Edison Investment Research is terminating coverage on Intelligent Energy Holdings (IEH). Please note you should no longer rely on any previous research or estimates for this company. All forecasts should now be considered redundant.
City of London Group (COLG) - Sch 1—RTO of Milton Homes Limited, an equity release provider which has a UK residential property portfolio of 586 properties with a market value of approximately £77 million as at 30 June 2017. Offer TBA. Due 5 Oct | Springfield Properties—Scottish housebuilder. Intention to float. Offer TBA “Our turnover exceeded £100 million for the first time this year and now we employ around 500 people. This IPO is the next step in our growth.” | Warehouse REIT - The Company will invest in a diversified portfolio of UK warehouse assets located in urban areas. The Company is targeting a dividend yield of 5.5p equivalent to a yield of 5.5 percent. for the year ending 31 March 2019. Issue price 100p. Offer raising £150m at £1 with market cap of £166m. Due 20 Sep | OnTheMarket—Intention to float on AIM to raise c. £50m which will be used to fund the growth of the OnTheMarket.com portal, already the third biggest UK residential property portal provider. Expected valuation £200m to £250m. |People’s Investment Trust—Objective of sustainable wealth creation. Also to list on the Social Stock Exchange. Targeting £125m raise on 17 Oct. No performance fees or executive bonuses in order to focus on long term rather than short term performance. | Charter Court Financial Services Group—Intention to float. Specialist lender serving the UK residential mortgage market. The net mortgage loan book stood at £4.4 billion as at 30 June 2017 growing at a compound annual growth rate of 92 percent since 31 December 2014. Part vendor sale and £20m primary raise. | ContourGlobal LP—Report on Bloomberg that the thermal energy power generator is considering a London listing. | Hipgnosis Songs Fund investment Company offering pure-play exposure to Songs and associated musical intellectual property rights. Offer raising £200m at 100p. The Company has decided to extend the closing date for the Placing, Offer for Subscription and Intermediaries Offer to 1 August 2017. The Company may bring forward this closing date at any time. Admission 15 Sep.
Companies: EEP SCE JDG CKT BGO BAR EYE PCA LBP RBW
Intelligent Energy’s interims were in line with the guidance given at the AGM in March. The results demonstrate that management has succeeded in reducing cash burn to its stated target of c £1.6m/month. It intends to bring the group to a cash break-even position within the next two years through volume roll-out of standard air-cooled products. Project wins during the period indicate there is appetite for Intelligent Energy’s fuel cell stacks in the target markets, although we note that additional funding will be required to support this process. We leave our estimates unchanged.
During H117, Intelligent Energy was reshaped to focus on driving sales of commercially ready B2B products. The group has won contracts in two of its three target segments: stationary power and drones, withdrawn from its Indian energy management business and realised substantial cost savings. However, product roll-out has been slower than originally anticipated, with management in financing discussions with key convertible loan note holders and we have reduced our estimates.
Intelligent Energy (IEH) has announced a deal to supply 600 low-power 1kW fuel-cell modules to US-based Luxfer-GTM Technologies for integration into Luxfer-GTM’s Zero-Set Lite portable light towers. The contract, the value of which has not been disclosed, underpins our assumption of £5.0m product sales during FY17, so we leave our estimates unchanged.
Intelligent Energy (IEH) has announced that the deal to acquire the Energy Management Business of GTL will not now be consummated. The move leaves management free to concentrate on driving sales of commercially ready B2B products, which is a key element of its strategy. We adjust our FY17e revenue estimate while leaving our pre-exceptional losses and cash-flow forecasts unchanged.
Intelligent Energy (IEH) has developed a high power density fuel cell technology suitable for use in multiple sectors. The group has an excellent record of providing technology for automotive companies, most notably for the Suzuki Burgman electric scooter. Under its revised strategy, it is focusing on near-term opportunities to deliver products for deployment in distributed power generation, UAV and consumer electronics applications to drive revenue growth during the years before mainstream adoption of fuel cell vehicles. We reintroduce our estimates to reflect the new strategy.
Intelligent Energy’s AGM statement notes significant progress since the commencement of FY16 with regard to executing its operational strategy and securing the funding required to fully realize the value of its innovative fuel cell technology.
Intelligent Energy (IEH) has signed a joint development agreement (JDA) with an emerging smartphone OEM. The announcement shows the group is making rapid progress on executing its operational strategy while management proceeds with completing its financing programme. In
January, management noted that good progress was being made towards completing both phases of the financing programme by the end of
calendar Q116, as originally indicated.
Anglo American | Anglo Pacific | Capital Drilling | Intelligent Energy | Lonmin PLC | Noricum Gold | PolyMet | Stellar Diamonds | Tri-Star Resources
Companies: AAL APF CAPD LBP NMG POM LMI STEL TSG
Intelligent Energy (IEH) made major steps forward in all three divisions during FY15, although the share price has been adversely affected by financing concerns, which management is actively addressing. The DP&G division negotiated a deal with GTL that transforms the group’s revenue profile and establishes a platform for volume deployment of fuel cells. The Motive division has broadened its customer base so it now works with one in four major automotive OEMs. The Consumer Electronics (CE) division launched its first product, acquired key assets for accelerating the development of fully embedded fuel cells and secured joint development work with an emerging smartphone OEM. We trim our estimates to reflect a modified CE business model and now see fair value at £426m ($643m).
Intelligent Energy (IEH) made major steps forward in all three divisions during FY15, although the share price has been adversely affected by
financing concerns, which management is actively addressing. The DP&G division negotiated a deal with GTL that transforms the group’s revenue profile and establishes a platform for volume deployment of fuel cells. The Motive division has broadened its customer base so it now works with one in four major automotive OEMs. The Consumer Electronics (CE) division launched its first product, acquired key assets for accelerating the development of fully embedded fuel cells and secured joint development work with an emerging smartphone OEM. We trim our estimates to reflect a modified CE business model and now see fair value at £426m.
Intelligent Energy (IEH) has signed an agreement to acquire GTL’s energy management business, which provides energy to over 27,400 telecom towers in India, for £85m ($129m). The transaction is expected to generate long-term recurring revenues worth £1.2bn ($1.8bn) over 10 years. Management expects EBITDA margin for this activity to rise from c 15% to 30-35% (c £40m or £61m per year), within three to five years. We revise our estimates and indicative valuation to reflect the transaction, giving a base case fair value of £471m ($717m).
Beowulf Mining | DiamondCorp | Firestone Diamonds | Kefi Minerals | Intelligent Energy | Weatherly International
Companies: BEM DCP FDI WTI LBP KEFI
Intelligent Energy (IEH) has signed an agreement to acquire GTL’s energy management business, which provides energy to over 27,400 telecom towers in India, for £85m. The transaction provides a platform for the large-scale economic deployment of fuel cells as a distributed power solution and is expected to generate long-term recurring revenues worth £1.2bn of revenues over 10 years. Within three to five years, EBITDA margin for this activity is expected to rise from c 15% to 30-35%, equivalent to c £40m per year. We place our estimates and indicative valuation under review.
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Hargreaves’ FY20 results are very solid indeed. As previously reported, the only noticeable impact from COVID was in the slippage of Blindwells’ land sales, which were due to conclude during the lockdown period. Site activity has resumed and sales remain on track to conclude in the current year. A final dividend of 4.5p has been declared and the outlook statement is measured but confident. We reintroduce forecasts today, effectively reinstating our pre-COVID expectations. Hargreaves is well positioned to deliver a period of significant, renewed growth with the prospect of a double digit dividend yield from FY22 as HRMS profits are distributed.
Companies: Hargreaves Services 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
HSP has announced positive results this morning, with a 30% increase in underlying EPS (continuing) for the year to May ‘20. Underlying PBT declined; however the prior year included land sales which did not recur in FY2020A. Stripping these out, profits were ahead YoY. Net debt rose marginally to £28.1m (prior year: £24.5m), largely on the back of accelerated mining activities (positive weather conditions) and delays to the sale of Blindwells, where the company had invested £8m; and is expected to remain steady during the coming year as the group continues to invest in Specialist Earthworks (with a switch to mainly leasing debt on HS2 plant funding). Having deferred the interim dividend on the back of Covid-19, the Board is now reinstating the dividend with a 4.5p payment in respect of the final DPS, reflecting the forward visibility it now feels it has. Given this forward visibility, we would also expect forecasts to be restored to the market in the near future, these having previously been withdrawn.
Companies: JSE HUR RDSA
In the midst of another attempted takeover by stealth, Petropavlovsk PLC (LSE: POG) announced their trading results for H1 2020 which leaves them on track to deliver one of their best years ever, operationally and financially, with more to come in 2021. This is down to the perseverance, skillset and hard work of the workforce out in the Amur Region and their CEO Dr Pavel Maslovskiy, who has staked his reputation on the successful build out of the POX plant. Any corporate raider (and shareholder alike) should realise, whether it be Vekselberg or UGC, that without the support of Dr Maslovskiy you won’t win the hearts and minds of the workforce essential for the smooth running of the organisation. Meanwhile, the gold price has run through $1,900/oz; clearly a positive for this leveraged business. Incorporating this and the results into our modelling delivers a new Target Price of 50p and the set of financials shown in the right-hand column.
Companies: Petropavlovsk Plc
There was less tension this quarter, as Shell had already cut its dividend in Q1. The trading units rose to the occasion, bringing a positive surprise in this horrendous quarter. The company has recorded a very large impairment, and is poised to announce a strategic shift once 2020 is in the books.
Companies: Royal Dutch Shell Plc
Centamin (CEY LN) – H2 profits rise 280% as company maintains 2020 production guidance | Chaarat Gold* (CGH LN) - BUY– H1/20 production in at 27koz with FY20 guidance reiterated at 55koz, Tulkubash
funding closure on course for YE20 | Edenville Energy* (EDL LN) – Rukwa coal operations restart | Pensana Rare Earths (PRE LN) – Final drilling results from Longonjo | Serabi Gold* (SRB LN) – Extension to drawdown period for the convertible loan | Versarien (VRS LN) - Launch of graphene enhanced protective face mask
Companies: CEY CGH EDL PRE SRB VRS
United has announced that it has successfully negotiated an 18 month extension to its Walton Morant licence, offshore Jamaica, in what could be a pivotal moment for the Company. United will assume a 100% working interest, and will complete a work programme to further de-risk the high-graded Colibri prospect ahead of a drill-or-drop decision in 2022. We view the award of the Walton Morant licence as a huge endorsement of the United team and its capabilities to operate a frontier, deepwater licence. We increase our risked valuation of the Colibri prospect to US$68.3m or 7.1p per share and our Company valuation to US$162.2m or 17p per share. Unrisked, our valuation of the Colibri prospect increases to US$752.7m or 78.7p, underlining its potential. We set our price target in line with our risked NAV at 17p, a 507% premium to the current share price, and reiterate our BUY recommendation.
Companies: United Oil
Walker Greenbank is a higher end interior furnishings business with well-established global brand names and manufacturing facilities in the UK. The Group has this morning released an update to coincide with its AGM, which confirms that the improving trends reported at the full year results last month have continued to be seen.
Phoenix today announces the results of 7 of its 30 holes into the Empire Open Pit resource gold zone from its property in Idaho. Results are encouraging with several, close-to-surface intersections e.g. 13.7m grading 2.1g/t gold from 5m and another hole with 1.6m grading 8.5g/t gold from 32m down. The gold is associated with minor silver (on average just over 3x the gold grade). Additional channel and field samples were also taken from surface to help site drilling and to define better the surface expression of the skarn-host contact and the higher-grade zones – with grade demonstrated in most of these.
Companies: Walker Greenbank Plc Phoenix Copper Ltd. (United Kingdom)
PetroTal (PTAL LN)C; Target price £0.45: Production at Bretana restarts – In anticipation of the re-opening of the ONP, Bretana oil production recommenced on July 15, 2020 and achieved over 12,000 bbl/d when all seven wells were online. Oil deliveries have also already commenced to the Iquitos refinery and approximately 40,000 bbl are expected be delivered during July 2020. Oil is being barged to the Saramuro Pump Station and will be delivered into the ONP immediately after it reopens , now expected in early August 2020. To manage the company’s inventory and barge storage capacity, Bretana production has been reduced to approximately 8,000 bbl/d pending the restart of the pipeline. While the share price has already increased 30% over the last three weeks, we continue to see PetroTal as a value and growth stock. The company’s value based on its 2P reserves only (2P NAV of £0.28 per share) represents 2x the current share price and our Core NAV is 3x current levels. Assuming production of ~12 mbbl/d in 2021 (i.e. the level achieved when the field was restarted) PetroTal’s share price implies EV/DACF multiples of 1.7x in 2021 and 0.2x in 2022. On a production/capex low case, we estimate that PetroTal generates aggregate Free Cash Flow over 2021-2022 equal to the company’s market cap.
IN OTHER NEWS
ExxonMobil (XOM US): Further volumes discovered in Guayana | Karoon Energy: Softening terms for acquisition of Brazilian asset | President Energy (PPC LN): Operational update in Argentina | Total (FP FP): Significant discovery in Suriname
Jadestone Energy (JSE LN): 2Q20 update | Repsol (REP SM): Compensation in Vietnam | ENI (ENI IM): Large volume confirmed in Vietnam
ADX Energy (ADX AU): Operational update in Austria and Romania | ENI (ENI IM): 2Q20 results, lower capex | EnQuest (ENQ LN): UK Acquisition | Equinor (EQNR NO): Dry hole in Norway | Hurricane Energy (HUR LN): Operational update in the UK | Lundin Energy (LUNE SS): 2Q20 results | OMV (OMV AG): 2Q20 results/dividend reduction/Volumes discovered at Hades (Norway) reduced | Royal Dutch Shell (RDSA/B LN): 2Q20 results | Total (FP FP): 2Q20 results, Dividend distributions maintained | Zenith Energy (ZEN LN): Acquisition of Italian assets terminated
FORMER SOVIET UNION
Enwell Energy (ENW LN): Negative licence update | Nostrum Oil & Gas (NOG LN): 1H20 trading update in Kazakhstan
MIDDLE EAST AND NORTH AFRICA
BP (BP LN), ENI (ENI IM), Total (FP FP): Discovery in Egypt | DNO (DNO NO): 2Q20 results | ShaMaran Petroleum (SNM CN), Gulf Keystone Petroleum (GKP LN) and Genel Energy (GENL LN): Payment in Kurdistan | Sound Energy (SOU LN)C: Raising up to £4.5 mm of new equity
Angola lowering tax | Cairn Energy (CNE LN): Divesting Senegal and returning cash to shareholders | Total (FP FP): Divesting mature assets in Gabon | Savannah Energy (SAVE LN): FY20 results and update in Nigeria | Seplat Petroleum (SEPL LN): 1H20 results | Tullow Oil (TLW LN): 1H20 update | Victoria Oil & Gas (VOG LN): 2Q20 update in Cameroon
EVENTS TO WATCH NEXT WEEK
04/08/2020: BP (BP LN) – 2Q20 results
04/08/2020: GeoPark (GPRK US) – 2Q20 results
04/08/2020: Gran Tierra Energy (GTE LN/CN) – 2Q20 results
05/08/2020: Parex Resources (PXT CN) – 2Q20 results
07/08/2020: Frontera Energy (FEC CN) – 2Q20 results
Companies: XOM KAR BP/ CNE DNO ENI ENQ EQNR GENL HUR JSE LUPE NOG OMV PTAL REP RDSA SAVE SEPL SOU TTA TLW VOG
Rio delivered a decent set of H1 results, especially considering the COVID-19 disruption. Once more, Iron ore single-handedly came to the group’s rescue and (largely) compensated for varying issues in other divisions, thereby facilitating $2.5bn of dividends. While we don’t expect a magical near-term turnaround in the troubled divisions, iron ore’s sustained resilience should provide healthy comfort – also from a dividend perspective. Hence, Rio remains our preferred diversified mining bet.
Companies: Rio Tinto Plc
Civil works have started at Europa’s Wressle oil field, keeping the project on track for start-up in H2 2020 when it will more than double production and materially boost cash flow. This project is not only economically attractive, but it will also underpin Europa’s pursuit of additional exploration and development opportunities.
Companies: Europa Oil
The stock is up 6% at pixel time, which shows rather good prowess from management, as it also cut (for good) the dividend in half. As investors swallow the bitter pill, the low-carbon shift (and promises of higher valuations) make it easier to digest. Also helping was a decent cash generation in this quarter, thanks to BP’s trading unit.
Companies: BP Plc
Salt Lake Potash has received commitments to raise A$15m through the placement of unsecured zero-coupon Convertible Notes to Equatorial Resources (ASX:EQX) and institutional investors. The Convertible Notes have been structured as deferred equity with zero coupon and mandatory conversion into equity at the lower of 45c/share or a 5% discount to any future equity raising of at least A$10m. These funds will enable Salt Lake Potash to continue to develop Lake Way to the project schedule through July as they finalise debt financing. Plant practical completion and first SOP sales remain on schedule for the March 2021 quarter. The debt financing process in its final stages and with an agreement expected to be executed within weeks.
Companies: Salt Lake Potash Ltd.
Baron Oil, an AIM-listed oil and gas exploration junior, has performed disappointingly in recent years but we believe is now entering a transformational phase. This primarily reflects Baron obtaining in November 2019, as part of an earlier accord with the operator, a 25% indirect interest in the high-impact Chuditch natural gas project in the Bonaparte Basin, an established hydrocarbons province. Chuditch is based on a discovery made by Shell in 1998 and is in close proximity to Santos’s Bayu-Undan field and the Woodside operated giant Greater Sunrise project. A Chuditch seismic reprocessing and evaluation programme is underway which, we believe, could lead to appraisal drilling in late 2022/early 2023. Baron also has a potential near-term drilling opportunity at the El Barco oil and gas prospect in the onshore Sechura Basin, NW Peru. El Barco offers a relatively low risk moderate resource potential project with few development complications.
Companies: Baron Oil Plc