Company Meetings Spring 2022

We met the companies below and you can learn more on any of these by contacting the person at JM Finn with whom you usually deal.


Price £6.53
52 week high-low £7.49 – £4.81
Net Yield 3.3%
Hist/Pros PER 12/15
Equity Market Cap (M) £23,423

Martin Cooper, IR Director

We met with Martin Cooper from BAE’s investor relations department and after arriving at BAE’s London offices we began with the fraught issue of ESG and defence; an issue cast into new light following the unfolding of recent geopolitical tensions. We learned that global tensions had encouraged some investors to reconsider their defence moratorium. Whilst we certainly didn’t leave the meeting completely convinced, BAE seem comfortable with their position in an increasingly ESG conscious world.

What had previously dogged the shares, and therefore dominated investor discussions, was the pension liability. However, having paid down £1bn of this deficit in a one-off lump sum payment last year, our meeting could focus elsewhere for once. BAE is arguably a company of two halves: a highly-visible but slow growing UK business where BAE operates as the largest defence player, and a fast growing, more competitive US business where BAE is often a ‘tier 2’ player. Martin summarised the transatlantic dynamics nicely: in the US you fund your own R&D and in return you get a higher margin; in the UK much of the R&D is government funded but the returns are thus more sedentary.

As a result of this faster growing, higher margin US exposure becoming a larger part of the business, in conjunction with operational improvements, BAE expects some steady margin progression going forwards. Having also quelled the pension concerns, Martin noted that BAE is now in a position to return cash to shareholders, building on the £500m buyback programme executed in 2020. I left the meeting feeling more sanguine about the business, if not entirely convinced BAE could regain favour with ESG conscious investors.


Crest Nicholson 

Price £2.96
52 week high-low £4.69 – £2.88
Net Yield 1.4%
Hist/Pros PER 11/17
Equity Market Cap (M) £751

Consumer Discretionary
Peter Truscott, CEO & Duncan Cooper, CFO

We recently spoke with Crest Nicholson, a UK listed housebuilder that is undergoing a strategy transformation under CEO Peter Truscott, who joined Crest in 2019. Under Peter’s leadership, Crest made numerous new senior hires, pooling talent from other UK housebuilders and, further afield, with Duncan Cooper joining from Sainsbury’s finance division.

Peter outlined how he had selected a breadth of industry experience to help Crest tackle core operational issues. A key example bringing this to life is Crest’s new house type range. In 2019, Crest were building approximately 128 different house types across their development sites. Putting it mildly, this lack of homogeneity was overcomplicating planning and slowing build times, hurting Crest’s profitability. So, Crest launched a new house type range (20 designs) that is being rolled out across sites. The refreshed housing range enabled site plans to be re-plotted to improve layouts and density with greater standardisation reducing technical expenses. Critically, building construction time has reduced by nearly two months. However, Crest pushed the lever further by considering procurement. Similar layouts and engineering requirements mean kitchens, windows, doors etc. are being purchased at greater scale, driving up Crest’s buying power and, lowering costs.

Operational improvements appear to be bearing fruit. In January, Crest reported that revenue grew 16% year-on-year, operating profit margins expanded and, net cash on the balance sheet rose +78% to £253m; providing a more solid financial footing. Ahead, risks remain. If interest rates continue rising this could push up mortgage rates and hit housing affordability. Crest may need to tread carefully when increasing housing volumes going forward.



Price £2.87
52 week high-low £3.04 – £2.17
Net Yield 3.2%
Hist/Pros PER 4/13
Equity Market Cap (M) £21,829

Consumer Staples
Jenny Carney, Head of ESG – Investor Engagement, Investor Relations

Tesco have been on a roll recently having demonstrated market share gains and progress at Booker.  Guidance was firmed up but by less than the market was expecting.  With that background in mind, Jenny indicated that market share gains had been driven by a perception of good value at Tesco.  She said their Aldi Price Match Promise (on 650 products) worked well with the Club Card prices on the value front.

We pushed the subject of on-line shopping, which peaked at 16% of sales from 9% pre-COVID 19 and is now 15%.  90% of orders are still hand-picked from stores although recent developments, which include a computer guiding the picker around the store, suggest that the economics might improve.   Click-and-collect is 20% of the overall on-line sales. I was left with the impression that store sales are most profitable, click-and-collect second best and on-line shop and delivery the least favourable.

Tesco now have three UFCs or Urban Fulfilment Centres with an aspiration to increase this to 27 within three years. UFCs are intended to use surplus space in Tesco’s larger stores.  They also have six dark stores around the M25 which are dedicated to on-line fulfilment but which use different automation models ranging from a computer guided hand-picker to a conveyor belt which is also what happens in the UFCs.  This sounds less developed compared to Ocado’s bots.

On the rapid delivery front, Tesco are developing their Woosh brand and partnering with Gorilla and Deliveroo in what is described as a “learning phase". 

On The Beach Group
Crest Nicholson Holdings

Fevertree Drinks

Equinor ASA

FINANCIALSLloyds Banking Group
Legal & General Group

HEALTH CAREEdwards Lifesciences Corporation

ITM Power
BAE Systems

Palo Alto Networks
Paypal Holdings
ASML Holding

Hill & Smith Holdings
DS Smith 

REAL ESTATESupermarket Income REIT
London Metric Property
Land Securities Group 

UtilitiesNatiuonal Grid

James Ayling, CFA, Research Analyst
Henry Birt, Research Assistant
John Royden, Head of Research

Managing your wealth

Managing your wealth

Understanding Finance

Helping clients understand what we do is key to building relationships. To explain some of the industry jargon that creeps into our world, we’ve pulled together a section of our site to help.

Also in this issue

JM Finn recognise that a work-life balance is essential for employee growth, personal happiness and productivity.

Edwards are the leading player in the treatment of structural heart disease and hemodynamic monitoring, the physics of how blood flows, with 97% of product sales coming from #1 global market share…

This last quarter has been a tough one for bonds with climbing inflation pushing up ten year yields.

Spring Issue Thirty Eight