Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on Gaussin. We currently have 15 research reports from 1 professional analysts.
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.
Key information : Revenue down to 75% to €4.3m in H1 15 compared to H1 14: Net income at €-4.9m in H1 15 versus €0.2m in H1 14: Order book at €120m: Authorisation to raise equity from international partners.
Finally, the license contract has not been accounted as revenue for 2014. The strong 58% growth in revenues to €19.4m (which was well below our expectation cf. our latest of January 28th) is not sufficient good news to offset the collapse in net income, from €2.3m in FY2013 to €-7.6m in FY2014. On the positive side, the order book grew from €29.7m as of year-end 2013 to €48.2m at year-end 2014 and to €122m at end of June 2015. Moreover, operating income increased from €3.3m in 2013 to €7.5m in 2014.
Research Tree provides access to ongoing research coverage, media content and regulatory news on Gaussin. We currently have 15 research reports from 1 professional analysts.
e il futuro
Companies: ABBY BDEV BWY BKG BVS CRN CSP CRST GLE INL MCS PSN RDW SPR TW/ TEF WJG
In July 2017, we highlighted the progress that AIM made in the first half of the year. We are now reviewing the performance over H2 2017. The latest AIM Statistics published yesterday show that there are currently 960 companies, with 80 new issues in 2017, raising £1.58bn and secondary issues raising a further £4.7bn. However, with 102 companies cancelling their listing there was a net 22 fall in 2017 as a whole. It appears that both the trends of new issue momentum and de-listings are set to continue in 2018. In Share News & Views, we comment on APC Technology*, ECSC Group* and IG Design.
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The latest Office for National Statistics (ONS) survey, ‘Ownership of UK quoted shares: 2016’, shows that retail investors are more important than most company managements realise or most capital markets professionals admit. When it is also appreciated that the data shows that retail investors set the share price for most quoted companies, most days, it becomes clear that engaging with such an audience enhances a company’s standing, whilst ignoring them courts disaster.
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A look back at our 2017 ideas In aggregate our analyst picks outperformed the FTSE All Share last year by 9% and the cumulative performance of our portfolio over 6 years would have given a total return of 300% (almost double the return on the FTSE All Share). In addition, many of our top-down themes played out very well such as our focus on secular growth in Tech, Life Sciences, Healthcare and Financials, an increase in M&A, our cautious stance on the Consumer and especially our bet on continued strength in the Industrials last year and solid growth in the global economy. What does 2018 have in store? We continue to play ongoing secular growth themes in Tech, Life Sciences, Healthcare and Financials. In addition, we tap into domestic areas of cyclical strength such as regional construction and house building, plus self-help initiatives and potential market share gains. We maintain a favourable view of Industrials given the global economic backdrop but think this could moderate during the year. Other changes of nuance include the potential for a better H2 in the Consumer sectors, which remain under pressure for now, and a better outlook in Media from a mini-quadrennial year in 2018.
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Stadium has reported that trading ta the year end was in line with expectations that were revised in November. It is encouraging that trading has stabilised and we now look forward to more details with the final results in March.
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Interim results reported revenue, EBITDA and PBT are ahead of our expectations as the company is confirmed as the market leader in UK small cap M&A. We increase revenue and cost estimates by £1m for the three forecast years while leaving our EBITDA expectations unchanged in view of the uncertainty over the timing of transactions closing. The unique high margin, high ROE and highly cash-generative model is set to grow significantly while we confidently expect a re-rating over time. We move our price target to 200p.
Companies: K3 Capital Group
XP saw a strong finish to the year, with Q4 revenue growth of 16% y-o-y and order growth of 24% y-o-y, resulting in FY17 revenues slightly ahead of our forecast. Good demand across all sectors and geographies was boosted by a strong contribution from the recent Comdel acquisition. Management expects continued growth in FY18; we maintain our forecasts which, based on current momentum, could prove conservative.
Companies: XP Power
Since Equifax announced a data breach in September 2017, legislators have been trying hard to penalize the lax attitude of data managers (including credit scoring companies). Recently, a bill was tabled in the Senate (Data Breach and Compensation Act), which proposes significant fines in the event of a data breach. Looking into the fine print, the bill recommends a fine of $100 per customer whose personal information gets compromised (with an additional $50 for each piece of data put at risk per person). The total sanctions are capped at 50% of the company’s total gross revenue. Also, if a company fails to disclose the breach to regulators in a timely manner, or has insufficient cyber security in place, the cap will increase to 75%. If this legislation had been in place during the Equifax fiasco, the company would have incurred a fine of at least $1.5bn.
We have increased our forecasts for adjusted profits and EPS by 5% for 2017 and by 3% for 2018 and 2019, following Bodycote’s stronger than anticipated Q4 performance. Our adjusted operating profit estimate of £124.5m for 2017 is in line with updated guidance, ie towards the top of the previous market range. Our 2018 forecast assumes organic sales growth of 3.9% vs. a tough 2017 comparative, but offers potential for further upgrades given the supportive industrial backdrop. Meanwhile the group’s strong balance sheet would support M&A or another return of excess cash to shareholders in the form of a special dividend. We have increased our target price from 995p to 1105p and our recommendation remains Buy.
Gateley was the first UK law practice to be floated on AIM. With the interests of partners and shareholders now closely aligned, the shares offer investors access to a business model set to directly benefit from the changing structure of the UK legal market; an opportunity-rich landscape for ambitious midtier firms. H118 results highlighted robust trading supporting our FY18 forecasts and reflecting good organic growth momentum (+8.5%). This is a quality earnings stream that we believe will support a progressive re-rating whilst earnings enhancing acquisitions provide the scope for upgrades in this highly fragmented sector.
The AIM Healthcare index has shown positive returns in all but three out of the past 11 years (2007, 2008 and 2011), growing at a CAGR of 7.6% over the period. This compares with a CAGR of -0.3% for the broader FT AIM All Share, +0.6% for the AIM 100 and +3.5% for its more senior FT All Share Health index. Sector growth and relative performance to the AIM All Share index has accelerated over the past five years; the sector having risen 19.19% CAGR since 1 Jan 2012. This compares with 6.8% growth in the AIM All Share and 6.1% in the FT All Share. This outperformance can be attributed to the increasing success amongst the Healthcare constituents which have progressed their business plans to a point where substantial value has been/is being created and where many companies have successfully scaled their businesses to sustain future growth. We highlight four companies that have different business models but exemplify the opportunities that are increasingly becoming evident within the sector.
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The acquisition of FBM gives the group a significant presence in the ‘hard to find’ or obsolete electronic component sector. FBM is expected to report revenue and profit growth in the current year. Furthermore, the existing APC business hasstarted FY2018E well and the group continues to trade in line with expectations. The net consideration of £0.5m, excluding £0.7m of cash which goes on completion, represents a multiple of 2.6x FY2016 PBT. We have upgraded our FY2018E PBT by 28% to £0.68m. We reiterate our Buy and 9p TP.
Companies: APC Technology Group
Next week Renishaw will report H1 18 results which we expect to show strong growth, consistent with rising global sector indicators such as manufacturing PMIs, industrial production growth and machine tool orders. We have belatedly refreshed our forecasts to reflect the positive momentum which has continued through FY17 into FY18, and moved estimates c.6% above consensus expectations. We have also increased our target price to 5600p, although retain our Hold recommendation given the shares’ strong run.
With the shares trading near to tangible book value we believe that Northgate is fundamentally undervalued. Our updated PBT forecasts are reduced 5% in FY’18 and 4% in FY’19. With a 49%/51% H1/H2 PBT split vs. 54%/46% last year and more aggressive capex assumptions increasing the Group’s debt profile, we believe the near term risk is to the downside. However, on a 12 month view the shares look undervalued. Northgate’s ten year average FY1 P/Book value is c.1.3x, last trading at a significant discount during the 08/09 recession. With a growing Spanish business, the potential for a turnaround in the UK, no sign of an imminent recession and stable residual values we believe the shares should trade at a premium to book value. We remain at Buy but reduce our target price to 526p (1.3x P/Book).
Despite redT energy (RED LN)# making considerable commercial progress in the last few months, it is clear that our previous expectations for sales in FY 2018 were too bullish. We remain firm believers in the technology and its suitability for deployment in the rapidly emerging energy storage sector but now expect one or two EBITDA break-even months in FY 2018 and full-year breakeven to occur in FY 2019, one year later than our initial expectations. Our FY 2017 forecasts are largely unchanged.
Companies: Redt Energy