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Companies: FOUR, ADN, AMO, BHRD, CLL, CONN, DSCV, EAH, EHG, FCRM, BOOT, LOK, MYSL, PPH, PCF, RNWH, RTHM, SEE, STAF, UTW, WATR, WYG
by finnCap, 4 Dec
4Imprint Group | Acal | Henry Boot | Cello Group | Connect Group | Fulcrum Utility Services | Lok'n Store Group | PPHE Hotel Group | Renew | Staffline Group | Utilitywise | Water Intelligence | Van Elle | WYG
"Topic of the quarter: It’s alive! Infrastructure and assets, in general, have traditionally been built to provide a fixed service and are maintained and renovated to a fixed schedule – dead and dumb. Technology will completely change this. Sensors and wireless networks have the potential to allow assets to ‘talk’ to us. These living, smart assets will be able to tell us when they need maintenance, how efficient they are being and provide the data that will directly influence their construction, availability and use. The implications for construction costs through to operating costs and the ability to service changing user needs are very significant. The Support Services, Construction and Technology sectors need to work together to maximise this potential, recognise and harness the power of data, and invest in and embrace change. These are daunting challenges in highly competitive markets where politics play a role, different skill sets (that are currently in short supply) are needed and shareholders are looking over management's shoulders. However, the prize for those companies who get it right is significant, and the risk of not changing much greater. There are positive early signs with Crossrail providing tangible examples of Smart Infrastructure using innovative sensors."
H1 better than last update | N+1 Singer, 4 Dec
"RhythmOne has delivered a better result at the revenue, EBITDA and cash levels than indicated at the last trading update. This is encouraging given trading appeared slightly below our expectations. The core business is trading well with RhythmMax growing very fast (+25%). Perk also traded well (ahead) and the first two months of Q3 have been good and now there is just the largest month of the year to go. The only fly in the ointment is RadiumOne where the costs program is slightly behind. This means a c$2m hit to FY18 EBITDA estimates, reducing it to c$14m. However from a big picture perspective the step change in profitability this year is still on track and the Company is happy that RadiumOne will be on plan in FY19 meaning that our FY19 EBITDA expectation should hold up. With the drift on the share price this makes the valuation look obscenely low. The Company indicates that the YUME acquisition remains on track to close in Q1 2018, although we note this is not key to getting an attractive return on the stock. We maintain our Buy rating."
The eyes have it | finnCap, 6 Dec
"On the back of the recent extremely positive newsflow, the group has raised an additional A$61m from equity to accelerate the development of the technology product and platform, expand global infrastructure and provide working capital headroom. Crucially, the contract award from a second OEM demonstrated that Seeing Machines (SM) has a credible DMS solution for the global automotive industry and is likely to win a significant share of a huge global market. Equity investors are now beginning to appreciate the scale of the opportunity and the true value of this business. To date, enthusiasm and valuation have been tempered by a relatively heavy investment programme for AIM and an obvious funding gap with likely dilution. We adjust our forecasts to reflect the post-placing investment; however, it clears that final hurdle and opens a path for SM to achieve its remarkable potential. We also highlight upside from a potential re-rating."
Bid approach indicates just how under-valued the group is | Liberum, 4 Dec
"The proposed bid that was reported in the press this weekend was at a rumoured £100m. On our calculations this puts the offer at a discount to NAV and our NAV is very prudent indeed. This was highly opportunistic in our view and truly does show just how cheap the Group is in our view. Trading has been strong and in line with expectations (last trading update 12 October), the shares offer an 8.4% dividend yield, and are currently valued at a c.40% discount to our NAV calculation. The market share the group commands on Barbados, its sales & marketing office and its
significant asset-backing all support a much higher valuation let alone the opportunity to see material earnings upgrades over the next few years."
Slight forecast reductions- RhythmMax +25% | Whitman Howard, 4 Dec
"RhythmOne has announced H1 revenues of $114.5M (H12017: $66.8M), up 72% year-on-year, slightly ahead of the range given in the trading statement of $112-114m. Adjusted EBITDA of $3.1M, an improvement of $5.7M (H12017: $2.6M Loss), is ahead of the $1.5-2m range given in the recent trading statement. RhythmOne on-platform revenues of $44.4M (H12017: $35.5M), were up 25% year-on-year. The company closed the period with $39.3M in cash. We are reducing our revenue forecasts to reflect the decline in non platform programmatic revenues, and our EBITDA to reflect slower cost turnaround at RadiumOne, and we now expect a small loss at RadiumOne vs small profit in year to March 2018. We retain our Buy and PT770p."
Excellent start to year - KPIs all trending up, sales growth accelerating | N+1 Singer, 6 Dec
"MySale is delivering on its strategy and the recent AGM trading update confirms that sales growth is accelerating and gross margins are increasing. The roll-out of its proprietary technology platform last year is driving improvements across the breadth of its KPIs. This performance underpins recently upgraded guidance of 15-20% sales growth this year (vs 6.4% in FY17). With momentum building, there appears to be scope for a higher H2 exit rate. We forecast 15% growth this year, conservatively moderating to 11% in FY19. Active customers only represent <4% of its total database, though, so we are excited by the compelling balance of enhanced supply/product assortment on the one hand, and improved digital capability/customer interface on the other. Having in fact softened since the prelims, the recent share price performance looks to be at odds with this acceleration in MySale’s underlying performance."
New bank has started strongly | Stockdale, 5 Dec
"PCF’s FY2017 final results beat expectations as adj. PBT of £5.0m added back only £1.37m banking costs vs our £1.5m forecast. The portfolio of receivables grew to £146m (SSL forecast £145m) from £122m and the quality was reflected by the record low impairment charge of 0.5%. Most importantly, PCF bank was launched in July and received £53m in deposits by 30 September. In our view, this access to lower cost of capital will enable PCF to achieve its FY2020 targets of a £350m portfolio and 12.5% RoE. We retain our 42p TP and Buy rating.
To enable it to meet the PRA/FCA capital requirements PCF successfully raised £10.5m in April via a placing (£10m) and an over-subscribed open offer at 25p per share. PCF then completed its banking mobilisation process and received its first deposits in July, which had reached £53m by end September. We have argued for the last two years that we believe becoming a bank will be transformational for PCF as it will enable the group to have a substantially lower cost of capital. This means PCF should have access to larger and more prime addressable markets in order to achieve its £350m loan portfolio target by FY2020. Our forecasts assume that this target will be achieved organically but the £750m portfolio target by FY2022 will require acquisitions. As expected the expanded equity base impacted the RoE (8.7% in FY2017 vs 13.0% in FY2016) but the reaffirmation of the 12.5% target shows the operational gearing of profits as the business scales."
Solid trading and share buybacks planned | Progressive Equity Research, 5 Dec
"Amino has released a positive update on trading for the year to 30th November 2017. Management disclosed that trading remained solid in the second half of FY17E, with adjusted pre-tax profit expected to be in line with market expectations and an “excellent” pipeline. In our view, the prospect of material share buybacks (announced on Friday) sends a positive signal on the outlook for profits and cash generation, and we leave earnings estimates unchanged.
Management disclosed that FY17E gross profit and adjusted profit before tax are expected to be in line with market expectations, highlighting ongoing commercial traction in both software and devices. Management flag that in revenue terms, FY17E is expected to be similar to FY16A due to product mix. The order backlog remains “solid” and the pipeline entering 2018 “excellent”"
Aivlosin® demand continues to grow | N+1 Singer, 6 Dec
"ECO Animal Health’s interim results highlight continued growth, with Aivlosin® generating strong demand. Sales of the antimicrobial increased 18% and are on track to meet our full-year estimate of £53m. EBITDA and EPS increased by 36% and 13% respectively. The balance sheet remains robust (£20.3m net cash at period end) and the interim dividend of 3.2p is 28% higher than last year. H2 has reportedly started well with a strong and growing order book. Our EBITDA forecast is unchanged and we upgrade our dividend assumptions. We remain positive on ECO Animal Health and look forward to additional marketing authorisations of Aivlosin®."
Trading on track | N+1 Singer, 8 Dec
"The Company produced an update yesterday confirming two main points. Firstly that executive director Ian Maude has resigned as he is planning to relocate, with his partner, to Sweden; and secondly flagging the second half business performance. Ian Maude’s Group Development Director role will be taken up by Richard Costa D’Sa, who is Chief Growth Officer. The Company has highlighted that 10 clients now use two or more group companies and that the group has won 36 new clients so far this year. Be Heard has great momentum in executing its strategy. Its focus on being able to deliver complete solutions to help clients improve their performance in digital marketing is proving highly attractive and we expect the Company to continue to make further significant commercial headway in 2018."