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12 Feb 19

LIBERUM: Plus500* - Too much of a good thing

Elevated volatility is good for trading platforms, but market falls in Q4 caused significant client losses ("P&L gain”), rather than higher spread revenue. The company is choosing to subtract this gain from Q4 revenues and to base 2019 guidance on the organic growth which they have always achieved.

Companies: Plus500

19 Feb 19

Cenkos: Seeing Machines Ltd - Sixth Automotive OEM Design Win

Seeing Machines, the advanced computer vision technology company that designs AI powered operator monitoring systems to improve transport safety, has secured a new programme design win with a global US-headquartered automotive OEM to deliver the Group's Driver Monitoring System (DMS) technology. Seeing Machines is working alongside a major Tier 1 partner to deliver the new programme via its highly scalable FOVIO Chip, with mass production scheduled from late 2020, and an estimated lifetime revenue of A$6M for the initially planned car models. The design win is classified as a small value programme but is considered strategic with a significant potential for volume/model expansion with increasing demand for driver monitoring systems, globally.

Companies: Seeing Machines

19 Feb 19

Cenkos: Duke Royalty Ltd - A myriad of royalties to come

Duke has announced a new £10.0m royalty investment into MRDB Holdings, trading as Miriad Products (Miriad), the largest privately-owned wholesale supplier of recreational vehicle (RV) parts in the UK. Following the recent addition of Capital Step, Miriad represents Duke's twelfth core holding, further diversifying the royalty portfolio. The deal continues the theme of investment into well-established UK businesses, with strong barriers to entry that help protect long-term royalty income.

Companies: Duke Royalty

13 Feb 19

Competitor highlights market strength

We believe the positive trading update from one of CloudCall’s key USbased competitors, Ring Central, highlights the ongoing strength of the UCaaS market. RingCentral’s Q4 results and guidance beat analyst expectations, driven by mid-sized enterprise clients and supported by a buoyant market environment. We believe this augurs well for CALL. Enterprise engagement is a key area of focus during 2019 and the beat adds to our confidence over the 30% revenue CAGR we forecast on a midterm horizon. The shares trade on 2.2x FY19E EV/sales. Our PT implies material upside and we reiterate our Buy rating.

Companies: Cloudcall Group

19 Feb 19

HomeSend progress update

Regular updates give us visibility into progress at HomeSend (HS) – the company’s 35.69%-owned JV with Mastercard. Today’s update excites with the first clear evidence of the changed focus as almost a third of the December flow now comes from account-to-account (A2A) transactions rather than remittances (i.e. banks and financial institutions instead of just MTOs). Although a key element of the eServGlobal investment, HS is private and at this stage commercial sensitivity limits information available. We assume that more information will become available as its scales. ESG’s management provides these updates to enable us to fine-tune our financial expectations for the JV and the group as a whole. This HS update follows on from one in late November and comes just ahead of the ESG’s FY 2018 results, due next week.

Companies: eServGlobal

12 Feb 19

Share & share alike

Roses are red – markets are blue! The rally since the start of the year resumed this week, after a pull-back last week. The FTSE 100 has risen due to the weakness of sterling and the impact on its dollar-earning constituents. More domestically-oriented indices have also risen but lagged more recently. The latest Brexit twist is due later with a statement to Parliament on the negotiations. Company news continue to dominate the morning headlines and amendment votes the evening ones. In Share News & Views we comment on DCC, EU Supply* FireAngel*, Location Sciences*, Northbridge* and NWF.

Companies: AOR APC BONH BMS CTG CRPR DMTR ESC EUSP FDM FA/ LSAI NKTN PCF SNX TCN VRE W7L

12 Feb 19

Acquisition and placing

SDI announced the acquisition of Graticules, a manufacturer and supplier of standard and bespoke reticles and graticules for the microscopy, metrology, education, scientific and defence markets. The company paid c.£3.4m, which represents historic FY 2018 EV/Sales and EV/EBIT multiples of 1.8x and 5.1x, respectively. The acquisition was funded by the full drawdown of its £5m revolving credit facility as well as the placing of 7.276m shares at 34p, raising £2.5m. There may be a further £0.1m raised through an open offer on PrimaryBid. We expect the acquisition to be 1% accretive to adjusted EPS in FY 2019 and c.5% in FY 2020. We raise our target price by 6% to 51p, which implies a FY 2020 EV/EBITDA of 9.9x and adjusted P/E of 16.6x with a FCF yield of 5.6% in FY 2020.

Companies: Scientific Digital Imaging

13 Feb 19

Small Cap Feast

United Oil & Gas (UOG.L) an oil and gas exploration and development company brought to the Official List (Standard Segment) in July 2017 by way of a reverse takeover of Senterra Energy plc. No capital to be raised, expected market cap of £17m and expected 28 Feb Techniplas –global producer and support services company providing highly engineered and technically complex components, making the supply chain to original equipment manufacturers more efficient. FYDec17 rev $515m.

Companies: NMRP PGD KDR CER CLIN NBB MLVN RENX BAGR D4T4

20 Feb 19

Refocused and primed for growth

Wey Education plc is a UK-based educational group delivering online education services in the UK and around the world. The tragic loss of its Executive Chairman towards the end of last year has necessitated a refocusing of Wey’s strategy, the details of which were announced in early February. Under the Chairmanship of Barrie Whipp, and led by CEO Jacqueline Daniell, the Group is now set to be more focused and streamlined around its existing businesses of InterHigh and Academy21. Coupled with a revised sales and marketing campaign, Wey is seeking to capitalise on the growing demand for online-based education, alongside targeted overseas opportunities to be achieved from the UK. Although there is a material rebasing of our estimates, we believe near-term forecast risk significantly reduces with potential, certainly in 2020E, towards the upside. Our DCF valuation conservatively sees fair value at 35p.

Companies: Wey Education

19 Feb 19

Morning Comment

Walker Greenbank is a higher end interior furnishings business with well-established global brand names and manufacturing facilities in the UK. The Group has this morning provided a year-end update confirming that results for the year to 31 January 2019 are anticipated to be in line with the Board’s revised expectations; these benefitting from significantly higher licensing income, including from a major contract with H&M. Underlying core trading, most notably in the UK, has continued to be challenging, a trend that in the near term shows little sign of abating. Reflecting these trends, whilst assuming that licensing income reverts to more normalised levels in the current financial year, leads us to reduce our FY 2020E earnings expectations by 25% this morning. Today’s update again illustrates the current market uncertainty and whilst this will take time to improve, we do believe that the Group remains strategically well positioned in its markets and should benefit from its overseas presence, further licensing opportunities and other initiatives in time.

Companies: Walker Greenbank

19 Feb 19

Robust interims show opportunity

In the first full six-month period since GDPR, DOTD has demonstrated that the Engagement Cloud platform continues to generate robust growth, through yet greater data integration and customer empowering insights. 33% headline growth from three strategic pillars included 15% organic revenue growth: pillar one, revenue from sales of additional functionality, grew 50%; pillar two, sales via strategic partners, grew 43% to constitute 41% of group revenue; and pillar three, international revenue, achieved growth of 40%. While Comapi suffered from UK retail exposure, the technology integration is well underway, leading to global opportunity from a fully omni-channel platform with broader functionality. With net cash of £16.7m at December 31st, the board has the benefit of balance sheet strength to consider all strategic opportunities. 12-month target 135p reiterated.

Companies: Dotdigital Group

14 Jan 19

Opportunity knocks

We are introducing our Best Ideas for 2019 and also review the performance of last year’s picks. We suggest ten solidly financed stocks with good business dynamics that ought to be considered for core portfolio holdings and six UK domestically focused stocks that our analysts believe should perform strongly in the event that uncertainties unwind. We also introduce a new style of research from N+1 Singer which presents a Company’s dynamics and metrics in a clear and concise manner and concentrates on the pivotal issues affecting that Company and an investment decision.

Companies: BCA CLIN CLG CBP DNLM EAH FDL FCRM FUTR GTLY INS GLE NICL SDL SPR TRI

31 Jan 19

Quarterly Research Outlook

The market has not faced quite so many conflicting challenges for a number of years, whether related to global geopolitics, trade wars, ongoing Eurozone issues or the “will they, won’t they” saga of Brexit. In our Best Ideas, we sought to highlight stocks that present investors with interesting opportunities following recent market moves. Those stocks, we believe, warrant investor attention, in many cases for uncorrelated or stockspecific reasons, regardless of the near-to-medium term market direction. These stocks, in general, represent attractive and well-managed businesses or assets, with share price catalysts and where valuations or recent stock performance provide investors with a good entry point.

Companies: 7DIG ABBY AMS ANX ARS ATYM AVON BLVN PIER CGS CAML CALL CSRT TIDE DTG DEMG ELM EMR FPO FST GTLY GENL GRI GEEC HDY HMI HAYD HEAD HILS HTG HUR IBPO IOG INDI JHD JOG KEYS KCT KGH LAM MACF MOD MKLW OXIG PCA PARK PMO RBW RMM REDD RSW RNO RKH RBGP ROR SUS SCPA SHG SOLG TWD TRAK TRI VNET VTC ZTF

13 Feb 19

GB Group - Expanding eIDV in the US

GB Group (GBG) has acquired IDology, a US identity verification business, for an enterprise value of $300m/£231m. It has placed 39m shares at 410p per share to fund £160m of the purchase price, with the remainder coming from a new credit facility. We estimate that the deal offers significant cross-selling potential and will boost GBG’s international revenues to close to 50%.

Companies: GB Group

14 Feb 19

LIBERUM: MJ Gleeson* - Very confident for H2

Gleeson has reported PBT up 63%, 11% better than expected, with Gleeson Homes delivering 14% growth, as expected, and Strategic Land increasing profit from £2m to £9m, driving all of the beat. Management expects full year profits at least in line with expectations and we leave PBT estimates unchanged.

Companies: MJ Gleeson

20 Feb 19

Shifting the gear down - Helios becomes an issue

Fresenius’s Q4 figures were pretty much in-line with our expectations adjusted for our too low assumption on FMC, as Helios came in stronger than expected, but Kabi a notch weaker. Consensus was also broadly met.

Companies: Fresenius SE & Co

20 Feb 19

Growing too fast?

The FY18 figures were decent and slightly above consensus and our estimates, except in FCF. Indeed, the disappointment comes from: i) the FCF at €203m in FY18, despite being within the 40-50% cash conversion guidance, at 42% and, ii) expected revenues at c.4.7bn for 2019 (below consensus at €4.8bn). However, MTU’s investment phase is now behind it and, going forward, margins and FCF generation will improve. The valuation appears to be full but MTU remains a quality stock.

Companies: MTU Aero Engines

20 Feb 19

Double-digit EBITDA growth in all businesses FY18, return to normal expected in FY19

Iberdrola released a strong set of FY18 results, higher than the consensus and our own expectations. Supported by higher tariffs and RAV in the network division and higher output in renewables and Generation and Supply, all businesses contributed evenly to the EBITDA growth. The group expect a mid-single digit growth in both EBITDA and net profit.

Companies: Iberdrola

20 Feb 19

Accelerated savings gains delivery

Second half operating trends were in line with plan, enabling management to reiterate its financial objectives for this year secured by accelerated savings gains delivery.

Companies: Lloyds Banking Group

20 Feb 19

A disruption-marred H1 FY19

H1 results were impacted by various disruptions at key assets. Moreover, receding copper price tailwinds and higher costs at Escondida reduced Base Metal’s profitability by >50%. Although, BHP’s bottom-line still benefited from the absence of hefty exceptionals. With the cashflow cushion of US shale disposal, net debt was reduced to <$10bn. While the iron ore market euphoria remains a near-term advantage, the renewed risk of regulatory scrutiny at Samarco, coal’s unpredictability and copper’s operational issues are key concerns.

Companies: BHP Billiton

20 Feb 19

Shareholders were rewarded

Ageas reported a net income of €809m, 2% lower than our estimates. Q4 was difficult with a 52% drop in the net result to €133m. The poor performance of the equity markets during Q4 affected the Life result (-70% to €45m). The Non-Life division also suffered (-29% to €88m). The Solvency ratio stood at 214% and the proposed dividend met our estimates at €2.20/share. We will keep our positive trend in the insurer’s future operating performances.

Companies: Ageas

20 Feb 19

A bright Q4, but no sunny 2019

FMC reported a more profitable Q4 without any restrucuring costs, which we had expected to clean up the company. The consensus was broadly met. However, 2019 will be a more challenging year due to investments in the future and the next cost-cutting programme kicking in into the one still running. The higher dividend and the share buyback programme make shareholders happy (Fresenius is the single largest one!) but leave us puzzled.

Companies: Fresenius Medical Care AG & Co

20 Feb 19

Poor Q4 18 but still a generous dividend

Q4 18 was difficult for Scor due to the multiplication of nat cat events. The operating result was -€7m, partially saved by the Life segment (up 26.9% to €99m). The net income was affected by the US tax reform (-€68m). This regulatory change was also reflected in the cash flow generation, only at €891m. The proposed dividend was better than expected, at €1.75/share. The CEO confirmed that Scor will remain independent. No major changes are expected in our model.

Companies: SCOR

20 Feb 19

FY18 weak as expected. The transformation plan should start paying off.

- Q4 18 was weak, as a result of the reduction in workforce - management insists no further financing is required (on the condition that the transformation plan actually bears fruit) - the guidance for FY19 is modest and should be met - IFRS16 impact: c. +€15m in EBITDA, +€105-115m in debt - no big changes to expect in our numbers

Companies: Solocal Group

20 Feb 19

FY18: better than the consensus, FY19 clearly expected to be better than FY18

Harsh weather conditions in the US in Q1, unexpected increase in energy costs and lower than expected asset sales gains impacted EBITDA growth, so that only two regions contributed positively to EBITDA. However, management gave a fairly rosy positive picture for FY19, saying that it is confident in being able to reach the current consensus thanks to tailwinds from energy prices as well as improving operations.

Companies: HeidelbergCement

20 Feb 19

Having arrived at the dead-end

Management had to release preliminary numbers for 2018 and an outlook for 2019 which are a disaster. While the revenue number of just below €1.70bn (+2.0% reported and +7.3% organic) was reasonable, profits again collapsed and are expected to fall further in the current year. Because of this dismal outlook, it proposes to pay no dividend at all for 2018. While management had projected a margin of 7% for 2018, the preliminary number suggests that it fell to 5.9%. In fact, it was down to 2.8% in Q4 18. This year’s EBIT margin is expected to come in between 4% and 5%.

Companies: ElringKlinger

20 Feb 19

AEX Gold - Change in strategy driven by high nugget effect

AEX Gold is an exploration company with a substantial ground holding in Greenland. The company’s most advanced project is the former producing high-grade gold mine, Nalunaq. Over 350,000oz of gold were produced from Nalunaq at an average grade of 15g/t Au between 2004 and 2009, with an additional 15,000oz produced between 2011 and 2013. Following its Summer Work Programme at Nalunaq, AEX has changed its strategy and is now focused on using a four-phase bulk sampling programme to achieve a better understanding of the grade distribution of gold mineralisation at Nalunaq. This programme is expected to commence in Q2/Q319.

20 Feb 19

Bushveld Minerals - Interview at 121 Mining, Cape Town

20 Feb 19

Ready to fight a challenging environment

Thanks to professional investors on Q4, reservations were very positive. Nexity maintains its mid-term guidance despite the end-market decrease of around 6% on 2019.

Companies: Nexity

20 Feb 19

Quality has a price

Good FY 18 figures. The good pipeline ensures 2019-2021 average 4% growth in revenue and net recurring profit in our view. However current Capitalization Rates on some assets are approaching the limit of potential value destruction.

Companies: Gecina