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04 Aug 20

Games Workshop Group - Winning performance

Games Workshop’s (GAW) FY20 results show that demand post lockdown, during which the company initially suspended all trading, has surprised on the upside, leading to a greater profit outturn than recently anticipated by management. Management is aiming to grow revenue in FY21e, while maintaining the operating margin given a focus on leveraging Online (19% of group revenue) as the economic environment will likely lead to lower growth for Trade (52% of group) and a decline in Retail (29% of group) revenue. Our new forecasts for FY21e are for revenue to increase by 2.1% and PBT to decline by 5% due to lower royalty income.

Companies: Games Workshop Group Plc

30 Jul 20

Belvoir Group - Forecasts upgraded, strategy continues to deliver

Since the restrictions were lifted in mid-May, Belvoir has seen a surge in activity due to pent-up demand, resulting in June being a record breaking month for the group’s Newton Fallowell estate agency network in terms of instructions and sales and the financial Services division in terms of written income. Management have stated that with the positive impact of the stamp duty reductions still to take effect they are confident that the Group is well positioned to capitalise on the current market upturn and to take advantage of the opportunities arising from more challenging conditions. We have upgraded our PBT forecasts for FY 2020 to the level we forecast pre-COVID. We have also upgraded our target price from 169p to 233p and highlight that H1 2020 has demonstrated the resilience of the group, management’s ability to navigate difficult market conditions and the power of the franchise-led strategy.

Companies: Belvoir Group Plc

03 Aug 20

Cenkos: Seeing Machines Ltd - Better trading than expected

Seeing Machines has released a trading update demonstrating the business is performing better than expected on key metrics: Revenues of A$39.7m were 13% ahead of our expectations of $35.1m and cash of A$38.7m was 21% ahead of our expectations of A$32.0m. We believe this strong end to the financial year reflects the continued demand for the company's Fleet product by sophisticated fleet owners and that the key home markets of Australia and New Zealand have been less affected by COVID than feared. We believe this strong cash performance should reduce the perceived funding risk weighting and help the valuation recover towards previous levels. We iterate our Buy recommendation and 7.2p price target.

Companies: Seeing Machines Ltd.

06 Aug 20

Cenkos: Duke Royalty Ltd -- Restoring the royalties

Trading in the royalty partner portfolio over Q1/21 shows a material rebound from May, which has been sustained to date, as the portfolio as a whole returns to more normalised trading. Consequently, Duke's cash receipts, while down 20% YoY currently, are set to step up in H2/21 as forbearance measures largely expire and deferred royalties realised. This bodes well for a rebound in earnings and a return to cash paid dividends. A share price down over 55% since Feb 20, standing at p/book of 0.56x H1/20A's NAV p/s thus appears overdone. We await further clarity on the portfolio before reissuing forecasts, thus leave our recommendation U/R.

Companies: Duke Royalty

05 Aug 20

First UK order for Primestore MTM device

EKF has secured its first order in the UK for the Primestore MTM sample collection device, worth £3m over the next 7 weeks. The purchaser is a partner from the private sector, with the device being used in a Covid-19 testing programme for UK staff. With these increasing orders, EKF has expanded its production line in Cardiff and now has capacity for 25,000 sample collection tubes per day. In addition, the production line in Germany is now up and running. We increase our FY20 revenue estimates by a further £3m and EBITDA by £2m. Given the nature of the device, which is agnostic over which molecular test is used, we expect demand to continue at elevated levels for the duration of the pandemic and continue to see further upside potential to our already materially upgraded estimates. EKF remains one of our best Ideas for 2020.

Companies: EKF Diagnostics Holdings Plc

03 Aug 20

Making the most of lockdown

As is characteristic of this company, management has acted swiftly to execute an additional acquisition, putting the placing proceeds to work with another immediately earnings-enhancing acquisition, creating a Group with diversified revenue and profits, significant growth potential and greater visibility in a post-COVID world. We reintroduce estimates with CAGR in revenues of 29% between FY 2021 and FY 2023 and a CAGR in EBITDA of 34%. Quantuma, an insolvency and restructuring specialist targeting SMEs, is being acquired for £26.95m from existing resources to give an EBITDA multiple of 7.47x (EBITDA March 2020: £3.6m). Our forecasts take into account the greater visibility and predictability that the recent acquisitions bring to the Group. Our new SOTP valuation arrives at a reinstated price target of 300p.

Companies: K3 Capital Group Plc

05 Aug 20

Low interest rates wipe out operating resilience

L&G reported an operating profit from continuing divisions (excluding Mature Savings and General Insurance businesses) of £1,128m, -2.2% yoy. The COVID-19-related cost was £129m. LGR posted a growing operating profit to £721m. Net profit amounted to £290m vs. £874m a year before, being affected by the reduced discount rate used to calculate LGI reserves. The Solvency II ratio stood at 173%. The Board recommended an interim dividend of 4.93p/share, stable relative to H1 19.

Companies: Legal

30 Jul 20

Still winning major deals

Sopheon has this morning announced a major win for Accolade – the global snack food giant, Mondelez. The deal is good evidence that Sopheon continues to win material deals despite the pressures of COVID-19, and that its innovation management platform is genuinely market-leading. We continue to believe that the group will see a return to strength as the market slowly recovers, and see today’s announcement as a useful signal.

Companies: Sopheon Plc

06 Aug 20

Teams spirit

LoopUp recently unveiled a major extension to its ambitions – the group is aiming to become a leading global provider of telephony “inside” Microsoft’s Teams product. The opportunity is clear and growing, as enterprise customers look to use Teams for “normal” external phone calls, and LoopUp seems well placed to deliver a differentiated offering using its existing infrastructure and knowhow. In this document we provide an overview of the new platform and explain its strategic significance.

Companies: LoopUp Group plc

06 Aug 20

Hurricane Energy - Technical review and operational update

Technical review and operational update

Companies: Hurricane Energy Plc

03 Aug 20

The Ince Group plc* - Stabilisation and Cause for Optimism

While Ince's FY20 results are complex given the various movements in reported figures associated with accounting for the Ince International consolidation, our assessment is that there are emerging signs of increasing operational effectiveness and reasons for optimism for investors. The operating environment and outlook remains opaque and thus we keep our forecasts and recommendation for the Group withdrawn at this time.

Companies: The Ince Group plc

03 Aug 20

Another positive trading update lifts forecasts

Byotrol released a further positive trading on the back of a strong Q1 FY 2021, citing product sales in excess of £3.4m in the quarter and for the business to significantly exceed full-year market forecasts. With the order book at the end of June still being c.£2m (similar to at 30 April) and continued improving supply chain management for biocidal ingredients, we have upgraded forecasts to reflect this outlook. We increase FY 2021 revenues, adjusted EBITDA and EPS by 15%, 38% and 55%, respectively. Consequently, we upgrade our target price to 10p, at which level the stock would trade on 3.7x sales. As previously indicated, we think the pandemic should result in a secular shift towards improved disinfection prevention, reducing the prospect of FY 2021 being a one-off exceptional performance. The prospect for further upgrades should current monthly revenues extend for longer than anticipated and additional IP monetisation events should not be discounted, in our view, either.

Companies: Byotrol Plc

03 Aug 20

Rebound post lockdown

What’s new: Purplebricks Group results for the year to 30 April 2020, show the Australian and US units as discontinued; but include the Canadian unit sold for C$60.5m (i.e. £35m) in July. Investors will focus on the UK unit which revealed:  11% fall in UK revenue to £80.5m (FY19: £90.1m), as the number of instructions fell 23% (impacted by early Covid uncertainty and lockdown), but the average revenue per instruction “ARPI” rose 12% to £1,394;  UK gross profit margin improved to 64.1% (FY19: 63.0%);  UK marketing costs to revenue improved to 25.6% (FY19: 29.6%);  Spend on Digital capacity pushed UK operating costs 32% to £26.2m (FY19: £19.9m), as new management team pursued initiatives which are being “delivered at pace with significant opportunity for further innovation.”  UK adjusted EBITDA fell 53% to £4.8m (FY19: £10.2m).

Companies: Purplebricks Group Plc

03 Aug 20

Signs Softcat as a reseller, momentum elsewhere

Smartspace released positive news for both Space Connect and SwipedOn on Friday, sending the stock nearly 50% higher. Space Connect has signed a distribution agreement with Softcat and the SwipedOn has posted 80% yoy growth in AAR. Encouragingly too, SMRT also flagged current net cash at £1.7m (vs. £1.9m in April) demonstrating impressive reliance despite a challenging macro backdrop. In fact, SMRT has adapted quickly and is proving a ‘Covid beneficiary‘, seeing strong inbound demand as customers look for safe news ways to conduct business. Reassured by this, we continue to believe that Space Connect and SwipedOn could be worth considerably more than the current market cap.

Companies: Smartspace Software Plc

30 Jul 20

Reduced credit loss absorption capacity

As expected, the quarter saw a sharp increase in loan impairments. However, one can wonder if the increase was not capped by the group’s willingness to keep its results afloat. Management’s downbeat guidance in terms of revenue recovery potential and cost reduction does not bode well as regards the group’s future credit loss absorption capacity.

Companies: Lloyds Banking Group Plc

06 Aug 20

Farewell, for now, to advanced autonomous tech

Continental posted a mixed set of H1 20 results with shrinking revenue (-25.9% yoy) dragged down by the non-rubber business (-28.3% yoy). This revenue contraction translated into a -€448.8m profitability hit (margin of -2.7% vs. 4.8% in H1 19). As such, FCF was affected (-75.7% yoy) though benefiting from favorable working capital and lower capex (-35% yoy). Despite the lack of an official outlook, the company expects an improvement in the automotive market for Q3 20.

Companies: Continental AG

06 Aug 20

Q2 figures beat consensus and show a trough

Like its peers, Randstaad and Manpower, Adecco reported Q2 figures ahead of expectations, albeit slightly lower. Nevertheless, the company seems to have won market share in France, Spain and Italy. Costs remained under control, providing some support to the group’s profitability and margins. We are maintaining our current estimates and may revise them upwards if the Q3 confirms the positive trend seen in June and July.

Companies: Adecco Group AG

06 Aug 20

HANetf's Hector McNeil says price of gold is heading towards $3000 by year end

06 Aug 20

In-depth restructuring is waiting to establish long-term optimisation

The Lufthansa Group reported a large but better-than-expected Q2 net loss. The H2 traffic projection remains lacklustre and the carrier may need yet another year to recover its 2019 passenger demand. The group will implement numerous in-depth restructuring plans, which could hopefully accelerate the rebuilding of its competitiveness.

Companies: Deutsche Lufthansa AG

06 Aug 20

First recap: done. Waiting for a second one?

Vacancy strongly increased in Q2 20. LTV surpassed the 50% mark on 30 June 2020 due to strong value destruction in H1 20. Hammerson announced a £550m cash capital increase coupled with a disposal of £270m. Its ex-post pro forma net debt should be £2.2bn, i.e. LTV of 42% on a proportionate basis. Too high?

Companies: Hammerson Plc

06 Aug 20

Focus on Q320, capital is key

ING Group Q220. Adjusted (for goodwill impairment) the gross result was above expectations, again driven mostly by other income. Loan losses were above expectations (management expects lower provisioning in H2 vs H1 which would be coherent with expectations). At 15bps, the CET1 ratio was 100bps above our expectations and management will update its capital policy during Q320 (possible change in the dividend policy and buy-backs).

Companies: ING Groep NV

06 Aug 20

H1 20: Handshake agreement turned out to be a politician’s word

Atlantia’s H1 results came in below the consensus. As expected, traffic saw a significant drop in the concessions. The management reiterated its top line and cash flow post-capex outlook as announced during the FY19 report, but now expects traffic to be down by a respective 15% and 65% for motorways and airports. We had anticipated details of the agreement to accompany these results but the parties have yet to reach an agreement, hence skepticism prevails.

Companies: Atlantia SpA

06 Aug 20

Q2 20: buoyant Defence against the sluggish automotive environment

Rheinmetall released its formal H1 figures, which were in line with the Q2 preliminary publication. No impact related to the pandemic is expected for the Defence sector (where guidance has been narrowed) and demand still well oriented. On the contrary, visibility is still limited for Automotive which remains the company drag, while the strategic examination of this activity should not lead towards a spin-off.

Companies: Rheinmetall AG

06 Aug 20

Impressive Q3 figures ahead of expectations

Siemens’ Q3 results were strong and ahead of consensus in profitability and FCF generation. Management confirmed the 2020 outlook and announced an acceleration in DI’s cost savings, which will be fully completed in 2021 instead of 2023.

Companies: Siemens AG

06 Aug 20

Deferral of elective procedures weighs on Q3

Impacted by the temporary closure of clinics and the deferral of elective procedures, CZM’s Q3 sales were down 30.2% – ophthalmic devices as well as microsurgery witnessed a decline of similar magnitude. Operational deleverage and continued investments into R&D pressurised the adjusted operating profit further (-84.4%). However, with the gradual resumption of elective procedures, a recovery is expected in Q4 with consumables likely to fare better than equipment. The launch of new product (video laryngoscope) also bodes well for the coming quarters.

Companies: Carl Zeiss Meditec AG

06 Aug 20

Amryt Pharma releases Q-2 financials that show strong revenue growth as company issues guidance

06 Aug 20

“One-shot” provision frontloading

Management did not hesitate to frontload the bulk of the expected annual COVID-19 impact, although the first-half pre-provision performance was affected by depressed revenue generation and a rigid cost base. The group’s recovery potential remains the big unknown.

Companies: AIB Group Plc

06 Aug 20

A rather weak Q3 outlook

Q2 was weak as expected due to oil prices and the pandemic The outlook for Q3 is very cautious In particular, America remains a concern given the group’s geographic exposure We will revise downwards our forecasts for the current year at least

Companies: Tenaris SA

06 Aug 20

Strong results - Fixtures indicate upside

Q2 EBITDA 3% ahead of Cons. Adj. EPS of USD 2.63 (ARCe: USD 2.41, Cons.: USD 2.26) Q3 fixtures indicate 13% upside to Cons. EBITDA We expect the share to outperform the market on the back of the report

Companies: Scorpio Tankers, Inc.