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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

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

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

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

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

08 Feb 19

LIBERUM: CEO Video: David Braben, Frontier Developments

In these five short videos Frontier Developments CEO, David Braben discusses the record interim results, the continued success of Jurassic World Evolution, the importance of the Chinese market, future Frontier franchises and the big industry themes in 2019.

Companies: Frontier Developments

06 Feb 19

LIBERUM: Frontier Developments* - Record revenues and profits

Frontier Developments strategy is to grow a portfolio of game franchises by launching, and then supporting, each game. Interims show a record set of results on the back of the very successful JWE launch and encouraging player engagement from the other two franchises.

Companies: Frontier Developments

11 Feb 19

From Asia with Love

We believe the significant skew of VPN access in Asia to entertainment demonstrates a hidden appetite for Western media content, supporting our thesis on Zoo Digital. In our view, streaming demand growth will be driven by urbanisation and globalisation trends outside of North America and Western Europe. We believe Zoo Digital is well positioned to exploit such trends and reiterate our Buy rating.

Companies: Zoo Digital Group

05 Feb 19

THE MONTHLY February 2019

This Investment Research Paper addresses the issue of renewable power generation in the UK and in mainland Europe, which – after the deep-seated financial crisis of 2008/09 and the ensuing recession – now has better prospects of achieving critical mass. It also considers investment perspectives.

Companies: OPM AVO AJB AGY ARBB AVCT DISH BUR CLIG CSH DNL DPP GTLY GDR HAYD KOOV MCL MUR NSF OXB PCA RE/ REDX STX SCE SIXH TRX TON VAL VTA W7L

11 Feb 19

ICE boxes

Once again the company hosted investors at the annual ICE exhibition at Excel London. This year’s event was a useful follow up on last month’s trading update. At the event we noted that the global casino industry appeared in very good health, with more exhibitors than ever and the major electronic gaming machine (EGM) manufacturers again putting on impressive displays. It was also very clear that QXT remains a leading sub-systems provider with adoption of an outsourcing model continuing to grow across the industry. We believe the slight easing in FY 2018 guidance in the January trading update had more to do with a few specific and uncorrelated issues at customers, than any systemic industry or market concerns and that the future remains extremely encouraging.

Companies: Quixant

04 Feb 19

Cenkos: Duke Royalty Ltd - A step change in scale

Duke has announced the acquisition of Capital Step, the only known rival provider of royalty finance and debt products to SMEs in UK&I. The acquisition materially accelerates development of Duke's royalty portfolio, adding 6 core new investments (to a total of 11) in several new sectors. This adds significant diversification, de-risking the portfolio to individual names/sectors. The deal is expected to be immediately earnings enhancing, reflected in our upgrades to FY19E & FY20E EPS forecasts of 5% and 3%. This gives further support to DPS estimates which produce a market leading 9% yield on our revised FY20E forecasts.

Companies: Duke Royalty

11 Feb 19

Underlying H1 sales soar 21% - Game on!

UPGS’ latest trading statement confirms the group’s improved sales momentum. Moreover, with all four growth pillars performing positively, FY2018’s setback can be seen as exceptional, rather than the norm. We remain positive on the outlook for both UPGS’ sales and profitability, which is in our view available to investors at a very attractive share price valuation.

Companies: Up Global Sourcing

06 Feb 19

FY 2019 earnings and cash already in the bank

H1 sales have come in slightly ahead of last month’s upbeat trading update, driven by the success of the third franchise game, Jurassic World Evolution (JWE). That success has seen H1 2019 revenue jump to £64.7m, up 240% YoY. Riding on the back of the Universal film release, as well as excellent reviews from players and gaming magazines, sales of JWE exceeded 2m units just 7 months after launch. We lifted forecasts with the update, but today we again nudge forward expected FY 2019 sales from £81.5m to £83.0m, although at this stage we leave earnings expectations largely unchanged. H1 delivered 97% of our FY 2019 EPS forecast and all of the cash inflow so H2 will see investment in the fourth franchise, which remains on track for a launch this calendar year. The stock price suffered in the market correction last year and a P/E of just 22x FY 2019 offers excellent value for a high quality growth business with such a strong IP base.

Companies: Frontier Developments

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

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

15 Feb 19

TV advertising slightly up, main goals achieved

2018 was a good year in terms of TV advertising on free-to-air channels revenue (+1.2%) thanks to a strong Q3 18 which benefited from the broadcasting of the Football World Cup. Excluding the cost related to the Football World Cup, TF1 had a double-digit current operating margin (11.7% of revenue) and the cost of programmes was lower than expected. Finally, the diversification activities represented 34% of group revenue, a year ahead of the objective (one-third was assigned for 2019).

Companies: Television Francaise 1

15 Feb 19

Robust 2018 results, lower 2019 voltage

EDF released a mixed set of results. The 2018 results were strong (11.1% organic growth in EBITDA) as hedged prices started to reflect the rebound in European power prices in early 2016. However, the group gave a cautious 2019 outlook, below market expectations, due to competitive pressure in the retail activities, uncertainty around nuclear output (FR+UK) and higher comparatives. We stick to our negative recommendation.

Companies: Electricite de France

15 Feb 19

Better than expected

Key facts for 2018 Group ADP traffic’s: +7.6% at 281.4 million passengers Revenues are up yoy by +24% to €4.48bn, in the higher range of the consensus EBITDA was sharply up by +25% yoy to €1.96bn, in the higher range of the consensus EBIT was €1.24bn, up 20% yoy Net result was €610m, up 6.9% yoy and the company maintained a 60% payout ratio Going forward ADP anticipates traffic to grow by +2% to +2.5% in 2019 Consolidated EBITDA should be down by 10% yoy to €1.76bn Excluding TAV Airport and AIG contribution, EBITDA should be up between +1% and +2% yoy

Companies: Aeroports de Paris

15 Feb 19

Taronis Technologies - Good start to FY19 sales

Taronis Technologies (formerly MagneGas) has announced its preliminary sales figures for January. These show the seven successive acquisitions made over the last year driving a fivefold year-on-year increase in monthly sales to $1.42m. Importantly, the figures show 42% growth compared with December, as activity has picked up after the holiday period.

15 Feb 19

The bad H1 does not hampered the full year yet

H1 revenues missed estimates H1 revenues were €658m, down 4.4% yoy, slightly below the expectation H1 EBITDA was €518m, down 5.1% vs €521m for the consensus EBITDA margin reached 78.8%, down 0.6ppt yoy FCF was €235m, down 30% yoy Leverage was 3.1x vs 3.3x in H1 17 The company confirmed all its guidance for the year and expects a return to growth in the second half.

Companies: Eutelsat Communications

15 Feb 19

Q4: 2018 marked by growth in the Middle East

Adjusted operating profit: €2,994m (-9% qoq), above consensus • Exploration & Production: €2,927m (-5% qoq) • Gas & Power: €43m (-39% qoq) • Refining & Marketing and Chemicals: €143m (+54% qoq) Adjusted net profit: €1,459m (+5% qoq)

Companies: Eni

15 Feb 19

UMG to finance a massive share buy-back?

A quite correct set of results in Q4 for Vivendi with revenue growth of 5.6% yoy similar to Q3’s and slightly better than in H1. It was once again due to Universal Music Group (UMG) which represents 45% of Vivendi’s business and whose sales were up by c.12% yoy (besides in a quarter which alone represents a third of the annual revenue of the music company). Note, however, Canal + (35% of Vivendi’s business) has seen its revenues decrease by nearly 4% yoy and lfl in Q4, reflecting the continued and worrying decline of its subscriber base in France. Global EBITA was up by 20.25% in H2 with here again a good performance by UMG (21% yoy driven by revenue growth) and the 16.8% growth at Canal quite disappointing as the benefits of restructuring were more offset than expected by the decline in revenues. The group has decided to propose a dividend of €0.5 per share, up by 11% yoy. But the key point of the release is, however, that among the resolutions to be submitted to a vote at the shareholders’ meeting to be held on 15 April, there will be: - The expected renewal of the authorisations already granted to repurchase shares of the company within the limit of 10% of the capital at a maximum purchase price of €25 per share, and to reduce the capital within the limit of 10%. - A new authorisation to purchase shares of the company by way of a public share buy-back offer (OPRA) within the limit of 25% of Vivendi’s share capital at a maximum purchase price of €25 per share, and to cancel the shares acquired. Well, it seems that the eventual sale of up to 50% of UMG in the next coming months should allow Vivendi to buy back 35% of the capital of Vivendi. It would imply that Bolloré SA should control Vivendi at 40% without having to make a bid on the rest of the capital.

Companies: Vivendi

15 Feb 19

Transient Q4 challenges scarred an otherwise strong 2018

While the cost burden had been mounting during the year, Stora’s Q4 performance was impacted by temporary challenges (at six mills). As a result, close to €50m of operating profits were shaved-off. However, the full-year results were still pretty impressive, with dividends increasing by 22%. With fundamentals of growth divisions remaining unchanged, although pricing normalisation still remains a reality, ample cushion should come from the recently-unveiled cost savings programme.

Companies: Stora Enso OYJ

15 Feb 19

Supportive environment, but first are the questions on the valuation front

Segro benefits from further yields compression in H2 18. After anticipating this new increase in asset valuations, and being perfectly right, management now mentions lower visibility on the 2019 valuation front.

Companies: SEGRO

15 Feb 19

Good numbers from Deere

The company increased its revenue by 15% to almost $8.0bn in Q1 (November through to January) and the operating result increased by 21% to $769m. Revenue grew disproportionately for construction and forestry machinery (+31% to $2.26bn) but demand was also good for agricultural and turf equipment (+10% to $4.68bn). The rolling 3-month retail sales show unchanged demand for tractors in Europe but a high single-digit increase for combines. In the USA and Canada, demand was up by double-digits for turf and utility equipment. CNHI’s generates about 35% of its Agricultural Equipment division in both Nafta and EMEA. Therefore, the above Deere numbers should also support CNHI’s numbers.

Companies: CNH Industrial

15 Feb 19

FY18 finishes on a high; robust outlook for the next year

Driven by a strong performance in the oncology franchise (Somatuline, Cabometyx and Onivyde) and robust operational leverage, revenue and profitability targets exceeded management’s expectations in FY18. As the positive growth momentum is likely to continue in FY19 as well, we anticipate that the financial targets set for FY20 would be achieved a year in advance. An acquisition is also on the cards, which also explains a flat dividend for FY18, despite a c.35% increase in EPS.

Companies: Ipsen

15 Feb 19

Executive interview – Sealand Capital Galaxy

15 Feb 19

The strong Q4 and other positive signals

AstraZeneca finally returns to growth. Q4 top-line was largely in line with the street’s expectations but lower than our estimates. Product sales were healthy, delivering a CER growth of 8% to $5.8bn, taking the total sales figure for the quarter to $6.4bn (+14% at CER). Core EPS grew by 22% to $1.8, again ahead of the expectations. The commentary in the conference call was quite positive and exuded strong focus, discipline and confidence.

Companies: AstraZeneca