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12 Dec 18

Cenkos: Seeing Machines Ltd - Collaboration with L3 for Flight Simulators

Seeing Machines Limited, the advanced computer vision technology company that designs AI-powered operator monitoring systems to improve transport safety, has announced that it has partnered with L3 Commercial Aviation, a leading provider of airline pilot training solutions, to deliver integrated eye tracking capabilities into their Full Flight Simulator (FFS). The first device with this functionality will be delivered to a major Australian airline in 2019.

Companies: Seeing Machines

10 Dec 18

Laundry continues on growth path

H1 results show continued strong growth in Laundry and a faster than expected recovery in Japan but slower B2B and third party sales in the UK. These later two points are expected to improve in H2 and guidance for the full year is maintained but there is clearly some risk here. We retain our target price of 183p based on a 5% FY 2019E free cash flow yield.

Companies: Photo-Me International

13 Dec 18

Protecting shareholder value

Strix announced three important updates in relation to its IP and patent protection in an RNS yesterday. This announcement is important both for the quality of the company’s growth and for the valuation placed on the company’s shares. As a result, we view it positively.

Companies: Strix Group

10 Dec 18

Interim Results

Photo-Me has announced H1 2019E results. Underlying revenue grew 2.5% and although adjusted PBT fell 7.9%, the Group maintains its strong cash generation with net cash of £32.4m. Laundry continues to perform strongly, ID saw growth through the roll-out of secure upload enabled booths, the first banking booths were launched in France and the Japanese re-structuring is proceeding as expected. The Group maintains its full year estimate of c.£44m adjusted PBT but notes that the ability to achieve this will be dependent upon consumer sentiment, the economic environment and foreign exchange movements.

Companies: Photo-Me International

13 Dec 18

Another non-core business to sell

According to Sky News, L&G has instructed Fenchurch Advisory Partners to sell its general insurance business. This is a small business unit that has no significant impact on the insurer’s operating earnings. The revealed valuation matches our figures. However, this sale may be difficult to achieve, as the general insurance market remains tough.

Companies: Legal & General Group

05 Dec 18

Interim CEO appointed

The resignation of Hagai Tal has now been accepted, and the experienced divisional CEO, Rivi Bloch, has stepped up to Interim Group CEO, reporting to (although not joining) the Board. Ms Bloch is an extremely capable executive with many years of experience at Taptica, and currently leads the Performance Marketing business. We have every confidence she will prove a safe pair of hands to take the group forward and look forward to an update in the new year. In the meantime, we have sought greater clarity on the sharp fall in revenue and rise in margin guidance from the company yesterday. We understand that there has been a rapid change in the underlying ecosystem for the business, particularly the Performance Marketing division (the old Taptica business) to which these changes mainly pertain.

Companies: Taptica International

11 Dec 18

FY18 PBT in line; Positive dividend surprise

Driver’s FY18 results were well flagged in the October trading update (EPS upgrades of 9%/12% in FY18/19 at the time). Today’s results are in line with expectations, highlighting a year of significant profit growth. Adj. PBT increased by 54% to £3.8m, driven by higher utilisation rates (80% in FY18 vs. 76% in FY17) and a focus on higher margin work (e.g. growth in services provided by Diales). The turnaround has been delivered and management’s focus is now on growing revenue, profit and cash generation. The outlook statement is positive and a return to dividend payments (0.5p final dividend recommended) is a statement of management’s confidence in the outlook for the Group. We believe earnings momentum will continue to drive the share price higher and we expect a positive reaction to today’s results.

Companies: Driver Group

10 Dec 18

Cenkos: Kromek Group Plc - A new market segment

DARPA has extended its engagement with Kromek into a new market segment. Kromek's Sigma platform now incorporates biological threat detection and the product has a meaningful competitive advantage. The proof of concept contract could possibly be extended in our opinion. This further raises revenue visibility and underpins our Buy recommendation.

Companies: Kromek Group

11 Dec 18

FY18 results in line with October guidance

Zytronic reported results for FY18 in line with its October guidance, with adjusted PBT down 16%. This was driven by a decline in gross margin, due to operating inefficiencies resulting from lower revenues to its Financial end market, and yield problems as new designs for the Gaming market, requiring new processes, moved into production. We have made no changes to our forecasts for adjusted PBT and EPS, which assume modest sales growth and no uplift in margin while the group works to improve yields. These put the shares on an EV/EBITDA multiple of 7.6x for calendar 2019, which represents a c.13% discount to the smaller cap goods stocks.

Companies: Zytronic

11 Dec 18

Significant disruption during peak Q2 trading period due to GST changes in Oz

The changes to the general sales tax (GST) in Australia from 1st July, that removed the exemption for low value e-commerce direct imports with a value below A$1,000, has had a severe impact on MySale’s recent trading (GST is 10%). Although plans were in place and trading during Q1 was in line, several factors have combined during the peak Q2 period that will have a significant impact on forecasts, with a small loss expected in the first half to December. Accelerating planned cost reductions, as well as changes in product strategy alongside efficiency gains due to prior investment in technology over the last several years should mean profitability will return in the second half.

Companies: Mysale Group

04 Dec 18

Treatt - A more normal year

Treatt has reported yet another set of strong results in FY18. The company remains in the sweet spot of current consumer trends, with ingredients that help to deliver better-for-you products with clean labels and without compromising on taste. The US expansion is on track and on budget, and will be fully operational in H119. The UK relocation is progressing well, although it is more complex and the timetable has slipped by about six months. FY19 has started well, and at this stage we leave our estimates broadly unchanged. Our DCF-derived fair value remains 510p.

Companies: Treatt

06 Dec 18

Cenkos: Beeks Financial Cloud Group Plc - Tier 1 financial services customer win

This morning, Beeks Financial Cloud announced that it has secured a new contract with a Tier 1 insurance sector customer to manage the customer's hybrid cloud IT activities across the Beeks private cloud and the public cloud. Beeks will provide IaaS connectivity and managed services to connect the customers private cloud activities with its major public cloud providers. Since IPO the business has expanded into all major asset classes for automated trading IaaS services and now added a further hybrid cloud managed service offering, utilising its financial services expertise and growing network resilience and presence. Beeks enjoys high levels of subscription based revenues, with annualised committed monthly recurring revenue of £6.9m at the end of FY18. We forecast 2019E revenue growth of 44% to £8m and 51% EBITDA growth to £2.9m and prospective dividend yield of 0.5%.

Companies: Beeks Financial Cloud

11 Dec 18

Corporate update

Whilst California drilling has seen a small delay of c2 weeks, Wick is due to spud imminently, and Reabold has managed to secure significant optionality around Danube funding. We remain with our BUY recommendation and increase our RENAV from 3.5p to 3.8p.

Companies: Reabold Resources

12 Dec 18

2019 interims - LfL growth, net debt reduction

Against a back-drop of the casual dining sector being under intense pressure, The Fulham Shore Plc (“FUL”) has issued a solid set of interims for the six-month period to the end of September 2018. Revenues of £33.0m and underlying EBITDA of £4.6m were up 19.8% and 1.4% year on year respectively. Margins remain under pressure but cash generation continues with net debt at £8.9m at period end, down from £9.7m a year earlier and down from £12.0m at the end of March 2018. Current trading remains upbeat and the Company now expects to open more restaurants in the year to March 2020 than the forecast four openings in the current financial year to March 2019. We have increased our March 2019 revenue forecast (+6.2%) but our 2019 underlying EBITDA forecast remains essentially unchanged at £7.5m.

Companies: Fulham Shore

13 Dec 18

LIBERUM: Manx Telecom* - Capital Markets presentation highlights Goshawk upside

The shares, back at 5 year lows, reflect some of the pricing challenges in the core island telecoms business and the implied risk to the progressive dividend policy. While there are some headwinds in traditional fixed line and mobile services, what the market misses is the potential for a "transformed" Manx, to launch new, innovative, cash generative off-island telecoms services which can deliver high cash returns.

Companies: Manx Telecom

14 Dec 18

Manx Telecom - Worth listening out for clearSound

In September, Manx Telecom (MT) subsidiary Goshawk announced the launch of clearSound (MTcS), an innovative mobile phone service for people with hearing needs. Following positive feedback from test groups, MT has signed a deal with BT/EE to launch the Goshawk proposition on their UK networks and it intends invest £10m on the launch over the next three years. This has a five-year target to attract 20% of the three million people in the UK with moderate to severe hearing loss. The recent sell off of MT shares, exacerbated by UK small-cap weakness, has exposed good value in the stock, now at a high 30% P/E discount to its peers.

Companies: Manx Telecom

14 Dec 18

GB Group - Location, location, location

GB Group’s Loqate division was the focus of yesterday’s capital markets day. Presenters highlighted the need for accurate address data as a prerequisite for many business processes, including e-commerce, insurance and invoicing. Loqate’s ability to provide the “golden record” in a simple, fast and consistent way gives it a competitive edge and supports the division’s international growth ambitions.

Companies: GB Group

14 Dec 18

New plan to renew with growth

WPP presented a new plan for 2019-21 in order to renew with growth. The medium-term targets include amongst others organic net revenue growth in line with peers and a headline operating profit margin (excluding associates) of at least 15% of revenue by the end of 2021. Furthermore, it was confirmed that the future of Kantar should be with a strategic or financial partner and WPP as a minority shareholder. The final decision is due to be announced in Q2 19.

Companies: WPP

14 Dec 18

John Laing Group - Delivering against guidance

John Laing Group’s (JLG’s) pre-close update confirms the strong level of activity in the business in FY18. JLG will provide guidance on the level of realisations and investment commitments expected for FY19 at its results (due March) but we believe the outlook for next year and beyond appears encouraging based on the investment pipeline and global demand for infrastructure. JLG’s discount to its peer group does not reflect its proven track record or the prospects for further growth.

Companies: John Laing Group

14 Dec 18

Nothing abnormal in the Q4 results

There was no surprise in the Q4 trading update. We believe the retail business will continue to clock double-digit growth in the coming quarters. The Solutions business also seems to be on the right track, with the first CFC likely to go live in 2020. Assuming management will be able to execute these client contracts on time, we believe the stock is currently trading at very attractive levels. No change to our stock recommendation.

Companies: Ocado Group

14 Dec 18

Shore Capital Group - Diversified business model

Since its flotation in 2000, Shore Capital has navigated a number of market cycles, generating operating profits throughout this period. More recently, it has continued to grow its franchise, adding further corporate clients and increasing assets under management in the first half of the current year, helped by investment to support client service. Equity market conditions have become more difficult but this has already been reflected in a weaker share price, which now stands below book value, suggesting significant potential upside on a longer-term view.

Companies: Shore Capital Group

14 Dec 18

Morning Note – 14 December 2018

Companies: Optibiotix Health

14 Dec 18

LIBERUM: SThree* - Strong 4Q and encouraging outlook enables CEO to leave on high

Although the announced departure of CEO Gary Elden is s surprise, it comes at a time when momentum in the business is strong and the strategic shift undertaken during his six year tenure is paying off. This is evidenced by the 12% growth in underlying gross profit during 4Q18, driven by strong momentum in both the US and EU businesses.

Companies: SThree

14 Dec 18

Shield Therapeutics (STX) Presentation at MELLO London November 2018

14 Dec 18

(Almost) Daily Market News Update

The European Central Bank did not create any surprises and decided to end its bond purchasing programme at the end of this year. More importantly, the ECB is getting more cautious about Eurozone growth next year and reduced its 2019 GDP forecast by 0.1 percentage points.

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13 Dec 18

DP Poland - Corporate update

13 Dec 18

Bigblu Broadband - New partner, strong organic growth prospects

Bigblu Broadband (BBB) has established a strong position as an alternative and rural broadband provider across multiple geographies using satellite, fixed wireless and 4G/5G technologies. Its customers are homes and businesses unserved or underserved by fibre and the group is in a strong position to leverage the heavy investment made by satellite operators in high-speed broadband as well as its own selective roll-out of ultrafast and giga-fast fixed wireless services. With Bigblu set for strong organic growth and well established in key markets, the days of high M&A and equity issuance also appear to be over.

Companies: Bigblu Broadband

13 Dec 18

LIBERUM: Speedy Hire* - Acquisition of Geason scales up services and boosts EPS

Speedy has acquired Geason, a leading provider of construction and professional services training for an initial consideration of £9m and deferred payment of up to a further £26m over three years based on an ambitious earn-out schedule. The acquisition contributes to management’s strategy of improving the proportion of revenues from services and brings critical mass to training, allowing Speedy to better utilise spare training facilities with new training staff.

Companies: Speedy Hire

13 Dec 18

LIBERUM: Sports Direct* - Strong momentum in a tough market

H1 underlying EBITDA, excluding House of Fraser, increased 15.5% vs. management’s full year guidance of 5-15%. Core UK Sports Retail EBITDA has increased +1.5% year-on-year, with the balance of growth driven largely by reduced losses in the Rest of World Retail and an improvement in European Sports Retail.

Companies: Sports Direct International