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07 Jul 20

Well positioned with excellent growth prospects

Kape’s recent Capital Markets Day (CMD) was an extremely useful update on the many benefits of integrating complementary acquired businesses (including the collaboration between engineering teams) and the opportunities for upselling that new product development brings. Over the last six months, Kape has proceeded with the integration of PIA, expanding the growth of new users through the application of the Group’s user acquisition knowhow and technology. It has also made further enhancements to its product offering which, inter alia, will improve user engagement and retention. This note looks to bring out the main points from the CMD and highlights the significant progress that has been made this year.

Companies: Kape Technologies

07 Jul 20

Cenkos: Seeing Machines Ltd -- USA to mandate DMS from 2024

The ‘Moving Forward Act', the strongest automotive safety bill in decades, has now been passed in the House of Representatives. The bill is focused on advancing safety technologies proven to reduce crash and harm and to make sure strong safety standards are in place to save lives. The bill, which now needs to be passed in the Senate, will mandate automatic braking, lane-keeping, blind-spot detection, event data recorders as well as DMS in all cars and trucks sold in the US from 2024. This aligns with the European General Safety Regulation, which passed into law in November 2019. However, in the EU, the European Association of Automobile Manufacturers (ACEA) has requested a 2‐year delay for the introduction of the 2022 Euro-NCAP protocols due to the projected lengthy time that will be needed to recover from the effects of COVID-19. Euro NCAP has agreed, and a delay is now expected to the 2022 and 2024 rating. The new dates will give automakers and Tier 1 suppliers more time to incorporate the necessary changes given the events of recent months with a number of manufacturers announcing 12 month delays to new models.

Companies: Seeing Machines

13 Jul 20

SP Angel Healthcare Conditions

Novacyt (NCYT.L): Trading update | Avacta (AVCT.L): COVID-19 wastewater detection sensor collaboration with Integumen

Companies: Novacyt Avacta Group

01 Jul 20

THE MONTHLY July 2020

A number of REITs have the ability to thrive in current market conditions and thereafter. Not only do they hold assets that will remain in strong demand, but they have focus and transparency. The leases and underlying rents are structured in a manner to provide long visibility, growth and security. Hardman & Co defined an investment universe of REITs that we considered provided security and “safer harbours”. We introduced this universe with our report published in March 2019: “Secure income” REITs – Safe Harbour Available. Here, we take forward the investment case and story. We point to six REITs, in particular, where we believe the risk/reward is the most attractive.

Companies: AGY ARBB ARIX BUR CMH CLIG DNL HAYD NSF PCA PIN PXC PHP RE/ RECI SCE SHED VTA

09 Jul 20

Dart Group*

FY20 results – All Focus on Resuming Operations

Companies: Dart Group

08 Jul 20

WHI Equity Research: Jubilee Metals (JLP)

Robust, cash-generative production from mining waste Jubilee operates several chrome-Platinum Group Metal (PGM) operations in South Africa and is constructing a zinc-lead (vanadium) plant at Kabwe in Zambia after already commissioning the copper and cobalt circuits (the ‘Sable' refinery). The company has a growth pipeline identified and significant opportunities to find new projects in Africa (or globally); more specifically, Jubilee announced that it is looking to increase its copper (cobalt) production in Zambia aggressively to make full use of the Sable Refinery. Jubilee also owns the Tjate PGM project in South Africa, which is currently on hold. The company model is to treat its own waste materials and to supplement these with third party ores and wastes where possible. This year has been nothing if not eventful for Jubilee, but further progress and material catalysts are expected over the course of 2020. Jubilee has a high-margin business with cash on hand, and we see plenty of opportunities for Jubilee to capitalise on its robust business model through the global Covid-19 crisis and beyond. We initiate with a fair value of 11.2p/sh

Companies: Jubilee Platinum

08 Jul 20

Independent review of UK supply chain

Independent review launched: The Boohoo Group has announced the launch of an immediate independent review of its UK supply chain, intended to identify any areas of risk and non-compliance and to further strengthen the Group’s compliance procedures to ensure similar allegations will not recur in the future. The review is to be led by Alison Levitt QC, a highly experienced advocate who has previously reported on complex issues, including safeguarding enquiries. Boohoo has also announced an initial additional £10m investment in ensuring any supply chain malpractice is eradicated and is accelerating its independent third-party supply chain review with ethical audit and compliance specialists Verismo and Bureau Veritas.

Companies: Boohoo Group Plc

08 Jul 20

When the tough get going

Successful businesses ‘never let a crisis go to waste’. Indeed since an otherwise strong Q1’20 was interrupted by COVID-19, Mpac has further streamlined operations, accelerated R&D and launched new remote equipment diagnostic/acceptance testing, virtual reality & other ‘Industry 4.0’ services.

Companies: Mpac

07 Jul 20

Finally, a change of strategy?

With a new CEO, Amanda Blanc, Aviva’s shareholders could dream of a possible change in the group’s strategy, with a more focused insurance business. The new Chief has an opportunity to take painful decisions in a year where no one will require a high operating performance.

Companies: Aviva Plc

08 Jul 20

Hurricane Energy

Operational update

Companies: Hurricane Energy

10 Jul 20

Solid Uninterrupted Production

Central Asia Metals (CAML LN) announced robust Q2 2020 operating statistics which highlight that there were no COVID-19 related interruptions, in part due to stringent measures put in place by the company. Q2 2020 copper output of 3.4kt was down 6% YoY, up 6% QoQ, however, H1 2020 total production was flat at 6.6kt indicating the company is on track for our 13.4kt 2020F target. Q2 Lead and zinc production of 7.5kt and 6.1kt were up 3% and 5% YoY although both were down 1% QoQ respectively. For H1 2020 12.2kt of zinc and 15.1kt of lead were up 5% and 6% which was primarily due to higher throughput.

Companies: Central Asia Metals

09 Jul 20

RBL interim revenues on track for +36% H1, uncertainty elsewhere

RBG Holdings pre-close trading update to June 30th confirms a strong H1 performance for RBL, the Group’s law firm, with revenues up 36% like-for-like to c.£11.4m YoY. Convex, the CF boutique, understandably has faced COVID headwinds, with most of its H1 pipeline deferred indefinitely, whilst Litigation Finance continues to grow its pipeline and financing commitments on a longer term view. Due to continued uncertainty from COVID we withdraw our forecasts this morning, with a view to reinstating once more clarity on H1 outturn and momentum into H2 is available.

Companies: Rosenblatt Group

09 Jul 20

Exits Native Antigen Company for strong return, heading to evergreen

The Native Antigen Company (“NAC”) has been acquired by LGC for up to £18.0m – with the ongoing COVID pandemic highlighting the value of knowledge and execution in the infectious diseases space. Mercia invested in NAC via both its balance sheet and 3rd party funds. The exit represents a strong return for both sources of capital, validating complete connected capital to optimise value creation. For the balance sheet stake, the £5.2m proceeds represent a £2.5m gain on realisation (c.1.5% of our FY21e NAVps). Final Results will be announced next week, when we will review our forecasts. The shares are currently trading at a 45% discount to NAV (which is 20% cash). Today’s exit demonstrates justification for a much narrower discount, if not a premium, to conservative carrying values.

Companies: Mercia Technologies

07 Jul 20

Open Orphan*

Laboratory Services Contracts Signed

Companies: Open Orphan

07 Jul 20

Palace Capital*

Trading Well in Tough Market

Companies: Palace Capital

14 Jul 20

Cenkos: Circle Property Plc -- Robust rental collection

 Share Valuation. Since its IPO in Q1/16, Circle Property has produced a TSR of 101% in the 4-year period. Despite this impressive NAV and dividend record, the shares are back to just 5p above their IPO price. This seems unduly harsh and puts the shares on a 48% discount to the reported 290p EPRA NAV for March 2020 (representing a 5% increase in the year). In our view, the existing portfolio continues to offer strong income and capital growth prospects in the medium/longer-term. Other companies with high weightings to regional offices trade at much lower discounts to NAV – such as Regional REIT 35% and Palace Capital 45% - and yet RGL and PCA have reported both NAV falls and have some retail/leisure assets unlike Circle Property.

Companies: Circle Property

14 Jul 20

Omega Diagnostics - FY 2020 results – multiple upcoming newsflow

Full-year results to 31 March were in line with the trading update at the time of the recent fundraise (£10.5m net), with revenues, adjusted pre-tax loss from the continuing businesses and year-end net debt of £9.8m (+12%), £0.4m and £0.8m, respectively. The company is fully funded to exploit the emerging COVID-19 diagnostic testing opportunities. Despite the disruption to its Food intolerance business in Q1 FY 2021, we still expect strong growth and a profitable FY 2021, with multiple value inflections points (WHO prequalification for VISITECT CD4, UK-RTC lateral flow COVID-19 antibody test CE marking and Chinese approval for Food Detective self-test) and subsequent orders determining the actual outcome, with potential upside to forecasts. We leave our forecasts unchanged for the time being and our target price under review.

Companies: Omega Diagnostics Group

14 Jul 20

Trading Update 14Jul2020

Vertu has reported a strong performance for the month of June, following the reopening of all showrooms in England from 1 June and 12 Scottish showrooms reopening on 29 June. Adjusted PBT of £9.0m for the month is ahead of prior year and above the Group’s pre-Covid business plan of £8.6m whilst net cash of £9.7m at 30 June reflects impressive working capital management.

Companies: Vertu Motors

14 Jul 20

Bango - EUS growth matched by revenue and profit growth

This has been an impressive half for Bango. Mobile usage and transactions have risen during lockdown, driving End User Spend (EUS) over its platform up by nearly 60% to £740m. Moreover, Bango’s ongoing revenue also rose >50%, to a record level of £4.8m, with revenue growth more closely matching EUS growth than previously. With operational gearing in the payment platform, group profitability continues to rise rapidly as its revenue increases; group H1 2020 adj. EBITDA alone beating the whole of FY 2019. The major deals delayed from December also flowed through, both in Payments and the early-stage Bango Marketplace business. The period saw the purchase of a controlling stake in Audiens by a S. Korean tech conglomerate, allowing increased management focus while retaining a 40% stake in the business set to be boosted to a new level by considerable funding and IP injected by its new parent. Overall, Bango was cash generative and ended the half with £4.2m cash, suggesting c.£0.8m of cash from operations. This is a very reassuring performance, with the deals signed in H1 expected to boost H2 EUS to the £2bn targeted this year and leaving the company on track to meet our FY forecasts of strong revenue growth and material profitability.

Companies: Bango

14 Jul 20

Record order backlog signalling a step change

NOD reported solid Q2 results and Q3 guidance, with a record order backlog at USD 202m (+80% y-y and up 64% vs Q1/20) which supports both strong Q3 and Q4 revenues. We expect a continued re-rating driven by short range strength and from 2021 increased confidence in cellular IoT. We make minor estimate changes as our 2H/20 estimates were already well above consensus. We maintain our Buy rating but increase our target price to NOK 110 (88).

Companies: NORDIC SEMICONDUCTOR

14 Jul 20

Record strong quarter as expected

GJF reported Q2 CR of 80.1% and EPS of NOK 3.90 (ARCe 4.1, Cons 3.8) P&L roughly in line with cons., but premiums surprise on the upside Solvency 283%, ambition still to pay dividend as soon as possible Solid report, estimates likely to come up 2-4% on higher premiums

Companies: GJENSIDIGE FORSIKRING

13 Jul 20

Cruising through 2020 at a higher speed

DNB reported lower impairments than feared and together with a better trading and solid quality income lines this resulted in a clear earnings beat. The impressive capital generation and the solid level of the CET1 ratio increases the likelihood for both 2019 DPS and a higher 2020 DPS in our view. We increase ‘20e/‘21e/’22e EPS 20%/4%/4%. We reiterate Buy and raise our target price to NOK 154 (146), equivalent to 12x 2021e EPS and a 2020e P/B of 1.03x.

Companies: DNB

13 Jul 20

The NAGA Group - Recovering in favourable market conditions

NAGA recorded a heavy EBITDA loss in FY19, affected by adverse market conditions and a significant decline in revenues from services from Naga Development Association (NDAL). Preliminary Q120 figures show solid growth in sales and net income as the company benefited from high market volatility triggered by the COVID-19 pandemic and a lower operating cost base following the completion of group restructuring. The focus is now on expansion outside Europe, which it plans to finance with proceeds from a targeted €5m capital increase announced in June 2020.

13 Jul 20

Jubilee Metals CEO welcomes 54% growth in first half operational earnings

13 Jul 20

Belvoir Group CEO talks new strategic alliance with Nottingham Building Society

13 Jul 20

4iG - Acquisition of TRC

As part of its ongoing buy-and-build strategy, 4iG has announced the acquisition of TR Consult (TRC), a specialist IT consultancy focused on the cybersecurity sector. Based in Budapest, TRC addresses a corporate client base in the broader Central Eastern European (CEE) region, as well as in Hungary. TRC was founded in 2007 and is well known to management, having worked with 4iG for the last 10 years. In FY18, TRC had total revenues of c €2m (HUF0.7bn). The purchase price was not disclosed.

13 Jul 20

SP Angel . Morning View

Centamin (CEY LN) – Q2 results confirm 2020 production and cost guidance remains broadly intact | Jubilee Metals Group (JBL LN) – Interims highlight strong PGM earnings growth and maintenance of cash position | Novagold (NG CN) – Novagold suing short-selling firm J Capital Research for defamation (Mining.com) | Panther Metals (PALM LN) – Raising £250,000 | Pensana Metals (PM8 AU) – Drilling from Longonjo – updated mineral resource estimate expected by end of September | Vast Resources* (VAST LN) – Baita Plai development update

Companies: CEY JLP NG PALM VAST

13 Jul 20

Beating consensus - at the adjusted level

Having guided for a weak Q2, Akzo released some preliminary figures, which look a bit stronger than expected, at first sight. But adjusted figures do not reflect reality. In the parallel / adjusted world, the company beat consensus. We await the full Q2 report, which will show the real figures and we would not be surprised if the company reports some weaker than expected profitability (EBIT: Q2 19: €308m: Q2 20 est.: €157m).

Companies: Akzo Nobel

13 Jul 20

FY’19 solid; outlook ‒ broad range of outcomes

Key takeaways from NSF’s results and presentation were: i) solid underlying 2019 with normalised operating profits up 20% and lower impairments to revenue; ii) £60m cash now ‒ April and May cash-generative; and iii) current collections 86% of pre-lockdown levels. NSF is a going concern and is considering an equity raise to help fund additional growth. Downside includes: i) statutory loss with further goodwill impairments; ii) material uncertainty arising from COVID-19 effects and so possibly its going-concern status; and iii) operating performance improvement needed for further securitisation-line drawings (waiver extended on 29 June).

Companies: Non-Standard Finance