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22 Aug 19

Strong FY19 results, strong structural position

Arcontech has reported a strong set of FY19 results that have driven large but still conservative upgrades to our existing 2020 estimates. In this report, we also present an in-depth review of the Arcontech investment case, which we split into two parts. For Arcontech’s organic business, we expect that the company’s robust structural position can continue to deliver at least 6% revenue growth (FY19 +12%) and at least 7% EPS growth (FY19 +26%) in 2020-21. Meanwhile, we believe that Arcontech’s strong balance sheet creates a range of options for Arcontech as an acquirer or target, or could alternatively facilitate greater shareholder returns. We upgrade our price target to 200p based on 25x 2020 EPS, and Arcontech trades on 12m fwd multiples of 19x P/E, an EFCF yield of 3.8%, and a dividend yield of 1.4%.

Companies: Arcontech Group

16 Aug 19

Cenkos: Equals Group Plc - Adding the fuel for accelerated growth

As Equals broadens its retail and corporate offer beyond its retail FX legacy, the company is transitioning into a global, multi-product, highly profitable e-banking specialist with an integrated supply chain. To drive sales of its promising corporate expense platform, pursue attractively priced payments acquisitions and meet increased collateral requirements, the company is raising £16m (gross) in new equity inclusive of a £2m open offer. We believe these steps will lead to accelerated growth, particularly in FY21E, towards revenues of c£60m.

Companies: Equals Group

22 Aug 19

Strongest ever pipeline accompanies SaaS transition

Interims to June report performance in line with unchanged expectations. Our previous note title, “sunshine and Cloud”, remains appropriate: with targeted expansion in sales resources, the group has experienced 48% growth in the total value of pipeline deals since January, with all-time highs in volume of larger opportunities, within which SaaS business has expanded sharply. Against an unusually strong 1H comparative, we are confident of FY forecasts, tailored for 2H strength as well as increasing proportion of SaaS deals, which will also enhance multi-year visibility. Underlying commercial momentum is increasing in tandem with Sopheon’s earnings quality from growing recurring revenue (currently $15.3m ARR), as the use cases of the Accolade software product broadens and with it the sales funnel. Target 1,425p reiterated.

Companies: Sopheon

21 Aug 19

LIBERUM: NewRiver* - Not all Retail is the same

NewRiver’s current valuation does not reflect its significant differentiation to Retail peers. In our view, the 38% share price decline since April is overdone.

Companies: Newriver Reit

21 Aug 19

HomeSend – home straight

Wameja (formerly eServGlobal) is a direct 35.68% investment in the well-funded HomeSend (HS) JV with Mastercard, a partnership with a payment industry global leader in the $127 trillion cross-border payments market. The sale of the legacy business removes distraction and appeases risk, enabling focus on the value and opportunity in HS as payment platforms such as TransferWise and Monzo – cross-border in particular – see valuations soar. The 2Q update highlights strong growth and, with Mastercard backing, success is surely inevitable. Although patience may be required, Wameja is built for it and the longer the inevitable corporate action takes, the higher peer group multiples grow. With a fair value of 30-50p, we reiterate our 20p 12-month target price as the market gains awareness of value of the platform, in anticipation of a corporate event.

Companies: eServGlobal

21 Aug 19

LIBERUM: Costain* - Interims slightly ahead and further evidence of margin progression

H1 results were slightly ahead of expectations with divisional operating margins increasing from 3.5% in H1 18 to 4.0% in H1 19. We leave our FY19 earnings estimates unchanged given that management has confirmed it is trading in line with revised expectations.

Companies: Costain Group

23 Aug 19

LIBERUM: Plus500* - Anticipated regulation of Australia

The Australian regulator has acted swiftly, with a package of measures not dissimilar to those adopted by ESMA and now national laws across Europe. The reduction in company revenues appears to be close to 7.5%, with 25% of Australian revenues protected by the wholesale designation and the remainder dropping by 2/3.

Companies: Plus500

14 Aug 19

Cenkos: Duke Royalty Ltd - Revenues and profits coming through

Duke's FY19E pre-close update highlights a step change in YoY financial performance, anticipated by our FY19E forecasts. The royalties from all 12 partners are beginning to come through, met with a stabilising cost base, producing operationally geared profit growth. As royalties from partners annualise over FY20E, we see another large profit uplift ahead.

Companies: Duke Royalty

19 Aug 19

Cenkos: IXICO Plc - Performance driven upgrade

Following the recent commercial update, IXICO has released a trading update highlighting its strong revenue growth and anticipating the results for FY19 will be ‘materially ahead of current market expectations'. In light of this performance and ahead of the release of the full year results to Sep-19, we are upgrading our forecasts as discussed below. We believe IXICO's proprietary AI algorithms, focus on the growing CNS market and established client relationships support our Buy recommendation.

Companies: IXICO

22 Aug 19

Interims in line with recent update

Sopheon’s interim results reflect a return to a stronger second half weighting, as flagged in July’s trading update – although EBITDA is $0.5m ahead of the number in that announcement. Alongside the delays in closing some license contracts in the first half, management reiterates the strength of the new business pipeline and the supportive underlying market conditions, and notes customers apparently reverting to a year-end buying pattern. With a sharp increase in the proportion of SaaS business in the pipeline – reflective of industry procurement trends - we expect to see higher recurring revenues over time (bringing greater visibility) and enhanced lifetime customer revenue. Chairman Barry Mence comments that the future prospects for Sopheon ‘have never been brighter’ when highlighting the positive trends for the Group in the outlook statement – and we note the pipeline and the long-term value being built within the growing SaaS business.

Companies: Sopheon

20 Aug 19

LIBERUM: Non-Standard Finance - EPS +13%, DPS +17%, trading in-line

One stable cash-generating business, one growing at 40% and the big one growing at 22%. The company is working towards lower borrowing costs and higher returns at its biggest business as it moderates growth and benefits as recently-opened branches mature.

Companies: Non-Standard Finance

15 Aug 19

On a clear flightpath

Avation is a lessor of commercial passenger aircraft to a number of airlines, including VietJet, airBaltic, easyjet, Air France and Virgin Australia. The business was founded in 2006 by Jeff Chatfield, its current Executive Chairman, and is quoted on the full list. From a standing start, Avation has grown its fleet to 48 commercial passenger aircraft and has a proven capacity to buy and sell aircraft assets profitably. Its fleet is well diversified both by aircraft type and customer base. Our forecasts presently only reflect the addition of ATR 72-600s on order, leaving scope for our estimates to be raised as further aircraft are added to the fleet. Ahead of full year results next month, we see scope for another year of strong progress in FY 2020E for this US$ business and see fair value at 346p, some 20% above the current share price.

Companies: Avation

15 Aug 19

Tencent drops after weak guidance, SoftBank makes energy investment, Security software leaks 1m fingerprints

Tencent shares slumped as much as 3.88% on Thursday after the Chinese technology giant missed analyst expectations, despite beating forecast on earnings. Revenue rose 21% year-on-year to 88.82 billion yuan. Profit attributable to shareholders beat analyst forecasts, rising 35% year-on-year to 24.14 billion yuan. The company's gaming division returned to growth, posting revenue of 27.3 billion yuan, up 8% year-on-year, with mobile games performing particularly well.

Companies: KAPE AVST BIDS CDM CNS DFX ECSC FLX FDEV GFIN IGP KWS NCC OSI SOPH SUMO TM17

05 Aug 19

Results don’t need to be appealed

Burford has announced its interim results for 1H’19 and has produced another excellent set of figures. After stripping out third-party interests, revenue was up 40% to $287m and earnings grew 36% to $225m. Litigation investment was again the star, with income also increasing 36% to $265m. While this saw some benefit from the recent Petersen transaction, there were strong results beyond that with the rest of the portfolio producing a first-half RoIC of 78%. These brought total recoveries to $1.16bn from 99 investments, with a cumulative RoIC of 98% (from 85% to 31 December 2018) and IRR of 32% (from 30%).

Companies: Burford Capital

13 Aug 19

Trade Secrets of a Professional Investor & Equity Analyst

Back in May 2003, I was ‘burning the midnight oil’ at UK mobile operator O2, but had a career changing epiphany on a day off – strangely whilst gardening of all things. You see, I’d previously bought a chunk of Trafficmaster stock, a supplier of ‘smart driving’ services. But in the 2 hours it took me to trim a couple of hedges & mow the lawn – the shareprice doubled, after the firm won a landmark contract with Peugeot.

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23 Aug 19

ERM Power - Shell announces takeover offer

ERM Power has announced a takeover offer by Shell Energy Australia for 100% of its share capital at a cash price of A$2.465 per share, broadly in line with our DCF-based base case valuation of A$2.4/share. ERM’s directors and the largest shareholder, Trevor St Baker, support the proposal, which will be subject to shareholder approval – likely in or around early November 2019.

Companies: ERM Power

23 Aug 19

LIBERUM: UK Small & Mid Cap Dispatches

Strategy Update, Plus500, XPS Pensions Group, SMID Market Highlights

Companies: Plus500 XPS Pensions

23 Aug 19

LIBERUM: Plus500* - Anticipated regulation of Australia

Companies: Plus500

23 Aug 19

Henry Boot - Half Year Results 2019

23 Aug 19

Profit stable in challenging H1

Tribal reported interim results which highlight growing demand for cloud services and improving Annually Recurring Revenues (ARR) (+7% y/y; constant currency). Profitability benefitted from the rising proportion of recurring revenues, with Adj operating margins up +70bps to 15.5% (constant currency). Revenues were down 4% y/y (constant currency: 3%) driven by the early curtailment of a QAS contract. New sales opportunities in HE were also limited, although performance in FE and other markets remained strong. As a result of low HE opportunities we trim our revenue forecasts, with earnings down 5-6% for FY’20E and FY’21E. We continue to see Tribal as exceptionally well positioned to benefit from Cloud demand, and we see value at current levels (FY’19E EV/EBITDA 8.1x; 40% discount to peers).

Companies: Tribal Group

23 Aug 19

First Light

Jersey Oil & Gas (JOG) – Corporate – Additional Licence Award

Companies: Jersey Oil And Gas

23 Aug 19

GMP FirstEnergy ― UK Energy morning research package

Westmount Energy (WTE LN) (not covered): Subscription to raise up to £5.0 mm | Lekoil (LEK LN) (not covered): Acquisition of participating interest in OPL276 in Nigeria | Tlou Energy (TLOU LN) (not covered): Sustained gas flows

Companies: WTE LEK TLOU

22 Aug 19

Executive interview - Marshall Motor Holdings

22 Aug 19

Cenkos: 88 Energy Ltd - A Premier Partner

88 Energy has signed a Sales and Purchase Agreement (SPA) with Premier Oil PLC (Premier), through which Premier will farm into the Western Play Fairway at Project Icewine. Under the SPA, Premier will earn a 60% operated interest by paying the full cost of the Charlie-1 appraisal well, up to a cap of US$23m, with an option to earn an additional 50% working interest on success in the Central or Eastern play fairways by spending a further US$15m. The Charlie-1 well is expected to be drilled and tested during Q1/20, penetrating multiple stacked horizons and potentially de-risking a large part of the conventional portfolio at Project Icewine. 88 Energy will retain a meaningful 30% working interest within the Western Play Fairway, containing net mean prospective resources of 720mmbls. We update our model, reducing 88 Energy's working interest across the Western Play Fairway, whilst increasing the chance of success across the Charlie-1 prospects. We reduce our price target to 2.6p (from 3.1p) and reiterate our BUY recommendation.

Companies: 88 Energy

22 Aug 19

Cenkos: Rotala Plc - H1/19A Interim Results

Rotala has produced a robust set of Interim Results, with improved profitably YoY. We maintain our forecasts as trading remains in line with expectations. Trading on an FY19E P/E of 7.8x and offering a 4.8% prospective dividend yield, we feel the stock offers good value to investors. Buy.

Companies: Rotala

22 Aug 19

Premier Oil - Half Year Results 2019

22 Aug 19

First stage in potential world-class copper mine

Phoenix Copper Ltd (PXC) achieved a further milestone in its strategy for a staged development of the potentially world-class Empire copper mine in mining-friendly Idaho, US. The new economic model for an open pit “starter mine” is key to the Feasibility Study due by 2Q’20. Capital and cash operating costs have been cut by 25% and 7%, respectively, with minimal production impact. This mine will provide cashflow to explore far more extensive mineralisation in the deeper sulphide ore body and adjacent land package. While we evaluate PXC’s upside in more detail, our estimated DCF valuation for the first mine is 32p/share, and 49p/share using the company’s base-case assumptions.

22 Aug 19

H1 Results: Another Strong Performance

Net Income after tax of US$5.1 million was 39% higher than our forecast of US$3.7 million, primarily due to a lower than expected depreciation charge for the half year and lower financing charges. EBITDA for the half year of US$12.6 million was 5% below our forecast of US$13.2 million. Capital’s EBITDA margin of 23% is in line with both Tamesis estimates and H1/2018 despite the additional overheads in establishing the West African business. Cash from operations of US$10.5 million was 22% lower than our expected US$13.3 million – attributable to a larger than expected change in working capital.

Companies: Capital Drilling