See what's trending this week...
Companies: AHCG, CCT, DOTD, EAH, HUR, IQE, WJA
IQE (IQE)
VCSEL ramp up drives upgrades | N+1 Singer, 21 Dec
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"IQE’s full-year trading update confirmed that the anticipated VCSEL ramp up is driving upgrades to all forecast years. The Photonics division is on track to achieve c.100% revenue growth, well ahead of our prior 50% forecast. Total FY’17 revenue is expected to be at least £150.0m, with adj. PBT c.4% ahead of expectations despite a reduction in high margin licence income. We expect the strong growth in Photonics to continue, resulting in c.17% adj. PBT upgrades in FY’18. With the number of devices containing IQE’s VCSEL technology set to expand, and further volume increases likely from the group’s other technologies, we retain our 181p TP and Buy recommendation."
Character Group (CCT)
Product strength in face of retail challenge | Allenby, 19 Dec
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"The Character Group (CCT.L), the UK's leading independent toy company, enters 2018 with what management believes is its strongest ever product line up with a balance between its ‘ever-green’ brands (including Peppa Pig, Little Live Pets, Scooby Doo and Stretch Armstrong) and new products, some developed in-house. On top of this, there is considerable potential from Pokémon, scheduled for launch next summer. This portfolio strength combined with management’s considerable expertise are key as Character Group contends with a difficult retail environment, typified by the Chapter 11 of Toys R US in North America and proposed store closures in the UK. As a result, management expects revenue will drop in H1 before returning to growth in H2. We believe that CCT is better placed to weather the retail storm than its larger rivals (Hasbro, Mattel and Lego) as it offers price competitive products and its products are not aligned to any particular film franchises. It also has a strong balance sheet with substantial unutilised working capital facilities. Forecasts and fair value of 580p per share, equivalent to an FY18 PER of 13.9x and 4.0x yield remain unchanged. (David Johnson)."
ESERVGLOBAL (ESV)
Three’s a crowd | finnCap, 19 Dec
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"HomeSend – eServGlobal’s JV with MasterCard and BICS – is undertaking a €10m capital raise in December. This will be used for working capital and to accelerate the development of additional functionality. It will allow HomeSend to focus on the far larger than expected growth opportunities in the cross-border banking market. eServGlobal will participate using existing cash resources, to maintain its 35% holding in HomeSend, but early indications suggest that BICS might not participate and, if so, eServGlobal intends to take up its proportionate share, increasing its holding to 35.7%. The raise is being undertaken at an agreed implied value of €46m; obviously not a fair market value but clearly suiting MasterCard as the key shareholder might be keen to acquire the whole business."
Hurricane Energy (HUR)
Fabrication on track; commissioning now in focus | Edison, 19 Dec
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"On 12 December 2017, we visited the Aoka Mizu FPSO at Drydocks World Dubai and had the opportunity to meet a number of Hurricane Energy and Bluewater employees. We returned with greater confidence in Hurricane’s ability to mobilise the Aoka Mizu to location in Q218 and to deliver first oil in H119. While some risk remains relating to weather-critical items, we feel that the risk of schedule slippage is lower than we had previously assumed. We bring first oil forward by six months in our updated valuation; this is offset by a slightly more conservative view of production ramp-up and uptime assumption in the first six months of production."
Dotdigital Group (DOTD)
Positive AGM statement | N+1 Singer, 19 Dec
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"Dotdigital issued an AGM statement indicating the positive momentum it saw at the time of the prelims continued into the new fiscal year. International growth and its relationship with partners were key drivers. In addition, the integration of the Comapi acquisition is on track. Comapi has also recently won a significant contract which helps to underpin its forecasts. Dotdigital remains well placed and looks well placed to deliver another year of strong progress."
ECO Animal Health Group (EAH)
Marketing authorisation for Aivlosin® in the Philippines | N+1 Singer, 19 Dec
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"ECO Animal Health has received its seventh Aivlosin® marketing authorisation of the year with the most recent being in the Philippines in chickens laying eggs for human consumptions in a water-soluble formulation. The Philippines is the fourth most important egg producing country in South East Asia and seventeenth globally. ECO Animal Health continues its global rollout of Aivlosin® for commercial layers after it was first approved in a water-soluble formulation for the treatment of layers in Europe in 2016. We reiterate our positive stance and continue to expect Aivlosin® to generate strong growth in multiple geographies."
Action Hotels (AHCG)
Trading update | Zeus Capital, 22 Dec
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"We note the announcement released this morning by Action Hotels providing an update on trading conditions and providing details of a rent waiver the company has signed with a significant shareholder. The hospitality market in the Middle East is currently experiencing static economic conditions which have negatively impacted RevPAR (price driven). The company has been proactive in addressing the weakened trading performance and have negotiated a rent waiver which will deliver a $1.2m cost reduction in 2017E. While this is a disappointing update, we note the significant asset backing with an adjusted NAV of 101p announced in September based on current spot rates that should help to support the current share price."
