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30 Jun 20

D4T4 Solutions - A transitional period sets up secure growth in FY 2022

The FY 2020 results are in line with our expectations and reflect the impact of the previously announced switch from large perpetual licences to recurring annual term licences during the year. Despite the COVID strictures, with its large global partnerships, D4t4 continues to close numerous lucrative data gathering and data management contracts with major blue-chips around the world. It is successfully converting a high proportion of its new sales to recurring revenue contracts, but this will sacrifice growth and earnings in FY 2020 and FY 2021. Nevertheless, with growing recurring revenue base, an exciting pipeline and a very strong balance sheet, D4t4 is very well positioned for continued long-term growth and security.

Companies: D4T4 Solutions

01 Jul 20

THE MONTHLY July 2020

A number of REITs have the ability to thrive in current market conditions and thereafter. Not only do they hold assets that will remain in strong demand, but they have focus and transparency. The leases and underlying rents are structured in a manner to provide long visibility, growth and security. Hardman & Co defined an investment universe of REITs that we considered provided security and “safer harbours”. We introduced this universe with our report published in March 2019: “Secure income” REITs – Safe Harbour Available. Here, we take forward the investment case and story. We point to six REITs, in particular, where we believe the risk/reward is the most attractive.

Companies: AGY ARBB ARIX BUR CMH CLIG DNL HAYD NSF PCA PIN PXC PHP RE/ RECI SCE SHED VTA

29 Jun 20

Cenkos: Equals Group Plc -- An eventful and improving Q2/20 hinted

Equals' FY19A results confirm another year of strong, double-digit revenue and adj EBITDA growth. The move to a B2B focused offering continues to progress and looks well timed in view of Covid-19's impact on overseas travel. While the pandemic impacted Q2/20E trading early on, we note June KPI's indicate a positive rebound. Given the continued uncertainty as to Covid's full impact upon FY20E trading, we refrain from reissuing forecasts and thus leave our recommendation under review.

Companies: Equals Group

03 Jul 20

Manolete Partners

Accelerating activity in to FY21

Companies: Manolete Partners

02 Jul 20

Strategically important acquisition in Germany

Gamma is acquiring around 80% of HFO Holding AG (HFO), one of the leading SIP Trunk providers in Germany, for an initial consideration of €20.4m in cash with an option to purchase the remaining shares over the next three years. In line with its stated strategy, Gamma can invest and use its commercial strength and expertise to accelerate HFO’s growth and replicate the Group’s success in the UK by developing a market leading position in Germany. Noting net debt of €2.9m when the deal closed, the implied historical EV/EBITDA multiple of about 10x compares with Gamma’s equivalent of 18.7x. We estimate that the deal will be 4% earnings enhancing in the first full year of ownership and our estimate upgrades reflect that. The European markets for cloud telephony in which Gamma is now represented will ultimately overtake the UK in size, providing Gamma with significant future growth potential. We view this acquisition as another significant step in Gamma’s strategic aim to expand into Europe via exposure to another lucrative market opportunity.

Companies: Gamma Communications

29 Jun 20

CMD – Positive new insights

CentralNic's CMD gave us new positive insights into the company's investment case. CentralNic's organic growth is stronger than we thought, the Direct division generates high ROI, the monetisation market was shown to be critical to the domain name market, Team Internet's market leadership was further reinforced and acquisition opportunities were shown to be larger than anticipated. These investment views are not reflected in CentralNic's low valuation multiples, in our view.

Companies: Centralnic Group

03 Jul 20

Avon Rubber - Cream rises to the top

The announcement that Avon Rubber is to sell milkrite | InterPuls, its dairy division, to DeLaval Holding for £180m gross proceeds is strategically logical and financially compelling. The fit of dairy and defence has always looked slightly anomalous and the terms of the deal show that the opportunity to augment dairy through value-accretive deals is difficult given the scale of the business and opportunities. Management must now recycle the cash balances that will be created into Avon Protection, where there are a greater number of potential investments.

Companies: Avon Rubber

30 Jun 20

Full-year results

Full-year results were at a record level and slightly ahead of expectations by £0.2m at the adjusted PBT level, or 2.8% better at the EPS level. Cash generation was also stronger than expected, resulting in net cash of £3.2m. The dividend was maintained – a sign of confidence. Good strategic progress was made, helped by the integration synergies of Pacer and new product development programmes. Our forecast and price target remain under review given COVID-19-related uncertainties.

Companies: Solid State

02 Jul 20

£55m placing as brick demand bounces back

Brick and concrete products manufacturer Forterra has raised c. £55m gross in an equity placing in order to maintain its strong balance sheet and support the Group's continued investment programme. It was accompanied by, in our view, a reassuring trading statement which we believe is backed by yesterday’s brick industry data and comments from housebuilders, which suggest that demand has been recovering from its lockdown lows, before the PM’s promises to “build, build, build” housing and infrastructure.

Companies: Forterra

03 Jul 20

FY20A Results

Whilst Arena delivered FY20E results in line with our expectations, this has inevitably been overshadowed by the challenges posed by COVID-19 to the industry. Arena acted swiftly to cut costs and preserve cash, such that it currently has a c£23.5m cash balance. This is enough to see the company through into 2021, even if the global event market remains heavily disrupted for the rest of the year.

Companies: Arena Events

06 Jul 20

Macfarlane Group*

Resilient Trading Update

Companies: Macfarlane Group

02 Jul 20

GB Group - Managing cash now to support long-term strategy

GB Group reported strong performance in FY20 and started taking measures to preserve cash in Q420. Trading in Q121 has been mixed and while management is unwilling to provide guidance for FY21, it has confidence that in the longer term it is well positioned to benefit from the acceleration in digital transformation that should drive demand for its identity data intelligence services. We have upgraded our EPS forecasts by 5% in FY21 and 3% in FY22.

Companies: GB Group

29 Jun 20

Significant capital injection supports next growth phase

Successful K3 Capital placing to raise £30.45m (gross) at 150p to fund the £9.3m acquisition of Randd UK Ltd, an R&D tax credit specialist with an LTM EBITDA of c.£2.0m, with a margin of c.50% and revenues typically contracted for 5 tax years with many recurring thereafter, followed by future potential deals in SME exposed markets. K3 has established itself as an innovative company that is able to effectively gather, generate and mine large quantities of data in order to scale up M&A services to SMEs. Transferring these lead generation capabilities to adjacent SME markets can allow rapid growth from proven models, at scale.

Companies: K3 Capital Group

03 Jul 20

CentralNic Group - A platform business, looking to scale

CentralNic’s capital markets day (CMD) on 24 June 2020 introduced the divisional management team and provided insight on each of the three key segments as they will report in FY20: Indirect (Wholesale, Registry); Monetisation (Team Internet); and Direct (Retail, Corporate). We have picked out what we believe are the four key themes from the CMD: FY20 performance, COVID-19 and seasonality; organic growth; M&A; and, pulling it all together, the benefit of scale. CentralNic continues to trade on an FY20 EV/EBITDA of 9.1x and a P/E of 15.8x, a material discount to its peer group, with our DCF indicating further share price upside. M&A could bring CentralNic’s multiples down further.

Companies: Centralnic Group

29 Jun 20

Cenkos:One Media iP Group Plc -- Striking a Chord

One Media's strong H1/20A financial performance is testament to the resilience of its business model and the market in which it operates. The Group generated material top line growth (+28%), driven through both organic channels (+9%) and acquisitions (+19%), whilst improving its margin profile. This financial strength culminated in the recommencement of its cash dividend policy. One Media trades at a discount relative to its peer group, our fair value per share scenario analysis and DCF valuation. We reiterate our Buy recommendation.

Companies: One Media Ip Group

06 Jul 20

Oil & Gas Daily Flow

RockRose Energy (RRE LN): All cash offer to purchase RockRose for 1,850p/share | I3 Energy Energy (I3E LN): Binding purchase and sale agreement for Gain Energy confirmed

Companies: Rockrose Energy I3 Energy

06 Jul 20

SP Angel Healthcare Conditions- 06-07-2020

Fusion Antibodies (FAB.L): Trading update | N4 Pharma (N4P.L): Business update

Companies: Fusion Antibodies N4 Pharma

06 Jul 20

Supermarket Income REIT acquires 'cracking portfolio' of six Waitrose supermarkets

06 Jul 20

ReNeuron Group - Strong data in retinal therapy shows long effects

ReNeuron has released further follow-up data from the ongoing human retinal progenitor cell (hRPC) trial, which shows a robust sustained averaged response. This data set completes the six-month data on eight patients and extends, for one individual, to 18 months, who showed a good net gain. The next dose level, two million cells in nine patients, remains delayed due to COVID-19. A filing to start a pivotal study is expected in the second half of CY21. Our indicative value remains at £107m.

Companies: Reneuron Group

06 Jul 20

Market Report: FTSE 100 rockets higher after economic bounce-back optimism in Asia

06 Jul 20

SP Angel . Morning View

Altus Strategies* (ALS LN) – >400koz mineral resource at Diba gold project | Beowulf Mining* (BEM LN) – Grab sampling results from Madjan Peak in Northern Kosovo | Cora Gold* (CORA LN) – H1/20 exploration update | Eramet (ERA PA) – Eramet to sell Aubert & Duval subsidiary | Hochschild Mining (HOC LN) – Immaculada mine suspends operations as Covid19 hits S American mines | Kazatomprom (KAP LN) – Extension of reduced uranium operational activity due to pandemic-related risks

Companies: ALS BEM CORA CORA HOC

06 Jul 20

Blackstone Minerals steps out at Ban Chang target and hits high-grade nickel, copper and PGE

06 Jul 20

PowerHouse Energy Group - Cementing relationship with Peel Environmental

Over the last 18 months, Powerhouse has cemented its relationship with Peel Environmental, which is targeting the development of at least 30 distributed modular generation (DMG) plants across the UK. Each of these will potentially generate £0.5m in annual licence fees for Powerhouse. This roll-out is conditional on shareholders approving the proposed acquisition of former development partner Waste2Tricity (W2T) at the general meeting on 14 July

Companies: Powerhouse Energy Group

06 Jul 20

Walker Greenbank - Implementing strategy in COVID-affected markets

Walker Greenbank has a tangible strategic impetus under its new management team with a clear business model migration plan. While COVID-19 related market effects are affecting near-term trading – and the decision not to pay an FY20 final dividend – they are also presenting opportunities. Our estimates remain suspended for now ahead of the AGM on 29 July when an update on trading and the financial position can be expected.

Companies: Walker Greenbank

06 Jul 20

Bragg Gaming Group - Delivering operationally and financially

Bragg’s Q120 results demonstrated strong revenue growth (44% y-o-y), adjusted EBITDA margin expansion (to 8.7%) and improved free cash flow generation. Operationally, it continues to win new customers in new geographies and enhance product functionality, which should continue to improve the customer offer, drive growth and de-risk the business. Management has reiterated FY20 guidance for revenue and EBITDA growth of at least c 32% and 349%, respectively, vs FY19. The key drivers of share price performance will be continued strong operating performance and financing the Oryx deferred consideration, part due in September 2020.

06 Jul 20

Yet another financial restructuring

The financial restructuring, if approved, will end up in a massive dilution of existing shareholders. We calculate that the value of existing shares could reach as low as €0.072, while the psychological impact of the deal could bring it even lower. Solocal’s history proves again to be a complex one, with hopefully a sound financial structure at last post restructuring…provided the pandemic comes to an end soon.

Companies: Solocal Group

06 Jul 20

Acacia Pharma - BYFAVO receives FDA approval

The US FDA has approved BYFAVO (remimazolam) for injection, a very rapid onset/offset intravenous benzodiazepine sedative for use during invasive medical procedures in adult patients lasting 30 minutes or less. This is Acacia’s second asset approval this year following the US approval on 26 February of its lead asset, BARHEMSYS (amisulpride injection) for the management of PONV. 2020 is a transformative year for Acacia marking its evolution into an integrated hospital pharmaceutical company with strong development and commercialisation capabilities. BYFAVO broadens Acacia’s US commercial pipeline and will enable significant leverage of its commercial infrastructure in the US on launch. Timely launches and effective sales execution of both products is critical. Our revised valuation is €1.03bn.

06 Jul 20

Allenby Capital TMT Update - 06.07.20 - ECSC.L, TWD.L, TRT.L

ECSC Group plc* (ECSC.L, 71.5p/£7.2m) | Trackwise Designs plc (TWD.L, 90.5p/£20.0m) | Transense Technologies plc (TRT.L, 59.5p/£9.7m)

Companies: ECSC Group Trackwise Designs

06 Jul 20

Outperformance through every stage of cycle

ICGT, the 39-year listed private equity (PE) investor, has delivered a total NAV return of 178% over 10 years (comparable FTSE All Share return 61%). Since Intermediate Capital became the manager in 2016, ICGT has earned mid-teen p.a. underlying returns every year. This has been achieved by leveraging the attractive PE market with incremental manager synergies. It has a concentrated portfolio of “high-conviction” investments (19% p.a. average returns over five years, 42% of portfolio, defensive growth focus) and a diversified third-party PE funds book. ICGT manages over-commitment tightly. The 33% discount to NAV is above peers.

Companies: ICG Enterprise Trust

06 Jul 20

Brisk growth rate supports higher valuation

The ongoing pandemic only serves to underline business models that are robust, and those that aren’t. This morning’s trading update from UPGS puts them firmly in the winners’ category. As the company approaches the final weeks of FY2020, it not only reports “better than expected progress” against an uncertain business backdrop, but also that revenue and key profit measures for the year should be ahead of current market expectations. Furthermore, online as a portion of total business should record a fourth consecutive increase, providing additional flexibility and strength in the case of a second wave.

Companies: Up Global Sourcing