Research Tree | Equity Research for Private Investors

Level the playing field with real-time Equity Research

Research Tree offers both private and institutional investors access to the latest UK investment research from over 35 Brokers and Research Providers, offering comprehensive coverage of small and mid-cap stocks.

The Equity Research Platform

Equity research, broker reports, target prices, and valuations on UK-listed companies in real-time.

Our platform learns which sectors, industries, and markets you're intersted in to help you discover new stocks.

12 Jul 19

LIBERUM: Burford Capital* - ROIC lessons

Burford is off 22% relative since the recent peak. Much has been written about returns, in some cases valuing the business excluding the big wins, but including all losses, which makes no sense, or putting the core business on 10x and its opex on 15x (same), or entirely ignoring the extra returns from the sovereign wealth fund deal (same).

Companies: Burford Capital

12 Jul 19

SP Angel – Oil & Gas View

Hurricane Energy (HUR): Capital Markets Day

Companies: Hurricane Energy

09 Jul 19

Petersen appeals to investors

Burford has made a double announcement about the Petersen case. Argentina had appealed to the US Supreme Court over the decision about where the case will be heard. The Court has declined to hear the appeal, so proceedings will take place in the US. Burford has also sold another 10% of its entitlement in the case for $100m; implying a market price of $1bn, ca.25% above the value implied by the smaller July 2018 transaction. Additional disclosure is that the sale took place to 11 institutional investors, with 40 having participated in the market now. This adds credibility to the valuation generated by the transactions to date.

Companies: Burford Capital

10 Jul 19

H1 update reveals Platform profitability from Q2

This trading update highlights the growing strength of Bango’s position. The payment processing platform continues to make excellent progress on the back of rapidly growing End User Spend (EUS), its revenues now covering the cash costs. The cash it generates will fund development of the new exciting data monetisation business, which has made an encouraging start; making early sales while its range of audiences offered expands. In turn, it should feed platform volumes in a virtuous circle to grow the whole group business. Overall, H1 revenue grew 64% YoY to £4.3m, assisted by a full half of Audiens. The full results are out in September.

Companies: Bango

11 Jul 19

FY19e trading in line with June guidance

Somero’s trading update confirms that performance is in line with June guidance ($87m revenues, $28m EBITDA and net cash of $18m). We leave our forecasts unchanged on the back of this, though we highlight that we remain 6% below guidance/consensus at the EBITDA level, reflecting our cautious view surrounding the extent to which further cost savings can be materialised, particularly following recent success in delivering a lean operating structure. We remain Neutral on a short-term horizon as we see limited negative earnings catalysts in coming months, though we maintain our fundamental view that ongoing signs of industry and economic headwinds facing the US non-residential construction industry could have a material impact on FY20e earnings.

Companies: Somero Enterprises

16 Jul 19

Cenkos: CloudCall Group Plc - 30% Growth

CloudCall is expected to deliver revenue growth of +30% YoY in the six months to June. The company is making good headway into large enterprise accounts although sales cycles are somewhat elongated in this market segment. This growth performance continues the strong trajectory seen last year but is slightly below our run rate projections for 2019E and we are revising our forecasts accordingly.

Companies: Cloudcall Group

10 Jul 19

Cenkos: Equals Group Plc - Signs are there for an excellent year

Equals Group (formerly FairFX) has released a H1/19E trading update highlighting recent operational achievements and strong, broad-based turnover growth. We see this as clear evidence that prior investments in customer experience and extending the product range have produced returns, which are set to continue. We expect further share price appreciation to follow given today's encouraging signs on FY19E trading, with our forecast 52% EPS growth coming at an attractive PEG of just 0.37.

Companies: FairFX Group

16 Jul 19

LIBERUM: Staffline* - Dilution results in EPS reduction

We expect an H1 FD EPS weighting of 27%, vs 43% in FY18. The significant H2 weighting leaves a lot of work to do in a difficult trading environment.

Companies: Staffline Group

16 Jul 19

Upgrading forecasts after strong H1

“Don’t fight the Fed” is a tried and tested Wall Street strategy that has worked a treat over the past decade. Basically it states that when US interest rates fall, global equities should rise thanks to lower borrowing costs for consumers and corporates alike. Similarly after last week’s dovish testimony to Congress by FOMC Chair, Jerome Powell, we believe this bias towards more monetary easing should keep the economy ticking along, and places a ‘Put’ under valuations

Companies: Mpac

10 Jul 19

LIBERUM: Alpha FX* - H1'19 trading ahead / FY19e EPS estimate +9%

Alpha FX has grown H1'19 revenues by 60% year-on-year despite the subdued macro backdrop for UK plc. This highlights their market share gains in the core UK and increasingly European corporate FX markets and the initial contributions from the Institutional business, Alpha Pay and the first overseas office initiative.

Companies: Alpha Fx Group

12 Jul 19

LIBERUM: Miton Group* - Net outflows experienced but market movement strong

Miton’s Q2 AuM update shows £4.7bn under management, 2.7% up from the last disclosed number at the end of March. Over the quarter, Miton has experienced net outflows of £87m, while performance recovered strongly, adding £211m to AUM.

Companies: Miton Group

12 Jul 19

Half-year end trading update

The half-year trading update was satisfactory, indicating trading in line with expectations. A new revenue split between components and services was previously flagged and highlights revenue growth of 5.7%, of which 2.9% is organic. The net debt position at £18.8m is better than expected and points to good underlying cash generation from trading, with a further debt reduction in H2. No change to forecasts. We retain our 200p price target, with the shares currently trading at very attractive levels and at a significant discount to its peer group. The dividend yield remains attractive at 4.9%.

Companies: Flowtech Fluidpower

16 Jul 19

H1’19 trading: Good progress, est. trim on timing

CloudCall published a trading update for H1’19, reporting strong commercial progress and reiterated management guidance on net user addition run-rate of >1,000/month for the year. A confluence of factors has led us to rebase our FY19E-FY20E nos for slight delays from: (1) a staggered rollout of the group’s recent enterprise contract win; and (2) time taken to implement SMS within MS Dynamics; alongside (3) additional headcount to smooth enterprise onboarding. However, with liquidity robust post the refinancing of the group’s revolving facility, we continue to view our thesis as intact. We reiterate our Buy rating on the shares as one of our top picks of 2019, seeing substantial upside potential to our revised 260p PT.

Companies: Cloudcall Group

17 Jul 19

Cenkos: XLMedia Plc - Tender Offer

XLMedia has announced a Tender Offer to buy back 9.5% of the current issued share capital at 80p per share. If passed at the forthcoming EGM and fully tendered, then the earnings accretion in 2020E will amount to a 12% increase in fully diluted EPS. The company has also confirmed that current trading is in line.

Companies: XLMedia

16 Jul 19

Small Cap Feast

Voyager AIR The Company will focus on the acquisition, leasing and management of primarily widebody aircraft, with asset management services to be provided by Amedeo Limited the IPO will comprise a Placing and Offer for Subscription of Shares to raise up to approximately US$200m. Uniphar, a diversified healthcare services business with a workforce of over 2,000, is looking to join AIM. Raising EUR135m with market cap on admission of EUR309.6m, expected 17 July 2019. Roxi Music UK music streaming service plans London IPO as it goes up against Spotify. They have appointed investment bank Arden Partners for an initial public offering (IPO) on the London Stock Exchange later this year.

Companies: CALL BIRD ABC KDR EMAN BST SCE ZEG SAG FUL

17 Jul 19

ASX Listed Managed Investments Monthly Report

Capital Continues to Flow Into LMIs Through April and May we have seen three more listed managed investment vehicles (LMIs) start trading on the ASX including two fixed income focused listed investment trusts (LITs), Perpetual Credit Income Trust (ASX:PCI) and MCP Wholesale Income Opportunities Trust (ASX:MOT). Refer to our LMI Monthly Update of 18 March 2019 for more details on these LITs. Pengana Private Equity Trust (ASX:PE1) units listed in April after it raised $205m, at the lower end of its $100m to $600m target range. PE1 is a unique offering in that it is the only LMI that will provide exposure to a well-diversified portfolio of global private equity investments. Although the PE1 raising was towards the lower end of expectations we remain comfortable that it will still be able to achieve its objective of building a well-diversified portfolio and maintain our Recommended Plus rating. The listing of PCI and MOT continues the recent trend of fixed income managers tapping the LMI sector for funds. Given the domestic and global low interest rate environment and the potential for further interest rate cuts, it is not hard to see why these offerings are attracting strong demand. These fixed income trusts are offering investors higher yields than available on bank deposits, which are the traditional avenue for retail investors looking for a reliable income stream. However, with rates now so low and even negative factoring in inflation, yield hungry investors have gone in search of yield in alternative fixed income products which were once on the periphery of the retail market and only generally accessed by institutional investors. These products are now being increasingly accessed by retail investors through LMI products and unlisted unit trust structures. However, investors need to be aware that while the underlying assets can produce a higher yield and pay regular, stable income, the risks are higher than traditional bank deposits. Investors should always ensure that they understand the risks associated with any new fixed income offerings and are comfortable including these in their portfolios. These products don’t come with any guarantees, unlike bank deposits, and a significant deterioration in global credit conditions could have an impact on returns. The addition of PCI and MOT takes the total number of fixed income LMIs to six and we are aware of two more offerings in the pipeline, including one from Partners Group, a global private markets investment manager which is planning to launch a listed investment trust later this year. The Partners Group LMI will invest in a portfolio of global debt instruments in a segment of the market that is not generally accessible to retail investors. We will provide more information on the proposed LMIs as it comes to hand. In addition to funds flowing into new LMIs, there have also been a number of secondary market raisings in recent months. In May/ June VGI Partners Global Investments (ASX:VG1) successfully raised $300m via a placement and entitlements offer. VG1 shareholders also stumped up $75m for shares in the Manager as part of an IPO offer for VGI Partners (ASX:VGI). There have also been a number of secondary market raisings by fixed income LMIs with NBI Global Corporate Income Trust (ASX:NBI) raising $476m via entitlement and shortfall offers. This was the maximum under the offer and funds will be invested in accordance with NBI’s strategy to invest in global, high yield, liquid corporate bonds. In June, Qualitas Real Estate Income Fund (ASX:QRI) raised $34.7m via a placement to wholesale investors and in July Gryphon Capital Income Trust (ASX:GCI) announced entitlement and shortfall offers to raise up to $108m. These offers show that the fixed income LMIs are having no trouble finding new assets for their investment portfolios and there is no shortage of investors willing to provide the funds. This sector had a market cap of $3bn at the end of May and with the new offerings yet to come to market and secondary market raisings we expect this to be well over $4bn by the end of 2019. Spotlight on DUI and Rating Upgrade Diversified United Investment (ASX:DUI) is one of the older style internally managed LICs. Listed on the ASX in 1991, the company invests in a portfolio of ASX-listed securities to generate income and capital appreciation over the long-term. Whilst the portfolio is predominantly invested in Australian large caps, up to 5% can be held in small-caps via an allocation to small cap fund managers and up to 20% (currently 15%) can be held in international shares via ETFs and international fund managers. The portfolio has performed well with DUI at the top of our performance table (see above) for LICs with an Australian shares focus. It has outperformed the S&P/ASX 200 Accumulation Index over 1, 3, 5 & 10-year periods. The outperformance can perhaps partly be attributable to the small international holding, but individual Australian stocks, such as an overweight position in CSL, have played a large part. The portfolio is managed by the Board which meets on a monthly basis to review the portfolio. All four directors have significant market experience. Like the other internally managed LICs, DUI is low cost with a management expense ratio of just 0.12% p.a. The fully franked dividend yield of around 3.5% is a little lower than some other Australian share focused LICs. Given the strong and consistent portfolio performance we are upgrading our rating for DUI from Recommended to Recommended Plus. At the time of writing the shares are trading at a 6.5% discount to pre-tax NTA. We believe this is a good entry point for long-term investors seeking exposure to a well-managed portfolio of Australian shares with some modest international exposure. Bailador has a Good Year Technology focused LIC, Bailador Technology Investments (ASX:BTI) had a good FY2019 with pre-tax NTA per share at 30 June 2019 up 18.2% for the 12 months. The increase in NTA was driven by sizable upwards revaluations in a number of its key portfolio companies including SiteMinder (+30.4%), DocsCorp (+19.3%) and Straker Translations (+25.7%). We shone the spotlight on BTI 12 months ago in our June 2018 Monthly LMI Update when the shares were trading at $0.74. This was after write-downs in a couple of its portfolio companies, including iPRO which was completely written off in 2017. At the time we wrote “Overall, the portfolio now appears to be in relatively good shape and with the underlying portfolio of businesses growing revenue at an annual rate of 35% there appears to be good valuation upside. At current prices we think BTI probably offers good value given the large discount to pre-tax NTA and the potential for valuation uplifts over coming months.” We did remind investors that “private equity style investing is more suited to higher risk, patient investors and that it should form only a relatively small portion of a well-diversified portfolio.” We note that returns from this style of investment can be lumpy and take time to emerge. Investors who acquired BTI at the time have done well with the shares now trading at $1.07. Despite the strong share price performance the shares are still at a discount to the June 2019 pre-tax NTA of $1.31 per share and also the post-tax NTA of $1.21 per share. We will take a closer look at BTI and its prospects in our next Monthly LMI Update. Our rating for BTI is Recommended Plus.

Companies: AMTRUST FINANCIAL SERVICES Bollore

17 Jul 19

Still very confident in its end-demand

The company continued to enjoy the sweet spot of its quasi-monopolistic position in the Lithography market and monopolistic one in EUV. Thus, ASML is one of the very few semiconductor equipment companies that will enjoy growth this year, supported by a healthy mix of clients. Therefore, despite the softness on the market, ASML has not changed its FY19 guidance and has reiterated its confidence in fulfilling all of its objectives.

Companies: ASML Holding

17 Jul 19

Tightening discount to NAV dispirits a positive Q2

Investor followed up a satisfactory Q1 with a positive value performance in Q2 from its listed companies’ portfolio (+5.8% qoq), Patricia Industries (+6%) and EQT (+8%). As the equity markets’ boon lingers on, investors cannot seem to get enough of Investor – with its share price climbing a further +9% over Q2, squeezing the already narrow discount to under 8% of its reported NAV.

Companies: Investor

17 Jul 19

Decent Q2, but orders plateauing

Q2 results are very decent, and margins remain high However, the order intake was a bit weak in the quarter, due to SMT and SMS The balance sheet remains very clean, which is not a surprise At the end of the day, the stock is likely to be capped before visibility improves on the macro front

Companies: Sandvik

17 Jul 19

Lake Resources NL (ASX: LKE) - Lithium - Argentina

Full Report can be accessed on www.independentresearch.com.au Lake has defined a large Mineral Resource Estimate (“MRE”) of 4.4 Mt lithium carbonate equivalent (“LCE”) at a grade of 211 mg/L Li, and is now working towards a Pre-Feasibility Study, due for completion in late 2019. The key to the possible technical and commercial viability is the utilisation of ion exchange technology for the direct extraction of lithium from the brines. An Engineering Study, undertaken in conjunction with US-based and Silicon Valley backed Lilac Solutions, and using ion exchange technology developed by the same, has been successful and has shown the potential for the extraction of lithium from Kachi brines at a cost of US$2,600/ tonne (+-30%), comparable with the lower quartile of operating costs of current evaporative brine operations in South America. Recoveries of up to 90% have resulted, significantly higher than that for evaporation operations, as well as production of lithium within a few hours of commencement of processing, as compared with up to 24 months for traditional operations. The viability of the process given the altitude and arid conditions at Kachi will be further tested through a pilot plant, due to start operating on site in late 2019. Ion exchange is a well understood and widely used separation, purification and decontamination process (the orange juice you drink has probably been through an ion exchange filter), however has only recently been looked at for treating lithium brines. It has the potential to be a disruptive technology should it prove viable. Other brine projects include Cauchari and Olaroz, where the Company has pegged ground on the margins of the salars and adjacent to the world class resources of Orocobre (ASX: ORE), Lithium Americas Corporation (TSX: LAC), Advantage Lithium (TSX: AAL) and Ganfeng - these two salars host Resources totalling ~36 Mt LCE at a grade of ~580 mg/L Li. The strategy here is to test, through drilling, an interpretation that the aquifers hosting the Resources extend under the alluvial fans and that basin margins are sub-vertical. Initial assay results from a recently completed hole at Cauchari have supported the concept, with these returning values of between 340 to 538 mg/L li (comparable with grades from the neighbouring properties) from a 144 m thick zone from 172 to 316 m. This zone also has low Mg/Li ratios of 2.7 to 3.0 and high brine flows, with detailed sampling now underway. Ongoing drilling success could lead to the estimation of significant Resources at Cauchari and Olaroz, with the drilling rig now to move to Olaroz. Finally, Lake holds ~80,000 ha over ground with known pegmatite hosted spodumene mineralisation near the capital of the Province of Catamarca. This is early stage, has seen no modern exploration and provides blue sky potential. KEY POINTS �� Large MRE and control of the salar at Kachi: Work by Lake has defined a major brine Resource at Kachi, with significant upside potential - a key point is that Lake controls the salar. �� Disruptive technology: Successful commercial implementation of the Lilac Solutions ion exchange technology could be a game changer in the lithium brine business. �� Transport infrastructure: Areas are all well served by transport infrastructure. �� In the right commodity: Although there are differing demand forecasts for lithium, the fundamentals look strong over the medium to long term with the expected +20% CAGR growth largely in electric vehicle (“EV”) battery markets, with Lake ideally situated to take advantage of this. �� Strong management and committed personnel: Company personnel, including consultants, have extensive industry experience in varied regions (including Argentina) and commodities. In addition directors hold significant share holdings, and thus will be motivated to producing strong returns for shareholders. �� Steady activities and news flow: Ongoing activities including drilling (four holes planned at Olaroz, with the current Cauchari hole recently completed), and the PFS and ion exchange pilot plant at Kachi should provide steady news flow over the next six to 12 months. �� Value uplift with success: We see significant upside in the value of Lake, with this to be driven by a positive PFS, successful ion exchange pilot plant and drilling success - the Company has an EV/tonne LCE value significantly lower than peers.

17 Jul 19

Roller-coaster ahead of large scale 5G deployment

Ericsson has posted solid top-line growth for its Q2 19, but the market has been frustrated by the gross margin. Short-term margin headwinds are expected to last in the subsequent quarter as Ericsson undertook an aggressive pricing strategy ahead of several other strategies. We, however, believe that this should not question the long-term strategy of the company, especially ahead of the incoming 5G cycle. Furthermore, since Ericsson was fairly valued, this might have magnified the reaction of this disappointment.

Companies: Telefonaktiebolaget LM Ericsson

17 Jul 19

Weaker orders on lower scrubbers

Alfa Laval reported a mixed set of results, with declining orders due to both pumping systems and scrubbers, a better than expected development in Energy and Marine, while Food and Water underperformed and affected the whole group’s performance. The Marine division continues to drive growth thanks to good deliveries and execution. Management remains confident and expects demand to be “somewhat higher” in Q3 compared to Q2.

Companies: Alfa Laval

17 Jul 19

Martin Currie Global Portfolio Trust - New manager motoring ahead

Martin Currie Global Portfolio Trust’s (MNP) investment performance has improved considerably following the appointment of Zehrid Osmani as lead manager on 1 October 2018. However, he remains vigilant, continuing to seek long-term, attractive investment opportunities. The trust’s more concentrated portfolio contains the manager’s highest-conviction ideas, and is constructed without reference to the FTSE World index benchmark. Part of the in-depth fundamental research process involves focusing on three long-term megatrends: the future of technology, demographic change and resource scarcity. MNP is a member of the large AIC Global sector; while the peers follow different mandates, the trust’s pure equity, fundamental investment approach has proved successful and MNP is ranked second out of 16 funds over the last 12 months.

Companies: Martin Currie Global Portfolio Trust

17 Jul 19

Q2 sales above expectations; US listing on the cards

Genmab’s collaboration partner, J&J, has released better than expected sales numbers for Darzalex for Q2, but the beat was largely due to one-off adjustments. On a separate note, Genmab plans to raise c.$500m, through the listing of ADSs in the US, to fund its R&D investments and be commercially launch-ready.

Companies: Genmab

17 Jul 19

Capital issues?

Swedbank released this morning its numbers for Q2 19. Profit before loan losses was 3% higher than expected (mainly driven by volatile/other income however). Management has revised downwards the pay-out ratio from 75% to 50% (for regulatory and money-laundering reasons). We are comfortable with our EPS and our recommendation on the stock (stay away until we get more clarification on the money-laundering front).

Companies: Swedbank

17 Jul 19

Bitesize briefing - Technicolor

17 Jul 19

Cenkos: XLMedia Plc - Tender Offer

Companies: XLMedia

17 Jul 19

Sarine Technologies - Termination of coverage

Edison Investment Research is terminating coverage on Sarine Technologies. Please note you should no longer rely on any previous research or estimates for this company. All forecasts should now be considered redundant. Previously published reports can still be accessed via our website.

Companies: SARINE TECHNOLOGIES

17 Jul 19

Tinexta - Executive Interview

Tinexta founded in 2009 and has expanded quickly through a combination of organic growth and M&A. It is listed on the STAR segment of the Italian Stock Exchange and provides IT solutions, information and consulting services in niche markets predominantly to corporate clients. In this video director of corporate and financial communications, Lawrence Kay, provides an overview of Tinexta’s development, the business units and their competitive landscapes, historic growth rates and current financial guidance. Read our initiation note or latest research on Tinexta here.

Companies: Tecnoinvestimenti

17 Jul 19

An interesting slow growth story but the dividend remains relatively low

Q2 revenues were up by 2.6% yoy, while EBITDA (excluding restructuring charges in Austria) grew by 2.7% (adjusted for IFRS16) : it is slightly better than in Q1 and slightly above the outlook given by management for the whole year. We maintain our opinion at Add on the stock.

Companies: Telekom Austria