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10 Sep 19

Microbiome-targeting, evidence-based food ingredients

We initiate coverage on life sciences company OptiBiotix Health plc (“OPTI”) with an OUTPERFORM recommendation and a target price ("TP") of GBp97 per share. OPTI discovers and develops targeted microbiome-modulating probiotics, prebiotics and other functional food ingredients backed by scientific and clinical evidence. Since its founding in 2014, the company has developed four products for cardiovascular lifestyle diseases and entered >45 commercial deals with corporate partners through which it generates revenues throughout the value chain. The first two ingredients, LPLDL for cholesterol reduction and SlimBiome for weight loss were launched in May 2017 and are already generating revenues. We expect total revenues including those of latestage assets SweetBiotix (calorie-free sweet fibres for sugar replacement) and LPGOS (prebiotic that enhances the effect of LPLDL) to exceed £50m by 2025E.

Companies: Optibiotix Health

12 Sep 19

Hurricane Energy - Lincoln Crestal positive flow test

This morning Hurricane Energy announced the flow test results from its Lincoln Crestal well, the second well of a three-well drilling campaign in the Greater Warwick Area (GWA). The well tested at a maximum stable flow rate of 9,800bopd using electrical submersible pumps (ESPs). The well flowed at an average rate of 4,682bopd under natural conditions and no formation water was produced. The well will now be suspended, with the intention that it will be used for production via tie-back to Lancaster’s Aoka Mizu FPSO in 2020, subject to further work, regulatory consent and final investment decision by the joint venture. Production from the tie-back would generate reservoir data to be used in planning future phases of development of GWA. The drilling rig will now move to the location for the third and last well of the 2019 drilling programme, Warwick West. Our latest risked valuation of Hurricane Energy stands at 102.8p/share, with GWA tie-back being valued at 3.5p/share and GWA FFD at 21.6p/share. Hurricane Energy is currently trading at 49.0p/share.

Companies: Hurricane Energy

12 Sep 19

IQE - Executive interview

IQE’s CFO, Tim Pullen, discusses the company’s recent interim results and explains the operational measures IQE has put in place to support growth. He also explains why it is well placed to adapt to shifts in the global electronics supply chain being brought about by US/Chinese trade sanctions. With the infrastructure phase of the capacity-expansion programme nearing completion, he explains why future investment in capacity will be much more linear and discretionary, based on anticipated demand. As a result, supported by recent cost-control measures, the company expects to generate cash in H2. With an increased debt facility in place, management is confident it will not need to raise further capital. Tim ends by discussing how management sees margins evolving and how investors should view the timing of the company’s growth opportunities across multiple different applications.

Companies: IQE

13 Sep 19

LIBERUM: AFH Financial* - Acquisitions, a positive trading update and a primary focus now on organic growth and improved profitability

AFH organic net inflows continue at at least 8% p.a. The company states it is “primarily focused on driving the organic growth of our business by providing professional and cost-effective services to our clients and, in-turn, enhancing profitability”.

Companies: AFH Financial Group

09 Sep 19

LIBERUM: Judges Scientific* - Initiation - The science and art of acquisition

Judges has a formidable record of value creation. Management has built an acquisition model averaging double digit EPS and DPS growth, high returns and FCF that funds deals. We dive deep into the history and the numbers to show how the model works.

Companies: Judges Scientific

10 Sep 19

1H reveals quality growth

Interim results confirm that the integration of Defaqto has and continues to progress well and the enlarged Group significantly increasing the scale of the Group. The Group now serves >6,000 intermediaries and >350 financial institutions. The statement notes that, including the 3-month contribution from Defaqto, there has been material P&L growth:  Group revenues rose 20% 1H on 1H to £29.1m (1H18 revenue: £24.2m);  Adj EBITDA grew 30% to £6.8m (1H18 adj EBITDA: £5.2m);  Adj PBT rose 34% to £5.9m (1H18: £4.4m);  Adj PAT rose 41% to £4.9m;  Adj EPS was 5.23p and the Board declared an interim DPS of 1.41p. Group net debt was £30.1m at 30 June 2019. This is “in line with expectations, after scheduled payment of a £1.6m dividend in April” and after the capital raising and payments for the Defaqto acquisition in March.

Companies: Simplybiz

10 Sep 19

Cenkos: RA International Group Plc - Interim Results Update

This morning, RA International announced interim results for the period to 30 June 2019. During the period RA secured over US$65m new contracts and further diversified its revenues geographically and by customer. The contracted order book is now over US$166m, up c40% since December 2018. As indicated in the trading statement on 24 June 2019, both revenue and profitability for FY19 will be H2/19 weighted. With RA seeing increasing numbers of Supply contracts as well as several longer-term contracts starting in H2/19, we remain confident in our FY19 forecast.

Companies: RA International

09 Sep 19

Cenkos: Filta Group Holdings Plc - H1/19A Interim Results

A strong H1/19E saw +21% organic revenue growth, which was further enhanced by consolidation of the WatBio acquisition. Efficiency and cost savings initiatives at WatBio have been implemented, albeit at a slower pace than initially expected. Despite this delay our FY20E Adj EBITDA (including change in deferred revenue) increases £0.3m (due to IFRS 16 impact) to £6.0m (without the accounting impact it is unchanged).

Companies: Filta Group

11 Sep 19

FY19 results - Settlements ahead of expectations

Revenue increased 17% to A$34.7m (Ae: A$48.4m). We note that the difference to our forecast was due to an accounting presentation change only, whereby revenues are now stated net instead of gross including capital deployed. We believe this new presentation is much more intuitive and note that, if it had not been applied, revenue was in fact in line with our numbers at A$48.2m. Gross profit, or net gain on investment, was up 23% to A$20.3m (Ae: A$19.0m). This is particularly encouraging as it shows the actual gain on the capital previously deployed. We noted in our 5 July note that our numbers were likely on the light side, so it is pleasing to see this come through. ROIC increased from 117% last reported to 135%, displaying the lucrative returns of recent settlements.

Companies: Litigation Capital Management

16 Sep 19

Tech IPOs outperform, Uber’s great freight hope, New Huawei technology

Tech IPOs year to date have performed well. 8/13 venture-backed tech IPOs this year, including Slack's direct listing, are in profitable territory. If you'd put $1 million into each of them at the IPO price, your $13 million initial investment would be worth $21.7 million - a 67% gain compared to +20% performance in the S&P 500 YTD. As we’ve discussed earlier this month, investors’ appetite for technologies leveraging secular trends appears undiminished

Companies: TRAK CPX SEE QTX

09 Sep 19

LIBERUM: Air Partner* - Encouraging H1 pre-close update

H1 trading has been slightly better than anticipated since the last update. Management now expects the current year’s performance to be evenly weighted between H1 and H2, rather than the H2 weighting anticipated at the AGM update at the end of June.

Companies: Air Partner

09 Sep 19

LIBERUM: CEO Video: David Braben, Frontier Developments*

In these six videos Frontier Developments CEO, David Braben discusses the record FY19 revenues, the lessons learned from multi-year franchises, the initial reception for Planet Zoo, the recent third-party publishing deal, future games and how will the industry look in five years time.

Companies: Frontier Developments

10 Sep 19

Reported EBITDA in line amidst investment for the future

While one-off adjustments make the picture more confusing than many investors would like, the company is performing well and investing for the future, where we believe a scalable, reliable business has the potential to emerge. EBITDA comes in at 60% of our full-year number, while underlying PBT of £1.6m was 60%.

Companies: STM Group

09 Sep 19

Positive End to FY2019 Confirmed

UPGS’s pre-close FY2019 trading statement confirmed a previously stated view on 17th July that FY2019 would end on a positive note. The company will announce preliminary full year results on 5th November 2019. Ahead of then, underlying trends remain firmly positive. We upgrade FY2020 forecasts too.

Companies: Up Global Sourcing

10 Sep 19

Cenkos: Arena Events Group Plc - H1/19A Interim Results

Arena's interim results showed strong revenue growth, driven primarily by acquisitions, along with modest LFL growth. We expect a strong performance in the Middle East to be offset by a more challenging environment in the UK and the US, leading us to revise our forecasts downwards.

Companies: Arena Events

16 Sep 19

Canacol Energy - Record production achieved

On 24 August 2019, Canacol achieved a record production of 217mmscfd of natural gas. This is a significant milestone for the company in Colombia, as it has now surpassed production from the country’s declining offshore gas fields. This was made possible by the completion of the Jobo to Cartagena pipeline in July 2019, which supplied Canacol with additional export capacity. Canacol is now working with its partners to form a consortium to build and operate a new export pipeline to Medellin that would expand export capacity to 315mmscfd by the beginning of 2023. To guarantee supply to this increasing pipeline network, Canacol has been active at the drill bit. The drilling programme has been successful to date, with two development wells and two exploration wells tied into the Jobo production facility and brought onto production. Our updated 2P + risked exploration NAV stands at C$6.40/share, a 2% increase since our last note. The slight delay in the pipeline coming online was offset by a stronger US dollar versus the Canadian dollar.

Companies: Canacol Energy

16 Sep 19

Anglo Pacific - Labrador Iron Ore investment increase

16 Sep 19

Executive interview - Regional REIT

16 Sep 19

Cenkos: Finsbury Food Group Plc - FY19A Annual results

A strong H2/19A meant Finsbury reported LFL revenue growth of +4% for the year, outpacing the market. FY19A was largely in line with our expectations, and we leave FY20E forecasts broadly unchanged. A heavy capex period is reaching an end, resulting in rising FCF for investors (c18% FCF yield for FY20E). Buy.

Companies: Finsbury Food Group

16 Sep 19

Half Year Results 2019 interview

16 Sep 19

Bitesize briefing - Australian spodumene concentrate production, what went wrong?

16 Sep 19

Open Orphan - Introduction to Maurice Treacy, Company Director

16 Sep 19

LIBERUM: MJ Gleeson* - Growth continues in Homes, Strategic Land stays

MJ Gleeson has announced 11% growth in PBT, 1% better than we expected. Homes operating profit grew 15%, lagging Homes volume growth of 25%, due to a well flagged and expected drop in margin as it becomes more expensive to build at faster rates in support of strong demand.

Companies: MJ Gleeson

16 Sep 19

LIBERUM: Real Estate Investors* - Strong H1 earnings growth, and ready with £25m for deals in H2

REI has delivered positive H1 earnings growth ahead of our expectations. £25m of cash and facilities leaves management ready to capitalise on opportunities in the region, particularly in the case of any market dislocation.

Companies: Real Estate Investors

16 Sep 19

Report & Accounts published

6% rise in Group Funds under Management to US$5.4bn (£4.2bn), with Emerging Market products contributing 78% and diversification products (i.e. Developed Market, Opportunistic Value and Frontier products) 22%. Profit before tax of £11.4m (in line with Zeus forecast of £11.4m), with a profit before tax attributable to shareholders of £8.8m (Zeus old forecast of £8.8m). Fully diluted EPS of 34.1p (Zeus forecast of 34.2p) and Full Year DPS of 40.5p (Zeus old forecast of 40.5p).

Companies: City Of London Investment Group

16 Sep 19

Prices and volumes under pressure in H1

MPE has announced H1 2019 results to end June 2019. H1 2019 was always going to be a difficult reporting period, simply because the average CPO price in H1 2019 is down 20% on H1 2018. Further, some of the plantations have taken a bit of a ‘growth pause’ after exceptional growth in 2018, while MPE has accelerated some field and mill maintenance tasks (and associated costs) in H1 2019. While H2 is likely to be much stronger due to a stronger CPO price and helpful seasonality with plantation harvests, we find it necessary to trim forecasts. However, our price target of 1,100p/share is unchanged as it looks through short-term earnings volatility.

Companies: M.P. Evans Group

16 Sep 19

Further progress

Be Heard made further operational, strategic and financial progress in the first half. Group revenues rose +5%, with further strong growth at MMT Digital (+16%) and Freemavens (+82%) partially offset by challenging trading at agenda21 (-19%) and The Corner (-23%). Tight cost control led to pre-IFRS16 EBITDA more than doubling to £1.6m while the operating margin increased to creditable 10.9%. Cash generation was encouraging and the group has made good progress in fixing its earnouts. The share element was settled in July, leaving £9.4m cash to be paid. We maintain our full year forecasts on an underlying basis, though update for IFRS16. In our view, the group is now in far better operational and financial shape than a year ago and although the shares have been disappointing performers, we retain our view that equity value can be rebuilt.

Companies: Be Heard Group

16 Sep 19

Morning Note – 16 September 2019

M.P. Evans (MPE): Corp Prices and volumes under pressure in H1 | Omega Diagnostics (ODX): Corp VISITECT CD4 ERPD clearance

Companies: M.P. Evans Group Omega Diagnostics Group

16 Sep 19

GMP FirstEnergy ― UK Energy morning research package

Africa Oil (AOI CN/SS): BUY, C$2.60 & Tullow Oil (TLW LN): REDUCE, £2.00; Oil Discovery Offshore Guyana | Savannah Petroleum (SAVP LN) (not covered): Signature of Niger-Benin Export Pipeline | Vaalco Energy (EGY US) (not covered): Intention to float & operating update

Companies: AOI SAVP EGY

16 Sep 19

Relentless demand underpinning growth plans

Gleeson’s prelims confirm a strong conclusion to FY19 with PBT and EPS coming in 2% ahead of our expectations. Market fundamentals remain highly supportive of the Gleeson model and it is reassuring to see that the business has not missed a beat since the high profile leadership change in June. Gleeson Homes remains well on track for the current year and for the 2022 target for 2,000+ homes (vs. 1,529 completions in FY19). Gleeson Strategic Land is well positioned to continue to deliver consistent profits and cashflows and the decision has been taken to retain the business within the Group. We are long term supporters of the Gleeson model, which in our view remains compelling in the current environment.

Companies: MJ Gleeson