17 Nov 17
N+1 Singer - boohoo.com - Shares oversold – upgrade to buy
For investors wondering where all the shoppers have been, they have probably been shopping online at Boohoo... and will be logging in again this weekend after the UKs fashion press, bloggers, vloggers and influencers give what will inevitably be a lot of positive commentary to spring/summer lines showcased at its fashion event yesterday. Boohoo, Nasty Gal and Boohoo Man were represented and of particular interest according to feedback at the event were Premium, Curve, Menswear and athleisure lines across brands. The mood of the team was very upbeat and their continuing focus on capacity solutions means risk there is being managed. After the recent 30% correction there is scope for shares to rebound. We move back to buy.
14 Nov 17
Funds raised to support VCSEL ramp-up
IQE has announced its intention to raise up to £95.1m (gross) through a placing of up to 67.9m new shares at 140p/share. The funds will enable IQE to expand capacity to support multiple VCSEL volume ramp-ups from FY19 onwards. We expect the share issue to be earnings neutral in the near term, and are encouraged by this signal of confidence from management as it prepares for the next step change in output.
17 Nov 17
Strong Growth + Scarcity Value = Melt Up
We are upgrading our forecasts, target price and recommendation on AB Dynamics. Thanks to a growing portfolio of unique testing products that are critical to developing and launching increasingly sophisticated autonomous driving in shortest possible time, we now believe that AB Dynamics can grow at 28% per annum over the next three years. This is much superior growth to Renishaw, the top rated UK robotics/automation stock, which has a consensus forecast CAGR of 8% over the next three years. Applying Renishaw’s 2018 EBITDA multiple of 23x to AB Dynamics generates a minimum valuation of 1,030p per share. We therefore raise our target price to 1,030p and recommendation to BUY. Frankly speaking, for UK investors starved of mainstream self-driving/electric car plays there are very few alternatives.
Companies: AB Dynamics
17 Nov 17
N+1 Singer - T. Clarke - Positive update, order book building for FY18/19
T Clarke’s trading update strikes a confident tone and reiterates full year expectations. After a period of share price weakness, we expect this to be well received, with the order book for outer years also being replenished. The Group is on track to deliver PBT of £6.5m and revenue in excess of £300m, which would represent another year of good progress after the significant profit growth of the past two years. It has been a busy period for the Group, which has seen the handover of two significant schemes, Bloomberg HQ and Facebook’s new London HQ at Rathbone Square. The integration of ETON Associates (acquired in August) is progressing well and the reception from the market place has been positive. The order book stands at £380m (£320m at this stage last year) and importantly £190m of planned revenue for FY18 (c.60% of our forecast) has already been secured.
09 Nov 17
The Joy of Techs
This quarter we use finnCap’s Slide Rule to provide both top-down and bottom-up analysis of the UK’s Technology and Telecoms sectors. Our findings are very reassuring: the Tech sector scores the best (across all sectors) when considering Growth and Quality – Taptica*, Frontier Developments* and dotDigital* in particular stand out on these metrics. Given these attractive characteristics and growth prospects, the Tech sector is unsurprisingly one of the most expensive – currently trading at 17.2x FY1 EV/EBIT and 23.8x FY1 P/E, versus 15.0x and 18.5x respectively for the wider market. Despite valuations appearing high, we believe there are value opportunities. For example, Proactis* features in finnCap’s QVGM+ portfolio (ranked 17/462) – the company offers attractive organic and inorganic growth, with earnings forecast to grow by 26% CAGR over the next two years, but despite this, only trades on 15x FY1 earnings and offers 8% FCF yield in FY2.
Companies: 7DIG ALT AMO ARTA BOTB BLTG CTP CFHL CYAN ISL DTC DOTD ELCO ESV FDEV GBG IDEA IDOX IMTK IGP IOM KBT KCOM KWS LRM MAI MMX NASA NET ONEV PHD QTX QXT RCN 932 SSY SEE SIM SPE SRT STR TAP TAX TEP TPOP TRAK UNG VIP ZOO
20 Nov 17
Taking a break: On the Beach & Thomas Cook to HOLD; reiterate SELL on TUI
We revisit the tour operators ahead of upcoming FY results. Thomas Cook, TUI and On the Beach shares have performed well YTD, to varying degrees, navigating multiple industry challenges. We take a closer look at what the market now prices in, triggering a downgrade of On the Beach to HOLD (from BUY), an upgrade of Thomas Cook to HOLD (from SELL) and a reiteration of our SELL rating on TUI.
Companies: OTB TCG TUI
21 Nov 17
Companies: ABZA AKR AGY APH AGL AVCT BVXP COG CTH IHC LID MTFB ODX OPTI NIPT PRM SDI STX SNG TSTL
10 Nov 17
N+1 Singer - IQE - Ramping up for 2019
IQE has announced a placing at 140p to raise c.£95.1m. The new funds will enable it to scale the business to take advantage of the growth opportunities in 3D sensing and other mass market opportunities. The group has also confirmed that if the current VCSEL ramp continues on its current growth curve, there is potential to exceed current FY’17 expectations. Our published bull case scenario shows the potential for 81% upgrades to FY’18 EPS and we believe this placing is indicative of demand for IQE’s products well in excess of our current forecasts. The new tools bought with the funds from this placing are unlikely to deliver material revenue until FY’19, however, we expect previously announced capacity increases to enable significant upgrades in FY’18. With continued strong newsflow likely we believe the shares remain attractive and retain our positive view on the stock.
15 Nov 17
Revenue forecasts up/ PT up to 1750p retain BUY
PRSM has released a trading update this morning and the strong momentum of H1 has actually increased. We are upgrading our revenue forecasts substantially and we are increasing our PT to 1750p from 1250p.
Companies: Blue Prism Group
21 Nov 17
N+1 Singer - Photo-Me International - Snap it up
PHTM is at an inflection point. We see new technology and rapid expansion in a complementary segment as key factors behind an imminent step-up in profit growth. The stock also provides a substantial level of exposure to recovering European economies, especially France (c45% of PBT). In our view, consensus significantly underestimates these improving profit dynamics and emerging growth in Photo/ID, Laundry & Kiosks. Our base case assumes a 3-yr EPS CAGR of 10% (vs cons c5%) and our analysis suggests scope for this to be 18-23%. We initiate with a 225p target price and highlight a 2-3 year bull case of 350p (10x cal20 EBITDA). Interims are on 11 Dec.
Companies: Photo-Me International
21 Nov 17
Empresaria is an international staffing group operating a multi-brand strategy and addressing both permanent (FY16 revenues 40%) and temporary (FY16 revenues: 60%) recruitment markets. We have today reduced our forecast expectations
Companies: Empresaria Group
20 Nov 17
N+1 Singer - Xaar - Lowered expectations due to Ceramics & Graphics
Xaar has issued a trading update downgrading expectations for 2017. This has been driven by lower sales of the 2001 printhead in the competitive Ceramics market, as well as a slower ramp-up of the new 1201 printhead for Graphic Arts due to supply constraints. Management is guiding to H2 17 sales broadly in line with H1, which we have reflected in our estimates, along with reductions for the following years. This has driven cuts in our adjusted PBT forecasts of 31% for 2017, 15% for 2018 and 5% for 2019. These downgrades are disappointing. However it is notable that the issues relate to the decline of Xaar’s legacy Ceramics business, along with short-term issues in meeting demand for the new Graphics product. Demand continues to grow for the portfolio of new products introduced in the last two years, as previously reported. The group’s transition continues towards more diversified and resilient revenue streams, and more effective leverage of its IP, albeit with more volatility than had been hoped. The group’s new and broader product portfolio offers exciting growth prospects, with management’s vision unchanged of £220m sales by 2020.
15 Nov 17
A new chapter with a bright future
Avon Rubber has delivered a confident FY17 performance and has set out a clear threefold strategy to drive medium-term growth. The core business is buoyed by strong order activity in Protection while dairy market trends look set to stay positive into 2018. Cash performance has also been solid, which underpins selective future acquisitions.
Companies: Avon Rubber
17 Nov 17
N+1 Singer - Elementis - Share price drift presents buying opportunity
Elementis’ shares have drifted recently, underperforming peers despite reporting a very solid Q3 performance just three weeks ago. The shares now trade at a marked discount to the peer group, having de-rated since the start of the year. We expect an in line outturn to FY17 and believe Elementis is well set to deliver continued profit growth in FY18 with the potential for non-core disposals to enhance cash generation. End market conditions are generally favourable in Specialties (US and China coatings exposure both positive, oilfield recovery continues, personal care growth well in excess of GDP). Meanwhile, Chromium looks to be through the worst of a challenging competitive environment. We consider recent share price weakness a buying opportunity with the shares now trading on an FY18 P/E rating of <17x, a 10% discount to the peer group.
13 Nov 17
Revenue of $12.7m is in line with September’s update and confirms a strong H1, with sales growth of 63%. We lift FY18E sales from $21m to $26m (implying 58% y-o-y growth), while reiterating essentially unchanged profit expectations, reflecting greater investment than anticipated. We also introduce maiden FY19 forecasts and upgrade our price target to 97p.
Companies: Zoo Digital Group
22 Nov 17
9M 17 results look solid, but did not meet high market expectations
In 9M 17, CD Projekt generated total revenues of PLN339.6m, which corresponded to a 19.1% decline yoy. EBIT amounted to PLN186.2m (54.8% margin) vs. PLN207.9m (49.5%) in 9M 16, while net income reached PLN154.4m (45.5% margin) compared to PLN171.2m (40.8%) in the previous year. Despite a lower net income yoy, operating cash flow declined only slightly from PLN199.3m in 9M 16 to PLN198m. Cash flow from investing, of which PLN-51.7m stemmed from investments in the development of “GWENT” and “Cyberpunk 2077” and PLN-207.7m from short-term deposits, amounted to PLN-263.1m (PLN-233.4m). While free cash flow excluding investments in deposits amounted to PLN142.6m (9M 16: PLN155.3m), cash flow from financing, which was mainly impacted by the first-ever dividend payout, equalled PLN-101.8m (PLN3.3m). At the end of September 2017, CD Projekt had net cash of PLN637.5m. In 9M 17, the “CD Projekt RED” segment generated revenues of PLN210.4m (-35.7% yoy) and a net margin of 66.5% (9M 16: 51.8%). The GOG.com segment, which according to CDR’s reporting methodology also includes a share of results from “GWENT: The Witcher Card Game”, contributed revenues of PLN129.1m (+39.2% yoy) and a net margin of 11.2% (9M 16: 6%).
Companies: CD PROJEKT
22 Nov 17
When less is more
GSK has received the FDA approval for its HIV two-drug combo in a single tablet called Juluca. It is a fixed-dose tablet containing two previously approved (active ingredients) drugs, dolutegravir from GSK and rilpivirine from J&J, and will be given to patients who have been on an anti-retroviral therapy for at least six months.
22 Nov 17
Solid State plc - Interim results 2017/18 update
22 Nov 17
Good operational performance bucked by a bunch of UK tour operator headwinds
H2 revenues were +17.0% yoy. Underlying EBIT came in at +7.6%, in line with expectations, with a 10.5% margin (+130bp vs. H2 16). Guidance on 2018: “well-positioned to achieve current market expectations.” It expects the improvement in the airlines’ performance to continue; Continental and Northern Europe should remain strong; initiatives taken to get the UK back to profitable growth.
Companies: Thomas Cook Group
22 Nov 17
Another good quarter, due to some exceptionals
Following the Q3 17 earnings results, we have adjusted our model. As a reminder, the key highlights on the better than expected Q3 17 figures ($4.1bn vs. $3.6bn expected) were: - In the integrated gas business, the group reported clean earnings of $1.3bn, up from $0.9bn a year ago, thanks to higher realised energy prices (oil & gas and LNG), as well as higher production and LNG liquefaction volumes. Total production was up 10% to 1mbpd and LNG volumes up 11%, mainly due to higher production from Gorgon with now three trains online, compared to only one in the same quarter a year ago. - In the Upstream division, clean earnings came in positive at $562m vs. $4m a year ago and $339m in Q2 17. Higher energy prices helped. Production came down 1% yoy to 2.65mbpd, despite the increased ramp-ups in Brazil, Kazakhstan and the Gulf of Mexico contributing, all in all, 243kbpd. - In downstream, clean earnings rose 28% to $2.7bn. Oil products increased 31% yoy to $2bn, driven by a +229% earnings increase in trading ($0.9bn). Stronger refining industry conditions simply explain the increase, while the refinery processing intake decreased by 8%. Marketing generated $1.1bn, down 11%, reflecting lower volumes mainly due to portfolio impacts and lower underlying unit margins. Chemicals contributed $650m, up 20%, due to unplanned downtime at the Moerdijk and Deer Park plants. Cash flow from operations in the quarter was $7.6bn and, excluding working capital, was $10bn, leading to a free cash flow for the quarter of $3.7bn. Total dividend distributed was $4bn, of which $0.9bn was settled by issuing 33.8m shares under the scrip dividend programme.
Companies: Royal Dutch Shell
22 Nov 17
Sarine Technologies - Preparing for the peak season
Sarine’s ytd (Jan to Sep) profitability was relatively subdued, with lower equipment sales due to excess midstream inventories in Q2 and Q3, as well as the illicit actions of competitors. Simultaneously, Sarine incurred considerable R&D costs related to the development of Clarity and Colour grading technology and Sarine Profile. This was further exacerbated by the strengthening of the Israeli shekel. However, downstream demand remains strong (according to the company), while new products and lower R&D expenses should support earnings going forward. Sarine trades on a P/E of 16.3x FY17e, a 35% discount to the peer group.
Companies: SARINE TECHNOLOGIES
22 Nov 17
RCM Beteiligungs - Rising expectations
Q3 results show RCM Beteiligungs to be in fine form. A rise of over 50% in pre-tax profit accompanied confident guidance both for this year (proposed 50% hike in the dividend) and 2018 (targeted pre-tax profit to exceed €3m). A recent €11m bumper development sale epitomises a successful focus on certain well-defined projects, which is clearly paying off in terms of efficiencies as well as asset development and appreciation. We are further encouraged by the resumption of the share buyback programme and continued enhancements to the group structure, which should aid transparency.
Companies: RCM BETEILIGUNGS NA. O.N.
22 Nov 17
Medserv - Trading update highlights Q4 delays
Medserv’s trading update has highlighted project delays that will see H217 miss expectations. A lower Q4 drilling contribution from Cyprus and activity in Iraq falling off Q3 levels prompt us to reduce our FY17 forecasts. However, contracted projects underpin our FY18 estimates and we leave them unchanged.
22 Nov 17
No major changes on the horizon
Lagardère released Q3 17 revenues which were globally in line with expectations at €1.85bn, up 2% on a lfl basis, mainly supported by a buoyant Retail Travel division (+7%). On a reported basis, revenues declined by 6.3%, mainly reflecting the press distribution’s disposal. Based on the current group’s operational trends and the outlook for the end of year, management remains confident it can deliver its previous guidance of 5-8% EBIT growth for FY17e on a lfl basis and at CER.
Companies: Lagardere SCA
22 Nov 17
Solid H1 17/18 results ahead of 2020-25 price review
United Utilities reported a solid set of first half results. Key highlights Revenue up 2.7%, at £876m Underlying operating profit up 10%, at £344m Underlying net profit up 5.7% at £160.1m RCV gearing in line at 61% Interim dividend up 2.2%, at 13.24p Management confirmed the ODI’s outcome guidance for the current regulatory period of between a £30m reward and a £50m penalty.
Companies: United Utilities
22 Nov 17
H1 not reflective of future potential
Accsys has reported H1 FY2018 interim results, delivering 13% revenue growth to a capacity-constrained €28.3m. Gross margin has been impacted by several, individually small, temporary pressures while the new Accoya reactor delivering a 50% capacity increase is a little late in delivery. These factors chip away at our forecasts a little but the longer-term picture and investment case remain unchanged. Retain Buy and 100p price target.
Companies: Accsys Technologies
22 Nov 17
CRH uses a value-creating bazooka for acquisitions
Key information: • Cumulative sales amounted to €20.7bn for the 9m 17, an increase of 2% compared with 9m 16. On a lfl basis, sales were also 2% higher. • EBITDA up by 2% only due to the collapse in Asia’s EBITDA by 45% over the 9m period. • To date in 2017, the group has spent c.€1.34bn on 27 acquisition/investment transactions. • Management expects year-end net debt to be in line with last year’s (2016: €5.3bn).
22 Nov 17
Vernalis - Operational initiatives in place, execution is key
Tuzistra XR prescriptions (Rx) grew threefold to ~35k in FY16/17 (2nd year on the market) vs ~12k in FY15/16. Investment into addressing the barriers to higher Tuzistra XR prescribing is translating into higher Rx rates, although this has not been matched by revenue growth due to higher inventory stocking in the same period last year. In H217 FDA issued partner Tris with two complete response letters to Vernalis’s CCP-07 and CCP-08 NDAs and we now model launch during the 2018/19 cough cold season. Our updated forecasts reflect this and lower Tuzistra XR revenues due to a slower than anticipated sales trajectory in the near term.
22 Nov 17
Wacker Neuson - Improving prospects in key end-markets
Following a weak FY16, Wacker Neuson (WAC) returned to its profitable growth path in 9M17, with sales up 12.7% y-o-y and adjusted EBIT margin up 300bp y-o-y to 9.5%. This was driven by the upturn in both construction and agricultural machinery markets. Management raised its FY17 sales guidance to the upper end of €1,450-1,500m from €1,400-1,450m in March. Solid balance sheet headroom (net debt/EBITDA FY17e at 0.9x) allows for further investments into extending WAC’s global reach (medium-term target of 40% sales outside Europe vs 25% in FY16). The shares are trading on a FY17e P/E of 20.7x, implying a c 18% discount to the peer average.
Companies: Wacker Neuson
22 Nov 17
Stride Gaming - Scale drives core growth
Stride reported net gaming revenue (NGR) growth of 18% to £89.9m in FY17, driven by an impressive 39% organic growth in the core real money gaming (RMG). Adjusted EBITDA of £20.2m was slightly above our recently raised estimates. Stride has invested heavily in technology and operational leverage should kick in as acquired customers migrate to the higher-margin proprietary platform. A small investment into the Indian rummy market could also lead to diversified revenue growth. Strong cash flow and £17.4m net cash leaves the company well positioned to pay the final Tarco earnout. The stock trades at CY18e 8.2x EV/EBITDA and 12.0x P/E, slightly below peer group averages. Profitability in the core business should offset potential investment losses and our estimates remain largely unchanged.
Companies: Stride Gaming
01 Nov 17
Trinity Exploration and Production - Update from 121 Oil and Gas, London
23 May 17
Assura plc - Full Year Results
31 May 17
LondonMetric - Full Year Results 2016/17 CEO Interview
17 Nov 17
Keywords Studios Synergistic Growth capital markets event November 2017
19 May 17
Leading UK fund manager, Gervais Williams, discusses investing, his outlook and two companies he's excited about
23 Oct 17
CAP-XX (CPX) ShareSoc growth seminar October 2017
25 Oct 17
Automotive ecosystem: Sitting ducks webinar
23 Oct 17
AVO - Progress at Harley Street, timelapse
13 Oct 17
Executive interview - accesso Technology Group
08 Sep 17
MiFID II & the private investor
17 Oct 17
Flowtech - 2017 Q3 Trading update
11 Oct 17
Telford Homes - Trading update
26 Oct 17
NWF Group (NWF) - Investor presentation October 2017
27 Mar 17
Executive Interview - IQE
09 Oct 17