Most popular equity research this week | 26 Feb - 2 Mar

Dotdigital Group (DOTD)

Three pillars of wisdom on the path to omnichannel | finnCap, 27 Feb

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"dotDigital has delivered interims to December in line with the January trading update and unchanged EBITDA/adj PBT expectations. The three strategic pillars for growth continue to prove highly effective, delivering 25% revenue growth including 17% organic revenue growth, complemented this year by the Comapi acquisition in November. Geographic expansion, increasing numbers of strong partnerships, and product innovation continue to drive the strong growth as the group excels at current operations and demonstrates the strength of its path to become an omni-channel dataled customer behaviour and analysis platform. Target 115p reiterated..."

Dotdigital Group (DOTD)

Progress on all fronts | N+1 Singer, 27 Feb

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"The group’s interim results (largely preannounced in trading update) showed 17% organic sales growth, 8% EBITDA growth and 14% EPS growth. Progress was made in growing international revenues (25% of sales) and broadening partnerships (sales +35% y-o-y). The integration of Comapi is on track and furthering the group’s omnichannel offering. We have made no changes to forecasts and believe the cal’18 EV/EBITDA rating of 18.1x is supported by our EPS growth forecast of 26% and 29% in FY’18 and FY’19..."

M&A galore

by Stockdale Securities, 26 Feb

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APC Technology | Brave Bison | ECSC | EU Supply | FDM | GetBusy | Synectics | Sprue Aegis

"The London listed technology space has been brimming with activity since the start of this year, with three companies M&A targets, with an aggregate deal value of some £1.5bn, over twice the combined £679m M&A market in 2017. We take a closer look at Temenos’s £1.4bn acquisition of FTSE 250 constituent Fidessa, which was announced last week. Although the deal alone is over twice the value of the entire London-listed technology M&A market in 2017, the final selling price could be higher with the involvement of well known activist hedge fund, Elliott Capital Advisors.."

eServGlobal (ESG)

PayMobile looks to a bright future after a tough year | finnCap, 28 Feb

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"eServGlobal changed its year-end from October to December to align itself with its key HomeSend subsidiary. To that end, it has released a set of 14-month accounts to December 2017, detailing the extra two months trading from the October 2017 12-month results, released just after Christmas. The results are weaker than expected; sales of A$12.2m and adj. LBT of A$27.5m, against our forecast of A$12.6m and A$23.4m respectively. The core mobile-money operation has been struggling for some time and although these results are poor, 2017 was a year in which many of the issues in that business were addressed and resolved..."

XP Power (XPP)

Increasing complexity drives growth | Edison, 1 Mar

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"Strong demand across all markets and geographies, combined with market share gains and the recent Comdel acquisition, have resulted in record revenues and earnings for XP in FY17. Expanding its product range to include high voltage and RF power solutions has widened the company’s addressable market and gives XP the opportunity to support its customers in the development of more complex solutions. With strong cash flow generation and access to debt, XP has the resources to fund growth, whether through internal product development or via acquisition..."

RTC Group (RTC)

Adjusted PBT ahead of expectations | Whitman Howard, 26 Feb

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"Adjusted PBT at £1.5m for the 12 months ended December 2017 represented growth of 22% and was ahead of our expectation of £1.4m. In turn, this supported dividend growth of 13% against an expected 6%. Net debt was £4.4m though allowing for an unwind in receivables of £1.5m in January 2018, the underlying net debt position represents a significant improvement on the December 2016 position. Looking forward, we are leaving our adjusted 2018 PBT forecast unchanged representing adjusted PBT growth of 25% but note RTC’s commentary of ‘pursuing acquisitions’..."

Clinigen Group (CLIN)

Downgrades irritating, mask more important progress | N+1 Singer, 1 Mar

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"A relatively minor 2.3% EPS downgrade has prompted a 13% share price fall in Clinigen’s share price. Issues in the small CTS division and FX headwinds have been partially offset (though not sufficiently) by strength in Commercial Medicines, where much of the value lies, in our opinion. Importantly, our FY19/20 estimates are largely unchanged. We continue to see latent potential in the Quantum Pharma pipeline in particular and investors should be reassured by positive commentary around its integration and performance since acquisition..."

Playtech (PTEC)

Looking for a significant catalyst | Whitman Howard, 28 Feb

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"Management flagged M&A when presenting final results with a focus on regulated markets. Also flagged comfort with leverage of 1-2x Net debt/EBITDA. On our FY18E EBITDA forecast of €341m and with forecast net cash of €356m it implies taking on debt of up to c.€1bn. Adding in the liquid holding in Plus500 and LCL LN (£345m) of €390m would give PTEC up to c. €1.6bn of firepower for M&A. A debt funded deal in regulated gaming would increase earnings between 31% and 42%, demand a higher rating for the shares..."

Zotefoams (ZTF)

Capacity utilisation opportunity to drive revenue | Arden Partners, 28 Feb

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"Our analysis of Zotefoams’ capacity investment and historical utilisation indicates material upside to current market revenue forecasts. Asset turnover on consensus revenue forecasts implies a drop in ongoing asset efficiency, which we believe is not in keeping with recent newsflow, growth investments and the portfolio of growth opportunities the Group has..."

WH Ireland (WHI)

Light at the end of the tunnel | Equity Development, 1 Mar

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"The issue of a substantial number of new shares, even if overwhelmingly to existing shareholders, is often accompanied by a decline in share price as it alters the supply/demand balance. However, the issue of 2 million shares by WHIreland (“WHI”) was immediately followed by a sharp rise in the share price to a 5-year high followed by a modest decline to just below the previous high. We do not know the reason for the moves, but continue to think that the shares are undervalued. Therefore, it seems an appropriate time to update our research and add a forecast to our “sum of parts” valuation..."

Safestyle UK (SFE)

Trading update | Zeus Capital, 28 Feb

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"Safestyle has announced a trading update this morning warning of increased competitive pressures that have impacted order intake and are expected to result in a 9.5% reduction to FY18 revenues. The actions of an aggressive new market entrant have led to a decline in the Group’s canvassing salesforce in certain regions of its operations. Management is taking action to counter these pressures with planned major restructuring of the Sales and Canvassing functions underway and a review of the company’s cost base progressing..."