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06 Aug 20

Cenkos: Duke Royalty Ltd -- Restoring the royalties

Trading in the royalty partner portfolio over Q1/21 shows a material rebound from May, which has been sustained to date, as the portfolio as a whole returns to more normalised trading. Consequently, Duke's cash receipts, while down 20% YoY currently, are set to step up in H2/21 as forbearance measures largely expire and deferred royalties realised. This bodes well for a rebound in earnings and a return to cash paid dividends. A share price down over 55% since Feb 20, standing at p/book of 0.56x H1/20A's NAV p/s thus appears overdone. We await further clarity on the portfolio before reissuing forecasts, thus leave our recommendation U/R.

Companies: Duke Royalty

13 Aug 20

Cenkos: RA International Group Plc -- Significant commerical sector contract win

RA has announced the award of a significant US$60m Integrated Facilities Management (IFM) contract with a large engineering and construction firm in the oil and gas sector in Southern Africa. The contract will run for two years. This maintains the contract award momentum of 2019 and the strong level of operating activity during H2/19 which continued into early 2020 (FY19A order book ended the year at US$141m). The current order book is now US$188m. Despite inevitable Covid-19 interruption, RA has demonstrated its ability to continue to expand its business substantially with this current US$188m order book now representing 2.7x FY19A revenue.

Companies: RA International Group Plc

06 Aug 20

Teams spirit

LoopUp recently unveiled a major extension to its ambitions – the group is aiming to become a leading global provider of telephony “inside” Microsoft’s Teams product. The opportunity is clear and growing, as enterprise customers look to use Teams for “normal” external phone calls, and LoopUp seems well placed to deliver a differentiated offering using its existing infrastructure and knowhow. In this document we provide an overview of the new platform and explain its strategic significance.

Companies: LoopUp Group plc

11 Aug 20

WHI Morning Comment: Solid State (SOLI) - Continues to trade ahead of expectations, pipeline expansion ongoing

Solid State's update on the four months to March 31st shows that the company, a manufacturer of computing, power and communications products, and value added distributor of electronic components, continues to surprise on the upside. With group revenues relatively stable and the quantum of the order intake YoY reduction on the back of the pandemic shrinking during the recent period, we view this in an encouraging light, particularly against the backdrop of “solid” cash generation as evidenced by cash remaining stable at the year end net cash level of £3.2m. The order book, which is reported to have stood at £39.9m at the year end, was only marginally below this four months on, at the July 31st level of £38.3m, a creditable achievement given that post-Covid some shorter timescales have been seen in UK domestic orders. As previously, our forecasts remain under review for the present. However, with a strong balance sheet and meaningful unutilised bank facilities, we continue to view the group as well-placed to win out as the Covid crisis recedes and indeed to be well-positioned to grow by consolidation as well as by resuming organic growth.

Companies: Solid State Plc

07 Aug 20

Velocys

2019 has been a transformative year for Velocys, setting the company up for further progress in the current year and beyond. Despite COVID 19 restrictions the company has continued to develop with the current year seeing further funding secured, the delivery of reactors to Red Rock Biofuels and the securing of planning permission at the Altalto sustainable aviation fuel project. The JDA at Altalto has also been strengthened with British Airways and Shell providing a further £1m funding. Demand for sustainable fuel, especially for aviation, and for negative carbon solutions is growing and Velocys is one of the few companies able to deliver here.

Companies: Velocys Plc

06 Aug 20

Hurricane Energy - Technical review and operational update

Technical review and operational update

Companies: Hurricane Energy Plc

13 Aug 20

Congestion Charge Contract Renewed and Expanded

Following on from Capita’s announcement earlier this week, Eckoh announces it has secured a 6-year £4m contract renewal with Capita for the provision of Congestion Charge Services to TfL. Such contracts typically consist of minimum guarantees and volume related elements. Given the far greater reach of the LEZ and ULEZ and their 24/7 operating times, we imagine volume related elements could mean the contract ends up significantly in excess of the £4m mooted today over time. The high repeat revenue element of Eckoh’s UK business has helped it weather lockdown headwinds, with revenues and profit in April/May at comparable levels to the prior year. Today’s announcement is further validation of both repeatability and the ability to upsell in its highly cash generative UK business.

Companies: Eckoh Plc

04 Aug 20

Games Workshop Group - Winning performance

Games Workshop’s (GAW) FY20 results show that demand post lockdown, during which the company initially suspended all trading, has surprised on the upside, leading to a greater profit outturn than recently anticipated by management. Management is aiming to grow revenue in FY21e, while maintaining the operating margin given a focus on leveraging Online (19% of group revenue) as the economic environment will likely lead to lower growth for Trade (52% of group) and a decline in Retail (29% of group) revenue. Our new forecasts for FY21e are for revenue to increase by 2.1% and PBT to decline by 5% due to lower royalty income.

Companies: Games Workshop Group Plc

11 Aug 20

Resilient interims to May 2020

Amino has reported reassuring interims in line with the June trading update, confirming 10% revenue growth to $38.0m, including 24% organic growth in software and services, now 26% of group revenue. The July 2019 acquisition of 24i Media accelerated delivery of the January 2019 strategic shift towards software, delivering improved earnings quality from diversification as gross margins from integrated devices hold steady. With 24i moving to a positive contribution of $0.2m (1H19: $-0.2m), the group is positioned well to benefit as visibility of orders and sales pipeline supports FY20 (November y/e) expectations. Management is understandably cautious around the impact of potential COVID delays to customers and the supply chain, but the group remains well supported by a strong balance sheet with net cash of $2.1m, including gross cash of $4.3m and headroom of $13m of undrawn banking facilities. Forecasts are unchanged save for adjustment to FCF expectations to accommodate changes in credit terms, still leaving FY20 net cash of $8m. With the long-term prospects for Amino shining brightly as demand for both platform and content provider solutions is accelerated by COVID, we reiterate our 215p target.

Companies: Amino Technologies Plc

12 Aug 20

1HJuly21 update - sailing through the darkest hour

Checkit has released another positive update, one that reveals robust trading has continued into Q2 (possibly the business’ most challenging quarter). This thereby provides optimism that growth may rebound sooner than anticipated (FY20 CKT Europe growth: +30%). The update splits out Q1 & Q2: LFL revs +13% in Q1. For Q2 – and as anticipated - progress did moderate: LFL sales c.-11%. Importantly however, this outcome is better than internal expectations and worth noting also: even during Q2, recurring revenue grew – both y/y and sequentially. For H1 as a whole, LFL recurring revs grew an impressive 23% to £2.3m, total sales meanwhile grew +2% to £6.4m. Success in ‘recurring growth‘ can be attributed to CKT UK (acquired 2019) and its strong presence within the healthcare sector. Here the division has benefitted from new installations and the conversion of existing annual calibration and maintenance agreements to all-inclusive subscription contracts. CKT also updates the market on cash – currently £13.4m. Through this reflects a £0.5m benefit of a repaid loan (so u/l: £12.9m) this still means that YTD cash burn has been modest – evidencing that CKT has responded actively to CV19. We leave forecasts U/R for now and look forward to interims (16/09/20) for a further update on trading. The company continues to fascinate following its landmark BP deal and wider mission: to become a leading provider of cloud-based Connected Workflow Management and Automated Monitoring solutions.

Companies: Checkit Plc

11 Aug 20

CentralNic Group - Strong growth, but lower Q2 margins

In its trading update, management indicated that it expects H120 revenues in excess of US$110m, with adjusted EBITDA of at least US$15m. Cash increased to US$27.6m at 30 June 2020, while net debt fell marginally to US$76.4m. This would indicate relatively strong Q2 revenues of US$53.6m (Q1: US$56.4m), but a fall in Q2 adjusted EBITDA to US$6.9m (Q1: US$8.1m), meaning lower Q2 margins of 12.9% (Q1: 14.4%). On this basis, revenues would be c 11% ahead of our H120 estimates (US$99.1m), but EBITDA only c 2.7% ahead (US$14.6m) with H120 margins of 13.6% vs our estimate of 14.7%. At this stage, with limited visibility on the performance of the underlying businesses and with no forward guidance, we intend to leave our forecasts unchanged, pending review after the interim results on 1 September 2020.

Companies: CentralNic Group Plc

07 Aug 20

Hit in advertising and production

Total advertising revenue dropped by 43% in Q2 20 and ITV Studios was affected by the stop in production. The adjusted EBITA margin collapsed to 14% of revenue (-8pts yoy) despite the reduction in the cost of programmes by £77m and overheads cost savings of £51m over £60m targeted in 2020. There is no guidance for Q3 20 and FY2020. The negative trend in advertising was reduced in July 2020 (-23%). ITV Studios restarted production in June 2020.

Companies: ITV Plc

10 Aug 20

Open Orphan* - Major New RSV Challenge Study Contract

Open Orphan has announced that hVIVO has signed a new contract for an RSV human challenge study clinical trial with a top 3 global pharmaceutical company. The contract shows the Group's ability to convert the existing hVIVO pipeline and engage with the top customers in the industry providing great encouragement for investors in the medium term. Reiterate Buy

Companies: Open Orphan Plc

13 Aug 20

STM - Acquisition and accompanying facility to fund more

Acquisition of Berkeley Burke (Financial Services) Ltd and Berkeley Burke Employee Benefit Consultants Ltd for £2.9m maximum consideration (£1.4m initial plus £1.5m deferred and contingent on revenue hurdles). In addition to the acquisitions announced today, the company has received credit committee approval from RBS International for a new £5.5m acquisition facility, further strengthening the potential for STM’s acquisitive growth strategy. The execution of both the due diligence and the deal itself is impressive in the current climate, and the deal adds £0.3m of PBT in 2021E, with a minimum of £0.6m expected from 2022E. We reiterate our 53p price target.

Companies: STM Group Plc

07 Aug 20

SIMEC Atlantis

The investment in feedstock provision for the Uskmouth power station conversion adds an element of de-risking at a crucial time for financing the project in our view. The deal increases feedstock options and allows SIMEC Atlantis exposure to additional profit in a potentially improving waste management market. The proposed c.£6m funding also provides additional resource to the £9.4m cash announced at the end of June, allowing the company to continue to move forward on several fronts.

Companies: SIMEC Atlantis Energy Ltd.

13 Aug 20

Prudence all the way

SpareBank 1 Ringerike Hadeland (RING) published its Q2 numbers today and NII fell more than we anticipated, but was more than compensated by a solid contribution from SB1 (incl Fremtind), higher MtM gains and low impairments. We have increased our 2020e/2021e EPS 11%/12%. Following positive estimate revisions and reduced uncertainty following prudent provisioning we increase our TP to NOK 215 (190) and upgrade to a Hold (Sell) recommendation.

Companies: SpareBank 1 Ringerike Hadeland

13 Aug 20

Unusually weak

Sparebanken Møre (MORG) presented a strong Q2 EPS of NOK 7.2, but the surprisingly weak NII overshadowed the report. We had also expected increased provisions within offshore and this uncertainty remains a weakness in our view. We have increased 2020e EPS 19%, but lowered 2021e/2022e EPS 4%. We lower our target price to NOK 280 (290) but retain our Hold recommendation. The new TP is equivalent to 11x 2021e EPS and 0.85x 2020e BV.

Companies: Sparebanken Møre

13 Aug 20

Increased offshore provisions lower risk

Sparebanken Vest (SVEG) reported a solid Q2 result with a 12.1% ROE characterized by high MtM gains, low opex and an improved contribution from Frende. NII was weak following the mismatch between repricing of deposit and lending rates, but we expect a bounce back in Q3. We have increased 2020e/2021e EPS 10%/5%. We increase our TP to 63 (58) and retain our Hold recommendation, but continue to find SVEG most expensive amongst the regional banks.

Companies: Sparebanken Vest

13 Aug 20

Estimates up after show of strength in Q2

We had expected a Q2 rebound but underestimated the scale of it as NOFI delivered a very solid Q2 report. Though some effects (on cost and net value changes) look somewhat temporary, a 24.5% ROE is nothing to scoff at. On the back of the report we increase NII 1%, lower opex slightly and lower our loan loss estimates. Our EPS is lifted 16%/7%/5% for 20/21/22, leading us to also lift our target price to NOK 92 (85) and reiterate our Buy recommendation.

Companies: Norwegian Finans Holding ASA

13 Aug 20

Positive EBITDA only boxes away

24Storage reported Q2/20 revenue of SEK 21.2m, up 23% Y/Y supported by higher rents and increased occupancy. Rent/sqm in Q2/20 was SEK 2,008, up 8.1% from SEK 1,857 in Q2/19, as the property portfolio continued to mature. Occupancy rate in Q2/20 was 71.7%, up from 70.8% in Q2/19 despite a more than 5,300 sqm increase in lettable area over the past year. We reiterate our Buy recommendation and TP of SEK 60, as we find risk/reward appealing.

Companies: 24Storage AB

13 Aug 20

On the right track

SpareBank 1 Helgeland (HELG) published Q2 yesterday afternoon and we found the report encouraging. The EPS beat is due to a NOK 82m gain from the sale of Frende, announced after our last update, but quality earnings were also on the strong side. 2020 and 2021 will be years of transition, but we eye minimum 8-9% ROE from 2022-2023, rendering a higher valuation. We keep our Buy recommendation and increase our TP to NOK 88 (76).

Companies: Helgeland Sparebank

13 Aug 20

The Saga continues

Arnarlax has delivered on its volume guidance since our last update and we believe the probability of additional license awards has increased following the new risk assessment. We see several triggers going forward: i) cost improvements during H2/20, ii) announcement of a smolt strategy, iii) potential license awards and iv) a potential OSE main listing. We stick to our Buy rating while raising our target price to NOK 150 (100).

Companies: Arnarlax AS

13 Aug 20

Stay-at-home's positive effects did not help everywhere

Lockdowns do not always have to be something negative, by definition, as one could start a private cooking career or the beginning of the home swimming pool season could be moved forward, especially in the Americas. The Consumer segment could offset much of the negativity in k+s’s Q2 report. However, the agro business suffered from lower ASP in all reported regions. Profitability in Europe+ nearly halved. The reported figures were slightly below our expectations, but street expectations were moderately beaten.

Companies: K+S AG

13 Aug 20

Not immune to crisis, but well equipped

GEA posted -2% yoy H1 20 revenue, driven by its Food & Healthcare tech (-5.3% yoy) and Farm tech (-5.7% yoy) segments. Limiting this contraction, Separation & Flow tech (GEA’s second largest segment) grew by 2.8% yoy. Furthermore, GEA presented lower COGS (-5.1% yoy) and selling expenses (-7.3% yoy), translating into a +35% yoy net income. For the outlook, the company expects revenue to contract slightly yoy, EBITDA (before restructuring charges) to be €430-480m, and ROCE 12-14%.

Companies: GEA Group AG

13 Aug 20

Deltic Energy's Selene prospect 'even more attractive than first anticipated' says CEO Swindells

13 Aug 20

Solid H1 20 figures in line with consensus expectations

• Net income attributable to shareholders decreased by 42% to $1.2bn for H1 20 • Estimated COVID-19 claims for FY2020 of $750m for P&C business were fully booked in H1 • The non-life combined ratio rose from 95.1% for H1 19 to 99.8% for H1 20 • RoE was 8.1% for H1 20 compared to 14.2% for H1 19

Companies: Zurich Insurance Group AG

13 Aug 20

Hit on profitability and no 2020 outlook

Nordex reported a very strong topline in Q2 20, while profitability was significantly impacted by COVID-19. As guided by management in Q1, the order momentum showed signs of a slowdown, which raises some uncertainties as regards demand in the coming quarters. Unlike peers, Nordex has not provided any targets for 2020, which is clearly disappointing.

Companies: Nordex SE

13 Aug 20

Q2 20 results again considerably impacted by COVID-19

• Net profit attributable to shares decreased from €37m for Q2 19 to €5m for Q2 20 • Loss allowances rose from €23m for Q2 19 to €48m for Q2 20 including €39m direct and indirect impacts of COVID-19 • Aareal considers a substantially positive consolidated operating profit expected in the medium to high double-digit €m range for FY2020

Companies: Aareal Bank AG

13 Aug 20

Subcutaneous formulation off to an encouraging start; R&D pipeline progressing well

Despite being slightly impacted by COVID-19 in Q2, Darzalex continued to gain share in the multiple myeloma market. Given the encouraging launch of the subcutaneous formulation, we anticipate a steady uptake in the coming quarters. Interestingly, given the strong launch of Tepezza, management has upgraded the FY20 targets marginally. Note that the R&D pipeline has progressed quite well ytd – positive top-line data in amyloidosis and cervical cancer space – and this bodes well for the mid-term.

Companies: Genmab A/S

13 Aug 20

WHI Equity Research: Savannah Resources (SAV) - A premier European source of hard rock lithium

A premier European source of hard rock lithium Savannah is developing the Mina Do Barroso lithium project in Portugal. An advanced-stage project using simple mining and processing techniques to produce a high-grade, low-impurity spodumene lithium concentrate for sale to China (in the first instance). Mina do Barroso will eventually form part of the solution to Europe's lithium raw material supply chain and will, in our opinion, attract high level support. It has a low capital intensity and as such it is appropriately sized for Savannah to develop to cash-generative stage. The project lies in a prospective area and we would not be surprised if additional resources could be found to either extend the mine's life or increase its production. Savannah also has a (growing) stake in the Mutamba mineral sands project in Mozambique which, while not a priority, contains significant long-term value in our opinion. We initiate with a fair value of 10p/sh and see catalysts on further progress at Mina do Barroso and support from Europe to drive interest in the short-term.

Companies: Savannah Resources Plc