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22 May 20

Hurricane Energy

Operational update

Companies: Hurricane Energy

22 May 20

Cenkos: Seeing Machines Ltd -- Resilience and long-term value

Following the announcement of a business restructure and temporary cost reduction measures to reduce costs by A$12m, we have updated our forecasts for Seeing Machines. We believe that the significant measures taken by the management offset a weaker revenue outlook, as the impact of COVID-19 looks likely to continue for longer than anticipated. The net result is a similar to previous expectations in terms of cash, which we believe remains sufficient to see the company through FY22 ahead of profitability in FY23. The long-term effects of the business restructure is expected to be positive for shareholder value as demonstrated by our DCF based valuation which increases to 7.2p (from 7.0p).

Companies: Seeing Machines

22 May 20

Digital transition accelerates

Future’s H1 results highlight the benefits of the Group’s diverse revenue model. Group sales grew 33% y/y to £144.3m (organic: +11%; N1Se: £145.0m), with AOP up 77% to £39.9m (organic: +40%; N1Se: £38.7m). Organic Media sales growth of +21% y/y reflects strong online user growth, with H1 average monthly online users up +26% to 253m, driving eCommerce sales up +68% organic. Online audience growth rapidly accelerated post lockdown (+66% y/y in March) supported by gaming and Live Sciences verticals. Magazine revenues, particularly at TI Media, have been impacted by lockdown, yet the opportunity to leverage Future’s Vanilla platform and SEO expertise to drive growth in TI’s asset base remains significant. We make no changes to forecasts, yet with strong H1 performance, H2 forecasts look undemanding with risk to the upside. Future offers a 7.4% FY’21E FCF yield on our conservative forecasts.

Companies: Future

20 May 20

WHI First Light: Judges Scientific (JDG) & Jubilee Metals (JLP)

Judges Scientific, a group involved in the buy and build of scientific instrument businesses, has provided a trading update ahead of its AGM today. Year-to-date organic order intake, as of mid-May, was down 18.5% compared to the same period in 2019, caused by the closure of universities, the cancellation of scientific conferences and travel restrictions impacting sales and installations. Although the precise impact to order intake has varied by global territory, from minus 4% to minus 25%, the order book, at the end of April 2020, stood at a respectable 11.9 weeks (down from the 13.2 week starting position), the weaker order intake countered by reduced deliveries. Jubilee announced yesterday that it will move its fine chrome plant from the Dikolong Chrome Mine (DCM) in South Africa to either its Windsor or Inyoni plant. DCM is not currently operational and Jubilee could make better use of its capacity at one of its other plants. Jubilee is a world-leader in fine-chrome recovery and the relocation of its plant will be earnings enhancing at one of the other locations.

Companies: Jubilee Platinum Judges Scientific

21 May 20

Cenkos: TP Group Plc -- FY19A Results

TP Group's FY19A results were in line with our expectations, with strong organic revenue growth of +16% YoY. Whilst the business remains resilient, with a large net cash position and a record order book, COVID-19 has caused uncertainty around the timing of some pipeline opportunities. Therefore, in line with a number of other companies, TP Group is withdrawing market guidance. We also withdraw our forecasts and place our recommendation Under Review.

Companies: TP Group

21 May 20

Enhancing performance

Kape Technologies was one of the first companies to report an uplift in the usage of its products and solutions as the early effects of COVID-19 lockdowns started to be felt around the world. Today’s AGM statement confirms that Kape has continued to trade strongly so far in 2020 with increased demand for its products as remote working has become the norm. It has also made further enhancements to its product offering which, inter alia, will improve user engagement and retention. Kape has been able to reopen regional offices in certain locations while the remainder of its employees successfully continue to work remotely. Management remains confident of delivering the cost synergies outlined at the time of the transformational acquisition of PIA last November and is already seeing an uplift in the growth of new users, from the introduction of Kape’s user acquisition knowhow and technology into PIA. The Group has reiterated guidance for revenues and Adjusted EBITDA of $120-123 million and $35-38 million respectively for the current financial year. We leave our estimates unchanged while noting the positive momentum in the business.

Companies: Kape Technologies

21 May 20

Kape Technologies

AGM statement upbeat; co on track; Buy

Companies: Kape Technologies

20 May 20

Hurricane Energy - Further data needed ahead of next stages

In April 2020, Hurricane Energy provided an update on Lancaster early production system (EPS) data gathered since first oil. The company announced that productivity from the two producing wells is over 10.0kbod per well. Aggregate water has been higher than initial expectations; however, this has been identified as being perched water and is expected to stabilise with time. Management expects that a longer period of data gathering will be required before the next stages of development. Given the need for additional data and the current commodity price environment, Hurricane is reviewing its capital allocation for 2020–21. Although the capital markets day did not confirm the next steps required to be able to confirm the upside case for the company's asset base, Hurricane’s balance sheet is strong and the EPS keeps on delivering. Our mid-case risked valuation has slightly decreased to 70.4p/share from 73.0p/share ( 4%) as we adjust our short-term oil price assumptions and our core NAV stands at 21.9p/share, a premium of 99% to the current share price.

Companies: Hurricane Energy

20 May 20

Frontier Developments

Guidance beaten for FY20; upping our target price

Companies: Frontier Developments

20 May 20

New JV as Mount Sinai and Renalytix to launch Covid-19 antibody test

Mount Sinai and Renalytix has formed a JV, called Kantaro (75:25% equity interest, respectively), to develop and scale production of Mount Sinai’s high-performing Covid-19 antibody test kit, in a move that is potentially transformative for Renalytix and demonstrates the strength of the Renalytix-Mount Sinai relationship. An antibody test allows the study of immune response to Covid-19, the precise rate of infection, the identification of donors of therapeutic serum/plasma, and importantly may correlate with protection/immunity. Whilst it is still too early to identify what constitutes a protective response and the usefulness of an antibody test in the real-world setting, clearly the potential market opportunity is vast. The JV is in the process of validating the scaled assay and seek final EUA of the test kit before sales can commence. Kantaro has also collaborated with Bio-Techne to manufacture and distribute the antibody test kits at scale, with a goal of producing >10m patient tests per month by July. We anticipate sales could begin in July 2020 (Q1 FY’21, and to come at a modest extra financial costs to Renalytix other that time and internal resources. It is too early to pinpoint the financial implications and make changes to our forecasts. Nevertheless, for illustration at full capacity and a conservative estimated reimbursed price of $400/test kit, we anticipate this could translate to >$50m additional income on an annualised basis for Renalytix.

Companies: Renalytix AI

22 May 20

Open Orphan*

Accelerating the COVID-19 Opportunity

Companies: Open Orphan

19 May 20

Affimers: First-Class Prospects

Avacta is leveraging the antibody-like properties of Affimers for Therapeutic and Diagnostic applications across multi-billion dollar markets, including testing and treatment for COVID-19, building a differentiated pipeline and global partnerships. The near-term key is the roll out of its SARS COV-2 antigen tests, including potentially one of the first Point-of-Care tests to-market, offering game-changing commercial scope, sufficient to significantly accelerate the clinical development of its Therapeutic pipeline.

Companies: Avacta Group

20 May 20

Cenkos: IXICO Plc -- Well positioned

IXICO has reported its results for the six-months to March 2020. Revenues grew 33% to £4.6m, and EBITDA for the period was £0.7m versus £0.1m for H1/19A. Cash at 31 March 2020 was £6.7m and the order book stood at £15.3m, boosted post period end by a £10.5m contract win. The COVID-19 pandemic has, to date, only had a limited impact on IXICO's business, though management expect trial delays to impact FY21 business more notably. While forecasting remains uncertain, we believe IXICO is in a strong position to weather the current environment (strong cash position, order book and remote working) and the mid- to longer- term opportunity remains significant for the company.

Companies: IXICO

22 May 20

FY20 in line; Outperforming in FY21 to date

FY20 results report EPS slightly ahead (4%) of our previous forecast. Net debt (pre-IFRS 16) was also slightly better than expected at £6.9m (N+1SE: £7.5m). The Group had a very strong start to FY21, achieving PBT of £6.0m in Q1 and trading is expected to be strongly ahead of budget in May. The order book for June is also encouraging. This is an impressive result against the significant challenges posed by COVID-19 for the aviation industry. Performance in H2 will likely depend upon the recovery in activity levels in Private Jets and Safety & Security, but Air Partner is already seeing some signs of recovery here. We believe the Group is well placed to achieve a strong full year result given the diversity of its model and the strength of the balance sheet.

Companies: Air Partner

26 May 20

Funding for COVID-19 challenge model

Open Orphan, a niche Contract Research Organisation (CRO) and world leader in testing the efficacy of vaccines and antivirals, raised £12.6m (gross) to fund development of the world’s first COVID-19 challenge model. Compared with traditional trials, challenge studies can fast-track testing of vaccines and antivirals, with reduced costs and fewer volunteers. The company is in active discussions with 12 global vaccine manufacturers with regards such a challenge model. Given the paucity of lab testing capability in the UK, Open Orphan is exploiting its in-house virology lab to offer third-party services and commercialise a lab-based COVID-19 antibody test, for which it has UK exclusivity from Quotient. We initiate coverage with a target price of 19p, based on a sum-of-the parts analysis.

Companies: Open Orphan

26 May 20

Pure Gold adds 12.3 million dollars to treasury bringing total to over 100 million

26 May 20

FastForward Innovations Ltd names new CEO, updates on recent portfolio company achievements

26 May 20

Thor Explorations fully financed through to first gold at its flagship Segilola project in Nigeria

26 May 20

The Merchants Trust - Opportune reduction in gearing in early 2020

The Merchants Trust (MRCH) is managed by Simon Gergel at Allianz Global Investors (AllianzGI). Aiming to continue to provide a high and growing level of income, he is adjusting the trust's portfolio in the wake of dividend cuts sparked by the negative economic effects of COVID-19. If there is an income shortfall in this financial year, MRCH is well positioned to maintain its dividend, with revenue reserves of more than 1x the last annual payment. It has not been an easy period for value managers over the last decade as growth stocks have led the charge; however, Gergel has outperformed the UK market over this period in both NAV and share price terms. The board reduced MRCH's gearing in late January 2020, which was opportune timing ahead of the recent significant stock market weakness.

Companies: Merchants Trust

26 May 20

PRI is Ubisoft’s middle name

Ubisoft’s FY19-20 revenue was hit by the bad reception of the supposed-to-be outstanding Ghost Recon Breakpoint. This led to a loss despite lower marketing costs (due to delayed games). Conversely, ‘Player Recurrent Investment’ (PRI) and Mobile gaming experienced solid progress. With 5-AAA games in the FY 20-21 pipeline, a revenue boost is expected from the hugely popular franchises that back these games.

Companies: Ubisoft Entertainment

26 May 20

BioLargo - Clyra launches Clyraguard

Clyra Medical, BioLargo’s partially owned (36%) subsidiary, recently announced that it registered with the FDA and launched Clyraguard, a disinfectant marketed for the treatment of non-critical surfaces such as personal protective equipment (PPE) that is non-irritating to skin. Concurrent with this BioLargo announced the results of two studies that showed Clyraguard and the company’s environmental product CupriDyne could both fully inactivate COVID-19.

Companies: BIOLARGO

26 May 20

ClearStar Inc's Bob Vale says they've had 'large interest' in its new coronavirus testing service

26 May 20

Synairgen CEO details expansion of key coronavirus trial to patients in home

26 May 20

Block Energy CEO talks 'transformational' Schlumberger deal and progress towards first gas sales

26 May 20

Borussia Dortmund - Good to see you again

Borussia Dortmund’s Q320 results were positive from a profit and cash flow perspective despite the impact of COVID-19 at the end of the period. The Bundesliga has led the way in recommencing games after the season was temporarily suspended, albeit games are to be played behind closed doors, which will lead to lost ticket revenue (among other revenues). Borussia Dortmund is well placed to qualify for the Champions League in the 2020/21 season if the current season can be completed. We downgrade our EBITDA forecast for FY20 by c 49%, to reflect lost revenue due to COVID-19 and lower net transfer income. The share price looks well supported by asset valuations.

Companies: Borussia Dortmund GmbH & Co.KGaA

26 May 20

David Buik MBE, market commentator: Edison’s bull/bear game

26 May 20

The right time to establish itself as a software provider

Not immune to the COVID-19 crisis, Keyware nevertheless boosted the revenues of its software division, within which the EasyOrder application was a success during the lockdown period. The payment terminals and authorisations segments should face further headwinds during the year (and especially in Q2), which finally confirms that the company’s transformation into a software developer has come at the right time.

Companies: Keyware Technologies

26 May 20

Weak Q3 but better than feared

Weak, but better than expected Q3 thanks to North America. The strategic review and the massive pressure from a shareholder group led by the activist Veraison gave hope that the continuing transformation could lead to a stable F&B company. However, we believe that there’s still a long way to go.

Companies: ARYZTA

26 May 20

Treatt - What crisis?

Treatt demonstrated its strength and resilience in H120, as so far the COVID-19 pandemic has not had any adverse impact on trading performance. Of course, this is in part due to the categories in which Treatt operates, with some of its products being used in household cleaners, which have witnessed a global spike in demand. Nevertheless, the steady performance is testament to the management and culture of the business, which have been able to withstand the unexpected and exogenous shock. H219 and H120 were affected by a global weakness in citrus raw material prices, which in turn affected revenue growth. Citrus prices have now started to firm and we expect growth in this category to return in H2. We leave our forecasts mostly unchanged but roll forward our DCF and hence our fair value rises to 560p (from 530p previously).

Companies: Treatt

26 May 20

SP Angel . Morning View

Adriatic Metals* (ADT1 LN) – Environmental approval at Veovaca | Altus Strategies* (ALS LN) – 1,600m diamond core drilling starts at Tabakorole | Ariana Resources* (AAU LN) – Q1 production on track to achieve 2020 guidance | Asiamet Resources (ARS LN) – Negotiations with Aeturnum Energy | Beowulf (BEM LN) – Parliamentary questions asked over delays to mining projects in Sweden | Bluebird Merchant Ventures (BMV LN) – Terms for South Korean debt facility funding expected shortly | Pure Gold Mining (PUR LN) – Raised C$12.3m from warrant exercise | Shanta Gold (SHG LN) – Singida mineral reserves and resources update | Vast Resources* (VAST LN) – Baita Plai equipment shipment update

Companies: ADT1 ALS AAU ARS BEM BMV PUR SHG VAST