HgCapital Trust PLC Edison issues review on HG Capital Trust (HGT)
August 04 2023 - 2:15AM
RNS Non-Regulatory
TIDMHGT
HgCapital Trust PLC
04 August 2023
London, UK, 4 August 2023
Edison issues review on HG Capital Trust (HGT)
HgCapital Trust (HGT) continues to operate against the backdrop
of a tougher macroeconomic environment, muted M&A markets and
higher interest rates. Nevertheless, it delivered a 12-month NAV TR
to end-March 2023 of 10.3%, which supports its longer-term
outperformance of listed PE peers and major public indices. While
Hg (its investment manager) expects some pressure on sales to new
customers across HGT's portfolio, it sees several other organic
growth drivers, including cross- and up-sell. Last 12 month (LTM)
revenue and EBITDA growth to end-March 2023 remained high across
its top 20 holdings at 30% and 27%, respectively.
Despite the tougher external environment, SaaS companies are
expected to continue generating healthy top-line growth and
increasing profitability over the next two years, with current
Refinitiv consensus implying revenue and EBITDA growth at c 10-15%
pa. HGT is a quality play in the sector, underpinned by the
defensive growth profile of its holdings, Hg's sector expertise,
in-house value creation team and buy-and-build strategy. HGT has
historically delivered revenue and EBITDA growth of 20-30% pa at a
margin above 25% (FY22: 29%) across its top 20 holdings. Therefore,
it fulfils the 'Rule of 40', which warrants a valuation premium
versus the broader private IT sector. The shares now trade at a c
17% discount to end-March 2023 NAV.
Click here to view the full report.
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