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11 Dec 19

Pipeline remains robust with growing SaaS content

Sopheon’s trading update confirms that some of its customers are delaying decisions on contracts because of uncertainty prevailing in their own markets and businesses. At the time of the interim results, Sopheon’s management expected a return to a stronger second half weighting for the full year numbers. That is still the case and the Group continues to highlight the strength of the new business pipeline and a higher proportion of SaaS (Software as a Service) opportunities. Nevertheless, the anticipated signings of a number of opportunities have now slipped into 2020. With revenue visibility currently at $28 million, we conservatively move our current year revenue estimate down 13% to $29 million with a knock-on effect on EBITDA (down 29%). We also assume that buying cycles remain extended during FY 2020E and therefore take a prudent view on our numbers for that year as well with revenue and Adj. EBITDA estimates reducing by 10% and 40% respectively.

Companies: Sopheon

13 Dec 19

Hurricane Energy

Operational update

Companies: Hurricane Energy

10 Dec 19

Are these unprecedented results a major opportunity?

Futura Medical has reported the results of the pivotal Phase III study (FM57) for its lead compound, MED2005. Whilst all doses achieved all primary endpoints against baseline (p<0.001) at 12 weeks, there was no differentiation between any active arms and placebo. The placebo arm consisted of the DermaSys formulation and these results suggest that this proprietary gel has an effect comparable to the active arms at all three glyceryl trinitrate doses (0.2%, 0.4%, and 0.6%). This data is clinically relevant and suggests that DermaSys alone may be effective in treating Erectile Dysfunction (ED). Clearly the data needs to be digested before licensing discussions with possible partners continue. Equally, the commercial opportunity, especially the OTC potential, will need to be assessed. Until we have greater visibility, we suspend our valuation and forecasts; for context our model valued Futura Medical at £127m (62p a share).

Companies: Futura Medical

10 Dec 19

Renewed banking facilities and HMRC payment

Augean has announced the renewal and extension of the Group’s banking facilities and also that it has paid all outstanding and disputed HMRC Landfill Tax assessments totalling £40.4m, including accrued interest. Management reaffirms it will continue to robustly challenge all HMRC assessments based on legal advice that the Group has correctly collected and paid appropriate landfill tax. The HMRC payment allows management to focus on the strategic development of the Group and provides investors with a much cleaner basis for valuation.

Companies: Augean

10 Dec 19

Short term caution, medium term confidence

Zytronic’s FY19 results (to September) are in line with expectations, confirming a customary improvement in H2 activity. As highlighted previously, a decline in Gaming volumes was the key driver of a 10% decline in Group revenue during the year. There is some near term caution in the statement with trading in the first two months behind the prior year. Our FY20 PBT forecast reduces by 29% as a result. Nevertheless, the pipeline is substantially higher than last year, underpinning medium term confidence. The dividend will no doubt be a focus for investors. This was maintained at 22.8p for the full year (11.8% yield), and the future policy is under consideration by the Board. On our revised forecasts, the shares are trading on 14.5x P/E with £13m net cash.

Companies: Zytronic

11 Dec 19

On the road towards mainstream adoption

Rarely has Britain ever invented such world-beating technology as that developed by Kromek. Indeed its next generation radiation detectors are disrupting 3 major verticals - Medical Imaging (eg BMD & SPECT), Nuclear Detection (D3S) and Security Screening (Airport baggage/bottles) – each worth >$100m pa.

Companies: Kromek Group

12 Dec 19

LIBERUM: Costain* - Adverse judgement on A465

The arbitration decision splits responsibility for the design information. Trading elsewhere is in line with expectations.

Companies: Costain Group

10 Dec 19

Focused on building Laundry market presence

Photo-Me’s H1 results are solid with sales up +3.3% (-1.4% underlying), adj. PBT up +6.7% and FCF up +24.9%. Continental Europe led this growth through the acquisition of Sempa, the continued roll-out of Laundry and a better-than-expected photobooth performance in France. This was partly offset by challenges in the photobooth market in the UK. We expect these trends to continue, make no major changes to our full year forecasts and continue to highlight the 10% dividend yield (the interim dividend was held as expected) and the £25m net cash balance.

Companies: Photo-Me International

10 Dec 19

LIBERUM: Futura Medical* - Unexpected P3 result means shift in strategy but potential approval timelines likely unchanged

Futura announced P3 results from its FM57 study testing MED2005 in 3 doses (0.2%, 0.4% and 0.6%). None of the doses showed superiority in improving erectile dysfunction outcomes vs. placebo.

Companies: Futura Medical

11 Dec 19

Cenkos: Kromek Group Plc -- Major increase in output expected

Recent investment in capital equipment has increased Kromek's CZT production capability seven-fold. Contracted medical imaging output will ramp up in H2E and revenue visibility for FY20E stands at over 90%. Kromek is on track for organic growth of +27% this year. We adjust our working capital assumptions to reflect a slightly slower cash recovery but momentum in the business and all time low share price support a Buy.

Companies: Kromek Group

11 Dec 19

Remarkable data from pivotal trial opens new possibilities

Futura Medical has presented details of the pivotal Phase III study (FM57) results for its lead compound, MED2005. All doses achieved all primary endpoints against baseline (p<0.001) throughout the 12-week period, with secondary endpoints also being met. However, the placebo arm, consisting of the DermaSys formulation alone, achieved similarly impressive results. Dose-dependent variation in side-effects should allay fears that administration errors may be to blame. These data suggest that the DermaSys gel alone has a significant clinical effect across the three severities of ED (Erectile Dysfunction) examined. Clearly the data needs to be digested, but this would appear to open up new opportunities, especially in terms of regulatory pathways, patent life, and commercial potential. Until we have greater visibility, we suspend our valuation and forecasts; for context we valued Futura Medical at £127m (62p a share).

Companies: Futura Medical

06 Dec 19

Cenkos: Duke Royalty Ltd -- Scaling of the portfolio delivering riches

Duke delivered significant YoY growth in H1/20A results, as earlier efforts to broaden the royalty portfolio came through this year. This strong growth will continue with recent debt & equity raises forward funding investments to income levels of £15m by FY21E. Met with an enhanced, but now stabilised cost base, operational leverage should drive continued strong adj EBIT growth (to £13m, at a c85% margin) and further DPS rises.

Companies: Duke Royalty

09 Dec 19

Reassurance on the FY 2019E outcome

In our view, today’s trading update from Amino reassures on the FY 19E financial outcome. Management expects to report trading performance in line with market expectations and strong operating cash flow delivery. The release confirms that 24i has been successfully integrated into the group, and we see the announcement of a contract win for the supply of an endto-end (“E2E”) video solution to Youfone as a further positive – it represents the first joint customer announcement from the “new” Amino group.

Companies: Amino Technologies

11 Dec 19

XP Power - Temporary supply issues cause Q4 shortfall

In the process of upgrading its group-wide ERP system, XP Power suffered some short-term disruptions to shipments from mid-October to mid-November. While shipments have returned to normal levels, the company expects a revenue shortfall of c £6m for FY19, with a consequent impact on earnings. We have revised our FY19 forecasts resulting in a 10.7% reduction in our normalised EPS forecast. As order intake has been robust so far this quarter, we maintain our FY20 estimates.

Companies: XP Power

12 Dec 19

Vianet

Interim Results

Companies: Vianet Group

13 Dec 19

Flurry of activity

Having removed the head of IR, k+s’s management has decided to make its communications to the capital markets known through a reputable newspaper. And there was really something to tell: it is striving hard to reduce debt quickly but the current business/pricing environment is unhelpful. It is on management’s agenda and a necessity, which is in their hands, as the operating performance is determined by many other factors (e.g. pricing). It is a sign: k+s is still alive.

Companies: K&S

13 Dec 19

Things coming together nicely in Greenland, says Bluejay Mining's CEO

13 Dec 19

LIBERUM: Science in Sport* - Too cheap to ignore

SiS’s valuation has fallen from over 2x EV/Sales in 2017 to just 0.8x currently. This is despite the group now consisting of two leading brands with over £20m of sales each, growing at strong double-digit rates, compared to it being just the SiS standalone business previously.

Companies: Science In Sport

13 Dec 19

Australis Capital - Australis to reverse merge with Folium

Australis Capital announced on 11 December 2019 that it has entered into an agreement with Folium Biosciences to merge into a combined company focused on non-psychoactive cannabinoid products. Existing Australis shareholders will own approximately 11% of the resulting company, but the plan is for Australis management to be involved in running the combined entity. We expect the company to divest its assets based in THC, with the goal of making the company fully federally legal in the US, and to list on a US stock exchange.

13 Dec 19

John Laing Group - Underlying market strength

John Laing Group (JLG) believes it remains on track to meet its targets for investment commitments and realisations for 2019–21, despite the run rate being below the level required to achieve this in 2019 to date. However, the adverse impact from exchange rates and reduced power price forecasts has led us to reduce our FY19e NAV per share from 353p to 343p. JLG’s share price now stands at c 9% premium to its last disclosed NAV per share, broadly in line with its peers. A continuation of the rapid growth achieved in recent years should help underpin further share price appreciation.

Companies: John Laing Group

13 Dec 19

Zanaga Iron Ore's significant project in West Africa 'coming alive again'

13 Dec 19

Allied Minds - Meeting of minds with shareholders

Following a dialogue with shareholders, Allied Minds has announced a number of restructuring initiatives, including board changes, to cut costs and better align employee and shareholder interests. Mike Turner will step down as co-CEO, leaving Joe Pignato as CEO and CFO. The company has made amendments to the executive director compensation plan, including a reduction of the maximum bonus, elimination of the Management Incentive Plan and forfeiture of certain long-term incentive plan (LTIP) grants. These restructuring initiatives will allow recurring central costs to be cut by 20%, to $6m pa, in line with the Strategic Review announced in April 2019. Allied Minds now expects to be able to return c $40m (12.4p per share) to shareholders from the proceeds of the disposal of Hawkeye 360 ($65.6m) by early Q120.

Companies: Allied Minds

13 Dec 19

Horizonte Minerals CEO details 2020 priorities at its Araguaia and Vermelho projects

13 Dec 19

Bezant Resources focused on developing its copper and base metals assets in Zambia

13 Dec 19

Arden Tech SoundBytes

Xbox Series X to launch holiday 2020

Companies: BIDS FDEV CDM SUMO TM17 KWS GFIN

13 Dec 19

Cohort - Executing the strategy

Cohort has delivered a strong first half performance, with healthy like-for-like growth in revenues, and adjusted operating profit augmented by the initial first half contribution from Chess. With a record period-end order book of £207m, prospects remain bright and management expects to meet market expectations for FY20. The strong balance sheet supports the agile growth strategy and is facilitating the proposed €11.3m acquisition of ELAC Nautik from Wärtsilä Corporation which, we estimate, should enhance EPS by around 7% in a full year following completion. Even before the potential uplift from ELAC, the FY21e P/E of 15.8x does not look demanding against defence peers given the progression of the strategy.

Companies: Cohort

13 Dec 19

Trakm8*

Possible sentiment boost on election result

Companies: Trakm8

13 Dec 19

Several opportunities ahead in Asia

As part of its Capital Markets Day, SGS reaffirmed its 2020 EBITA margin to be above 17%, while for this year organic growth should be lower than expected, due to the challenging macro environment. Management also presented Asia as being a very interresting area for its long-term growth, driven by production shifts with new business in certification.

Companies: SGS

13 Dec 19

FY18/19 in line

FY18/19 results are broadly in line with estimates. Sales were pushed by the growth in renewable generation and higher demand for heat, which offset the lower revenues in the Networks segment and the gradual reduction in thermal electricity production. But, because of higher operating expenses, EBIT grew at a slower pace. Net debt was broadly flat compared to Q3. The guidance of the bottom line is satisfactory.

Companies: EVN

13 Dec 19

Bridgestone reduces its stake

Japanese tyre producer Bridgestone, the world’s largest industry player, has long been a major shareholder of Nokian Renkaat. It has now reduced its stake to 3.0%.

Companies: Nokian Tyres