Research Tree | Equity Research for Investors

Level the playing field with real-time Equity Research

Research Tree offers both private and institutional investors access to the latest UK investment research from over 35 Brokers and Research Providers, offering comprehensive coverage of small and mid-cap stocks.

The Equity Research Platform

Equity research, broker reports, target prices, and valuations on UK-listed companies in real-time.

Our platform learns which sectors, industries, and markets you're intersted in to help you discover new stocks.

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

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

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

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

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

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

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

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

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.

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

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

10 Aug 20

Open Orphan: World-leading expertise drives growth

Open Orphan (LON:ORPH) has rapidly restructured and integrated its Venn and hVIVO subsidiaries, and is delivering on its growth strategy by maximising its specialist capabilities and is converting a pipeline with an estimated value of over £100mln, to deliver long-term, profitable contracts. This w

Companies: Open Orphan Plc

05 Aug 20

First UK order for Primestore MTM device

EKF has secured its first order in the UK for the Primestore MTM sample collection device, worth £3m over the next 7 weeks. The purchaser is a partner from the private sector, with the device being used in a Covid-19 testing programme for UK staff. With these increasing orders, EKF has expanded its production line in Cardiff and now has capacity for 25,000 sample collection tubes per day. In addition, the production line in Germany is now up and running. We increase our FY20 revenue estimates by a further £3m and EBITDA by £2m. Given the nature of the device, which is agnostic over which molecular test is used, we expect demand to continue at elevated levels for the duration of the pandemic and continue to see further upside potential to our already materially upgraded estimates. EKF remains one of our best Ideas for 2020.

Companies: EKF Diagnostics Holdings Plc

06 Aug 20

Welcomed strategic decisions

H1 20 operating profit declined by 12% to £1,225m and the COVID-19 claims impact was £165m. Cash remittances from business units to the group was only £150m. The insurer said that it will focus on the UK, Ireland and Canada, which means an exit from other European and Asian markets. The Board has declared a second interim dividend in respect of the 2019 financial year of 6p/share and will inform shareholders about the 2019 final dividend in Q4 20.

Companies: Aviva Plc

12 Aug 20

Strong lending growth confirms attractiveness

Sparebanken Telemark (SBTE) published its Q2 numbers today and the EPS was on the strong side with an ROE of 9.6% in the quarter. Lower impairments, higher MtM gains and a strong contribution from SB1 (incl. Fremtind) gave a solid 78% beat. We have increased 2020e/2021e EPS 16%/4%, mainly as a result of the strong Q2 figures. We increase our target price to NOK 123 (115), but retain our Hold recommendation for now.

Companies: SpareBanken Telemark

12 Aug 20

Strong capitalisation leaves room for growth

SpareBank 1 BV (SBVG) published Q2 today and the result was on the strong side with a ROE of 12.1% in the quarter. NII was soft, but will bounce back in Q3. A strong contribution from SB1 (incl. Fremtind), higher MtM gains and lower impairments resulted in a 33% earnings beat. We have increased our 2021e EPS 3% and increase TP to NOK 37 (35), but retain our Hold recommendation. The new TP is equivalent to 11x 2021e EPS and a 2020e P/B of 0.83x.

Companies: SpareBank 1 BV

12 Aug 20

Prudent provisioning is a strength now

SpareBank 1 Nord-Norge (NONG) reported a solid Q2 result with strong NII, lower impairments and a solid contribution from SB1 (incl. Fremtind) and MtM gains. The ROE was 14.6% in the quarter and the bank upheld its 12% ROE target for 2020. We have increased 2021e EPS by 13%, partly since we have moved the transfer of the Helgeland portfolio from Q1 to Q2, while underlying earnings are upped 5%. We increase our TP to NOK 70 (66) but retain our Hold recommendation.

Companies: SpareBank 1 Nord-Norge

12 Aug 20

Blank sailings, a double-edged sword

HHLA posted declining H1 20 revenue (-9.4% yoy) driven by its container and intermodal divisions (-9.6% yoy and -8.5% yoy, respectively). The container division’s volume was dragged down by increased blank sailings, which, in turn, increased storage times and fees (increasing the division’s ASP). This volume contraction translated into a 74.2% yoy drop in profitability and lower FCF (-34.1% yoy). As for the outlook, the company expects, for FY20, to suffer from a strong reduction in volumes, revenue, and profitability.

Companies: Hamburger Hafen und Logistik AG

12 Aug 20

Target upgrade by 11.1% (Swissquote Group Holding)

TARGET CHANGE CHANGE IN EPS2020 : CHF 6.00 vs 5.17 +16.1% 2021 : CHF 6.05 vs 4.68 +29.2% Following the H1 20 earnings release, we have raised our expectations going into H2 20 and 2021. For H2 20, we expect revenues slightly above management's guidance (at CHF300m) as the H1 20 trend seems to be continuing into H2 20 (based on July and the first days of August). The sharp increase in new accounts also looks sustainable (they have contributed 10% of total revenues in H1 20) and we find it therefore appropriate to increase revenues in 2021. We have also revised downwards total expenses expectations for 2021 due to the good cost controls showed during FY2020.

Companies: Swissquote Group Holding Ltd.

12 Aug 20

Seneca Global Income & Growth's David Thomas reckons there's much more NAV growth to come

12 Aug 20

Business recovery is hoped to be expedited by mainstream's intensity

The UK-based hotel giant reported mediocre H1 results with Coronavirus shocks of a lesser extent than its peers. Its very important presence in the resilient mainstream segment is likely to help in stepping up the rebuilding of its business, where some early positive signs have been seen.

Companies: InterContinental Hotels Group Plc

12 Aug 20

Cenkos: Salt Lake Potash Ltd -- Lake Way funding

Lake Way is one of the most advanced SOP development projects globally and the A$300m financing is a major milestone to pass. The SFA incorporates no refinancing restrictions after 18 months, giving Salt Lake the potential to refinance this relatively expensive debt and flexibility to utilise non-dilutive financing options for early works at its next lake development. A trade-off study is currently underway with a decision on the next lake development expected in the first half of 2021 and the medium-term goal of producing SOP across multiple lakes. As reported in the 2019 BFS, at 245ktpa of SOP, the Project is expected to generate EBITDA of A$111m and average annual post tax free cash flow of A$78m. Payback is estimated to be 3.6 years. With eleven lakes in the Goldfields and the potential to be self financing going forward Salt Lake offers significant growth potential and we maintain our Buy rating.

Companies: Salt Lake Potash Ltd.

12 Aug 20

Exploration Underway

Up 435% YTD and 84% since our initiation, Prime Mining (PRYM CN) has now articulated a detailed exploration programme and further strengthened its management team, meanwhile gold price performance has as expected driven a positive rerating in exploration and development valuations with the peer group EV/resource multiple up 64% since our initiation to US$171/oz. With exploration results expected through the balance of the year, we believe that PRYM’s initial rerating driven by the gold price will be supported by results which confirm the underlying upside potential from rising resource confidence, extensions of known mineralisation and testing new targets.

Companies: Prime Mining Corp.

12 Aug 20

Gore Street Energy's Alex O'Cinneide sees strong growth and returns for storage as an asset class

12 Aug 20

Schroder Japan Growth - Overview

Schroder Japan Growth Fund (SJG) invests in Japanese equities with a bottom-up process, aiming to generate long-term capital growth. The analytical team look at a variety of quality and valuation considerations. The process centres on the identification of companies trading at a discount to fair value through fundamental research carried out by a team of 11 analysts on the ground in Tokyo, including three specialising in the Japanese small-cap market. The manager, Masaki Taketsume, is based in London, having taken over from Andrew Rose in July 2019. However, he had been co-manager since 2017 and previously worked in the analyst team in Tokyo from 2007, with continuity of the investment process maintained. As discussed under Portfolio, the process focusses on constructing a Fair Value Model for each stock the team covers, looking at a variety of characteristics on an absolute and relative basis to determine the competitive position of a company. Structurally SJG tends to overweight the small- and mid-cap markets, with the manager noting that their depth of analytical resource helps them benefit in these lesser-researched names. As we discuss in the Performance section, the relative fortunes of SJG to its peer group tend to fluctuate broadly in line with the absolute performance of the market (i.e. relative performance has tended to be better in periods where market returns were positive). At c. 15.1% (as at 01/06/2020), SJG currently has the widest discount within the AIC Japan sector. The dividend yield is also amongst the highest in the sector at c. 2.7%.

Companies: Schroder Japan Growth Fund

12 Aug 20

S&U - Still in profit and tentative positive trends

S&U motor finance sales are recovering even as credit criteria have been tightened. There is still uncertainty about the impact of the wind down of employment support schemes and how collections will recover following repayment holidays, but S&U expresses cautious optimism on the latter point. The current year results will be significantly affected by lower sales and higher arrears but management indicates the group is still profitable, is maintaining its high customer service levels and has liquidity headroom to respond once it is sensible to target stronger growth.

Companies: S&U Plc

12 Aug 20

Q2 20 - slightly lower market expectations

Due to lower partnership earnings, EBITDA decreased by 18%. EBITDA generated by offshore assets increased by 7% on the back of new operating capacity. EBITDA generated by onshore assets doubled but is still insubstantial at the group level. The group confirmed its operating FY20 figures but slightly reduced its FY20 investment guidance, due to timing effects. Our negative recommendation is confirmed, for more details on the investment thesis, please see the leader in a highly competitive sector – 19/05/20.

Companies: Ørsted A/S

12 Aug 20

Solid Q2 figures but higher COVID-19 costs

• Net profit attributable to shareholders decreased by 57% to €103m for Q2 20 versus Q2 19 • Net earned premiums rose by 4% to €9.5bn for Q2 20 • Net COVID-19 expenses were €430m for Q2 20 compared to €228m for Q1 20 • Hannover Re has been the most profitable big global reinsurance company for years and remains the backbone of talanx • Hannover Re’s stake in talanx is valued €8.5bn, whereas talanx is valued at only €8.0bn

Companies: Talanx AG