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25 Mar 20

LIBERUM: Sylvania Platinum* - Best placed miner to weather the storm

Sylvania's share price has fallen 53% since its peaked on the 21st Feb, as the global economy hit the brakes. The short term demand outlook for PGMs is miserable, with supply chains breaking down as both luxury goods and car sales sales collapse.

Companies: Sylvania Platinum

30 Mar 20

Interims – pre-COVID growth

Bioventix delivered a strong set of interims, with revenues up 21%. Given the 9% decline in operating expenses, this resulted in a 31% increase in adjusted EBITDA, with adjusted pre-tax profit also rising 31% to £4.4m (52% of full-year forecasts) and adjusted EPS up 29% to 69.4p. An interim dividend of 36p was declared (+20%) with net cash at period end of £5.5m. Growth was driven by both Vitamin D antibody sales/royalties (+c.25%), its portfolio of other antibodies (+c.12%) and a more meaningful contribution from troponin. Given the inevitable disruption that COVID-19 will have to some testing volumes (although tests such as NTproBNP are likely to benefit from high risk COVID patients), we leave forecasts unchanged, confident that the strong H1 and weaker sterling in H2 should offset any potential H2 trading shortfall. We leave our forecasts unchanged and reiterate our 3750p target price. At this level, the stock would trade on a 30x FY 2020 P/E with a free cashflow yield of 3.1x

Companies: Bioventix

26 Mar 20

Somero Enterprises

Trading below its 5-year PE low, compelling entry point

Companies: Somero Enterprises

31 Mar 20

Strong FY19 results highlight Tremor’s potential

Tremor has reported a strong set of FY19 results and announced a prudent $10m buyback. The results are in line with January’s trading update, and demonstrate strong growth in Digital Video and Connected TV (CTV) advertising. Tremor has also seen a solid start to FY20, but COVID-19 could markedly affect a number of its clients. The management and board highlight that it is too early to fully assess the impact of COVID-19 on Tremor’s FY20 outlook, and we consequently leave our FY20 estimates broadly unchanged at this point. In this report we also explain Tremor’s investment case in depth, and highlight that Tremor is excellently positioned to capitalise on the major growth in Video and CTV advertising, and can see further upside from M&A and the resolution of the Uber case.

Companies: Tremor International

25 Mar 20

LIBERUM: GAN* - SaaS resilience as outlook confirmed

GAN has provided an update today on the Italian and US real-money internet sports betting outlook, as well as the momentum they are seeing in their core Simulated Gaming operation. Management have confirmed current guidance, which underscores the high underlying growth and the diversified resilience of their SaaS model. The company is on-track for a NASDAQ listing, hopefully in Q2. No material change to forecasts or our Target Price of 200p

Companies: GAN Plc

25 Mar 20

IQE - Well positioned to withstand near-term uncertainty

Yesterday’s trading update confirms that IQE’s FY19 results will be in line with the revised guidance it provided in November when the full extent of the impact of the US-China trade war became visible. We have cut our FY20 revenue estimate by 6%. In IQE’s case the impact of COVID-19 on global handset demand is likely to be softened by gaining share in both the wireless and photonics markets. However, the full effect of the pandemic on the global economy and IQE’s business remains to be seen.

Companies: IQE

23 Mar 20

WHI Equity Research: Spectra Systems (SPSY)

Results ahead; forecast upgrades, special dividend, yielding 7% SPSY has announced a strong set of results, with EBITDA and PBTA some 6% and 4% respectively ahead of our forecasts, following a succession of upgrades and some notable wins during 2019. Reflecting the strong momentum, and with forecasts well supported by firm contracts which exist independently of the current global crisis, the company is (1) trading ahead of expectations in the current year, and (2) with strong cashflow, feels confident to announce a special dividend this morning to be paid in June. With meaningful upgrades to the current year, and new, progressive, forecasts for FY2021E, the current outlook is strong at a time when this is rare for a mid-cap company; while key opportunities developed over the past eighteen months continue to be highly promising. SPSY provides advanced technology solutions for banknote, product authentication, and secure lottery transactions as a highly specialised operator, working in fields which offer valuable respite from Covid 19. Cash of $US14.3m is ahead of our expectations and some 13% ahead YoY. Well-invested and with well-controlled costs (and high gross margins), today's results provide further support for our fair value assessment, which in turn is far ahead of the current share price.

Companies: Spectra Systems

31 Mar 20

Kape Technologies

COVID-19 update – on track and good liquidity

Companies: Kape Technologies

24 Mar 20

CloudCall

COVID-19 profit warning on increased uncertainty

Companies: Cloudcall Group

27 Mar 20

Hurricane Energy

Worker evacuated from Lancaster FPSO

Companies: Hurricane Energy

30 Mar 20

LIBERUM: Alpha FX* - Update as global trade slows

Alpha has released an update today, which highlights the impacts of the recent global lockdown and extreme FX volatility on the trading and working capital of their clients. We have reduced this year’s revenue forecast by 14% and EPS by 24%. We show the Company has sufficient capital to hit these revised forecasts and importantly has a business model, capital structure, technology platform and client proposition to continue to take share and return to high-growth when economies normalise.

Companies: Alpha Fx Group

27 Mar 20

Cenkos: 1pm plc -- Supporting UK SMEs through difficult times

1pm has provided a trading update outlining its response to the current Covid-19 outbreak. Operations continue as usual (remotely) and the group continues to write new business, however, it has received multiple requests for repayment deferrals. The group is offering this flexibility where merited to assist credit worthy UK SMEs and has the balance sheet to absorb these lower cash collections. 1pm's own funders remain supportive to the business. Given the uncertainty over the duration of the outbreak and the impact the UK's shutdown is having on 1pm's trading, we withdraw forecasts and put our recommendation under review.

Companies: 1PM

25 Mar 20

The Industrial Revelation

US & German manufacturing PMI hits lowest readings since 2009, UK manufacturing PMI heads below 50, BorgWarner expects material financial impact from customer production halts

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

26 Mar 20

COVID-19 induced demandpause

3 weeks ago, we thought the coronavirus would be a Chinese/Italian phenomena impacting global supply chains, but not triggering full/partial lockdowns across large swathes of the planet. How things have changed.

Companies: Mpac

27 Mar 20

LIBERUM: Non-Standard Finance - Prudent actions taken should position the business well

We believe that NSF’s response to the current pandemic is in the interests of all its stakeholders. The operational shift towards remote working helps protect its staff whilst enabling its clients to continue to access the services they need. Similarly, its decision to reduce lending and focus on its existing clients and those most in need, is the prudent thing to do. These actions, combined with the high risk-adjusted margins on its existing loan book should enable the group to generate positive cash flow, even allowing for an increase in impairment during the current period of economic uncertainty. This should leave the group in a stronger position to serve its clients and win share when the current government restrictions are lifted. As a result, of this medium-term outlook we reiterate our BUY rating.

Companies: Non-Standard Finance

31 Mar 20

LIBERUM: Appreciate Group* - Strong balance sheet, digital strategy accelerating

Appreciate saw trading in line with expectations until the end of February, but the closure of fulfilment locations in response to COVID-19 has seen a substantial drop in billings in the past week. Management is withdrawing its guidance, but will provide an update in the second half of April. Meanwhile, the interim dividend (£2m) will not be paid and the FY dividend will be reviewed in June (c. £4m). We see the net cash balance sheet as strong enough to weather the storm. The company’s digital first strategy will accelerate and help to mitigate the pressure on physical vouchers. We will review our estimates in April, but we think that a CY20E EV/EBIT of 3.8x on existing numbers more than reflects the downside risks.

Companies: Appreciate Group

31 Mar 20

Capital Access' Hot Off The Wires - The Day Ahead

Today's news & views, plus announcements from RDSB, IMB, POLY, SVT, WPP, SMIN, ROR, MGAM, GFRD, MRL, MBH, APP, HDD

Companies: Appreciate Group

31 Mar 20

Cash rich, asset light

Xpediator has issued a COVID-19 related trading update. The key messages are reassuring: the business has a strong balance sheet and is asset light, trading is in line with internal budgets and the group has begun to see activity returning from its Chinese customers following an understandably difficult January and February. Some businesses are performing ahead of expectations, but where the reverse is true, early action is being taken on costs.

Companies: Xpediator

31 Mar 20

Esker - Moderating growth expectations for FY20

Esker reported FY19 revenue growth of 20%; higher than expected investment in headcount limited the increase in normalised EBIT to 7% y o y. High recurring revenues (80%) and strong order intake in FY19 (+47%) provide good visibility for FY20 and beyond. During the COVID-19 crisis, the business is providing services remotely, and while Q1 transaction volumes have not been materially affected we expect this to change in Q2. Reflecting weaker SaaS volumes and delays in signing new business in Q2, we have reduced our FY20 revenue and EPS forecasts.

Companies: Esker

31 Mar 20

Kazia Therapeutics - Paxalisib trial still on track for H220 start

In the current viral pandemic, it is worth recalling that brain cancers will arise during and after the epidemic. The core business case for Kazia remains strong as it is developing the only brain penetrating PI3K inhibitor agent in trials to treat glioblastoma. In the current Phase II, the 21-patient expansion cohort was fully recruited in February. No hospitalisation is needed to continue with this study; it is oral dosing. The potentially pivotal Phase III using the AGILE trial network is on track for an H220 start. H120 results showed cash of A$6.4m. Our indicative value remains A$137m.

Companies: Novogen

31 Mar 20

Frontier IP 'in strong position' and working closely with portfolio companies to mitigate new risks

31 Mar 20

Morning Report: Smiths Group halts planned demerger of medical arm

31 Mar 20

Castings*

Year-end trading update

Companies: Castings

31 Mar 20

WHI First Light: FIH Group & Parity Group

FIH's year end update this morning reveals an inline performance in the year to March 31st 2020, notwithstanding disruption over the past six weeks, and also updates on the respective likely effects of Covid-19 on its three business streams, with greater relative resilience seen in the Falklands business and bigger impacts already apparent on the two UK-based businesses, not surprisingly. We note that PTY, in line with requests to companies from the FCA and FRC, is formally delaying its results announcement for FY2019A (year to December), which would in the normal course of events have been published today. A new release date will be issued in due course. Re 2019, the company highlights its update from January indicating inline P&L performance in FY19A combined with good progress on cash resulting in an anticipated net positive cash situation at the year end.

Companies: FIH Group Parity Group

31 Mar 20

Egdon Resources - Management estimates commercial upside

Egdon Resources has provided an update on its Biscathorpe project (45% interest) in Lincolnshire. The company has integrated reprocessed 3D seismic data with data from the 2019 Biscathorpe-2 well and concluded that the project holds a potentially material and commercial resource. Management estimates that the project is robust at the current oil price with an NPV10 break-even Brent price of $18.07/bbl for the primary Westphalian target. In addition, the company sees significant commercial upside in the secondary Dinantian carbonate. Egdon retains the option to test the potential of any future drill targets via a side-track of the suspended Biscathorpe-2 well.

Companies: Egdon Resources

31 Mar 20

FY19 prelims & Covid-19 update

Revenue growth of 10% in H2 brought FY results in line and the company was looking well set for strong progress in FY20. However, Covid-19 presents a significant short term challenge, given SUN’s focus on elective surgeries. The Board has moved quickly to enact cash preserving and cost saving measures, whilst continuing to supply essential products. Cash on the balance sheet and support from the group’s bankers provides short term liquidity and other indications of financial support are being actively considered.

Companies: Surgical Innovations Group

31 Mar 20

Strong trading update

Kape has issued a strong Q1 trading update, noting a modest acceleration in Digital Privacy demand trends as a function of Covid-19 related travel restrictions. Remote working increases the number of potential vulnerabilities within a user’s network, which Kape’s VPN offering solves through provision of secure and private browsing solutions. Kape has been able to successfully service the acceleration in demand, whilst at the same time implementing its own remote working policy to ensure business continuity. Management have reiterated guidance for $120m - $123m of revenues and EBITDA of $35m - £38m, with the uplift in demand providing added headroom in forecasts. Our FY’20E forecasts generate an FCF yield of >5%, which is well underpinned by strong renewal rates and flexibility around direct marketing spend.

Companies: Kape Technologies

31 Mar 20

Strong MDI data highlights triple modality of ensifentrine

Today’s Phase II single-dose (Part A) data on the metered dose inhaler (MDI) formulation of ensifentrine in COPD patients are strong, demonstrating a statistically significant and clinically meaningful, dose-response improvement in lung function vs. placebo. This improvement was statistically significant in all doses vs. placebo, except at the lowest strength. Furthermore, this lung function improvement showed statistically significant dose-response durability over 4 hours and 12 hours. Whilst it is too early to predict the leading MDI dose strength, the general dose-response and placebo-like safety profile of the MDI formulation, which will be seen favourably by potential commercial partners. However, the initiation of the multi-dose (Part B) stage trial has been postponed for the time being due to the ongoing Covid-19 pandemic. Nevertheless, today’s result means ensifentrine has shown clinically meaningful lung improvements across three widely used inhaled modes: nebuliser, dry powder inhaler and MDI. This underpins Verona’s partnering/licensing efforts for ensifentrine, which represents substantial blue-sky upside to our valuation.

Companies: Verona Pharma

31 Mar 20

Covid-19 update

Nichols has issued a Covid-19 update this morning, signalling the need to protect the balance sheet during the current uncertainty to help ensure it emerges in a strong position to deliver mid-term growth objectives. Briefly, whilst trading in the first two months of FY20 was in line with management’s expectations, Covid-19 is expected to have an adverse impact in the months ahead. This reflects both the OOH division being directly exposed to the UK lockdown of pubs/restaurants/cinemas but also recognising the potential risk to retail sales from any protracted restriction of movement of people worldwide. Given this backdrop, management now expect a significant financial impact in FY20. In line with some of its peers, the company is temporarily removing financial guidance and we withdraw our forecasts. Given the uncertain outlook, the Board has taken the prudent decision to cancel the final dividend announced in the Feb finals of 28p per share, conserving a significant £10.4m of cash. Notably, the update signals that the Board will consider reinstating the dividend payment once there is a better handle on the cash position post the critical spring/summer period. In addition to this there are various other cost action plans to protect the P&L and cashflow. Whilst today’s update is not a huge surprise given the Covid-19 backdrop, it does not fundamentally change the positive investment thesis - as evidenced by 10% PBT CAGR in the last decade (virtually all organic). Nichols has an asset light business model, an excellent and proven management team and a robust balance sheet (£41m netcash at Dec’19) to ensure it effectively manages near term pressures and prospers over the medium term.

Companies: Nichols

31 Mar 20

Cenkos: One Media iP Group Plc -- Strategic Acquisitions

One Media has produced a strong set of FY19A numbers with revenue growth of 30% YoY. It has further strengthened its content offering through five strategic acquisitions for a total consideration of $6.9m. Despite current market conditions we believe the short- and long-term outlook for One Media remains positive. We expect streaming volumes to remain robust and reaffirm our Buy recommendation.

Companies: One Media Ip Group