Most popular equity research this week | 23 - 27 Apr

"Here are my slides from the talk I gave at the brilliant Mello 2018 Investor Show. The main theme of the talk was what is wrong with the current landscape, and how it is shifting three months into MiFID II. To demonstrate what is broken I analyse events around the IQE short attacks in early February. It is a perfect example of the huge information asymmetry between private investors and institutions, and one obvious solution to help close that gap..."

"boohoo.com has announced results for the year ended February 2018, with Group performance coming in ahead of ZC estimates. Revenue of £579.8m is up 97% YoY (92% CER) and 3.4% ahead of estimates with growth across all geographies and contribution from new brands PrettyLittleThing and Nasty Gal. Gross margin is down 180bps as a result of increased promotional activity that has helped to deliver top line growth..."

"Focusrite has delivered an outstanding first half with substantial growth on all metrics, across all territories and in both product brand groups. Constant currency revenue growth of 26% is double that of FY17 although, after an unprecedented pre-Christmas period, it is possible that the shape of trading may be becoming more seasonal. The company has net cash of c £20m, and the share price appears to discount a return on that..."

"A more detailed post YE update reveals FY March 2018 earnings were ahead of forecast; higher margins more than compensated lower than expected revenue as the software model transitions from perpetual licences to recurring SaaS business and reflecting the popularity of D4T4’s hybrid analytics cloud solutions. We ease revenue forecasts but lift our FY 2018 FD adj. EPS forecast slightly..."

"Interim results from The Character Group (CCT.L), the UK’s leading independent toy company, reflect a good performance against a tough retail backdrop that has seen its larger rivals (including Hasbro, Mattel and Lego) suffer. This reflects the success of Character’s strategy of offering price-competitive products that are not aligned to any particular film franchise coupled with a number of ‘ever-green’ brands (including Peppa Pig, Little Live Pets, Scooby Doo and Stretch Armstrong)..."

"Proactis has reported interims in line with the February trading update, confirmed as EBITDA of £8.4m from revenue of £26m. The challenges we anticipated following the acquisition are on track, and we expect progress with synergies in FY18 (July year end) and revenue growth in FY19: synergies are on track for delivery of the net £3m in the year’s income statement from a year-end run rate of £5m; and catalysts for growth into FY19 remain strong..."

"In our initiation report on UK Gambling on 11 December 2017, we referenced likely volatility in share prices as a result of the uncertainty surrounding B2 staking levels. UK media, citing the Chancellor is in favour of a £2 stake on B2 (FOBT) machines, and that the Treasury is close to a deal with the Department of Culture, Media and Sport (DCMS) and is seeking tax neutrality. This likely implies increasing online betting duties (POC tax) to c. 18% on GGR from 15% in order to mitigate the tax losses on FOBTs (table2, p3). Though we believe any changes to online gaming taxes is subject to a separate consultation and did not form part of the current Triennial Review on FOBTs..."

"U+I has a substantial pipeline of regeneration projects which could generate significant development profits. We see ~50% upside to NAV from developments, of which the majority will be returned to shareholders..."

"The SNAI deal improves PTECs regulated profile where we estimate that over 70% of EBITDA will come from regulated markets by the end of FY19e. The deal is expected to complete in two steps by the end of 2018. We expect to see the enlarged group generate revenue of c. €1.9bn and EBITDA of c. €516m in FY19e..."

"A trading update for the year to 30 April 2018 points to better-than-expected revenue growth as well as the benefits of a reduced tax charge, reflecting increased R&D tax credits for FY 2018 and a re-assessment of FY 2017 claims. We now expect Scientific Digital Imaging to report revenues of £14.1m, an increase of 31%, c.11% of which arises from a full year’s contribution from the Astles acquisition..."