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Companies: ABZA, AKR, AGY, APH, AVCT, BVXP, COG, CTH, EMR, EPWN, FDEV, HEAD, IHC, INSE, IOM, LID, MTFB, ODX, OPTI, PHD, PRM, PFG, SDI, SPE, SNG, TSTL, YGEN
by finnCap, 24 Aug
Abzena | Allergy Therapeutics | Alliance Pharma | Avacta Group | Bioventix | Motif Bio | Optibiotix Health | Premaitha Health | Proteome Sciences | Synairgen | Acadia Realty Trust | Cambridge Cognition | CareTech, | Inspiration Healthcare Group | Lidco Group | Omega Diagnostics Group | Scientific Digital Imaging | Tristel
"Topic of the quarter: many recent news articles have highlighted the growing opiate addiction rates across the world, particularly in the US where new president Donald Trump has declared a national emergency with regard to prescription drug abuse. We look at the underlying trends in this growing space and potential opportunities for investors in the coming years both here in the UK and in the US."
Inspired Energy (INSE)
Interims to Jun’17 | Panmure Gordon & Co, 22 Aug
"Strong growth continues on expanding margins. Cash generation excellent. EBITDA / interim dividend grew at 26% / 23% respectively on sales up 20% (1H’17/1H’16). We believe that more than half the sales growth was organic; excluding our estimates of the contributions of IBS/FEML (organic growth in SME division grew at 16%). Gross and EBITDA margins have each risen by >150bps, and more importantly, cash from operations grew 36%, boosted mainly by an improvement in payables. The order book - which provides strong visibility of revenues - has risen by 60% to £41.2m. Net debt at £12.6m is lower than our FY’17 forecast of £13.5m."
Interims: value and growth opportunity | finnCap, 24 Aug
"Interims are in line with expectations and the strong performance track record evident since 2015. 9% revenue growth (all organic) was strong even compared with a strong 1H16, which had been boosted by a notably large deal. 28 licence orders (1H16: 20) indicated strength in a greater volume of more typically sized licence sales as well as associated maintenance and services, with regular deals de-risking reliance upon delivery of particular contracts. Demand for Enterprise Innovation Management software and solutions is growing, with awareness amongst potential customers leading to increased activity. With visibility of FY revenue expectations at 78%E (FY16: 79%A; FY15: 72%A), underlying board confidence in continuing growth (revenue and profit and cash) is further expressed through consideration of a prospective dividend policy. We reiterate our 620p target price, still only equating to 9x FY17 EV/EBITDA, en route to a peer group multiple of potentially twice that."
Iomart Group (IOM)
Re-visiting investment case, upgrade to Buy | N+1 Singer, 22 Aug
"Iomart has continued to generate robust revenue, profit and cash flow growth, in line with expectations. Despite this, the shares have broadly stayed flat over the last 12 months, underperforming the All Share by c.7%. Re-visiting the iomart investment case highlights the continued attractiveness of its market, a strong track record of organic growth in terms of revenue (c90% recurring) and profits and excellent cash generation (97% conversion) allowing it to fund bolt on acquisitions, organic growth and pay dividends (2.2% yield). We believe this is a highly attractive compounding stock and upgrade to Buy (was under review) with a target price of 388p."
Provident Financial (PFG)
Shooting themselves in the foot leads to a bullet in the head. Remains avoid for now | Whitman Howard, 23 Aug
"The shock in yesterday’s announcement was not the CCD collections and consequent second profit warning in two months, but the disclosure that a significant product within Vanquis has been under FCA investigation for over a year. This helped explain the cessation of dividend payments at the group level and withdrawal of the declared interim payment given the BoE has barred dividends from Vanquis to the group entity."
Frontier Developments (FDEV)
Frontier announces Jurassic World as third franchise | finnCap, 21 Aug
"Frontier has revealed that the title of its third franchise will be Jurassic World Evolution and will launch in summer 2018 on PC, Xbox and PS4. Its release will coincide with the next chapter of the hugely successful film Jurassic World, which was the fourth most lucrative box-office film of all time. The combination of Jurassic Park’s global appeal, the likely level of publicity ahead of Jurassic World: Fallen Kingdom, and Frontier’s proven expertise suggest that Frontier’s third self-published franchise will be its most successful to date. No change to forecasts, but TP increased to 968p."
"Market challenges have been well documented and mostly negotiated thus far by Epwin. Management has elected to take action to reduce costs and capacity in the light of ongoing market conditions. We expect more detail with the release of H117 results on 13 September. Epwin remains in robust financial health and in our view, is in a position to sustain its dividend – currently yielding c 10%."
"PROACTIS has released a brief full year update indicating that trading in the year to July 2017 was in line with consensus expectations following a reassuring number of new business wins. Management’s focus is currently on integrating the Perfect Commerce acquisition, with £1.4m of the targeted £5m of annualised cost synergies realised to date and the rest expected to be realised by the year end as planned. We are encouraged by the performance of the underlying PROACTIS business and make no changes to our forecasts, recommendation and target price pending the release of full year results on 11 October. We remain excited by the increased commercial opportunities for the enlarged group."
"Empresaria’s H1 results confirm the message of July’s trading update, and the outlook for the full year – continued growth in Net Fee Income (NFI) and EPS. Net Fee Income was up 26% (17% at constant FX), adj. Operating Profit +23% (9% at constant FX). This has been delivered against a mixed background for the wider peer group. The big generalists such as Hays or Randstad have maintained growth, but some of the specialist peers (notably Impellam plc.) have encountered headwinds. Empresaria has benefitted, in our view, from a balanced geographic footprint and from its multi niche customer industry base. The company has noted that there has been a slowdown in hiring processes in the UK post-election, but overall the group is on track, and we maintain our FY forecast of 19.5% earnings growth, well ahead of the sector trend."
"Headlam, the leading UK and Continental European flooring distributor, has issued a strong set of interim results, providing extra detail on the positive pre-close update (issued 18th July). Revenues were +4.0% to £342m, with growth driven by expansion in the UK and Continental Europe. Greater collaboration between the business units and the new management style being introduced has resulted in a 103-basis point expansion in the gross margin. Overall Headlam is trading in-line, no change to forecasts. We reiterate our BUY recommendation (TP 700p)."