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17 Jul 18

Cenkos: CloudCall Group Plc - Calling an unchanged market opportunity

The rapid +31% YoY revenue growth delivered in H1E did not include any meaningful contribution from the recently expanded sales headcount. Indeed, this growth rate would have been higher and in line with our forecast of +36% had new hires impacted in a timely manner. While we reduce our forecasts for 2018E in relation to this softness, we continue to expect an exit run rate this year strong enough to support an unchanged 2019E.

Companies: Cloudcall Group

10 Jul 18

AIM Market – A game of two halves?

In January, we highlighted the progress that AIM had made in H2 2017. We now review the performance in H1 2018. The latest AIM Statistics published on Friday showed that there are currently 944 companies, with 38 new issues so far in 2018, raising £781m and secondary issues raising a further £2.4bn. However, with 51 companies cancelling their listing there was a net fall in H1 2018 of 13 companies. That said, new listings appear to have accelerated recently. In Share News & Views, we comment on Braemar*, Cohort, Cropper*, GetBusy*, IG Design, Lakehouse* Porvair and Wynnstay Group.

Companies: AOR APC BMS CRPR DMTR ECSC ESC EUSP FDM GETB PCF SNX TCN W7L

11 Jul 18

LIBERUM: Burford Capital* - Update on Petersen - Justiciable in US Federal Courts

In a statement this morning Burford has announced that the US Second Circuit Court of Appeals affirmed the trial court decision finding the Petersen claims against Argentina and YPF to be justiciable in the United States federal courts. They also announced that due to Eton Park being dissolved they have bought the Eton Park equity stake in the YPF litigation case, however, they have sold part of the stake to leave cash exposure unchanged.

Companies: Burford Capital

18 Jul 18

Resetting the bar

Selling high-value packaging machinery to large corporates can sometimes feel like ‘threading the needle’. For the vast majority of the time everything runs like clockwork - however occasionally unforeseen problems crop up. Indeed, at this morning’s pre-close trading statement MPAC revealed it had encountered some technical challenges on two legacy contracts which would result in “material” cost over-runs this year.

Companies: Molins

17 Jul 18

Strong H1’18; rebasing FY’18 on timing

CloudCall’s performance during H1’18 was strong but slightly weaker than our expected run-rate on slower recruitment of personnel to its growing sales team. Our FY18E estimates have been cut on the mismatch between rising costs due to continued investment in growth and the lag to achieve top-line performance, but our price target remains intact. We highlight the impact is localised to FY18E and the group’s product, sales and marketing teams are now in place to support rapid commercialisation. We continue to see substantial upside potential to our PT of 300p, particularly given the shares’ recent weakness, and reiterate our Buy rating.

Companies: Cloudcall Group

17 Jul 18

LIBERUM: Amino Technologies - Initiation - Building next generation TV services

Disruptive commercial and technology challenges facing Amino’s telco and cable operator customers mean they have to reshape and, in some cases, recreate their pay-TV services. This needs investment in new software and cloud models and will require support from specialist solutions providers like Amino.

Companies: Amino Technologies

12 Jul 18

Trading update

We note the trading update released this morning from GYG, confirming that trading has been difficult in the first half of the year and the full year outturn is likely to be materially behind current expectations. We update our forecasts to reflect this new guidance. We now expect EBITDA in 2018E of €4.5m (€9.9m previously) growing to €7.2m in 2019E (€8.2m previously). While this is clearly a disappointing update, the group’s balance sheet remains robust and we believe the industry dynamics remain attractive with the group well positioned to benefit from growth in yacht numbers.

Companies: GYG

17 Jul 18

Delivering TV-as-a-service

Interims for the period to May 2018 delivered EBITDA of $6.8m from $41.2m turnover. Contracted revenue represents 77% (FY17: c75%) of the FY18 target and sales orders 40% ahead of last year, leaving forecasts unchanged. Gross margin of 42.1% (1H17: 44.4%) reflected expected market-wide pressure described at prelims in January; however, cost control reduced opex 3% (vs 1H17), including partial benefit from the completed rationalisation of R&D centres (3 to 2), resulting in annualised savings of $1.4m. Cash generation was typically strong (pre exceptionals), lifting cash to $15m and leading to unchanged FY expectations of $23.5m demonstrating balance sheet strength. Abort fees on M&A deals shows management is strategically active; the dividend is 10% ahead of last year; and momentum is strong, with the order book healthy. Amino continues to demonstrate that it is a software-focused solutions provider delivering TV to customers for clients, anytime, anywhere and on any device. We reiterate our 275p target and look forward to further contract win newsflow.

Companies: Amino Technologies

17 Jul 18

Half time scorecard: Q2 to the rescue

With the first half of 2018 behind us, we evaluate the performance of the tech sector versus the broader market, and peers across the pond to see how the London listed technology universe compares to its bigger and better known US counterparts. We examine if the UK listed tech sector is overvalued on a relative basis. No tech sector review can be complete without analysing the performance of the big eight mega tech companies who had a strong H1 period and currently have an aggregate market capitalisation of US$5.18tn, marginally bigger than the Japanese economy.

Companies: APC ECSC EUSP FDM GETB LSAI SNX

09 Jul 18

Defensive growth investment

H&T Group PLC (LON:HAT) is the UK market leader in pawnbroking, with a chain of 182 high street stores across the county, offering consumers secured credit against items such as gold, watches, and jewellery. In addition to the core pawnbroking activity and related jewellery and watch retailing, H&T Group offers a range of other financial services, detailed in this report.

Companies: H&T Group

11 Jul 18

LIBERUM: Alpha FX* - Strong H1'18 revenue growth

The H1'18 trading update highlights further strong market share gains for AFX with revenues up c50%. We have increased our revenue forecasts and maintain our profit estimates reflecting a number of investments which will position the company to scale significantly over the next few years.

Companies: Alpha Fx Group

11 Jul 18

Totally plc - Great Progress, Great Prospects

Having completed the transformational Vocare acquisition and added to its already well experienced management team, Totally is now tasked with grasping a very significant opportunity within UK healthcare. The NHS' direction of travel has been to address the impact of non-acute presentation at its hospitals. Totally is committed to building a business which provides this triage and a range of support services including, but not limited to, urgent care. While the company has not yet completed the “buy” component of its “buy and build” strategy, it has made significant strides while retaining a key cash generative quality. Final results, for the 15-month period to March 2018, highlight great progress and prospects. We believe that the share price does not reflect this, offering an equity value only just over the current net cash position. It is time for the market to reflect on the prospects for a unique company operating in high growth markets.

Companies: Totally

18 Jul 18

Good performance in H1 underpins FY18 outlook

Strix has released a trading update for the six months to the end of June confirming that trading is on course to meet FY18 expectations (ZC forecast FY18 revenue of £96.1m and profit before tax of £29.1m) leading us to leave forecasts unchanged. Global market share has been maintained at c. 38% with the US showing particularly good growth in Regulated Markets. The U9 series is starting to attain good volume with c.20% of specifications going into Less Regulated Markets. In other product segments Aqua Optima has continued the performance seen in FY17 taking UK market share up to 20%, a record level. The shares have rerated recently closing last night at c.169p. This puts the shares on 14.5x current year earnings, assuming a 19% tax rate. The balance sheet is robust with a forecast net debt to EBITDA of sub 1.0x and the shares yield 4.2%, covered almost twice by earnings.

Companies: Strix Group

09 Jul 18

New strategy under new management

Metminco (MNC) owns the Quinchia Gold Portfolio located in central Colombia within the prolific Middle Cauca Belt. This region is host to numerous largescale projects including AngloGold’s 28Moz La Colosa and Gran Colombia’s 8Moz Marmato gold deposits. With assay results from its nearby Tesorito gold prospect pending, we expect a re-rating of MNC’s stock on the back of results, confirming extensive gold mineralisation. We initiate coverage with a Buy recommendation and a target price of 2p per share (1.5p fully diluted).

Companies: Metminco

10 Jul 18

Investing for the long term

FY 2018 results are in line with the recent trading statement except for a lower tax charge. Sales are up +5.9% at constant currency driven by rapid expansion in Laundry and growth in Kiosks. EBITDA is up a slightly more subdued +2.8% as Japan dragged. As promised, the dividend has been raised by +20% and net cash was £26.7m. Laundry now accounts for 16% of group sales (up from 10%) and is expected to continue to grow in importance. Management has stated that FY 2019E reported PBT is expected to be at least £44m, which is in line with our forecasts. Similarly, this year’s dividend will be held flat. Slightly better cash flow and lower tax, which we assume continues, enables us to raise our target price from 163p to 183p based on a 5% FY 2019E free cash flow yield.

Companies: Photo-Me International

18 Jul 18

Profit before tax guidance revised upward

EasyJet reported strong Q3 results thanks to its increasing customer demand and despite the growing number of flight cancellations, which affected mainly EasyJet’s costs in this quarter. This performance was supported by an important increase in ancillary revenues and favourable market dynamics.

Companies: easyJet

18 Jul 18

Solid market-beating numbers

Strong set of numbers, driven by new drugs, primarily Cosentyx and Entresto. Volume gains strong enough to combat generic competition as well as price erosion. Lower price erosion in Q2 vs Q1 marks the sequential out-performance. Sandoz does not offer much hope in the near term, but innovative medicines remain robust.

Companies: Novartis

18 Jul 18

Eland Oil and Gas - Capital Markets Day Interview (Long)

18 Jul 18

Sound organic growth in H1, upgrades needed to support current valuation

SGS delivered H1 results broadly in line with expectations, showing a better-than-expected organic growth (+5.6% vs +4.9% cons), but a touch light on margins (14.6% at cc vs 14.8% cons). The bottom line is mainly affected by exceptional items (c. CHF50m restructuring charge in IND and provisions for cumulative overstated revenues reported in prior periods in Brazil). Key highlights: Revenue growth of +8.5% to CHF3.31bn (+5.6% org, +0.9% acq, +2.0% FX) Increase in adjusted operating income of +9.2% resulting in 14.6% adjusted operating margin (+40bp gain yoy) Profit for the period increased by 1.0%, up to CHF296m Investment of CHF181m in capex and acquisitions Free cash flow of CHF176m Both short-term and mid-term guidance are reiterated: 2018 (qualitative) guidance: solid organic revenue growth, higher adjusted operating margin and robust cash flow. 2020 outlook: mid single-digit organic growth, acquired revenue over the 2016-20 period of CHF1bn and adjusted operating margin of at least 18%.

Companies: SGS

18 Jul 18

Results in line...

Handelsbanken (SHB) announced this morning its Q2 18 results. Total income at SEK11.6bn was in line with expectations (+7.5% vs our own expectations with the beat almost entirely driven by volatile other income). Total expenses at SEK5.2bn were in line with expectations (+6% higher than our forecasts). Profit before loan losses at SEK6.4bn is therefore 8% above expectations. The CET1 ratio at 21.4% is 20bp lower qoq.

Companies: Svenska Handelsbanken

18 Jul 18

Stronger NWC inflow

We are a bit puzzled about Production’s strong decline in profitability, which doesn’t appear to be explained well to us. We assume unfavourable FX developments and higher energy costs (gas) in Europe had burdened the division’s earnings. Therefore Yara’s Q2 figures clearly did not meet our expectations, but matched or beat at some levels.

Companies: YARA INTERNATIONAL

18 Jul 18

Oryzon Genomics - Awaiting for eventful 2019

The next year is shaping up to be transformative for Oryzon with two data readouts from Phase IIa trials with ORY-2001 in Alzheimer’s disease (AD) and multiple sclerosis (MS). In addition, an innovative design basket trial with ORY-2001 in several neuropsychiatric disorders may also deliver first results next year. Oryzon is resuming the development of ORY-1001 in acute myeloid leukaemia (AML) and small-cell lung cancer (SCLC). While Roche’s departure was a setback in 2017, the stars started to align again after the Biogen Abeta antibody data provided a much-needed boost for AD research industry and indirectly for Oryzon’s ORY-2001. Furthermore, a fundamental study published in Cell described the potential of LSD1 inhibition in immunooncology setting adding a new dimension to ORY-1001’s potential. We value Oryzon at €328m or €9.6/share (vs €9.4/share).

Companies: Oryzon Genomics

18 Jul 18

LIBERUM: Volution* - 11th acquisition since IPO

Volution yesterday announced the acquisition of Air Connection, for £3m, in Denmark. This is the Group’s 11th acquisition since the IPO in 2014, spending a combined total of almost £100m from its own internally generated free cash flow. Instead of upgrading estimates by 1% in line with potential earnings enhancement from Air Connection, we leave estimates unchanged.

Companies: Volution Group

18 Jul 18

Recovery is now well on track

Ericsson reported its Q2 18 results that confirmed the Q1 18 turnaround. The results beat the Street for both revenues and margins. The positives were the organic growth in Networks led by North America, the big increase in the gross margin (+580bp yoy) and the positive operating income. The company looks confident of its financial target for 2020, implying a >10% operating cash flow.

Companies: Telefonaktiebolaget LM Ericsson

18 Jul 18

The best ever H1 for Swatch

Swatch has released its best ever H1 and raised much hopes for a strong H2. Margins have improved on the back of better capacity utilisation.

Companies: The Swatch Group

18 Jul 18

Questions on capital...

Swedbank announced this morning its numbers for Q2 18. Total income at SEK11.8bn was 3% above expectations, mainly driven by higher volatile trading and other income. Core revenues (net interest income and fees/commissions) were indeed roughly in line with expectations. Total expenses at SEK4.25bn were slightly higher than expected (+1.4%). Profit before loan losses at SEK7.53bn was therefore 4% above expectations (+17% yoy due to weak revenues from other and trading income in Q1 18). The CET1 ratio was disappointing at 23.6%, 120bp lower qoq and 80bp below consensus estimates.

Companies: Swedbank

18 Jul 18

Disappointing P&L numbers...the Estonian matter won't help...

Danske Bank announced this morning its numbers for Q2 18. Total income at DKK10.9bn is 7% short of expectations (10% below our expectations) driven by a weak quarter in terms of trading as well as a disappointing level of net interest income (-3% versus expectations). Total expenses were also higher than expected at DKK5.8bn (+2% above expectations). Profit before loan losses was therefore 15% below expectations. The CET1 ratio at 15.9% is 40bp lower qoq (but in line with expectations). Regarding the Estonian issue, management might waive gross revenues realised through its non-resident portfolio in Estonia (about DKK1.5bn). However, we expect Danske bank to be penalised in the form of higher requirements or financial penalties.

Companies: Danske Bank

18 Jul 18

Bionomics - RESTORE trial completed, data this quarter

Bionomics announced on 9 July 2018 that it had completed treatment in its 193-patient Phase II clinical study of BNC210 for post-traumatic stress disorder (PTSD). The RESTORE clinical study completed the treatment phase on time and the company stated that it intends to provide topline data by the end of calendar Q318.

Companies: Bionomics

18 Jul 18

NWC becomes an issue

Akzo’s NWC outflow really swelled as the company financed its customers and paid suppliers. The higher inventories fit into this picture, as higher raw material prices triggered a re-valuation. The top-line was characterised by lower volumes and higher prices to dampen the effects from higher raw material prices. Operating performance did not meet our already moderate expectations and failed to meet analysts’ estimates.

Companies: Akzo Nobel

18 Jul 18

VolitionRx - Shifts in US CRC screening; major catalysts in H2

VolitionRx has broad R&D programme and expects to announce major milestones in the coming months, culminating with CE marking and launch of both colorectal cancer (CRC) triage and frontline screening tests in Europe, potentially in 2019. Other recent positive developments include a recommendation to reduce age to start CRC screening in the US and a new legislative initiative that could help increase reimbursement coverage in the US. Our valuation is $243m or $7.02 per share (vs $6.93 per share).

Companies: VOLITIONRX