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Companies: ACRL, APC, PRSM, BOO, BBSN, CNE, ECSC, ENQ, ENT, EUSP, FPM, FDM, FA/, FLTR, GETB, LCL, PTEC, SDI, SMRT, SNX, TRIN, TLW, WJA, WMH
by Stockdale, 24 Jan
"With 2017 behind us, we evaluate the performance of the tech sector versus the broader market, and look across the Atlantic to see how the London listed technology universe compares to its bigger and better-known counterparts. We examine if the UK listed tech sector is overvalued on a relative basis. Lastly, no annual review of tech can be complete without analysing the performance of the big eight mega tech companies who had a very good year and currently have an aggregate market capitalisation of US$4.82 tn, roughly the size of the Japanese economy."
by Whitman Howard, 22 Jan
"UK papers reporting over the weekend that newly appointed Secretary of State to the Department of Culture, Media and Sport (DCMS) is in favour of a £2 maximum stake on category B2 machines in betting shops.. Papers referencing “overwhelming response has persuaded them to reduce the maximum stake to £2.” The consultation on B2 stakes will conclude tomorrow 23 January 2018 and where we weren’t expecting a final decision on the matter for c. 6 – 8 weeks after the end of the consultation period. It is possible the final decision could be brought forward sooner after the conclusion of the consultation period tomorrow."
Boohoo.com ( BOO)
Buy into derating as brand momentum increases | N+1 Singer, 22 Jan
"Given execution & capacity risk has diminished, a 30% de-rating means the market is discounting higher growth and profit from the 3 brands, and future warehouse savings. Many headwinds faced by offline UK retailers are also Boohoo opportunities, namely the online shift and a promotional market, where it excels. The brands are at different life cycle stages; so near-term mix dilutes EBITDA % but, over time, EBITDA growth should exceed sales growth. The market appears to have adjusted badly to the mix dynamics of having high growth/immature brands, Pretty Little Thing (PLT)/Nasty Gal (NG), and undervalues the group as a result. Buy for growth and outperformance."
Sideshow Bobble | finnCap, 24 Jan
"Today’s trading update confines itself to the continuing struggles of the original PayMobile business in its highly competitive market for developing world for pre-paid top-up and mobile financial services; there is no new information on the much more lucrative and valuable HomeSend JV with Mastercard; however, the eServGlobal directors remain satisfied with the progress of the business as it moves into the cross-border bank-to-bank and payments domain."
Blue Prism Group (XPRSM)
Substantial upgrades to forecasts and price target | Whitman Howard, 25 Jan
"Following on from their trading statement in November 2017, Blue Prism today announced its Year to October Full Year numbers. They reported revenues of £24.5m vs exp £24m. Adj EBITDA loss was £8.3m vs exp loss £7.2m. Cash at £16.3m and cash flow were better than we had expected, due to advanced payments of £5.2m, but also reflecting the positive working capital characteristics of the model. The company has raised £40m of new money, a third of which will be reinvested to accelerate the growth of the business."
Justifying the 250p price target | Whitman Howard, 26 Jan
"With the full year numbers confirmed, we focus on the diversity of the earnings stream and by adopting a sum-of-the-parts methodology to reflect their different characteristics we determine a fair value of 250p. This is substantially ahead of the current share price. With clients requiring ‘connected office’ software, RedstoneConnect is now generating sustainable revenues from a wide client base and from numerous sources e.g. SaaS, licence fees, consultancy, one-off and recurring contracts. At 250p, the FY19 PE rating is 19x."
by Whitman Howard, 24 Jan
"In this short note, we update our oil price assumptions. Given that share prices are now looking more reasonable relative to our RENAVs, we downgrade Tullow Oil and Faroe Petroleum to HOLD. We reiterate our BUY recommendations on Cairn Energy and Trinity E&P, and remain with our HOLD recommendation on EnQuest.
We have generally been of the view that oil prices as low as the last few years were unsustainable, and as such have a long-term oil price of $70/bbl (unchanged). Clearly, OPEC’s cuts plus stronger demand has helped to boost oil prices faster than we had expected."
Accrol Group (ACRL)
H1 results, the road to recovery | Zeus Capital, 22 Jan
"We believe a strengthened management team is executing a successful recovery plan and maintain its unique market position as the UK’s leading independent tissue converter. Clearly, the year to April 2018 was going to be a difficult year for the group, and our revised 2018E forecasts are very much worst case, with three months of the financial year to go. Importantly, we leave our expectations for 2019E and 2020E unchanged and remain comfortable with our longer-term trading assumptions."
Core business update | Edison, 26 Jan
"Delays in closing contracts in the core business resulted in a revenue shortfall for eServGlobal in FY17, although some of these have now been signed and will contribute from FY18. Continued efforts to reduce the cost base should reduce the break-even revenue level to c €12.5m/A$19min FY18, which the company is aiming to achieve through focusing on additional sales to its existing customer base. eServGlobal participated in the recent HomeSend funding round, marginally increasing its stake to 35.7%."
Interims underpin FY 2018 forecasts | finnCap, 26 Jan
"Scientific Digital Imaging reported strong interim results to 31 October 2017, with a 34% increase in revenues and adjusted EPS of 1.22p (+74%). Results included a first-time contribution from Astles and ATC, which contributed £1.1m (67%) to revenue growth. Legacy businesses also grew, by a commendable 11%. Despite this, we leave forecasts unchanged given that H1 included a one-off licence payment (£0.15m) that boosted underlying profits, without which EPS growth was 50%. These results, however, clearly demonstrate the improved free cash flows, driven by high-margin profitable businesses (c.20% EBITDA margin)."