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As is characteristic of this company, management has acted swiftly to execute an additional acquisition, putting the placing proceeds to work with another immediately earnings-enhancing acquisition, creating a Group with diversified revenue and profits, significant growth potential and greater visibility in a post-COVID world. We reintroduce estimates with CAGR in revenues of 29% between FY 2021 and FY 2023 and a CAGR in EBITDA of 34%. Quantuma, an insolvency and restructuring specialist targeting SMEs, is being acquired for £26.95m from existing resources to give an EBITDA multiple of 7.47x (EBITDA March 2020: £3.6m). Our forecasts take into account the greater visibility and predictability that the recent acquisitions bring to the Group. Our new SOTP valuation arrives at a reinstated price target of 300p.
Companies: K3 Capital Group Plc
For this Monthly, we are delighted that Rooney Nimmo and 24Haymarket have allowed us to reproduce a recent report they jointly published, entitled An analysis of UK exits (2015-2019), which provides a granular analysis by sector of the activity in our dynamic private companies world. We hope you find the insights of interest.
Companies: AVO AGY ARBB ARIX CLIG ICGT NSF PCA PIN PXC PHP RECI SCE TRX SHED VTA
Keywords published a H1'20 trading updating this morning for the period ending 30 June. The group expects to report revenues of EUR173.5m, implying YoY growth of 13% (of which 8% CCY LFL) and a an adjusted PBT figure of EUR21.7m, an 18% increase YoY. Adjusted EBITDA is expected at EUR30.8m, up 19% YoY. The group continues to pursue M&A opportunities and highlights liquidity of c.EUR200m including EUR101m of net cash. We note that the run-rate on growth and margins implied by H1 performance appears to be toward the top-end of consensus expectations for FY20.
Companies: Keywords Studios Plc
This morning's announcement that VDTK has been awarded a sizeable, $US2.2m / 1.5MW, contract by SAF Group following the positive evaluation of its product is very encouraging. The six unit order from specialist engineering, construction and project management company SAF Group follows successful trials of VDKT's lightweight and robust solar energy product at one of SAF's sites (announced on June 22nd), and thus provides significant affirmation of the potential of its product to provide green energy effectively in a wide variety of settings. As a result of the win, VDTK will deliver six containerised ultra-light units from its manufacturing plant at Lainate in Northern Italy, for delivery in the coming months, with deployment of VDTK's product to provide temporary and semi-permanent power in the Sindh province of Pakistan across SAF's operations.
Companies: Verditek Plc
Edison Investment Research is terminating coverage on Avacta Group (AVCT), BCI Minerals (BCI), Destiny Pharma (DEST), Globalworth Real Estate Investments (GWI), Henderson Alternative Strategies Trust (HAST), Herantis Pharma (HRTIS), Jupiter Green Investment Trust (JGC) and Rockhopper Exploration (RKH). Please note you should no longer rely on any previous research or estimates for these companies. All forecasts should now be considered redundant.
Previously published reports can still be accessed via our website
Companies: Avacta Group Plc
In Keywords Studios’ trading update, management expectations are for H120 revenues of approximately €173.5m, delivering organic growth of 8% and a rise of 13% over H119 (€153.2m). Adjusted EBITDA is expected to be €30.8m (17.8% margin), a 19% increase on H119 (€25.8m), with adjusted PBT of €21.7m, 18% higher than H119 (€18.4m). Given the impact of COVID-19, this represents a strong performance, helping to demonstrate the benefits of a diversified services business, with a global footprint. We maintain our view that Keywords is well placed as the only games service provider on a global scale. The P/E rating, though undoubtedly high (52.8x FY20e, 40.1x FY21e), reflects the increasing recognition of Keywords’ resilient growth credentials, but should fall further as Keywords executes its buy-and-build strategy. Following its placing in May, Keywords has c €200m of dry powder to convert a ‘strong and attractive’ M&A pipeline.
This morning's announcement from WATR again places the company's successful reacquisition strategy under the spotlight, with the Melbourne acquisition adding $AU250k of profits to the Corporate business and $AU1.29m revenues for less than a $AU1.8m purchase price. This latest reacquisition means that the group is keeping up the strong pace set earlier with the Maryland acquisition last month, following on from San Jose and Minneapolis in May and June respectively. It is also a reflection of the company's global approach. With strong technology and capabilities in the field of minimally invasive leak detection and remediation, WATR is able to benefit from drivers which go well beyond national frontiers, since water infrastructure challenges are well-nigh universal.
Companies: Water Intelligence Plc
Intelligent Ultrasound has announced its results for the 6-months to June 2020. EBITDA loss of £1.2m was slightly ahead of the recent trading update expectation (£1.3m-£1.4m) on revenues of £2.5m for the period, which were negatively impacted by COVID-19. Currently all group revenues are generated by the Simulation division which successfully minimised the impact of COVID-19 on sales and marketing activities to limit the group level impact. Importantly, the first ScanNav AI software product remains on track to deliver revenues in 2021, while commercial discussions for the second product, AnatomyGuide, are on-going. Cash at period end was £10.1m. COVID-19 uncertainties led us to withdraw forecasts and we remain Under Review.
Companies: Intelligent Ultrasound Group Plc
This has been an impressive half for Bango. Mobile usage and transactions have risen during lockdown, driving End User Spend (EUS) over its platform up by nearly 60% to £740m. Moreover, Bango’s ongoing revenue also rose >50%, to a record level of £4.8m, with revenue growth more closely matching EUS growth than previously. With operational gearing in the payment platform, group profitability continues to rise rapidly as its revenue increases; group H1 2020 adj. EBITDA alone beating the whole of FY 2019. The major deals delayed from December also flowed through, both in Payments and the early-stage Bango Marketplace business. The period saw the purchase of a controlling stake in Audiens by a S. Korean tech conglomerate, allowing increased management focus while retaining a 40% stake in the business set to be boosted to a new level by considerable funding and IP injected by its new parent. Overall, Bango was cash generative and ended the half with £4.2m cash, suggesting c.£0.8m of cash from operations. This is a very reassuring performance, with the deals signed in H1 expected to boost H2 EUS to the £2bn targeted this year and leaving the company on track to meet our FY forecasts of strong revenue growth and material profitability.
Companies: Bango Plc
Bango’s H1 20 trading update in our view delivers a number of confident messages. Growth in the key End User Spend (“EUS”) metric remainsrobust, and the group delivered record revenue growth and EBITDA during the period. The group’s financial position saw a solid improvement in the first half. A closing gross cash position of £4.2m represents a £1.5m increase on the FY 19A level and demonstrates the company is now generating cash from its operations. H1 20 was a busy period for Bango, with a number of new contracts signed in both the payments business and Bango Marketplace, establishing a good base for growth in the second half and into 2021. We make no changes to estimates following the update but believe that Bango continues to demonstrate strong momentum and that the group remains well placed to deliver its FY 20E targets.
This morning's news from MLVN that its Singapore operation is to be closed marks a further stage in the company's ongoing response to the challenges posed by Covid-19, which have also included a fund-raise and a change in management. Loss-making 2018 and 2019, Singapore has this year confronted problems common to all global education businesses; and closure reflects recognition by management of the lack of a clear pathway to profitability for this business against this backdrop, not just in the short but in the medium term.
Companies: Malvern International Plc
RBG Holdings pre-close trading update to June 30th confirms a strong H1 performance for RBL, the Group’s law firm, with revenues up 36% like-for-like to c.£11.4m YoY. Convex, the CF boutique, understandably has faced COVID headwinds, with most of its H1 pipeline deferred indefinitely, whilst Litigation Finance continues to grow its pipeline and financing commitments on a longer term view. Due to continued uncertainty from COVID we withdraw our forecasts this morning, with a view to reinstating once more clarity on H1 outturn and momentum into H2 is available.
Companies: RBG Holdings Plc
Anexo has released a good AGM trading update with trading performing in line with management expectations. The Group indicates it intends to reinstate financial guidance for 2020 at the interim results in August which should give investors added comfort that the business is performing well and seeing improving underlying trends, a strong message to the market.
Companies: Anexo Group Plc
Avacta Group plc (AVCT): Expansion of agreement with Daewoong Pharmaceutical
The global online gaming market generated c £40bn of gross gaming revenues (GGR) in 2018 and newly regulating markets (the US) are expected to contribute to 7% CAGR to 2023 (according to H2 Gambling Capital (H2GC)). However, while regulated markets have provided significant opportunities for operators to date, government intervention remains a constant threat and legislation is tightening. Some mature markets (notably the UK) have been raising taxes and implementing regulatory burdens, which increases the cost of business. In our view, success will depend on a combination of scale, diversification, proprietary technology and a strong balance sheet. Many of the 12 operators in this report should benefit from these dynamics and sector valuations remain attractive, at 12.6x P/E, 8.2x EV/EBITDA and 6.0% dividend yield for FY19.
Companies: 888 ACX BETSB ORPH GVC GYS OPAP PTEC RNK WMH