Most popular equity research this week | 29 Jan - 2 Feb

Sopheon (SPE)

Significantly ahead of expectations | Progressive Equity, 29 Jan 

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"In today’s more detailed trading update, Sopheon has confirmed its brief statement in early January that revenue and profit for FY 2017E will exceed market expectations. As well as providing an anticipated revenue figure above U$28 million, it states that both EBITDA and pretax profits will be ‘significantly ahead of current market expectations.’ Today’s update notes that volume of transactions increased with a greater number of license deals and new SaaS customers – and Q4 contained two substantial deals. Sopheon ended 2017 with net cash of U$9.5 million..."

Seeing Machines (SEE)

Management change | finnCap, 29 Jan 

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"Mike McAuliffe is leaving as CEO; this is obviously disappointing so soon after the group raised £35m to deliver on a huge and exciting opportunity. We understand Mike’s departure has nothing to do with the operation, or prospects for the future. We know that the second tier of management in this business is particularly strong and will continue to follow the strategy and deliver on the milestones as expected. Overseeing them, the Executive Chairman, Ken Kroeger, remains popular and well supported. He has carried the business forward since its early days in the mining industry and will continue to lead that strong second tier of executive which runs the individual Fleet, Automotive, Rail and Aviation divisions. We see little change and reiterate forecasts and expectations."

W.H. Ireland Group (WHI)

Overcoming distractions | Equity Development, 29 Jan 

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"The true performance of WHIreland (“WHI”) is obscured by a raft of exceptional costs, some of which have been quantified and some of which, particularly double-running costs during the changeover of their back office systems, are just included under “administrative expenses”. So we consider the £0.4m operating profit before exceptionals to be very conservative."

The Monthly - UK Infrastructure Report

by Hardman & Co, 1 Feb 

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1pm | Abzena | Advanced Oncotherapy | Allergy Therapeutics | Alliance Pharma | Arbuthnot Banking | Avacta Group | Burford Capital | Chamberlin | City Of London Investment | Collagen Solutions | Diurnal | Evgen Pharma | Gateley | Genedrive | Inland Homes | Morses Club | Murgitroyd | Non-Standard Finance | Obtala | Oxford Biomedica | PPHE | Premaitha Health | Primary Health Properties | REA | Redx Pharma | Scancell | Surface Transforms | 600 Group | Tissue Regenix | Titon | ValiRx

 

"In the February 2018 edition of the Hardman Monthly Newsletter, Nigel Hawkins addresses the issue of the UK's infrastructure expenditure, much of which is energy-related. Government figures show that there are some 600 projects/programmes, each of which exceeds £50m - the total amount is over £420bn. Much of this projected expenditure is energy-related, covering large power station projects, such as Hinkley Point C, to more standard networks investment. Railways present probably the greatest challenge given the size of the backlog, Network Rail's poor record and straitened finances, notwithstanding the impact of HS2. Telecoms investment is dominated by broadband, which is proving very challenging for BT, whose finances are not strong

The controversial PFI is under real strain, following Carillion's liquidation and a deep profit-warning and fund-raising from Capita."

Low & Bonar (LWB)

Significant change | N+1 Singer, 31 Jan

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"Not for the first time Low & Bonar is subject to significant change. The Civil Engineering division is being reorganised, a cost reduction programme is underway, a defined plan to reduce debt by £15m is also underway and Philip de Klerk has been promoted from FD to Chief Executive. We now expect a flat year in FY18, having previously expected good growth. We see the management change as positive and if the debt can be successfully managed down, we continue to see value within the Group. However, confidence rebuilding is clearly required and we await further detail at the analyst presentation and then later in the year."

Sumo Group (SUMO)

Quality earnings in a high growth sector | Zeus Capital, 1 Feb

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"Sumo Digital is a market leading, independent global video games co-developer, who has deep long-term relationships with the world’s largest publishers that enables them to provide full turnkey solutions for AAA games. The core business has stable, long-term revenues based on a premium games development service, a formidable track record of delivery and high utilisation rates. The business currently trades on an EV/EBITDA of 15.1x and P/E of 22.3x to December 2018, an attractive discount of c.41- 45% to the average of the UK peers..."

Keywords Studios (KWS)

Marching on | Edison, 1 Feb

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"FY17 was a transformational year for Keywords, both operationally and financially. Acquisitions have bolstered the company’s capability set and geographical reach, while driving strong double-digit earnings growth. Organic growth remains strong and we see potential for market share gains to accelerate, driven by a strengthened platform for cross-selling. It is not unreasonable to expect a similar scenario into FY18/19. Execution of this should drive further share price upside, despite the premium rating."

Scientific Digital Imaging (SDI)

QSI acquisition and upgrades | finnCap, 2 Feb

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"SDI is acquiring Quantum Scientific Imaging (QSI), a manufacturer and supplier of high-performance cameras that have applications in the astronomy and life sciences fields. Considered a bolt-on acquisition, it will be incorporated into SDI’s Atik Cameras business. SDI is paying £246k ($350k) for the assets, trademarks and patents of QSI, representing prospective EV/Sales of 0.7x. The acquisition is being funded by SDI’s recently enlarged banking facility..."

The Monthly - ONS highlights importance of retail investors

by Hardman & Co, 9 Jan 

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1pm | Abzena | Advanced Oncotherapy | Allergy Therapeutics | Alliance Pharma | Arbuthnot Banking | Avacta Group | Burford Capital | Chamberlin | City Of London Investment | Collagen Solutions | Diurnal | Evgen Pharma | Gateley | Genedrive | Inland Homes | Morses Club | Murgitroyd | Non-Standard Finance | Obtala | Oxford Biomedica | PPHE | Premaitha Health | Primary Health Properties | REA | Redx Pharma | Scancell | Surface Transforms | 600 Group | Tissue Regenix | Titon | ValiRx

 

"The latest Office for National Statistics (ONS) survey, ‘Ownership of UK quoted shares: 2016’, shows that retail investors are more important than most company managements realise or most capital markets professionals admit. When it is also appreciated that the data shows that retail investors set the share price for most quoted companies, most days, it becomes clear that engaging with such an audience enhances a company’s standing, whilst ignoring them courts disaster."

Yu (YU/)

Strong business growth continues | N+1 Singer, 29 Jan

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"A strong year-end trading update from this “Best Idea 2018” stock highlights continued rapid revenue growth well ahead of consensus. While we expect substantial increases to revenue estimates, the pace of investment in the business will mean more prudent increases to earnings expectations..."