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19 Nov 20

Somero Enterprises - Positive update – trading ahead of expectations

The group has released a positive trading update, signalling a strong H2 and performance ahead of expectations. The new guidance points to a 6.7% upgrade to revenues and a 10.5% upgrade to EBITDA. Cash generation has been notably strong, at about $26m, which will drive an increase in supplemental dividends with a dividend yield of 7.1%. We raise our TP from 255p to 285p, based on a target P/E of 14x, giving decent upside to the current 11.6x.

Companies: Somero Enterprises, Inc.

20 Nov 20

Cenkos: Venture Life Group Plc -- Maintaining the momentum

Venture Life has developed significant momentum through 2020, reflected in the strong share performance over the year. Building on this momentum, the company has announced it is conditionally raising £34m via an equity raise to help it secure additional M&A opportunities. At this time, Venture Life has identified three opportunities, which we estimate could deliver significant earnings accretion if all are completed. We have updated our forecasts to reflect the raise but at this time have left our underlying assumptions unchanged. We expect Venture Life to maintain the momentum it has developed, supported by the proposed raise and M&A opportunities; we re-iterate our Buy recommendation.

Companies: Venture Life Group Plc

17 Nov 20

Rude Health - finnCap Life Sciences quarterly sector note

Moderna announced the first interim analysis from the Phase III study of its COVID-19 vaccine candidate, which was found to be c.95% effective in preventing symptomatic COVID-19 disease. This follows a similar announcement from Pfizer/BioNTech last week, and the caveats we mentioned at that time remain the same. AstraZeneca-Oxford University are also due to announce initial results this month. While these results are highly encouraging, we reiterate that they do not diminish the urgent need for COVID-19 treatments and testing, which will still be required for years to come, and we outline why. We consider Synairgen, Avacta, genedrive, Omega Diagnostics and Open Orphan to offer good buying opportunities.

Companies: AVCT ODX SNG GDR ORPH

23 Nov 20

Rude Health - finnCap Life Sciences quarterly sector note

Oxford University and AstraZeneca announced the first interim analysis from the Phase III study of its COVID-19 vaccine candidate, which was found to be 70% effective in preventing COVID-19. This follows similar announcements from Moderna, and Pfizer/BioNTech in the previous two weeks, and the caveats we mentioned at the time remain the same. While all of these results have been highly encouraging, we reiterate that they do not diminish the urgent need for COVID-19 treatments and testing, which will be required for years to come. We consider Synairgen, Avacta, genedrive, Omega Diagnostics and Open Orphan to offer good buying opportunities.

Companies: AVCT ODX SNG GDR ORPH

17 Nov 20

Strong trading + operating leverage drives upgrades

G4M has reported a substantial uplift in profitability, notably EBITDA margin >11% from <3%. While conditions in Q1 contributed through abnormally rich margin and marketing efficiency, results underline what G4M is capable of on higher volumes. We prudently upgrade by another 15% but note that it is well prepared for Brexit, has a continuing focus on higher margin products, is taking market share through digital innovation, and has ongoing software development at the core of its growth strategy. Valuation is extremely undemanding.

Companies: Gear4music (Holdings) PLC

17 Nov 20

Progress on all fronts - further revenue upgrade

Strong trading has continued through October and we raise FY21 revs forecasts by 6% to £56m. With much of the upside from lower margin SMS, we leave profits forecasts unchanged. H2FY20 revenue growth was impacted by the pandemic and dropped to 9% after 2.5 years of 15% growth. Our new FY21 forecast imply a return to c. 18% growth as dotdigital makes a strong recovery and benefits from the shift to omnichannel online marketing driven by booming e-commerce. FY20 growth was strongly assisted by International revenues up 19% and Functionality up 16% and yet there is still plenty of room for growth here with the former just 31%/revs and the latter just 30%. We see a significant and extended growth runway leading to consistent progress for the company over the foreseeable future.

Companies: dotDigital Group plc

24 Nov 20

FY’21 interims and fundraising of up to £17.5m

ReNeuron, a UK-based stem-cell therapy developer, has announced today a fundraising of up to £17.5m (gross) through the means of a placing, subscription and open offer. The Company has also announced its FY’21E interim results as well as the latest data from its lead candidate hRPC in the ongoing Phase I/IIa clinical trial for Retinitis Pigmentosa (RP). The additional funding aims to provide liquidity for the next 18 months, and through key clinical development milestones for the hRPC programme and exosome collaborations. **** As joint broker to ReNeuron, we are restricted and can therefore provide factual comment only. Shareholder approval for the transaction will be sought at the General Meeting to be held on the 11th December 2020 ****

Companies: ReNeuron Group plc

19 Nov 20

Macfarlane Group* - Strong Trading Update – Earnings Upgrades

Macfarlane has released a strong trading update for the 4 months to October 31 2020 highlighting second half revenue and PBT to date being ahead of 2019 and the expectation that 2020 PBT will be broadly in line with 2019, a strong recovery from the uncertain position at the interim results. Separately, the Group has announced that CFO John Love will be stepping down from his role and the Board to be replaced by Ivor Gray, current Group Financial Controller and Company Secretary. We expect this to be a seamless transition given Ivor's experience in the Group and represents very well managed succession planning by the Board. Reiterate buy rating.

Companies: Macfarlane Group PLC (MACF:LON)Macfarlane Group PLC (5K6:FRA)

24 Nov 20

Intercede - Interims: gaining momentum

Interims, in line with the October trading update and unchanged forecasts, follow a second (November) purchase order from the new US Department of State contract, highlighting momentum. The 5Cs that form management’s measure of strategic development have all generated positives: colleagues, with employee NPS rising, and no furloughs or paycuts; new & renewing customers, high-profile names and sectors; a broadening channel including generating new clients; code increasing with the addition of FIDO and increased reach through MyID Enterprise/ MyID Professional; and cash of £8.1m with £4.8m debt all in the form of in-the-money December 2021 convertibles. Strong 1H performance and cashflow derisks full-year expectations. Target raised to 125p (100p).

Companies: Intercede Group plc

24 Nov 20

Appreciate Group - Initiation Note

Appreciate is the UK's leading voucher, gift card, and e-code provider, working with brands from Iceland to Halfords to Boots. It sells its pre-paid products to corporates as well as directly to consumers. It also runs the UK's largest Christmas Savings scheme, having helped some 2.7m families put money aside for Christmas expenses over the years. In Appreciate, we see a business that's undergone significant change and modernisation since 2018. Under its highly competent and dynamic management team it has transformed from a Christmas savings business that physically produced hampers, to a pure play financial services business with material growth prospects in the longer term.

Companies: Appreciate Group plc

12 Nov 20

Acquisition, interim results and board changes

Volex has reported interim results that are in-line with expectations following a strong trading update in mid-October. Of far greater significance is today’s announcement of the proposed acquisition of DEKA for a consideration of up to €61.8m on a debt free basis. DEKA is a leading and highly profitable power cord manufacturer, strategically located in Turkey, that serves leading European white goods manufacturers. The acquisition should close in early CY2021, subject to expected Turkish Competition Authority approval. We foresee 15% earnings enhancement in FY2022E with further opportunities for revenue synergies with Volex in the Far East as its operations also vertically integrate, production efficiencies increase and the cost of production falls. The statement highlights that pro forma net debt/EBITDA remains under 0.4x and this provides scope for further bolt-on acquisitions alongside a new $70m RCF and $30m accordion, also announced with the interims.

Companies: Volex plc

17 Nov 20

dotDigital - Investing to deliver growth

DOTD has reported prelims to the period ending June 2020, only a month after the strong October trading update, which had already resulted in a 6% revenue upgrade. On the back of FY20 outperformance we once again push revenue up FY21 expectations (+5%, to a total of +11% upgrade) with unchanged EBITDA as the group continues to invest in product development in anticipation of further revenue growth. Success in investment is evident in each of the three pillars for growth, with advances in territorial reach and product functionality manifesting in greater sales, both direct and pre-integrated into CRM and e-commerce platforms. With a heavyweight balance sheet including £25m cash, revenue upgrades with EBITDA maintained demonstrate an expansion in investment (opex and capex) to drive greater revenue growth into FY22 and beyond, particularly internationally and in functionality: DOTD is both succeeding now and investing in its future. Target 170p reiterated as the group creates a growth platform for future upgrades.

Companies: dotDigital Group plc

17 Nov 20

Extraordinary profits in extraordinary times…

Gear4music (G4M) has delivered an outstanding set of interim results figures, based on its position as a beneficiary from the Covid restrictions across Europe. The previously disclosed 42% sales increase included new customer numbers jumping 52% over last year to just over 400,000, who will bring benefits over the medium- and longer-term. Performance increases and profit margins were leveraged going down the profit & loss account, with PBT of £4.9m delivered against last year’s small loss of £0.1m. With November seeing a continuation of strong trading patterns, G4M expects FY21E results to be ahead of recently upgraded market forecasts. We have consequently increased our EBITDA forecast by £1.1m (+9%) to £13.5m.

Companies: Gear4music (Holdings) PLC

24 Nov 20

Robust H1, US SecPay driving growth

Eckoh’s fast growing US SecPay business and robust UK business model have minimised the impact of lockdowns with u/l H1 revs down just 3% yoy and profits flat. ECK reintroduces FY21 guidance, expecting H2 revenues comparable to H1 and FY21 AOP comparable to FY20. US SecPay is now a meaningful >30% group revs, growing 80% in H1 and with larger customers now re-engaging. We expect growth to continue in FY21 and beyond; the opportunity is multiples of current sales (FY21E $13m- +60% yoy). We similarly expect the cash cow UK business to continue to recover and return to c. 5% secular organic growth over time. It is especially continued success with US SecPay that is likely to lead to group FCF exceeding that of £5-6m achieved in FY20/19 over time and a FCF yield well above 5%. That’s attractive.

Companies: Eckoh plc

17 Nov 20

FY20 didn’t increase our confidence

Mixed feelings: the NGP beat should be welcome, as well as the transparency about FY21, but we believe that the decline in NGP investments should be a brake in the future and we are still concerned about the lower price/mix at IMB’s level.

Companies: Imperial Brands PLC

24 Nov 20

GeoPark Limited (NYSE: GPRK): All eyes on CPO-5

Divesting non core asset in Brazil • GeoPark is selling its 10% non-operated working interest in the Manati gas field in Brazil to Gas Bridge. • The total consideration amounts to R$144.4 mm (approximately US$27 mm), including a fixed payment of R$124.4 mm and an earn-out of R$20.0 mm. • The transaction has an effective date of 31/12/2020 and is expected to close in 4Q21. • This does not come as a surprise as two other non-operating partners in the Manati gas field consortium, with a combined 55% WI, have already announced their respective agreements to sell their WI to Gas Bridge. Streamlined portfolio The consideration for the Brazilian asset is below our valuation of US$37 mm, but the difference (US$10 mm) is not material in the context of GeoPark. We do not see much upside to the Brazilian asset (in terms of growing reserves or through exploration opportunities) and this divestment may allow GeoPark to reallocate resources to it’s core operations. We would rather see management remaining focused on deploying capital on higher return assets such as Colombia and Ecuador. Second CPO-5 well to be spudded imminently We understand that the second well of this year’s programme for CPO-5 (the Aguila exploration well) will be spudded in the next few days. Even after today’s share price appreciation, our Core NAV continues to be 60% above the current share price. Our unrisked NAV for the 2021 drilling programme is ~US$9.00 per share, which represents ~90% of the current share price. Our target price of US$20 per share represents ~100% upside to the current levels.

Companies: GeoPark Ltd

24 Nov 20

Better than expected Q3 leads to FY outlook improvement

Quadient beat expectations in Q3, led by the strong organic growth performance of its ‘growth engines’, Business Process Automation and Parcel Lockers Solutions, giving further validity to the group’s transformation strategy as outlined by the Back to Growth plan. Meanwhile, PE interest for Quadient’s Customer Experience Management solution puts in evidence the value behind the group’s digital-led businesses, even if the division is clearly not for sale.

Companies: Quadient SA

24 Nov 20

CMD outlook

Enel has set ambitious renewable energy targets at the 2030 horizon coupled with an accelerated coal exit. In addition, investment in new technologies (batteries and hydrogen) should protect its status as a cutting-edge company. The group will also massively invest to upgrade its networks in Europe, to limit operating costs and cope better with the increasing weight of renewables. We confirm our recommendation. Enel is currently among our top picks.

Companies: Enel SpA

24 Nov 20

Appreciate Group to seize upon £7bln market and grow their share by targeting corporate sector

24 Nov 20

Mondo TV - Good pipeline into FY21 and beyond

Mondo TV continues to report production, distribution and licensing deals that will drive its future revenue and profits, supported by the €10.5m funding agreed with Atlas Special Opportunities. Q3 figures show broadly flat revenues for the year-to-date, with nine-month EBITDA margins up from 71.4% to 74.7%, reflecting reduced operating costs. We have pulled our full year revenue estimate back by 14% to reflect lower growth than we originally expected, translating to a reduction of just 4% at EBITDA level due to the margin uplift. The shares remain valued at a discount to peers.

Companies: Mondo TV S.p.A.

24 Nov 20

Eckoh see US Secure Payments arm of revenue surge 80%

24 Nov 20

Alphamin Resources - New tin producer generating cash flow

Alphamin’s team developed the high-grade Mpama North tin project from resource to production in under five years. Now a mid-tier producer mining c 4% of the world’s tin in the lowest cost quartile of the global cost curve, Q3 results showed a 24% increase in EBITDA to US$16.1m cf Q220.

Companies: Alphamin Resources Corp.

24 Nov 20

Greencoat Capital makes third acquisition this year with 49% stake in Humber Gateway

24 Nov 20

Eco Atlantic Oil & Gas say 'future is bright' with 'a lot of cash'

24 Nov 20

ImmuPharma set to meet FDA in December to discuss phase III lupus clinical trial

24 Nov 20

OTC Markets Group - A further estimate upgrade

OTC Markets Group (OTCM) announced third quarter results with revenue and profit ahead of our expectation, as in Q220. This resulted from strong transaction volumes at OTC Link and higher user numbers and price increases for Market Data Licensing. The diversity of the group’s income was evident as Corporate Services was flat year-on-year, although here a step up in client additions is encouraging for the future. Pandemic-related and political uncertainties may be less acute now, but, in any event, OTCM maintains its long-term focus on developing its cost-effective, efficient markets.

Companies: OTC Markets Group Inc.

24 Nov 20

Capital Access' Hot Off The Wires - The Day Ahead

Today's news & views, plus announcements from Compass Group, CRH, Carnival, AO World, Pets at Home, Appreciate Group*, ImmuPharma and IG Design. *We have also initiated coverage on Appreciate Group, with the note linked in this edition.

Companies: Appreciate Group plc

24 Nov 20

9m 20: financial strength boosted by weak M&A game

Overall, a good operating performance with 9m lfl EBITDA 2% ahead of 9m 19. Management expects EBITDA to be above $4.4bn, and other items to be largely in line with last year, with the P&L mainly impacted by $0.8bn of non-cash impairment. In view of these results, we expect a slight increase in our target price. We intend to keep our Add recommendation.

Companies: CRG CRHCF CRH CRH

24 Nov 20

SP Angel Spec Sits: CML Half Year Trading Results

H1F21, impacted by the COVID pandemic, created mixed trading conditions across CML's end-markets, particularly when combined with continuing industry headwinds. However, with solid sales and new orders in Storage markets and a growing product portfolio in Communications markets, supported by a clear strategy focused on enhanced capabilities and internal expertise to increase the size of the addressable market; strong proprietary IP and respected quality/reliability of technology; and continued investment in R&D to grow the product portfolio and in sales & marketing to expand the customer base; it is evident that CML is positioning itself for medium to long-term growth. We believe it is evident that these investments today will allow CML to deliver strong shareholder returns in the future.

Companies: CML Microsystems Plc

24 Nov 20

SP Angel . Morning View

Anglo Asian Mining* (AAZ LN) – FY20 production guidance revised to 68-72koz GEO | Bezant Resources (BZT LN) – Drilling intersects copper mineralisation at the Gorob-Vendome project, Namibia | Bushveld Minerals* (BMN LN) – New orders from Invinity indicate rising demand for VRFB Grid storage systems | Keras Resources* (KRS LN) – Nayéga Project Update Togo | Kingston Resources (KSN AU) – Misima PFS | Panthera Resources (PAT LN) – Review of historical data from Beredo | Vast Resources* (VAST LN) – Shareholders approve the acquisition of the minority stake in Baita Plai |Versarien* (VRS LN) – MOD DSTL awards £1.95 for product development

Companies: AAZ BZT BMN KRS KSN PAT VAST VRS