See what was trending this week...
Companies: 7DIG, AA/, EPWN, GYS, IDOX, LOOK, MER, PHD, SEE, VEC
Care estimates unchanged, Social Housing reduced | Liberum, 17 Aug
Gold Access
"H1 17 FD EPS 2% ahead of expectations. FY 2017 FD EPS reduced 9% to 30.6p due to Social Housing. The Grenfell Fire tragedy has caused significant short-term disruption at Social Housing."
Seeing Machines (SEE)
FY 2017 in line; Fleet and Automotive progress | finnCap, 17 Aug
Gold Access
"The recent trading update saw the group expect to meet its revenue forecasts in FY 2017, driven by the Fleet roll-out and growth in distributors. The OEM Automotive business continues to make steady progress; it is launching a production car model and is now collaborating with another Tier-1 supplier (Autoliv) but continuing to invest heavily. Assisted by government grants, the group ended FY 2017 with A$22m cash. We adjust our revenue forecasts as we gain a greater understanding of these new markets. At the same time, management is suggesting that it could significantly increase the scale of the OEM prospects should it receive additional funding and is investigating strategic investment opportunities. We examine what the financials and opportunities might look like in that scenario."
Jackpotjoy (JPJ)
A third set of reassuring quarterly figures | Edison, 15 Aug
Free Access
"Jackpotjoy plc (JPJ) has produced another set of robust quarterly earnings, with Q217 revenues increasing 17% to £75.2m and a 39.9% EBITDA margin. The core Jackpotjoy division grew 18% and is gaining market share. Q3 has started well, management has reiterated its expectations for FY17 and our forecasts remain unchanged. The stock trades at a significant discount to peers, with 2018e multiples of 7.2x EV/EBITDA, 6.1x P/E and 15.0% free cash-flow yield. The balance sheet is simplifying following a major earn-out payment and, as the company continues to demonstrate its market dominance, we would expect a re-rating in the shares."
Proactis (PHD)
Perfect Commerce makes perfect sense | N+1 Singer, 14 Aug
Gold Access
"We have upgraded our forecasts following the completion of the acquisition of Perfect Commerce for up to $132.5m. This transformational deal positions the enlarged PROACTIS group as the sixth largest pure-play provider of E-purchasing solutions globally, as well as one of the fastest growing and most profitable. The commercial and operational synergies arising from this combination are considerable and warrant the acquisition multiples paid (max. 3.4x est. FY 2018 revenue and 19.0x est. EBITDA). Our FY 2018 group revenue, EBITDA and EPS estimates increase by 105%, 119%, and 18% respectively. We raise our target price from 201p to 226p and reiterate our Buy recommendation."
7Digital Group (7DIG)
A good start to the year | Edison, 16 Aug
Free Access
"7digital’s recent trading update confirmed good progress. H117 revenues increased 13%, with a strong performance from high-margin licence and creative sales. Momentum in monthly recurring revenues and new contract wins, as well as the full impact of the 24-7 acquisition, put the group on track for an even stronger second half and add to our confidence in the deliverability of targeted EBITDA profitability in 2018. Given the progress being made, the 3.0x FY18 EBITDA rating looks extremely attractive."
AA (AA/)
The anatomy of a balance sheet | Liberum, 14 Aug
Gold Access
"The shares have reacted very negatively to a downgrade and removal of Executive Chairman for ‘gross misconduct’. The engine may be misfiring but it is not a write-off."
IDOX (IDOX)
Significantly upscaling the elections business | Progressive Equity Research, 17 Aug
Free Access
"Idox has announced the £5.0m acquisition of Halarose Holdings Ltd (“Halarose”), a supplier of Electoral back office Management Software and Services (“EMSS”) to UK local government. We believe the deal has solid strategic logic, transforming Idox into the second largest EMSS supplier in the UK, and offers strong synergy potential. We make modest increases to FY18E estimates (adj. EPS +3.1%) following the announcement."
Vectura Group (VEC)
Inspiring... | Panmure Gordon & Co, 15 Aug
Gold Access
"Vectura has a strong and growing revenue stream that generates sufficient cash flow to support a broad development pipeline founded on an extensive base of IP. In our view, share price significantly undervalues the company, currently attributing value to only the marketed products and cash – with the whole of the very extensive development portfolio, both partnered and in house, as upside. We believe the recent weakness in the shares, which have not recovered from the delay in VR315 approval, offers a very attractive entry point for investors. We initiate coverage with a BUY and a 150p target price."
Epwin Group (EPWN)
Cost inflation remains an issue | Zeus Capital, 16 Aug
Gold Access
"The interim update indicates that, despite H117 being broadly in line with expectations, market conditions remain difficult. Cost inflation continues to be a significant issue and, with market volumes broadly flat, the benefit of price rises has been eroded. This leads us to downgrade estimates across the forecast period. This results in a 7.8% cut to PBT in FY17 followed by 9.3% in FY18. Importantly, today’s statement indicates that the dividend remains unaffected with the shares yielding 7.1% with good earnings and cash cover. The balance sheet remains un-stretched, even after the impact of today’s cut to numbers Net Debt/EBITDA remains low at 0.6x. The shares had already started to discount weaker trading conditions and the recent customer issues, declining from 125p in May to last nights close of 94p. On new forecasts Epwin trades on just 7.2x FY17 earnings.."
Lookers (LOOK)
Well positioned to deliver on strategic growth | N+1 Singer, 17 Aug
Gold Access
"Interim results reveal a strong H1 performance, with market outperformance in all areas of the business (including mid single digit LFL unit growth in New and Used, on maintained GPPUs). Whilst the outlook commentary signals a slightly more cautious view in New, the market remains close to all time high levels and the significant brand enhancement strategy completed over 18 months means we continue to anticipate market outperformance in both sales and GPPU. With the impressive CMD event still fresh in mind from May, we remain upbeat about future prospects and believe the valuation is unduly low on 7x P/E and 3.4% yield. M&A remains on the cards should vendor price demands correct and just deploying half available resource should deliver accretion of c15%. The shares should rise today."
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