3rd Feb 2023 14:04
(Alliance News) - Liberum on Friday said it is leaving its 2023 earnings forecast for CMO Group PLC unchanged, following an "encouraging" order book.
The online building materials retailer said total sales for 2022 were up by 9% to GBP83.1 million from GBP76.3 million in 2020. Like-for-like sales continued to grow, with a year-on-year improvement of 2% despite widely reported industry headwinds, it added.
Liberum noted that CMO will therefore miss the broker's revenue target for the company of GBP84 million.
"Pleasingly, the last two months of 2022 saw strong growth of 8% in Superstore orders over 2021. As previously advised, we experienced a slower unwind of the order book in this period which impacted dispatched sales," CMO said.
Liberum said the strong order intake in November and December is "encouraging".
However, CMO said it expects adjusted earnings before interest, tax, depreciation and amortisation to be GBP2.1 million, down 43% from GBP3.7 million a year ago.
Liberum noted that the company will therefore miss Liberum guidance of GBP2.2 million marginally, but it left its 2023 Ebitda estimate of GBP3.0 million unchanged.
However, it lowered its 2023 sales target to GBP87.0 million from GBP88.3 million. This is a 1% change.
"There are changes below the Ebitda line as we reflect higher interest rates and increased lease costs – as CMO has increased warehousing space as it fulfils a slightly higher proportion of orders, to maintain high service levels of faster moving lines," Liberum explained.
The Plymouth, England-based company said it closed the year with a cash balance of GBP6.2 million It noted that this was assisted by increased order intake in November and December.
Shares in CMO were down 3.6% to 27.00 pence each in London on Friday afternoon.
"The shares offer good value here as valuation ignored the likelihood of better growth returning, once confidence improves and margins rising as the business matures," Liberum said.
Liberum rates CMO at 'buy' with a target price of 45p.
By Sophie Rose, Alliance News reporter
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