20 Mar 18
FY’17 a transformational year, more to come in FY’18
IQE has released its results for the year to December ’17. While the results themselves are strong, these were largely flagged at the trading update in December, and we see the FY’18 and FY’19 outlook as more important for the share price from here. The group expects continued growth in wafer sales, driven by both the expansion of existing business and qualifications of new business streams. Given the group’s strong operational gearing, we expect this to lead to a steady expansion in group margins. The group has given explicit forward guidance for the first time, which is in-line with our FY’18 revenue and EBIT forecasts, although a higher non-cash tax charge is likely to lead to EPS downgrades. With further high growth expected in FY’18 and the potential for more strong growth in FY’19 and beyond, we retain our positive stance.
07 Mar 18
UK North Sea M&A – Smaller company potential
This book is split into two parts. The first part is thematic and focuses on the UK North Sea, where we discuss the potential for smaller companies to benefit from making acquisitions of producing assets. This is based on a screen of potentially available assets, and their likelihood of being available for sale. In the second part, we include profiles of the oil and gas companies in our coverage, and take the opportunity to update several of our models and recommendations. We intend this to be the first in a series of periodic publications focusing on themes within the oil and gas sector.
Companies: JOG IOG RRE SQZ FPM PMO ENQ PMG AMER BLVN GENL GEEC HDY HTG HUR IOG LAM RKH
15 Mar 18
Déjà vu or something new?
Two years ago, when the share price was 290p we wrote a note (31 March 2016 “Stick with it”) observing that our 33% upside 12 month target price had been achieved in a week, following strong results. This time, the feat has all but been achieved in one day! In this note we update the investment case, set out a bullish growth scenario in relation to borrowing limits and discuss further details of yesterday’s very strong results. In light of the market reaction to the results and the evident acceptability of higher P/E multiples on what we regard as conservative EPS forecasts, we raise our target price further, as detailed below, and reiterate our buy recommendation.
Companies: Burford Capital
16 Mar 18
Updated view post today’s update
A brief holding statement from Conviviality this morning. It effectively seeks to reassure that discussions with lenders and the HMRC are progressing in a constructive manner. We also note a reference to PWC undertaking a review of the business and its future funding requirements. Whilst not referenced, we would also expect PWC to be carrying out a full independent audit of historic and current accounting to reassure investors and lenders and moreover, before any appropriate value can be ascribed to the business. Not surprisingly there is an acknowledgement this morning about the possibility of an equity raise to recapitalise the business. The update highlights that the shares remain suspended. We feel an equity raise is inevitable with which may come alongside management changes given there have been serious failings on a number of fronts. Based on what we know to date, in what is now a very fluid situation credibility and trust are completely lacking. Despite the calamity of recent weeks we do not subscribe to the doomsday scenario. Ultimately Conviviality is a £1.7bn revenue business with its incumbent structures, supply chain, business relationships and a strong portfolio of retail outlets which is difficult to recreate and as such there is undoubtedly value in the business. We do however expect the short term fall out of this unpalatable mess to be ugly. Given this and the need for more funding / forecast clarity we put our recommendation, target price and forecasts under review.
20 Mar 18
Solid FY’17 but cutting FY’18E EPS on higher investment
CALL’s solid FY’17 results continue to underpin our conviction. Growth continues at pace in all regions assisted by rising internal efficiency while the outlook statement points to management confidence, good momentum on product development and support from regulatory trends. While we have cut our FY’18E numbers on accelerated investment in growth (and FY19-20E on lower R&D credits – see detail inside), we view management’s FY19E aspiration of ~break-even and cash trough as intact, with tangible upside risk from further M&A by Bullhorn and improving ARPU from new products launches in the mid-term. We reiterate our Buy rating and retain our PT of 300p.
Companies: Cloudcall Group
21 Mar 18
Quarter end looms with some signs of stability
As the quarter ends and Easter approaches, the results marathon is set to pause. As highlighted previously, the vast majority of results have been as anticipated, with some notable exceptions. The state of the UK economy is improving according to the Chancellor. The MPC meeting on Thursday is likely to leave interest rates unchanged but an increase in May seems likely, even though inflation is set to fall over the next 12 months. We have continued to see significant M&A activity. In Share News & Views, we comment on Braemar Shipping*, Burford, CLS, ECSC*, FDM*, GetBusy* and XLMedia.
Companies: APC BMS CRPR EUSP FDM GETB PCF SNX SPRP TCN W7L
22 Mar 18
Sopheon has delivered a very strong 2017 – in line with the previous trading updates, and benefiting from a very good end to the year. The group is ahead of our estimates on all metrics, and is well placed going into 2018 and beyond. Management have signalled their confidence with the welcome introduction of a maiden dividend (2.5p). We upgrade our estimates for both 2018 and 2019.
20 Mar 18
Into the Rabat Deep
Strap yourself in, we’re going on a ride! Chariot’s long awaited RD-1 well on the JP1 prospect is drilling ahead. This is one of the largest prospects to be drilled globally this year and the first offshore Morocco for four years. A result is expected in around a month and, whatever the outcome, it will be volatile, so this is not one for the faint-hearted. Within our 39p/sh 3P NAV, which sets our price target, we carry JP-1 at a risked valuation of 12p/sh. So, in the event of a duster, our 3P NAV could fall 30%. A success, on the other hand, could be even more material; JP-1 is the only Moroccan prospect included in our current 3P NAV and a discovery would materially de-risk another dozen leads/prospects. There is much to play for then. Risks on frontier exploration are always high, but with a 1 in 4 CoS and the well being drilled by Eni, the best carbonate explorer in the world currently, these seem tolerable. Moreover, a second material and fully funded well in Q4 2018 in Namibia should help keep investors involved whatever the outcome.
Companies: Chariot Oil & Gas
14 Mar 18
Full-year results – dividend turbo boosted
Full-year results were slightly above expectations and point to being on track to exceed our previous FY 2018 forecasts slightly. Market conditions remain robust in its main US market, with significant growth seen in Europe. A revised dividend policy gives new clarity to cash returns, (backed by $19m of net cash), and triggers a strong uplift in ordinary dividend plus a supplementary dividend. The shares remain attractive on an earnings basis but also have premium yield attractions. Our raised 465p TP is based on a P/E of 17.0x in 2018 and 16.0x in 2019 and offers strong upside scope to the shares. Market conditions remain favourable and cash returns underwrite our positive stance.
Companies: Somero Enterprises
19 Mar 18
Some signs of light?
As previously announced in January 2018, recent business performance has been adversely impacted by increases in input costs which remains tough. Adverse foreign exchange contracts should expire over the coming months and ease some pressure. However, a new development is significant internal cost escalation which is higher than previously anticipated. We now expect a loss of £5.0m at the adjusted EBITDA level for 2018E (vs. £0.8m previously). Forecasts for 2019E are unchanged as we expect the benefits from management’s efforts to mitigate these risk factors while new work from existing clients recently secured should also help, driving a higher 2020E outturn in our forecasts. It is still early days in the turnaround process and while near term uncertainty persists, we continue to believe management will create a more focused business with better earnings quality going forward.
Companies: Accrol Group
21 Mar 18
Mixed performances but strong overall result
accesso has released full year results in line with the indications given in the 25 January trading update, which highlighted a small revenue beat and an adjusted EBITDA performance substantially ahead of expectations. Full year revenue increased 30% to $133.4m, delivering adjusted EBITDA up 29% to $24.6m – 8% ahead of our estimate. While the group result was ahead of expectations, we suspect that the positive impact of strong Ticketing volumes was offset by lower than expected Queuing revenues. Both acquisitions made positive contributions, with an impressive early performance from TE2 highlighting the attractions of its personalisation capabilities to multiple verticals. We need to review our forecasts and target price in detail, but anticipate putting through a 5-10% upgrade to our revenue and earnings estimates.
Companies: Accesso Technology Group
20 Mar 18
Opportunity to invest
Regulatory changes and uncertainty and a change in NAHL’s cash characteristics have hit the shares hard. However, personal injuries will still happen and redress will still be appropriate. NAHL’s ability to source high quality legal enquiries has not changed, but the legal profession’s appetite to progress them is likely to reduce. Management has a proven track record in successfully adapting to changing market conditions and is investing to fill this gap, encouraged by the early success of its legal joint ventures. An in-house solution from enquiry generation through to settlement will be created, with investment in WIP, new systems and staff. We expect post tax ROCE to bottom at 13% in 2018 and operating margins to climb from a low of 26% in the same year. NAHL remains a high returns business. We expect 2018 to be the bottom for FCF and see improving cash flow as the main driver for the shares. We set an FY 2020E target FCF yield of 5.4%, a 20% discount to the current market yield of 4.5% and initiate coverage with a target price of 257p.
Companies: NAHL Group
21 Mar 18
FY2017 results in line, highlighting new generics strategy
Today’s FY results are in line with our expectations, and emphasise the recently announced shift in strategy in favour of partnered development of inhaled generics. The in–market performance of key value drivers flutiform®, Seebri®, Ultibro® and EXPAREL® has been in line with forecasts, and the ongoing VR475 and VR647 trials (Phase III/EU and Phase II/US respectively) are on track, with top-line data expected in H2. We reiterate our Buy recommendation (we upgraded to Buy on 27th Feb at 72p) and 120p target price.
Companies: Vectura Group
19 Mar 18
Time to press the button
Two features stood out in Forterra’s first full year results since its IPO: another significant ‘beat’ on cashflow expectations; and the formal signal that Britain’s second biggest brickmaker was to ‘press the button’ on a new plant, having previously waited until there was clear evidence of sustainable housebuilding demand. We believe the time is right, but that the company will remain measured in its expansion, in keeping with what we believe is its conservative track record.
22 Mar 18
Strong momentum continues
Strong momentum continues, with a checklist of positive catalysts into FY18 and FY19: repeat outperformance; reinstated forecasts, having been upgraded since being suspended at the time of the trading update in December; product excellence leading to global large enterprise adoption; regular product updates and functionality improvements to keep existing customers enthused and potential customers even more interested; a focus on distribution partners to further boost sales; and the financial strength and confidence in balance sheet to accelerate inward investment – while also instating a maiden dividend, showing a commitment to cash management, shareholder returns, and the broadening the potential investor base. Having delivered 23% organic revenue growth, and 53% EBITDA growth, management has taken the decision to invest for growth, accelerating the expansion of sales and marketing and R&D in order to create the platform to deliver accelerating growth. The stars are aligned and visibility is at record levels, with 62% of FY18 revenue (FY17: 51%) already contracted: we lift our 12-month target to 1000p (620p), Sopheon having shown the evolved maturity to merit a fuller enterprise software multiple of a target 17x FY18 EBITDA.
23 Mar 18
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23 Mar 18
Solid revenues do not percolate to earnings
The company’s achievements in 2017 exceeded our expectations revenue-wise, while its bottom line was lower than our expectations due to the impact of non-recurrent effects in 2016.
Companies: Sonae SGPS
23 Mar 18
Positive long-term stance
FY2017 was very challenging for Next and seems to be one of the toughest for many years. The company has reported declining sales and profits which were expected. Full-year sales were down 1% to £4,055m. Next brand’s full-price sales were up 0.7%, while sales including markdowns decreased by 0.6%. Online sales have increased by 9.2% to £1,887m, which mitigated the 7.9% drop in retail sales (£2,123m). Overseas sales outperformed with growth of 26% to £295m. As regards profitability, the gross margin lost 40bp to 33.4% and the operating margin declined by 150bp to 18.7%. The operating profit was down 8.2% to £759.9m. Both retail and online margins have slowed down to 12.7% (-260bp) and 24.4% (-40bp) respectively. Net profit declined by 6.8% to £591.8m. The financial structure has weakened slightly following these poorer margins. Operating cash flows decreased by 12% to £615m. The surplus cash after capex and ordinary dividend amounted to £335m and was fully returned to shareholders through special a dividend and share buy-backs. The board has proposed a flat ordinary dividend of 158p. The backdrop is likely to remain challenging in the current year but comps will be easier. The central guidance was kept unchanged at 1% full-price sales growth and £705m group profit before tax (-2.9%).
23 Mar 18
Blancco Technology Group - Clean slate
Blancco’s H118 results reflect the non-recurrence of one-off licence deals signed in H117 as well as a period of restructuring. Despite the weak H1, management has a sufficiently strong sales pipeline that it expects to meet previous guidance for FY18. The company is now in better shape for the soon to be appointed new CEO to drive sustainable, cash-generative revenue growth.
Companies: Blancco Technology Group
23 Mar 18
Transgene - 2018: A year of clinical data
We anticipate nine of Transgene’s ongoing clinical trials to read out data later this year. This will be the first major test of the company’s strategy for combining its products with approved therapies. In our view, data packages from two trials testing the combination of TG4010 and Opdivo in advanced first- and second-line NSCLC will be key inflection points. Cash as of FY17 results will be sufficient to fund operations into 2019. We value Transgene at €236m (€3.8/share) vs €207m (€3.7/share) previously.
23 Mar 18
John Laing Group - Diversified portfolio continues to deliver growth
John Laing Group’s (JLG) FY17 results delivered further growth in DPS and NAV and highlighted the increasing internationalisation of the business. The announcement of a rights issue to fund future growth was unexpected, but we see significant opportunity in the global infrastructure market. At the current share price of c 260p, JLG stands at a significant discount to its adjusted NAV per share of 281p.
Companies: John Laing Group
23 Mar 18
An expensive minority shareholder?
All members are treated equal? We are concerned about the latest development at Siemens Gamesa Renewable Energy (SGRE). The minority shareholder, Iberdrola (8.07%), has prepared two proposals for the AGM which will take place today. All board members should receive the same information and major decisions should not be executed outside Spain. In addition, an independent expert committee should look after the minority rights. In the shareholder agreement on page 11 there is a paragraph about minority shareholder protection. Iberdrola is trying to integrate and add the proposals as part of the shareholder agreement. Iberdrola’s president Galan is closely linked to his son-in-law David Mesonero who is responsible for integration at Siemens Gamesa.
Companies: Gamesa Corporacion Tecnologica
23 Mar 18
Invesco Asia Trust - Track record of solid long-term performance
Invesco Asia Trust (IAT) aims to provide attractive long-term capital growth through investing in a diversified portfolio of Asian and Australasian equities. With few investment constraints, the relatively concentrated portfolio of 50-60 stocks is a reflection of the manager’s highest conviction ideas, driven primarily by bottom-up considerations. IAT has a solid long-term track record and its NAV total return has outperformed the benchmark over three, five and 10 years. Asian equities have performed strongly over the past two years, leaving valuations above the historic average. However, they remain at a meaningful discount to global equities, and the manager continues to find attractive long-term investment ideas.
Companies: Invesco Asia Trust
23 Mar 18
JDC Group - Muted Q417 does not spoil FY18 outlook
JDC Group has been successful in implementing its fintech strategy so far and continues to acquire new insurance portfolios, as illustrated by the recent deals with Albatros and Artus Gruppe. This is confirmed by JDC’s preliminary FY17 numbers, with revenues and adjusted EBITDA improving by 7.6% and 62.5% y-o-y, respectively. However, even adjusted for one-off items, FY17 EBITDA was below management target (€3.9m vs €5-6m), while revenues (€84.5m) missed guidance (€85-95m) by a small margin. Despite a weaker Q417, management remains confident in strong growth in 2018 driven by new business acquired in 2017. JDC’s shares are trading at a 2018 P/E ratio of 55.3x, c 192% ahead of the peer group.
Companies: JDC Group
23 Mar 18
SDX Energy - Strong operational netback
SDX Energy has reported FY17 results, which reflect the positive impact of the late January 2017 acquisition of Circle Oil’s Egyptian and Moroccan business, strong netbacks and Egyptian receivable recovery. Netback, defined as sales net of operating expense and government royalties, stood at $28.9m and compares with our estimated $26.4m. Cash at year-end 2017 stood at $25.8m and has since grown to $30.6m as at 28 February 2018 after a further $6m in backdated receivables was recovered. We recently published a detailed update on our view of Moroccan gas sales and group valuation, which stands at a core NAV 58.3p/share and RENAV of 65.6p/share.
Companies: Sdx Energy
23 Mar 18
Henry Boot - Full Year Results 2017
23 Mar 18
Executive interview - Blue Prism
23 Mar 18
Rating downgrade – risk too high pre possibly momentous Prelims - TP -21%
The appointment of a new Food Division Managing Director – not unexpected after the change of tack on Food at the Nov 17 Interims – reinforces the sense that significant further re-positioning commentary is likely at the 23rd May Prelims – possibly accompanied by negative numbers impacts. We wish to neutralise our recommendation before the pre-announcement positioning work from the company starts. We feel that buying the stock before announcements that are likely to presage further depression of earnings growth makes no sense. We are reducing our recommendation from Buy to Hold and our Target Price by 21% to 285p.
Companies: Marks And Spencer Group
23 Mar 18
FY results in line with expectations
Robinson has reported FY results for the year ended 31 December 2017. These results are very much in line with our expectations, showing 8.6% revenue growth but a material drop in adjusted PBT as a direct result of increased opex to enable further growth in the packaging business in 2018 and future years. Net debt is in line with our expectations, and the company has secured further facilities to enable some material capex in 2018. We are not changing our FY2018E forecasts materially, and our sum-of-the-parts derived target price of 130p suggests c.45% upside.
28 Feb 18
SOLO Oil - Additional 5% equity in Horse Hill
19 May 17
Leading UK fund manager, Gervais Williams, discusses investing, his outlook and two companies he's excited about
08 Mar 18
Ascent Resources - Shareholder meeting
08 Mar 18
Premier Oil - Full Year Results 2018
21 Feb 18
121 Mining, Cape Town - Central Asia Metals
16 Feb 17
Trifast - Trading update
30 Nov 17
Ascent Resources - Shareholder update
20 Sep 16
Ascent Resources - Company update
24 Jan 18
Bango Strategy Day, 24th January 2018
05 Feb 18
James Dolman discusses PCF Group
29 Dec 17
Highlights 2017: redT - The Olde House
08 Sep 17
MiFID II & the private investor
13 Dec 17
Research Tree's new investor tool - Watch our 3min "How to" guide here
30 Nov 17
redT energy - December 17 Update
07 Dec 17