Today's trading update demonstrates Equals producing robust FY20E revenues, as it rebounds steadily from a COVID-19 affected Q2/20. Material progress has been made on rightsizing costs, the benefits of which should be felt in FY21E. While our newly reissued forecasts expect a weaker profit delivery in H2/20E, we expect strong YoY EBITDA growth thereafter, as the group returns to double-digit revenue growth with a rationalised cost base and geared profit growth. Should these forecasts be met, we expect the current c2x EV/Sales multiple to move back towards Jan 20's pre-covid 4x multiple, hence we move back to “Buy”.
Companies: Equals Group Plc
To achieve YoY revenue growth over H1/20A despite the challenges of Covid-19 and its impact on the travel sector is testament to Equals' resilience and increasing focus on B2B and International payments services. While weaker gross profit and EBITDA margins have impacted profitability in H1/20, we see potential for an earnings recovery in H2/20 given cost reduction measures currently being undertaken. This should lead Equals to cash breakeven in Q4/20 and FCF positive by early FY21.
AEX Gold (TSXV:AEV) is intending to admit its shares to AIM alongside a £45m placing. The Company, led by CEO Eldur Ólafsson, has established the largest land package of gold assets in Greenland with a current portfolio of licences covering 3,356 square kilometres, in the two known gold belts in Southern Greenland, the Nanortalik and Tartoq gold belts. Nalunaq is a highgrade gold asset with an updated Inferred Mineral Resource covering 422,770 tonnes at 18.5 grams per tonne of gold, or 250,970 ounces of gold, which covers the area in and around the historical mine. Due July. Current mkt cap C$66.7m.
Companies: SYM CBP GGP UKOG MTPH PGH XLM FEN EQLS DOTD
Equals has delivered flat H1/20E revenues, exhibiting trading resilience in view of headwinds brought about by Covid-19. While there was a slowdown across all segments over Q2/20, Equals' evolving B2B focus and strong International payments growth has supported trading. There are tentative signs of recovery in those areas of weaker performance, boding well for H2/20E. While the speed of that recovery is uncertain, we refrain from reissuing forecasts with our recommendation unchanged.
Equals' FY19A results confirm another year of strong, double-digit revenue and adj EBITDA growth. The move to a B2B focused offering continues to progress and looks well timed in view of Covid-19's impact on overseas travel. While the pandemic impacted Q2/20E trading early on, we note June KPI's indicate a positive rebound. Given the continued uncertainty as to Covid's full impact upon FY20E trading, we refrain from reissuing forecasts and thus leave our recommendation under review.
Today's update confirms Equals delivered another quarter of significant revenue growth YoY, delivered by organic and acquisitive means. Performance across the product range has varied unsurprisingly and we expect these trends to continue over Q2/20E. Given the great uncertainty over the duration and severity of COVID-19's impact on the group, we withdraw FY20-21E forecasts and place our recommendation Under review, awaiting further clarity. Equals is supported by a strong, debt-free, balance sheet and is undertaking measures to further conserve cash.
Today's update confirms Equals has delivered a second straight year of material revenue and profit growth, despite difficult market conditions, with a significant shift in the revenue profile towards more profitable B2B customers. Given profit delivery has been slightly lower than expected, we rebase our forecasts to take a more prudent view of trading in years FY21E and FY22E, but we are confident Equals has now assembled the products, infrastructure and management it needs for strong growth.
Plaid, the U.S. start-up, whose software helps link fintech apps with people's bank accounts, said on Thursday it was now rolling out its services in Ireland, France and Spain. According to consultancy firm EY's global fintech adoption index, Ireland's level of adoption stands at 71%, Spain's at 56% and France's at 35%. "Ireland is going to continue to grow and generate really fantastic companies," Plaid's chief said. Plaid is one of our top two Fintechs to watch. PayPal is making the biggest acquisition in its two-decade history, announcing on Wednesday that it's buying Honey Science for about $4 billion. Honey, which is best known for providing a service that helps consumers find deals while they shop online, works with 30,000 online retailers and claims to have 17 million monthly users. PayPal said Honey's technology will help it reach consumers as they begin their "Shopping journeys" with personalized offers. In our view, PayPal’s deal may demonstrate a step toward the new normal of leveraging consumer data. Commission-free stock trading app Robinhood has announced plans to officially launch in the UK next year, marking its first market outside the US. The fintech 'unicorn' opened a waiting list for UK customers following yesterday’s announcement, with Rander Rutgers, head of Robinhood UK, telling Yahoo Finance UK that the app would be tailored to the UK market. We believe that the solvency of a number of UK-based legacy brokers will be tested as aggressive subsidisation and lower overheads of FinTechs drives down pricing.
Companies: BGO BOKU EQLS TRU NETW
The Pebble Group, a provider of products, services and technology to the global promotional products industry, announces its intention to seek admission of its shares to trading on the AIM market of the London Stock Exchange, which is expected to take place in early December 2019.The Group delivered revenue of £99.8m in the year ended 31 December 2018.No mention of bottom line and a suggestion that funds raised would provide an exit to private equity shareholders and the repayment of debt. Offer TBA.
Longboat Energy raising £10m. Expected admission November 2019. The company has been established by the former management team of Faroe Petroleum to create a new full-cycle North Sea oil and gas company .The strategy to achieve this will initially be through the acquisition of assets where the management team can add value through subsurface and operational improvements, follow-up deal opportunities and nearfield exploration; and by value creation through the drill bit.
Companies: ORR CORA ECSC SCPA GAN UPR ITM EQLS KAPE ARCM
AT&T announced the launch of HBO Max streaming service for May 2020, with a new "Game of Thrones" series at the current HBO price of $15/month. The move surprised analysts and investors attending the Warner Media presentation on Tuesday as it was lower than expected. HBO Max is expected to reach 75 million to 90 million global subscribers by 2025, with about 50 million of these coming from the United States. The success of HBO Max is in many ways a referendum on a strategy to merge content with the means to distribute it. Challenger banks and FinTech firms are expected to have half of all consumers using their payments, card and retail banking accounts in the next three years, according to Capgemini. The group’s World Retail Banking Report highlights how challenger banks are changing the overall banking journey as well as offering customers new services, like quick or early access to funds not covered by traditional loan or card systems. Traditional banks have the right product but are "Lagging behind and giving ground to non-traditional payers in the last-mile customer experience". In our view this should surprise nobody. But the acid test of trust through a future financial crisis is yet to occur. Huawei Technologies lifted its share of China's smartphone market to a record 42%, with third-quarter shipments rising by two-thirds as domestic consumers rallied behind it after US sanctions, data released on Wednesday showed. Huawei strengthened its dominance of the world's biggest smartphone market even as the Chinese company was all but banned by the US in May from doing business with American companies, significantly disrupting its ability to source key parts We are surprised by the strength of recent data supporting Huawei.
Companies: 7DIG ZOO AMO BOOM BGO BOKU EQLS MIRA TECH
The recent run-up in semiconductor stocks hit a speed bump Tuesday afternoon that could turn into much more. Texas Instruments gave a forecast that was much worse than expected in a Tuesday earnings report, raising questions over whether the cycle is anywhere near the trough as was widely expected.
Companies: ENET TRAK BGO BOKU CAPX CML EQLS IQE SEE TCM TRCS QTX XPP FIN NETW
Facebook's Libra plans continue to stumble as PayPal quits the digital currency project, with Visa and Mastercard also reconsidering their involvement. In a statement late on Friday, PayPal says it has decided to "Forgo further participation in the Libra Association at this time and to continue to focus on advancing our existing mission and business priorities”.
Companies: BGO BOKU ECK EQLS TECH
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Litigation Capital Management (LCM) is an alternative asset manager specialising in disputes financing, with its main operations in Australia and the UK. The company provides funding for litigation in exchange for a share of any settlement and has built a strong track record of supporting winning c
Companies: Litigation Capital Management Ltd
H1 has seen a clearer outlook for portfolio valuations which has allowed Mercia to recoup some of the reduction at the Finals. Cash earnings are better than expected as costs have remained lower for longer. A well-funded portfolio and £25m cash has prompted declaration of a maiden 0.1p interim dividend – a strong signal of confidence. Lower costs and increased asset values have prompted 30-45% upgrades to adj. EBITDA across the horizon. The shares are trading at a 32% discount to NAV, of which 17% is cash. This disregards all value for the asset management platform. A 10x EBITDA multiple ascribed to 3rd party asset management earnings plus NAV points to a c.40p/share intrinsic value, before further value creation.
Companies: Mercia Asset Management PLC
Today's news & views, plus announcements from AZN, LLOY, WEIR, TATE, GFTU, INCE, DELT, SOLG, HYVE
Companies: LLOY SOLG INCE
Mondelez International has announced that it has appointed MediaMonks to manage global technology infrastructure, global websites and content production for North America, Latin America and AMEA. We believe this account win by S4 Capital further vindicates the unitary structure and integrated offer of the group as Mondelez initially worked with MightyHive before broadening the scope of this relationship to encompass MediaMonks. S4 Capital describes the account as a Whopper, indicating that it will generate revenues of over $20m when the account is fully transitioned. We will update our forecasts for the account win at the next financial newsflow from the group. We currently forecast LFL Gross Profit growth of +26% for FY21 and believe the Mondelez win will further accelerate this. We raise our target price to 500p (was 475p) and retain our Buy recommendation.
Companies: S4 Capital plc
Today's news & views, plus announcements from LLOY, POG, FRAS, PETS, SPR, WHI, FKE, RLE
Companies: Lloyds Banking Group plc (LLOY:LON)Real Estate Investors plc (RLE:LON)
Augmentum Fintech has confirmed the successful completion of the equity fundraise launched earlier this week. £28m (gross) has been raised through an oversubscribed placing at the fixed 120p price. This will allow the manager to target a plentiful £120m pipeline of opportunities; both new and in the existing portfolio. AF is carefully curating a diversified portfolio of investments which are innovating the future of financial services.
Companies: Augmentum Fintech
Liontrust has delivered in line interims, however AuM growth since the HY point drives higher earnings estimates. In H1, net inflows remained strong despite the backdrop and, alongside performance, contributed to 28% AuM growth. Post-period, performance momentum has boosted AuM by a further 5% to £28.1bn, plus the completion of Architas. Together, this results in a step up in the run rate. We update our forecasts for higher than expected AuM driving a +5% upgrade to FY21e EPS and +10-13% in outer years. We do not forecast scaling in Architas or Global which could prompt further upgrades, reducing the 15x FY22e PER.
Companies: Liontrust Asset Management PLC
President Trump likes to project himself as a highly successful businessman, but surprisingly little is known about his true financial position. Various articles, including a 2016 in-depth analysis by The Wall Street Journal, have speculated about his income and asset base. All sorts of claims and counter-claims have been made about his wealth – by Trump himself, pitching his fortune at some $9bn, and by journalist Timothy O'Brien, suggesting that it is as “low” as $150m-$250m. It is doubtful whether we shall ever know the truth, but we can use Trump’s UK corporate filings to gain an insight into his businesses in Scotland.
Companies: AVO ARBB ARIX CLIG DNL FLTA ICGT PCA PIN PHP RECI STX SCE TRX SHED VTA YEW
Today's news & views, plus announcements from Capita, JD Wetherspoon, HarbourVest Global Private Equity, Walker Crips Group, Randall & Quilter*, Michelmersh Brick, LoopUp, Schroders British Opportunities Trust and Baillie Gifford UK Growth Trust.
Companies: Randall & Quilter Investment Holdings Ltd.
An in-line trading update for the year to 31 December 2020 states EBITDA will be at least £3.6m and £2.0 at the PBT level. However, conservative budgeting affects 2021E and 2022E with the company rebasing expectations following year-end re-forecasting exercise, taking into account the prolonged challenging macroeconomic environment. The acquisitive opportunity remains in place.
Companies: STM Group PLC
Record has set itself the goal of generating greater growth and H121 showed some encouraging steps in this direction. The substantial new dynamic hedging mandate in the period was traditional business for the group, but there was also news of a new currency impact fund, which provides diversification, higher fee margins and the potential for significant development. The implementation of new IT systems is underway, and measures to develop and retain staff have been taken.
Companies: Record plc
Palace Capital’s (PCA) H121 performance was robust and ahead of our central expectations. We have slightly increased FY21 earnings forecasts and introduced FY22–23 estimates, with growth driven by Hudson Quarter completion, on track for March 2021. Significant additional reversionary potential and development/refurbishment represent significant value creation potential.
Companies: Palace Capital plc
1H’21 results cover the depths of the initial market impact of COVID-19. We note the 4.7% fall in EPRA NTA and the effect of the dividend rebasing announced some months prior. There are no negative surprises. The focus on regional offices is a positive. There are other positives that we consider to be important, namely the ongoing contractual performance of the leisure asset tenants and lengthening of leases there, and the continuing encouraging residential sales (and small letting) at the mixed-use development of PCA’s newly created Hudson Quarter, York. Here, we see just one of PCA’s initiatives to unlock value and deliver attractive returns.
Today's news & views, plus announcements from KGF, MRO, UU, BAB, BRW, FUTR, GNS, HICL, LIO, AEXG, FUL, KWS
Companies: AEX GNS HICL
Alliance Trust (ATST) underwent a major overhaul three and a half years ago, refocusing on its global equity portfolio. Non-core parts of the company have been sold and overheads slashed. Today, the trust’s assets are managed by nine of the world’s best stock pickers. Investing sustainably is a strong theme within the fund, but the manager, Willis Towers Watson, seeks to blend managers with different styles so that the trust is not beholden to any particular fashion in markets.
Companies: Alliance Trust