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30 Jul 20

Belvoir Group - Forecasts upgraded, strategy continues to deliver

Since the restrictions were lifted in mid-May, Belvoir has seen a surge in activity due to pent-up demand, resulting in June being a record breaking month for the group’s Newton Fallowell estate agency network in terms of instructions and sales and the financial Services division in terms of written income. Management have stated that with the positive impact of the stamp duty reductions still to take effect they are confident that the Group is well positioned to capitalise on the current market upturn and to take advantage of the opportunities arising from more challenging conditions. We have upgraded our PBT forecasts for FY 2020 to the level we forecast pre-COVID. We have also upgraded our target price from 169p to 233p and highlight that H1 2020 has demonstrated the resilience of the group, management’s ability to navigate difficult market conditions and the power of the franchise-led strategy.

Companies: Belvoir Group Plc

29 Jul 20

Avacta Group - Termination of coverage

Edison Investment Research is terminating coverage on Avacta Group (AVCT), BCI Minerals (BCI), Destiny Pharma (DEST), Globalworth Real Estate Investments (GWI), Henderson Alternative Strategies Trust (HAST), Herantis Pharma (HRTIS), Jupiter Green Investment Trust (JGC) and Rockhopper Exploration (RKH). Please note you should no longer rely on any previous research or estimates for these companies. All forecasts should now be considered redundant. Previously published reports can still be accessed via our website

Companies: Avacta Group Plc

03 Aug 20

Cenkos: Seeing Machines Ltd - Better trading than expected

Seeing Machines has released a trading update demonstrating the business is performing better than expected on key metrics: Revenues of A$39.7m were 13% ahead of our expectations of $35.1m and cash of A$38.7m was 21% ahead of our expectations of A$32.0m. We believe this strong end to the financial year reflects the continued demand for the company's Fleet product by sophisticated fleet owners and that the key home markets of Australia and New Zealand have been less affected by COVID than feared. We believe this strong cash performance should reduce the perceived funding risk weighting and help the valuation recover towards previous levels. We iterate our Buy recommendation and 7.2p price target.

Companies: Seeing Machines Ltd.

03 Aug 20

K3 Capital - Making the most of lockdown

As is characteristic of this company, management has acted swiftly to execute an additional acquisition, putting the placing proceeds to work with another immediately earnings-enhancing acquisition, creating a Group with diversified revenue and profits, significant growth potential and greater visibility in a post-COVID world. We reintroduce estimates with CAGR in revenues of 29% between FY 2021 and FY 2023 and a CAGR in EBITDA of 34%. Quantuma, an insolvency and restructuring specialist targeting SMEs, is being acquired for £26.95m from existing resources to give an EBITDA multiple of 7.47x (EBITDA March 2020: £3.6m). Our forecasts take into account the greater visibility and predictability that the recent acquisitions bring to the Group. Our new SOTP valuation arrives at a reinstated price target of 300p.

Companies: K3 Capital Group Plc

29 Jul 20

Cenkos: Shearwater Group Plc -- Cautious on Covid

Shearwater delivered adjusted EBITDA ahead of expectations. FY20A was a strong year with the Group delivering maiden profitability and an enhanced margin profile. Cybersecurity and resilience are enduring themes but we are now cautiously presenting a picture of unchanged profitability in FY21E as a measure against the impact of COVID-19.

Companies: Shearwater Group

30 Jul 20

Still winning major deals

Sopheon has this morning announced a major win for Accolade – the global snack food giant, Mondelez. The deal is good evidence that Sopheon continues to win material deals despite the pressures of COVID-19, and that its innovation management platform is genuinely market-leading. We continue to believe that the group will see a return to strength as the market slowly recovers, and see today’s announcement as a useful signal.

Companies: Sopheon

03 Aug 20

Byotrol - Another positive trading update lifts forecasts

Byotrol released a further positive trading on the back of a strong Q1 FY 2021, citing product sales in excess of £3.4m in the quarter and for the business to significantly exceed full-year market forecasts. With the order book at the end of June still being c.£2m (similar to at 30 April) and continued improving supply chain management for biocidal ingredients, we have upgraded forecasts to reflect this outlook. We increase FY 2021 revenues, adjusted EBITDA and EPS by 15%, 38% and 55%, respectively. Consequently, we upgrade our target price to 10p, at which level the stock would trade on 3.7x sales. As previously indicated, we think the pandemic should result in a secular shift towards improved disinfection prevention, reducing the prospect of FY 2021 being a one-off exceptional performance. The prospect for further upgrades should current monthly revenues extend for longer than anticipated and additional IP monetisation events should not be discounted, in our view, either.

Companies: Byotrol Plc

28 Jul 20

Open Orphan* - COVID-19 Vaccine Ph I Trial Contract Signed

Open Orphan has announced the signing of a new contract with Codagenix Inc, a vaccine developer, to conduct a phase 1 trial for a COVID-19 vaccine candidate. The trial will focus on evaluation of safety and immunogenicity of the single-dose intranasal candidate in 48 volunteers. Although this is a phase I trial, in our view, it goes some way to validate Open Orphan's offering in the market and could lead to follow-on contracts. We expect the opportunity available to Open Orphan continues to increase and that H2 2020 should bring further good news flow and momentum to the stock. Reiterate buy

Companies: Open Orphan Plc

03 Aug 20

The Ince Group plc* - Stabilisation and Cause for Optimism

While Ince's FY20 results are complex given the various movements in reported figures associated with accounting for the Ince International consolidation, our assessment is that there are emerging signs of increasing operational effectiveness and reasons for optimism for investors. The operating environment and outlook remains opaque and thus we keep our forecasts and recommendation for the Group withdrawn at this time.

Companies: The Ince Group plc

03 Aug 20

Signs Softcat as a reseller, momentum elsewhere

Smartspace released positive news for both Space Connect and SwipedOn on Friday, sending the stock nearly 50% higher. Space Connect has signed a distribution agreement with Softcat and the SwipedOn has posted 80% yoy growth in AAR. Encouragingly too, SMRT also flagged current net cash at £1.7m (vs. £1.9m in April) demonstrating impressive reliance despite a challenging macro backdrop. In fact, SMRT has adapted quickly and is proving a ‘Covid beneficiary‘, seeing strong inbound demand as customers look for safe news ways to conduct business. Reassured by this, we continue to believe that Space Connect and SwipedOn could be worth considerably more than the current market cap.

Companies: Smartspace Software Plc

28 Jul 20

Trading activity improves and NED appointment

The group has announced its H1 trading update, with a challenging Q2 due to lockdown effects albeit with improving trends throughout the quarter. With previously outlined cost savings of £1.6m and additional restructuring delivering a further £1m of annualised savings, the group expects the second half to be profitable and cash generative. Net debt at £14.6m has reduced a further £1m since March. Our forecasts and price target remain under review.

Companies: Flowtech Fluidpower Plc

03 Aug 20

Rebound post lockdown

What’s new: Purplebricks Group results for the year to 30 April 2020, show the Australian and US units as discontinued; but include the Canadian unit sold for C$60.5m (i.e. £35m) in July. Investors will focus on the UK unit which revealed:  11% fall in UK revenue to £80.5m (FY19: £90.1m), as the number of instructions fell 23% (impacted by early Covid uncertainty and lockdown), but the average revenue per instruction “ARPI” rose 12% to £1,394;  UK gross profit margin improved to 64.1% (FY19: 63.0%);  UK marketing costs to revenue improved to 25.6% (FY19: 29.6%);  Spend on Digital capacity pushed UK operating costs 32% to £26.2m (FY19: £19.9m), as new management team pursued initiatives which are being “delivered at pace with significant opportunity for further innovation.”  UK adjusted EBITDA fell 53% to £4.8m (FY19: £10.2m).

Companies: Purplebricks Group Plc

29 Jul 20

Resilient performance and confident outlook

Hargreaves’ FY20 results are very solid indeed. As previously reported, the only noticeable impact from COVID was in the slippage of Blindwells’ land sales, which were due to conclude during the lockdown period. Site activity has resumed and sales remain on track to conclude in the current year. A final dividend of 4.5p has been declared and the outlook statement is measured but confident. We reintroduce forecasts today, effectively reinstating our pre-COVID expectations. Hargreaves is well positioned to deliver a period of significant, renewed growth with the prospect of a double digit dividend yield from FY22 as HRMS profits are distributed.

Companies: Hargreaves Services Plc

30 Jul 20

Reduced credit loss absorption capacity

As expected, the quarter saw a sharp increase in loan impairments. However, one can wonder if the increase was not capped by the group’s willingness to keep its results afloat. Management’s downbeat guidance in terms of revenue recovery potential and cost reduction does not bode well as regards the group’s future credit loss absorption capacity.

Companies: Lloyds Banking Group

31 Jul 20

Cenkos: SkinBioTherapeutics Plc - Significant progress

SkinBioTherapeutics has provided a development update for its two lead commercial programmes, demonstrating strong progress towards accessing two significant market opportunities, cosmetic ingredients and psoriasis. Sederma, the division of Croda which is developing SkinBiotix, has completed initial manufacturing development and has progressed to scale up validation. Following completion of the AxisBiotix formulation development ahead of schedule, SBTX has established a protocol for a self-managed food supplement trial, designed to mitigate the restriction associated with the COVID-19 pandemic. The trial is anticipated to commence in early 2021. We maintain our Buy recommendation.

Companies: SkinBioTherapeutics Plc

04 Aug 20

VSA Morning Miner

NQ Minerals (NQMI NXX) has released an update demonstrating strong progress since the commissioning of additional throughput capacity at the Hellyer operation in the last week of June. July was the first full month at the new 1.2mnpta run rate, in fact NQMI outperformed that achieving an annualised 1,25mntpa or 106.5kt resulting in record monthly lead concentrate of 4.1kt, strongly above the average Q2 2020 monthly output of 2.9kt. Zinc concentrate output of 1.5kt in July, was modestly higher than the 1.4kt Q2 2020 monthly average. Zinc prices at US$2,300/t are in fact flat YTD having recovered all of the Q1 2020 losses while lead prices are trading at US$1,867/t just 2.9% down YTD.

Companies: NQ Minerals Plc

04 Aug 20

Keywords Studios - H1 trading update

Keywords published a H1'20 trading updating this morning for the period ending 30 June. The group expects to report revenues of EUR173.5m, implying YoY growth of 13% (of which 8% CCY LFL) and a an adjusted PBT figure of EUR21.7m, an 18% increase YoY. Adjusted EBITDA is expected at EUR30.8m, up 19% YoY. The group continues to pursue M&A opportunities and highlights liquidity of c.EUR200m including EUR101m of net cash. We note that the run-rate on growth and margins implied by H1 performance appears to be toward the top-end of consensus expectations for FY20.

Companies: Keywords Studios Plc

04 Aug 20

Reassurance on the FY 20E outcome

We believe Beeks has issued a reassuring update on business performance for the twelve months ending 30 June 2020. Management expects to report FY 20E trading results within the range of current market expectations. The sales pipeline continues to grow, and implementations with existing Tier-1 clients are progressing according to plan. Beeks has also announced that COVID-19 has so far had only a minimal impact on the group but signals that some clients decision-making processes have been altered. We maintain our FY 20E estimates following the release but amend FY 21E forecasts reflecting revised assumptions on timing of revenues from new Tier1 clients.

Companies: Beeks Financial Cloud Group Plc

04 Aug 20

WHI First Light: Water Intelligence (WATR) - Accretive Melbourne reacquisition reflects strong demand and fundamental growth momentum

This morning's announcement from WATR again places the company's successful reacquisition strategy under the spotlight, with the Melbourne acquisition adding $AU250k of profits to the Corporate business and $AU1.29m revenues for less than a $AU1.8m purchase price. This latest reacquisition means that the group is keeping up the strong pace set earlier with the Maryland acquisition last month, following on from San Jose and Minneapolis in May and June respectively. It is also a reflection of the company's global approach. With strong technology and capabilities in the field of minimally invasive leak detection and remediation, WATR is able to benefit from drivers which go well beyond national frontiers, since water infrastructure challenges are well-nigh universal.

Companies: Water Intelligence Plc

04 Aug 20

WHI First Light: Malvern International (MLVN) - Closure of Singapore reflects improvement strategy for group

This morning's news from MLVN that its Singapore operation is to be closed marks a further stage in the company's ongoing response to the challenges posed by Covid-19, which have also included a fund-raise and a change in management. Loss-making 2018 and 2019, Singapore has this year confronted problems common to all global education businesses; and closure reflects recognition by management of the lack of a clear pathway to profitability for this business against this backdrop, not just in the short but in the medium term.

Companies: Malvern International Plc

04 Aug 20

bet-at-home - Improving momentum

bet-at-home reported headline figures for H120 ahead of consensus expectations. The results are encouraging given revenue growth in Q220 was better than might have been expected with the regulatory changes (Poland and Switzerland) and the impact of COVID-19 on sports betting. Management has reiterated its guidance for FY20, and the strong financial position makes the prospective dividend yield of 7.0% look attractive.

Companies: bet-at-home.com AG

04 Aug 20

WHI First Light: Immotion Group (IMMO) - Mandalay Bay site now open with improved terms

Immotion is a leading UK-based ‘out of home' Virtual Reality (VR) experience provider. This morning, the group has announced that its 36 seat Ocean Explorer VR theatre located in the Shark Reef Aquarium at Mandalay Bay opened on 1 August and with an improvement in terms for Immotion. Under this new agreement, the element of the standard Shark Reef entry price being allocated to the VR experience has been set at $9 per head, of which Immotion receives 50%, and compares to the previously reported minimum allocation of $5/$2.50 per head. Encouragingly, the Shark Reef Aquarium re-opened to the public on 1 July and has a reported c.1,000 visitors per day (implying the equivalent of over £110k contribution to Immotion per month based on the current rate), which compares to the 500,000+ annually prior to COVID-19 (the equivalent of £150k+ per month to Immotion).

Companies: Immotion Group Plc

04 Aug 20

Japanese global pharma Astellas added to the client roster

The oncology consultancy using mathematical models and its Virtual Tumour™ technology to support the development of cancer treatment regimens and personalised medicine solutions announced last week the award of a contract by a new client, Astellas Pharma Inc. (TSE: 4503), a Japanese global pharmaceutical Company.

Companies: Physiomics Plc

04 Aug 20

Cenkos: Pelatro Plc -- Expansionary raise

Pelatro has raised $2.7m in an equity Placing to fund an expansion in sales headcount and marketing activities in order to further expand the business, subject to shareholder approval. The product suite is fully developed and ready to be taken to a much broader set of customers. The beneficial impact of this expansion should be felt from the end of 2021E onwards.

Companies: Pelatro Plc

04 Aug 20

A first step in a larger overhaul?

Natixis released its Q2 20 numbers. The top line was rather disappointing due to losses in the equity division (CIB) offset, however, by good cost controls. Loan losses were in line with expectations and guidance for FY2020’s total loan losses is unchanged. The most important news from this release is the “departure” of CEO François Riahi after only two years. He is replaced by Nicolas Namias (BPCE’s head of group finance and strategy and Natixis’ former CFO).

Companies: Natixis SA

04 Aug 20

H1 20: disproportionate decline in profits

FCC published its H1 20 results with revenues down by 5.7%, largely due to the construction activities and through the regions like the UK and the Americas. EBITDA dropped by 6% but net profits were down by 41% due to lower EBITDA and an unfavourable FX effect.

Companies: Fomento de Construcciones y Contratas SA

04 Aug 20

H1 20: weak, as expected

H1 20 results show a substantial loss The exposure to the advertising market and the share of fixed costs are keys to the poor performance Despite the efforts on the cost side, the current year (and possibly next one too) looks like a lost year The rebound will largely depend of the shape of the economic recovery, with little hope of improvement before next year at best We will revise downwards our numbers and price target

Companies: JCDecaux SA

04 Aug 20

Purplebricks Group huge scope for a rise in forecast instructions (Analyst Interview)

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04 Aug 20

Morning Note – 4 August 2020

Companies: KBT FTC CGH ORPH

04 Aug 20

Filtronic - FY 2020 leaves Filtronic well positioned for growth

The FY 2020 results are broadly in line with the YE trading update, showing resilience and effective management through a challenging period. Even with the distraction of settling a warranty claim, the sale of the antenna business, management change, and finally a pandemic, the ongoing business still grew revenue and profits YoY. The sale allows FTC to focus on core markets: public safety; aerospace & defence; and telecoms backhaul. The proceeds funded significant investment in staff, production capability, and product development while still leaving £2m cash in the bank at YE. Operations continued through lockdown, with all customer requirements delivered on time. Delayed deliveries are recommencing, with staff steadily returning from furlough. Contract wins have been impressive through the year, and despite orders slowing in the Q4 lockdown, the YE orderbook matches the opening orderbook and was since boosted by a £4.9m follow-on order to its lead defence customer. Management rightly remains cautious on the immediate outlook with the economic impact of COVID (and Brexit in January) as yet unknown, so our forecasts remain Under Review. However, in the longer term, the underlying fundamentals look very healthy, with exciting opportunities to build value in the targeted markets.

Companies: Filtronic Plc