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31 Jul 17

N+1 Singer - IQE - VCSEL ramp up just the start

IQE’s trading update confirmed that it has secured multiple, multi-year contracts for VCSEL wafers, which we believe relate to 3D sensing opportunities, the most high profile of which is the 10th anniversary iPhone. We are upgrading our FY’17/’18/’19 EPS forecasts by 5%/6%/10% respectively however we believe these forecasts remain very conservative. Assuming a more optimistic level of adoption for the expected new iPhone results in a bull case scenario of 81% EPS upgrades in FY’18. IQE is one of our Key Buys for 2017, a stance which has served us well so far (+185% YTD). With forecasts conservatively struck and multiple additional near-term opportunities outside of Apple on the horizon, we believe the shares will continue to perform. We increase our target price to 147p and retain our Buy recommendation.

Companies: IQE

12 Jul 17

AIM – End of summer term report

We update this table which we first published in early January and highlight the continued progress of the biggest AIM companies so far this year and activity in general. The latest AIM Statistics show that there are 963 companies currently, with 28 new issues year to date raising £441m. What’s more, this momentum has been maintained since June. This demonstrates that despite, the uncertainty surrounding the UK economy, generally investors continue to be active in the AIM market. In Share News & Views we comment on Cohort, ECSC*, Porvair, Quarto*, SQS* and Xafinity.

Companies: BMS CRPR ECSC EUSP FDM PCF PPIX QRT SNX SPRP SQS TCN W7L

07 Aug 17

Going straight to video

Taptica is expanding its range of markets addressed and revenue streams received with the acquisition of a share in its small Japanese partner, followed by a much bigger move into the video advertising business with the purchase of US-listed Tremor Video’s DSP business for $50.0m, although this comes with a net $22.5m of working capital in the target. Taptica is utilising cheap debt with a $30m loan to help fund the second acquisition, along with existing cash resources. These two additions are both expected to be earnings-enhancing – seeing a 6% upgrade in FY 2018 – and will accelerate the group’s expansion in two high-growth areas of digital ad spending (Asia-Pacific and digital video) while substantially broadening the revenue base.

Companies: Taptica International

10 Aug 17

A watershed moment for CAR-T

In the short term we retain our sector neutral recommendation, as drug pricing, uncertainty over healthcare reform in the US, and Brexit in Europe create a more challenging backdrop. However, the long term trends in healthcare – an aging population, rising spending on healthcare globally both in developed and emerging markets and innovation changing healthcare practice – in addition to the rapid pace of technology development, make it an attractive time for stock picking.

Companies: ABC AMS AGY ANCR BTG C4XD CTH CSRT DPH DNL EKF FARN HCM HZD IMM MXCT MTPH PLI SCLP SPHR VLG VER

09 Aug 17

French audio and localisation consolidation

The acquisition of four French companies gives Keywords Studios strong capabilities across all major European languages for localisation and voice-over recording. The transactions boost our FY18 EPS by 5%, although some investment in integrating the entities will be required. The expanded offering should also support organic growth, through helping secure more centrally procured, multi-language contacts.

Companies: Keywords Studios

16 Aug 17

Pre close update

Epwin, the low maintenance building products manufacturer, has issued a mixed pre-close trading update. First half revenues and earnings were “in-line” with management expectations (slightly ahead of PG forecasts). Revenues up (principally due to M&A) and adjusted EBIT (modestly down). Overall a solid performance. However, management are mindful that input cost inflation and issues at two of its larger customers present certain headwinds. As a consequence of the weak RMI market and inflationary pressures we are flexing our full year forecasts (FY17 revenue forecasts unchanged, EBIT forecasts reduced by 8%).

Companies: Epwin Group

16 Aug 17

Cost inflation remains an issue

The interim update indicates that, despite H117 being broadly in line with expectations, market conditions remain difficult. Cost inflation continues to be a significant issue and, with market volumes broadly flat, the benefit of price rises has been eroded. This leads us to downgrade estimates across the forecast period. This results in a 7.8% cut to PBT in FY17 followed by 9.3% in FY18. Importantly, today’s statement indicates that the dividend remains unaffected with the shares yielding 7.1% with good earnings and cash cover. The balance sheet remains un-stretched, even after the impact of today’s cut to numbers Net Debt/EBITDA remains low at 0.6x. The shares had already started to discount weaker trading conditions and the recent customer issues, declining from 125p in May to last nights close of 94p. On new forecasts Epwin trades on just 7.2x FY17 earnings.

Companies: Epwin Group

08 Aug 17

N+1 Singer - T. Clarke - Good organic progress alongside Eton upgrades

T Clarke’s interims confirm good organic progress, which will be bolstered by the acquisition of Eton Associates, announced yesterday. Revenue increased by 17% and PBT by 8%, driven by a particularly impressive performance from the dominant London & South East division. Profit growth would have been greater still were it not for a loss making half from Central & South West (a profitable H2 is expected). Overall, the Group is well positioned for the full year and we upgrade 2018 EPS by 6.5%, principally to reflect the contribution from Eton. Further upgrades may yet follow and we believe the shares are undervalued on a P/E rating of 7x with a 4% yield.

Companies: T Clarke

07 Aug 17

New records galore

The past fortnight has seen a number of records broken in the technology sector, both in the UK and abroad. FDM* share price set a record, going past the £10 mark, after beating market expectations. Sage made its biggest ever acquisition. Samsung set a record for net profit in a quarter, making it the world’s most profitable company. Apple’s cash pile grew to a record US$262bn. Google’s record US$2.7bn fine meant it had a rare decline in profitability. GetBusy* had a strong debut on AIM, increasing 22% on its first day, adding to the track record of recent tech company listings in London.

Companies: BBSN ECSC EUSP FDM PPIX QRT SPRP SQS SNX

14 Aug 17

N+1 Singer - PROACTIS Holdings - Perfect Commerce makes perfect sense

We have upgraded our forecasts following the completion of the acquisition of Perfect Commerce for up to $132.5m. This transformational deal positions the enlarged PROACTIS group as the sixth largest pure-play provider of ePurchasing solutions globally, as well as one of the fastest growing and most profitable. The commercial and operational synergies arising from this combination are considerable and warrant the acquisition multiples paid (max. 3.4x est. FY 2018 revenue and 19.0x est. EBITDA). Our FY 2018 group revenue, EBITDA and EPS estimates increase by 105%, 119% and 18% respectively. We raise our target price from 201p to 226p and reiterate our Buy recommendation.

Companies: Proactis

10 Aug 17

Strong signs of a good 2017

L&G reported an operating profit of £988m, up 27% year-on-year. Except for General Insurance which recorded a 52% drop in operating profits to £15m, all business lines posted an improvement in profitability. The best performance was posted by Legal & General Retirement (LGR) which recorded a 40% increase to £566m, remaining the major contributor to operating profits (more than 50%). Legal & General Investment Management (LGIM) operating earnings saw a 13% increase to £194m. Legal & General Capital (LGC) raised its profits by 5% to £151m, while Legal & General Investment Management’s (LGIM) earnings were stable at £151m. The Solvency II surplus reached £6.7bn over its Solvency Capital Requirement, corresponding to a coverage ratio of 186% on a shareholder basis. The Board recommended an interim dividend of 4.3p/share vs. 4p a year before.

Companies: Legal & General Group

10 Aug 17

N+1 Singer - Hill & Smith Holdings - Positive H1

As indicated in May, trading has been positive in H1 and is in line with expectations. Most areas are trading well and, if anything, a little better than expectations. We retain forecasts but note that as the year progresses, attention will turn to FY18 and the further significant opportunities therein. We nudge our target price up to 1435p and remain at Hold, while remaining very supportive of management and the strategy and the long term potential for the group.

Companies: Hill & Smith

09 Aug 17

Deleveraging target exceeded, thereby helping reinstate dividends

Anglo American posted strong H1 17 results, resulting in dividends being reinstated. Higher prices (average +30% yoy) across commodities — (met) coal, iron ore, copper and PGMs (due to palladium) — and healthy volumes (in De Beers and Minas-Rio) resulted in the top-line increasing by 22% yoy (and 5.9% hoh) to $12bn. Profit improvements were stellar, with adjusted EBIT soaring 87% yoy (and 22% hoh) to $2.5bn. In addition to the top-line support, profitability also benefited from cost improvements that were partly offset by adverse forex movements and inflation. H1 net attributable profit came in at $1.4bn vs. a loss of $813m (including sizeable impairments) in H1 16 and a profit of $2.4bn (including sizeable asset disposal gains) in H2 16. Even reported OCFs improved by 45% yoy (and 31% hoh) to $3.7bn, aptly supported by a working capital release of $231m (vs. release of $498m in H1 16 and use of $107m in H2 16). Strong cashflows along with controlled capex of $800m (-27% yoy; -39% hoh) further facilitated significant deleveraging, with net debt falling (-22% vs. 2016 end) to $5.5bn. Given that Anglo overshot its deleveraging target for 2017 during the first half, management decided to resume dividends – a good six months before the earlier guidance. As a result, an interim dividend of USc48 per share was announced. 2017 production guidance across commodities remains unchanged, except for Kumba – where 41-43mt of iron ore output is being targeted (vs. 40-42mt guided earlier). In terms of capex, the guidance for 2017 has been reduced by $0.2bn to $2.3bn.

Companies: Anglo American

09 Aug 17

Last patient out….no time for doubt

Motif Bio (MTFB) has announced that the last patient has completed treatment in its 600 patient pivotal trial of iclaprim in ABSSSI (REVIVE-2). The achievement of this clinical milestone known as last patient out (LPO) follows on from a successful $25.8m fundraise achieved earlier in the year and brings iclaprim a step closer to potential commercialisation. We continue to expect top-line readout within two or three months, with clinical results for REVIVE-2 possibly being available as early as mid-October. We also note the upcoming presentation of scientific data in San Diego (October 2017) which follows on abstract publications (July 2017) and take this opportunity to discuss other potential indications of iclaprim in a little more detail. We retain our 100p target price and Buy recommendation as of this morning, expecting positive results to significantly re-rate the shares.

Companies: Motif Bio

09 Aug 17

Summertime, and the livin’ is easy?

In the middle of the holiday season, when in theory the livin’ is easy, far from taking a breather, markets have continued to rise. All major indices are close to all-time highs. Although the Brexit picture is no clearer, share prices continue to make headway. Both M&A and new issue activity remains to the fore. In contrast, the latest snapshot of the economy shows increasing signs of a slowdown. The reporting season continues apace which will set the near term direction. In Share News & Views, we comment on recent results/news from AdEPT, Clipper Logistics, FDM*, GetBusy*, Quarto* Sprue* and Staffline.

Companies: BMS CRPR ECSC EUSP FDM PCF PPIX SNX SPRP SQS TCN W7L

16 Aug 17

Good set of results, but disappointing WCR performance

Key information: • Orders received grew by 5.2% and by 5.6% in local currencies. • Revenue rose by 2.7% and by 2.9% in local currencies. • Operating profit increased by 10.7%. • EBIT margin reached 11.7% vs 10.9% in H1 16. • Net profit grew by 12.6%. • Cash flow from operating activities increased by 3.3%.

16 Aug 17

A good start to the year

7digital’s recent trading update confirmed good progress. H117 revenues increased 13%, with a strong performance from high-margin licence and creative sales. Momentum in monthly recurring revenues and new contract wins, as well as the full impact of the 24-7 acquisition put the group on track for an even stronger second half and add to our confidence in the deliverability of targeted EBITDA profitability in 2018. Given the progress being made, the 3.0x FY18 EBITDA rating looks extremely attractive.

Companies: 7Digital Group

16 Aug 17

Lookers wary of future despite strong H1 numbers

Shares are down this morning off the back of Group's half year results and caution of the market's future.

Companies: Lookers

16 Aug 17

Epwin: trading figures in-line, cost inflation pressures cause share price drop

Panmure and Zeus have both adjusted their year-end forecasts for the Group. Shares off 17% following profit warning.

Companies: Epwin Group

16 Aug 17

Quarto: shares dive as bid talks collapse

The good news for the Group was short lived after discussions did not progress to the satisfaction of the Board.

Companies: Quarto Group

16 Aug 17

Marshall Motor Holdings - Analyst interview, Zeus Capital

16 Aug 17

N+1 Singer - Morning Song 16-08-2017

Lookers (LOOK LN) Strong results and well positioned to deliver on strategic growth

Companies: Lookers

16 Aug 17

N+1 Singer - Lookers - Strong results and well positioned to deliver on strategic growth

Interim results reveal a strong H1 performance, with market outperformance in all areas of the business (including mid single digit LFL unit growth in New and Used, on maintained GPPUs). Whilst the outlook commentary signals a slightly more cautious view in New, the market remains close to all time high levels and the significant brand enhancement strategy completed over 18 months means we continue to anticipate market outperformance in both sales and GPPU. With the impressive CMD event still fresh in mind from May, we remain upbeat about future prospects and believe the valuation is unduly low on 7x P/E and 3.4% yield. M&A remains on the cards should vendor price demands correct and just deploying half available resource should deliver accretion of c15%. The shares should rise today.

Companies: Lookers

16 Aug 17

Pre close update

Companies: Epwin Group

16 Aug 17

H1 2017 Results

CLS has delivered an excellent set of interim results in what has been a transformational period for the Group. Profit after tax increased to £99.0m (H1 2016: £29.5m) reflecting a property valuation uplift of £48.7m (H1 2016: £2.4m) and profit on sale of properties of £41.7m (H1 2016: £4.4m). The EPRA NAV per share increased to 268.5p (+9.3%) compared to EPRA NAV at 31 December 2016 at 245.6p (restated for the share subdivision). The progressive dividend has delivered an interim dividend at 2.05p (+6.6%) and on the basis of a one third: two thirds split we anticipate the full year dividend to be 6.15p. The shares have performed very well and are up 53% in the last 12 months and 40% YTD. Despite this the shares are still trading at an unwarranted 20% discount to EPRA NAV of 268.5p. We have increased our target price to 248p/share (from 234p) to reflect our view that the shares should not trade at more than a 7.5% discount to EPRA NAV. Buy.

Companies: CLS

16 Aug 17

Cost inflation remains an issue

Companies: Epwin Group

16 Aug 17

Robust H1, forecasts unchanged

Lookers has delivered a solid set of interim results this morning, with adj. PBT from continuing operations (ex parts) up 18% to £50.2m (H1 2016: £42.6m). There was a good performance across all new, used and aftersales demonstrating a robust margin performance across all segments of the business. The trading outlook remains uncertain as we are currently seeing across the sector, and clearly September remains key for the full year performance. We are maintaining our forecast assumptions for now, and believe the valuation remains undemanding given the company’s long term track record of generating value.

Companies: Lookers

16 Aug 17

Termination of bid discussions

The discussions announced on 8 August, with an unnamed bidder have been terminated by mutual agreement. The approach was unsolicited. Discussions had not progressed to the satisfaction of the Board due to regulatory approvals extending the process longer than indicated. Mindful of the need to deliver a strong finish to the year, the Board was not prepared to prolong discussions during a key trading period. QRT confirmed its confidence of delivering a strong finish to the year. Our recommendation, estimates and TP are under review.

Companies: Quarto Group

16 Aug 17

Interim Results to 30 June 2017

CLS Holdings plc (CLI.L / CLI LN) has reported Interim Results for the period 1 January to 30 June 2017 today. The Company have reported a strong set of results with record EPRA net assets per share. Highlights are as follows: EPRA net assets per share: 268.5 pence (31 Dec 2016: 215.1 pence); Profit after tax: £100.0 million (2016: £29.7 million); Earnings per share: 5.3 pence (2016: 8.1 pence); and an Interim Dividend of 2.05 pence.

Companies: CLS

16 Aug 17

Panmure Morning Note 16-08-2017

Vectura has signed an agreement with Dynavax for a lung cancer program using Vectura’s smart nebuliser technology. Vectura will receive some ‘modest’ milestones and development service revenues. We see the agreement as incrementally positive, though with the potential to be very significant in the future. It supports our argument that the depth of Vectura’s technology in the respiratory field makes it a partner of choice. We make no changes to our forecasts (either revenue or R&D spend). We reiterate our BUY recommendation and 150p price target.

Companies: Vectura Group