Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on Gaussin. We currently have 17 research reports from 1 professional analysts.
Gaussin launched a capital increase of €2.5m at €0.14 per share, namely c.18m new shares. In accordance with the decisions taken by the boards of directors on 16 January 2018, making use of the delegations given by the EGM on 15 June 2017, it was decided to proceed with reserved capital increases, with a subscription period expiring on the 30 January 2018. All subscriptions were received before the expiry of the subscription period. The final completion of these capital increases has been noted by the boards of directors meeting on 18 January 2018 and 25 January 2018. As a result of the capital increases and the exercise of part of the convertible bond, the capital is now composed of 111m shares at the end of January 2018.
EPS CHANGE CHANGE IN EPS2017 : € -0.13 vs -0.11 ns 2018 : € -0.04 vs -0.04 ns Based on the fact that we were expecting something like 78m diluted shares (average) at the end of 2017 vs 70m realised, this has a dilutive impact on EPS (lower number of shares for an unchanged loss expected).
TARGET CHANGE CHANGE IN TARGET PRICE€ 0.25 vs 0.50 -51.0% As we have reduced our forecasts for 2017 and 2018 (we now expect negative EBITDA and earnings for these two years), the peers-based valuation method suffers: as EBITDA is forecast to remain negative over the next 18 months, the EV/EBITDA valuation generates a nil valuation, which is a very penalising due to its weight in the overall target price. In a similar way, the P/E valuation gives a 50% valuation compared to the current share price. CHANGE IN EPS2017 : € -0.11 vs 0.00 ns 2018 : € -0.04 vs 0.04 ns Following, the publication of the H1 results, we now expect a negative adjusted net income of c.€9m. CHANGE IN NAV€ 0.51 vs 0.67 -24.0% Following the publications of the H1 results, we have revised our model. The issue of a convertible bond could result in additional dilution for current shareholders of c.27m new shares should the stock price remain stable over the following 18 months. We now expect something like 150m shares at the end of 2019. The change in the number of shares explains all the decrease in the NAV valuation. CHANGE IN DCF€ 0.35 vs 0.74 -53.0% Concerning our DCF valuation, we remain convinced that Gaussin could hit c.€100m in revenue by 2027. However, as for the NAV, the convertible bond issued in June has a negative effect on our valuation. But we have also reduced the perpetual EBITDA margin from c.24% in 2027 to c.17%. This effect is the major component in the decrease in our DCF valuation.
Key information: • Revenues: €2.1m after audit vs €5.7m previously announced and vs €4.9m in 6m 16. • EBITDA: €-3.3m vs €-3.8m in 6m 16. • Net income: -€5m vs -€9.7m in 6m 16. • Cash and cash equivalents: €6.6m thanks to the issue of a new convertible bond. • Order book: €82m.
Financial freedom by 2019? TARGET CHANGE CHANGE IN TARGET PRICE€ 0.53 vs 0.61 -12.2% Note that we changed our recommendation from a Call option recommendation (held for almost two years) to a Buy in June 2017. We believe that the debt restructuring and the strong guidance (namely €18m of revenue and a positive reported net profit for FY17) are positive elements. We believe that the company could become cash break-even from 2019 onwards, which would be a very positive element and a strong catalyst for the share price. Finally, in our view, Gaussin's dependence on capital increases is approaching an end (we forecast only a €5m capital increase in 2018). Gaussin's financial freedom will be significantly rewarded by the market. In anticipation of this, we have switched to a positive recommendation. CHANGE IN EPS2017 : € 0.00 vs 0.02 -76.2% 2018 : € 0.04 vs 0.05 -22.9% Following a Q2 that was disapointing relative to Q1, we have decided to lower our EPS forecasts. We now expect the company to be break-even in 2017 on an adjusted basis. We still expect Gaussin to deliver positive adjusted net income in FY 2018. CHANGE IN NAV€ 0.67 vs 0.71 -6.68% Following the issuance of convertible bonds, we have adapted our assumptions about the future capital increase, namely the conversion of debt into shares. We now expect this to takes place at c.€0.25 per share vs €0.30 previously, explaining all the decrease in our NAV. CHANGE IN DCF€ 0.76 vs 0.83 -8.51% Following the issuance convertible bonds, we have adapted our assumptions about the future capital increase, namely the conversion of debt into shares. We now expect this to takes place at c.€0.25 per share vs €0.30 previously, explaining all the decrease in our DCF.
Key information: • Revenue of €5.7m in H1. • Revenue up by 16%. • Order book of €81m. • ATT revenue is up by 44%. • MTO revenue down by 18%.
As the company has issued a guidance for the first time, we have decided to take it into account and trust management. As a consequence, we have now revised upwards our 2017 EPS into positive territory.
Key information: • Revenue of €4.9m after auditing vs €9.1m announced in June 2016. • Operating income at €-4.9m vs -4.5m in H1 15. • Net income at €-9.7m vs €-4.9m in H1 15. • Equity at €9.3m. • Cash and cash equivalents at €3.8m at 30 September 2016. • Order book down by 14% due to cancellation
TARGET CHANGE CHANGE IN TARGET PRICE€ 0.63 vs 1.02 -39.0% We were previously expecting several capital increases over the 2016-2018 period at €1 per share. Now that the share price has collapsed, we no longer expect capital increases at €1 per share but rather at €0.50 per share, resulting in higher dilution. Hence, we have sharply reduced our target price. CHANGE IN EPS2016 : € -0.45 vs -0.07 ns 2017 : € -0.01 vs 0.04 ns Concerning the EPS, we now expect a significant net loss for the full year, whereas we had previously been expecting slightly negative net income. CHANGE IN NAV€ 0.90 vs 1.61 -43.9% Our NAV valuation suffers from our new assumption on the capital increases, namely at €0.50 per share instead of €1.00. This results in higher dilution: the 2018 number of shares is now expected to be 78m vs 50m previously. Moreover, the valuation suffers from the fact that the order book has decreased by 14%. As the company is highly leveraged, this has a compounding effect on our valuation. CHANGE IN DCF€ 1.11 vs 1.27 -12.4% Our DCF valuation suffers from our new assumption on the capital increases, namely at €0.50 per share instead of €1.00. This results in higher dilution: the 2018 number of shares is now expected to be 78m vs 50m previously.
Issue of convertible bonds does not change the big picture EPS CHANGE CHANGE IN TARGET PRICE€ 1.11 vs 1.10 +1.02% Following a decrease in our forecast of WCR, net debt has been lowered. As a result, the EV/EBITDA peer valuation increased sharply and compensated for the decrease in our DCF, resulting in an unchanged target price and recommendation. CHANGE IN EPS2016 : € -0.07 vs -0.05 ns 2017 : € 0.04 vs 0.04 -1.55% As we have changed the timeline for the capital increases following the issue of €10m of convertible bonds from 2016 to 2017 and 2018, this had an impact on the average number of shares for the year 2016. We have not changed our net income forecast. CHANGE IN NAV€ 1.61 vs 1.64 -1.83% In our NAV, the lower net debt expected at 2016 year-end had a positive effect on the valuation and we have also increased the valuation of the licence which was compensated by a decrease in the multiple used for the Port division from 0.7x order book to 0.6x, as we now forecast a lower EBITDA margin than previously for this division, and by the removal of DTA from gross assets as a result of the warning by auditors. Our forecast concerning the number of shares remains mostly unchanged. CHANGE IN DCF€ 1.29 vs 1.52 -14.7% In our DCF, the main change is the lower forecasted EBITDA margin from 2018 onwards. We now assume a 15.5% EBITDA margin from 2018 onwards versus 19.0% previously. The change was motivated by the fact that the average EBITDA margin for the capital goods sector is roughly 14%, and therefore our assumptions were not conservative enough. The lower net debt expected partially had an offsetting effect on our DCF valuation. We have left capex assumptions unchanged. Our forecast concerning the number of shares remains mostly unchanged.
Key information: • Revenues of €9.1m in H1 16 vs €4.3m in H1 15. • Revenues of MTO division boosted by new technologies. • Revenues of ATT division remained disappointing. • Order book at €116m.
Following the publication of the H1 16 sales number, we have revised our model. The main changes are a lowering in our 2016 revenue forecast from c.€30m to c.€18m for 2016 and a decrease in 2016 net income from €0m to €-2m, as well as the lowering of our forecasts for 2017. Beyond 2018, our hypothesis is mainly unchanged. We might have to reduce our net income forecast after the publication of the H1 16 financial statements if we deem that our forecasts are not conservative enough. Overall, this has a negative impact on the peers' valuation as we use 18-month forecasts. The NAV and the DCF are mainly unchanged as we maintain our opinion that the long-term potential remains intact, should Gaussin manage to find an industrial partner.
Following the release of the 2015 annual results, we have updated our model. We have made only minor changes to our forecast. Note that we still expect the number of shares to cross the 50m threshold in the next few years, a sharp increase compared to the 2.5m shares in 2009. We also continue to forecast an EBITDA margin in the vicinity of 20% by 2018 onwards and an EBITDA growth rate of 7% between 2018 and 2026. Note also that should the company manage to raise capital at €2 per share, this would act positively on our valuation as it would reduce the dilution.
Gaussin announced that it has raised €7.5m through a private placement and a reserved transaction. The private placement was for 4m shares at €1 per share and was covered by the 10th resolution from the general meeting on 30 October 2015. The reserved transaction was for 3.5m shares at €1 per share and was covered by the 24th and 25th resolutions from the same general meeting. These transactions were a necessary condition in order for Gaussin to receive €5.5m of debt-equivalent from BPI France, since there was a resolutory condition to its attribution, namely a €6m capital increase. This financing received will be used to finance the VASCO (translated from French: Vehicle Automated Supervised for Containers) project. The goal of this project is to develop the first system of automatic guidance for terminal trailers without the need to install infrastructural equipments. Management insisted on the fact that this capital increase does not prejudge the industrial partnership that the group is currently negotiating with a Chinese group and an Indonesian group.
Poor performance for FY2015 but bright prospects for the future TARGET CHANGE CHANGE IN EPS2015 : € -0.45 vs -0.38 ns 2016 : € -0.09 vs -0.01 ns Following publication of the FY2015 revenue figures we decided to take a slightly more negative view on our EPS forecasts. CHANGE IN NAV€ 1.72 vs 1.92 -10.5% Following publication of the FY2015 revenue figures we have updated the reference multiples in our NAV, explaining the decrease in the NAV valuation. CHANGE IN DCF€ 1.50 vs 1.51 -0.63% The change of our DCF valuation is limited as we had already taken into account a conservative scenario with very significant dilution.
Research Tree provides access to ongoing research coverage, media content and regulatory news on Gaussin. We currently have 17 research reports from 1 professional analysts.
Full-year results were slightly above expectations and point to being on track to exceed our previous FY 2018 forecasts slightly. Market conditions remain robust in its main US market, with significant growth seen in Europe. A revised dividend policy gives new clarity to cash returns, (backed by $19m of net cash), and triggers a strong uplift in ordinary dividend plus a supplementary dividend. The shares remain attractive on an earnings basis but also have premium yield attractions. Our raised 465p TP is based on a P/E of 17.0x in 2018 and 16.0x in 2019 and offers strong upside scope to the shares. Market conditions remain favourable and cash returns underwrite our positive stance.
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AB Dynamic’s (ABD) shares have risen tenfold since its 2013 AIM admission, fuelled by an impressive 19% organic revenue CAGR. The company is investing in a platform to sustain this performance. In the last 18 months it has opened new facilities, bolstered in-country customer support, reshaped its management structure and raised capital. The final part of this plan, a new CEO, is expected to take the helm in the summer. He, or she, looks set to inherit a business in great shape and enjoying long-term growth drivers. ABD’s investment should help it to capitalise on these trends and sustain its impressive growth.
Companies: AB Dynamics
Avon Rubber’s Capital Markets Day highlighted the strength and depth of its product portfolio. Investment in both divisions has ensured that the company is able to address strong growth trends in its end-markets with attractive solutions. Avon Protection has received US regulatory approval for its Powered Air Purifying Respirator range, which should see further orders. Meanwhile, milkrite I InterPuls is offering solutions for productivity improvements to a dairy market increasingly open to technology.
Companies: Avon Rubber
As the quarter ends and Easter approaches, the results marathon is set to pause. As highlighted previously, the vast majority of results have been as anticipated, with some notable exceptions. The state of the UK economy is improving according to the Chancellor. The MPC meeting on Thursday is likely to leave interest rates unchanged but an increase in May seems likely, even though inflation is set to fall over the next 12 months. We have continued to see significant M&A activity. In Share News & Views, we comment on Braemar Shipping*, Burford, CLS, ECSC*, FDM*, GetBusy* and XLMedia.
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Augean had a tough 2017 in terms of profitability and HMRC assessments regarding potential landfill tax liabilities. Adjusted PBT reduced by 19% to £5.8m driven by a lossmaking legacy Colt contract, a softer year for Energy & Construction, and a higher cost base due to an increase in headcount at the end of 2016. However a sharper focus on cost control meant that net debt was held at £10.8m. Our adjusted PBT and EPS forecasts are unchanged, as segmental adjustments and the disposal of the total waste management business have been offset by cost savings. Our net debt forecasts have fallen reflecting the renewed cost focus, including the decision not to declare a dividend given the ongoing discussions with HMRC. More HMRC assessments have been received, plus a communication that the latest assessment is likely to be significantly reduced, but the total potential liability remains uncertain.
Two features stood out in Forterra’s first full year results since its IPO: another significant ‘beat’ on cashflow expectations; and the formal signal that Britain’s second biggest brickmaker was to ‘press the button’ on a new plant, having previously waited until there was clear evidence of sustainable housebuilding demand. We believe the time is right, but that the company will remain measured in its expansion, in keeping with what we believe is its conservative track record.
The company has announced the acquisition of Beaumanor Engineering and Derek Lane & Co for a total consideration of £10.2m to be financed by a two-part placing totalling £11m at 170p. The acquisition is a snug fit with existing operations and offers some strong synergies. The placing leaves the business with a strong balance sheet with headroom for some small bolt-on acquisitions, although post the Beaumanor deal 2018 is expected to focus on extracting synergies and operational improvements. The trading update signals that underlying trading is on track. We have updated our forecasts for the placing and acquisition. The shares have performed well, reflecting previous EPS-enhancing acquisitions, and remain attractively rated. Our 215p price target is based on a 2019 P/E of 12.4x
Companies: Flowtech Fluidpower
Perfomatrix PLC, a global end to end Performance Marketing technology and services company headquartered in the UK, is looking to join AIM in early April 2018, offer TBC Crusader Resources, an ASX-listed public company incorporated in Australia, which is primarily focused on the exploration and development of gold assets in Brazil. Offer TBC, expected late March. SimplyBiz, a Financial Services Firm, reported to be considering an IPO targeting a market capitalisation of between £140m and £155m in a listing that would raise £30m of new money. Bacanora Lithium—Readmission. No new money. Mkt cap £140m. Due 21 March. the new holding company for Bacanora Minerals Ltd Core Industrial REIT—established to invest in Irish-based industrial properties, predominantly located in the Greater Dublin Area. Vendor placing and new funds to a total of €225m, Target gross proceeds €207m. Expected Mid March Polarean - Medical drug-device combination company operating in the high resolution medical imaging market. Offer TBC. Due26 March
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Hot on the heels of the recent £4m fund raise and acquisition of the Louisville franchise, Water Intelligence has announced the acquisition of its Bakersfield, California franchise. Bakersfield is one of the larger cities in California and a major centre for agriculture in the US. Drought conditions in California make water loss a particularly sensitive issue with respect to agribusiness. Given these characteristics, the area was significantly under served by the former franchise owner with only $180k of sales in 2017. Water Intelligence has paid $252k for the territory, truck and equipment and plans to expand the operations in this territory rapidly given the size of the opportunity. We have upgraded our FY 2019E EPS by 2% and FY 2020E by 3% and raised our target price to 263p, factoring in value from potential future franchise re-acquisitions.
Companies: Water Intelligence
Flowtech has announced the complementary acquisition of Balu Limited, for £8.2m (EV of £10.2m), alongside a proposed placing to raise £11m (gross). Balu comprises two subsidiaries: Beaumanor Engineering, a Leicester-based fluid power equipment distributor and a long-standing competitor to Flowtechnology, with annual sales of £8.1m; and Derek Lane & Co, a specialist fluid power engineering business that has crossover with Flowtech’s Power Motion Control (‘PMC’) Division (sales of £3.3m). The purchase expands the footprint by providing a second logistics centre in Leicester, alongside new customers and product lines from which to extract commercial synergies. There is scope to drive operational improvement, within Balu and across the wider Group, and this is a key area of focus for management in 2018. We forecast FY2018E/19E EPS to be broadly unchanged following the transaction, including the dilution from the placing. Nevertheless, the platform on which to deliver future expansion is significantly stronger, and now at a sufficient scale to explore consolidation opportunities in the €12.6bn European market, albeit most likely in FY2019.
Companies: Flowtech Fluidpower
1Spatial issued a positive trading update for the year ending 31 Jan 2018 with overall adjusted EBITDA expected to be in line with expectations. The performance was driven by the core geospatial business which had higher revenues, EBITDA and margins than forecast. The group also announced that it is disposing of its controlling stake in Enables IT (for a nominal sum) allowing it to fully focus its resources to the core geospatial business where it has differentiated IP. We are highly encouraged by the continued progress shown by the group against its strategy, noting some key wins in the UK and the US during the year. As such, we see good upside (>2x revenues) to the current rating of 1.5x EV/sales (only using Geospatial revenues) with continued delivery.
As demonstrated by the recent trading update, XPD continues to grow rapidly by acquisition and also organically (+46% year-on-year in 2017). We anticipate further strong growth during the course of our estimates, driven by a combination of: exposure to faster GDP growth than the UK (CEE & the Baltic states); the relatively newer areas, such as Eshopwedrop and Pall-Ex; new offices, warehouses and services; and, not least, further acquisitions. Our valuation methodology suggests today’s market capitalisation currently undervalued the business by at least 50%, with further corporate activity likely ahead.
Capital Drilling (CAPD): Corp FY results – encouraging margin gain | Water Intelligence (WATR): Corp Acquisition of an underperforming franchise
Companies: Capital Drilling Water Intelligence
Northgate issued a complex trading update on Thursday 22nd February with significant implications for forecasts. We anticipated near term downside risk in our 19th January note, but not the magnitude. Our headline PBT forecasts are now cut by 20% in FY’18 to £55.8m, 44% in FY’19 and 31% in FY’20. Despite this rebasing of our forecasts, a number of risks remain – e.g. earnings still declining into FY’19, net debt still rising with covenant pressure in FY’19 and a change in depreciation policy which could increase exposure to vehicle residual values. There is some potential for a turnaround, but management itself does not expect any significant improvement in trading until FY’20. A breakup is a possibility to drive value, but failing that we believe a 30% discount to NAV is justified and set our target price at 279p.