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20 Jul 17

N+1 Singer - IQE - Photonics ramp up begins in earnest

IQE’s H1’17 trading update confirms a strong first half, with multiple photonics programmes ramping up, which should deliver very strong growth in Photonics revenue in future periods. The group has confirmed that it has secured multiple, multi-year contracts for VCSEL wafers, which we believe relate to 3D sensing opportunities, the most high profile of which is the 10th anniversary iPhone. In order to deliver the expected increase in demand, the board has authorised a capacity expansion plan, which initially includes c.£15m of tools orders. The group has also agreed heads of terms for the lease of new premises in South Wales with the Cardiff City Region. IQE is one of our key picks for the year and we believe the group is in the very early stages of a significant ramp up in Photonics. Management are guiding to modest upgrades in FY’17 and FY’18 this morning, however we believe that eventual EPS upgrades to the FY’18 exit run rate could be closer to 75% (40% on a full taxed basis).

Companies: IQE

12 Jul 17

AIM – End of summer term report

We update this table which we first published in early January and highlight the continued progress of the biggest AIM companies so far this year and activity in general. The latest AIM Statistics show that there are 963 companies currently, with 28 new issues year to date raising £441m. What’s more, this momentum has been maintained since June. This demonstrates that despite, the uncertainty surrounding the UK economy, generally investors continue to be active in the AIM market. In Share News & Views we comment on Cohort, ECSC*, Porvair, Quarto*, SQS* and Xafinity.

Companies: BMS CRPR ECSC EUSP FDM PCF PPIX QRT SNX SPRP SQS TCN W7L

19 Jul 17

US market squarely in the cross-hairs

One golden rule of investing is not to ‘count chickens’. A prudent view that we’ve adopted when modelling Tristel’s application to the EPA/FDA to launch chlorine dioxide (Clo2) based infection, hygiene and contamination control products in the US. Whilst our approach is admirable, there is nonetheless a danger of us being too conservative for too long. Especially when, in Tristel’s case, the opportunity of accessing the world’s biggest healthcare market is now almost within striking distance.

Companies: Tristel

24 Jul 17

LIBERUM: Burford Capital* - Significant positive investment result announced

Burford has reported a significant positive result pertaining to its investment in a claim brought against Argentina, regarding its expropriation of two airlines. Burford's entitlement is estimated to be in the region of $140m, a 9.8x return on initial investment.

Companies: Burford Capital

05 Jul 17

Conviction List Q3 2017

Since its inception in 2010, the Panmure Gordon Conviction List has outperformed the market, returning 284% against a Small Companies index that would have returned 221% over the same period.

Companies: ALD AVON CTH GKN HVN HCM INF NOG OTB POLY SNR SQS STJ

17 Jul 17

Taking on water

In the recent FY trading update, it appears that sales, EBITDA and net cash will be in line with our bottom of the range forecasts; however, when also considering the £2.2m provision, profit is considerably below. Out of the three metrics, poor operating cash conversion is our principle concern – estimated at just 15%, rising to 43% excluding £2.6m of exceptional costs. Furthermore, what’s alarming is that we do not know the source of this: are credit terms on new contracts exceptionally long? Or is aggressive revenue recognition a wider theme than the statement highlights? In view of provisional results, we downgrade both FY18 and FY19 forecasts after reviewing our cost assumptions: FY18E EBITDA £9.1m (prev: £11.0m), meaning that (ex provision) EBITDA will be flat y-o-y. Furthermore, we expect continuing cash pressure, with expected FCF of £-3.8m in FY18 vs. £-5.2m in FY17, suggesting that Blancco might need an additional £4m cash in FY19. In view of revised forecasts, we adjust our target price to 80p and reiterate our Sell recommendation.

Companies: Blancco Technology Group

12 Jul 17

Looking Forward on the markets H2 2017

The AIM market turned twenty-two in June and it is fair to say it has had its fair share of difficultiesH1 2017 saw a further net loss of constituents and we ask what will the rest of 2017 hold in store. Arguably the stability of the UK government, Brexit and the shift in global monetary policy will be the biggest themes for the remainder of the year.

Companies: IDP PEG AMYT SOU EVRH TST VANL W7L G4M

19 Jul 17

Updating forecasts post TE2 acquisition

The acquisition of The Experience Engine (TE2) looks like a good fit in the expanding Accesso product set. Accesso continues to move towards, through acquisition and internal IP development, providing a ‘frictionless’ customer experience. TE2 is growing fast ($2.2m to $12.7m 2015-16) and already has a number over lapping clients with Accesso (Cedar Fair & Merlin Entertainments). Even without the potential cross-sell, we expect TE2 to continue its growth trajectory. We upgrade our forecasts and retain our BUY.

Companies: Accesso Technology Group

19 Jul 17

N+1 Singer - City of London Investment Group - FuM +7% in Q4, modest positive earnings surprise, better final dividend

City of London Investment Group (“CLIG”) has issued a FY trading update indicating that FY17e earnings are expected to be 7% ahead of our forecasts and that FuM grew by 7% in Q4. FY17e PBT is expected to be £11.6m when final results are reported on 18th September. The board has recommended a small increase in the final dividend to 17p (FY16 16p). FuM grew by 6.8% to $4.7bn over the final quarter driven in the main part by positive underlying benchmark performance. We will update our forecasts for the positive earnings indication. We recognise that CLIG shares offer a healthy dividend yield (6%+) but net inflows are not being sustained. We remain at HOLD.

Companies: City Of London Investment Group

21 Jul 17

H117 trading update

No change to forecasts following H117 update; our forecast equates to earnings growth of 23% in FY17. We believe a PE valuation around 10x remains inconsistent with current trading, geographical alignment and delivery of the strategy to acquire niche growth businesses such as Rishworth and ConSol. We anticipate an ongoing narrowing of the discount to its peer group as superior growth rates compensate for size/liquidity and cash generation drives a rapidly improved balance sheet. A rating of at least 13x is a realistic short term expectation providing scope for meaningful share price outperformance from current levels.

Companies: Empresaria Group

19 Jul 17

Fully fledged bank

PCF has this morning announced that the regulatory restrictions relating to the bank mobilisation have been lifted and the group can now commence taking in deposits as a fully operational bank. The mobilisation process concluded within seven months (max 12 months allowed) without impacting the business momentum. Indeed, new business originations were up 20% YoY in 3Q17 with the quality of loan book improving with the introduction of prime business trials. Management now expects FY2017 profits to be slightly ahead of previous expectations. This update reinforces our view at 1H17 that good cost control and impairments are likely to more than offset slightly lower loan and revenue growth as management focus on maintaining their credit underwriting discipline. We maintain our TP of 38p, implying a 2017E P/B of 2.1 which we think is fair for a bank in its infancy and in the medium term targeting RoE of 17.5% and loan growth of 35% CAGR.

Companies: Private & Commercial Finance Group

18 Jul 17

Taking share in a challenging market

Today’s trading statement confirms the difficult market conditions commented on at the Group’s AGM statement in May, with FENSA data showing market volume decline of more than 10% in the first five months of the year. Despite this backdrop, Safestyle has continued to grow its order intake, up 2% YOY, an encouraging performance that implies significant market share growth. We trim our forecasts for the first time since the Group came to market in December 2013 with modest revisions that reflect Safestyle’s continued outperformance. Our FY17 revenue and PBT forecasts move -4.9% and -6.4% respectively to reflect the weak market backdrop and management’s more cautious outlook for the second half. We maintain our dividend expectations, reflecting the Group’s strong cash flow generation and solid balance sheet with £16.2m net cash forecast in FY17. A dividend of 11.8p gives an attractive 4.6% prospective yield for a well-run business that is solidifying its market leadership thanks to its differentiated proposition.

Companies: Safestyle Uk

18 Jul 17

Doing the difficult things others won’t or can’t do

Solid State continues to make progress towards management’s goal of doubling revenues over the next five years. It delivered pre-exceptional profit growth from continuing businesses of 6% during FY17. The record order book combined with investment during FY17 in both the Manufacturing and Distribution divisions shows management is driving organic growth to complement its successful acquisition programme.

Companies: Solid State

21 Jul 17

Heavy results week – combating sluggishness

Next week includes a busy reporting schedule for the UK FMCG sector with 7 names in our coverage universe due to release either a trading statement or results. So far, we infer that Q2 2017 included sustained slowing in emerging markets for the larger operators and continued sluggishness in mature markets, notably Western Europe. However, for the small and mid-cap soft drinks companies, which include Britvic (BVIC LN, BUY, T/P 800p) the UK weather was clearly helpful. This should have had a positive impact also on domestic Food to Go.

Companies: RB/ CWK FEVR BATS BVIC DGE GNC

17 Jul 17

Strong FY17 results ahead of expectations, integration on track and confident outlook

Following on from the positive trading update in May, Conviviality today reports a strong full year set of results. Group sales increased 85% YoY to £1,560m, while adjusted EBITDA doubled to £60.9m, 5.2% ahead of our forecast of £57.9m. Adjusted PBT increased 111% to £45.8m, and adj. fully diluted EPS of 21.0p was also ahead of our forecast of 20.2p. FY17 was a transformational year for Conviviality and significantly the integration of the recent acquisitions are running ahead of plan. Management remain confident in the outlook for the business, reflected by the 33% increase in the full year dividend to 12.6p that is covered 1.7x, as well as increased guidance on synergies in FY19.

Companies: Conviviality

24 Jul 17

Producer, developer, explorer

We refresh our view on Cairn Energy, focusing on key areas of interest for investors already familiar with the company. We examine a number of valuation approaches for SNE in Senegal, the potential for reserve upgrades and exploration value. We believe SNE is an outsized asset and assume Cairn seeks to farm-down. This will naturally affect long-term value upside, but would in our view drive a better balance of asset and financial risk. We also examine features of Catcher, Cairn’s cost of capital and look at the Indian tax dispute. After a long period of value stagnation (as cash was invested to develop Catcher/Kraken), coming years could be a time when investors see a path to this investment steadily bearing fruit. Our core contingent NAV is 225p/share and our RENAV is 255p/share.

Companies: Cairn Energy

24 Jul 17

Business progressing on multiple fronts

Allium Medical has made significant progress across business lines. The safety monitoring board has recommended continuing the study of Gardia’s embolic protection device; clinical data will be reported by end Q317. A clinical trial of its urological stents in the local population will not be necessary for approval in China; this is in line with our expectations. We expect sales to start in 2018 via a NIS58m eight-year distribution agreement. Following positive preclinical data, Allevetix is on track to start a clinical trial by year-end 2017. We forecast revenue CAGR of 41% in 2016-20e and expect the company to break even in 2020. Our valuation is NIS1.95-2.08/share.

24 Jul 17

Good H1 figures

The reported net profit attributable to shareholders was down by 2% to CHF353m for H1 17 compared to H1 16. Interest and dividend income rose by 11% to CHF566m in H1 17. Net commission and fee income increased by 25% to CHF922m for H1 17 compared to H1 16. Trading income was down by 23% to CHF90m in the same period. Operating income increased by 12% to CHF1.59bn for H1 17 compared to H1 16. Personnel expenses were up by 21% to CHF764m for H1 17. General expenses rose by 8% to CHF311m in H1 17 compared to H1 16. Operating expenses were up by 17% to CHF1.15bn for H1 17. Pre-tax profit was flat at CHF439m for H1 17. Assets under management (AuM) rose by 6% to CHF355bn compared to year-end 2016. Net new money inflows were CHF10.2bn (+6.1% annualised) in H1 17. The Basel 3 CET1 ratio stood at 14.9% and 11.9% on a Basel 3 (2019) fully applied basis as at 30 June 2017.

Companies: Julius Baer Gruppe

24 Jul 17

Longer than expected recovery in demand weighs on margins

Q2 17 highlights: • Market activity remained healthy overall and improved in mining equipment. • Orders received decreased 2% and totalled €749m (€761m), but were 12% higher when adjusting for a large mining equipment order in the comparison period. Services orders increased 8% to €480m (€444m). • Sales increased 1% to €675m (€671m). Services sales increased 1% and totalled €445m (€439m). • Adjusted EBITA decreased to €70.0m, or 10.4% of sales (€77.3m, or 11.5%). • Earnings per share totalled €0.24 (€0.28). Metso’s overall trading conditions are expected to be better than in 2016 and improve to satisfactory for mining equipment (previously: weak) and remain good for mining services. Metso’s Board of Directors has appointed Nico Delvaux President and CEO of Metso, effective at the beginning of November 2017 at the latest. Nico Delvaux is currently Senior Executive Vice President for Atlas Copco AB and Business Area President for Compressor Technique, with responsibility for the global compressed air business of the Atlas Copco Group.

Companies: METSO OYJ

24 Jul 17

Columbus Energy Resources - Corporate update

24 Jul 17

Acacia Mining - Half Year Results 2017

24 Jul 17

Further strong growth

Once again, the group has delivered strong results across its businesses, further demonstrating management’s ability to deliver significant growth through a combination of organic and acquisitive investment. Recent price weakness has resulted in valuation metrics well below market and peer averages, despite a significantly superior growth profile and very high revenue visibility. We retain our 127p price target, implying potential share price upside of 53%.

Companies: Mortice

24 Jul 17

Intention to double revenues in five years

Recent FY results were in line with expectations. Significant investment in facilities and people has positioned the group to up-scale its activities. Its ambition is to double revenue over the next five years through acquisitions and organic growth. The group should experience a recovery in its manufacturing business and is also well placed to continue consolidating a fragmented market, with acquisitions that extend its technology reach and result in market share growth. The shares remain attractively rated, at a discount to its peers, and offer decent upside to our 535p price target.

Companies: Solid State

24 Jul 17

N+1 Singer - IFG Group - Higher exceptionals in current year, underlying guidance reiterated

IFG Group issued an unscheduled trading update mid-morning on Friday. The statement indicated that exceptional costs in the current year are to be materially higher than previously expected driven by the decision to accelerate restructuring in James Hay and also higher legal costs associated with the HMRC investigation into client investments into Elysian Fuels. The statement provides some detail on KPIs from H1 and reiterates that guidance for underlying operating profit for FY17e remains unchanged, as well as aspirations to grow profits in 2018. The sole impact is to reported profits. We see potential to enhance returns, especially in James Hay, and await evidence of this.

Companies: Ifg Group

24 Jul 17

WH Ireland - Half year results

24 Jul 17

N+1 Singer - Earthport - Transaction growth leading the way

Earthport has released a positive trading update for the year to June 2017. Group revenue grew 33% to £30.3m, in line with expectations, driven primarily by a strong increase in transactional revenue from existing customers. Good cost control resulted in a sharp y-o-y reduction in EBITDA loss to £2.9m, with net cash at the period end significantly ahead of our expectations at £11.9m (N+1Se: £9.4m). Earthport continues to invest to secure its position in the vast cross-border payments market, and with $17.5 billion of monetary value processed during the year, a c.25% underlying operating margin on existing business and a strong pipeline of future opportunities, we continue to believe that the group is very well placed to succeed.

Companies: Earthport

24 Jul 17

N+1 Singer - Burford Capital - Positive damages award in smaller Argentina case

Burford has announced a favourable arbitration panel decision and award in respect of one of its two high profile cases involving Argentina. The ICSID panel awarded damages of $324m plus interest, to which (if paid in full) Burford would be entitled to roughly $140m for a to-date investment of $13m. While there is still risk of further appeal-type proceedings and significant delay, this looks like substantial progress and will lead to further income being included in the (H2) 2017 results. Burford’s entitlement also looks to be in line with our evolving thinking on the valuation of the two jumbo cases involving Argentina. As such, while the market will likely applaud what looks like another great investment by the company, its impact on underlying valuation may be more muted.

Companies: Burford Capital

24 Jul 17

N+1 Singer - Ergomed - PeproStat™ Phase IIb fully recruited; top line data Q4 2017

Ergomed has completed recruitment in its Phase IIb trial evaluating PeproStat™ six months ahead of schedule. The group announced in June that it had reached recruitment mid-point quicker than originally anticipated with top line data expected in Q4 2017, earlier than the original Q1 2018. This highlights Ergomed’s ability to recruit patients successfully and undertake trials efficiently. PeproStat™ offers a differentiated approach to current products in the haemostat market in that it is manufactured from blood-free components and is formulated in a ready-to-use solution. We reiterate our highly positive stance on Ergomed and look forward to the data later this year.

Companies: Ergomed

24 Jul 17

N+1 Singer - ECO Animal Health Group - Marketing authorisation for Aivlosin® in the US: a key growth territory

The approval of water soluble Aivlosin® for swine respiratory disease is very encouraging and in line with expectations. The approval strengthens the group’s offering in the US where Aivlosin® was first approved in 2012 in a water soluble formulation for the treatment of enteric disease of swine and later approved (for the same disease in swine) in 2016 in a premix formulation. North America represented 19% of Aivlosin® sales in FY 2017 and is a key territory for driving growth. ECO Animal Health reported in its 2017 full year results (announced June 2017) that 2018 had started well with growth and good demand in North America. We believe the new approval will enhance this further and we re-iterate our positive stance.

Companies: Eco Animal Health Group

24 Jul 17

Tech Biweekly

Last week the S&P 500 Information Technology Index set an all-time high, finally surpassing its prior record set way back in March 2000, at the peak of the dot com bubble. Far from being greeted with euphoria, the new high was seen as a red flag that the technology sector was once again overvalued and in the midst of tech bubble 2.0. We examine if these fears are indeed warranted. 2017 is shaping up to be a great year for Amazon. We see how Amazon’s 2017 Prime Day event fared and how its share price has performed since the start of the year

Companies: BBSN ECSC EUSP FDM PPIX QRT SPRP SQS SNX