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The UK market showed a continued recovery in the first quarter albeit the indices are still well short of their all-time peaks, unlike many of their international peers. The FTSE 100 has risen by 1,186 points (21.4%) since the end of October and the FTSE 250 by 4,304 points (25.0%). The comparable performance since the start of the year is less spectacular- the FTSE 100 has risen by 253 points (3.9%) and the FTSE 250 has risen by 1,070 points (5.0%). The factors behind the sustained rally are familiar. The belief that the roll-out of the vaccine and some relaxation of lockdown limitations will lead to a significant economic recovery, compared to the collapse seen in the first half of 2020, due to lockdowns. Indeed, the recent economic picture is becoming more optimistic than previous expectations. According to the ONS, the economy grew a little more than initially estimated in Q4 last year. This means GDP for 2020 as a whole contracted by 9.8%, revised up marginally but still the worst contraction on record. Markets, in general, have focused upon the potential scope and extent of the recovery. The sectors and stocks that have outperformed have been seen as ‘recovery’ plays with a rotation from stocks seen as ‘lockdown’ winners into those set to benefit from the ‘unlocking of society’ and/or exposed to the consumer. We expect 2021 will continue to be a “stock-picker’s” market. The sharp increase in the household savings ratio in Q4 highlights the scope for a recovery driven by expenditure. As further lockdown limitations are lifted, evidence of this growth will help to underpin the more optimistic outlook for Q2 and beyond.
Companies: AMYT ARBB BPC BAG BVC BEG BONH BLVN BRSD CML CWK CRPR EYE ECHO FDM FAR FA/ GPH GSF HUW INSE JDG KAPE KP2 MACF MPAC MNZS NESF NBI OTMP OBD PREM QFI RUA SCS SEN SOS SUR TON TOU TXP TGL TCN UEM VLS WYN
The Budget offered a clear picture of the state of the economy. Put simply, the economy will be 3% smaller in three years’ time than it would have been without the impact of the pandemic. However, it is forecast to return to pre-pandemic levels by mid-2022, six months earlier than previously thought. The OBR forecasts that the UK economy will grow by 4.1% in 2021, (lower than the 5.5% outlined in November 2020). It has set its GDP forecasts in 2022, 2023 and 2024 at 7.3%, 1.7% and 1.6%. Positively, we have a continuation of substantial support for various parts of the economy – totalling £350bn. The market may focus on two elements. Under the so-called “super-deduction scheme, businesses which invest in the next two years will be able to claim 130% of the cost against their tax bill. This is significant but also significant is the proposed increase in corporation tax on profits from 19% to 25% in 2023. This has material consequences. Looking that far ahead is not straightforward. The increased tax charge will inevitably impact ratings. This may not be a consideration currently but may become one as more FY2023 estimates are introduced. Closer to home, we have continued to see most results/updates in line with expectations. An increasing number of companies have restored dividends. M&A across a broad range of sectors also looks set to continue.
Companies: AMYT ARBB BPC BVC BEG BRSD BWNG CBOX CTG CLG CML CWK EYE ECHO EML ESC FBD FA/ GSF HTWS INSE JDG MACF MTW NESF NAVF NSF NBI OTMP PCF PPC QFI SAVE SEN SNX TGL UTL VLS WYN
In its seasonally weakest quarter, Tremor has announced that it is expecting Q1 21 organic net revenue growth of +71-87% to net revenue of $55-60m ($63-68m as reported), and adjusted EBITDA of $25-28m (Q1 20 $0.5m). The Programmatic division is driving this remarkably strong performance with expected Q1 21 organic net revenue growth of +84-95%, as the strong H2 20 momentum has continued into Q1, and Tremor’s platform is capitalising on the structural growth in digital video and Connected TV advertising. After upgrading our forecasts 4 times since September 2020, we conservatively upgrade our FY21 and FY22 EBITDA +21% and +23% to $82m and $100m, and if Tremor’s Q1 21 momentum continues through FY21, our forecasts are likely to see substantial upside. We upgrade our FY21 and FY22 adjusted EPS by 23% and 28%, and upgrade our FY21 and FY22 net cash to $145m (previously $136m) and $211m (previously $188m). As Tremor prepares for its proposed US listing in Q2 21, we do not expect that its current valuation will be sustainable due to market or external interest. As we highlight from p5 of our 10 March 2021 report, Tremor is trading at a major discount to its US peers despite experiencing the same 2020 trends, expecting Q1 21 organic revenue growth of +71-87% that is substantially ahead of all of its US peers at +13-41%, and having conservative FY21-22 forecasts. Tremor’s current 12-month forward EV/EBITDA of 12x with NTM EBITDA growth of +34%, compares to its US peers PubMatic, Magnite, and The Trade Desk, on 12-month forward EV/EBITDA of 41x, 67x, and 88x, with NTM EBITDA growth of +4%, +33%, and +51%, and Tremor’s 12-month forward EFCF yield of 5% compares to its US peers on less than 1%. We upgrade our target price to 1,200p based on 22x FY22 EBITDA, and look forward to further trading updates.
Companies: Tremor International Ltd.
Reach’s prelims were ahead of N1S estimates for H2 sales and EBITDA (1% and 3% resp.) and showed excellent progress with both the customer value strategy (‘CVS’) and business transformation agenda. Whilst FY’20 Group sales were 15% y/y lower as CV19 impacted Print, Digital revenue grew +11% y/y to £118m (H2: +20% to £70m), supported by a strong uptick in user engagement with content (page views/user: +39% y/y) and further progress in signing up new registered users (Feb’21: 5.8m; Dec’20: 5.0m; Dec’19: 0.7m). Meanwhile quick action to mitigate CV19 impact on Print volumes and execution on the business transformation plan saw AOP margins increase 50bps y/y, with Group H2 AOP down just 4% y/y (FY’20: -13%). Looking ahead, there were highly encouraging results from initial campaigns on the Group’s ReachID platform (+10%-40% uplift in click-through rates on early campaigns), whilst further cost savings of £11m are announced through rationalisation of the Group’s Print sites. Strong cash performance was reflected in £42m of cash inflow (post pension and historic legal and contractual payments), which gives management confidence to declare a final cash dividend of 4.26p/share. The path to sustainable top-line and FCF growth remain very much open, with FY’21E adj FCF of £120m generating an 11% yield at current valuation.
Companies: Reach plc
MAST Energy Developments (MED) is to IPO on the Standard List on 14th April 2021 under the ticker MAST. The company has raised £5m giving a market capitalisation on listing of c. £23m. MED is currently a 100% subsidiary company of AIM quoted, Kibo Energy*. MED was established to acquire and develop a portfolio of flexible power plants in the UK and become a multi-asset operator in the rapidly growing Reserve Power market. PensionBee has confirmed its intention to float on the High Growth Segment of the Main Market of LSE. The online pension provider had approximately 130,000 Active Customers and £1.5bn of assets under administration, in each case as at 28 February 2021. The Offer will comprise new Shares raising gross proceeds of approximately £55m and existing Shares to be sold by certain existing small minority shareholders of up to £5m. None of the founders, directors or members of senior management of PensionBee are selling any existing Shares. Expected in April. Cornerstone FS to join AIM, an SME focused, cloud-based provider of international payment, currency risk management and electronic account services focused on removing the complexity of international payments for customers. Raising £2.2m. Mkt Cap £12.3m. Due 6 April. Imperial X (AQSE:IMPP) to join the Main Market (standard). It is also proposed that on Admission to the Official List, the Company will change its name to Cloudbreak Discovery Plc. With effect from Admission, Imperial X will hold equity positions and royalties in a variety of projects in the natural resources sector across multiple jurisdictions, primarily in the Americas and Africa. The Company is proposing to raise up to £1.5m by way of placing of new Ordinary Shares to support further prospect acquisitions. Current Mkt cap £4.7m Expected April 2021. Parsley Box, the direct to consumer provider of ready meals to the 60+ demographic, recently announced its AIM IPO plans. Parsley Box provides ready meals, which are not required to be stored in a fridge or freezer, have a shelf life of up to six months and are cooked in minutes. The company reported revenue of £24.4m for the financial year ended 31 December 2020 (unaudited). Deal details TBC and admission is expected to occur late March/ early April 2021. Proposed move to AIM from the main market (standard) by Emmerson (EML.L) to provide Emmerson with access to a market and environment which is more suited, in the Board's view, to the Company's current size and strategy ahead of pivotal period for the Company with the commencement of mine construction at the Khemisset Potash Project expected by end of 2021. Follows recent award of Mining Licence granting Emmerson exclusive right to develop and mine the potash deposit and £5.5m raise to fund ongoing project development work. NextEnergy Renewables to launch an IPO on the Main Market. NREN is a differentiated renewables investment Company that aims to capture the most attractive private renewables and energy transition infrastructure investment opportunities globally. Targeting a £300m raise. NREN is targeting total returns of 9-11 per cent. per annum (net of all fees and expenses but including the Target Dividend and capital appreciation) . The Company's target dividend yield for the first full financial year to 31 December 2022 is 5.5 pence. Due Early March 2021. Digital 9 Infrastructure launch an initial public offering on the Specialist Fund Segment of the Main Market of the London Stock Exchange, by way of an initial placing and offer for subscription for a target issue £400m. Digital 9 Infrastructure plc is a newly established, externally managed investment trust. The Company will invest in a range of digital infrastructure assets which deliver a reliable, functioning internet. The IPO Prospectus is expected to be published in March 2021. Fix Price announces its intention to float on the Main Market of the London Stock Exchange. Fix Price is one of the leading variety value retailers globally and the largest in Russia, with more than 4,200 stores. Fix Price has revenues of RUB 190.1bn, RUB 142.9bn and RUB 108.7bn for 2020, 2019 and 2018, respectively. Adjusted EBITDA for the same years was RUB 36.8bn, RUB 27.2bn and RUB 14.2bn, respectively. The Offer would consist of an offering of GDRs by certain existing shareholders of the Company. Great Point Entertainment Income Trust PLC announced its prospectus has been approved by the FCA. Great Point Entertainment Income Trust PLC is a newly established, externally managed closed-ended investment company. The Company will provide project finance to content makers and commissioners in the global television and film production industry via senior loans secured against pre-sold intellectual property (IP) rights. GPEIT's investment objective is to provide Shareholders with dividend income and modest capital growth through exposure to media content finance. Deliveroo has applied for admission of the Company's Shares to the standard listing segment of the Official List of the FCA and to trading on the main market of the London Stock Exchange. Deliveroo works with over 115,000 best loved restaurants, takeaways and grocery stores globally and provide work to over 100,000 riders across 800 locations in 12 markets, serving 6m customers globally. The price range for the Offer has been set at £3.90 to £4.60 per Share, implying an estimated market capitalization at Admission of between £7.6bn and £8.8bn. Raising c. £1bn. Due 7 April
Companies: SYM CGNR EKF KBT GGP VLS TMO ECK B90 MDZ
We are lucky that Next, one of the shrewdest commentators on retail sector developments, is among the first to update on Christmas trading. It confirms suspicions that unseasonable Q415 weather dented trade. However, there are also signs in the statement to the structural shifts occurring in UK retailing that could negatively affect sector valuations.
Companies: NXT NXT NXS NEXT NAC/U NXTGMS NEE NXTC NXGN NE/H NGW NEXT OILS 1316 YNPC ALNXT NXTV NFC NESF NEXD NXTG 282 NXGN NXTM NML 4814 3842 3186 7094 003580 065170 089140 137940 160550 NGB NXGEN NEXT NXB 348210 NEXT NEP NXTCL 8147 EFFI NXGT NEX NXRA NXSL NXMR NXTN NGMC NGAC NCAP
Reach plc today provides a strong Q4 trading update highlighting upgraded FY’20E AOP expectations of £130m-£135m ahead of consensus (cons: £124.3m) and record growth in Digital. Digital sales growth has recovered strongly since Q2, accelerating to 25% y/y (Q3: +13%; H1: -1%) benefitting from both higher traffic through implementation of Group engagement initiatives and yield recovery as advertisers in CV19 impacted verticals return. Print circulation revenue decline moderated to 11.7% y/y in Q4 (Q3: -12.6%), a significant deceleration from the -18.2% y/y in H2 and modestly better than our H2 forecasts. Continued focus on audience engagement, the quality of audience data and insights, and further extension of locally focused digital content we see driving further gains online, with Digital sales still on track to double on a four year view. We are upgrading forecasts, increasing FY’20E sales, AOP and adj FCF by 2%, 6% and 5% respectively, with upgrades filtering into future periods. A 17% FY’21E FCF yield sits well in advance of global peers (3%-7%), with a 10% FCF yield generating an intrinsic valuation of 315p/share.
Further media reports that Dr Martens, the British Boot brand is planning an IPO on the LSE. It is currently owned by PE group, Permira who is expected to sell down its stake at the IPO. March 2020 YE the group had revenues of £672m and EBITDA of £184m. Deal size TBC. Upon Admission to AIM, Nightcap will acquire The London Cocktail Club Limited (the "London Cocktail Club"), which is an award winning independent operator of ten individually themed cocktail bars in nine London locations and one location in Bristol. Offer TBC Due mid Jan. HSS Hire Group, HSS.L transfer from Main to Aim. Mkt Cap c. £70m. Recently raised £52.6m. Leading supplier of tool and equipment for hire in the United Kingdom and Ireland and has provided equipment hire services in the United Kingdom for more than 60 years, primarily focusing on the B2B market. Due 14 Jan. VH Global Sustainable Energy Opportunities plc, a closed-ended investment Company focused on making sustainable energy infrastructure investments, today announces intends to launch an initial public offering of shares on the Official List (Premium) of the Main Market of the London Stock Exchange. Due by Early Feb.
Companies: IUG CBP KAT APP RST DIS NICL BOKU CNIC HE1
Tremor’s listed peer Magnite has announced that it intends to acquire SpotX for $1.17bn in cash and shares, or c10x SpotX FY20 net revenue of $116m. After Tremor upgraded its FY20 net revenue to $180m in its January trading update, 10x net revenue would imply a Tremor valuation of $1.8bn or 1,000p per share. The SpotX transaction enables Magnite to grow its scale within connected TV and digital video advertising, and will provide Magnite with $67m of FY20 net CTV revenue, or almost triple Magnite-SpotX’s Q4 20 net CTV revenue to $42m compared to $15.3m for Magnite standalone. In comparison, we expect Tremor to report over $15m of net CTV revenue in Q4 20 and $35m for FY20 as Tremor’s momentum in CTV has continued to accelerate. However, before the Magnite-SpotX transaction, Magnite’s market cap was over $4.8bn compared with Tremor’s market cap of $1.0bn. As Tremor continues to deliver and exceed expectations, we do not expect that its current valuation will be sustainable due to market or external interest, and today’s transaction highlights that M&A is taking place around the growth in CTV and digital video that Tremor is capitalising upon. On 12-month forward forecasts, Tremor is currently trading on 13x EV/EBITDA with conservative EBITDA growth of +15%, which compares to US peers Magnite, The Trade Desk, and PubMatic on 61x, 114x, and 53x 12-month forward EV/EBITDA with EBITDA growth of +10-60%.
AMTE Power, a developer and manufacturer of lithium-ion battery cells for specialist markets, announced its intention to seek admission to trading on AIM. Admission is expected to take place during March 2021. The Company intends to raise approximately £7m by way of a placing of new ordinary shares in the capital of the Company. Timing TBC. Samarkand Group Limited, the cross-border eCommerce technology and retail group opening up the world's largest market for brands and retailers, intends to IPO on the Apex Segment Aquis Stock Exchange Growth Market. Admission is targeted for March 2021. Cellular Goods a UK-based provider of premium consumer products based on biosynthetic cannabinoids announced its intention to join the main market (standard) this Spring. Target valuation £20m raising c. £8m “to finalise the development and launch of a range of the Company's premium-quality consumer products based on biosynthetic cannabinoids, which is fully compliant under UK law.” NextEnergy Renewables to launch an IPO on the Main Market. NREN is a differentiated renewables investment Company that aims to capture the most attractive private renewables and energy transition infrastructure investment opportunities globally. Targeting a £300m raise. NREN is targeting total returns of 9-11 per cent. per annum (net of all fees and expenses but including the Target Dividend and capital appreciation) . The Company's target dividend yield for the first full financial year to 31 December 2022 is 5.5 pence. Due Early March 2021. Auction Technology Group is considering an IPO on the Main Market. The Group operates six world-leading online Marketplaces and proprietary global auction platform technology for curated online auctions. In FY20 the Group delivered pro forma revenue of £52.3m, supported by notable underlying year-on-year growth from both Standalone ATG Group and Standalone Proxibid Group (12.4 per cent. and 40.4 per cent., respectively). For the same period, the Group delivered a strong profitability performance of £22.3m pro forma Adjusted EBITDA representing a pro forma Adjusted EBITDA margin of 42.6 per cent. Expected March 2021. Digital 9 Infrastructure launch an initial public offering on the Specialist Fund Segment of the Main Market of the London Stock Exchange, by way of an initial placing and offer for subscription for a target issue £400m. Digital 9 Infrastructure plc is a newly established, externally managed investment trust. The Company will invest in a range of digital infrastructure assets which deliver a reliable, functioning internet. The IPO Prospectus is expected to be published in March 2021. Team PLC announced their plans for an AIM IPO. Team owns Theta Enhanced Asset Management Ltd, trading as Team Asset Management. This is a Jersey-based active fund manager providing discretionary and advisory portfolio management services to private clients, trusts and charities. Assets under management were GBP291m in November, up from GBP140m in December 2019 . The Company is seeking to raise no less than £5 million. The Placing will be priced on a pre-money valuation for the Company of £7m. Targeting March Admission. Virgin Wines UK Plc recently set out their plans for an AIM IPO. Virgin Wines is a direct-to-consumer online wine retailer that sells products to retail customers in the UK through two subscription schemes and a pay-as-you-go offering. The Group also sells a range of beers and spirits and operates a B2B sales channel for corporates. Deal details TBC but media reports suggest a £100m valuation. Targeting 2nd March Admission Fix Price announces its intention to float on the Main Market of the London Stock Exchange. Fix Price is one of the leading variety value retailers globally and the largest in Russia, with more than 4,200 stores. Fix Price has revenues of RUB 190.1bn, RUB 142.9bn and RUB 108.7bn for 2020, 2019 and 2018, respectively. Adjusted EBITDA for the same years was RUB 36.8bn, RUB 27.2bn and RUB 14.2bn, respectively. The Offer would consist of an offering of GDRs by certain existing shareholders of the Company. Great Point Entertainment Income Trust PLC announced its prospectus has been approved by the FCA. Great Point Entertainment Income Trust PLC is a newly established, externally managed closed-ended investment company. The Company will provide project finance to content makers and commissioners in the global television and film production industry via senior loans secured against pre-sold intellectual property (IP) rights. GPEIT's investment objective is to provide Shareholders with dividend income and modest capital growth through exposure to media content finance. According to media reports, Deliveroo, are expecting to release their IPO plans on 8th March. The company raised more than $180m in January with a valuation of more than $7bn.
Companies: OTMP MNO FNX NSCI CNIC CHAR RBD CLP DXSP CUSN
CentralNic delivered FY20 revenues of US$241.2m, a 121% y-o-y increase (FY19: US$109.2m). Adjusted EBITDA rose 71% to US$30.6m (FY19: US$17.9m), supported by the acquisitions completed in FY19 and FY20 and led by growth in Monetisation. On a pro forma basis, adjusting for the Codewise acquisition, the group delivered 9% organic revenue growth in FY20. In FY21, the group has already completed two acquisitions (SafeBrands and Wando) and secured €60m of additional bond headroom from shareholders, of which €15m has been placed to fund Wando and future M&A deals. On the basis of the strong FY20 results, with the group trading in line with management’s expectations ytd, we have updated our forecasts. The valuation continues to look attractive versus peers.
Companies: CentralNic Group Plc
In 2020, the decrease in organic net revenue (-8.2%) and the headline operating margin (14.9% of net revenue) were in line with guidance. The reported losses were due to huge impairment charges related to old acquisitions whose carrying values had to be reassessed. The return to organic growth is expected as from Q2 21 on the back of the better economic outlook and the development in digital advertising. The headline operating margin is expected to be 13.5-14% of net revenue in 2021.
Companies: WPP Plc
Eagle Eye, a leading SaaS technology company that creates digital connections enabling personalised, real-time marketing through coupons, loyalty, apps, subscriptions and gift services, has reported its interim results for the six-month period ended December 2020 (H1 FY21). Overall, we see these results as testament to Eagle Eye’s growing importance in the omnichannel ‘loyalty’ market and its ability to remain financially strong throughout a challenging trading environment, caused by the COVID-19 pandemic. As demonstrated through new client wins, platform development and low customer churn, Eagle Eye is a key partner to leading merchants and brands as they make the move into a more digitally enabled customer engagement strategy. As the Group continues to scale, we look forward to financials strengthening in parallel. HOUSE STOCK.
Companies: Eagle Eye Solutions Group PLC
