2020 Outlook
Companies: ATU CNQ PXT SRX TOU TVE ENB PD K FM LUN TCN AIF ATA TCS ARE CCL/B SIS
Altura announced it has entered into a definitive PSA with an unnamed private company to divest of a 12.5% working interest in all of the corporation’s production, wells, lands and facilities (including ARO) for gross proceeds of $7.0 mm.
Companies: Altura Energy Inc
Altura reported fourth quarter financial and operating results that were in line with expectations. The company had provided an update within its prior release surrounding its 2018 year-end reserve book a few weeks ago.
Altura reported very strong 3Q18 financial results featuring CFPS of $0.03/sh, in line with our estimate of $0.03/sh and slightly ahead of consensus figures of $0.02/sh.
With the contribution from 7 of 8 wells drilled at LWB this summer, October volumes month to date are 1,700 boe/d (GMPFE 4Q18e 1,750 boe/d). The 8th well is a larger stepout which is scheduled for completion in November.
Altura reported fourth quarter financial and operating results that fell modestly short of expectations, influenced by lower top-line pricing on widened differentials and higher unit G&A relative to prior periods, though transportation and operating costs were in line to lower than estimated which is positive. The third Extended Reach Horizontal (ERH) at Leduc Woodbend (LBW) produced 293 bbl/d in that last seven days. Its IP26 is ~267 bbl/d (17° oil from the Rex). The well has a lateral length of 2,000m (TVD 1,300m) and was completed with 46 stages at a DCET cost of $2.5 mm. This is new information and a positive result – our type curve anticipates 250 bbl/d IP0 at $2.650 mm/well achieving 205 mbbl EUR (263 mboe including associated natural gas). There are no changes to our 2018e or 2019e forecast at this juncture. Our 12-month target price is 5.1x 2019e EV/DACF on the current strip, postulated at levels that do not reflect the potential for high growth ahead. We continue to rate this stock as a high conviction BUY.
Altura has provided its 2017 year-end reserves which we characterize as in line with prior reports for growth and FD&A metrics, primarily reflecting the company’s development activity at Leduc-Woodbend (LBW) in 2017. We continue to await results from the company’s 3 rd and most recent ERH well drilled at LWB, in January expected to be brought on production by the end of February. Ahead of this operational update and formal year-end 2017 results, we have left our target price unchanged at $0.75 per share, reflective of 5.8x 2019e DACF at the strip.
The stocks on the GMP FirstEnergy Best Ideas List represent our highest conviction BUY recommendations with an expected return of 20% or more over the next 12 months. The investment thesis for each name on the list is laid out in this report.
Companies: CNQ AAV ATU PXX KEL RRX SPE WCP PXT SES PPL
Altura has entered into an agreement to purchase 125 boe/d (55% oil and liquids) of low decline (~10%) Upper Mannville production and 7.3 net sections of land for total cash consideration of $4.0 mm. The assets are 100% operated and located in the Killam area of Alberta, ~40 miles west of Wainwright, Alberta. Management estimates that the acquisition adds 12 Upper Mannville horizontal drilling locations based on current approved well spacing. The deal is accretive to CFPS. The Company’s 2H16e drilling program is unchanged. The Company retains an excellent financial position. There are no changes to our 12-month target price or ranking at this juncture.
Impact: Positive. While not transformational, this transaction aligns with corporate strategy of early stage growth through acquisition.
Altura reported second quarter financial and operating results slightly behind our estimates, though at this early stage the key components of its organic growth strategy remain intact. We have made no changes to our forward estimates at this juncture as Management reiterated a 7-well summer drilling program mainly focusing on its Klein North property, though testing some exploration concepts. We have reaffirmed our 12-month target price of $0.45 per share and Outperform ranking, noting a robust implied return and current valuation that is well below its oily small cap peer group.
Impact: Neutral. Results lagged FirstEnergy forecasts, though capital costs continue to trend lower as the commodity price environment continues to lend itself to potential transactional catalysts for the stock.
Some Recovery on Segmented Cash Flow Generation Over Q1 Though Still Down 56% Y/Y. In aggregate, the Intermediate, Mid, and Small Cap groups are expected to generate 2Q16e cash flow of $1,281 mm, $183 mm, and $53 mm, or $1.517 billion in total, that while depressed relative to the same period last year (~$2.647 billion combined), is up 17% sequentially from the prior quarter, largely on the strength of crude oil price recovery in the period. Severely weak natural gas pricing picture markedly reversed into summer, market likely to ignore financials for natural gas producers and look ahead to winter and formalization of sell-side 2018e estimates in coming months. Spot AECO natural gas prices recently crested C$2.60/mcf, and with a reasonable alignment of previously distressed NE BC Stn2 differentials, augmented by a withdrawal expected next week, view the market psyche as constructive and looking ahead, with the analogy that this market is shaping up to mirror 2012 still holding. That said, with crude oil poised to retest support levels, combined with strong stock price performance broadly observed YTD, we would characterize sentiment as slightly pessimistic in the near-term which could reduce or unwind momentum-based investment strategies that have worked thus far in 2016.
Companies: AAV ARX BTE BNP CPG ERF POU PEY PGF PWT PSK VII TOU VET WCP BNE CJ CR DEE JOY KEL LTS NVA PPY PNE RRX RMP SRX SGY TOG TET ATU CKE GXE IKM LXE MQL PRQ SPE SKX TVE TVETF YO
Altura reported first quarter financial and operating results slightly behind our estimates, though exiting the quarter with a stronger cash position on lower capital outlays. We have made no changes to our forward estimates at this juncture as Management reiterated a 7-well summer drilling program mainly focusing on its Klein North property, though testing some exploration concepts. We have reaffirmed our 12-month target price of $0.45 per share and Outperform ranking, noting a robust implied return and current valuation that is well below its oily Small Cap peer group.
With this publication we briefly summarize our projections for 1Q16e quarterly results for the Junior E&P (Intermediate, Mid & Small Cap) segments of our coverage universe
Companies: AAV ARX BTE BNP CPG ERF POU PEY PGF PSK VII TOU VET WCP BNE CJ CR DEE JOY KEL LTS LRE NVA PPY PNE RRX RMP SRX SGY TOG TET ATU CKE GXE IKM LXE ROAOF MQL RE SPE SKX TVE TVETF YGR YO
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An H1 trading update to December confirms a strong start to FY21, with sales growth accelerating to 22% y/y – a material rebound from a Covid impacted 2H20 (+9% y/y) and +15% achieved prior to this. KPI‘s are strong across the piece, for instance every Geo grew >20%, Connector revenue grew +20% (Shopify: +115%) and ‘enhanced functionality‘ revs grew +20% also. It‘s genuinely hard to find fault with this performance. To us, this evidences how DOTD is executing on its strategy (around products, partners and Geo‘s) while also benefitting from strong thematic tailwinds benefitting its sector and end-markets. We leave recently upgraded FY21 forecasts unchanged, though note the strong H1 sales performance now requires an undemanding +14% y/y growth to hit N+1 estimates, so see upgrade/ outperformance potential. As well as DOTD‘s clear organic growth opportunities, we also highlight how cash continues to accumulate (now £27.6m) and could be deployed in a number of vectors.
Companies: dotDigital Group plc
Today's news & views, plus announcements from BRBY, BHB, DPLM, IWG,GFTU, CMCX, JDW, GFRD, BGO
Companies: Bango plc (BGO:LON)Galliford Try Holdings PLC (GFRD:LON)
Although 2020 will probably go down in history as one of the most challenging years experienced during our lifetime, it will also likely be chronicled as one of the best years for the recognition and appreciation of science. As we entered 2020, the COVID-19 pandemic was in its infancy. However, it rapidly evolved through the exponential rise in infections and mortality globally. Much has been achieved during the past 12 months in the fight against COVID-19, but, as we enter 2021, there are considerable concerns about the emergence of a mutant version of the virus and the second wave that we are now facing.
Companies: AVO ARBB ARIX BBGI CLIG DNL FLTA ICGT OCI PCA PIN PHP RECI STX SCE TRX SHED VTA YEW
Ahead of the FY Trading Update at the end of January, we revisit RBG’s investment case, and respond to investor concerns over Convex’s M&A pipeline and the short term cash requirements of Litigation Financing. Outperformance of the UK legal industry vs UK GDP over 2020 validates RBL’s continued performance. M&A market data shows an encouraging recovery in deal completions which looks set to continue into 2021, and we anticipate Convex to be well placed to convert its pipeline of >20 deals (c.£18m) into revenues, underpinning forecasts. LionFish is now well seeded, and the Group’s early cash realisations of cases ensure cashflows for the business are broadly neutral. Whilst case outcomes are binary, the de-risked option value here is a compelling addition to the investment case. We see intrinsic value as c.100p; highlighting the breakout potential in these shares.
Companies: RBG Holdings Plc
Time has produced robust interim results, slightly ahead of its earlier trading update, reflecting the gradual recovery of trading from a COVID-19 impacted March to June 2020, which saw a low in the lending book. With own-book origination holding up and arrears/forbearance falling, we view H2/21E positively but note the current UK lockdown presents uncertainty. Still trading at 20% below tangible book value, despite improved macro conditions, we see upside ahead and maintain a “BUY”.
Companies: Time Finance plc
Success has been made in reranking three of the ten targeted websites with Google. The rationalisation of the broader estate is ongoing and 2021 should see the business lean, reranked, cash rich and solidly profitable.
Companies: XLMedia Plc
Ergomed’s H220 trading update highlights a successful end to 2020 despite the COVID-19 pandemic causing restrictions for much of the year. Total revenues were £86.4m (up 26.5%). Like-for-like revenues in the PrimeVigilance segment grew 30% (or 56% including the acquisition in January 2020). Unsurprisingly, the CRO segment was flat. However, in H220 revenues were up 11.2% over H120 and up 15.2% y-o-y. Ergomed’s key markets are the US and Europe, where vaccine deployment should be relatively efficient, so we expect the CRO segment to rebound throughout 2021. The recent MedSource acquisition will also significantly add to the 2021 top line. Because of the well-balanced pharma services offering (pharmacovigilance and CRO), Ergomed has proved to be a resilient business with further growth prospects intact, in our view. Net positive revisions to our estimates and an expansion of peer multiples have led to an upgrade of our valuation to £501m or 1,113p/share (from 845p/share previously).
Companies: Ergomed PLC
Results for H1 to end Nov ‘20 show Time’s recovery is well underway from an industry-wide, Covid-induced slump in good quality lending demand and spike in bad debt provisions. This coincides with a Group rebrand, which consolidates 5 years of buy-&-build success and offers a range of new competitive advantages. The share price of 25p is 30% off pre-pandemic levels with valuation multiples suggesting Time looks significantly undervalued in relation to peers.
Foresight Group , the award-winning infrastructure and private equity investment manager to IPO on the Main Market (premium). The Offer will primarily comprise a sale of shares by existing shareholders (c.80% of the Offer) with a smaller offering of new shares (c.20% of the Offer) to be issued by the Company. Details TBA. Cornish Metals (TSX-V: CUSN) intends to list on AIM. The Company is proposing to raise £5 million by way of private placement of new Common Shares (the "Fundraising") to advance the United Downs copper-tin project. The Company expects that Admission will become effective in February 2021. The Company's Common Shares will continue to be listed and trade on the TSX-V in Canada. 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: TYM W7L BEG CRPR EUZ IRR CMCL FARN KETL AUG
Anglo Asian Mining* (AAZ LN) – STRONG BUY – Update on Restored Contract Areas Chaarat Gold* (CGH LN) – Kapan production beats guidance and delivers $19m EBITDA Sunstone Metals (STM AU) – Drilling results from the Espiritu gold-silver prospect in Ecuador Tertiary Minerals* (TYM LN) – Sale of data on Finnish project Versarien* (VRS LN) – Interim results W Resources (WRES LN) – La Parilla Q4 production
Companies: AAZ CGH WRES TYM VRS STM
What’s new: SimplyBiz’s trading update gives clear guidance for their full year results due on 16 March: - £61m revenue (3% below 2019 revenue: £63m); - 28.3% adjusted EBITDA margin (same as 2019: 28.3%), which implies £17.4m adjusted EBITDA (i.e. 2% lower than 2019 adj EBITDA of £17.8m); - Robust cash flow conversion (calculated as adjusted EBITDA, less working capital movements, lease payments, CAPEX, development expenditure, corporation tax paid and interest, as a percentage of Adjusted EBITDA) is expected to exceed 65% (2019: 46%); - Net debt reduced to £19.5m (31 December 2019: £27.0m) and net debt to adjusted EBITDA ratio of 1.1x (2019: 1.5x).
Companies: SimplyBiz Group plc
Today's news & views, plus announcements from JET, PSN, SONG, HWDN, MSLH, PAGE, WMH, ASC, BGO, CUSN, CAY
Companies: Bango plc (BGO:LON)Persimmon Plc (PSN:LON)
Anexo has announced a trading update for the year ended 31 December with adjusted PBT in line with current market expectations despite further disruption and restrictions in the UK in the latter part of the year. We believe the resilience shown by the business, investment in legal capacity and growth opportunities positions it well for 2021 and beyond. Reiterate buy rating
Companies: Anexo Group Plc
Anexo’s trading update for the year to the end of December 2020 rounds up a resilient performance from the Group in an operating environment that was influenced by COVID-19 and the associated lockdowns and restrictions. The Board expects to report adjusted PBT in line with current market expectations which we believe is around £16.0m, with our estimate at £16.1m. We make no changes to our numbers. We note the lower than expected spend on the VW emissions case in H2 and assume that other costs have increased faster than we expected in line with growth in the business. The VW case remains a potential significant positive impact on revenue and profits, although we only reflect the costs in our estimates at present. While Anexo has previously flagged cash absorption in H2, we note that cash collections rose ‘significantly’ in Q4 with a record high in December – usually a quieter month in that respect. Overall, we believe that Anexo remains well set for further growth in FY 2021.
Experian delivered a strong show in Q3 FY20/21 (7% organic revenue growth), ahead of management’s guidance of 3-5% yoy. The US mortgage activity and consumer services in North and Latin America continued to drive the top line. However, the top-line momentum is expected to ease in Q4, given the tough comparable base. Management has guided the benchmark EBIT to be similar to the previous year’s.
Companies: Experian PLC
