Sector reports

Below is a list of sector reports.

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Travel & Leisure

16/10/2017
UK gaming sector: Winning against the odds
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2017 has been a challenging year for the UK gaming sector. Negative media has been compounded by an increasingly aggressive regulator. The imminent outcome of the Triennial Review will certainly have an adverse impact on betting shops, as well as placing additional burdens on advertising and social responsibility for all operators. Furthermore, the Budget presents the risk of higher taxes across the board. However, valuations are undemanding vs the market and, as the regulatory overhang clears, winners should emerge. Paddy Power Betfair (PPB) has limited downside to the fixed odds betting terminal (FOBT) debate and Rank may even benefit. Soft gaming companies, Jackpotjoy plc and Stride Gaming, are growing strongly and internationally diversified players (eg GVC, Playtech) are relatively well positioned. M&A is also highly likely.

Companies mentioned

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Technology

29/09/2017
Automotive ecosystem: Sitting ducks
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Transport is likely to be the next industry to be digitised and almost all vehicle makers are unprepared. Electric vehicles (EVs) and autonomy could reduce overall US transport spending by 65%, which needs to be supplemented with digital services by players wishing to survive. Edison thinks that sensor data is the one area where vehicle makers have an edge and hence is critical to their future. They must control this asset or face becoming sitting ducks for those that would reduce them to handsets on wheels.

Companies mentioned

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Consumer Support Services

25/09/2017
European luxury goods - Signs of life
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The industry is seeing a patchy recovery in demand, but is unlikely to return to the stellar growth rates of 2010-14. Luxury goods companies will continue to be buffeted by macro-economic and geopolitical events and are more exposed than ever to consumer confidence trends and tourist flows. Chinese consumption (increasingly at home) remains a key driver. Recent positive top-line numbers have driven valuations back up to demanding levels so stock selection is paramount.

Companies mentioned
European luxury goods , See more..., LVMH (MC FP), Kering (KER FP), Hermes (RMS FP), Richemont (CFR VX), Burberry (BRBY LN), Moncler (MONC IM), Tod’s (TOD IM), Ferragamo (SFER IM), Prada (1913 HK), Mulberry (MUL LN), Ted Baker (TED LN), Hugo Boss (BOSS GR), Brunello Cucinelli (BC IM)

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Oil & Gas

16/06/2017
Exploration watch - Offshore Mexico
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Mexico’s offshore acreage is vastly underexplored compared to the US Gulf of Mexico, but now the region is being opened up to international investment as the country implements its 2013 energy reform. Three offshore rounds have been held since 2015, attracting a range of companies including majors ExxonMobil, Total, Chevron, Statoil and BP, and two further rounds are expected in 2017. International companies have drilled a number of successful appraisal wells in shallow waters here over the last nine months, while the first non-Pemex exploration well in over 80 years, Zama-1, was spudded in May 2017. However, the deepwater round generated most interest and activity here is expected to commence from late 2018.

Companies mentioned

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Investment Companies

13/06/2017
LPE sector performance - Positive trends
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The LPX Europe Total Return Index (LPX) of major UK and European listed private equity (LPE) companies rose nearly 38% over the 12 months to end May 2017, outperforming the Stoxx Europe 600 and FTSE All-Share indices over one, three and five years. The LPX has lagged somewhat over 10 years despite NAV outperformance due to discount widening. However, the rolling 10-year relative performance is set to improve strongly as high pre-crisis valuations drop out of the comparatives. Assuming a flat performance going forward, the LPX would show over 7% outperformance of the major indices by end May 2018 and over 60% relative outperformance by May 2019. This could improve the perception of LPE as an asset class with long-term investors.

Companies mentioned
LPEQ

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Technology

29/03/2017
Reality Bytes
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Voice is where much excitement and hype is to be found. Every ecosystem is developing a voice controlled digital assistant with which it hopes to enrich Digital Life and control the homes of its users. However, we find that voice suffers from significant limitations meaning that the user experience and functionality that it can offer is inferior to what can be achieved using a visual device. This combined with the fact that the intelligence of voice based systems remains rudimentary at best means that voice is unlikely to replace screens any time soon.

Companies mentioned
Mobile ecosystems

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Oil & Gas

15/03/2017
Exploration watch - Wells to watch in 2017
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Since the oil price crash of 2014, exploration has been particularly badly hit as companies looked to trim expenditure. Wood Mackenzie estimates that 2017 exploration will account for 8% of upstream expenditure, down from historic norms of 14%. In this more difficult environment, any surviving exploration has tended to be led by majors, for example ExxonMobil’s giant Liza discovery offshore Guyana in 2015. In this Exploration Watch, we highlight wells due to spud in 2017 that involve independent companies, with resource estimates greater than 100mmboe. Our exception is the much anticipated multi-billion barrel potential Korpfjell prospect in the Barents Sea offshore Norway, which is operated by Statoil and partnered by major companies.

Companies mentioned

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Financials

02/03/2017
Listed Private Equity - Risk in LPE: Perception versus reality
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In our second report on listed private equity (LPE), we examine public market investors’ perception of risk in the LPE sector and investigate whether perceived risk matches reality. We support the analysis with manager and investor interviews.

Companies mentioned
LPEQ , See more..., 3i Group, Aberdeen Private Equity Fund***, Altamir SCA***, Candover Investments, Deutsche Beteiligungs AG***, Gimv*, HarbourVest Global Private Equity***, HgCapital Trust*, Partners Group, Standard Life Private Equity Trust***, SVG Capital