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16 Jan 19

Cenkos: Seeing Machines Ltd - Half year trading update

Seeing Machines has announced a trading update for its half year ended 31 December 2018 where the Board's expectation for FY2019 remains unchanged ie for revenues approximately in line with FY2018 of A$30.7m. The Automotive sector continues to dominate the news with Seeing Machines noting that it is currently in six RFQs worth A$140m, with decisions expected by the end of the financial year. This could double the minimum projected revenues from existing OEM awards. Seeing Machines also expects another 3-4 automotive RFQs going live this financial year demonstrating the strong momentum in the sector following regulatory drivers such as Euro-NCAP.

Companies: Seeing Machines

16 Jan 19

Trading ahead of expectations, 5% EPS upgrade

The company has announced a positive trading update signalling a stronger than expected H2, with sales and EBITDA moderately ahead and cash more meaningfully ahead of expectations. We upgrade our 2018 EPS forecast by 4.9% and raise 2019 by 4.6%, confirming robust trading continues. The company has also announced a small bolt-on acquisition of Line Dragon for $2.0m, which looks an ideal close fit. The shares have significantly derated and the trading update confirms robust trading continues, thus providing a strong buying opportunity. The 7% dividend yield and single digit P/E in 2019 highlight strong value – this quality stock is one of our favourites.

Companies: Somero Enterprises

14 Jan 19

UK Housebuilding Sector in 2018

‘From the deserts of East Ham to the gardens of Cottenham’, the UK Housebuilding Sector was whacked to the tune of 27% in 2018; and not one share price (out of 18) rose on the London Stock Exchange.

Companies: BWY CRST BDEV WJG PSN RDW TW/ MCS CSP TEF BKG ABBY GLE

15 Jan 19

Top line on song for further growth

Gear4music’s recent FY2019 profit warning prompted a stark share price reaction. However, there was no let-up in sales growth. As intended, Christmas market share improved at Gear4music and top-line expectations remain intact. Moreover, gross margins should end the year making progress on FY2018. There are good reasons to be positive, which now include valuation.

Companies: Gear4music

18 Jan 19

LIBERUM: Miton Group* - Record annual netflows, markets in Q4 reduce EPS by 4%

The Q4 trading statement confirms a record year for net flows. AUM finished the year at £4,376m vs. £3,823m in 2017.

Companies: Miton Group

14 Jan 19

Opportunity knocks

We are introducing our Best Ideas for 2019 and also review the performance of last year’s picks. We suggest ten solidly financed stocks with good business dynamics that ought to be considered for core portfolio holdings and six UK domestically focused stocks that our analysts believe should perform strongly in the event that uncertainties unwind. We also introduce a new style of research from N+1 Singer which presents a Company’s dynamics and metrics in a clear and concise manner and concentrates on the pivotal issues affecting that Company and an investment decision.

Companies: BCA CLIN CLG CBP DNLM EAH FDL FCRM FUTR GTLY INS GLE NICL SDL SPR TRI

15 Jan 19

Revenue +44%, Gross margin +170bps, FY19 Guidance upgraded

The boohoo Group has announced a 44% YOY increase in revenue for the four months to 31 December 2018 and upgraded full year revenue guidance for FY19. Trading over the key Christmas period has seen growth across all divisions and regions, bucking the trend of downbeat trading results seen across the wider retail sector. Of particular note, is this top-line progress has been delivered alongside a +170 basis-point expansion in Group gross margin YOY to 54.2%, at a time when heavy discounting has seen many of its peers’ profitability decline. This impressive gross margin performance YTD reflects the strengths of boohoo’s brand led model, giving it the ability to be more aggressive in its price positioning as and when the market demands. We believe the Group’s well invested model creates significant potential for further operational leverage as it builds towards its ambitious £3bn mediumterm revenue target. The business is backed by a solid balance sheet with net cash of £189m at 31 December 2018, reflecting the strongly cash generative nature of the Group. The shares currently trade on an FY19 PE of 48.1x, falling to 41.1x in FY20. When taking into account forecast earnings growth the shares trade on 2.1x, a notable discount to ASOS and Zalando.

Companies: Boohoo.Com

17 Jan 19

Small Cap Feast

Circassia Pharma (CIR.L) - specialty pharmaceutical company focused on respiratory disease transferring from the Main Market. No funds being raised. Due 4 Feb. Greenfields Petroleum (TSX-V:GNF) production focused company with operated assets in Azerbaijan seeking AIM dual listing including $60m private placement. Mkt cap $12.6m CAD. Expected late January 2019.

Companies: ORCP IOF FOX TEG XLM TAP FST SNG ARE SRB

15 Jan 19

LIBERUM: Frontier Developements* - Record first half / encouraging holiday season sales

As expected H1'19 was a record half for Frontier, with the highly successful launch of Jurassic World Evolution, their first licensed IP release, and as importantly, good contributions from Elite Dangerous and Planet Coaster. The company has had a positive start to H2, with holiday season promotions and new content, delivering strong unit sales across all three franchises, and importantly very encouraging player engagement KPIs.

Companies: Frontier Developments

16 Jan 19

Cenkos: 1pm Plc - Moving to the next stage of growth

1pm's H1/19A results reflect the first financial year since FY15A to not consolidate a new acquisition, following the successful completion of the buy & build strategy. The group is currently focused on organic delivery, witnessed in strong, broad-based YoY performance (adj EPS (FD) +16%) and positive indicators today on group integration and cross-selling. Demand from UK SMEs for this now multi-product offer remains strong despite the current macro-economic uncertainty, with material originations growth at stable rates. We continue to view the stock's current deep undervaluation as disconnected from the earnings accretive progress made over the past three and a half years.

Companies: 1PM

21 Jan 19

LIBERUM: The 4S’s - The negative working capital model in Construction is changing

Four measures are being considered to protect the supply chains in the wake of the Carillion collapse, a year or so ago; 1) Project Bank Accounts, 2) The Prompt Payment Code; 3) Retentions Reform; and 4) Assigning non-executives for the supply chain. (Read here). This means that in most cases, Costain is an exception, working capital will become less negative, which has a negative impact on cash flows, while Construction companies grow.

Companies: AA/ BAB BBY CPI COST GFRD HSV IRV KLR KIE MER MTO MGNS PAY RPS SRP STAF

15 Jan 19

Share & share alike

It may only be a fortnight into the new year but many of the factors that unnerved the market last month have continued to impact sentiment. The outcome of trade talks between the US and China, concerns about global economic growth and some poor trading statements, especially in the retail sector, have all featured. Above all, Brexit and the progress of the Withdrawal Bill have dominated with the latest “high noon” due later. Despite this, we have seen a good rally in the junior markets year to date. In Share News & Views we comment on Bloomsbury, DeepMatter*, James Fisher and Helios*.

Companies: AOR APC BONH BMS CTG CRPR DMTR ESC EUSP FDM FA/ LSAI NKTN PCF SNX TCN W7L

16 Jan 19

Positive trading update for FY 2018E

Kape has issued a trading update which confirms a strong finish to 2018, with Adjusted EBITDA likely to be slightly above consensus at U$10.4 million – up around 25% on the prior year. Revenues were U$56.4 million, down as expected on the prior year after the sale of the Media business. The Group ended the year with cash of U$40.3 million. We adjust our FY 2018E estimates to reflect these numbers which means that our revenue estimate reduces by 8% while Adjusted EBITDA increases by 2%. For FY 2019E, we leave estimates unchanged given the momentum in the business and await further detail in the March final results announcement. The proportion of subscription revenue has increased again, as the Group continues to transition customers while customer retention has improved further. Over the year, the Group’s subscriber base increased by 219% to c. 830,000 users. In line with November’s update on Intego and ZenMate, the integration of both acquired businesses is progressing ahead of management expectations and management continues to expect the benefits of the implementation of Kape’s user acquisition capabilities to be realised in 2019. In all, this is a very encouraging update with progress on user acquisition particularly of note.

Companies: Kape Technologies

21 Jan 19

Cenkos: CloudCall Group Plc - Excellent partner testimonial

The Capital Markets Day highlighted the positive market dynamics and large addressable market CloudCall is successfully selling into. Customer testimonials point to considerable potential upside in both the US and Europe. New products and future CRM partnerships enlarge this still further. We remain Buyers.

Companies: Cloudcall Group

14 Jan 19

Cenkos: Seeing Machines Ltd - DMS goes mainstream at CES 2019

More than twenty-five companies exhibited Driver Monitoring System technology at CES2019, around four times the number at CES2018, demonstrating how the technology is increasingly seen as indispensable by the auto industry. Out of the ten Tier 1 suppliers, only three seemed ready for near term production (Aptiv, Veoneer – confirming start of production by October 2019 - and Denso), with most targeting vehicles from 2022 and beyond. Whilst Seeing Machines currently has a leading position, with the only systems deemed reliable enough for motorway speed semi-autonomous functionality, the DMS market is clearly attractive, and Seeing Machines will need to continue to invest strongly to maintain its leading position and win a sizable share of the market.

Companies: Seeing Machines

22 Jan 19

Cenkos: Empyrean Energy Plc - Indonesia Update

Yesterday, Empyrean Energy announced that an independent audit by Gaffney, Cline & Associates (GCA) has estimated 2C contingent resources of 276 billion cubic feet (Bcf) to the Mako gas field, situated in the Duyung PSC, offshore Indonesia. The operator, West Natuna Exploration Limited (WNEL), has converted the Duyung PSC to the new Indonesian Gross Split PSC allowing for greater contractor spending and operational flexibility.

Companies: Empyrean Energy

22 Jan 19

Ideagen - Low risk and high activity in risk management

Interims are in line with guidance, as ever, including a boost in activity across the group, particularly SaaS and the US. 8% organic revenue growth was complemented by 67% recurring revenue (FY18: 62%), growing cash generation, and a continuing strong track record of acquisitions. The board structure implemented for FY19 is proving its worth, in delivering continuing operational excellence in addition to strategic acquisitions as the Integrated Risk Management market consolidates. Clients won in the period – household names including GlaxoSmithKline and McLaren Mercedes – reiterate product quality. Target 180p reiterated as Ideagen continues to lead the sector by example.

Companies: Ideagen

22 Jan 19

MOD Resources - Sandfire’s bid undervalues MOD

MOD Resources has raised A$10m through an oversubscribed institutional placing at a price of A$0.30/share (17p/share), a 36% premium to the closing price on 18 January 2019. The company also intends to raise a further A$5m through a fully underwritten rights issue at A$24/share (13p/share). In addition, the company has received an unsolicited, non-binding, indicative all-share offer from Sandfire Resources (SFR:AU) at a price of A$0.38/share (21p/share). The board of MOD believes the Sandfire offer undervalues the company’s assets.

Companies: MOD Resources

22 Jan 19

Esker - FY18 revenue growth of 14% confirmed

Esker saw another strong quarter in Q418, with underlying revenue growth of 15% resulting in FY18 revenue growth of 14% (or 16% in constant currency). A strong uplift in the value of contracts signed in FY18 provides good visibility for FY19 and support for the company’s target of generating another year of double-digit revenue growth. We have revised our forecasts to reflect FY18 revenues and the company’s strategy of reinvesting any profits above the 15% target operating margin level.

Companies: Esker

22 Jan 19

Morning Note – 22 January 2019

Companies: DOTD IDEA VEL ZOO

22 Jan 19

Second share buy-back announced

Linde plc had announced a $1.0bn share buy-back in mid-December and has now announced a $6.0bn buy-back. Based on the current share price, this represents almost 7% of Linde’s current outstanding number of shares. The transaction will start on 1 May 2019 (or earlier if the previous share buy-back has been finalised before this date) and last until 1 February 2021. Management has decided to pass a large chunk of the proceeds received from forced disposals to shareholders.

Companies: Linde

22 Jan 19

Velocity Composites - Full-year results

After a difficult year, FY 2018 results were slightly better than reduced expectations, still achieving sales growth of 15% in the year. H2 performance was a marked improvement on H1. Operational progress has continued, with contracted business now £67m, albeit new wins are at a slower rate than anticipated at IPO. Forecasts remain under review, with an outlook pointing to a similar level of revenue and gross margin as 2018.

Companies: Velocity Composites

22 Jan 19

FY18 profitability in line with expectations, net debt ahead

Strix has confirmed that it expects to report FY18 results in line with market expectations. ZC forecast constant currency revenue of £96.1m, adj operating profit of £30.8m and PBT of £29.1m, in line with consensus expectations. The global kettle market continued to grow strongly at an estimated 7%. Strix states it has maintained its market share by volume at c.38%, indicating that it has also seen good underlying growth. Albeit, the mix of growth has shifted towards less regulated markets and the US and away from China. We view this positively in terms of margin outlook and potential to increase global market share. The only change to numbers today relates to lower net debt, ZC reduces its FY18 forecast from £30.8m to £28.0m, as stated in the trading update. This flows through into FY19 and FY20 estimates, however, forecasts currently assume no impact from the investment into the new factory. The shares trade on 9.6x FY19e earnings and yield 5.3% on the 7.7p dividend committed to by management.

Companies: Strix Group

22 Jan 19

Trading update

GYG has released a trading update this morning, confirming that trading in the last two months of the year, since the trading update released on the 31st October, has improved slightly. The group now expects revenue to be marginally ahead of current market expectations with an adj. EBITDA loss of no more the €0.95m (vs our forecast of a €1.2m loss). The order book now stands at €33.9m (up 61% v the same point in the previous year). We update 2018E forecasts to reflect this new guidance but leave our assumptions for 2019E and 2020E unchanged for now.

Companies: GYG

22 Jan 19

Progress made

Accrol has delivered H1 results that shows good progress since the turnaround programme commenced in February 2018. The financial results also show good progress vs. H2 2018. We are maintaining our forecasts following revised 2019E guidance on 8 January, given the dramatic transformation undertaken in 2018 which has now been executed, we anticipate the benefits of such actions to be seen during the months ahead.

Companies: Accrol Group

22 Jan 19

Now 15p/share ex-dividend

Bowleven’s shares are ex- a special dividend of 15p/share, which will cost almost £50 million in total. It will be paid on 8 February from the US$80 million of cash and financial instruments held by the Company at the end of November 2018. This is more than Bowleven requires to progress the Etinde project in Cameroon to a Final Investment Decision (FID), when it will be entitled to receive US$25 million from its partners. To reflect the return of capital, we are reducing our NAV and price target from 47p/share to 32p/share.

Companies: BowLeven

22 Jan 19

All business areas performing well

Instem’s trading update for the twelve months ending December 2018 confirms that all three key business areas (Data Collection, Regulatory Solutions and Informatics) are performing well, with underlying group EBITDA in line with management’s expectations. Momentum in SEND Services remains strong, with order value +500% YoY. Management commentary on the outlook is positive, and we make no changes to earnings estimates following the announcement.

Companies: Instem

22 Jan 19

2018 rock solid – 2019 off to a good start

FDM’s trading update provides reassurance around the 2018 outcome (which appears to be ahead of our expectations in terms of revenue and Mountie numbers) and in terms of the outlook for 2019 and beyond. The announcement describes “record levels of client engagement and demand” and presents a strong and upbeat message. We take comfort from both the metrics and the upbeat tone – we make no changes to forecasts, but strongly reiterate our Buy recommendation and 1050p Target Price.

Companies: FDM Group

22 Jan 19

Hit to FY19E revenue but outlook solid

ZOO Digital (“ZOO”) has announced a likely shortfall in revenues for the year to March 2019. The group has seen a double whammy – a steep decline in legacy (but high margin) “packaging” work on DVD/Blu-ray, and the cancellation of one unusually large order from one of its major customers. We make material reductions to 2019E EBITDA, but leave 2020E unchanged as the medium-term outlook remains bright.

Companies: Zoo Digital Group

22 Jan 19

Christmas Cracker!

With a geographically well diversified portfolio, strong customer relationships, manufacturing and sourcing expertise and successful integration of acquisitions, Design Group has delivered 9% like-forlike sales growth for the nine months to 31st December 2018. It is on track to meet current market expectations and deliver greater than 20% fully diluted EPS growth for the full year.

Companies: IG Design Group