December 6, 2023

PE strikes Ten Entertainment

Macro & Overnight

The US Jolt job openings data estimates there were about 600,000 fewer job vacancies in October than in the prior month and about 20% fewer than a year ago.

The more widely followed non-farm payroll data is on Friday, where investors will look for an affirmative indicator of lower employment or higher unemployment. In an example of bad news being good news, this would be a positive indicator of lower interest rates next year. As the saying goes, the Fed wants you to lose your job.

However, US services ISM/PMI data showed this vital employment sector remains in positive territory, within the 50-55 range of the last few months. And out of the negative, contractionary territory, it briefly visited last year.

UK Company News

In the UK, there is a recommended private equity offer for Ten Entertainment at a 33% premium, valuing the company at GBP287m, continuing the long cycle of the ten-pin bowling industry moving in and out of PE ownership. The premium looks modest and focuses on the potential for a higher offer and the prospects for its larger listed peer, Hollywood Bowl.   

Likewise, the floor coverings distributor updated that November 2023 has proved to be a record revenue and profits month. Growth resulted from increased volume rather than price inflation. The company continues to invest in logistics, sales teams, and point of sale to expand its geographical coverage. Its performance reflects good supplier relationships and presence with independent retailers and contractors. It sees further growth in 2024, citing its medium-term ambition of exceeding £200m in revenue.

Likewise CEO, Tony Brewer is a 40-year flooring veteran and co-founder of Headlam, the UK industry leader. At an age when most people would be spending more time on the golf course, Tony founded Likewise and has grown it at pace to be a national distributor, taking share in a GBP 2bn pa UK market. Flooring retailers require efficient value-added distribution to compete effectively with the major multiples. Tony and his team know how to operate well in the space and seem destined to continue taking market share for some time.     

Uranium investment company Yellow Cake’s H1 report estimates a proforma NAV of 658p based on a spot price of $81.45 /lb and over 21m lbs of inventory. It continues to expect higher uranium demand as nuclear energy is critical to meeting net-zero ambitions. Notably, China’s nuclear capacity target has increased significantly. On the supply side, Yellow Cake cites its ten-year framework agreement with Kazatomprom, the world’s lowest-cost producer, which allows it to acquire $100 million of uranium annually until 2027, as key to its investment case. 

Prognosticator 

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