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Tekmar’s H1 results were well flagged in the 30th October update. Revenue was slightly lower YoY at £15.2m (H1’20: £17.1m), with EBITDA of £0.8m (H1’20: £2.0m), reflecting the impact of COVID-19. Whilst there continues to be some short term disruption, the COVID-19 backdrop is improving and we believe Tekmar is well placed to return to growth as its markets recover. The balance sheet is robust, with net cash of £0.7m, and demand is strong, with the enquiry book increasing by 21% YoY to £225m. Industry forecasts point to significant long term structural growth in Tekmar’s end markets and new CEO Ally MacDonald is conducting a strategic review focused on positioning the Group to capitalise on this. N+1 Singer has been appointed joint broker and we will initiate coverage in due course. We believe the historic EV/EBITDA rating of 7.7x is undemanding and see the current share price as an attractive entry point given the scale of the growth opportunity and strong recovery prospects.
Companies: Tekmar Group Plc
Today's news & views, plus announcements from AZN, LLOY, WEIR, TATE, GFTU, INCE, DELT, SOLG, HYVE
Companies: LLOY SOLG INCE
FY20 has been a transformational year for Avon Rubber as it exited from dairy and recycled the proceeds into higher-return businesses with better growth prospects to further strengthen Avon Protection. The redeployment of capital to form a more focused group should enhance value creation for shareholders. The $91m acquisition of Helmets & Armor on 2 January 2020 was joined by Team Wendy from 2 November 2020. Overall, our FY21 EPS estimate falls by 2% in FY21, although this still represents strong growth. The reporting currency will switch to US$ in FY21 as more than 90% of revenues are of US origin.
Companies: Avon Rubber p.l.c.
Ince has announced excellent interim results with promising trends for the near and medium term which bode well for the Group's earnings and cash progression. First half revenue has grown 6% YoY, a strong result considering the impact of COVID during the period.
Companies: Ince Group plc (INCE:LON)Ince Group plc (W1G1:BER)
H1/21A results reflect a period where COVID-19 impacted Q1/21 trading, masking over early signs of progress from the company's new strategic plan. Given activity rebounded during Q2/21 to pre-COVID levels, we expect a stronger H2/21E delivery and a profitable FY21E on flattish revenues. In FY22E, we expect to see material signs of progress in trading from strategic growth initiatives (housebuilding/EV/smart metering etc). Given these long-term drivers, we believe Fulcrum should be viewed as an attractive growth, rather than prior earnings quality, investment case.
Companies: Fulcrum Utility Services Ltd
Checkit has emerged from a period of corporate activity as a pure-play business focused on driving the adoption of its connected SaaS software, in particular its workflow management application. Checkit’s software is designed to enable smarter operations management, exploiting Internet of Things technology to connect people, processes and assets. With a proven ability to sign up blue-chip customers across a number of target verticals, growth in recurring revenues and an expanding customer base should help to close the valuation discount to software peers.
Companies: ECKTF CKT EKC
Cohort has completed the acquisition of ELAC Nautik from Wartsila for a headline consideration of €11.25m, as previously announced. ELAC extends Cohort’s maritime offering and has attractive medium- to long-term prospects. It will make an initial five-month contribution and should be modestly earnings enhancing. More detail should be available with interim results next week, but the lack of a trading comment suggests the ongoing activities remain on track to meet market expectations.
Companies: Cohort plc
The Group's cash generation and profitability remained robust in H1/21A despite the onset of COVID-19. This enabled the Group to pay down a further £8.2m of term loan principal, resulting in net debt declining 44.6% to £34.9m. In light of improving visibility in industrial electricity demand we release prudent FY21E and FY22E forecasts. We believe OPG is undervalued, trading at a c50% discount to its peer Group. We move our recommendation from Under Review to Buy.
Companies: OPG Power Ventures Plc
Seeing Machines has announced its FY20 results which show a steady underlying improvement in financial performance with the company surpassing our expectations set in May despite a highly challenging operating environment for the transportation sector. Looking forward, whilst the ongoing pandemic is continuing to affect the business, and we have tweaks to our divisional expectations to account for this, visibility into the path to profitability is increasing and the funding of this has been significantly de-risked by the recent US$20m placement to Federated Hermes Inc. With the risk reducing and the macro environment improving and considerable upside left in our numbers from Aftermarket, Aviation and further technology license deals, we reiterate our Buy and increase our DCF valuation to 8.6p.
Companies: Seeing Machines Limited
Volex has reported interim results that are in-line with expectations following a strong trading update in mid-October. Of far greater significance is today’s announcement of the proposed acquisition of DEKA for a consideration of up to €61.8m on a debt free basis. DEKA is a leading and highly profitable power cord manufacturer, strategically located in Turkey, that serves leading European white goods manufacturers. The acquisition should close in early CY2021, subject to expected Turkish Competition Authority approval. We foresee 15% earnings enhancement in FY2022E with further opportunities for revenue synergies with Volex in the Far East as its operations also vertically integrate, production efficiencies increase and the cost of production falls. The statement highlights that pro forma net debt/EBITDA remains under 0.4x and this provides scope for further bolt-on acquisitions alongside a new $70m RCF and $30m accordion, also announced with the interims.
Companies: Volex plc
This week the global specialist in technologies reported further successful test reports from the Laboratory of Virology at the University of Campinas, Brazil (Unicamp) on the Company's anti-viral nitrile gloves and polypropylene fabric facemasks, made with Symphony's d2pAM (antimicrobial) technology.
Companies: Symphony Environmental Technologies plc
Empresaria has issued a very encouraging update, confirming continued profitability in each month of H2 to date. Evidence of recovery is being seen across many parts of the Group. Whilst the pace of recovery remains slow, the COVID-19 backdrop is improving and the Group’s sectoral and geographical diversity continues to benefit its performance. Strategic initiatives continue to progress at pace, not least investment in new IT systems, positioning the Group for growth as its markets recover. Management now anticipates full year net fee income of £52m to £55m and adj. PBT of £4.4m to £4.9m, which we reflect by introducing an FY20 forecast. The Group is trading on a Dec. ’20 P/E rating of 11.6x on new forecasts, which looks undemanding to us given the depressed earnings level and the Group’s recovery prospects. Whilst we do not introduce FY21 forecasts at this stage, we would expect some advancement on the FY20 outturn given an improving backdrop.
Companies: Empresaria Group plc
The new ammendments to the UK CfD renewable energy support scheme opens up an opportunity for tidal energy to compete against floating offshore wind. We think the two technologies can deliver similar costs but that tidal, and specifically the already permitted capacity at Atlantis’s MeyGen site, has a marginal advantage in terms of readiness.
Companies: SIMEC Atlantis Energy Ltd.
Less than a fortnight after a major new contract announcement in West Africa, Capital has announced the expansion of its operations at Barrick Gold’s Bulyanhulu Gold Mine in Tanzania. The contracts include a five-year laboratory services contract for MSALABS, together with a two-year underground grade control drilling contract. Capital commenced operations at Bulyanhulu in February 2020, undertaking a deep hole delineation drilling program. The successful execution of this resulted in an expansion of services, with two underground rigs added to operations from May. The new contract will expand the underground fleet to four, utilising two rigs from the existing fleet and including the acquisition of a further two rigs.
Companies: Capital Limited
We launch coverage of IQGeo with its proposed acquisition of OSPInsight (OSPi). IQGeo is a Cambridge-based supplier of geospatial software for planning, building and maintaining dispersed network infrastructure. It sells this directly to global Tier 1 and 2 telecoms and utilities. It is raising £5.3m to help buy OSPi, a Utah-based supplier of similar systems to Tier 3 and 4 telcos, mainly in the US.
Companies: IQGeo Group PLC