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21 Oct 20

SP Angel Healthcare Conditions- Novacyt (NCYT.L): Initiation of Research

Novacyt Initiation of Coverage: Through the rapid commercialisation of a COVID-19 test, Novacyt has transformed its financial position. Demand for the Group's COVID-19 test and other COVID-19 reagents are expected to make up the majority of revenue generated until FY22E, whereupon the Group is looking to drive long-term growth across its business via the development of high-margin clinical diagnostics and establish itself as a leader in infectious disease testing.

Companies: Novacyt SAS

21 Oct 20

Tremor - Strengthening momentum drives FY20 upgrades

Tremor has announced in today’s trading update that its platform has continued to gather further momentum since H1 20 results on 22 September, and it now expects FY20 revenue and EBITDA to be in the range of $340-360m for revenue and $30-36m for EBITDA. This leads us to upgrade our FY20 revenue forecasts by +6% to $350m from $330m, and upgrade our FY20 EBITDA by +32% to $33m from $25m at an incremental margin of 40%. This reflects that Tremor’s platform benefits from strong operational gearing that translates to EFCF, and we increase our FY20 net cash to $79m from $71m. This strengthening momentum for Tremor’s differentiated platform reflects that it is capitalising upon a rebound and shift in advertising spend through the success of the initiatives it launched in 2019 and the successful integration of Unruly, and we explain these factors in more depth from p9 of our 22 September report. Today’s announcement also marks the second upgrade to our Tremor forecasts since COVID-19 impacted the advertising market and Tremor in Q2, and this reflects that Tremor has adopted a prudent approach to its guidance. Applying a similar approach to our estimates, we conservatively do not change our FY21 forecasts, and this means that we continue to forecast FY21 organic revenue growth to $420m or +20% YoY, with organic EBITDA growth to $55m or +67% YoY. This conservative, strong FY21 organic growth means that Tremor looks substantially undervalued on 7x FY20 EV/EBITDA or 5x NTM, and a NTM EFCF yield of 6%; vs peers on 13-19x EV/EBITDA with NTM EBITDA growth of 18-47%, and EFCF yields of 1-2%.

Companies: Tremor International Ltd.

22 Oct 20

SDI Group - Positive trading update drives FY 2021 upgrade

A positive trading update from SDI Group justifies upgrading FY 2021 sales and adjusted EPS forecasts by 10% and 15%, respectively, broadly to the levels we were forecasting before the COVID-19 pandemic struck in early 2020. Contract wins for MPB Industries (flowmeters for ventilators) and Atik Cameras (supplying cameras for PCR DNA amplifiers) are expected to be fulfilled within FY 2021 and consequently we leave FY 2022 forecasts unchanged. We are encouraged by the news that the other businesses within the group are seeing order patterns returning towards normality. We upgrade our target price to 110p, at which level the stock trades on multiples that compare favourably to both the market and peer comparators. Our forecasts exclude the potential for further acquisitions as the company continues to execute on its buy and build strategy.

Companies: SDI Group plc

21 Oct 20

WHI Morning Comment: Spectra Systems (SPSY) - Significant Contract Announcement – Central Bank secured

Spectra Systems Corporation, a leader in machine-readable high speed banknote authentication, brand protection technologies, and gaming security software, has announced that it has executed a comprehensive services contract with a ‘long standing' central bank customer for the development, manufacture and servicing of a sensor system. The initial development phases underpin our FY2021E estimates (with risk likely to the upside), but moreover, the balance of development work, comprising supply of sensors (estimated value up to $34m in 2024-25), servicing revenues ($7.5m) and resultant high margin material sales through to at least 2035, provides significant underpinning of future prospects. Our updated Sum-of-the-Parts valuation (reflecting higher than anticipated development revenues and margins) indicates a risked fair value of 240p (from 200p).

Companies: Spectra Systems Corporation

21 Oct 20

Cenkos: Seeing Machines Ltd -- MOU with L3Harris Technologies

Seeing Machines has announced that it has signed a non-binding Memorandum of Understanding with global aerospace and defence technology company L3Harris Technologies. The MOU frames the intent to enter into a global non-exclusive license agreement to enhance pilot training technology with Seeing Machines's dedicated precision eye-tracking system for flight crew training in the full flight simulator (FFS) environment. A license arrangement is currently in advanced discussions between the parties and subject to the negotiation and execution of definitive, binding licensing and other legal agreements. Further announcements regarding the progress of the negotiations in relation to such binding documentation will be made when appropriate.

Companies: Seeing Machines Limited

22 Oct 20

Impressive H1 sales and gross margin growth..

G4M’s H1 trading update confirms the continued strength of the top line sales growth already disclosed in its Q1 sales update. H1 sales have risen by an impressive 42% to £70.2m, complemented by gross margin expansion of 330bps to 28.5%, reflecting G4M’s focus on profitable sales growth. This translates to gross profit growth of £7.5m (+60%) compared with last year and will deliver interim financial results materially higher than last year. While sales momentum has continued into October, management remains mindful of the ongoing uncertainties around Covid-19 and Brexit heading into the peak trading period. With market estimates already raised on the Q1 update, this prudent caution tempers our full year PBT upgrade to 13%.

Companies: Gear4music (Holdings) PLC

21 Oct 20

Strong Q1, +6% FY21 revenue upgrade

Positive update today, reporting that trading in FYJun21 has begun well. As a result – and also thanks to DOTD’s strong revenue visibility – revenue guidance is already being upgraded. Consequently, we lift FY21E sales by 6% to £53.0m, so now expecting +12% y/y growth. To put this into context, growth fell to +9% in 2H20. We find this rapid recovery to more typical growth levels highly encouraging. Guidance for profit and cash is reiterated, meaning we leave both profit and cash forecasts unchanged. Somewhat obviously, this requires us increasing our cost assumptions….and if these don’t fully materialise, provides upside risk. Cash continues to build, now £27.7m as at Q1 – we might expect this to be strategically deployed, to enhance what is impressively consistent organic growth.

Companies: dotDigital Group plc

27 Oct 20

Revolution Bars Group - Proposed CVA

The group has announced a proposed Company Voluntary Arrangement (“CVA”) in order to reduce the size of its Revolution Bar estate and rental cost base and improve profitability over the longer term. There is no impact on the Revolucion de Cuba brand. The initiative is one of several that management have introduced to counter the impact on trading of COVID-19 and will have the dual benefit of trimming the estate of underperforming sites and delivering a cash flow benefit of c.£2m p.a. The group’s balance sheet remains strong.

Companies: Revolution Bars Group Plc

21 Oct 20

Hurricane Energy - Forecast and valuation update

Forecast and valuation update

Companies: HUR HUT HRCXF

19 Oct 20

Bioventix - FY 2020 results

Bioventix reported a strong set of full-year results, that were 8% above expectations, assisted in part by a c.£0.2m (+3%) FX benefit, which helped offset the obvious drag on performance in Q4 due to the impact of COVID-19 on routine testing in hospitals. A 53p special dividend was proposed, resulting in a full-year dividend of 141p, up 18%. Due to the COVID-19-related disruption to testing, which only exacerbates the poor visibility to customer royalty streams, we are withdrawing forecasts until normality returns. That said, the business remains in very good shape, with evidence that: (i) high sensitivity troponin is gaining momentum; (ii) physical antibody sales growth remains robust (+34%); and (iii) progress in its development pipeline (particularly pollution monitoring programme) is being made. The business is expected to remain cash generative, and with c.£8.1m of cash at 30 June, the company is a strong position to weather this period of disruption before returning to growth.

Companies: Bioventix Plc

21 Oct 20

Cenkos Securities - Strong activity and lean cost base

Cenkos’s first half results demonstrated the benefits of its flexible operating model and strength of its client relationships. While challenges related to COVID-19 are set to continue, Cenkos’s focus is on growth companies and its fund-raising year-to-date has had a greater emphasis on corporates financing M&A and growth opportunities rather than for defensive purposes. This should prove more sustainable although, as always, the timing of transactions in the encouraging pipeline reported remains uncertain.

Companies: Cenkos Securities plc

26 Oct 20

Robust H1 update, Strong momentum into H2

Despite challenges in the early part of the period, Yourgene has delivered a robust H1 performance and enters H2 with strong momentum on a number of fronts. Key strategic milestones were achieved in the period, including the launch of the flagship IONA Nx NIPT product on the Illumina platform in September and the acquisition of Coastal Genomics and associated fundraise in August. Both are supportive of FY estimates, as are the launch of Yourgene's Covid services and products such as DPYD, which are generating strong momentum. We make no change to our forecasts at this stage.

Companies: Yourgene Health Plc

21 Oct 20

Earnings update

Anglo Asian Mining is an AIM listed precious and base metals producer running flagship Gedabek operations in western Azerbaijan which include open pit and underground mining facilities and a processing complex fit for different types of ores. Production runs at ~70-80kozpa GEO (~90% gold) with low operating costs status allowing the Company to generate FCF for organic growth opportunities within the highly prospective +1,000km2 land package and potential value accretive transactions over targets outside Azerbaijan as well as offer a generous dividend yield.

Companies: Anglo Asian Mining PLC

22 Oct 20

GB Group - Resilient H1 trading drives upgrades

GB Group (GBG) expects to report underlying revenue growth of 10% y-o-y for H121, with a one-off contract in the US making a material contribution to revenues. Combined with strict cost control this resulted in adjusted operating profit growth of 26% y-o-y and a £32m h-o-h reduction in net debt. With management guidance for revenue well ahead of our and consensus forecasts for FY21, we have upgraded our revenue and EPS forecasts for FY21–23. Despite COVID-19 related pressure on new business in the short-term, we view GBG as well placed to benefit from the accelerated shift in the digitalisation of business processes.

Companies: GB Group PLC

23 Oct 20

WHI Morning Comment: Avation (AVAP) - Full year results illustrate actions taken in such a challenging backdrop

Avation is a lessor of 46 commercial aircraft to a diversified airline client base. This morning, the group has released results for the 12-months to 30 June 2020, which illustrate the challenges faced by its customer base as a result of Covid-19, as well as the corrective actions taken by the Board that have resulted in profitability being maintained in the year as a whole. Loan repayment deferrals of c.$24.4m were obtained in the period, in comparison to $13.1m short-term rent deferrals being granted to airline customers and thus emphasising management's focus on liquidity during an unprecedented period for global airlines. Avation again reports that it is currently reviewing alternatives in relation to the 6.5% senior notes due in May 2021. Whilst at this point our forecasts remain under review, and near term challenges remain across the industry, we believe that demand for aircraft from lessors such as Avation will increase in time as a result of airlines being even more reliant upon aircraft leasing firms due to the retirement of older aircraft during 2020 in combination with much weaker balance sheets that are unable to support direct aircraft purchases.

Companies: Avation PLC

28 Oct 20

SourceBio International gets set for IPO as Covid-19 testing demand becomes main focus

28 Oct 20

Q3: e&p rebounds, mixed in downstream

The results were in line with estimates with the exploration & production division up by €1.3bn qoq, against a $12/bbl increase in the oil price. Net debt was stable at €14.5bn and so is the net cash from operations of €1.45bn qoq (but up by c. €600m excluding impact from working capital movement). On the outlook, the group announced disposals of €1bn agreed to date this year and revised downwards its EBIT guidance for mid-downstream to €0.5bn vs €0.8bn previously.

Companies: Eni S.p.A.

28 Oct 20

Sensyne Health and Microsoft strengthen strategic relationship

28 Oct 20

CASI Pharmaceuticals - New drug licensed targeting antibody checkpoints

CASI announced that it has in licensed the Greater Chinese rights to BI-1206 from BioInvent, which is being investigated in Phase I trials for the treatment of non-Hodgkin lymphoma (NHL) and solid tumors. The drug has a novel target FcγRIIB, an antibody receptor on leukocytes with checkpoint-like properties. The drug is currently in two dose escalation studies for NHL and solid tumors in combination with rituximab and Keytruda, respectively.

Companies: CASI Pharmaceuticals Inc

28 Oct 20

Slow-paced top-line recovery, but profitability growth was impressive

Novartis witnessed a partial recovery in Q3 largely (and surprisingly) driven by the non-oncology portfolio. Nevertheless, the group reported healthy Q3 operating profit improvements and also upgraded its full-year profitability guidance. While re-emerging COVID-19 lockdown risks can (further) de-rail near-term momentum, the recent share price sell-off opens an attractive investment window, especially considering the unchanged potential of the pipeline assets across therapeutic and newer/innovative treatment frontiers.

Companies: Novartis AG

28 Oct 20

Small net profit above expectations despite windfall profits and low risk provisions

• Net revenues rose by 13% to €5.9bn for Q3 20 compared to Q3 19 due to higher Investment Bank revenues. • Risk provisions decreased by 64% to €273m (25bp) for Q3 20 compared to Q2 20 (61bp). • Deutsche Bank reaffirmed its guidance for the FY2020 provision for credit losses of 35-45bp of loans. • Profit attributable to shareholders was €182m for Q3 20 compared to a loss of €942m for Q3 19.

Companies: DBK DBK DBN DBK1 DBK DEUTSCHE DBN DBKEUR DBK DB DBK

28 Oct 20

Good visibility on FY20 earnings

Carlsberg upgraded its EBIT guidance after Q3 volume and revenue beat the consensus expectations. Carlsberg continues to be our favourite beer stock, with a strong balance sheet, limited risk from emerging markets and offering much more visibility than Heineken and ABI.

Companies: CARLB CABJF CARL CARLB CBGB CARLB

28 Oct 20

Lacks confidence despite the solid Q3

Q3 comfortably beat the consensus volume expectations, but the directional-only guidance doesn’t give any visibility. Q4 will remain challenging.

Companies: Heineken NV

28 Oct 20

Lucky Caixa

The third-quarter results were in line with consensus expectations, confirming the group’s good commercial momentum and CaixaBank’s well-capitalised investment.

Companies: Bankia (BKIA:BME)Bankia, S.A. (BKIA:MCE)

28 Oct 20

Disappointing Q3 revenues but very solid EBITDA

Q3 was in line with expectations with a disappointing 3.7% yoy and lfl decline in revenues but very solid EBITDA up by 1.3% yoy and lfl. The stock has already recovered and is trading 7% below its February levels and at its May levels. This is however also due to recent rumours about a takeover of KPN by the European private equity firm EQT. We maintain our Buy opinion on the stock.

Companies: Royal KPN NV

28 Oct 20

Exceptional Q3 results

Capitalising on across the board metal price tailwinds, Boliden reported impressive Q3 results. Both divisions had a good run. While Mining margin hit highs unseen since 2018, Smelting managed healthy growth, despite the maintenance shutdown impact. Macro uncertainties are now re-emerging – due to second-wave risk of COVID-19 – which could result in pricing volatility. However, Boliden is very well-positioned to limit the overall operating impact, and its ability to deliver in volatile markets should again come to fore.

Companies: Boliden AB

28 Oct 20

Underperformance in France

In Q3 20, the decrease in organic revenue (-5.9%) was above expectation due to France (-15.4%). The French activities were impacted by a drop of revenue in consulting services, aeronautics and transport, and by a management decision on paid leave for employees (not imposed in the lockdown and pushed in summer) that represented 5 to 6 growth points. Given the trend as of Q4 20, 2020 guidance was maintained excluding the impact of the cyberattack which is still under review.

Companies: Sopra Steria Group SA

28 Oct 20

Thor Explorations' focuses on drill project in Douta, Senegal, aiming for results in November

28 Oct 20

Preparing for reconstruction?

BASF’s official wording for the justification of the impairments taken in Q3 is that they expect continued oversupply of basic chemicals and weaker demand from certain end-customer industries. We find the idea of preparing the company for a BASF 2.0 quite compelling. Nevertheless, Martin Brudermueller still has a long way to go as impairments could be only be a signal. The management could see the pandemic as an opportunity for a fundamental shift.

Companies: BAS BASEUR BAS 0BFA BASF BAS BASF BFFAF BASN

28 Oct 20

SP Angel . Morning View

Altus Strategies* (ALS LN) – BUY – 132p (from 115p) – Good Diba metallurgical testwork points to better project economics | Atalaya Mining (ATYM LN) – Feasibility study on new cathode production technology | Chaarat Gold* (CGH LN) – BUY – Robust Q3 results with FY20 guidance reiterated | Empire Metals* (EEE LN) – Gold grades from drilling at Eclipse indicate potential for further discovery | Gem Diamonds (GEMD LN) – Improving diamond prices from Letšeng | KAZ Minerals (KAZ LN) – Nova Resources to buy Kaz Minerals in £3bn deal | Rainbow Rare Earths* (RBW LN) – Results | Savannah Resources* (SAV LN) – Advances on the Mina do Barroso lithium project | Trans-Siberian Gold (TSG LN) – High grade drilling results from V25 to potentially upgrade Asacha resource

Companies: ALS ATYM CGH EEE GEMD KAZ RBW SAVE TSG