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30 Jun 20

D4T4 Solutions - A transitional period sets up secure growth in FY 2022

The FY 2020 results are in line with our expectations and reflect the impact of the previously announced switch from large perpetual licences to recurring annual term licences during the year. Despite the COVID strictures, with its large global partnerships, D4t4 continues to close numerous lucrative data gathering and data management contracts with major blue-chips around the world. It is successfully converting a high proportion of its new sales to recurring revenue contracts, but this will sacrifice growth and earnings in FY 2020 and FY 2021. Nevertheless, with growing recurring revenue base, an exciting pipeline and a very strong balance sheet, D4t4 is very well positioned for continued long-term growth and security.

Companies: D4T4 Solutions

01 Jul 20

THE MONTHLY July 2020

A number of REITs have the ability to thrive in current market conditions and thereafter. Not only do they hold assets that will remain in strong demand, but they have focus and transparency. The leases and underlying rents are structured in a manner to provide long visibility, growth and security. Hardman & Co defined an investment universe of REITs that we considered provided security and “safer harbours”. We introduced this universe with our report published in March 2019: “Secure income” REITs – Safe Harbour Available. Here, we take forward the investment case and story. We point to six REITs, in particular, where we believe the risk/reward is the most attractive.

Companies: AGY ARBB ARIX BUR CMH CLIG DNL HAYD NSF PCA PIN PXC PHP RE/ RECI SCE SHED VTA

29 Jun 20

Cenkos: Equals Group Plc -- An eventful and improving Q2/20 hinted

Equals' FY19A results confirm another year of strong, double-digit revenue and adj EBITDA growth. The move to a B2B focused offering continues to progress and looks well timed in view of Covid-19's impact on overseas travel. While the pandemic impacted Q2/20E trading early on, we note June KPI's indicate a positive rebound. Given the continued uncertainty as to Covid's full impact upon FY20E trading, we refrain from reissuing forecasts and thus leave our recommendation under review.

Companies: Equals Group

29 Jun 20

CMD – Positive new insights

CentralNic's CMD gave us new positive insights into the company's investment case. CentralNic's organic growth is stronger than we thought, the Direct division generates high ROI, the monetisation market was shown to be critical to the domain name market, Team Internet's market leadership was further reinforced and acquisition opportunities were shown to be larger than anticipated. These investment views are not reflected in CentralNic's low valuation multiples, in our view.

Companies: Centralnic Group

30 Jun 20

Full-year results

Full-year results were at a record level and slightly ahead of expectations by £0.2m at the adjusted PBT level, or 2.8% better at the EPS level. Cash generation was also stronger than expected, resulting in net cash of £3.2m. The dividend was maintained – a sign of confidence. Good strategic progress was made, helped by the integration synergies of Pacer and new product development programmes. Our forecast and price target remain under review given COVID-19-related uncertainties.

Companies: Solid State

03 Jul 20

Manolete Partners

Accelerating activity in to FY21

Companies: Manolete Partners

02 Jul 20

GB Group - Managing cash now to support long-term strategy

GB Group reported strong performance in FY20 and started taking measures to preserve cash in Q420. Trading in Q121 has been mixed and while management is unwilling to provide guidance for FY21, it has confidence that in the longer term it is well positioned to benefit from the acceleration in digital transformation that should drive demand for its identity data intelligence services. We have upgraded our EPS forecasts by 5% in FY21 and 3% in FY22.

Companies: GB Group

03 Jul 20

Avon Rubber - Cream rises to the top

The announcement that Avon Rubber is to sell milkrite | InterPuls, its dairy division, to DeLaval Holding for £180m gross proceeds is strategically logical and financially compelling. The fit of dairy and defence has always looked slightly anomalous and the terms of the deal show that the opportunity to augment dairy through value-accretive deals is difficult given the scale of the business and opportunities. Management must now recycle the cash balances that will be created into Avon Protection, where there are a greater number of potential investments.

Companies: Avon Rubber

02 Jul 20

Strategically important acquisition in Germany

Gamma is acquiring around 80% of HFO Holding AG (HFO), one of the leading SIP Trunk providers in Germany, for an initial consideration of €20.4m in cash with an option to purchase the remaining shares over the next three years. In line with its stated strategy, Gamma can invest and use its commercial strength and expertise to accelerate HFO’s growth and replicate the Group’s success in the UK by developing a market leading position in Germany. Noting net debt of €2.9m when the deal closed, the implied historical EV/EBITDA multiple of about 10x compares with Gamma’s equivalent of 18.7x. We estimate that the deal will be 4% earnings enhancing in the first full year of ownership and our estimate upgrades reflect that. The European markets for cloud telephony in which Gamma is now represented will ultimately overtake the UK in size, providing Gamma with significant future growth potential. We view this acquisition as another significant step in Gamma’s strategic aim to expand into Europe via exposure to another lucrative market opportunity.

Companies: Gamma Communications

03 Jul 20

CentralNic Group - A platform business, looking to scale

CentralNic’s capital markets day (CMD) on 24 June 2020 introduced the divisional management team and provided insight on each of the three key segments as they will report in FY20: Indirect (Wholesale, Registry); Monetisation (Team Internet); and Direct (Retail, Corporate). We have picked out what we believe are the four key themes from the CMD: FY20 performance, COVID-19 and seasonality; organic growth; M&A; and, pulling it all together, the benefit of scale. CentralNic continues to trade on an FY20 EV/EBITDA of 9.1x and a P/E of 15.8x, a material discount to its peer group, with our DCF indicating further share price upside. M&A could bring CentralNic’s multiples down further.

Companies: Centralnic Group

02 Jul 20

£55m placing as brick demand bounces back

Brick and concrete products manufacturer Forterra has raised c. £55m gross in an equity placing in order to maintain its strong balance sheet and support the Group's continued investment programme. It was accompanied by, in our view, a reassuring trading statement which we believe is backed by yesterday’s brick industry data and comments from housebuilders, which suggest that demand has been recovering from its lockdown lows, before the PM’s promises to “build, build, build” housing and infrastructure.

Companies: Forterra

03 Jul 20

FY20A Results

Whilst Arena delivered FY20E results in line with our expectations, this has inevitably been overshadowed by the challenges posed by COVID-19 to the industry. Arena acted swiftly to cut costs and preserve cash, such that it currently has a c£23.5m cash balance. This is enough to see the company through into 2021, even if the global event market remains heavily disrupted for the rest of the year.

Companies: Arena Events

29 Jun 20

Significant capital injection supports next growth phase

Successful K3 Capital placing to raise £30.45m (gross) at 150p to fund the £9.3m acquisition of Randd UK Ltd, an R&D tax credit specialist with an LTM EBITDA of c.£2.0m, with a margin of c.50% and revenues typically contracted for 5 tax years with many recurring thereafter, followed by future potential deals in SME exposed markets. K3 has established itself as an innovative company that is able to effectively gather, generate and mine large quantities of data in order to scale up M&A services to SMEs. Transferring these lead generation capabilities to adjacent SME markets can allow rapid growth from proven models, at scale.

Companies: K3 Capital Group

29 Jun 20

Cenkos:One Media iP Group Plc -- Striking a Chord

One Media's strong H1/20A financial performance is testament to the resilience of its business model and the market in which it operates. The Group generated material top line growth (+28%), driven through both organic channels (+9%) and acquisitions (+19%), whilst improving its margin profile. This financial strength culminated in the recommencement of its cash dividend policy. One Media trades at a discount relative to its peer group, our fair value per share scenario analysis and DCF valuation. We reiterate our Buy recommendation.

Companies: One Media Ip Group

29 Jun 20

Allenby Capital TMT Update - 29.06.20 - BIRD.L, MIRA.L, TERN.L, CKT.L

Blackbird plc* (BIRD.L, 19.25p/£64.7m) | Mirada plc* (MIRA.L, 92.5p/£8.2m) | Tern plc* (TERN.L, 10.75p/£29.0m) | Checkit plc (CKT.L, 39.5p/£24.5m)

Companies: BIRD MIRA MIRA TERN CKT

03 Jul 20

Can a Diagnostics-less Roche be a reality?

With CHF13bn ($14bn) annual sales, Roche is a dominant force in the global diagnostics market. Interestingly, in recent years, most diagnostics majors have witnessed material re-ratings – also a function of increased M&A euphoria. Now, in the backdrop of COVID-19, Roche has also emerged as a prominent player on the testing front. With big pharmas moving away from (low-growth) non-pharma offerings, is it time for Roche to consider unlocking value from Diagnostics?

Companies: Roche Holding

03 Jul 20

Electric vehicle sales to accelerate following coronavirus pandemic

03 Jul 20

Evolva - Nootkatone green light nears

A 15-day public review period for nootkatone has started in the US. All studies submitted to the US Environment Protection Agency (EPA) have been accepted and the review period allows the general public to share their comments with the agency. We believe the public notice period is largely a formality and expect the EPA to complete the registration of nootkatone shortly thereafter. Nootkatone use will then be allowed in pest control. Following the delay to the approval process announced in March 2019, this comes as good news for the financial trajectory of the business.

Companies: Evolva Holding

03 Jul 20

Catenae Innovation completes development of Onsite ID and reveals new Afrik-ID initiative

03 Jul 20

Telix Pharmaceuticals - Major developments coming up

We expect 2020 to be a major turning point for Telix Pharmaceuticals. The regulatory submissions for illumet will determine whether the company will start commercial operations in 2021. The clinical groundwork for TLX-250-CDx is being laid in the ongoing pivotal Phase III ZIRCON study, which recently restarted in Europe and is expected to be fully enrolled by the end of 2020. Finally, the company has guided towards starting new clinical studies for TLX591 and TLX250 in late 2020, contingent on FDA feedback and financing. This report provides our clinical and commercial outlook.

Companies: Telix Pharmaceutical

03 Jul 20

SP Angel . Morning View

Power Metals Resources* (POW LN) – Test-pit results from Kisinka | Rio Tinto (RIO LN) – Oyu Tolgoi project update | Tertiary Minerals* (TYM LN) – Issue of shares to Precious Metal Capital Group

Companies: POW RIO TYM

03 Jul 20

Market Report: FTSE 100 lower as Super Saturday approaches

03 Jul 20

Oil & Gas Daily Flow

Mosman Oil & Gas* (MSMN LN): Extension agreed for sale of the Welch Project

Companies: Mosman Oil And Gas

03 Jul 20

Royal Road Minerals busy drilling in Nicaragua and Colombia with results due 'imminently'

03 Jul 20

Avon Rubber - Cream rises to the top

Companies: Avon Rubber

03 Jul 20

Norcros - Adapting to changing markets

The Norcros operating companies largely performed relatively well in challenging market conditions (in both the UK and South Africa) in FY20 though year end trading was affected by COVID-19 lockdowns, as flagged previously. The group’s financial position appears robust following management actions (including foregoing an FY20 final dividend) and well-placed to both contend with weaker near-term markets and the pursuit of market share gains from a position of relative competitive strength. Our estimates remain suspended at this time.

Companies: Norcros

03 Jul 20

Ariana Resources' Kerim Sener says investors should be feeling 'very bullish' following Özaltin deal

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03 Jul 20

Salt Lake Potash welcomes key new strategic investor as part of A$15mln funding

03 Jul 20

CentralNic Group - A platform business, looking to scale

Companies: Centralnic Group

03 Jul 20

ZOOM for Pharma

Cambridge Cognition ("COG") has provided a trading update for the 6 months to 30 June and presented its growth strategy at an excellent Capital Markets Day. The Group continues to build on an impressive H1 2020, announcing additional contract wins that take the order intake to £4.9m (+88% vs H1 2019). COG is currently 'seeing unprecedented demand' for its solutions which enable pharmaceutical companies to continue clinical trials even while participants are unable to physically visit clinical trial sites.

Companies: Cambridge Cognition