Research from Hardman & Co, Hardman & Co

Hardman & Co

Research from Hardman & Co

Investment research on quoted companies and funds

Hardman & Co is a multi-disciplinary financial consultancy and investment research firm, employing highly experienced analysts and professionals with a broad range of capital markets expertise. Our clients are public and private businesses as well as fund managers, ranging from start-ups to £1 billion+ market capitalisations. Hardman & Co offers corporate research & consultancy, serving the needs of both public and private companies. We produce gold-standard research with a global reach for trading and investment companies, as well as providing market commentary and analysis. In addition, we carry out a number of bespoke investment-related assignments, including due diligence on bond listings, assessments of private company valuations and other corporate advisory services. We engage with the market through traditional and digital media, offering illuminating video content on corporate management strategy, results communication, interviews and in-house sector discussion.

Equity Bottom-Up

<ul><li>In our April 2024 initiation, we highlighted that DUKE, by optimising the best of equity and debt, aimed to achieve equity-type returns with debt levels of risk.</li><li>We highlighted four pillars of returns, namely: i) term credit; ii) participating preference shares, which support DUKE’s high, covered and growing dividend yield (2025E 10.0%, 2026E 10.7%, 2027E 11.4%); iii) early exit fees; and iv) equity stakes.</li><li>Here, we update investors on how management will take DUKE to the next level, noting i) a £20.2m+ equity issue to fund short-term growth, and ii) the progress made towards a third-party capital model, negating the need for further raises.</li></ul>

In our April 2024 initiation, we highlighted that DUKE, by optimising the best of equity and debt, aimed to achieve equity-type returns with debt levels of risk.We highlighted four pillars of returns, namely: i) term credit; ii) participating preference shares, which support DUKE’s high, covered and growing dividend yield (2025E 10.0%, 2026E 10.7%, 2027E 11.4%); iii) early exit fees; and iv) equity stakes.Here, we update investors on how management will take DUKE to the next level, noting i) a £20.2m+ equity issue to fund short-term growth, and ii) the progress made towards a third-party capital model, negating the need for further raises.

Duke Capital (DUKE): Taking Duke Capital to the next level

<ul>
<li>In our April 2024 initiation, we highlighted that DUKE, by optimising the best of equity and debt, aimed to achieve equity-type returns with debt levels of risk.</li>
<li>We highlighted four pillars of returns, namely: i) term credit; ii) participating preference share elements, which support DUKE shareholders’ high (2025E: 9.0%), growing (2027E: 14% above FY’24), and 1.7x covered dividend; iii) early exit fees; and iv) equity stakes.</li>
<li>The 2024 results saw three of the four show positive returns; consequently, DUKE delivered record recurring cash revenue (+12% to £24.3m) and total cash revenue (+38% to £30.2m), with £18m free cashflow.</li>
</ul>


In our April 2024 initiation, we highlighted that DUKE, by optimising the best of equity and debt, aimed to achieve equity-type returns with debt levels of risk.
We highlighted four pillars of returns, namely: i) term credit; ii) participating preference share elements, which support DUKE shareholders’ high (2025E: 9.0%), growing (2027E: 14% above FY’24), and 1.7x covered dividend; iii) early exit fees; and iv) equity stakes.
The 2024 results saw three of the four show positive returns; consequently, DUKE delivered record recurring cash revenue (+12% to £24.3m) and total cash revenue (+38% to £30.2m), with £18m free cashflow.


Hardman & Co Research: Duke Capital (DUKE) - FY’24 results: record cashflows

<ul>
<li>DUKE’s unique product provides SMEs across diversified sectors with hybrid capital, allowing the existing team to retain control.</li>
<li>By optimising the best of equity and debt, DUKE aims to achieve equity-type returns with debt levels of risk.</li>
<li>The loan and participating preference share elements support DUKE shareholders’ high (2024E: 9.0%), growing (2026E: 7% above 2024), and covered dividend.</li>
</ul>


DUKE’s unique product provides SMEs across diversified sectors with hybrid capital, allowing the existing team to retain control.
By optimising the best of equity and debt, DUKE aims to achieve equity-type returns with debt levels of risk.
The loan and participating preference share elements support DUKE shareholders’ high (2024E: 9.0%), growing (2026E: 7% above 2024), and covered dividend.


Initiation of Coverage: Duke Capital (DUKE): Meeting customer needs, giving investors returns

Thematic (Sector/Industry)

<ul>
<li>Feature article: “ROOM” (Running Out of Money) risk, How managing liquidity risk can sustain corporate value and maintain shareholder confidence</li>
<li>As we come close to the end of a very challenging year for many UK entrepreneurs, as well as a frustrating period for shareholders, it is time to address one elephant in the ROOM! ROOM stands for “Running Out of Money”.</li>
<li>The risk of doing so, or the perception that it could occur, can destroy corporate values and prematurely paralyse a business. </li>
</ul>


Feature article: “ROOM” (Running Out of Money) risk, How managing liquidity risk can sustain corporate value and maintain shareholder confidence
As we come close to the end of a very challenging year for many UK entrepreneurs, as well as a frustrating period for shareholders, it is time to address one elephant in the ROOM! ROOM stands for “Running Out of Money”.
The risk of doing so, or the perception that it could occur, can destroy corporate values and prematurely paralyse a business. 


<ul>
<li><span style="font-size: var(--content-font-size);">Budgets are always important for investors.</span></li>
<li>The imminent Budget, at the end of October, will be doubly so, because it is the first from the new Labour government, and it has already signalled the need to fill an alleged £22bn black hole, while ruling out changes to more than half the tax base.</li>
<li>That implies a lot of the pain will be felt by investors.</li>
</ul>


Budgets are always important for investors.
The imminent Budget, at the end of October, will be doubly so, because it is the first from the new Labour government, and it has already signalled the need to fill an alleged £22bn black hole, while ruling out changes to more than half the tax base.
That implies a lot of the pain will be felt by investors.


United Kingdom

Duke Capital Ltd is a private credit investment company. The Company provides hybrid capital solutions for management buy-outs, buy and build strategies, shareholder restructuring, and debt re-financing. Duke Capital serves customers worldwide.

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Duke Capital (DUKE LN)

Duke Capital (DUKE): Taking Duke Capital to the next level

In our April 2024 initiation, we highlighted that DUKE, by optimising the best of equity and debt, aimed to achieve equity-type returns with debt...

Hardman & Co

Hardman & Co Research: Duke Capital (DUKE) - FY’24 results: record cashflows

In our April 2024 initiation, we highlighted that DUKE, by optimising the best of equity and debt, aimed to achieve equity-type returns with debt...

Hardman & Co

Initiation of Coverage: Duke Capital (DUKE): Meeting customer needs, giving investors returns

DUKE’s unique product provides SMEs across diversified sectors with hybrid capital, allowing the existing team to retain control. By optimising...

Hardman & Co

The Hardman & Co Monthly: November 2024

Feature article: “ROOM” (Running Out of Money) risk, How managing liquidity risk can sustain corporate value and maintain shareholder confidence

Hardman & Co

Hardman & Co Monthly: October 2024

This paper considers the impact of increases in rates for those taxes that affect investors, and the withdrawal of tax concessions and reliefs.

Hardman & Co

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