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04 Aug 20

Games Workshop Group - Winning performance

Games Workshop’s (GAW) FY20 results show that demand post lockdown, during which the company initially suspended all trading, has surprised on the upside, leading to a greater profit outturn than recently anticipated by management. Management is aiming to grow revenue in FY21e, while maintaining the operating margin given a focus on leveraging Online (19% of group revenue) as the economic environment will likely lead to lower growth for Trade (52% of group) and a decline in Retail (29% of group) revenue. Our new forecasts for FY21e are for revenue to increase by 2.1% and PBT to decline by 5% due to lower royalty income.

Companies: Games Workshop Group Plc

06 Aug 20

Cenkos: Duke Royalty Ltd -- Restoring the royalties

Trading in the royalty partner portfolio over Q1/21 shows a material rebound from May, which has been sustained to date, as the portfolio as a whole returns to more normalised trading. Consequently, Duke's cash receipts, while down 20% YoY currently, are set to step up in H2/21 as forbearance measures largely expire and deferred royalties realised. This bodes well for a rebound in earnings and a return to cash paid dividends. A share price down over 55% since Feb 20, standing at p/book of 0.56x H1/20A's NAV p/s thus appears overdone. We await further clarity on the portfolio before reissuing forecasts, thus leave our recommendation U/R.

Companies: Duke Royalty

03 Aug 20

Cenkos: Seeing Machines Ltd - Better trading than expected

Seeing Machines has released a trading update demonstrating the business is performing better than expected on key metrics: Revenues of A$39.7m were 13% ahead of our expectations of $35.1m and cash of A$38.7m was 21% ahead of our expectations of A$32.0m. We believe this strong end to the financial year reflects the continued demand for the company's Fleet product by sophisticated fleet owners and that the key home markets of Australia and New Zealand have been less affected by COVID than feared. We believe this strong cash performance should reduce the perceived funding risk weighting and help the valuation recover towards previous levels. We iterate our Buy recommendation and 7.2p price target.

Companies: Seeing Machines Ltd.

05 Aug 20

First UK order for Primestore MTM device

EKF has secured its first order in the UK for the Primestore MTM sample collection device, worth £3m over the next 7 weeks. The purchaser is a partner from the private sector, with the device being used in a Covid-19 testing programme for UK staff. With these increasing orders, EKF has expanded its production line in Cardiff and now has capacity for 25,000 sample collection tubes per day. In addition, the production line in Germany is now up and running. We increase our FY20 revenue estimates by a further £3m and EBITDA by £2m. Given the nature of the device, which is agnostic over which molecular test is used, we expect demand to continue at elevated levels for the duration of the pandemic and continue to see further upside potential to our already materially upgraded estimates. EKF remains one of our best Ideas for 2020.

Companies: EKF Diagnostics Holdings Plc

03 Aug 20

Making the most of lockdown

As is characteristic of this company, management has acted swiftly to execute an additional acquisition, putting the placing proceeds to work with another immediately earnings-enhancing acquisition, creating a Group with diversified revenue and profits, significant growth potential and greater visibility in a post-COVID world. We reintroduce estimates with CAGR in revenues of 29% between FY 2021 and FY 2023 and a CAGR in EBITDA of 34%. Quantuma, an insolvency and restructuring specialist targeting SMEs, is being acquired for £26.95m from existing resources to give an EBITDA multiple of 7.47x (EBITDA March 2020: £3.6m). Our forecasts take into account the greater visibility and predictability that the recent acquisitions bring to the Group. Our new SOTP valuation arrives at a reinstated price target of 300p.

Companies: K3 Capital Group Plc

05 Aug 20

Low interest rates wipe out operating resilience

L&G reported an operating profit from continuing divisions (excluding Mature Savings and General Insurance businesses) of £1,128m, -2.2% yoy. The COVID-19-related cost was £129m. LGR posted a growing operating profit to £721m. Net profit amounted to £290m vs. £874m a year before, being affected by the reduced discount rate used to calculate LGI reserves. The Solvency II ratio stood at 173%. The Board recommended an interim dividend of 4.93p/share, stable relative to H1 19.

Companies: Legal

06 Aug 20

Teams spirit

LoopUp recently unveiled a major extension to its ambitions – the group is aiming to become a leading global provider of telephony “inside” Microsoft’s Teams product. The opportunity is clear and growing, as enterprise customers look to use Teams for “normal” external phone calls, and LoopUp seems well placed to deliver a differentiated offering using its existing infrastructure and knowhow. In this document we provide an overview of the new platform and explain its strategic significance.

Companies: LoopUp Group plc

03 Aug 20

Another positive trading update lifts forecasts

Byotrol released a further positive trading on the back of a strong Q1 FY 2021, citing product sales in excess of £3.4m in the quarter and for the business to significantly exceed full-year market forecasts. With the order book at the end of June still being c.£2m (similar to at 30 April) and continued improving supply chain management for biocidal ingredients, we have upgraded forecasts to reflect this outlook. We increase FY 2021 revenues, adjusted EBITDA and EPS by 15%, 38% and 55%, respectively. Consequently, we upgrade our target price to 10p, at which level the stock would trade on 3.7x sales. As previously indicated, we think the pandemic should result in a secular shift towards improved disinfection prevention, reducing the prospect of FY 2021 being a one-off exceptional performance. The prospect for further upgrades should current monthly revenues extend for longer than anticipated and additional IP monetisation events should not be discounted, in our view, either.

Companies: Byotrol Plc

03 Aug 20

The Ince Group plc* - Stabilisation and Cause for Optimism

While Ince's FY20 results are complex given the various movements in reported figures associated with accounting for the Ince International consolidation, our assessment is that there are emerging signs of increasing operational effectiveness and reasons for optimism for investors. The operating environment and outlook remains opaque and thus we keep our forecasts and recommendation for the Group withdrawn at this time.

Companies: The Ince Group plc

03 Aug 20

Rebound post lockdown

What’s new: Purplebricks Group results for the year to 30 April 2020, show the Australian and US units as discontinued; but include the Canadian unit sold for C$60.5m (i.e. £35m) in July. Investors will focus on the UK unit which revealed:  11% fall in UK revenue to £80.5m (FY19: £90.1m), as the number of instructions fell 23% (impacted by early Covid uncertainty and lockdown), but the average revenue per instruction “ARPI” rose 12% to £1,394;  UK gross profit margin improved to 64.1% (FY19: 63.0%);  UK marketing costs to revenue improved to 25.6% (FY19: 29.6%);  Spend on Digital capacity pushed UK operating costs 32% to £26.2m (FY19: £19.9m), as new management team pursued initiatives which are being “delivered at pace with significant opportunity for further innovation.”  UK adjusted EBITDA fell 53% to £4.8m (FY19: £10.2m).

Companies: Purplebricks Group Plc

07 Aug 20

Velocys

2019 has been a transformative year for Velocys, setting the company up for further progress in the current year and beyond. Despite COVID 19 restrictions the company has continued to develop with the current year seeing further funding secured, the delivery of reactors to Red Rock Biofuels and the securing of planning permission at the Altalto sustainable aviation fuel project. The JDA at Altalto has also been strengthened with British Airways and Shell providing a further £1m funding. Demand for sustainable fuel, especially for aviation, and for negative carbon solutions is growing and Velocys is one of the few companies able to deliver here.

Companies: Velocys Plc

03 Aug 20

Signs Softcat as a reseller, momentum elsewhere

Smartspace released positive news for both Space Connect and SwipedOn on Friday, sending the stock nearly 50% higher. Space Connect has signed a distribution agreement with Softcat and the SwipedOn has posted 80% yoy growth in AAR. Encouragingly too, SMRT also flagged current net cash at £1.7m (vs. £1.9m in April) demonstrating impressive reliance despite a challenging macro backdrop. In fact, SMRT has adapted quickly and is proving a ‘Covid beneficiary‘, seeing strong inbound demand as customers look for safe news ways to conduct business. Reassured by this, we continue to believe that Space Connect and SwipedOn could be worth considerably more than the current market cap.

Companies: Smartspace Software Plc

06 Aug 20

Hurricane Energy - Technical review and operational update

Technical review and operational update

Companies: Hurricane Energy Plc

03 Aug 20

THE MONTHLY August 2020

For this Monthly, we are delighted that Rooney Nimmo and 24Haymarket have allowed us to reproduce a recent report they jointly published, entitled An analysis of UK exits (2015-2019), which provides a granular analysis by sector of the activity in our dynamic private companies world. We hope you find the insights of interest.

Companies: AVO AGY ARBB ARIX CLIG ICGT NSF PCA PIN PXC PHP RECI SCE TRX SHED VTA

03 Aug 20

Velocys

The successful delivery of reactors to the Red Rock Biofuels project demonstrates the company’s ability to manufacture to specification and on time in our view. Progress on this project represents a key milestone and, with commissioning expected next year, will provide further evidence of the ability to create sustainable road and aviation fuel from biomass using Velocys technology.

Companies: Velocys Plc

09 Aug 20

IoC: Super(ba) growth and return prospects

Aker BioMarine is the only fully integrated player and has a 70-80% global market share in the Krill industry. We expect an adj. EBITDA CAGR of 38% during 2019 – 2022, which significantly outperforms all its peers. CapEx is set to normalize from 2022 onwards which will boost FCF yield towards 10% in 2022 based on the current share price. We initiate coverage with a Buy rating, and we introduce a target price of NOK 185.

Companies: Aker BioMarine AS

07 Aug 20

Alpha Growth PLC using experienced team to start Alpha Growth and Income strategy or AGI.

07 Aug 20

High value, high expectations...in the second half

Pirelli posted shrinking H1 20 revenue (-31.6% yoy), driven by its standard tyre segment (-38.8% yoy). This contraction led to a €-101.7m net income (-133.1% yoy) and €-698.8m FCF (-59.4% yoy). Despite a heavily weakened OEM market, Pirelli expects its High Value volume to contract by only 1% yoy in H2 20, reducing its total FY20 volume by at most c.20% yoy. In our opinion, this is rather optimistic as we expect FY20 volume to contract by c.21% yoy.

Companies: Pirelli

07 Aug 20

Set for a Q2 rebound

The economic development in Norway (and the Nordics) in recent months has been encouraging, and though the environment remains challenging for NOFI our confidence is boosted. We still expect lending volumes to drop in 2020 vs 2019, but do expect improvement in H2/20. For Q2 we model a NOK 2.45 EPS while our FY estimates are relatively unchanged. We stick to our Buy recommendation and lift our TP to NOK 85 (80) ahead of Q2 on Aug 13th.

Companies: Norwegian Finans Holding ASA

07 Aug 20

Flat Q2, after double-digit Q1 growth

After an impressive Q1, driven by COVID-19-induced stocking, growth fizzled out in Q2. GLP-1 offerings continue to do well, but headwinds in insulins and the lack of major non-diabetes growth drivers have again emerged as major roadblocks. Despite industry-leading return metrics, the group lacks major growth assets/catalysts and, hence, our cautious recommendation should be maintained.

Companies: Novo Nordisk A/S

07 Aug 20

Reassuring Q2 figures, remain cautious for FY20

The group has reported better-than-expected sales and gross margin in Q2 20. The higher exposure to Asia, notably to China, and accelerated growth in e-commerce has not only limited the top-line contraction but also led the group to give an encouraging expectation for Q3 20. However, the piling up of inventory has weighed on the margin, which may result in heavy price-discounting in the after-season, thus putting pressure on the margin for the rest of the year.

Companies: adidas AG

07 Aug 20

Tinexta - Exceptional performance

Tinexta’s Q220 results were much better than consensus expectations, as all business units produced improved organic growth trends versus Q120, in the face of the COVID-19 lockdown, and cost control helped improve profitability. The group is well positioned to benefit from structural growth drivers, including the digitisation of economies. We increase our EBITDA forecasts for FY20 by 7.6%, taking us 6.6% above management’s reiterated and recent guidance for FY20.

Companies: Tinexta SpA

07 Aug 20

Further cost cutting to grapple with the industry's structural downsizing

The French hotel giant reported weaker-than-expected H1 results. Management expects that RevPAR will return to its normal level only by 2022 and business may probably be down by 10% permanently. The newly-launched cost savings plan should help until travellers come back.

Companies: Accor SA

07 Aug 20

Hit in advertising and production

Total advertising revenue dropped by 43% in Q2 20 and ITV Studios was affected by the stop in production. The adjusted EBITA margin collapsed to 14% of revenue (-8pts yoy) despite the reduction in the cost of programmes by £77m and overheads cost savings of £51m over £60m targeted in 2020. There is no guidance for Q3 20 and FY2020. The negative trend in advertising was reduced in July 2020 (-23%). ITV Studios restarted production in June 2020.

Companies: ITV Plc

07 Aug 20

Q2 20: unimpressive

Q2 results were rather modest in the context of the pandemic and still high imports to Europe In particular, more than half of the profits stem from the volatile Ferrochrome division The group’s (qualitative) outlook for Q3 looks rather cautious We will adjust our numbers downwards in the light of this set of results

Companies: Outokumpu Oyj

07 Aug 20

H1 20: results in line, gradually improving visibility on C-Band

The results were marginally above estimates, with contrasting trends across divisions. We anticipate further pressure on the rest of the year, which has led management to reduce its guidance, but this was already factored in our expectations. Finally, the C-Band monetisation seems to be following its path, according to expectations, a positive for SES.

Companies: SES SA

07 Aug 20

Margins proliferated in Q2

Despite the integration of BCN Pharma, Faes’ Q2 top-line came under pressure primarily due to the decline in sales of Bilastine (due to the reduction in pollen allergies). However, the momentum was partly made-up by strong growth for Hidroferol. Interestingly, management’s efficient cost management ensured a significant rise in profits. With the gradual reopening of the economies, the recovery has been noticed in all the franchisees.

Companies: Faes Farma SA

07 Aug 20

Kavango Resources' Mike Moles talks 'breakthrough' from new report on KSZ

07 Aug 20

Q2 in line, fixtures imply upside to Q3 est.

Adjusted EBITDA of USD 96.3m (+4% vs. Cons) Repurchased USD 20m worth of shares – another USD 30m authorised Q3 fixtures imply upside to consensus expectations… …which should be positive for the share price performance today

Companies: International Seaways, Inc.

07 Aug 20

Epwin Group - Rising activity levels as H1 closes

Building on previous updates – and having reopened all facilities – Epwin has confirmed that it has seen demand levels rebuilding following COVID-19 disruption during H1. In particular, sales in the replacement market have exceeded their prior year equivalents in the latest two trading months. Net debt dipped at the period end, further boosting liquidity headroom. The near-term focus is on delivering increased customer requirements and full commissioning of the new Telford warehouse facility. Our estimates remain suspended currently.

Companies: Epwin Group Plc