level.
28 February 2018
Gordon Dadds Group - Theory into Practice
Gordon Dadds has delivered on its commitment to extend its innovative operating model and acquire additional firms. Three acquisitions since the turn of the year have prompted material upgrades to our 2019 and 2020 forecasts. Critically, these additions are on terms which allow the Group to align future performance with consideration, protecting a significant net cash position and maintaining the scope to acquire further. On valuation, we continue to see material upside using a DCF model and value on a comparative basis
14 February 2018
Low & Bonar - Final Results Review
Low & Bonar unveiled a measured action plan to deal with the issues demonstrated by its results. Management is reviewing the status of Civil Engineering and has restructured some of the business. It has identified production opportunities in CTT while acting to ensure that growth in B&I and I&T is sustainable. Critically, the company has committed to greater cash discipline, pointing to a significant reduction in net debt in the current year. While we have modestly reduced our forecasts for 2018 and 2019, our assessment of value remains positive. Using comparative ratios for EV/EBITDA, PER and yield, our theoretical value is 97p, comfortably ahead of the current level. In particular, the current yield premium does not adequately reflect the company’s prospects.
10 January 2018
Low & Bonar Update: Over Reaction - Solid Yield Premium
The share price fell by almost 33.0% in Q4 2017 on the back of two trading updates and the departure of the CEO. Superficially, this appears consistent with reactions to similar announcements elsewhere in the market. However, we believe that the fall is an over-reaction and prefer to base our valuation on fundamentals. Specifically, relating the share price move to our downgrades to earnings implies a substantial de-rating which is not borne out by either the prospects for the bulk of the Group nor its ability to manage cash flow. On this last point, we continue to expect further progress in debt reduction, underpinning modest increases in the dividend across the timeframe. This is at odds with the current yield and is the basis for our theoretical value of 92p per share.
01 December 2017
Gordon Dadds Update - Proof of Concept
The acquisition of CWE and the recent interim results demonstrate the attractiveness of the Gordon Dadds’ model to both professional service providers and shareholders. In our view, CWE is immediately accretive to earnings and limited in balance sheet impact. By the company’s own admission, CWE is almost unique, but we gain the impression that others are in the pipeline. The detail of the interim results supports our new forecasts without further acquisitions.
29 November 2017
GlobalData Update - Information is King
GlobalData’s interim results demonstrate the breadth of its offering and the success of its recent acquisition strategy. It has reported robust growth in all its KPIs, not least a 20.0% increase in the interim dividend. Considering these results and a confident outlook statement, we have increased our adjusted current year and 2018 forecasts by 9.0% and 14.0% respectively.
Critically, this improves our expectations for cash flow generation, such that we now look for a net cash position by December 2019. We have eschewed a comparative valuation because the Company has few direct peers and the relative valuation basis appears unstable in our opinion. Rather, we have used a 10-year Discounted Cash Flow model that captures our view that GlobalData will continue to generate significant free cash flow. Using a market consistent discount rate and terminal value construct, we arrive at a theoretical value of 651.0p, some 9.0% higher than the current traded value.
11 October 2017
Gordon Dadds Group Initiation - Legal Ease
Gordon Dadds offers investors near-unique access to a nascent but exciting legal services opportunity. Focused on small to mid-ranked legal partnerships, the company allows legal professionals to work within a more efficient structure; both operationally and financially. Its success in securing both lateral hires and firms to join its operation has been impressive but, coupled with considerable relative financial strength, it is likely that this growth could accelerate over the coming three years. Our initial forecasts are based on conservative further recruitment assumptions and no material acquisitions but show considerable growth in earnings and cash. Longer term, our DCF model implies material upside from the current level, a function of the company’s inherent operational gearing.
01 August 2017
Low & Bonar - Interim Results 2017 - Still Travelling
Despite underlying KPIs emerging at the top end of expectations, the market appeared to focus on a slightly cautious outlook statement, a decline in Civil Engineering profits and a higher than expected cash outflow. Macro-economic caution aside, we believe that the “negatives” of the interim statement are essentially short-term and, in the case of cash flow, indicative of further strategic progress. Reviewing our forecasts, we maintain our current year PBT forecast but increase 2018 by 2.6% and 2019 by 4.7%. Critically, we now look for higher dividend payments across the forecast timeframe at earnings cover of over 2.0x. The shares look inexpensive in comparison with the wider peer group, on a range of comparative ratios. On dividend yield particularly, we believe that theoretical value is 127p. With no scheduled news flow from Low & Bonar until November 2017, share price performance may be prompted by further forecast upgrades. Given the current width in consensus forecast ranges and pessimistic low-end expectations, we believe that this is entirely possible before end financial 2017.
17 July 2017
Jaywing Initiation - Expecting to Fly
Jaywing’s 2017 final results highlight a company which is positioning itself appropriately for accelerating its growth. During the year, it has successfully integrated two important acquisitions in Bloom and Digital Massive, enhancing the company’s proposition in marketing technology. The headline results reflect the financial impact of this expansion, whilst the underlying performance is solid. Importantly, Jaywing is investing in its core intellectual property, which will be critical to the success of its on-going growth strategy, while maintaining a robust financial position. The extent of the management’s confidence in its strategy is supported by the announcement of dividend payments for the coming year.
26 June 2017
Intercede Update - There is a Tide...
Intercede’s final results confirmed that it is making progress against its key medium term goals. Chief amongst these are the consolidation of MyID’s position within the core customer base, a strengthened financial position, the recruitment of key personnel and the launch of new applications for its software. Since the year end, Intercede has been awarded further contracts from its pipeline, brought in credible sales experience from ARM and launched MyIDaaS. We believe that the pace of news flow is likely to accelerate over the coming year as the Group continues to extend its involvement in key eco-systems within the mobile transaction and IoT environments. As a result, our new 2020 forecasts imply further growth and underpin a higher theoretical value.
06 April 2017
Intercede - Flashnote
Providing a further update reflecting its success in securing some of its outstanding pipeline contracts, Intercede has signalled that the second half of 2016/17 is likely to be materially stronger than the first. There is clearly a return in momentum within its core “occupational” market (MyID) which bodes well for the current year (2017/18). We remain convinced that the move to mobile usage in this market and the roll-out of the RapID product in mobile transactions will drive substantial improvements such that the Group returns to profit by 2018/19. Moreover, the success it has had in generating cash underpins both our confidence in the operational improvement and our positive view of the shares’ theoretical value. We upgrade forecasts and our estimate of NPV as a result.
14 March 2017
Waterman Group - Solid First Half Results - 14 March 2017
Despite the uncertainty that followed the EU referendum, Waterman has continued to trade steadily with good levels of enquiries and new commissions. It has a sufficiently broad operational and geographic spread to provide continued resilience and is likely to benefit from the recent increase in government funding for road spending.
06 March 2017
Intercede Initiation Report
Intercede Group’s core intellectual property sits at the heart of the development of global cybersecurity. Providing critical elements of Multi-Factor Authentication (MFA), the company’s addressable market is poised to expand from the historic, occupational focus to a much wider transactional basis with the clear long term potential to participate in the Internet of Things (IoT). While there have been short term timing issues with key orders, this is more representative of Intercede’s history than its prospects. We view current and prospective regulatory change within national IT infrastructures, critical organisations and financial services as the catalyst for significant revenue growth, a return to profitability and share price appreciation.
03 March 2017
GlobalData - Full Year 2016 Results
A Transformed Global Data Provider GlobalData has now transitioned itself into an integrated, multi-platform provider of business data. The FY2016 results are in many respects, the first full year in the new format with GlobalData trading as one global business.
24 February 2017
Low & Bonar - Full Year 2016 Results
The New Strategy is Gaining Traction The FY2016 results for Low & Bonar were ahead of our estimates despite the underperformance of the CTT division, which had been flagged early in the year. The other three divisions generated strong constant current profits growth, through a combination of organic revenue increase and margin improvement.
08 November 2016
UK Media Sector Valuation
Valuation figures and consensus estimates for the UK Media sector.
24 August 2016
GlobalData - Interim Results and Initiation of Coverage
The Journey Begins For investors who were looking for evidence that GlobalData could repeat the performance of Datamonitor before its timely sale to Informa in 2007, the recent 1H16 results will have been encouraging. Having integrated the acquisitions of significant healthcare and consumer data assets within the past year, GlobalData is now poised for strong organic growth. The model has moved on since the Datamonitor days, with most content now provided on a subscription basis via multiple channels. However, the fundamentals are much the same. The business generates significant and recurring cash returns from the provision of proprietary content to large national and international clients. It is scalable, recession resistant and has high barriers to entry.
01 August 2016
Low & Bonar - First Half 2016 Results
Moving up the food chain The disposal of the Sports and Leisure yarns business is proof that Low & Bonar is intent on delivering its strategy to focus on higher margin markets at the expense of commodity businesses or areas in which it does not have a strong market position.
11 May 2016
ImmuPharma - Lupuzor™ Phase III trial fully funded and progressing well - 11 May 2016
Recruitment underway to enrol 200 patients in the pivotal Phase III clinical trial for Lupuzor™
09 March 2016
G4S - Equity Data Sheet - March 2016
08 March 2016
Porta Communications - Initiation of Coverage
A Solid Platform For Future Growth
26 February 2016
Jaywing - Equity Data Sheet - February 2016
18 February 2016
Low & Bonar - Full Year Results - February 2016
16 February 2016
Velocys - Equity Data Sheet - February 2016
09 February 2016
ImmuPharma - Funding in place to complete Phase III trials for Lupuzor™
Successful fundraising to raise in aggregate £8.3m before expenses
20 January 2016
NewRiver Retal - Third Quarter 2015-16 Portfolio Update
Significant progress on all fronts The 3Q16 portfolio update from NewRiver Retail was in line with expectations and re-iterated the progress that the company has made during the current financial year. Assets under management have increased to £1.1bn and the managed rent roll is approaching £100m. The existing portfolio is trading well with occupancy and rental values edging upwards and the significant development potential, particularly within the pub portfolio, continues to be exploited. We have not changed our FY2016 or FY2017 estimates. The shares are trading on a premium to net asset value but offer considerable earnings and dividend growth potential.
12 January 2016
Avation - Equity Data Sheet - January 2016
12 January 2016
NewRiver Retail - Placing and Further Acquisitions
Since our recent post interim results update on 18th November, NewRiver Retail has raised a further £150m though a placing of shares at 325p/ share and invested £108m of the proceeds in a portfolio of four shopping centres and two retail warehouses. The move follows a similar £150m placing in June 2015 at 300p/ share, the proceeds of which were used to buy out joint venture partners and to acquire further retail assets including the Ramsey retail warehouse portfolio and the Punch Taverns pub portfolio. In the light of this frenetic activity we have revised our estimates upwards for the current year and next. The shares are trading on a premium to adjusted NAV but the prospect of strong earnings growth bolstering dividend growth leads to very undemanding PER and yield ratings.
08 January 2016
Horizon Discovery - Equity Data Sheet - January 2016
17 December 2015
Waterman Group - Equity Data Sheet - December 2015
Global Engineering Consultant
16 December 2015
ImmuPharma - Over 70 Lupus specialists together for the Lupuzor™ Investigators Meeting
Investigators Meeting brought together key specialists in the field of Lupus
09 December 2015
ImmuPharma - Patient recruitment for pivotal Phase III Lupuzor™ trial started in the US
The first sites are open for the recruitment of patients in the pivotal Phase III trial of Lupuzor™
23 November 2015
NewRiver Retail - In Full Flow
Strong First Half Results Supported by Recent Acquistions
20 November 2015
Utilitywise - Equity Data Sheet - November 2015
Industry leading energy and water consultancy
20 November 2015
BTG - Equity Data Sheet - November 2015
A leading specialist healthcare company
09 November 2015
Immupharma - Patient recruitment to start for pivotal Phase III trial for Lupuzor™
Important operational and regulatory milestones reached to allow patient recruitment
07 October 2015
Lupuzor Phase III trials and new Chairman Appointed
Tim McCarthy appointed as non-executive chairman.
Further to the sad news of the passing of Richard Warr, the Chairman and co- founder of ImmuPharma in July, the group has announced the appointment of Tim McCarthy as non-executive chairman. Tim has an international career in high growth biotech, healthcare and technology companies and is currently Chairman of a number of biotech and healthcare related companies. He has previously been both Chief Executive Officer and Finance Director of a number of UK listed companies with great knowledge of the UK regulatory processes as well as substantial experience in fund raising and business strategy. His experience will no doubt be valuable to ImmuPharma as it progresses its lead compound LupuzorTM through the Phase III trial as well as contributing to the group’s longer term strategic direction.
27 July 2015
￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼Following on from the earlier Capital Markets Day (which we covered in detail in our last note on 25th June), the interim results contained no real surprises.
Four of the five segments delivered both constant currency revenue growth and operating margin gains. LWB was also able to capture, to a greater extent than in the past, the benefits of lower polymer prices during the period. Despite the challenges in Civils and the slower than expected progress in the Saudi JV, the strength of the performance elsewhere in the group leaves the overall outlook for the year unchanged. The FY’15e PE and dividend yield of 12.5x and 4.0% respectively look well under-pinned by near term prospects.
25 June 2015
Transformation complete; focus on delivery
FY’15 results were in-line with expectations for revenue; marginally ahead for profitability and materially ahead in terms of cash-flow and net cash.
This was achieved despite H2 client volatility, primarily within Data, and speaks to the progress achieved through the Volex Transformation Plan. Although there is further to go in terms of operational execution, management have drawn a line in the sand regarding the substantive re-organisation of the group and we now expect a substantial reduction in exceptional restructuring costs. Volex has now moved into the delivery phase of its recovery and we take a great deal of comfort from the deeper customer reach demonstrated in these results as well as the better than expected balance sheet performance. The share price has staged an encouraging recovery from the lows earlier in the year, reflecting improved investor confidence in the outlook.
07 May 2015
Preliminary Results and a promising start to this year
ImmuPharma announces its Preliminary Results as well as reiterating a number of positive developments for the start of this year.
The most significant that it has entered into a Collaboration Agreement with Simbec-Orion Group Limited, a well- regarded, full service, international Clinical Research Organisation (CRO) for the further development of LupuzorTM. Simbec-Orion is to invest a significant proportion of its fee in ImmuPharma shares, at a fixed price of 150p. This provides a strong endorsement for both the validation and prospective valuation of the LupuzorTM asset. LupuzorTM was granted an updated Special Protocol Assessment (SPA), which allows a reduced number of patients in the trial, thus reducing its time and cost. The agreement also leaves options open for the company’s future strategy with the possibility of retaining the rights to LupuzorTM to commercialisation. The Phase I/IIa trial for ImmuPharma’s cancer programme has been completed with further applications identified. The company has a strong cash position of £5.4m and shareholder backing, which was demonstrated by the successful £3.4m fundraising completed in October. The £50m equity finance facility with Darwin Strategic also provides further financial flexibility to the group.
30 April 2015
Order book update; life carries on
ISG has announced an additional £80m of UK and European Data Centre contract awards.
As a result, the group order book now stands at £1.1 billion. This is a welcome piece of good news, following the difficulties experienced in UK Construction, and demonstrates the benefits of management focus on this growth market. The order book update is also a timely reminder of the strength in the group’s core businesses (ex UK Construction). Coupled with the swift action taken to strengthen the equity capital base, this indicates that clients have moved on from the issues announced in February. On a calendarised basis and on our revised estimates, the 12 month forward PE / dividend yield is 6.5x / 5.9%. With ISG undertaking to pay a final dividend, the yield looks well supported at current levels.
16 February 2015
Cancer drug - IPP-204106 to progress to Phase II trials
ImmuPharma has released more positive news flow, this time relating to its lead Cancer programme – IPP-204106.
This second potential blockbuster has shown exciting promise in the treatment of cancer and its development has been supported by major funding grants received from prestigious French Government Organisations. The drug has now completed a dose finding clinical Phase I/IIa study which confirmed the maximum tolerated dose of 9mg/kg. This was the primary objective of the study and now completed enables the group to move into a Phase II efficacy trial using the optimum human dosage. This will take the drug a stage further along the regulatory process and if efficacy is demonstrated this will bring the drug to an exciting juncture. The company could potentially seek to license out the drug at that stage or continue its development in-house further enhancing shareholder value.
09 February 2015
Year of progress; promising outlook
Appearances, and headlines, to the contrary, FY14 was another year of progress.
The Q3 hit to Civil Engineering notwithstanding, Low & Bonar exited FY14 having generated 7% constant currency revenue and profit growth. FX headwinds and delays to the Saudi JV meant that, at the reported level, FY14 was broadly flat on FY13. Given the challenging conditions LWB faced in continental Europe, this has to be seen as a pretty solid result. Where does that leave LWB heading into FY15E? The core European markets look to have stabilised; the non European markets are performing well; the group is ramping up investment in China and the Saudi JV should deliver a positive contribution in FY16E. Coupled with a solid looking balance sheet, post the successful facility refinancing, the outlook for FY15E looks promising. The shares have rebounded healthily from their November lows and offer an FY15E PE of 10.3x and a yield of 4.8%.
04 February 2015
UK construction disappoints; strength elsewhere
ISG has issued a trading update which underlines the challenges facing the UK Construction business.
Beyond the immediate hit to current year estimates; the key disappointment is that this comes at a time when Fit Out, Engineering Services and International continue to perform very well. The headline impact is material; a net £7m downgrade (UK Construction -£10m, elsewhere +£3m) to FY15E PBT and a further £16m relating to discontinued operations. However, the majority of the impact are provisions made against recovery of historic costs already incurred, which means the balance sheet effect is not as pronounced. Whilst clearly unwelcome, these charges should not impact on the core value drivers for the group. On our revised estimates, the shares are now trading on an FY15E PE of 15.7x and an FY16E PE of 6.8x.
27 January 2015
Lupuzor development partner demonstrates strong validation of asset as it moves into Phase III trials
ImmuPharma has announced that it has entered into a Collaboration Agreement with Simbec-Orion Group Limited for the execution of the pivotal Phase III clinical trials for LupuzorTM.
ImmuPharma is to start the Phase III trials with this well-regarded, full service, international Clinical Research Organisation (CRO). Simbec-Orion is to invest a significant proportion of its fee, approximately £1.35m, in ImmuPharma shares, buying approximately 900,000 new ordinary shares at a price of 150p, a premium of 206% to the closing mid- market price on 21 January 2015.
22 December 2014
ISG has released an AGM trading update confirming a strongly performing core (London Fit Out and data centres), progress in UK Retail and Asia / Middle East but challenges in UK Construction and, to a lesser extent, Europe.
In light of the trading update we are revising our estimates, resulting in a revenue upgrade to both FY15E and FY16E, current year PBT largely unchanged but a 7% upgrade to FY16E PBT. ISG continues to stand out amongst its peers in terms of delivered performance and estimate direction yet continues to trade at a valuation discount. Recent share price outperformance notwithstanding, we would expect this discount to narrow further.
22 October 2014
£3.4m fund raising supports Lupuzor’s pivotal Phase III trials
ImmuPharma has announced that it has raised £3.4million, principally from its long standing shareholder Aviva.
The placing was at a price of 53 pence, a premium to Monday’s closing price. This is further good news for the group following the recent announcement that Phase III clinical trials for LupuzorTM are to commence with an as yet un-disclosed partner that is believed to have strong credentials and expertise in late stage development. The group has a strong cash position, which will be bolstered by the proceeds from this fund raising, along with a £50m equity finance facility with Darwin Strategic. Importantly - this provides significant financial flexibility to assist in the funding of the Phase III trials. The company has already manufactured the drug product for the trial and established a world class Scientific Advisory Board to provide guidance and support for the Phase III programme. LupuzorTM has a new and unique mechanism of action aimed at modulating the body’s immune system and has a strong safety and efficacy profile. This has supported the FDA’s granting of Fast Track status and approval to commence Phase III trials under an amended Special Protocol Assessment (SPA), which allows for a reduced number of patients in the trial, thereby reducing the development time and cost.
07 October 2014
Phase III trials for LupuzorTM to begin soon
ImmuPharma has announced that the pivotal Phase III clinical trials for Lupuzor are to commence soon with a yet un-disclosed partner.
The partner, that is believed to have strong credentials and expertise in late stage clinical development, will run the pivotal phase III clinical programme based on the strengthened study protocol agreed between ImmuPharma and the FDA. Further newsflow is expected when the development agreement is finalised. The company has already made significant progress in putting the building blocks in place for the trials, having established a world class Scientific Advisory Board and having manufactured the drug product. LupuzorTM has been granted an updated Special Protocol Assessment (SPA) and Fast Track status by the FDA. The group has a strong cash position and the £50m equity finance facility with Darwin Strategic provides the group with the financial flexibility to enable it to assist in the funding of the Phase III trials.
14 July 2014
Impressive underlying performance
FX headwinds should not detract from what has been an impressive H1 performance.
The core businesses are delivering good growth and the group looks well positioned to leverage the Texiplast acquisition (which will make its full contribution in H2 FY14) and continue to target new growth opportunities such as the manufacturing facility in China, which is expected to come on stream in FY16E. Recent share price weakness looks overdone when one considers the double digit earnings and dividend growth profile over the next few years.
08 July 2014
The broad cyclical re-rating that buoyed the sector during H2 2013 now looks to have run out of steam.
Stock selection and differentiation is therefore likely to come to the fore. In terms of short to medium term earnings and dividend growth, ISG stands out amongst the peer group and yet continues to trade at a valuation discount. ISG continues to benefit from strong execution in robust, yet relatively niche markets and, all things being equal, we would expect operational performance to narrow this valuation discount further.
24 April 2014
Positive trading update
The trading update has re-affirmed the robust, underlying performance of the 80 80 group’s core operations, especially in the UK.
The net result is an underlying FY14E performance likely to be marginally ahead of (already upgraded) expectations. This makes for a welcome counterpoint to the news relating to the WSJ allegation. Although a legacy issue, this has undoubtedly cast a pall over what remains a strong story. The shares have declined 24% year to date; reflecting a perceived lack of clarity on underlying profit growth (unfair, in our view) and the WSJ internal investigation. The final results will allow the company to address the latter in more detail but in the meantime Sweett trades on an underlying FY14E PE of 8.6x (a 35% discount to the peer group). This looks undemanding given the strength of the underlying business.