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CAP-XX Ltd* (CPX.L, 4.5p/£19.9m) | Gfinity plc* (GFIN.L, 3.8p/£28.9m) | MTI Wireless Edge Ltd* (MWE.L, 44p/£38.7m) | Newmark Security plc* (NWT.L, 1.175p/£5.5m)
Companies: CPX GFIN MWE NWT
Interims are in line with the guideline full-year performance we quantified at the time of the June prelims –£5m of EBITDA and £5.3m of free cash flow derived from £53m revenue, with guidance of consistent performance in 2H20. We reintroduce forecasts for FY20, £9.5m EBITDA from £105m revenue, as 3Q sees the re-invigoration of projects postponed through COVID-19 and the opportunity for recovery into 2H20 and FY21, on top of £3m annualised cost savings. Cloud & software grew to 25% of group revenue; recurring revenue is at 74%; and new CEO Ioan MacRae’s measures to deliver efficiency and growth will increasingly bear fruit in 2H20 and FY21. Even if you think our 600p (11.5x a depressed level of EBITDA) target is wrong, the current share price is more so, with a current FY20 P/E of 6.0x and EV/EBITDA of 5.6x, and 1H proof of credible FY forecasts.
Companies: Maintel Holdings Plc
Good H1 performance from the provider of communications and radio frequency solutions given the global backdrop with revenue growth in all three divisions (Antenna, Mottech and Distribution) and overall growth of 3% to $19.6m. Operating profit increased significantly (+28% to $1.9m) with EBIT margin +190bps, reflecting operating leverage and cost savings. Strong cash conversion resulted in net cash of $7.6m (H1 FY19: $5.0m), post April’s final dividend payment ($1.8m). MTI’s diversified business (sector and geography) has provided some protection against COVID-19 as different countries have entered/emerged from lockdown as evidenced by recent Mottech contract wins in China. Management’s confidence in the outlook is underpinned by order book strength and MTI is currently on track to meet our FY20 profitability expectations. Forecasts and 46p/share fair value, equivalent to 13x FY21 EPS, remain unchanged.
Companies: MTI Wireless Edge Ltd.
MTI Wireless Edge, the provider of communications and radio frequency solutions, is seeing demand for its products and services across multiple geographies and sectors. FY19 performance was in line with forecast with revenue up 13% to $40.0m (ACLe: $39.8m) and PBT +29% to $3.4m (ACLe: $3.6m). Operating cash flow was very strong up 148% to $5.6m (ACLe: $4.2m) and net cash increased $3.3m to $7.7m (ACLe: $5.7m). Distribution and Professional Consulting Services performed well (+35% to $11.5m) and Mottech continues to grow (+15.5% to $16.5m). MTI is positioned to capitalise on three global trends: the adoption of 5G networks; climate change concerns driving water management; and increased defence spending. Forecasts and 46p/share fair value, equivalent to a 13x FY21 PER, remain unchanged and we view the recent share price retracement as an attractive opportunity for a company with a profitable track record cash on the balance sheet and yielding 6.3% in FY20.
Today’s results for YE March 2020, are somewhat historic having been flagged by the trading update back in April. However, they do reflect the impact that COVID-19 has had on international business, as well as actions SRT has taken to secure its future. Lockdowns put a hold on existing and new system projects, causing a delay in both revenues and expected contract signings during the final months of FY 2020 through H1 2021. Also, we highlight that SRT has prudently impaired an existing long-standing contract for a monitoring system in the Middle East to clear the decks for a new larger contract that includes both monitoring system and transceivers. Existing Systems contracts are again under way, with £8.5m received on deliveries, and negotiations have restarted on the expected new contracts. Meanwhile, the Transceivers business grew by 24% in the FY 2020, and surprisingly, is reported to be trading marginally ahead of last year in FY 2021 to date despite COVID restrictions.
Companies: SRT Marine Systems Plc
AVN Financing, BLU Timeline and Results, ECK Contract Wins, FITB Placing, Subscription and Convertible Loan Note, HRN Admission to AIM, MARL Estimate, MMH Interim Results, MXO Mexico Update, NET Contract Win, PLI Q2 Results and Highlights, SVR Contract Win, TRCS Trading Update, UNG Launch, VENN Trading Update
Companies: AVN BLU ECK HRN MMH MXO PLI SVR TRCS UNG ORPH NET MARL BIDS
Warren Buffett once said that as an investor, it is wise to be ‘fearful when others are greedy and greedy when others are fearful’. Fear is not in short supply right now.
Companies: OPM ALU ANCR BLV CONN CRC STU GATC HAT LEK MMH MCB MWE NXR NTBR NOG PAF PEG RFX SRC TEF TEG TPT VTU WYN XLM
ECSC Group plc* (ECSC.L, 145p/£13.0m) | Tern plc* (TERN.L, 9.5p/£27.0m) | MTI Wireless Edge Ltd* (MWE.L, 39p/£33.8m)
Companies: ECSC TERN MWE
Bigblu Broadband (BBB) has reported a strong set of FY19 results that demonstrate strong organic growth, and are in line to ahead of the previous consensus estimates. This establishes a strong foundation for BBB’s future growth, and we expect that BBB will see revenue, EBITDA, and EPS growth in FY20 and FY21 despite the uncertainty caused by Coronavirus. This reflects that BBB has a robust and resilient investment case, which we explain in depth in this report. We consequently believe that BBB is undervalued on 12m fwd multiples of 5x EV/EBITDA and 7x adj P/E, and initiate with a TP of 155p or 15x FY21 adj EPS.
Companies: Bigblu Broadband Plc
The Coronavirus pandemic is a human tragedy of vast proportions – as well as the terrible human toll, COVID-19 has led to economies across the globe going into physical lockdown and financial freefall. Entire populations are adapting to the “stay at home” edict, to safeguard the vulnerable – and some of these changes will lead to long-lasting or perhaps permanent changes in the way we live or work. This note describes some of our client companies whose business models are well adapted to these changes, or who might see a change in long-term structural demand.
Companies: AMO BGO FDM GAMA KAPE LOOP TERN ZOO
FY20 results: inline with guidance
Companies: Trakm8 Holdings Plc
Contract announcement
Gamma has delivered this morning another strong set of results for H1 to June. Despite the COVID-19 challenges, the business has grown organically, and the acquisition programme is delivering well on its promise of European expansion. The group is positioned well to build revenues on and around Microsoft Teams, which is clearly benefiting from the work-from-home trend. We raise our profit estimates for all three forecast years as a sign of confidence in ongoing growth and look forward to further strong performance (and potentially even further M&A) into H2 and beyond.
Companies: Gamma Communications Plc
