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07 Jul 20

Well positioned with excellent growth prospects

Kape’s recent Capital Markets Day (CMD) was an extremely useful update on the many benefits of integrating complementary acquired businesses (including the collaboration between engineering teams) and the opportunities for upselling that new product development brings. Over the last six months, Kape has proceeded with the integration of PIA, expanding the growth of new users through the application of the Group’s user acquisition knowhow and technology. It has also made further enhancements to its product offering which, inter alia, will improve user engagement and retention. This note looks to bring out the main points from the CMD and highlights the significant progress that has been made this year.

Companies: Kape Technologies

07 Jul 20

Cenkos: Seeing Machines Ltd -- USA to mandate DMS from 2024

The ‘Moving Forward Act', the strongest automotive safety bill in decades, has now been passed in the House of Representatives. The bill is focused on advancing safety technologies proven to reduce crash and harm and to make sure strong safety standards are in place to save lives. The bill, which now needs to be passed in the Senate, will mandate automatic braking, lane-keeping, blind-spot detection, event data recorders as well as DMS in all cars and trucks sold in the US from 2024. This aligns with the European General Safety Regulation, which passed into law in November 2019. However, in the EU, the European Association of Automobile Manufacturers (ACEA) has requested a 2‐year delay for the introduction of the 2022 Euro-NCAP protocols due to the projected lengthy time that will be needed to recover from the effects of COVID-19. Euro NCAP has agreed, and a delay is now expected to the 2022 and 2024 rating. The new dates will give automakers and Tier 1 suppliers more time to incorporate the necessary changes given the events of recent months with a number of manufacturers announcing 12 month delays to new models.

Companies: Seeing Machines

01 Jul 20

THE MONTHLY July 2020

A number of REITs have the ability to thrive in current market conditions and thereafter. Not only do they hold assets that will remain in strong demand, but they have focus and transparency. The leases and underlying rents are structured in a manner to provide long visibility, growth and security. Hardman & Co defined an investment universe of REITs that we considered provided security and “safer harbours”. We introduced this universe with our report published in March 2019: “Secure income” REITs – Safe Harbour Available. Here, we take forward the investment case and story. We point to six REITs, in particular, where we believe the risk/reward is the most attractive.

Companies: AGY ARBB ARIX BUR CMH CLIG DNL HAYD NSF PCA PIN PXC PHP RE/ RECI SCE SHED VTA

09 Jul 20

Dart Group*

FY20 results – All Focus on Resuming Operations

Companies: Dart Group

08 Jul 20

WHI Equity Research: Jubilee Metals (JLP)

Robust, cash-generative production from mining waste Jubilee operates several chrome-Platinum Group Metal (PGM) operations in South Africa and is constructing a zinc-lead (vanadium) plant at Kabwe in Zambia after already commissioning the copper and cobalt circuits (the ‘Sable' refinery). The company has a growth pipeline identified and significant opportunities to find new projects in Africa (or globally); more specifically, Jubilee announced that it is looking to increase its copper (cobalt) production in Zambia aggressively to make full use of the Sable Refinery. Jubilee also owns the Tjate PGM project in South Africa, which is currently on hold. The company model is to treat its own waste materials and to supplement these with third party ores and wastes where possible. This year has been nothing if not eventful for Jubilee, but further progress and material catalysts are expected over the course of 2020. Jubilee has a high-margin business with cash on hand, and we see plenty of opportunities for Jubilee to capitalise on its robust business model through the global Covid-19 crisis and beyond. We initiate with a fair value of 11.2p/sh

Companies: Jubilee Platinum

03 Jul 20

Manolete Partners

Accelerating activity in to FY21

Companies: Manolete Partners

07 Jul 20

Finally, a change of strategy?

With a new CEO, Amanda Blanc, Aviva’s shareholders could dream of a possible change in the group’s strategy, with a more focused insurance business. The new Chief has an opportunity to take painful decisions in a year where no one will require a high operating performance.

Companies: Aviva Plc

08 Jul 20

Hurricane Energy

Operational update

Companies: Hurricane Energy

08 Jul 20

When the tough get going

Successful businesses ‘never let a crisis go to waste’. Indeed since an otherwise strong Q1’20 was interrupted by COVID-19, Mpac has further streamlined operations, accelerated R&D and launched new remote equipment diagnostic/acceptance testing, virtual reality & other ‘Industry 4.0’ services.

Companies: Mpac

30 Jun 20

D4T4 Solutions - A transitional period sets up secure growth in FY 2022

The FY 2020 results are in line with our expectations and reflect the impact of the previously announced switch from large perpetual licences to recurring annual term licences during the year. Despite the COVID strictures, with its large global partnerships, D4t4 continues to close numerous lucrative data gathering and data management contracts with major blue-chips around the world. It is successfully converting a high proportion of its new sales to recurring revenue contracts, but this will sacrifice growth and earnings in FY 2020 and FY 2021. Nevertheless, with growing recurring revenue base, an exciting pipeline and a very strong balance sheet, D4t4 is very well positioned for continued long-term growth and security.

Companies: D4T4 Solutions

09 Jul 20

RBL interim revenues on track for +36% H1, uncertainty elsewhere

RBG Holdings pre-close trading update to June 30th confirms a strong H1 performance for RBL, the Group’s law firm, with revenues up 36% like-for-like to c.£11.4m YoY. Convex, the CF boutique, understandably has faced COVID headwinds, with most of its H1 pipeline deferred indefinitely, whilst Litigation Finance continues to grow its pipeline and financing commitments on a longer term view. Due to continued uncertainty from COVID we withdraw our forecasts this morning, with a view to reinstating once more clarity on H1 outturn and momentum into H2 is available.

Companies: Rosenblatt Group

08 Jul 20

Independent review of UK supply chain

Independent review launched: The Boohoo Group has announced the launch of an immediate independent review of its UK supply chain, intended to identify any areas of risk and non-compliance and to further strengthen the Group’s compliance procedures to ensure similar allegations will not recur in the future. The review is to be led by Alison Levitt QC, a highly experienced advocate who has previously reported on complex issues, including safeguarding enquiries. Boohoo has also announced an initial additional £10m investment in ensuring any supply chain malpractice is eradicated and is accelerating its independent third-party supply chain review with ethical audit and compliance specialists Verismo and Bureau Veritas.

Companies: Boohoo Group Plc

09 Jul 20

Exits Native Antigen Company for strong return, heading to evergreen

The Native Antigen Company (“NAC”) has been acquired by LGC for up to £18.0m – with the ongoing COVID pandemic highlighting the value of knowledge and execution in the infectious diseases space. Mercia invested in NAC via both its balance sheet and 3rd party funds. The exit represents a strong return for both sources of capital, validating complete connected capital to optimise value creation. For the balance sheet stake, the £5.2m proceeds represent a £2.5m gain on realisation (c.1.5% of our FY21e NAVps). Final Results will be announced next week, when we will review our forecasts. The shares are currently trading at a 45% discount to NAV (which is 20% cash). Today’s exit demonstrates justification for a much narrower discount, if not a premium, to conservative carrying values.

Companies: Mercia Technologies

03 Jul 20

Avon Rubber - Cream rises to the top

The announcement that Avon Rubber is to sell milkrite | InterPuls, its dairy division, to DeLaval Holding for £180m gross proceeds is strategically logical and financially compelling. The fit of dairy and defence has always looked slightly anomalous and the terms of the deal show that the opportunity to augment dairy through value-accretive deals is difficult given the scale of the business and opportunities. Management must now recycle the cash balances that will be created into Avon Protection, where there are a greater number of potential investments.

Companies: Avon Rubber

07 Jul 20

Open Orphan*

Laboratory Services Contracts Signed

Companies: Open Orphan

10 Jul 20

Impaired Wintershall Dea

BASF’s preliminary Q2 figures were characterised by a slightly better than expected operating and earnings performance before one-offs, but were hit by the negative effect from the impairment in the oil & gas business. The latter submerged the preliminary profitability figures to below our expectations. Consensus was also not meet on net earnings.

Companies: BASF

10 Jul 20

Shortsighted or too cautious?

We still have not made up our minds and it will be quite challenging to come to a conclusion without additional information. Nevertheless, the preliminary figures guide to a stronger than expected Q2. Even profitability was far better but, without additional details, it is quite difficult to see where the performance stems from. Preliminary figures were marginally above our estimates, but beat consensus at the profitability level.

Companies: Covestro

10 Jul 20

HSBC's parents divorce

Beijing’s forced implementation of the Hong Kong security law threatens the region’s financial hub status. This is a potential game-changer for HSBC but it does not seem to come as a surprise for the group as confirmed by the acceleration of its investments in China or its efforts to secure a leading position on the RMB.

Companies: HSBC

10 Jul 20

Morse code for outperformance in Europe – executive interview

10 Jul 20

Inspired Energy raises up to £35mln in placing and open offer to fully acquire Ignite Energy

10 Jul 20

Inspired Energy raises up to £35mln in placing and open offer and fully acquires Ignite Energy

10 Jul 20

AJ Lucas Group - Termination of coverage

Edison Investment Research is terminating coverage on ADMIE Holdings (ADMIE), AJ Lucas Group (AJL), Australis Capital (AUSA), Elbit Medical Technologies (EMTC), Focusrite (TUNE) and PPHE Hotel Group (PPH). Please note you should no longer rely on any previous research or estimates for this company. All forecasts should now be considered redundant. Previously published reports can still be accessed via our website.

Companies: AJ Lucas Group

10 Jul 20

Australis Capital - Termination of coverage

10 Jul 20

Elbit Medical Technologies - Termination of coverage

10 Jul 20

PPHE Hotel Group - Termination of coverage

Companies: PPHE Hotel Group

10 Jul 20

ADMIE Holding - Termination of coverage

10 Jul 20

Focusrite - Termination of coverage

Companies: Focusrite

10 Jul 20

SP Angel . Morning View

Condor Gold* (CNR LN) – Non-executive director’s share purchase | Jangada Mines (JAN LN) – Further drilling results from the Pitomberias vanadium property | Petropavlovsk (POG LN) – Court ruling remain pending and a new GM requisition | SolGold* (SOLG LN) – Magnetic survey confirms Rio Amarillo potential | Trans-Siberian Gold (TSG LN) – Vein 25 East Zone development is well progressed

Companies: CNR JAN POG SOLG TSG