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13 Feb 20

Y/e trading update – sales ahead, cash in line

Checkit has provided an encouraging year-end trading update to January, disclosing sales of £11.8m, 5% ahead of forecasts, equivalent to +3% LFL growth (group basis), or +8% (ex. EET; non-core). Cash is also reported at £14.3m – ahead of forecasts, but distorted by non-trading activities. After adjusting for both, we believe the underlying cash position is £12.4m – in line with forecasts, in turn implying that CKT’s investment program (and resulting cash burn) is proceeding as anticipated. The update also splits out Checkit Europe’s and Checkit UK’s sales. While such segmental reporting will not be continued, it is reassuring to note that Checkit Plc has acquired a company (now branded ‘Checkit UK’) in good financial health, as it grew pro-forma sales 7% y/y to £11.6m. Checkit Europe meanwhile grew more strongly, at +30% (but off a low base) to £1.3m. Looking forward, y/e pro-forma sales of £14.8m compares against £17.2m expected in FY21E, implying 16% growth. Driving this, we expect Checkit’s landmark contract win with BP (announced Oct-19) to be a material driver. To remind, Checkit won a three year deal to provide its Real Time Operations Management capability to BP at 320 sites. Naturally, we viewed this announcement very positively – as it provided validation of Checkit’s proposition (at an enterprise scale). We look forward to future news flow, confirming the roll-out is going to plan and - potentially - ‘sub contract wins’ also, as the contract may be extended beyond BP’s (320) owned sites, to dealer-owned sites and internationally also. N/c to forecasts.

Companies: Checkit

10 Feb 20

EBITDA margin sustains profit growth

Despite slower than expected sales growth, UPGS reconfirmed FY2020 profit guidance in a trading statement released today. Other features of H1 included extension of UPGS’s bank facilities and a 10-year addition to the Manor Mill lease. The company continues to monitor the effect of coronavirus closely, and its potential impact on sourcing from China. The central long-term growth message remains in place.

Companies: Up Global Sourcing

12 Feb 20

LIBERUM: Plus500* - Q4 stronger than thought

Q4 saw $100m of revenues ex customer P+L. The company will return 100% of 2019 profits to shareholders through dividends and buybacks, has $293m net cash, and may seek targeted acquisitions, new licences and product extensions.

Companies: Plus500

10 Feb 20

WHI First Light: Caspian Sunrise, Watchstone Group & Water Intelligence

Caspian Sunrise (CASP) – Corporate – Operational Update Market Cap £140m Share Price 7.7p Caspian Sunrise announced that the Deep Well A5 sidetrack has flowed for a period of 40 days and management stated it continues to believe that the well is capable of producing at a rate of at least 1,500 b/d. The company is focusing on ensuring flow is maintained by adjusting the wells choke size to maintain a constant reservoir pressure. The company stated it is planning to optimise the well through an acid job later in February and that the operation is expected to take three days. Watchstone Group (WTG) – Corporate – Pre-close trading update and planned capital return to shareholders Market Cap £68.4m Share Price 148.5p Watchstone has this morning released a pre-close update for the year ended 31 December 2019, as well as announcing a planned first tranche return of capital to shareholders by the end of June 2020, subject to approvals. Water Intelligence (WATR) – Corporate – FY trading update ahead of expectations Market Cap £44.2m Share Price 317.5p WATR has published another strong update this morning, demonstrating that the company is able to generate strong double digit growth in revenues while at the same time expanding margins. FY2019E results are reported to be well ahead of the prior year on both the sales and the profit lines (+27% and +36% respectively), while no less than 9% ahead of forecasts. Showing again that the company is able to grow sales and margins at the same time, PBT margins are up >150 basis points, while operating margins in the key Corporate activity are at 13.5% (also +150bp).

Companies: CASP WTG WATR

11 Feb 20

Cenkos: Arena Events Group Plc -- Interim results

Despite the challenging market environment, Arena has delivered interim results that were broadly in line with our expectations (Adj EBITDA of £16.6m vs £17.0m forecasted). Cost saving initiatives are being implemented, which should support margins going forwards, whilst the company is expected to benefit from some significant contracts due for delivery in FY21E.

Companies: Arena Events

12 Feb 20

Scapa Group

FY20 trading update – trading profit “significantly below expectations”

Companies: Scapa Group

17 Feb 20

CloudCall

New CRM partnership with Vincere

Companies: Cloudcall Group

12 Feb 20

The Industrial Revelation

UK GDP in line with Dec construction beat but manufacturing miss, Japanese machine tool orders fall 36% y/y in Jan, Boeing nets no orders in Jan

Companies: HAYD HILS JHD OXIG RSW RNO SCPA TWD ZTF SOM GHH

10 Feb 20

The Industrial Revelation

German industrial production falls in Dec missing expectations, Skanska expects strong outlook for US construction

Companies: CGS HAYD HEAD HILS JHD RNO TWD TRI ZTF SOM GHH

10 Feb 20

ReNeuron Group - Zero overhang

The last 16.42% of the former Woodford stake in ReNeuron has now been sold to Obotritia Capital. The rest of the former Woodford stake, 16.58%, is now managed by Schroders in an investment trust. Removing the 16.42% overhang should help the shares to stabilise and recover. Clinically, ReNeuron aims to present more retinitis pigmentosa eye data during 2020 adding to the strong initial data. Stroke data from the CTX PISCES III trial are expected around mid-2021. We value ReNeuron at £197m, unchanged.

Companies: Reneuron Group

12 Feb 20

LIBERUM: Premier Miton Group* - Net flow stabilisation should be a positive catalyst for the shares

Following a sharp rally in December 2019 many UK listed asset managers have continued to see small share price gains in 2020 with the sector up 4.0% year to date. However, we note that there has been a particular under-performance of Premier Miton’s shares, currently down 17.2% over the same period.

Companies: Premier Miton Group

13 Feb 20

Premier Oil

Schemes approved by debt holders

Companies: Premier Oil

13 Feb 20

CMD flags strong near-term opportunities

We take the opportunity after last week’s Capital Markets Day to review key themes touched on by management, and the impact on likely future performance. Takeaways impacting organic growth are: 1) The speed at which migrations/ launches occur with Vanilla is faster than previously expected; 2) Video Content and Intent Marketing opportunities open up new streams; and 3) The Group has more potential to generate value from back catalogue content than previously thought. Organic Media sales growth of +3% in our FY’21E forecasts looks too prudent in view of these updates. We therefore upgrade organic Media growth forecasts to +10% y/y, with modest upgrades of +2% and +3% to FY’21E sales and EBITDA. FY’21E FCF yield is 6.8% (Sept y/e); A yield of 4% would generate an intrinsic value per share of >£20.

Companies: Future

17 Feb 20

WHI Morning Comment: Spectra Systems (SPSY)

Good entry point for great business Only marginally above levels last seen a year ago, we view shares in SPSY at the current price as representing an excellent entry point after coming off on profit taking. This was not, after all, an ordinary year for SPSY but an excellent one, characterised by upgrades, contract wins and most importantly, a significant collection of major opportunities which the company is working through and any of which has the ability to be a game changer for the business. To name a few among many: (1) potential further new work for a G7 central bank (existing client), (2) potential wins from a major Asian central bank, (3) major prospective polymer substrate contract, (4) tobacco smartphone authentication opportunities (TruBrand). As a provider of advanced technology solutions for banknote, product authentication, and secure lottery transactions, SPSY is a highly specialised producer of proprietary equipment, solutions and services, with high entry barriers to match. It is well-invested, hence the enhanced DPS in recent years; and the balance sheet is strong, with $11.1m of net cash (excluding $1.1m of restricted cash) reported with the most recent (H1) results, underpinning future growth expenditure. Importantly, our forecasts only encompass firm business prospects / established contracts. With TruBrand conducting tests in China (see above), this may have affected sentiment, but if so this is misconceived, since (a) this potential future revenue stream is immaterial or non-existent in our forecasts and (b) SPSY is not a one-trick pony – the pipeline is strong with other and major opportunities.

Companies: Spectra Systems

10 Feb 20

WHI Morning Comment: Water Intelligence (WATR)

Growth and value; adj. PBT +36% YoY, 9% ahead of views, delivering 1 year early WATR has published another strong update, demonstrating that the company is able to generate strong double digit growth in revenues (+27%) while at the same time expanding margins, a winning combination. Both sales and profit growth outpaced expectations generously, with a 9% beat to our forecasts at both levels. Particularly pleasing are (1) the ongoing growth in franchisee revenues – despite reacquisitions, organic growth remains a significant feature, (2) corporate location revenue and margin growth, +44% including reacquisitions but double digit even if these are excluded, and (3) the B2B channel (insurance-led) generated a sparkling +41% increase in sales. WATR is rolling out a strategy which has had long gestation, featuring a nation-wide presence across forty-six US states, technical skill-sets, overseas expansion and, ultimately the huge drivers for saving water in the modern world (annual multi-billion $ domestic pay-outs by US insurers alone). Major entry barriers remain. The company is effectively delivering a year early. Given our 500p fair value, we see significant upside for the shares together with a significant buying opportunity.

Companies: Water Intelligence

17 Feb 20

Faron Pharma CEO confident as he looks ahead to new Traumakine study

17 Feb 20

Blue Whale Growth Fund: Aiming to deliver 'significant outperformance' for investors

17 Feb 20

Impact of coronavirus on speciality metals 'about to bite' as China industry slows

17 Feb 20

Q4: Somewhat lower commercialization risk

poLight’s Q4 results were broadly in-line with expectations. We view the two smartwatch design wins during Q4 as important reference designs for potential larger design wins in wearables. These, and a potential small barcode design win in mid-2020, are likely to have a minor positive impact on estimates. We maintain our Hold rating and increase our target price to NOK 70 (45) following changes to estimates and applied multiple from lower commercial risk.

Companies: Polight ASA

17 Feb 20

World first primary scandium mine to 'unlock the metal's massive potential'

17 Feb 20

World's first primary scandium mine to 'unlock the metal's massive potential'

17 Feb 20

Race for yield continues

Covivio decided to buy the listed Godewind in Germany, or a fully cash €1.2bn deal. It will extend its European Offices platform (France / Italy) following its successful residential German investment and alongside its Hotels branch. The recent share price catch up, from €90 in August 2019 to €110 today, translates the global shareholders’ race for yield, pushing the market to value Offices well above NAVs. The party continues.

Companies: Fonciere des Regions

17 Feb 20

Quadrise Fuels' Mike Kirk highlights progress across pipeline of business opportunities

17 Feb 20

In line Q4; encouraging FY20 guidance by the new CEO

Despite being weighed down by the recall of Zantac, FY19 ended on a decent note on the back of strong traction for Dupixent and Vaccines. The outlook for FY20 is also encouraging as the new CEO places his bet on Dupixent and the growing oncology pipeline during the transition phase. Results of the phase II multiple sclerosis study bodes well for the mid-term. Nonetheless, the Bioverativ deal seems to have back-fired as Roche’s Hemlibra continues to gain strength.

Companies: Sanofi

17 Feb 20

FY19 - head and shoulders above FY18

The company has published its FY19 results which far exceeded the FY18 results. Even though there was a decrease in the orders received, the company has managed to increase its organic revenues by 6% and has positive unadjusted bottom-line items finally. It lags behind in terms of margin improvement but has shown significant SG&A improvement. While we believe that the company has performed below its set targets, we will update our target price to reflect its improved performance.

Companies: Bilfinger

17 Feb 20

Nanoco Group - Patent infringement lawsuit filed against Samsung

Nanoco has announced that it has filed a patent infringement lawsuit against Samsung. The lawsuit alleges that Samsung has wilfully infringed the patents relating to Nanoco’s unique synthesis and resin capabilities for quantum dots. Nanoco is seeking a permanent injunction from further acts of infringement and unspecified but significant monetary damages.

Companies: Nanoco Group

17 Feb 20

Fidelity Asian Values - Seeking quality companies at the right price

Fidelity Asian Values (FAS) is managed by Nitin Bajaj. He employs a very disciplined process, seeking good businesses run by competent management, trading on attractive valuations. The polarisation in the stock market affords him many opportunities to invest in companies that fulfil his investment criteria. While the style bias against value stocks has affected the manager’s relative performance in recent years, FAS has a long-term record of outperformance versus both its previous and new benchmarks. The portfolio is trading on an average forward earnings multiple of less than 10x but has a 15% ROE, showing the manager is ‘seeking value without compromising on quality’. FAS also offers a 2.2% dividend yield, which is the highest in the three-strong AIC Asia Pacific Smaller Companies sector.

Companies: Fidelity Asian Values

17 Feb 20

Do you want to bet on six additional bull years?

The difference between the current market cap (£10.3bn) and FY 19 NNNAV (£7.4bn) was £2.8bn or a premium of 38%. This is the equivalent of six years of FY 19 accounted positive revaluations of £477m. The latter was c. half of both FY 18 and FY 17 contributions, i.e.e showed a kind of real softening.

Companies: SEGRO

17 Feb 20

Condor Gold: Proactive analyst on site at La India project in Nicaragua

17 Feb 20

Obvious FY19 results but eccentric decisions stole the show

Imerys could not fare well in terms of numbers which was quite obvious after the 9M2019 results. The volumes were down significantly and so were the revenues. Keeping everything else constant, revenues dropped down by 6.1% solely due to the decrease in volumes. The company’s non-recurring expenses remain high due to the transformation programme and impairments. Beyond the numbers, the company has made an announcement regarding the BoD and dividends, which remain the highlight of the FY19 announcements.

Companies: Imerys