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12 Feb 19

LIBERUM: Plus500* - Too much of a good thing

Elevated volatility is good for trading platforms, but market falls in Q4 caused significant client losses ("P&L gain”), rather than higher spread revenue. The company is choosing to subtract this gain from Q4 revenues and to base 2019 guidance on the organic growth which they have always achieved.

Companies: Plus500

19 Feb 19

Cenkos: Seeing Machines Ltd - Sixth Automotive OEM Design Win

Seeing Machines, the advanced computer vision technology company that designs AI powered operator monitoring systems to improve transport safety, has secured a new programme design win with a global US-headquartered automotive OEM to deliver the Group's Driver Monitoring System (DMS) technology. Seeing Machines is working alongside a major Tier 1 partner to deliver the new programme via its highly scalable FOVIO Chip, with mass production scheduled from late 2020, and an estimated lifetime revenue of A$6M for the initially planned car models. The design win is classified as a small value programme but is considered strategic with a significant potential for volume/model expansion with increasing demand for driver monitoring systems, globally.

Companies: Seeing Machines

19 Feb 19

Cenkos: Duke Royalty Ltd - A myriad of royalties to come

Duke has announced a new £10.0m royalty investment into MRDB Holdings, trading as Miriad Products (Miriad), the largest privately-owned wholesale supplier of recreational vehicle (RV) parts in the UK. Following the recent addition of Capital Step, Miriad represents Duke's twelfth core holding, further diversifying the royalty portfolio. The deal continues the theme of investment into well-established UK businesses, with strong barriers to entry that help protect long-term royalty income.

Companies: Duke Royalty

13 Feb 19

Competitor highlights market strength

We believe the positive trading update from one of CloudCall’s key USbased competitors, Ring Central, highlights the ongoing strength of the UCaaS market. RingCentral’s Q4 results and guidance beat analyst expectations, driven by mid-sized enterprise clients and supported by a buoyant market environment. We believe this augurs well for CALL. Enterprise engagement is a key area of focus during 2019 and the beat adds to our confidence over the 30% revenue CAGR we forecast on a midterm horizon. The shares trade on 2.2x FY19E EV/sales. Our PT implies material upside and we reiterate our Buy rating.

Companies: Cloudcall Group

19 Feb 19

HomeSend progress update

Regular updates give us visibility into progress at HomeSend (HS) – the company’s 35.69%-owned JV with Mastercard. Today’s update excites with the first clear evidence of the changed focus as almost a third of the December flow now comes from account-to-account (A2A) transactions rather than remittances (i.e. banks and financial institutions instead of just MTOs). Although a key element of the eServGlobal investment, HS is private and at this stage commercial sensitivity limits information available. We assume that more information will become available as its scales. ESG’s management provides these updates to enable us to fine-tune our financial expectations for the JV and the group as a whole. This HS update follows on from one in late November and comes just ahead of the ESG’s FY 2018 results, due next week.

Companies: eServGlobal

12 Feb 19

Acquisition and placing

SDI announced the acquisition of Graticules, a manufacturer and supplier of standard and bespoke reticles and graticules for the microscopy, metrology, education, scientific and defence markets. The company paid c.£3.4m, which represents historic FY 2018 EV/Sales and EV/EBIT multiples of 1.8x and 5.1x, respectively. The acquisition was funded by the full drawdown of its £5m revolving credit facility as well as the placing of 7.276m shares at 34p, raising £2.5m. There may be a further £0.1m raised through an open offer on PrimaryBid. We expect the acquisition to be 1% accretive to adjusted EPS in FY 2019 and c.5% in FY 2020. We raise our target price by 6% to 51p, which implies a FY 2020 EV/EBITDA of 9.9x and adjusted P/E of 16.6x with a FCF yield of 5.6% in FY 2020.

Companies: Scientific Digital Imaging

12 Feb 19

Share & share alike

Roses are red – markets are blue! The rally since the start of the year resumed this week, after a pull-back last week. The FTSE 100 has risen due to the weakness of sterling and the impact on its dollar-earning constituents. More domestically-oriented indices have also risen but lagged more recently. The latest Brexit twist is due later with a statement to Parliament on the negotiations. Company news continue to dominate the morning headlines and amendment votes the evening ones. In Share News & Views we comment on DCC, EU Supply* FireAngel*, Location Sciences*, Northbridge* and NWF.

Companies: AOR APC BONH BMS CTG CRPR DMTR ESC EUSP FDM FA/ LSAI NKTN PCF SNX TCN VRE W7L

19 Feb 19

Morning Comment

Walker Greenbank is a higher end interior furnishings business with well-established global brand names and manufacturing facilities in the UK. The Group has this morning provided a year-end update confirming that results for the year to 31 January 2019 are anticipated to be in line with the Board’s revised expectations; these benefitting from significantly higher licensing income, including from a major contract with H&M. Underlying core trading, most notably in the UK, has continued to be challenging, a trend that in the near term shows little sign of abating. Reflecting these trends, whilst assuming that licensing income reverts to more normalised levels in the current financial year, leads us to reduce our FY 2020E earnings expectations by 25% this morning. Today’s update again illustrates the current market uncertainty and whilst this will take time to improve, we do believe that the Group remains strategically well positioned in its markets and should benefit from its overseas presence, further licensing opportunities and other initiatives in time.

Companies: Walker Greenbank

13 Feb 19

GB Group - Expanding eIDV in the US

GB Group (GBG) has acquired IDology, a US identity verification business, for an enterprise value of $300m/£231m. It has placed 39m shares at 410p per share to fund £160m of the purchase price, with the remainder coming from a new credit facility. We estimate that the deal offers significant cross-selling potential and will boost GBG’s international revenues to close to 50%.

Companies: GB Group

13 Feb 19

Small Cap Feast

United Oil & Gas (UOG.L) an oil and gas exploration and development company brought to the Official List (Standard Segment) in July 2017 by way of a reverse takeover of Senterra Energy plc. No capital to be raised, expected market cap of £17m and expected 28 Feb Techniplas –global producer and support services company providing highly engineered and technically complex components, making the supply chain to original equipment manufacturers more efficient. FYDec17 rev $515m.

Companies: NMRP PGD KDR CER CLIN NBB MLVN RENX BAGR D4T4

14 Feb 19

LIBERUM: MJ Gleeson* - Very confident for H2

Gleeson has reported PBT up 63%, 11% better than expected, with Gleeson Homes delivering 14% growth, as expected, and Strategic Land increasing profit from £2m to £9m, driving all of the beat. Management expects full year profits at least in line with expectations and we leave PBT estimates unchanged.

Companies: MJ Gleeson

18 Feb 19

Nuclear contract win highlights growing momentum for Hayward Tyler

Avingtrans’ subsidiary, Hayward Tyler, has been awarded a material aftermarket contract from Vattenfall in Sweden for critical parts and components to help extend the life of the Forsmark nuclear power station. These parts will replace original equipment supplied by Hayward Tyler in the early 1980s. The contract is worth over £10m, with delivery expected to be broadly evenly split across FY2021 and FY2022. We have made no changes to our estimates, as contributions from the new contract begin after our current forecast horizon. However we are encouraged by the increasing momentum at Hayward Tyler since its acquisition by Avingtrans. We also see good potential for the business to win further contracts in nuclear life extension, given its installed base of original equipment within nuclear plants around the world. Avingtrans shares remain on undemanding EV/EBITDA multiples (8.3x FY19 and 7.1x FY20), with interim results scheduled for 27th February.

Companies: Avingtrans

19 Feb 19

Robust interims show opportunity

In the first full six-month period since GDPR, DOTD has demonstrated that the Engagement Cloud platform continues to generate robust growth, through yet greater data integration and customer empowering insights. 33% headline growth from three strategic pillars included 15% organic revenue growth: pillar one, revenue from sales of additional functionality, grew 50%; pillar two, sales via strategic partners, grew 43% to constitute 41% of group revenue; and pillar three, international revenue, achieved growth of 40%. While Comapi suffered from UK retail exposure, the technology integration is well underway, leading to global opportunity from a fully omni-channel platform with broader functionality. With net cash of £16.7m at December 31st, the board has the benefit of balance sheet strength to consider all strategic opportunities. 12-month target 135p reiterated.

Companies: Dotdigital Group

31 Jan 19

Quarterly Research Outlook

The market has not faced quite so many conflicting challenges for a number of years, whether related to global geopolitics, trade wars, ongoing Eurozone issues or the “will they, won’t they” saga of Brexit. In our Best Ideas, we sought to highlight stocks that present investors with interesting opportunities following recent market moves. Those stocks, we believe, warrant investor attention, in many cases for uncorrelated or stockspecific reasons, regardless of the near-to-medium term market direction. These stocks, in general, represent attractive and well-managed businesses or assets, with share price catalysts and where valuations or recent stock performance provide investors with a good entry point.

Companies: 7DIG ABBY AMS ANX ARS ATYM AVON BLVN PIER CGS CAML CALL CSRT TIDE DTG DEMG ELM EMR FPO FST GTLY GENL GRI GEEC HDY HMI HAYD HEAD HILS HTG HUR IBPO IOG INDI JHD JOG KEYS KCT KGH LAM MACF MOD MKLW OXIG PCA PARK PMO RBW RMM REDD RSW RNO RKH RBGP ROR SUS SCPA SHG SOLG TWD TRAK TRI VNET VTC ZTF

14 Jan 19

Opportunity knocks

We are introducing our Best Ideas for 2019 and also review the performance of last year’s picks. We suggest ten solidly financed stocks with good business dynamics that ought to be considered for core portfolio holdings and six UK domestically focused stocks that our analysts believe should perform strongly in the event that uncertainties unwind. We also introduce a new style of research from N+1 Singer which presents a Company’s dynamics and metrics in a clear and concise manner and concentrates on the pivotal issues affecting that Company and an investment decision.

Companies: BCA CLIN CLG CBP DNLM EAH FDL FCRM FUTR GTLY INS GLE NICL SDL SPR TRI

20 Feb 19

Morning Note – 20 February 2019

Companies: CTP GHH LID

20 Feb 19

Cenkos: Landore Resources Ltd - BAM PEA Positive

Landore has released its Preliminary Economic Assessment of the BAM gold deposit in Canada by Cube Consulting which shows the robust economics of the deposit at this early stage. Based on a $1,300 gold price, the base case generates a post-tax net present value of $69.2m (5.1p per share) at 5% discount rate and post-tax IRR of 22.4% for 12.7Mt at 1.26g/t Au containing 515koz Au. With additional drilling to confirm the inferred ounces and continuity of the deposit it is possible to use an extended case resource of 19.7Mt also at 1.26g/t Au containing 800k oz which generates a post-tax NPV5% of $123.7m (9.2p per share) and post-tax IRR of 26.9%.

Companies: Landore Resources

20 Feb 19

Gooch & Housego - AGM warns of softer microelectronics but better subsea

The AGM update points to a change in the business mix, with weaker microelectronics demand, particularly in China, partly offset by better-than-expected growth in subsea fibre couplers. 2H order books and demand profile signals a stronger 2H. The change results in a less rich margin mix and prompts us to downgrade 2019 EPS by 11.6%. We reduce our price target by a similar amount from 1,675p to 1,475p, pointing to a 2020 P/E of 22x. We anticipate that the shares will react to this disappointing statement but believe that the group’s fundamental attractions remain, but may need confirmation of a stronger level of microelectronics demand to restore outperformance.

Companies: Gooch & Housego

20 Feb 19

LiDCO - Full-year trading update

The transition from a capital purchase to HUP SaaS model is proving harder than expected. The level of interest in HUP remains strong, with no evidence of pipeline withdrawals. The active pipeline of contracts in the US as well as feedback from key customers in the US and UK, who report increased haemodynamic monitoring usage and commensurate consumable savings, gives us confidence in the future. Full-year revenues were £0.4m lower than expected at £7.3m, but with lower costs (c.£0.3m), we expect the adjusted pre-tax loss to be c.£2.0m. Net cash at year-end was £1.7m and is considered sufficient to execute on strategic objectives. We reiterate our target price of 11p. At this level, the stock would trade on a FY 2020 EV/Sales of 3.0x, falling to 2.5x in FY 2021.

Companies: Lidco Group

20 Feb 19

Bitesize briefing - Alkane Resources

20 Feb 19

Progress made in 2018 sets the business for long term value creation

Since hitting a high of 207p in September last year the shares have fallen back to c. 145p, a decline of c. 30%. This compares against declines in the FTSE All-share and UK General Diversified Industrials of c. 3%. Even against a more volatile green/clean tech comp set Ceres shares have underperformed YTD, despite the strong funding position and major commercial developments of last year. The current market capitalisation less estimated net cash values the business as at just c. £150m. This under values a business that raised c. £75m over the last twelve months from commercial customers, that took significant equity stakes, and equity investors. The cash position on the balance sheet is estimated to be enough to fund the development of the business through to commercialisation. There are very few disruptive technology businesses with this level of strength and visibility in its funding position. In unison with the commercial progress, financially the business has seen an improvement with the trading update in early December leading to revenue upgrades on the back of the Bosch and Weichai agreements.

Companies: Ceres Power

19 Feb 19

Ceylon Graphite: Back to Graphite's Original Source

Ceylon Graphite Corp, is listed on the TSX Venture Exchange. The company is an explorer for graphite and engaged in the development of graphite mines in Sri Lanka. The company holds exploration rights over a land package of around 121km². These rights cover areas of historic graphite production fro

19 Feb 19

121 Mining Investment - Cape Town 2019 highlights

19 Feb 19

Cenkos: Seeing Machines Ltd - Sixth Automotive OEM Design Win

Companies: Seeing Machines

19 Feb 19

Cenkos: Synnovia Plc - Broadly in-line is still fine

Synnovia has provided a trading update today, stating that it expects FY19E results to be “broadly in-line” with market expectations. The slight shortfall versus our previous forecasts (£83.8m in revenue, £8.3m of adj EBITDA) comes as the Films division recently suffered delays in the installation of new capacity leading to temporary constraints in the face of strong demand, while the operationally geared Industrials division has made further YoY progress since the interim results. We consider the shortfall to be a temporary in nature and see Films' need to add capacity as a positive indicator of growth prospects into FY20E and beyond.

Companies: Synnovia

19 Feb 19

Cenkos: Duke Royalty Ltd - A myriad of royalties to come

Companies: Duke Royalty

19 Feb 19

LIBERUM: The Renewables Infrastructure Group - Strong 2018 with more to come

TRIG's 11.6% NAV total return in 2018 benefited from a 0.3% reduction in portfolio discount rates, increased power price forecasts and operational enhancements. Dividend cover improved from 1.1x to 1.25x in the year (adjusted for scrip dividends), a result of an uplift in achieved power prices.

Companies: Renewables Infrastructure Group

19 Feb 19

Telford Homes - Sale of significant build to rent development for £105.5M

19 Feb 19

LIBERUM: Shield Therapeutics* - Value underpin, optionality and catalysts

The Shield investment thesis is simple in our view – the Norgine deal in Europe more than underpins the current valuation while the potential for US approval provides optionality worth >50% upside on a risk adjusted view.

Companies: Shield Therapeutics

19 Feb 19

13.5p special DPS

CLIG’s interims released yesterday are precisely in line with the update given on 16 January, except that it revealed: Group FUM rose 9.7% in January 2019 to US$5.1bn: with Sterling strengthening from $1.28/£1 to $1.30/£1, Group FUM rose circa 8% to £3.9bn. 9.0p interim DPS (1H18 interim DPS: 9.0p) will be accompanied by a 13.5p special DPS: both dividends will be paid on 22 March 2019.

Companies: City Of London Investment Group