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21 Oct 20

SP Angel Healthcare Conditions- Novacyt (NCYT.L): Initiation of Research

Novacyt Initiation of Coverage: Through the rapid commercialisation of a COVID-19 test, Novacyt has transformed its financial position. Demand for the Group's COVID-19 test and other COVID-19 reagents are expected to make up the majority of revenue generated until FY22E, whereupon the Group is looking to drive long-term growth across its business via the development of high-margin clinical diagnostics and establish itself as a leader in infectious disease testing.

Companies: Novacyt SAS

19 Oct 20

Bioventix - FY 2020 results

Bioventix reported a strong set of full-year results, that were 8% above expectations, assisted in part by a c.£0.2m (+3%) FX benefit, which helped offset the obvious drag on performance in Q4 due to the impact of COVID-19 on routine testing in hospitals. A 53p special dividend was proposed, resulting in a full-year dividend of 141p, up 18%. Due to the COVID-19-related disruption to testing, which only exacerbates the poor visibility to customer royalty streams, we are withdrawing forecasts until normality returns. That said, the business remains in very good shape, with evidence that: (i) high sensitivity troponin is gaining momentum; (ii) physical antibody sales growth remains robust (+34%); and (iii) progress in its development pipeline (particularly pollution monitoring programme) is being made. The business is expected to remain cash generative, and with c.£8.1m of cash at 30 June, the company is a strong position to weather this period of disruption before returning to growth.

Companies: Bioventix Plc

21 Oct 20

Tremor - Strengthening momentum drives FY20 upgrades

Tremor has announced in today’s trading update that its platform has continued to gather further momentum since H1 20 results on 22 September, and it now expects FY20 revenue and EBITDA to be in the range of $340-360m for revenue and $30-36m for EBITDA. This leads us to upgrade our FY20 revenue forecasts by +6% to $350m from $330m, and upgrade our FY20 EBITDA by +32% to $33m from $25m at an incremental margin of 40%. This reflects that Tremor’s platform benefits from strong operational gearing that translates to EFCF, and we increase our FY20 net cash to $79m from $71m. This strengthening momentum for Tremor’s differentiated platform reflects that it is capitalising upon a rebound and shift in advertising spend through the success of the initiatives it launched in 2019 and the successful integration of Unruly, and we explain these factors in more depth from p9 of our 22 September report. Today’s announcement also marks the second upgrade to our Tremor forecasts since COVID-19 impacted the advertising market and Tremor in Q2, and this reflects that Tremor has adopted a prudent approach to its guidance. Applying a similar approach to our estimates, we conservatively do not change our FY21 forecasts, and this means that we continue to forecast FY21 organic revenue growth to $420m or +20% YoY, with organic EBITDA growth to $55m or +67% YoY. This conservative, strong FY21 organic growth means that Tremor looks substantially undervalued on 7x FY20 EV/EBITDA or 5x NTM, and a NTM EFCF yield of 6%; vs peers on 13-19x EV/EBITDA with NTM EBITDA growth of 18-47%, and EFCF yields of 1-2%.

Companies: Tremor International Ltd.

22 Oct 20

SDI Group - Positive trading update drives FY 2021 upgrade

A positive trading update from SDI Group justifies upgrading FY 2021 sales and adjusted EPS forecasts by 10% and 15%, respectively, broadly to the levels we were forecasting before the COVID-19 pandemic struck in early 2020. Contract wins for MPB Industries (flowmeters for ventilators) and Atik Cameras (supplying cameras for PCR DNA amplifiers) are expected to be fulfilled within FY 2021 and consequently we leave FY 2022 forecasts unchanged. We are encouraged by the news that the other businesses within the group are seeing order patterns returning towards normality. We upgrade our target price to 110p, at which level the stock trades on multiples that compare favourably to both the market and peer comparators. Our forecasts exclude the potential for further acquisitions as the company continues to execute on its buy and build strategy.

Companies: SDI Group plc

21 Oct 20

WHI Morning Comment: Spectra Systems (SPSY) - Significant Contract Announcement – Central Bank secured

Spectra Systems Corporation, a leader in machine-readable high speed banknote authentication, brand protection technologies, and gaming security software, has announced that it has executed a comprehensive services contract with a ‘long standing' central bank customer for the development, manufacture and servicing of a sensor system. The initial development phases underpin our FY2021E estimates (with risk likely to the upside), but moreover, the balance of development work, comprising supply of sensors (estimated value up to $34m in 2024-25), servicing revenues ($7.5m) and resultant high margin material sales through to at least 2035, provides significant underpinning of future prospects. Our updated Sum-of-the-Parts valuation (reflecting higher than anticipated development revenues and margins) indicates a risked fair value of 240p (from 200p).

Companies: Spectra Systems Corporation

19 Oct 20

Highly scalable platform in growing self-care brands

Venture Life aims to become a global leader in the self-care branded product market, where there are a number of structural growth drivers. It has a unique and scalable platform to develop, manufacture and distribute products, including its own brands and international customers’ brands. What is already a high margin business is poised to deliver a compelling mixture of top line growth with significant operating leverage. Performance in H1 (EBITDA +347%) highlights the potency of VLG’s model. Acquisitions can also leverage the platform to drive growth, and management has a very strong track record here. On top of this exciting growth play, there is also a chance that its Dentyl dual-action mouthwash could have applications to slow/reduce CV19 transmission, adding to the upside potential.

Companies: Venture Life Group Plc

19 Oct 20

Tristel - FY 2020 results

Full-year results were 4% above expectations, with revenues and adjusted pre-tax profit rising 21% and 27%, respectively, boosted in part by acquisitions in FY 2018 and 2019 but also from COVID-19 related buying, particularly Cache surface disinfection products. We raise FY 2021 adjusted pre-tax profit by 3% to £7.2m and introduce FY 2022 forecasts, which point to c.11% EPS growth. FY 2021 growth is held back by the stated c.£0.75m commitment to developing a fuller pipeline of products to take to the FDA/EPA and Canada Health. We view this as a strong endorsement of the progress that has been made to date. We also lift our target price to 500p on the back of a small FY 2021 upgrade and outlook for growth in 2022, supported by renewed commitment and resourcing for North American regulatory approvals.

Companies: Tristel Plc

21 Oct 20

Cenkos: Seeing Machines Ltd -- MOU with L3Harris Technologies

Seeing Machines has announced that it has signed a non-binding Memorandum of Understanding with global aerospace and defence technology company L3Harris Technologies. The MOU frames the intent to enter into a global non-exclusive license agreement to enhance pilot training technology with Seeing Machines's dedicated precision eye-tracking system for flight crew training in the full flight simulator (FFS) environment. A license arrangement is currently in advanced discussions between the parties and subject to the negotiation and execution of definitive, binding licensing and other legal agreements. Further announcements regarding the progress of the negotiations in relation to such binding documentation will be made when appropriate.

Companies: Seeing Machines Limited

21 Oct 20

Strong Q1, +6% FY21 revenue upgrade

Positive update today, reporting that trading in FYJun21 has begun well. As a result – and also thanks to DOTD’s strong revenue visibility – revenue guidance is already being upgraded. Consequently, we lift FY21E sales by 6% to £53.0m, so now expecting +12% y/y growth. To put this into context, growth fell to +9% in 2H20. We find this rapid recovery to more typical growth levels highly encouraging. Guidance for profit and cash is reiterated, meaning we leave both profit and cash forecasts unchanged. Somewhat obviously, this requires us increasing our cost assumptions….and if these don’t fully materialise, provides upside risk. Cash continues to build, now £27.7m as at Q1 – we might expect this to be strategically deployed, to enhance what is impressively consistent organic growth.

Companies: dotDigital Group plc

22 Oct 20

Impressive H1 sales and gross margin growth..

G4M’s H1 trading update confirms the continued strength of the top line sales growth already disclosed in its Q1 sales update. H1 sales have risen by an impressive 42% to £70.2m, complemented by gross margin expansion of 330bps to 28.5%, reflecting G4M’s focus on profitable sales growth. This translates to gross profit growth of £7.5m (+60%) compared with last year and will deliver interim financial results materially higher than last year. While sales momentum has continued into October, management remains mindful of the ongoing uncertainties around Covid-19 and Brexit heading into the peak trading period. With market estimates already raised on the Q1 update, this prudent caution tempers our full year PBT upgrade to 13%.

Companies: Gear4music (Holdings) PLC

19 Oct 20

Ince Group: Explainer Note – Partner Remuneration

We have today released a new note on The Ince Group plc - this is the first of a series of "explainer notes" that take an in-depth look at the various aspects of the Ince investment case our investors have told us require more clarification. This edition examines the partner remuneration model - the headline for which is that this isn't discretionary bonus, it's more of a revenue share that partners are given in lieu of pay. Thus their remuneration is entirely variable, rather than representing a fixed cost.

Companies: Ince Group plc

20 Oct 20

Open Orphan* - Material UK Government COVID Study Contract

Open Orphan has announced a contract with the UK Government to develop and perform the UK's first COVID-19 (COVID) human challenge studies. The multi-faceted agreement provides strong endorsement and validation of hVIVO's capabilities, with material revenues driving forecast upgrades and further upside risk to earnings as pipeline conversion continues and industry awareness and penetration of challenge studies accelerates.

Companies: OPORF ORPH CRO VENN

20 Oct 20

Open Orphan - £10m COVID-19 challenge contract with UK Govt

ORPH has signed a contract with the UK Government for the development of a COVID-19 human challenge model. This will involve manufacture of the challenge virus and a first-in-human characterisation study. The contract begins immediately and is likely to be worth c.£10m. The government has also reserved the first three slots to test vaccines using the challenge study at a total cost of £7.5m. We revise our forecasts and increase our SOTP target price to 28p (range 25-31p), reflecting ORPH’s world-leading position in traditional challenge models, and now COVID-19 challenge models, with additional upside from the potential development of new challenge models, the monetisation of valuable challenge model data and the potential sale of its non-core pharmaceutical assets.

Companies: Open Orphan Plc

19 Oct 20

WHI Morning Comment: Judges Scientific (JDG) - Acquisition – small but well formed – small upgrades to FY2021E

Judges Scientific is focused on acquiring and developing companies in the scientific instrument sector. The acquisition of Korvus Technology, a UK-based but global supplier of vapour deposition systems, largely to academic institutions, marks Judges' third deal in less than 12 months. With Korvus generating revenues of £1.42m and adj. EBIT of £0.66m (46% margin), we choose to leave our FY2020E estimates unchanged but, after financing costs (all-cash initial consideration of £2.64m), we see a 3.5% uplift to FY2021E with our adjusted PBT increasing to £15.2m. Although a trading update is not provided this morning, we remain cautiously optimistic with respect to FY2020E. COVID-related business risks / restrictions remain; however the relative strength of H1:2020 (albeit at some expense to the order book) continues to provide some comfort, in our view.

Companies: Judges Scientific plc

20 Oct 20

Solid State - Encouraging H1 trading update

The group’s H1 trading update is reassuring, with a strong first half, pointing to a continuation of previously indicated trading patterns. Revenue and profit has been resilient, while cash flow has been strong, returning to normalised patterns having repaid PAYE and VAT and also its final dividend in September. H1 trading benefited from a strong order book heading into the lockdown and due to some delays in order intake over recent months has an order book around 7% less than last year. Management is cautiously optimistic, but still considers that the trading outlook remains uncertain, so guidance remains withdrawn. As such, we look to the December interims to resume forecasts, when order visibility will be clearer.

Companies: Solid State plc

24 Oct 20

Moving on: investment case still intact

NSKOG reported figures slightly above ARCe and Consensus, but still largely impacted by lower demand and prices due to Covid-19. Management expects demand down 20% for 2020 and hence implying an improving demand situation for Q4, while 2021 is supported by 2mt of announced closures in WE. We have lowered our estimates for 2020 while ’21-22 estimates are lifted by lower costs following closure of PM5 and a weaker NOK. We reiterate BUY and NOK 40/sh tp.

Companies: Norske Skog ASA (NSKOG:OSL)Norske Skog ASA (0BQ:STU)

23 Oct 20

Welcome respite.

Following Mercialys, Wereldhave has confirmed some early signs of stabilisation in Q3 20. Local units have proven more resilient than bigger or in-town ones. Wereldhave didn’t pass the pass anyway but, following the negative Q2 20, Q3 20 looks to be something of a respite.

Companies: Wereldhave N.V.

23 Oct 20

Q4 looks set to be Chinese OEM flavored

Revenue fell by 16.8% yoy albeit showing a promising recovery vs. H1 20 (-20.6% yoy), driven by the passenger car/light truck tyre segment (contracting by 16.2% yoy vs. H1 20: -22.3% yoy). Accordingly, the guidance was upgraded: a segment operating income in excess of €1.6bn and a FCF in excess of €1.2 billion. This recovery will thus see an increase to our sales and profit estimates (the latter being limited by a slowly-recovering Specialty segment, the usual profit driver).

Companies: Compagnie Generale des Etablissements Michelin SCA

23 Oct 20

Exceptional Q3 profitability

Despite the macro/market uncertainties, Holmen managed an impressive Q3 performance. While Forest and Paperboard continued to be the lynchpin divisions – accounting for >80% of the group’s operating profits, the other divisions didn’t disappoint. Operating margins hit record-highs. Overall, given a healthy mix of assets/divisions – where long-term demand is almost certain – Holmen remains an attractive bet. The stock upside is likely to be limited, however, considering the higher valuations vis-à-vis the sector.

Companies: 0XS9 HOLMB HL9C

23 Oct 20

Consumption rebound in Q3 20

Q3 20 was buoyant with organic sales growth of 15.2% and a jump in operating income to 10.1% of sales (vs 4.5% of sales restated for non-recurring items in Q3 19). Electrolux benefited from the catch-up in consumption, enhanced by the stimulus programmes around the world, following low sales during the lockdowns. For Q4 20, Electrolux anticipates a favorable volume/price/mix effect despite the limited visibility.

Companies: ELUXB ELX ELUXB ELUXF

23 Oct 20

Q3 20: better traffic than peers but performance below expectations

ADP has released its 9m revenue figure which was below consensus and our expectations, mainly owing to lower revenues in the retail business. Management is now focusing on summer FY21 and planning for a profitable next year (e.g. rapid testing). ADP has also lowered its traffic expectations and announced an additional opex savings target. We will be revising our numbers downwards.

Companies: Aeroports de Paris SA

23 Oct 20

Q3 volume recovery and strong EV performance dented by FX headwinds

Renault’s Q3 revenues came in modestly above expectations on the back of strong pricing and an EV-led product mix improvement. These positive developments, aligned with Luca de Meo’s new profit-focused vision for Renault, were unfortunately tarnished by unfavorable currency headwinds from emerging markets. Nonetheless, the group’s EV leadership, an encouraging Q4 order book and positive operating cash flow guidance for the automotive division in H2 instills confidence on Renault’s turnaround after the very tough H1.

Companies: Renault SA

23 Oct 20

Better than expected Q3 figures but a weak Q4 in the offing

ABB’s Q3 results were better than AV and consensus’ expectations. The cost programme implemented by the group is under way and on track to achieve its targets. A reduction in gross debt over the last six months and ongoing share buybacks reassure that there is enough liquidity to tackle the second wave. Decentralisation remains a key focus and the group will unveil its future strategy at its CMD next month.

Companies: ABB Ltd.

23 Oct 20

Improved attractiveness of Saint Laurent and Bottega Veneta

Kering reported a less-than-expected Q3 20 sales decline, mainly driven by the impressive sales rebound in North America and continued good momentum in Asia. While Gucci was still considerably affected by the lack of tourism, both Saint Laurent and Bottega Veneta delivered outstanding trading performances. Despite the uncertainties related to the pandemic and the US election, we are now more confident about the outlook.

Companies: Kering SA

23 Oct 20

Touchstone Exploration presents at the One2One Proactive virtual conference

23 Oct 20

Tharisa presents at the Proactive One2One virtual conference

23 Oct 20

OPG Power presents at the Proactive One2One virtual conference

23 Oct 20

Q3 20: more COVID-19 tailwinds than expected

Sartorius Stedim reported very strong Q3 20 numbers, as sales grew by 43% to €510.4m, driven by a 44.1% growth in bioprocessing. EBITDA was up 61.2% to €172.4m, with the associated margin at 33.8% (+470bp), benefitting from significant operating leverage. Management now expects FY20 growth at the top end/above the previous guidance of 26%-30% and an EBITDA margin at 32% (vs 31% previously). We will upgrade our estimates to factor in the strong Q3 showing and sustained tailwinds in bioprocessing.

Companies: Sartorius Stedim Biotech (DIM:EPA)Sartorius Stedim Biotech SA (DIM:PAR)

23 Oct 20

Stabilising figures in Q3 20. Will this be enough?

Prior to the impact of further lockdown measures adopted in early Q4 20 across Europe, Q3 20 was stabilising vs. Q2 20. Both tenant revenues and footfall were stabilising at c.10% below their 2019 levels. The good news, however, was that rents did not collapse in Q3 20. The question remains whether this recovery will be sufficient to avoid a recap. March 2021 (annual figures, including values) will at least provide the answer.

Companies: Klepierre SA

23 Oct 20

‘A fully formed medical device manufacturer’

RUA Life Sciences announced its trading update for the six months to 30 September 2020. The global pandemic and the reduction in the number of elective surgeries had a (previously announced) impact on RUA Medical Device’s revenues. There was also a slight reduction in RUA Biomaterial’s licensing income, but in both divisions there has been a recent recovery and catch-up. Our valuation remains unchanged as our model had included these delays, and those divisions comprise minor components of our total valuation.

Companies: RUA Life Sciences Plc