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13 Mar 19

LIBERUM: Burford Capital* - Beats, evolves, discloses more

$1.1bn of capital deployed, when we bullishly expected $0.6bn. Burford has also beaten profit expectations by 25%, with higher ROIC, a broader range of solutions for the legal industry and now greatly enhanced disclosure, even down to individual investments.

Companies: Burford Capital

13 Mar 19

Full-year results – eye-catching dividend pay-out

Results were slightly above recently upgraded expectations, with a stronger than expected H2. Strong sales growth was gained in the US, with ongoing demand in its construction customer base. New products provided a boost to sales, while the recently launched SkyScreed®25 will accelerate sales prospects in the medium term. A strong cash performance supports the exceptionally strong underlying and supplemental dividend growth. No change to 2019 PBT forecasts, with the year having started well, a higher tax charge results in a 2.6% EPS reduction to 40.8ȼ giving YoY growth of 8.1%. We introduce conservative 2020 forecasts pointing to YoY EPS growth of 5.6%. Our 465p price target continues to offer good upside, with an eye-catching 6.6% forecast dividend yield.

Companies: Somero Enterprises

12 Mar 19

LIBERUM: Staffline* - Suspension lifted – most allegations ill-founded

Independent legal advisers have investigated the concerns raised on the eve of the results. There have been no issues identified on invoice practices.

Companies: Staffline Group

18 Mar 19

LIBERUM: Miton Group* - Alpha + brand + cost control = success

Revenues beat by 3% and PBT by 9% as costs were controlled to plan. Fund performance remains good, while the range of funds offered is broader.

Companies: Miton Group

12 Mar 19

Strong update, +14% beat to forecasts; technology-led service offering

WATR is a leading and geographically diversified specialist in precision, minimally-invasive leak detection and remediation in both drinking and waste water. Technology-led, the business uses solutions such as infra-red and acoustics and continues to expand its technology offering – a key differentiator against typical support services companies. The business has been a consistent performer with a history of delivering and exceeding expectations, although the share price, latterly, has marked time. WATR has today reported an FY18A PBTA result which is a 14% beat to expectations; and while the rating could be seen as high in the context of Support Services, the valuation should be seen in the light of similar franchise businesses and technology-led companies, reinforced by strong structural growth characteristics (see below). Strong results disclosed this morning show FY sales growing 44%, demonstrating growing momentum and ahead of the already strong Q1-3. No one-off, this continues an accelerating and compounding trend over the past three years, which we expect to be maintained. Insurance channel sales have nearly doubled and this momentum notably shows every sign of carrying on, opening up a very large US market in which WATR remains the only national player. The differentiated model – advanced technology integrated into multiple and efficient delivery channels – offers meaningful opportunities, while selective franchisee reacquisitions are also adding to the growth momentum and optimising the group’s capital structure.

Companies: Water Intelligence

13 Mar 19

LIBERUM: Charles Taylor* - Building a platform for growth

2018 was a busy year for the group. In addition to acquisitions which helped transform the scale of the InsureTech business, the group has built a truly global platform within Claims Services.

Companies: Charles Taylor

11 Mar 19

Cenkos: Redde Plc - Dented earnings in FY20, but not a crash

Management put it aptly – Redde was “obviously disappointed” at losing a contract worth 18% of consensus forecasted sales in FY20. But expecting to more than halve the impact on earnings (adjusted operating profits are expected to be down 8.7% versus consensus) speaks volumes about the adaptability and resilience of their business model. Our revised forecasts still expect a robust dividend –ie given the sharp fall in the share price, a 11% prospective yield.

Companies: Redde

13 Mar 19

Strong growth achieved, ahead of bullish forecasts

FY2018 was a year of strong growth for Franchise Brands, with EBITDA growth of 37% achieved despite the challenges that required an overhaul of Metro Rod’s operations and support systems. Our expectations for FY2019 assume a continuation of the growth trend as the real potential at Metro Rod is unlocked and anticipates an organic increase in EBITDA of 28%. With the integration of Metro Rod now complete, management’s attention is turning to the selective acquisition of other reasonably valued franchise brands or businesses which can extend the scope and capabilities of existing brands. Given the expectation of further strong organic growth from a proven management team, we believe that the shares are fundamentally undervalued with fair value closer to the 2017 peak of 101p. (Ian Jermin)

Companies: Franchise Brands

05 Mar 19

XP Power - Driving share gains with expanded product range

In FY18 XP reported strong organic growth and operating margins, generating EPS growth of 18%. After a series of acquisitions, it has a full portfolio of power solutions to meet all voltage and power requirements, and management is now focused on increasing its market share at key accounts. In our view, the stock is trading at close to trough multiples with a dividend yield above 4%.

Companies: XP Power

10 Mar 19

THE MONTHLY March 2019

In the investment world, before MiFID II, essentially every institution talked to every broker, and the whole, professional market could see every research note and the forecasts in detail. This was the ‘Age of Consensus’. Everyone had the same information (well, everyone except retail investors), and this transparency helped share price formation and liquidity

Companies: OPM AVO AJB AGY ARBB AVCT CMH CSH DNL GTLY GDR KOOV MCL OXB RE/ REDX STX SCE SIXH TRX TON VAL VTA W7L

12 Mar 19

LIBERUM: Equiniti* - Delay is disappointing but fundamentals remain overly discounted

Although there are fewer positives than negatives with the FY18 results, on balance we still believe in the strength of Equiniti’s underlying business. This view is supported by the impressive organic revenue growth delivered in year (7.3%), and the 5% beat to our net debt forecasts.

Companies: Equiniti Group

13 Mar 19

LIBERUM: Equiniti* - Presentations highlight the strength of the franchise

In their presentations to the analyst community and our sales force, Equiniti’s management talked to the number of opportunities within the business. As a result of these they remain confident in the business’ ability to deliver 3-7% organic revenue growth and an improving trend in margins, despite the headwinds created by current market uncertainties.

Companies: Equiniti Group

14 Mar 19

LIBERUM: Clarkson* - Flooding the digital moat

Research with unrivalled breadth, depth and resources has been a key part of what differentiates Clarkson from its competitors. It has also been a key part of the barriers to entry protecting the group.

Companies: Clarkson

04 Mar 19

LIBERUM: Ramsdens Holdings* - Accretive acquisition of 18 stores

As long anticipated, Ramsdens has done a beautiful win-win deal with The Money Shop which will add 9% to March 2021 earnings, for starters. The acquired stores will gain a jewellery offering and all that is best in the Ramsdens offering of pawnbroking and FX, while existing staff will join Ramsdens.

Companies: Ramsdens

12 Mar 19

Strong FY 2018 results provide forward momentum

Gamma’s FY 2018 results show the anticipated continuation of the healthy performance which the Group has provided in recent years. In particular, they feature adjusted numbers which are 3-5% ahead of our estimates which were upgraded after January’s trading update. Importantly, the commentary and the numbers are consistent with recent trading updates and the evolution of Gamma’s strategy which was announced in some detail at the recent Capital Markets Days (CMD). The channel showed further growth during FY 2018 with more contract wins while the direct business also enjoyed a good 2018 – helped by a useful tailwind from contracts won in 2017. The outlook comments are positive and note the visibility afforded by the Group’s recurring revenue base. We make some small positive changes to adjusted estimates for FY 2019E and FY 2020E and introduce estimates for FY 2021E. In viewing the continued momentum in the business, we see our numbers as conservative and we expect to see Gamma further exploit the growth opportunities which it has identified.

Companies: Gamma Communications

18 Mar 19

Maintel - Prelims

Maintel has delivered prelims in line with the positive trading update of January 28th, detailing EBITDA of £12.7m (£12.4mE) from revenue of £136.5m (£133.9mE). A challenging year included a 2H slowing of sales cycles and postponed client implementation plans, which have however since begun, underwriting FY19 expectations. With an increase in momentum in 4Q18, and some high-profile contract wins on the ICON platform for 2 NHS Trusts, representing the group’s largest cloud implementations yet, it is evident that prospects remain strong. The current valuation of a business with 70% recurring revenue, expanding EBITDA margins, and a return to strong cash conversion, delivers an FY19 free cash flow yield of an almighty 12.9% – our 80% target price upside to the share price is highly reasonable. With a 7.3% dividend yield for FY19 (FY20: 7.6%), we reiterate our 900p target price and look forward to continuing momentum in contract wins.

Companies: Maintel

18 Mar 19

Bitesize briefing – Euromoney

18 Mar 19

Cenkos: Salt Lake Potash Ltd - Lake Way Resource

Salt Lake Potash released the initial ‘whole-of-lake' resource for the Company's Lake Way project. The total Mineral Resource Estimate at Lake Way has increased to 73 million tonnes of SOP calculated using Total Porosity and 8.2Mt of SOP calculated using Drainable Porosity. On a drainable basis, the overall resource estimate for Lake Way is now 8.2Mt of contained SOP at a grade of 15.1kg/m3, with around 3.2Mt, or 40% of this, hosted within the Measured and Indicated categories. Based on our estimated initial production of 200ktpa, the Measured and Indicated drainable resource would sustain a life of 16 years, with a further 25 years' life in the Inferred category to be further proved up. Management are subsequently investigating larger production scenarios for the project (beyond the 50ktpa demo plant) and expect to release an initial technical study on the results by the end of Q2/19. We feel that Lake Way has the potential to support a larger scale SOP operation and the next step to 200ktpa may not be the last. Construction activities have progressed with the initial holding ponds now taking shape, which should enable Salt Lake Potash to commence de-watering the Williamson Open Pit towards the end of Q2/19. The Company is focused on rapidly progressing the development of the Lake Way Project to become the first SOP production operation in Australia. Lake Way has the highest-grade SOP brine resource in Australia and the best infrastructure solution of potential Australian brine SOP producers. We feel that given the Resource and management's incentives, Salt Lake will probably progress direct to an economic 200ktpa plant rather than the 50ktpa demo plant, but this has not been confirmed.

Companies: Salt Lake Potash

18 Mar 19

Sirius Real Estate - Acquisition of business park in Bochum

18 Mar 19

Profit in line with (corrected) FY2018 target

Net attributable profit increased by 5% to €703m for FY2018 compared to FY2017. Net premiums earned rose by 8% to €29.6bn for 2018 compared to 2017. The net investment income was down by 16% to €3.8bn for 2018. RoI was 3.3% for 2018 compared to 4.0% for 2017. Insurance claims increased by 1% to €23.5bn in 2018 compared to 2017. The group’s net combined ratio of the non-life business was 98.2% for 2018 compared to 100.4% for 2017. Pre-tax result rose by 12% to €1.86bn for 2018. Equity capital attributable to common shares decreased by 1% to €8.5bn at the end 2018 compared to the end of 2017. RoE was 8.0% for 2018 versus 7.5% for 2017. The dividend per share proposal increased from €1.40 for FY2017 to €1.45 for FY2018. Talanx confirmed its net attributable profit target of around €900m for FY2019.

Companies: Talanx

18 Mar 19

Actinogen Medical - Differentiated treatment for Alzheimer’s disease

Actinogen Medical is an ASX-listed Australian biotech developing its lead asset Xanamem to treat cognitive impairment that occurs in chronic neurodegenerative diseases. Xanamem® is a selective 11β-HSD1 inhibitor that is able to cross the blood-brain barrier and target excess brain cortisol, which has been associated with cognitive impairment in Alzheimer's disease (AD). The ongoing Phase II XanADu trial is fully enrolled with mild AD patients, who receive Xanamem in conjunction with standard of care. The results are due by end-Q219 and will shape further development of Xanamem. Our valuation is A$195m or A$0.17/share.

Companies: Actinogen Medical

18 Mar 19

Attica Bank - Balance sheet repair nears completion

Through the Artemis and Metexelixis securitisations, Attica’s exposure to impaired loans has reduced significantly and now compares favourably with the larger Greek banks. Management forecasts common equity Tier 1 to increase from 12.2% to 13.2% at year end, representing significant headroom over regulatory requirements. Management will now move to the next stage of recovery, right-sizing the cost base and shifting the group’s focus to the small and medium-sized enterprise market. Q3 results provide evidence of tight cost control and declining impairments. With Attica trading at 0.18x tangible book value, investors are taking nothing on trust.

18 Mar 19

Morning Note – 18 March 2019

Companies: Maintel

18 Mar 19

LIBERUM: Volution* - Improving growth and Reading resolved

Volution has reported PBT up 8% to £19.2m, 1% better than we expected. The highlights of these results are that the Reading facility is now producing at normal levels, UK public RMI is growing again and acquisition integration is progressing well.

Companies: Volution Group

18 Mar 19

No major change post FY18 results (Crossject)

No major change post FY18 results EPS CHANGE CHANGE IN EPS2019 : € -0.51 vs -0.50 ns 2020 : € -0.39 vs -0.39 ns We have only fine-tuned our numbers after the release of FY18 results, which are anyway insignificant before the group’s products actually reach the market in FY2021, i.e. results (losses) before 2021 are almost simply the sum of operating costs. CHANGE IN NAV€ 10.0 vs 11.9 -15.4% The SOTP goes down a tick after the dilution stemming from the conversion of bonds at the beginning of the current year, the total number of shares rising from 13.6m to 15.7m. CHANGE IN DCF€ 15.0 vs 13.9 +7.91% The DCF goes up, despite the increased number of shares (partly compensated by a lower debt level) since the positive cash flows are actually “nearer” (by a year), with our forecasts now starting from FY19 on.

Companies: Crossject

18 Mar 19

LIBERUM: Miton Group* - Alpha + brand + cost control = success

Revenues beat by 3% and PBT by 9% as costs were controlled to plan. Fund performance remains good, while the range of funds offered is broader.

Companies: Miton Group

18 Mar 19

Securing the commercial future of NBT in depression

Nexstim is embarking on the next stage of its journey in commercialising its Navigated Brain Therapy (NBT) platform in MDD (major depressive disorder). The recently reported FY18 results confirmed operational progress was much as expected. A sizeable rights issue is planned, with the aim of securing sufficient funding to support the commercial roll-outs of NBT in depression in North America and Europe. It was also announced that the NBS pre-surgical mapping platform may be divested. We have updated our valuation and financial model to reflect the expected changes. We now value the company at €10.5m or €3.23 per share (also €3.23 diluted), against €32.0m, or €10.5/share (also €10.5 diluted) were financial risk removed.

Companies: NEXSTIM OYJ

18 Mar 19

Morning Comment

Spectra is a global leader in machine-readable high-speed banknote authentication, brand protection technologies, and gaming security software. This morning’s positive news relates to a signed basic research contract for a G7 bank, the margin profile of which is better than our model FY 2019 model had estimated. As such, our FY2019E revenue expectation is unchanged at $12.2m; however, our adjusted profit forecast is raised by 11% to $4.0m (from $3.6m), yielding adjusted EPS of 8.8c. FY2018 estimates are unchanged – with Spectra reporting its FY2018 results a week today (25 March). The shares trade on FY2019E EV/EBITDA and cash adjusted PER (given the cash-rich balance sheet) multiples of 12.4x and 14.0x respectively, both very undemanding when set against other IP-led businesses. Given the continued quality of earnings, we see near-term fair value at 145p.

Companies: Spectra Systems

18 Mar 19

GMP FirstEnergy ― UK Energy morning research package

BW Offshore (BWO NO) (not covered): Acquisition offshore Brazil | Eco (Atlantic) Oil & Gas (ECO LN/EOG CN) (not covered): Resources update in Guyana | Range Resources (RRL LN/RRS AU) (not covered): Restructuring and acquisition of education business

Companies: BWO ECO RRL

18 Mar 19

Finals – Positive newsflow for 2019

Starcom, the developer of wireless solutions for the remote tracking, monitoring and protection of assets and people, has announced FY results in line with January’s trading update. A combination of increased revenue and higher gross margin resulted in a $0.2m reduction in adj. EBITDA loss to $8k and the company was breakeven in H2. 2018 saw progress commercially and in the product set and newsflow post period end has been encouraging with contracts for the existing products (Helios, Kylos and Tetis) and the forthcoming Watchlock Lokie has generated considerable levels of interest. As a result, further higher margin revenue growth should result in Starcom moving into sustainable adj. EBITDA profit in FY19. The balance sheet remains tight, however, although the situation has improved somewhat with the receipt part of the funds from the North Africa contract announced last November.

Companies: Starcom