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19 Sep 18

Cenkos: Seeing Machines Ltd - Smooth transition for fleet

This morning, Seeing Machines released its FY18 results within which there is an increase in the forecast revenues from the five automotive OEM deals to A$138m (from A$110m), demonstrating the ever-broadening scope for DMS. The board has opted for a smooth transition to a license model for the fleet business and based on this we have substantially pared back our revenue expectations for FY19. Despite this, we believe Seeing Machines remains funded through FY19 thanks to lower expected cash requirements associated with the license model. We re-instate our BUY recommendation and adjust our target price to 15p (from 19p) to reflect recent events.

Companies: Seeing Machines

18 Sep 18

Board changes accompany Interim results

Interim results are in line with the previous trading update, although the outlook statement now points to some slightly softer market conditions, particularly in Flowtech’s engineering-oriented business. The company has recently seen a delay for a customer contract in PMC, which is likely to result in the group trading marginally below expectations. Sean Fennon has also announced that he is retiring as CEO, with Bryce Brooks stepping up to the plate. We reduce our 2018 EPS forecast by 7.7% to 14.8p, with a 5.7% reduction also in 2019. Our TP also reduces by 7% from 215p to 200p.

Companies: Flowtech Fluidpower

18 Sep 18

Cenkos: CloudCall Group Plc - New CRMs to drive additional growth

The 30% revenue expansion secured in H1A has been driven by voice-only products. H2E will see a broadened launch of the unified communications platform and further growth opportunities. The recent fund raising has helped finance the development of a scalable architecture and widen the number of CRM integrations which should lead to supplemental revenue expansion thereafter. The over-sold stock price is not fairly valuing the enlarged addressable opportunity in our opinion.

Companies: Cloudcall Group

18 Sep 18

Focusrite - Second-half trading as expected with higher cash

Focusrite ends the year with revenue as forecast, continued profit growth in the second half and revenue in line with our expected slower second-half growth. Cash of £22.8m is 10% higher than we forecast and is now over half the balance sheet. US tariffs will likely apply to Focusrite’s business there and management has been considering its response, while risks associated to Brexit appear relatively minor to us. It seems the share price continues to discount a significant acquisition.

Companies: Focusrite

19 Sep 18

FY 2018 results – Boots to range Skinny Tan

Full-year results were in broadly line with the 19 June trading statement, with revenues rising 21% to £10.7m (£0.3m shortfall attributed to timing and despatch of June sales into July), resulting in a pre-tax profit of £0.7m and year-end cash of £1.9m. Confirmation that Boots is to range Skinny Tan online and in 1,250 (50%) of its UK stores from February/March 2019 significantly expands the retail footprint to more than 2,000 stores (2.7x), whilst Roots should benefit from a 4x expansion to more than 1,600 stores by year-end. We retain a 220p target price, which implies a calendar-adjusted 2019 P/E, EV/EBIT and EV/Sales of 24x, 14.0x and 1.8x, respectively. Strong growth expectations justify these premia.

Companies: Innovaderma

24 Sep 18

Cenkos: XLMedia Plc - Resilient H1

A confluence of regulatory changes and malicious activity negatively impacted H1A but the impact of these on XLM's markets is beginning to unwind. Meanwhile, the company is successfully diversifying its economic interests into other growth markets. The sell-off in stock price is disproportionate to the financial impact of these temporal changes.

Companies: XLMedia

18 Sep 18

A year of transition

H1/FY2018 represents another period of significant development at Flowtech. Organic growth of c.9% and the benefit of the Balu acquisition in March for £10.2m, alongside four during H2/FY2017, has seen revenue increase by 65.1% to £56.4m, and operating profit from £4.5m to £5.7m (margin 10.1%). These acquisitions have also driven an improvement in the gross margin by 2% to 36.1%. The Board remains highly confident in the direction of travel and its commercial positioning to capture much further scale within the €12.4bn European fluid power sector. However, the shorter-term focus is firmly on investment that can deliver sustained operational improvements, procurement benefits and wider Group synergies. Our reduced forecasts incorporate increased operational costs associated with this investment and additional overhead from recent acquisitions. We also take a more cautious tone within Flowtech’s OEM-based businesses, including uncertainty on timing over a £1.5m order. Nevertheless, Flowtech continues to trade at a discount to peers on a PER of 11.5x in FY2018E, falling to 10.6x in FY2019E.

Companies: Flowtech Fluidpower

25 Sep 18

Positive Trading Update and new CFO

Today R1 has announced a positive trading update and the continued restructuring of the business with CFO Ed Reginelli resigning and being replaced by Mark Zorko. This is consistent with continued execution of R1 financial plan focused on accelerating growth and profitability. We retain our Buy and 770p price target.

Companies: Rhythmone

18 Sep 18

Cenkos: Bango Plc - Interim results

This morning, Bango announced interim results for the period to 30 June 2018, showing a strong increase in End User Spend (EUS), up 138% to £220m. EUS growth remains on track to more than double for the fourth consecutive year. Audiens has added a completely new and high margin, revenue stream during the period and there remains a growing pipeline of new MNO/App Store integrations to complete as well as further Google Play upgrades, together representing well over US$4 billion in EUS. Further expansion of the Bango platform has also enabled MNO customers to sign-up for Amazon Prime Video in the US, UK and India, and Pandora customers in the US; generating new subscription-based revenues for Bango.

Companies: Bango

24 Sep 18

LIBERUM: Miton Group* - Initiation - Hard work pays off - inflection reached

Miton Group is a small fund management company with everything optimised - right people, right funds, right systems. It offers top performing, high active share funds at the right price, and as a result it is gathering assets at pace.

Companies: Miton Group

18 Sep 18

All on track for ramp-up in H2’18

CloudCall’s performance in H1’18 was robust, as per the pre-release, with management confirming its H2’18 outlook and target to break-even during FY19E. Our estimates are unchanged. On strategy, the Phase II roll-out of UCS is due to go live in Q4’18, positioning the group to accelerate into FY’19E. We reiterate our Buy rating and continue to see compelling upside.

Companies: Cloudcall Group

25 Sep 18

Volatility returns but M&A activity continues

We have seen an unwelcome return of volatility over the last month. This has resulted in market weakness as shown in the table below. The main factors have been the ratcheting up of trade tariffs and the increasing uncertainty regarding Brexit. The political party conference season is likely to generate further uncertainty. That said, M&A activity continues apace. The reporting season continues, almost in the background with the occasional surprise. In Share News & Views, we comment on APC Technology*, Christie Group*, Cropper (James)*, Escape Hunt*, Porvair, Ricardo, Quarto* and Warpaint*.

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

24 Sep 18

Cenkos: CloudCall Group Plc - Strongly undervalued

Vonage has announced that it is acquiring one of CloudCall's key competitors, NewVoiceMedia. This acquisition provides strongly favourable read-across valuation data. The CloudCall share price has now reached a level which is disconnected with anything approaching fair value. We are strong Buyers.

Companies: Cloudcall Group

19 Sep 18

LIBERUM: Science in Sport* - Initiation - Moving forward

SiS operates in a structurally growing market in which it is rapidly taking share through its distinct market position and product range. The approach towards quality, cutting-edge science and banned substance testing is unique and is the only brand with dual accreditation at site and product level.

Companies: Science In Sport

19 Sep 18

Cenkos: RA International Group Plc - Interim results

RA International has announced interim results for the period to 30 June 2018. The strategy of pursuing larger and longer duration contracts has started to deliver, with RA successfully winning a 5-year contract with UNICEF and a further 5-year US$30m contract with the UN in Somalia in August. The bid pipeline has increased significantly since the June flotation and, in total, contracts worth US$63m have been won in 2018. Accordingly, management expects a stronger H2/18. Trading at a 2018E PER of 11.4x and EV/EBITDA of 8.9x, falling to 10.7 and 6.8x 2019E respectively, we believe RA offers significant upside potential from the current level. RA also provides a prospective yield of 0.5% with dividend payments commencing in the current year.

Companies: RA International

25 Sep 18

Guidance upgraded on better than expected H1

Next has done better than expected. Group sales were up 3.8% and the operating profit increased by 1.6%. Guidance was upgraded.

Companies: NEXT

25 Sep 18

Nuevolution - Pipeline and partnerships continue to strengthen

With the completion of the up-listing to the Nasdaq Stockholm main market and the successful gross SEK110m capital raise, Nuevolution continues to strengthen both its investor base and financial position. Amgen’s opt-in on the first programme in its multi-target collaboration and the identification of much sought-after small-molecule IL-17A inhibitors continue to validate Nuevolution’s Chemetics technology. Its transition to a clinical asset-focused company continues with the Almirall RORγt inhibitor programme likely to enter the clinic in 2019 and additional internal programmes (RORγt and BET-BD1) nearing clinical readiness. In addition to current partnerships, the company forecasts that a new deal is possible by year end. We value Nuevolution at SEK1,127m or SEK22.8/share.

Companies: NUEVOLUTION AS

25 Sep 18

Altitude Group - Interims – capture then convert

Interims highlight the substantial progress in the development of the distributor and supplier base of the ChannlPro platform. Members processing orders increased to 164 (Feb: 24; May: 57), of which 120 had placed multiple orders. The development of gross transaction revenue on the platform ($9.9m in the past 16 weeks) has advanced in anticipation of the margin Altitude takes from those suppliers, with the current focus on growing the scale and making ChannlPro the go-to platform for leading industry participant, distributors and suppliers. We review forecasts to accommodate lower near-term revenue, albeit all the operational KPIs are progressing in line with expectations as the scale of the platform develops. Twelve-month target price remains 105p, equivalent to an unchallenging 9x FY19 EBITDA, 13x P/E and a 5.4% free cash flow yield, target parameters which can be easily lifted with demonstration of execution credibility.

Companies: Altitude Group

25 Sep 18

Thin Film Electronics - First fully processed die from R2R line

Thinfilm has announced that it has completed its first fully roll-processed lots of die from its new roll-to-roll (R2R) manufacturing facility in California. These are Electronic Article Surveillance (EAS) die for use in anti-theft tags in apparel. It has also announced that it expects to complete its first fully roll-processed NFC lots by January 2019, reducing the uncertainty regarding the timescale for full NFC tag production.

Companies: THIN FILM ELECTRONICS

25 Sep 18

Profit warning for 2018, the first in probably a decade

We cannot remember BMW having to release a profit warning during the last decade or so. This positive environment has ended with WLTP. It has forced the entire industry to get rid of shelf warmers. Whereas BMW had previously given the impression that it had adopted WLTP test procedures early on, today’s profit warning tells a different story.

Companies: Bayerische Motoren Werke

25 Sep 18

Bitesize briefing - Nuevolution

25 Sep 18

2018 CMD: weak 2019 guidance reading between the lines

Concerning 2019 guidance: With current spot rates, FX is estimated to have a somewhat negative impact on the 2019 adjusted EBIT. On top of this, the impact from raw materials and tariffs is estimated at €100m in 2018 and for 2019 there will still be a headwind but less than in 2018. Overall, we guesstimate a further contraction to the 2019 EBIT. We will therefore adjust our forecasts, which should result in a lower target price but an unchanged recommendation.

Companies: KONE Corporation

25 Sep 18

TransContainer - Revenue and cost initiatives paying off

TransContainer (TC) has continued to show strong results, with Q218 EBITDA, reported on 29 August, increasing by 13% y-o-y. The company is benefiting from structural growth, especially switching rail cargo to containers, and Russia’s economic recovery. Recent monthly market data bode well for TC’s Q318 results. It has also continued to pursue initiatives that are benefiting the EBITDA margin by increasing the proportion of Integrated Services, profit-making runs and block trains. Our DCF model gives a valuation of RUB5,200/share (unchanged), which offers 12% upside to the current share price.

Companies: TransContainer PAO

25 Sep 18

Mosman Oil & Gas - Two US Acquisitions and Baja Strategic Alliance Update

25 Sep 18

FinTech Group - Banking joint venture with Austrian Post

FinTech Group (FTG) has announced a landmark 50/50 banking joint venture with Austrian Post (VIE: POST, market cap c €2.4bn) where FTG is supplying the technology while Post offers its established infrastructure. The deal creates a new growth arm for FTG that is expected to break even in 2022 and could act as a blueprint for similar deals in other countries. Meanwhile, H1 results were in line with expectations as margins benefited from strong growth in broking volumes. If FTG can meet its objective of generating €35m net income from the joint venture with Post by 2025, it would provide significant upside in the shares for the cost of the 7% dilution in the capital increase that has funded the deal.

25 Sep 18

AJ Lucas Group - Positive momentum in drilling services

AJ Lucas’s FY18 (to end June 2018) results highlighted a material increase in drilling service revenues (+70%) and margins (+635% EBITDA). Based on AJL’s current order book and leading indicators, management expects rig utilisation and mining sector drilling activity to be sustained in FY19 with robust margins after AJL’s exit from legacy contracts in the coal seam gas and water markets. Our updated valuation reflects expected engineering and construction sales proceeds of A$25m and an increased valuation for drilling services. The net result is an increase in our P50 valuation for AJL Lucas of A$0.93/share (from A$0.86/share).

Companies: AJ Lucas Group

25 Sep 18

Brighter - Data-driven diabetes management as a service

Brighter is a healthtech company developing solutions for chronic diseases. Its initial strategy is the launch of Actiste, a mobile-connected glucose meter and insulin injection device for diabetes, which the company has submitted for CE certification. Its CE-marked cloud-based platform called the Benefit Loop and associated companion applications collect, manage and analyse data for the purpose of sharing critical treatment information with friends, relatives, caregivers and healthcare providers in an effort to improve self-management outcomes.

Companies: BRIGHTER

25 Sep 18

WANdisco - Expecting an inflection in the second half

We expect WANdisco’s strong H1 commercial progress to translate into an inflection in growth in H2. Cloud partners Microsoft and Alibaba are likely to be key drivers of this, where revenues are recurring with good potential to scale-up. We leave our estimates unchanged and believe that achieving the required inflection in H2 could be a watershed for the perception of this business’s growth fundamentals.

Companies: Wandisco

25 Sep 18

Ebiquity - US momentum

Ebiquity’s interims are as indicated in July’s update, with good performance from the Media and Analytics & Tech segments. The strong new business pipeline underpins improving revenue and profit in H218 and our forecasts are unchanged. Management expects the Phase 2 CMA investigation on the Intel disposal to be concluded by this December. Once the situation is resolved, the shares can be appraised on fundamentals again. The continuing structural shifts in marketing should make for a fertile trading environment for an independent, trusted partner to guide decision-making. The current rating reflects uncertainty, rather than value.

Companies: Ebiquity

25 Sep 18

LIBERUM: Aquis Exchange* - Initiation - $30m of songs for $10 a month

Aquis is the Spotify of exchanges. It’s a subscription model, with unlimited trading above a certain volume, so a marginal trading cost of zero for high users, some of whom have already reduced their trading costs to 0.06bp.

Companies: Aquis Exchange