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Kape has issued a trading update for what was a very productive year for the Group and in which it exhibited a strong trading performance. Revenue for FY 2020E is expected to be at the top end of the expected range while Adjusted EBITDA is ahead of guidance. We increase our estimates by 1% and 8% respectively to be in line with the anticipated outturn for the year. It now has around 2.5m paying subscribers across its core markets of North America and Europe. Kape also completed the integration of Private Internet Access (PIA) ahead of schedule and launched new products, including its privacy suite. Kape expects to increase R&D spending further in FY 2021E to build on the successful additions to its product range and customer experience. With good momentum going into FY 2021E, the Group continues to demonstrate its ability to drive customer numbers and retention through the execution of a clear strategy for meeting the growing demand from consumers for digital privacy and security solutions.
Companies: Kape Technologies Plc
CentralNic has made a small acquisition of SafeBrands, an online brand protection software provider and corporate ISP based in Paris, for a cash consideration of up to €3.6m (0.9x FY19 revenue). €3m is payable upfront and €0.6m will be paid subject to meeting FY20 performance objectives. SafeBrands operated at close to break-even in FY19. Separately, CentralNic has also reorganised its Corporate division, rebranding it as the Enterprise division. Based on our estimates, the company trades on an FY21e P/E multiple of 15.8x and 9.8x FY21e EV/adjusted EBITDA. We expect earnings-accretive M&A to bring multiples down further as CentralNic consolidates a globally fragmented market of sub-scale, cash-generative businesses.
Companies: CentralNic Group Plc
The MISSION’s trading update indicates the group had a comfortably better Q4 than expected, with the full-year PBT over £1m, against our forecast £0.5m. Cash performance was significantly ahead, with a year-end net debt position of £1.3m allowing the payment of the delayed final 1.53p dividend from FY19. We will update our FY20 numbers with the full results in April. We have trimmed our FY21 forecast revenue by 7.5% to reflect the ongoing impact of the pandemic in H121, reducing PBT from £9.0m to £7.1m. We also publish our first thoughts on FY22, on an improving trend. The shares remain priced at a significant discount to peers on earnings multiples.
Companies: Mission Group Plc
A strong exit for FOUR from Q4-20 is a key message we are drawing from its trading update this morning, with excellent momentum during the closing months of the year reflecting that the underlying model remains extremely healthy. The data points are weekly order intake lifting from a touch over 60% of the prior year in October to an average of 70% for the whole quarter and hence implicitly suggesting a c.75% level in the latter part of the quarter. Revenues at $US560m are 65% of the prior year – again, a positive number in the context of the pandemic and, taking account of two strong months at the start of FY2020E prior to the onset of the pandemic, also reflect the accelerating progress of the business in the second half. We note the strong recovery in Apparel which was apparent when the company last reported to the market, at which point this sector was operating at close to 2019 levels, with the distribution hub 100% utilised, and no doubt this will have contributed to the overall picture.
Companies: 4imprint Group plc
Kape has announced the launch of its CyberGhost Privacy Suite solution, for Windows initially, which it had trailed in its July Capital Markets Day. The suite provides online users with a comprehensive protection solution which combines Kape’s market leading privacy and software products, providing a strong data privacy and system security offering to consumers on a global basis. The Group is also launching a password manager and an end-to-end encryption service for cloud-data. These launches represent the fruits of the collaboration between Kape’s complementary acquired businesses. In particular, we expect the undertaking to further improve user engagement and retention, driving revenue and profit into the long term.
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. Further media reports that Dr Martens, the British Boot brand is planning an IPO on the LSE. It is currently owned by PE group, Permira who is expected to sell down its stake at the IPO. March 2020 YE the group had revenues of £672m and EBITDA of £184m. Deal size TBC. 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. Moonpig, the digital greeting card company, is planning an IPO with a potential valuation of £1bln, according to multiple media reports. Further details expected to be announced over the next two weeks.
Companies: ZPHR PANR PRSM SENS CYAN G4M ITX CRCL FEN ZIN
4imprint’s trading update indicates that order intake in Q4 was a little better than we had anticipated. Unaudited FY20 revenue was reported at c $560m, or 5% above our prior forecast. We remain circumspect around trading prospects for FY21, given the impact of the pandemic on corporate America and leave our forecast unchanged for now. The indicated year-end net cash balance at $39.8m (excluding lease debt) was well ahead of our projected figure ($22.5m in our modelling), and close to the $40.1m reported in October, implying that cash collections have held up strongly. We continue to view 4imprint as a high-quality investment proposition.
With an improving outlook for advertising spend, The MISSION should see a good bounce in revenues in FY21. Initiatives such as MISSION Made, launched in October, should help drive efficiency, with increasing use of shared central resources and a careful eye on costs also set to lead a rebound in margin. The financial outcome will partially be determined by revenue mix, with the group exposed to high-performing segments, such as tech and pharma, as well as areas with greater COVID-19 related issues, such as property and events. There are no changes to our forecasts at this stage. The group’s valuation remains well below that of peers.
Tremor has announced that December trading materially exceeded its prior estimates, as its platform’s momentum has continued to accelerate since its last update on 30 November. Tremor now expects FY20 revenue and EBITDA to be in the range of $404-408m for revenue (from $390-400m), and $58-60m for EBITDA (from $50-52m). This leads us to upgrade our FY20 and FY21 revenue forecasts by +2-3% to $406m and $479m, and upgrade our FY20 and FY21 EBITDA by +16% and +10% to $59m and $68m. As Tremor’s platform benefits from strong operational gearing, this drives upgrades to EPS of +28% in FY20 and +16% in FY21. Our net cash then increases by $11m in FY20 to $96m, and despite including $10m of buyback in FY21, our FY21 net cash increases by $12m to $117m as we partially unwind conservative working capital assumptions. This is the fourth upgrade to our Tremor forecasts since COVID-19 impacted the advertising market and Tremor in Q2 20, and Tremor subsequently adopted a prudent approach to its FY20 guidance. We continue to mirror this conservatism in our FY21 EBITDA of $68m, which compares with H2 20 EBITDA of $57m, and our FY21 EBITDA includes additional investment as Tremor looks to gain share within a market growing at over 20% pa. From p9 we also highlight that Tremor is demonstrating the same trends as its US ad tech peers Magnite, PubMatic, and The Trade Desk, with each forecasted to see +15-35% organic revenue growth and +10-60% organic EBITDA growth in FY21, as they focus on expanding in connected TV. However, Tremor is trading at a major discount to its US peers on all metrics, such as FY21 EV/EBITDA of 9x vs 41x, 29x and 104x, and at a discount to the finnCap Tech 40 on 17x with +9% EBITDA growth. As Tremor continues to deliver and exceed expectations, we do not expect that its current valuation will be sustainable due to market or external interest, and we upgrade our target price to 800p based on 20x FY21 EBITDA.
Companies: Tremor International Ltd.
Reach plc today provides a strong Q4 trading update highlighting upgraded FY’20E AOP expectations of £130m-£135m ahead of consensus (cons: £124.3m) and record growth in Digital. Digital sales growth has recovered strongly since Q2, accelerating to 25% y/y (Q3: +13%; H1: -1%) benefitting from both higher traffic through implementation of Group engagement initiatives and yield recovery as advertisers in CV19 impacted verticals return. Print circulation revenue decline moderated to 11.7% y/y in Q4 (Q3: -12.6%), a significant deceleration from the -18.2% y/y in H2 and modestly better than our H2 forecasts. Continued focus on audience engagement, the quality of audience data and insights, and further extension of locally focused digital content we see driving further gains online, with Digital sales still on track to double on a four year view. We are upgrading forecasts, increasing FY’20E sales, AOP and adj FCF by 2%, 6% and 5% respectively, with upgrades filtering into future periods. A 17% FY’21E FCF yield sits well in advance of global peers (3%-7%), with a 10% FCF yield generating an intrinsic valuation of 315p/share.
Companies: Reach plc
Further media reports that Dr Martens, the British Boot brand is planning an IPO on the LSE. It is currently owned by PE group, Permira who is expected to sell down its stake at the IPO. March 2020 YE the group had revenues of £672m and EBITDA of £184m. Deal size TBC. Upon Admission to AIM, Nightcap will acquire The London Cocktail Club Limited (the "London Cocktail Club"), which is an award winning independent operator of ten individually themed cocktail bars in nine London locations and one location in Bristol. Offer TBC Due mid Jan. HSS Hire Group, HSS.L transfer from Main to Aim. Mkt Cap c. £70m. Recently raised £52.6m. Leading supplier of tool and equipment for hire in the United Kingdom and Ireland and has provided equipment hire services in the United Kingdom for more than 60 years, primarily focusing on the B2B market. Due 14 Jan. 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: IUG CBP KAT APP RST DIS NICL BOKU CNIC HE1
Kape has announced that it has raised gross proceeds of $115.5 million through a significantly oversubscribed placing and retail offer of 59.2 million shares at 150p and will use $72 million of the proceeds to buy out the two major vendors of PIA, the transformational deal which the Group completed at the end of 2019. The remaining $43.5 million will be used to strengthen the Group’s balance sheet as it looks to select further acquisitions. There is an additional tax-related cash benefit of around $50 million over 15 years that is now available to Kape following this change to the PIA deal structure. This seems an intelligent way of removing any potential share overhang while also adding further to the group’s M&A firepower. Kape will cancel the shares which it acquires from the vendors and will not issue the vast majority of the deferred shares. With trading still robust and guidance unchanged, we make no alteration to our underlying business assumptions. Our EPS estimates reflect the changes to the shares in issue, both existing and prospective.
Today‘s statement highlights several positives, firstly that H2 revs to December are expected to be higher than in H1 (£7.3m), so importantly indicates that trading conditions have improved since the first lockdown. We also note that high margin ‘Distribution revenue‘ (royalty income on ZIN‘s back catalogue) outperformed in Q4 and helped achieve this sequential growth. Zinc also updates the market on a key client win - none other than Amazon and in-so-doing, ZIN will break in to a new market with Amazon Audible. Key points here: ZIN is clearly evidencing how it‘s now a more cohesive and flexible company following 2020‘s re-org and what‘s more, we see this as a first step in ZIN potentially becoming a trusted partner of Amazon. i.e. this relationship evolve to include video content production in due course! Beyond Amazon, we also learn that Tern TV has won a number of recommissions and also that the new Zinc Communicate division had a strong Q4 and won three new contracts to produce short form video for brands and corporate partners. Here, the objective is similar to that with Amazon – grow internationally and access new customer types i.e. diversify beyond a historic focus on UK PSB‘s. As a consequence of this new business momentum (and previously flagged strong new biz pipeline) FY21 revenue visibility has increased from £4.1m (last reported) to £9.3m today. On top of this, ZIN has £5m of pipeline at an “advanced stage“ and £15m “in engaged discussion“. Put all these together and we start to understand how Zinc could be working towards a profitable 2H21. We caveat this however with a level of uncertainty due to lockdown 3….what is clear however – Zinc is making unquestionable progress in its turnaround and notwithstanding Covid.
Companies: Zinc Media Group plc
4imprint’s year-end update highlights a continued recovery in weekly order intake from 60% of 2019 in October to 70% in Q4 overall. FY 2020 sales are expected to be c.$560m, down -35% on 2019, and adj. PBT in line with the Board’s expectations. FY 2020 sales are, hence, 4% ahead of our previous forecast. We assume short-term marketing costs have also increased as the opportunity is taken to win market share, but upgrade FY 2020 adj. PBT from $0.8m to $2.8m. We leave our FY 2021 and onwards forecasts unchanged subject to further evidence on the shape and pace of a recovery. Net cash of c.$40m at December 2020 is ahead of our forecast $29m, suggesting a very strong working capital performance. We reiterate our view that the timing and pace of a recovery is very hard to predict, but we believe history will repeat, and that 4imprint will accelerate market share gains and profits can return to pre-COVID levels in 2023.
Mirada plc* (MIRA.L, 85p/£7.6m) | Two Shields Investments/BrandShield plc (TSI.L, 0.11p/£4.9m - pre-proposed placing, acquisition and share consolidation)
Companies: Mirada PLC (MIRA:LON)BrandShield Systems plc (BRSD:LON)