There has been much comment on the fact that equity markets in the US and Europe have been shrinking for some years now, certainly in terms of the number of quoted companies, if not in total market capitalisation (MCap). This paper has been written with the assistance of the Quoted Companies Alliance (QCA) and focuses on the evidence for such in the London market and, in particular, that for smaller and midcap companies. It assesses that evidence and considers explanations. Finally, we ask why it matters, and assuming that it does, what practical steps can be taken to reverse the trend. Successful public markets have been a key part of the United Kingdom’s economic success for generations, even centuries, and we should not allow them to wither on the vine.
Companies: AVO AGY ARBB ARIX ASAI DNL GDR HAYD NSF PCA PIN PXC PHP RE/ RECI RMDL STX SCE TRX TON SHED VTA
Caribbean Investment Holdings. Incorporated in Belize . CIHL primarily operates financial services businesses through its subsidiaries The Belize Bank Limited and Belize Bank International Limited, both located in Belize and international corporate services through Belize Corporate Services Limited. CIHL shares are also traded on the Bermuda Stock Exchange. Lord Ashcroft holds 75%. No capital raise. Due 28 April. £36m . 2019 net profit US$ 10.7m
Companies: PANR TON PRSM TAM KMK RBGP LID MERC BARK TM17
Initiation of our coverage was 16 March 2016 at 101.5p. In February 2018, the price was 215p and it stayed north of £2 for another year. In fiscal 2019, though, Titon weathered a perfect storm most notably in its largest profit earner, South Korea. Titon’s PBT dropped by a fifth and, now, early in fiscal 2020, a profit warning. Titon is a veteran with branded products and core financial strength. It is battening down the hatches and cutting costs (including Hardman & Co). It will prevail.
Companies: Titon Holdings Plc
We recently published a paper, Share ownership: For the many, not the few, based on a statistical survey of share ownership, produced jointly with Argus Vickers, the share analysis service. The Office for National Statistics (ONS) has now issued its equivalent survey. This paper compares its results with ours. Although there are, inevitably, differences in the detail, the two surveys reach the same conclusions.
Companies: AVO AGY ARBB CLIG DNL FLTA GDR MCL NSF PCA PIN PXC PHP RECI RMDL STX SCE TON VTA
‘Tis rare that a company reports on the same day as a general election. Okay, Titon’s gestation was the longer ‒ but the conclusions are the same. “It’s over and yet it has only just begun”. For Boris Johnson, this means actually ‘getting Brexit done’ and running the country. For Titon, it has just reported its full year in which it coped manfully with a number of travails; and now has to do the same in the next one and ‘win the peace’. Boris’s skill-set to deal with in-coming remains the subject of speculation. Not so Titon’s.
The trade-off in the risk/reward for gold and gold mining equities is improving, as central banks push the current iteration of the post-World War II Bretton Woods financial order towards its limits.
Companies: AVO AJB AGY ARBB BUR CLIG DNL DPP FLTA GTLY GDR MCL MUR NSF PCA PIN SRE PHP RE/ RECI RMDL STX SCE TON SHED VTA W7L
Since their privatisation in 1989, the 10 water companies have faced a periodic review every five years; it is undertaken by Ofwat, and prescribes customer prices, along with the investment requirements. As part of the ongoing review, PR19, Ofwat will publish its Final Determination numbers on 11 December 2019; they will apply as from April 2020, although water companies do have the option to seek a reference to the CMA.
Companies: AJB AGY ARBB CLIG DNL DPP FLTA GTLY GDR KOOV MCL MUR NSF PCA PIN PHP RE/ RECI RMDL STX SCE SIXH TON SHED VTA W7L
The challenges associated with value creation drive all investors. Any investment professional is eager to make their mark by picking organisations that are able to deliver superior returns. Increasingly investors look into how organisations are governed and how effective the top decision-making bodies of organisations really are. In this white paper, we shed light on research findings and reveal the seven hallmarks of effective boards. The seven hallmarks are proven to create more effective boards and are set to be the next lever in the value creation process. Better Boards has created advanced board evaluation tools designed to motivate and inspire and above all, contribute to superior value creation.
Companies: AVO AJB AGY CLIG DNL DPP FLTA GTLY GDR KOOV MUR NSF OXB PCA PHP RE/ RMDL STX SCE TRX TON SHED VTA W7L
The introduction of IFRS 2 in 2004 generated considerable debate about the best approach for handling ‘share-based payments’ (SBP). While it is clearly a cost to shareholders, which should be included in the statutory reporting lines through the P&L account, the question arose as to whetherit should be part of our underlying EBIT calculation.
Companies: AVO AJB AGY ARBB CLIG DNL DPP FLTA GTLY GDR KOOV MCL MUR NSF OXB PCA PHP RE/ REDX RMDL STX SCE TRX TON SHED VAL VTA W7L
When advisers first start looking at business relief (BR) products, there is much to take in: the rules governing such products; the investment strategies being used; and what the investment risk is. It is easy to lose sight of the fact that, for non-AIM products, the investment is being made directly into a company or partnership, rather than a fund. It is, therefore, essential that governance is part of the diligence process.
Companies: AVO AJB AGY ARBB CLIG DNL DPP FLTA GTLY KOOV LWRF MCL MUR NSF OXB PCA PHP RE/ REDX RMDL STX SIXH TRX TON SHED VAL VTA W7L
Companies: AZN AVO AJB AGY ARBB CLIG DNL DPP FLTA GTLY GDR HAYD KOOV MCL MUR PCA PHP RE/ REDX STX SIXH TON SHED VAL VTA W7L
Failure to applaud is the original meaning of the idiom ‘to sit on your hands’; it originated in the theatre, when an unimpressed audience refused to clap. In the modern lexicon, it means to remain idle when things go awry and when action is required. Titon has had a charmed run over the past three years but this year has met with a tough South Korean crowd. But “it is not in Titon’s nature to sit on its hands” and its decisive action will produce results in fiscal 2020 and 2021 and win the critical success Titon is used to.
How small- and mid-cap quoted companies make a substantial contribution to markets, employment and tax revenues.
Companies: OPM AVO AJB ARBB CMH CLIG DPP FLTA GTLY GDR HAYD KOOV LWRF MCL MUR OXB PCA PHP RE/ STX SIXH TRX TON VTA W7L
Although the focus of Hardman & Co is predominantly on companies in the smallto mid-sized market capitalisation range, when writing research reports, it is important to position them relative to the industry in which they operate. Apart from Japanese companies, all the major global pharmaceutical companies have reported full-year results for 2018 over the past few weeks; therefore, we have taken the opportunity to update our industry database and generate the first cut of global rankings for 2018. For an industry that requires a long investment cycle – it still takes, on average, 10 years from discovery to launch of a new drug – decisions made many years ago have important consequences on current financial results. Therefore, looking back at operational performance over 20 years reveals how different company strategies have panned out.
Companies: OPM AVO AJB AGY ARBB CMH CLIG CSH DNL GTLY HAYD KOOV LWRF MCL MUR NSF OXB PCA PHP RE/ REDX STX SCE SIXH TON VAL VTA W7L
In the investment world, before MiFID II, essentially every institution talked to every broker, and the whole, professional market could see every research note and the forecasts in detail. This was the ‘Age of Consensus’. Everyone had the same information (well, everyone except retail investors), and this transparency helped share price formation and liquidity
Companies: OPM AVO AJB AGY ARBB AVCT CMH CSH DNL GTLY GDR KOOV MCL OXB RE/ REDX STX SCE SIXH TRX TON VAL VTA W7L
Research Tree provides access to ongoing research coverage, media content and regulatory news on Titon Holdings Plc.
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Seeing Machines has announced plans to deliver a fully supported, integrated Driver Monitoring System (DMS) kit to the global automotive industry. This will be in the form of embedded software (e-DMS) for the Qualcomm® SnapdragonTM Automotive Development Platform (ADP) from Qualcomm Technologies. The kit is expected to be available before the end of this calendar year for use by select automotive Tier 1 suppliers and OEMs and will support a full stack Seeing Machines DMS solution on the Snapdragon™ ADP targeting integration into either infotainment or centralized ADAS systems, and includes an optimized DMS reference camera, ADP interface board and the company's FOVIO and Occula software.
Companies: Seeing Machines Ltd.
CAP-XX Ltd* (CPX.L, 4.5p/£19.9m) | Gfinity plc* (GFIN.L, 3.8p/£28.9m) | MTI Wireless Edge Ltd* (MWE.L, 44p/£38.7m) | Newmark Security plc* (NWT.L, 1.175p/£5.5m)
Companies: CPX GFIN MWE NWT
Avingtrans has issued a brief trading update and confirmed that the Group’s preliminary results to 31st May 2020 will be published on 30th September. The trading update is reassuring, highlighting a Q1FY2021E order in-take in-line with management expectations. The statement also highlights two further contract wins in the nuclear sector for US$2.8m in South Korea to provide spare parts for essential water service pumps and a £1.5m UK contract for replacement valves. The previous update in early July has already confirmed that the Group expects to report revenue of £114m, EBITDA of at least £11.5m and net debt (excluding IFRS16 lease liabilities) of £7.5m, which is incorporated into our FY2020E forecasts. It would seem likely that the Group will wish to re-instate forward guidance at the time of the results and to this end we would expect management to indicate a year of solid progress in EBITDA for FY2021E. Over the first quarter the Group has demonstrated good resilience, operating at close to normal levels, with the exception of Oil & Gas (where there is fairly limited exposure) and HVAC activities at Ormandy, supported by exposure to multiple markets and a strong customer base that includes governments and their agents.
Companies: Avingtrans Plc
The Group performed robustly in H1/20A, experiencing like-for-like revenue growth in Q1/20A. The Group's dynamic business model combined with the implementation of a strict cost reduction strategy ensured Group cash balances and margin profile improved. We expect recent trading momentum to persist into H2/20 as the Group continues to benefit from its diverse revenue channels, customer base and end markets.
Companies: Xpediator Plc
SMS reported solid interim results demonstrating the resilience of the business during a very uncertain period. 1H/20 revenue was flat at £54.2m with underlying PBT up 96.9% to £9.1m. We believe SMS remains substantially undervalued given: i) Base case DCF valuation of 1,058p; ii) Base case DDM valuation of 1,176p; iii) visible growth to mid-2025 with secured 2m meter order book and substantial CaRe asset potential; iv) attractive dividend with committed 10% p.a. growth to 2024; iv) balance sheet headroom with £44.5m net cash and £300m RCF; v) strong ESG credentials with long term sustainable and carbon reducing assets. Our base DCF and DDM valuations of 1,058p and 1,176p respectively are supported by the 16.4x net ILARR asset sale during 1H/20.
Companies: Smart Metering Systems Plc
Inspiration Healthcare has announced it has completed its final delivery of ventilators to the NHS in response to the COVID-19 outbreak, which were announced in March 2020. In total the company has now shipped ~£7m of ventilators, of which £5m relate to Inspiration Healthcare's direct contracts and ~£2m relate to orders to S.L.E., which was acquired in July of this year. These £7m of orders do not include revenues associated with the ventilator support service or ancillary orders received since March. We maintain our Buy recommendation.
Companies: Inspiration Healthcare Group Plc
As legendary investor Warren Buffet succinctly puts it: “it is better to buy great companies at fair prices, rather than fair companies at great prices”. Today, we think Mpac has done exactly that by acquiring Ohio based Switchback Group, Inc. for a maximum of $15m in cash (£11.4m). Equivalent to modest takeover multiples of 7.1x EV/EBIT and 1.1x EV/sales – with $13m of the consideration paid upfront, and the rest structured as a $2m earnout depending on EBITDA performance over the next 24 months.
Companies: Mpac Group Plc
Who would have thought when reporting pre-tax losses of £10m after the first half to end June that Breedon would emerge so strongly from lockdown to trade through July-August (and into September) with LFL revenues ahead of comparative 2019 and expected H2 EBIT broadly in line with the equivalent 2019, resulting in a reinstatement of guidance ahead of current FY20 consensus. That is a mark of confidence as much in the group's operating capabilities as market recovery itself – a feature of Breedon's management quality over a consistent period of time. Investors will be impressed by the short-term recovery but also encouraged that the longer-term outlook remains positive with an emphasis to infrastructure markets in GB and Ireland plus, of course, its unrivalled ability to utilise its asset base very efficiently and to add to that platform with accretive acquisitions. The shares hit a COVID ‘low' of 63p but were trading as high as 100p in February. We would see that upper level as the more likely direction of travel for the shares with 90p justified by a forward 2022E rating of 7.5x EV/EBITDA, c14x PE, commencement of dividends and significant deleveraging through high net cash flow generation.
Companies: Breedon Group Plc
A strong start to the year was offset by global lockdowns, which significantly impacted trading. Subsequently, the gradual reopening of economies has meant that Filta has seen a month-on-month improvement in trading since April, and now expects to reach run-rate revenues at c70% of prior year levels by the end of FY20E. The strength of Filta's model has enabled it to withstand a severe shock to the business, and emerge with its operations and balance sheet intact, positioning it well to capitalise on growth opportunities as conditions normalise. Due to continued Covid-related uncertainty, we maintain our Hold recommendation, and are not re-instating forecasts at this stage.
Companies: Filta Group Holdings Plc
Brickability has delivered on its promises with inaugural full year (to Mar-20) results that demonstrate EBITDA and profits growth, establish a base level of dividend, show good cash generation and of course its ability to make acquisitions and build a future pipeline. The impact of COVID-19 will be fully felt in the current year, inevitably setting earnings back although it has traded profitably at EBITA level in every month since April reflecting progressive sales recovery (June -17%, July +1.6%) and the low fixed cost base. The group is not yet ready to offer formal guidance for FY21 however the strategy outlined at IPO is very much intact and deliverable. With the shares over 40% below their post-IPO ‘high' yielding an historic 4.4% plus an EV/EBITDA of 5.3x and PE of c8x, both of which are re-attainable 2-3 years out, the valuation simply looks too cheap to ignore, especially versus its peers.
Companies: Brickability Group Plc
Overall performance shows resilience to the impact of COVID-19, with comprehensive restructuring and a focus on recurring, software-driven, revenue streams. H1’21 revenue grew 2.3%YoY (normalised basis) to £6.4m. Checkit UK, acquired on 24 May 2019, contributed 2.5 months of earnings, in H1’20 equivalent to £6.2m on an annualised basis. Notably, gross profitability improved significantly from 21.9% at July 2019 to 35.9% by July 2020. Checkit reorganised into two divisions: Checkit Connect, providing workflow management (CWM), automated monitoring (CAM), and building management services (CBM); and Checkit BEMS, responsible for building installation and maintenance projects. Checkit Connect contributed 53% of H1’21 revenue, growing 15%YoY (normalised), of which 68% was recurring, growing 23%YoY. Checkit Connect is the focus of a SaaS-based products and services business model; its recurring revenue base contributed almost 100% of divisional growth, driven by firmed pricing and a major contract. Checkit BEMS revenue declined 9%YoY (normalised) reflecting the impact of COVID-19 in limiting on-site access. Checkit’s operating loss was reduced from £2.9m in H1’20 to £1.5m, or £2.0m inclusive of exceptional items (H1’20: £3.1m loss). Investment in development was maintained, at £1.0m in H1’21 compared to £1.2m a year earlier. Elektron Eye Technology (EET) was sold in July for £0.9m, paid over 24 months. The cash position as of 31 July was £13.4m, compared to £14.3m on 31 January.
Companies: Checkit Plc
DX has reported good progress in FY 2020 given the impact of COVID-19. Sales were up +2% (H1 +8%, H2 -4%) and adj. PBT increased from a loss of -£0.2m in FY 2019 to a profit of £1.8m (IAS 17) or £0.3m (IFRS 16). This is a better result than our forecast of a loss of -£0.9m (IFRS 16) and was backed by strong cash flow resulting in net cash of £12.3m at June 2020. The outlook is positive, with management highlighting volumes are currently ahead of pre COVID-19 expectations, and the group is in a strong position to rebuild profitability, by improving efficiency, productivity and margins. We have upgraded FY 2021 EPS by 124%, FY 2022 by 63% and raised our target price from 18p to 29p.
Companies: DX (Group) Plc
The results from Xpediator for the six months to June were extraordinarily good. Revenues declined just 2.7%, with gross and operating margins modestly ahead - and this from a company with considerable exposure to the consumer. The results highlight the entrepreneurial nature of the business: new business was won and the utilisation of the Group’s Transport Solutions clients to find the best routes and rates when the pandemic closed several CEE borders. The dividend was increased by 61% y-o-y which highlights confidence in the outlook.
Journeo is a specialist provider of information systems and technical services to the transportation sector. Despite the disruption brought about by Covid-19, Journeo has delivered an excellent set of first half results, with a solid order book with which to underpin H2. First half revenues increased 18% to £6.8m (H1-2019: £5.7m) whilst operating profit increased £0.5m to £0.2m (H1-2019: loss £0.3m). Strong cash management in the period, a VAT payment deferral and a further small placing, results in net cash of £0.2m (FY 2019: -£1.0m), H1 net debt of £0.3m on an underlying1 basis. Order intake has continued into H2 with a further two significant contract awards (announced July/Aug), and smaller third, but nonetheless strategically important contract (TFC Fund - £0.3m) announced today. The sales pipeline is also said to be growing. As such, our FY 2020E estimates are unchanged this morning with our estimate of fair value at 75p.
Companies: Journeo Plc
Drax has announced additional loan facilities which will reduce its all-in cost of borrowing to below 4% and we see this as helping to give Drax the firepower to expand its US-based biomass feedstock business efficiently. We see this business as having growing importance as several governments look towards biomass carbon capture and storage as a key component of the net zero tool kit.
Companies: Drax Group Plc