Allergy Therapeutics (AGY): Corp FY 2020 – record pre-R&D EBIT | Amino Technologies (AMO): Corp Argentinian software contract win | ANGLE (AGL): Corp Peer reviewed publication, using Parsortix in MBC | Bigblu Broadband (BBB): Corp Quickline secures up to £6.1m of subsidy in Lincolnshire | Hardide (HDD): Corp Trading in line with a stronger Q1 expected | Trackwise Designs (TWD): Corp Interim results, new contracts boost confidence | Xeros (XSG): Corp Commercial progress tracking in line with expectations
Companies: AGY AMO AGL XSG TWD BBB HDD
Bigblu Broadband (BBB): Corp BBB’s SkyMesh becomes Australia’s largest satellite ISP | Hardide (HDD): Corp Trading update: oil sector demand softens | Morses Club (MCL): Corp Collections holding up on a reduced loan book | Savannah Resources (SAV): Corp Positive metallurgical update | Xeros (XSG): Corp Verification milestone for XFiltra
Companies: SAV XSG BBB HDD
The company’s trading update highlights that having seen resilient trading in its first half, Q3 has started to experience softening demand from oil & gas customers. We have reduced our forecasts for 2020 in light of the update, with a 22% forecast revenue reduction and the EBITDA loss widening from £0.3m to £0.5m. Our 2021 forecasts are conservatively flat. Good progress continues to be made in the aerospace sector, while the relocation and expansion of the Bicester facilities is on track and now operational.
Companies: Hardide plc
Against a backdrop of generally negative company announcements, Hardide bucked the trend by releasing solid interim results for the 6 months ended March 2020, noting limited impact to date from COVID-19 and a positive trading outlook. Furthermore, the allimportant move to new facilities and corresponding capacity expansion is both on track and on budget. Several of Hardide’s end markets will clearly be feeling the impact of COVID-19. However, we feel the importance of Hardide’s technology to its customers by extending the useful life of components and its diversity of end markets across multiple sectors including oil & gas, aerospace, flow control, power generation and precision engineering is enabling it to weather the storm. We leave our forecasts unchanged and see potential for an upgrade should end markets maintain strength and H2 margins match those of H1.
Hardide (HDD): Corp | Ideagen (IDEA): Corp | Quixant (QXT): Corp
Companies: HDD IDEA QXT
Interim results were in line with the period end trading update, posting a record half-year sales. Both UK and US sites are operating normally. Crucially, H2 has started well, with no significant reduction in demand resulting from COVID-19. Ongoing close dialogue with customers remains encouraging, with management alert to the potential for order book disruption. The company remains cautiously optimistic and, as such, forecasts remain unchanged. Having raised £2.5m in January and £0.4m of asset finance with Hitachi Capital, the group looks to have sufficient cash to complete its current expansion and relocation programme, which remains on track. Encouraging progress continues with Airbus and a supply agreement reached with a major Tier 1 supplier, while today it has announced its first low volume production order from Airbus for the A380.
ANGLE (AGL): Corp | Europa Oil & Gas (EOG): Corp | Hardide (HDD): Corp | Intercede (IGP): Corp | M.P. Evans (MPE): Corp | Quixant (QXT): Corp | Synairgen (SNG): Corp | Tremor (TRMR): Corp | Trifast (TRI): Corp
Companies: EOG HDD IGP MPE QXT SNG TRMR TRI AGL
dotDigital (DOTD): Corp Interim trading update | Elecosoft (ELCO): Corp FY 2019 earnings on track for growth forecast | eve Sleep (EVE): Corp FY19 pre-close; EBITDA loss/cash burn materially reduced | Hardide (HDD): Corp Placing proceeds to further upgrade equipment | LPA Group (LPA): Corp LED lighting contract win and trading update
Companies: DOTD ELCO HDD LPA EVE
The company has announced a small-scale placing, raising £2.5m as it makes good progress with its substantial expansion, upgrade and relocation project for its UK facilities. The commercial progress being made across a number of sectors, but highlighting the huge potential of new aerospace customers, supports stepping up the pace of the investment programme and also future-proofing the business through investment in modern, efficient, new equipment.
Intention to float by Gemfields Group. No Capital Raise. Currently listed on JSE. (GML:JNB) at circa £122m. The Group's key producing assets, the Kagem emerald mine in Zambia (believed to be the world's single largest producing emerald mine) and the Montepuez ruby mine in Mozambique (one of the most significant recently discovered ruby deposits in the world), are both expected to have long mine-lives with potential for expansion. Also owns the Faberge brand. Due Valentines Day 2020.
Companies: PEN SEEN SENS LPA PRM HDD BRD IGR CNC CNS
Amino Technologies (AMO): Corp | Frenkel Topping (FEN): Corp | Hardide (HDD): Corp | Savannah Resources (SAV): Corp
Companies: AMO FEN HDD SAV
Full-year results were in line with expectations, with a significantly better H2 benefitting from better order flow from oil & gas customers and growth in other market sectors. The relocation of UK facilities is on track and there have been significant steps forwards in Aerospace, with both Airbus and Lockheed Martin awarding approval. We are reducing forecasts to reflect some additional costs ahead of anticipated increases in production.
Hardide’s patented technology enables metal components used within a wide range of high-end manufacturing processes to be coated with a thin layer of Tungsten Carbide. This coating significantly strengthens and enhances the operating performance of the component and hence, reduces operational downtime and extends the useful life. Recent significant capital investment in both Hardide’s UK and USA facilities is expanding its number of reactors from the current six to nine by the end of 2020. This capacity expansion combined with a diversifying and growing end customer base has positioned the Company for significant revenue growth and operational gearing.
Companies: Hardide Plc
Avacta (AVCT): Corp LG Chem partnership expanded | Hardide (HDD): Corp F-35 approval and patent granted | Ideagen (IDEA): Corp Strong interim trading update
Companies: AVCT HDD IDEA
Armadale Capital (ACP): Corp Mahenge Liandu project update | Circassia (CIR): Corp Initiation report: interims clarify misperceptions | eve Sleep (EVE): Corp Inline H1; KPIs show good progress, with much still to do | Hardide (HDD): Corp Encouraging year-end trading update | Independent Oil & Gas (IOG): Corp Herculean interims | Pelatro (PTRO): Corp Focus on recurring revenue intensifies H2 weighting | Savannah Resources (SAV): Corp Interim results | Surface Transforms (SCE): Corp Breaking into a new OEM | Transense Technologies (TRT): Corp Full-year results start to show strong commercial traction
Companies: ACP HDD IOG SAV SCE TRT EVE CIR
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Spectra Systems Corporation, a leader in machine-readable high speed banknote authentication, brand protection technologies, and gaming security software, has announced that it has executed a comprehensive services contract with a ‘long standing' central bank customer for the development, manufacture and servicing of a sensor system. The initial development phases underpin our FY2021E estimates (with risk likely to the upside), but moreover, the balance of development work, comprising supply of sensors (estimated value up to $34m in 2024-25), servicing revenues ($7.5m) and resultant high margin material sales through to at least 2035, provides significant underpinning of future prospects. Our updated Sum-of-the-Parts valuation (reflecting higher than anticipated development revenues and margins) indicates a risked fair value of 240p (from 200p).
Companies: Spectra Systems Corporation
Seeing Machines has announced that it has signed a non-binding Memorandum of Understanding with global aerospace and defence technology company L3Harris Technologies. The MOU frames the intent to enter into a global non-exclusive license agreement to enhance pilot training technology with Seeing Machines's dedicated precision eye-tracking system for flight crew training in the full flight simulator (FFS) environment. A license arrangement is currently in advanced discussions between the parties and subject to the negotiation and execution of definitive, binding licensing and other legal agreements. Further announcements regarding the progress of the negotiations in relation to such binding documentation will be made when appropriate.
Companies: Seeing Machines Limited
We have today released a new note on The Ince Group plc - this is the first of a series of "explainer notes" that take an in-depth look at the various aspects of the Ince investment case our investors have told us require more clarification. This edition examines the partner remuneration model - the headline for which is that this isn't discretionary bonus, it's more of a revenue share that partners are given in lieu of pay. Thus their remuneration is entirely variable, rather than representing a fixed cost.
Companies: Ince Group plc
TP Group (TPG) delivered robust organic growth of 13% during H1/20A. However, the impact of COVID-19, together with increased investment and a shift in business mix, meant that Adj EBITDA reduced by £0.9m YoY to £1.4m. TPG has today announced it is in advanced discussions to dispose of its non-core oil and gas focused engineering business. Despite the strong and expanding order book, COVID-19 continues to create uncertainty around the timing of contract deliveries. As such, our forecasts remain withdrawn and our rating Under Review.
Companies: TP Group Plc
Judges Scientific is focused on acquiring and developing companies in the scientific instrument sector. The acquisition of Korvus Technology, a UK-based but global supplier of vapour deposition systems, largely to academic institutions, marks Judges' third deal in less than 12 months. With Korvus generating revenues of £1.42m and adj. EBIT of £0.66m (46% margin), we choose to leave our FY2020E estimates unchanged but, after financing costs (all-cash initial consideration of £2.64m), we see a 3.5% uplift to FY2021E with our adjusted PBT increasing to £15.2m. Although a trading update is not provided this morning, we remain cautiously optimistic with respect to FY2020E. COVID-related business risks / restrictions remain; however the relative strength of H1:2020 (albeit at some expense to the order book) continues to provide some comfort, in our view.
Companies: Judges Scientific plc
The Group has issued a trading update ahead of its interim results due on 12th November 2020. Overall, the first half has seen a strong recovery in activity and the Board now expects to report H1 revenues and operating profit of at least $200m and $20m respectively. This is materially ahead of market expectations and with a high degree of visibility through Q3 FY2021E we are upgrading our operating profit forecasts by 39% and 25% for FY2021E and FY2022E respectively. The Group is seeing strong growth in EV charging cables and bespoke high-performance cabling solutions, and consumer electronics demand has also remained robust. Together with investment in automation and cost efficiencies, the Group operating margin is now 10%, which is a testament to management’s operational and strategic focus. The shares trade on an FY2021E EV/sales multiple of 0.9x which compares to a sector based multiple of c.1.2x for companies with comparable operating margins and growth.
Companies: Volex plc
An explicit and substantially positive update from Norcros points to a strong Q2 trading recovery after a COVID-19 affected Q1 and a significant reduction in net debt to modest levels. The company’s portfolio of businesses have demonstrated resilience and agility in being able to respond to these variable demand conditions and in doing so have probably enhanced the group’s competitive position. Our estimates remain suspended ahead of the H121 results announcement on 12 November.
Companies: Norcros plc
Checkit has deepened its relationship with John Lewis, by signing a three year framework agreement with this existing customer. This provides all John Lewis shops with the opportunity to benefit from Checkit’s three proprietary software products: Connected Workflow Management (CWM), Connected Automated Monitoring (CAM) and Connected Building Management (CBM). Out of these three, it is CWM which is a new service offering for John Lewis. We find this product particularly interesting given the broad number of (previously manual and paper-based) operational workflows the platform can automate - increasing efficiency. Additionally - through Checkit’s cloud-based dashboard – managers can track tasks in real-time and also respond to critical issues. Lastly, analytical tools can be used to spot operational weaknesses or non-compliance. This contract therefore provides further validation of these products and how they are resonating with large enterprises, as they look to drive greater efficiency within their organisations. This news follows-on from us recently reinstating forecasts. For FYJan21, we’re looking for £13.1m of sales i.e. modest LFL growth (PY pro-forma: £12.8m), within this though, expect to see strong ‘recurring‘ growth – driven by contracts such as this. Should also see decent progress on profitability (FY21E EBITDA: £-2.0m) indeed such progress was highlighted in H1, as cash-burn fell to £-1.4m
Companies: Checkit plc
OPG has produced a strong set of full year results. Revenue increased 9.5% YoY to £154.0m whilst strong free cash flow generation enabled material debt repayments. Post period end, the Group continued to make debt repayments and favourably refinanced a portion of its debt. Management swiftly implemented a COVID-19 cost reduction strategy and capitalised on financial stimulus provided by the Government and the Reserve Bank of India. Importantly, September 2020 showed signs of a recovery as Chennai plant load factors increased to 63% (H1/21A 46%). We believe the long-term structural growth dynamics in the Indian power production sector remain compelling.
Companies: OPG Power Ventures Plc
The group’s AGM statement reads well, with record Q1 trading and strong cash flows. Net debt now stands below £1m, with significant headroom in facilities. Previous restructuring has delivered £2.4m of efficiency gains, which particularly benefit Levolux and Gatic. The UK market has seen a strong bounce accompanied by a strong export performance and a high level of export orders recently gained. No change to trading forecasts. The shares remain at a deep discount to our 130p price target and today’s update should be taken well.
Companies: Alumasc Group plc
Renewi’s operations are at the heart of the circular economy that collects, processes and converts waste into usable secondary materials to reduce the use of primary resources and to lower carbon emissions. The company has recently entered a new strategic phase with a clear roadmap to deliver a substantial increase in group profitability. Consequently, Renewi offers investors an environmentally friendly above-average earnings growth opportunity.
Companies: Renewi Plc
Following hot on the heels of last week’s significant project award for Siemens and London Underground, the group has announced a further significant project award for Alstom’s high-profile next generation of TGV trains for SNCF. While the value of the project has not been announced, it reinforces our optimism and view that momentum in the train market is improving and also further strengthens the group’s medium-term order book. We see the award as noteworthy also because it is in the group’s innovative electronics technology, validating the group’s product investment in this area.
Companies: LPA Group Plc
Symphony Environmental develops and sells innovative products and additives which make plastics and rubber smarter. The core d2w oxo-biodegradable product facilitates rapid and safe transformation of plastics into harmless biodegradable compounds. The newer d2p product is a protective technology which has many applications. The most commercially advanced prevents microbial growth on plastics, useful in food and non-food settings. This market is estimated to be worth $30bn globally and growing rapidly. Recent news has been positive. The Group has just announced that Turkey’s Uno Bakery will use oxo-biodegradeable d2w for its packaging. This follows a recent strengthening of the strategic partnership on d2w packaging with the world's largest bakery, Groupo Bimbo. In late September, in the UK, AGS Airports, which operates Aberdeen, Glasgow and Southampton airports has become the first UK company to trial a new d2w 100ml security bag. Further, Brazilian supermarket chain, Cotripal, has introduced an innovative combined d2w and d2p (antimicrobial) carrier bag. No financials for these announcements have been disclosed; we assume for the moment these are not material in the context of the Group. But the potential over the next few years is significant, in our view. Commercialisation is gathering momentum. Our valuation for SYM is 35p per share, indicating 30% potential upside.
Companies: Symphony Environmental Technologies plc
We are pleased to see that in a period in which most companies faced colossal challenges, and CSSG saw at least some partial business interruptions, the company nonetheless succeeded in generating a result which is ahead of the expectation set in early August, with £1.75m EBITDA as against the anticipated £1.6m. With the interim dividend reinstated eight weeks ago, the final dividend is now announced at 1.2p, giving the FY2020A total of 1.95p, making CSSG a rare example of a company (well-supported by £4.1m of net cash) which has lifted its FY2020A DPS as against the prior year, and by no less than 8%. We assume that some of the net cash relates to HMRC and / or other support schemes; however net cash at more than double the FY2019A level (£4.1m plays £1.7m) still seems like a positive outcome.
Companies: Croma Security Solutions Group PLC
Historically exposed to coal, Drax had to adapt to ecological constraints. Which we believe it has failed to do. We have therefore decided to terminate our coverage in order to allocate our resources to companies that are in tune with tomorrow’s challenges.
Companies: Drax Group plc