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11 Dec 19

Pipeline remains robust with growing SaaS content

Sopheon’s trading update confirms that some of its customers are delaying decisions on contracts because of uncertainty prevailing in their own markets and businesses. At the time of the interim results, Sopheon’s management expected a return to a stronger second half weighting for the full year numbers. That is still the case and the Group continues to highlight the strength of the new business pipeline and a higher proportion of SaaS (Software as a Service) opportunities. Nevertheless, the anticipated signings of a number of opportunities have now slipped into 2020. With revenue visibility currently at $28 million, we conservatively move our current year revenue estimate down 13% to $29 million with a knock-on effect on EBITDA (down 29%). We also assume that buying cycles remain extended during FY 2020E and therefore take a prudent view on our numbers for that year as well with revenue and Adj. EBITDA estimates reducing by 10% and 40% respectively.

Companies: Sopheon

10 Dec 19

Are these unprecedented results a major opportunity?

Futura Medical has reported the results of the pivotal Phase III study (FM57) for its lead compound, MED2005. Whilst all doses achieved all primary endpoints against baseline (p<0.001) at 12 weeks, there was no differentiation between any active arms and placebo. The placebo arm consisted of the DermaSys formulation and these results suggest that this proprietary gel has an effect comparable to the active arms at all three glyceryl trinitrate doses (0.2%, 0.4%, and 0.6%). This data is clinically relevant and suggests that DermaSys alone may be effective in treating Erectile Dysfunction (ED). Clearly the data needs to be digested before licensing discussions with possible partners continue. Equally, the commercial opportunity, especially the OTC potential, will need to be assessed. Until we have greater visibility, we suspend our valuation and forecasts; for context our model valued Futura Medical at £127m (62p a share).

Companies: Futura Medical

10 Dec 19

Renewed banking facilities and HMRC payment

Augean has announced the renewal and extension of the Group’s banking facilities and also that it has paid all outstanding and disputed HMRC Landfill Tax assessments totalling £40.4m, including accrued interest. Management reaffirms it will continue to robustly challenge all HMRC assessments based on legal advice that the Group has correctly collected and paid appropriate landfill tax. The HMRC payment allows management to focus on the strategic development of the Group and provides investors with a much cleaner basis for valuation.

Companies: Augean

04 Dec 19

CloudCall

New partnership with TargetRecruit; Positive

Companies: Cloudcall Group

06 Dec 19

Cenkos: Duke Royalty Ltd -- Scaling of the portfolio delivering riches

Duke delivered significant YoY growth in H1/20A results, as earlier efforts to broaden the royalty portfolio came through this year. This strong growth will continue with recent debt & equity raises forward funding investments to income levels of £15m by FY21E. Met with an enhanced, but now stabilised cost base, operational leverage should drive continued strong adj EBIT growth (to £13m, at a c85% margin) and further DPS rises.

Companies: Duke Royalty

10 Dec 19

Short term caution, medium term confidence

Zytronic’s FY19 results (to September) are in line with expectations, confirming a customary improvement in H2 activity. As highlighted previously, a decline in Gaming volumes was the key driver of a 10% decline in Group revenue during the year. There is some near term caution in the statement with trading in the first two months behind the prior year. Our FY20 PBT forecast reduces by 29% as a result. Nevertheless, the pipeline is substantially higher than last year, underpinning medium term confidence. The dividend will no doubt be a focus for investors. This was maintained at 22.8p for the full year (11.8% yield), and the future policy is under consideration by the Board. On our revised forecasts, the shares are trading on 14.5x P/E with £13m net cash.

Companies: Zytronic

05 Dec 19

LIBERUM: PayPoint* - Growth drivers becoming more powerful

The H1 20 results were ahead. PBT fell 5% yoy to £24.0m and FD EPS fell 5% to 28.5p due to the non-repeat of the VAT credit in H1 19, although both were 7% ahead of our estimates.

Companies: Paypoint

11 Dec 19

On the road towards mainstream adoption

Rarely has Britain ever invented such world-beating technology as that developed by Kromek. Indeed its next generation radiation detectors are disrupting 3 major verticals - Medical Imaging (eg BMD & SPECT), Nuclear Detection (D3S) and Security Screening (Airport baggage/bottles) – each worth >$100m pa.

Companies: Kromek Group

10 Dec 19

Focused on building Laundry market presence

Photo-Me’s H1 results are solid with sales up +3.3% (-1.4% underlying), adj. PBT up +6.7% and FCF up +24.9%. Continental Europe led this growth through the acquisition of Sempa, the continued roll-out of Laundry and a better-than-expected photobooth performance in France. This was partly offset by challenges in the photobooth market in the UK. We expect these trends to continue, make no major changes to our full year forecasts and continue to highlight the 10% dividend yield (the interim dividend was held as expected) and the £25m net cash balance.

Companies: Photo-Me International

05 Dec 19

Solid State - Record trading in H120

Solid State delivered an 11% pro forma increase in group revenues and a 60% jump in adjusted profit before tax during H120. While some of this increase was attributable to factors such as favourable forex, which management expects will reverse in H220, the group is showing a sustainable benefit from the acquisition of Pacer in November 2018 and a drive to higher margin added-value activities in the Manufacturing division. Management is confident of meeting consensus expectations for the year, which are broadly unchanged since the September upgrade. The shares continue to trade at a substantial discount to peers for prospective P/E.

Companies: Solid State

10 Dec 19

LIBERUM: Futura Medical* - Unexpected P3 result means shift in strategy but potential approval timelines likely unchanged

Futura announced P3 results from its FM57 study testing MED2005 in 3 doses (0.2%, 0.4% and 0.6%). None of the doses showed superiority in improving erectile dysfunction outcomes vs. placebo.

Companies: Futura Medical

11 Dec 19

Cenkos: Kromek Group Plc -- Major increase in output expected

Recent investment in capital equipment has increased Kromek's CZT production capability seven-fold. Contracted medical imaging output will ramp up in H2E and revenue visibility for FY20E stands at over 90%. Kromek is on track for organic growth of +27% this year. We adjust our working capital assumptions to reflect a slightly slower cash recovery but momentum in the business and all time low share price support a Buy.

Companies: Kromek Group

04 Dec 19

Cenkos: IXICO Plc -- Revenues growing and profitable

IXICO has reported a strong financial performance for FY19A built on continued commercial focus and a strengthened organisation. Revenues of £7.6m were up 40% and gross margin was up 600bps versus FY18A and the company delivered its first year of profitability since IPO. EBITDA of £0.5m was strongly ahead of our forecast (+£0.1m) and delivered an EBITDA margin of 6%. We have maintained our revenue growth expectations of 20% for FY20E and FY21E but have upgraded our profit expectations given the strong reported performance. We maintain our Buy recommendation.

Companies: IXICO

21 Oct 19

Quarterly Research Outlook Autumn 2019

Following continued delays of a Brexit agreement, few sectors within the UK market have remained attractive to investors despite low valuations. One sector which has continued to outperform despite the political drama has been the UK video gaming sector (henceforth UK gaming), which we are fans of. We believe a combination of sector-leading growth, strong cash conversion and timely cyclical positioning support our positive view on the UK video gaming sector.

Companies: ABBY AMS ANX ARS ATYM AVON BLVN PIER BUR CGS CAML CDM CSRT TIDE CYAN DTG DEMG ELM EMR FPO FDEV GTLY GENL GHH GRI GEEC GKP HMI HAYD HEAD HILS HTG HUR IBPO IOG INDI JHD JOG KAPE KEYS KWS KCT KGH LAM LIT LOK MACF MANO MOD OXIG PCA PANR APP ESRE PHC PMO RBW RMM RBGP REDD RSW RNO ROR SUS SCPA SEN SHG SOLG SOM SUMO TM17 INCE TWD TRAK TRI VNET VTC ZOO ZTF

09 Dec 19

Reassurance on the FY 2019E outcome

In our view, today’s trading update from Amino reassures on the FY 19E financial outcome. Management expects to report trading performance in line with market expectations and strong operating cash flow delivery. The release confirms that 24i has been successfully integrated into the group, and we see the announcement of a contract win for the supply of an endto-end (“E2E”) video solution to Youfone as a further positive – it represents the first joint customer announcement from the “new” Amino group.

Companies: Amino Technologies

11 Dec 19

Sirius Real Estate - €20M acquisition of office complex near Munich

11 Dec 19

Reassuring improvement in the gross margin

Inditex has released quite healthy 9-months results. The continued strong sales growth and a good improvement in the gross margin during the third quarter (c. 60% in Q3 19 vs. 56.8% in H1 19) have resulted in a bottom-line yoy growth of 12% to €2.7bn in 9M 19.

Companies: Inditex

11 Dec 19

A 2020 re-rating is very likely

Since 2018, we have written many times that the timing was not good and that the business structure’s transformation will have a positive impact, though not before the second part of 2020. And now we are here: we believe a re-rating of ABB in 2020 is very likely. We have updated our model and our recommendation is changed from Reduce with a 5% downside to Add with a 16% upside.

Companies: ABB LTD-REG

11 Dec 19

Kromek Group 'well-positioned to report its highest ever full year revenues'

11 Dec 19

EPS upgrade (2019: +4.1%, 2020: +9.4%) (Cementir Holding)

EPS CHANGE CHANGE IN TARGET PRICE€ 9.49 vs 9.11 +4.24% We have reviewed our long-term assumptions: we believe that the industrial plan offers some upside to our valuation. Nonetheless, we remain especially cautious in our long-term assumptions especially on the cash generation side of our DCF, meaning that there is more chance of a revision upwards than of a revision downwards. CHANGE IN EPS2019 : € 0.50 vs 0.48 +4.11% 2020 : € 0.63 vs 0.57 +9.36% In our opinion, the 300bp EBITDA margin improvement by 2022 as well as the back-ended green capex should drive EPS higher as soon as 2020, compared to our previous assumptions. Cementir remains a strong buy in the capital-intensive cement industry thanks to its clever capital allocation: it now favours internal investment rather than acquisitions, due to the fact that the payback period is about half that of an acquisition. Bottom line, Cementir is truly the king of capital allocation in the cement sector.

Companies: Cementir Holding

11 Dec 19

HarbourVest Global: 'Providing investors access to global portfolio of private companies'

11 Dec 19

S&U - Resilient amid softer sentiment and economy

S&U’s update indicates trading has remained in line with management expectations but there are some slightly more cautious elements compared with our forecast assumptions at the time of the H120 results. As a result, we have modestly tempered our estimates for FY20/21. Even so, the shares trade prospective earnings multiples of below 9x while the yield is over 5%.

Companies: S&U

11 Dec 19

DiscoverIE Group's Nick Jefferies discusses interim results to September 2019

11 Dec 19

Zanaga Iron Ore signs 'milestone framework agreement' to advance flagship project

11 Dec 19

Shefa Gems Ltd's James Campbell details maiden resource and 2020 outlook

11 Dec 19

ADMIE Holding - Yield with growth

ADMIE Holding reported 9M19 results, with net income up 12% y-o-y, and said that IPTO’s 2019 development capex plan is being implemented in a timely manner. We believe the stock continues to trade at an excessive discount to peers and to the implied regulated asset base (RAB) value. Such a discount would only be justified if allowed regulatory returns were significantly below the actual cost of capital, which we believe is not the case. Our valuation of ADMIE Holding is broadly unchanged at €2.89/share and is roughly in line with the RAB value implied by IPTO.

11 Dec 19

XP Power - Temporary supply issues cause Q4 shortfall

In the process of upgrading its group-wide ERP system, XP Power suffered some short-term disruptions to shipments from mid-October to mid-November. While shipments have returned to normal levels, the company expects a revenue shortfall of c £6m for FY19, with a consequent impact on earnings. We have revised our FY19 forecasts resulting in a 10.7% reduction in our normalised EPS forecast. As order intake has been robust so far this quarter, we maintain our FY20 estimates.

Companies: XP Power

11 Dec 19

Arix Bioscience - Interview with Aura

11 Dec 19

Numis Corporation - Tough times but a positive start to FY20

Numis has continued to build its franchise against a difficult market background, with net additions to its corporate client roster during FY19 and market share gains within its equities business. Lack of corporate activity meant the return on equity was reduced to 7% last year but, on a medium-term view, there are good prospects for a substantial improvement, with a return to the five-year average of 18% not an unreasonable aspiration.

Companies: Numis Corporation

11 Dec 19

No cure for the Bioenergy pain?

Novozymes reported soft Q3 19 numbers – missing estimates. Sales came in at DKK3,704m, up 1% on organic basis – driven by Household and Agriculture & Feed. EBIT came in at DKK852m with the associated margin at 23%. However, excluding on-offs, the underlying margin came in at 30%. Management re-iterated its FY 19 guidance: top-line growth of -2% to -0%, 27-28% EBIT margin and -5% to -0% net income growth. Following the soft Q3, we will be revising our estimates marginally downwards.

Companies: Novozymes