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AIM 2017 - a year to remember

by Stockdale, 17 Jan 

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Abbey | Barratt Developments | Bellway | Berkeley Group | Bovis Homes Group | Cairn Homes | Countryside Properties | Crest Nicholson | MJ Gleeson | Inland Homes | Mccarthy & Stone | Persimmon | Redrow | Springfield Properties | Taylor Wimpey | Telford Homes | Watkin Jones


"In July 2017, we highlighted the progress that AIM made in the first half of the year. We are now reviewing the performance over H2 2017. The latest AIM Statistics published yesterday show that there are currently 960 companies, with 80 new issues in 2017, raising £1.58bn and secondary issues raising a further £4.7bn. However, with 102 companies cancelling their listing there was a net 22 fall in 2017 as a whole. It appears that both the trends of new issue momentum and de-listings are set to continue in 2018. In Share News & Views, we comment on APC Technology*, ECSC Group* and IG Design."


Taptica International (TAP)

Debt reduction | finnCap, 17 Jan 

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"Taptica has taken advantage of investor demand following the recent positive trading update to raise $30m in an oversubscribed placing in order to reduce its debt. It has issued 4.85m new shares at 450p; approximately 7.7% dilution excluding dormant shares. Furthermore, CEO Hagai Tal has sold 1.65m shares (a further $10m) to pay a CGT liability due on the reorganisation of his holding in 2016. Founder Ehud Levy has also taken the opportunity of strong institutional demand to reduce his exposure to the business through the sale of 2.0m shares. Although there will be some dilution, the placing will strengthen the balance sheet and better position the Taptica for prospective M&A opportunities."


Cloudcall Group (CALL)

Initiation of coverage | Arden Partners, 18 Jan 

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"Arden Partners is soon to initiate full coverage of Cloudcall. We report on the Trading Update RNS released this morning, with full forecasts and initiation report to follow. Cloudcall reported a trading update for the year ending 31 December 2017, confirming the company’s continued execution to plan with revenues and profits in line with market expectations.  Revenue growth and gross margins were sustained, whilst investment into sales, marketing and development capabilities continued, making use of the £5.7m placing in October 2017."


Carclo (CAR)

Trading significantly behind; FD, chairman to leave | N+1 Singer, 15 Jan 

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"After the Interims in November, we said that forecast risk was higher due to the c37:63 H1: H2 PBT weighting, but that management was confident of achieving this. Unfortunately, this has not proved possible and results for FY18 are now anticipated to be significantly below previous expectations. Forecast downgrades are 27% off PBT in both FY18 and FY19. Forecast net debt of £32.9m is 2.1x EBITDA and well within covenant levels (2.75x). The FD and the Chairman are to leave and Mark Rollins, highly regarded by us from his time at Senior, becomes Chairman. There are good businesses within the Group, but there is a long road of confidence rebuilding ahead. We reduce our target price to 91p (P/E of 10x FY18) and move to Hold."


Hurricane Energy (HUR)

A fair wind | Arden Partners, 17 Jan 

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"Hurricane has made a series of large discoveries West of Shetland in fractured basement reservoir. The company is currently implementing the Lancaster EPS development, which is to produce at 17mbbl/d for up to 10 years. This will provide cash flow, and important production data to help demonstrate the commerciality of the over 2.5bn boe of resources that the company has discovered. Over the next 12 months, we expect periodic development updates, culminating in first oil in H1 2019. We have a Buy recommendation and 70p target."


Ricardo (RCDO)

Impressive H1 orders. Improved FCF. Upside risks abound | Liberum, 17 Jan 

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"Organic H1 order intake has increased >25% and >30% on a reported basis. This was generated from a broad range of sectors. Orders relating to electric or hybrid vehicles have been particularly encouraging at around 24% of intake, compared to 17% last year. Furthermore, strong working

capital performance drove net debt down to £32m even after paying for the CPC acquisition. FY estimates have headroom to improve and there are some exciting opportunities within Performance Products. McLaren is a useful reference. The shares currently trade on a CY18 P/E of 15.6x and EV/EBIT of 12.6x. Momentum is building. H1 results will be released on 28 February."


Crossrider (CROS)

A strong H2 in line with expectations | Progressive, 16 Jan 

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"Crossrider’s trading update for the year to the end of December 2017 includes revenue and Adjusted EBITDA expectations in line with our estimates. In particular, CyberGhost has continued to perform strongly. The increased level of deferred income reflects Crossrider’s ongoing transition towards a SaaS model - and its repositioning as a consumer security software business. Despite making further acquisition payments of U$7.7 million during the year, the Group ended 2017 with cash of U$69.4 million – the strategy includes making further acquisitions. Growth in Adjusted EBITDA of over 150% from core activities (excluding the discontinued Web Apps and License business) reflects good organic growth across an increasingly geographically-diverse customer base for Crossrider’s core software solutions. We reflect the updates on revenue and the cash position in our FY 2017E estimates and adjust amortisation upwards noting further acquisition costs in H2. The Board says that it is confident of delivering growth in 2018 in line with market expectations."


Air Partner (AIR)

Strong H2 trading, 2018E forecasts raised 7% | Liberum, 18 Jan 

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"Strong trading in the second half has seen management guide to FY underlying PBT of not less than £6.4m for the year to January 2018E (c.25% YoY growth). This is 7% ahead of our previously published forecast and we raise our estimates accordingly. In Broking, there has been notably strong trading in the US and Freight. At this early stage, we consider it prudent to leave forecasts for later years unchanged. We raise our DCFbased target price to 150p from 140p. However, after a 49% share price rise over the past year and on a 2018E P/E of 17x, there is insufficient upside potential to support a positive stance short term. We downgrade our recommendation to HOLD from Buy."


Carpetright (CPR)

Post-Xmas slump hits profits, but capacity likely to exit market | N+1 Singer, 19 Jan 

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"Despite a positive start to Q3, and a raft of self-help and growth initiatives, footfall and LFL sales have slumped since Xmas i.e. the important winter trading period. Compared to single-digit positive LFL growth, sales in core Flooring categories have since dipped to -7.1% in the last 3-4 weeks. While some of this might be weather related, the working assumption is the trend could persist through the remainder of the half. Given the impact of operational gearing, guidance is £2-6m FY18 PBT, a £10m downgrade at the mid-point of the range. Cashflow is also likely to be impacted given the w/c dynamics, although our initial assessment indicates there remains material headroom against the RCF; it also has c£60m freehold property backing. The only positive to be taken from today’s warning is that competition will also be struggling, especially loss-making new entrants. Capacity withdrawal could help CPR recapture lost sales and margin, and the subsequent swing back to the P&L could match the level of downgrades."


AA (AA/)

Growth in insurance should drive gradual de-leveraging | Liberum, 19 Jan 

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"Cold weather in December could adversely impact FY 2018 EBITDA by c. 1%. We expect that Green Flag is winning share against the RAC more than The AA, but weaker new car sales are negative for The AA’s B2B business. No management guidance for 2019 but additional patrols should be self-funding. We continue to expect net capex to increase in FY 2019, but make no change to our estimates. We expect no rights issue to pay down debt. The better route to de-leveraging is to grow EBITDA. We retain our target price of 250p."

The information contained within this post is based on personal experience and opinion and should not be considered as a recommendation to trade nor financial advice.