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18 Feb 20

LIBERUM: Sylvania Platinum* - Dislocation from record prices

Sylvania Platinum is trading at extremely cheap levels, just 0.9x adjusted EV/EBITDA on spot. The market clearly feels nervous about the rapid rise in the underlying commodities, palladium and rhodium.

Companies: Sylvania Platinum

19 Feb 20

Kape Technologies

Reiterating the Buy case

Companies: Kape Technologies

19 Feb 20

LIBERUM: CEO Video: Jaco Prinsloo, Sylvania Platinum*

In these five short videos incoming Sylvania Platinum CEO, Jaco Prinsloo discusses his recent appointment as CEO, the challenges for everyone regarding the power situation in South Africa, dump material life spans and spot prices, the current palladium and rhodium markets and his preferred use of surplus cash. Click below to watch the videos.

Companies: Sylvania Platinum

18 Feb 20

The Industrial Revelation

BHP could revise down estimates if "viral outbreak is not well contained" in Q1 20, HeidelbergCement sees positive demand in 2020, Kone withdraws from Thyssenkrupp bid

Companies: Rotork Somero Enterprises

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

17 Feb 20

CloudCall

New CRM partnership with Vincere

Companies: Cloudcall Group

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

20 Feb 20

The Industrial Revelation

US housing starts & building permits beat estimates, Spectris sees challenging H1, GE reportedly in talks with Airbus on new A330 engine as 737 Max hurts cashflow

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

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

14 Feb 20

The Industrial Revelation

German GDP stagnates in Q4, BorgWarner expects weak 2020, IPG Photonic cuts Q1 numbers on Coronavirus disruption

Companies: CGS JHD OXIG RSW RNO SCPA TRI ZTF SOM GHH

17 Feb 20

The Industrial Revelation

Japanese Q4 19 GDP sees largest fall since 2014 following recent tax hikes, US industrial production fell due to warm weather and Boeing 737 Max issues

Companies: HTG OXIG RSW RNO SCPA ZTF SOM GHH

17 Feb 20

Cenkos: Oil & Gas - Providence Resources, BP, Empyrean Energy, Coro Energy, 88 Energy, Premier Oil, Kosmos Energy, Tullow Oil, Karoon Energy, Tethys Oil, FAR, SDX Energy, Serinus Energy.

Oil clinched the best weekly gain for the year on signs the worst economic impacts of the lethal viral outbreak have been accounted for, easing concern about free-falling demand for crude. Futures advanced 1.2% in New York on Friday, settling above $52 for the first time this month. Investor confidence was lifted after China reassured the international community that a huge spike in new coronavirus cases was a one-off event. The optimism outweighed Goldman Sachs Group Inc. slashing its 2020 crude-demand growth forecast almost in half and lowering its first-quarter oil-price estimate by 16%. The Organization of Petroleum Exporting Countries and its allies have signalled a desire to stabilize the oil market that has tumbled almost 15% this year as the coronavirus wreaked havoc on the world's second-largest economy and beyond. The past two weeks have been rife with uncertainty for oil markets as Riyadh's push for an early meeting in February and fresh production cuts face an impasse with Russia. OPEC and its allies were close to abandoning any plans for an emergency meeting though Saudi Arabia had not given up on the proposal outright, several delegates from the group said on Friday. The outbreak has intensified concerns about crude demand, prompting technical experts from the coalition to propose deepening the current supply cuts by 600,000 barrels a day to relieve excess inventories. Chinese independent refiners have seized on the recent slump in oil prices to bulk up on cheap cargoes in a sign that they may be positioning for an eventual rebound in demand. West Texas Intermediate crude for March delivery gained 63 cents to settle at $52.05 a barrel on the New York Mercantile Exchange. Brent for April settlement rose 1.7% to settle at $57.32 on the ICE Futures Europe exchange. The structure of the Brent futures market also flipped into a backwardation, signalling that some of the oversupply may have eased. Meanwhile, Kuwait and Saudi Arabia will resume oil production from their shared fields this month, more than five years after a dispute halted supply. The projects will bring additional production capacity to an oil market that's already dealing with excess supply.

Companies: TPL KOS SENX PVR BP/ CORO EME PMO SDX TLW 88E

18 Feb 20

Crimson Tide*

Commercial momentum continues with Rail win

Companies: Crimson Tide

20 Feb 20

Lowered costs and impairments guidance at the rescue

The group released a mixed set of quarterly results, characterised by a fall in the tangible book value and a reduced capital usage. Management’s guidance for this is reassuring: the group is expected to meet expectations thanks to stronger cost control and lower cost of risk.

Companies: Lloyds Banking Group

14 Feb 20

Cenkos: Brickability Group Plc - Let the acquisition strategy begin

McCann Roofing Products becomes Brickability's first acquisition since IPO in late August and kicks off the ‘Buy and Build' strategy which will focus on related or (client) compatible businesses. It is also on point financially being acquired at a c4x exit EV/ EBITDA and 0.33x EV/sales, both ratios that are below the existing group rates of c7x (to Mar-21) and c0.8x thus instantly ‘adding value'. We fully anticipate McCann being the first in a series of accretive buys that, in parallel with good organic growth, will underpin the long-term investment case. The shares have moved ahead nicely since the inaugural interims (c15%) but remain very attractively rated in nominal and relative terms, plus against our conservatively-based model ‘fair value' of 88p.

Companies: Brickability Group

20 Feb 20

In case of emergency ...

In a manager’s training (?) book there is usually a chapter on how a manager should behave in an ‘emergency’ situation. It looks to us as if Wacker’s management has done just this. The announced efficiency programme pulls the ‘usual’ strings, but we don’t see the additional strategic announcements. So the proposed measures (local ones still have to be accepted by German employee representatives) are unlikely to be very meaningful.

Companies: Wacker Chemie

20 Feb 20

No drama, but momentum is not yet back

FY19 results were a bit lower than expected Q1 20 should be in the same vein as Q4 19, i.e. below FY20’s expected margin The integration of Ipsco (US) will provide some room for extra profits thanks to synergies FY20 should show a moderate growth in earnings We will revise our forecasts most likely with no big change in our target price

Companies: Tenaris

20 Feb 20

Sativa Group signs significant product listing with WH Smith Travel

20 Feb 20

Q4: adjusting production in a challenging environment

The additional buy-back announcement has eclipsed the consensus miss, part of which is due to higher exploration costs this quarter. Facing low gas prices, the group is lowering its production forecast for 2020. We reckon this is needed as gas prices in North America might need more than a cold winter before bouncing back up. Lastly, the release did not elaborate further on the energy transition strategy, but will do so in May.

Companies: Repsol

20 Feb 20

Another difficult year for AF-KLM?

The French legacy airlines released its FY19 results, which were in line but discouraging, especially in comparison with its mid-cycle goals announced last November. Its FY20 forecast is basically mediocre, but it is very likely to be considerably affected by the Coronavirus outbreak.

Companies: Air France KLM

20 Feb 20

Acceleration in the Industrial end-market

Dialog announced it is to acquire Adesto. We view this deal a constructive for Dialog’s portfolio as well as a good strategic fit in order to accelerate in the IoT industrial space while reducing the dependency on Apple.

Companies: Dialog Semiconductor

20 Feb 20

Release in line with expectations

MTU’s Q4 results were in line with expectations. The 2020 guidance, which does not include any impact from the Coronavirus, remains also in line with the one delivered by the company last November as part of its Capital Markets Day. Both confidence and visibility remain for 2020 and beyond. MTU remains a quality stock and any weakness in the share price is a Buy opportunity for long-term investors.

Companies: MTU Aero Engines

20 Feb 20

2019: a good vintage in the end

Group EBITDA was 4% below the consensus in Q4 19 but in the high range of guidance for the full year 2019. In a tough environment, the group succeeded to increase significantly its EBITDA margin in 2019 (15.3% of revenue, +2pts). All the divisions contributed positively to this performance. Finally, the financial situation improved with a significant reduction in net interest bearing debt at year-end (-21%) thanks to a strong cash conversion rate and capex discipline.

Companies: AP Moeller Maersk

20 Feb 20

A mixed year-ending

Fresenius’ figures were characterised by the mixed developments at FMC and Kabi. The latter division started to face a stronger impact from intensifying competition in North America. This had been expected, but kicked in more strongly than expected. Helios’ performance was in line. All in all, the figures were above our expectations, whereas consensus was broadly met.

Companies: Fresenius SE & Co

20 Feb 20

Software and services are supporting margin expansion

Schneider reported a solid set of FY 19 results, globally in line with both our estimates and consensus, except on FCF. The 2020 guidance, based on +1% to +3% organic revenue growth and adjusted EBITA margin between 16% and 16.3%, confirm the group’s medium-term prospects. We appreciate the strong positioning of Schneider on long-term trends around energy efficiency and automation, as well as the rebalancing of activities towards more software and services. Our current Reduce recommendation is likely to become an Add.

Companies: Schneider Electric

20 Feb 20

Touchstone Exploration now has the 'certainty' to accelerate its Ortoire plans after £9mln raise

20 Feb 20

Weak full-year results; 2020 – a critical (transition) year

Glencore witnessed a tough 2019, with trading (yet again) being the sole support. While weakness in metal industrial was largely due to prices – which should normalise sooner or later, the issue with energy industrial (primarily coal) is more structural in nature. Although 2020 operationally may not be ‘materially’ better vs. 2019 – also due to Coronavirus uncertainties, the expected change in leadership and, hence, new strategic measures could facilitate the much-awaited stock re-rating.

Companies: Glencore

20 Feb 20

Lowered costs and impairments guidance at the rescue

Companies: Lloyds Banking Group

20 Feb 20

The magic of Q4

FMC’s year-end profitability push came in rather unexpected. The gross profit margin moved into the right direction (down), but EBIT came in clearly above our expectations. The reasons therefore were not well explained (better performance of Care Coordination) and the set of figures provided was of no help. Nevertheless, the underlying business trend is intact.

Companies: Fresenius Medical Care AG & Co

20 Feb 20

FY19: strategic geographical presence at play

ACS announced its good FY19 results supported by an advantageous exposure to the Americas and huge dividend payment from Abertis. The Industrial services segment was the main growth contributor and will continue to be for 2020 as well. Yet again ACS managed to keep non-existent net debt. Although we will make downward revisions to our estimates, we will continue to have a Buy recommendation on the stock.

Companies: ACS Actividades de Constrccn y Srvcos