Cenkos: Duke Royalty Ltd -- Successfully navigated to more stable times
Today's results reflect a period impacted by COVID-19, whereby five royalty partners entered forbearance, with four subsequently exiting post-period and returning to royalty payments. This has shown Duke as a supportive, long-term capital provider, assisting partners to periods of more stable trading. In turn, this has preserved shareholder value and enabled the group to return to cash dividends from Q3/21. With more positive economic conditions ahead in 2021, we see upside to Duke's royalty/equity values and ultimately NAV.
09 Dec 20
Cenkos: Duke Royalty Ltd -- The return of cash dividends
Today's trading update reads positively, evidencing a further rise in cash receipts towards pre-Covid levels, as three royalty partners exit forbearance measures. As a result, Duke will return to cash paid dividends from Q3/21E at attractive yields currently. Our newly released forecasts see YoY recovery in performance to FY23E, while significant upside exists from sizeable equity stakes arising from forbearance. Trading at a 16% discount to forecast FY22E NAV, we see Duke as overly discounted given the continued improving outlook, thus move to a Buy recommendation.
12 Nov 20
Cenkos: Duke Royalty Ltd - Improving trading – increasing cash receipts
FY20A results largely reflect a period prior to the Covid-19 lockdown, yet show Duke entering a more challenging FY21E with momentum. Yesterday's trading update demonstrated another notable rise in quarterly cash receipts for Q2/21, as royalty partner trading continues to improve. As some partners' forbearance measures will expire this month, Q3/21 receipts should continue this upwardly momentum. This opens the door to a return to cash dividends at some future point. Today, Duke also confirms it is now seeking new royalty partners, alongside follow-ons.
17 Sep 20
Cenkos: Duke Royalty Ltd -- Restoring the royalties
Trading in the royalty partner portfolio over Q1/21 shows a material rebound from May, which has been sustained to date, as the portfolio as a whole returns to more normalised trading. Consequently, Duke's cash receipts, while down 20% YoY currently, are set to step up in H2/21 as forbearance measures largely expire and deferred royalties realised. This bodes well for a rebound in earnings and a return to cash paid dividends. A share price down over 55% since Feb 20, standing at p/book of 0.56x H1/20A's NAV p/s thus appears overdone. We await further clarity on the portfolio before reissuing forecasts, thus leave our recommendation U/R.
06 Aug 20
Cenkos: Duke Royalty Ltd -- Supporting partners to better times ahead
Today's update highlights that despite the Covid-19 outbreak and UK/IRE lockdown, which has affected trading, Duke has continued to collect cash royalties from most of its royalty partners. Short-term alternative payment terms have been agreed with those partners hardest hit, to support them to periods where royalties can be fully recouped. Therefore the 61% fall in p/b from 1.3 (at 20 Feb) to 0.5 today, appears overdone.
14 May 20
Cenkos: Duke Royalty Ltd -- Assessing the impact across the portfolio
The scaling of Duke's royalty portfolio was progressing as expected up to March 2020, with record cash receipts that month. Due to Covid-19 and the UK's economic shutdown, macro conditions have worsened and become highly uncertain. This is likely to see some royalty partners' future cash royalties decline, which in turn, will negatively impact FV's in the FY20E results. Duke's high margin and cash generative nature ensures it is well placed to trade through these challenges. Given the degree of uncertainty in outlook, we remove forecasts and put our recommendation Under Review and await further clarity on the portfolio.
02 Apr 20
Small Cap Feast
Abal Group (formerly on AIM) to relist as Supply@Me, a growing innovative "inventory monetisation" platform, having originated more than EUR300m of prospective "inventory monetisation deals" in its first six months of operating (to June 2018). In the first half of 2019, an additional prospective EUR300m was originated. As at the date of the publication of the Prospectus and Circular to Abal shareholders, dated 4 March 2020 , EUR972m of prospective contracts have been originated. Raising £2.2m. Due 23 March. The Proof Of Trust has announced its intention to list on the Standard Market. The Blockchain based business, owns patents to a protocol which facilitates dispute resolution based upon smart contract disputes. Transaction details TBC.
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17 Mar 20
Cenkos: Duke Royalty Ltd -- Scaling of the portfolio delivering riches
Duke delivered significant YoY growth in H1/20A results, as earlier efforts to broaden the royalty portfolio came through this year. This strong growth will continue with recent debt & equity raises forward funding investments to income levels of £15m by FY21E. Met with an enhanced, but now stabilised cost base, operational leverage should drive continued strong adj EBIT growth (to £13m, at a c85% margin) and further DPS rises.
06 Dec 19
Duke Royalty - Executive interview
In this interview Rael Sarembock, vice president of <strong><a href="https://www.edisongroup.com/company/duke-royalty/2905/" target="_blank" rel="noopener">Duke Royalty</a></strong>, discusses the attractions of royalty finance versus other forms of financing and the investment criteria Duke looks for when making an investment. He then discusses the company’s investment case and future dividend policy.
28 Oct 19
Cenkos: Duke Royalty Ltd - Larger scale, more diversified and rising DPS!
Duke is raising £16.1-20.0m (gross) in new equity to enlarge and balance out its portfolio of royalty partners. The placing also unlocks new debt finance for investing, such that Duke could have 16+ royalty partners funded by £131-141m of invested capital, producing royalty income of c£17m+ pa. This income will be met with a stabilised cost base from FY20E, producing significant operating leverage, more material FCF and with it DPS increases for this top 5% yielding AIM stock
07 Oct 19
Duke Royalty - A new wave of lending
Royalty investing is a profitable and significant form of alternative finance in North America. However, it is still a nascent industry in Europe and Duke Royalty was set up in 2015 by an experienced team to change this. Its current portfolio is now close to £80m and it aims to add £45–100m in deals a year in the coming years. Duke has just announced a fund-raising of up to £20m, of which £16.1m has already been placed in an institutional offering at 44p per share. This will allow it to invest another £45m in the next 12 months. We estimate a sustainable ROE of 14% for Duke and we see the current fair value range at 50–58p per share.
04 Oct 19
Small Cap Feast
AMRYT PHARMA PLC— a biopharmaceutical company focused on developing and delivering innovative new treatments to help improve the lives of patients with rare or orphan diseases have raised $60m before expenses and will relist on the AIM Market on the 25/09/2019
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10 Sep 19
Cenkos: Duke Royalty Ltd - Revenues and profits coming through
Duke's FY19E pre-close update highlights a step change in YoY financial performance, anticipated by our FY19E forecasts. The royalties from all 12 partners are beginning to come through, met with a stabilising cost base, producing operationally geared profit growth. As royalties from partners annualise over FY20E, we see another large profit uplift ahead.
14 Aug 19
Cenkos: Duke Royalty Ltd - Capitalising on more favourable terms
Duke has agreed modifications to the terms of three royalty agreements from the Capital Step acquisition. The effect is to unlock a minimum of £3.7m in additional revenues over the next 5 years. As a result, Capital Step's future revenue is expected to increase by 25%+ at no additional cost. This realises a key synergy from the Capital Step deal.
14 May 19
Cenkos: Duke Royalty Ltd - A myriad of royalties to come
Duke has announced a new £10.0m royalty investment into MRDB Holdings, trading as Miriad Products (Miriad), the largest privately-owned wholesale supplier of recreational vehicle (RV) parts in the UK. Following the recent addition of Capital Step, Miriad represents Duke's twelfth core holding, further diversifying the royalty portfolio. The deal continues the theme of investment into well-established UK businesses, with strong barriers to entry that help protect long-term royalty income.
19 Feb 19
Cenkos: Duke Royalty Ltd - A step change in scale
Duke has announced the acquisition of Capital Step, the only known rival provider of royalty finance and debt products to SMEs in UK&I. The acquisition materially accelerates development of Duke's royalty portfolio, adding 6 core new investments (to a total of 11) in several new sectors. This adds significant diversification, de-risking the portfolio to individual names/sectors. The deal is expected to be immediately earnings enhancing, reflected in our upgrades to FY19E & FY20E EPS forecasts of 5% and 3%. This gives further support to DPS estimates which produce a market leading 9% yield on our revised FY20E forecasts.
04 Feb 19
Cenkos: Duke Royalty Ltd - A profitable operation
Duke's H1/19A interims are the first to show the company producing a statutory net profit following initial deployments of the £42m net proceeds from August's placing. While deployment of the remaining proceeds is taking longer than previously expected, we see this as a positive sign to the rigour of the company's due diligence process. We now expect full deployment to be completed by the end of FY19E. This will produce a step change in Duke's financials per our FY20E forecasts.
04 Dec 18
Cenkos: Duke Royalty Ltd - Increasingly diversified portfolio
Today's results reflect royalties from only 3 partners, who in combination produce c£3m of annualised royalty income prior to any resets. Post year-end, the company has completed a further 2 royalty investments, one of whom utilised the £42m net proceeds raised in August. Duke has identified a further 3+ new names to add to the portfolio in FY19E. This added diversification will reduce overall risk across the portfolio and generate royalty income of c£9.0m pa. In turn, DPS should rise to 3.6p p/s by FY20E, providing a market leading yield of 8% on current pricing.
24 Sep 18
Cenkos: Duke Royalty Ltd - Rolling out the royalties
Duke has identified a near-term pipeline of four new royalty partners seeking capital, in addition to a longer-term opportunity and top-up investments in existing partners. Upon full deployment of the £36.5m of capital required, Duke would have nine royalty partners, with underlying exposure to 13 independent companies. This adds significant diversity in terms of partner, sector and geography; de-risking the overall portfolio. To finance these deals, working capital and its future pipeline, Duke has raised £44m at 44p p/s.
16 Jul 18
Small Cap Brunch
CentralNic-Schedule 1 from the business operating in proprietary retail platforms selling domain names and associated web presence services including hosting and email on a subscription basis, has acquired KeyDrive S.A which constitutes a RTO. Raising £24m at 52p, combined market cap of £88.7m Trackwise—established business that manufactures specialist products using printed circuit technology. Offer TBA. Due Late July Ovoca Gold (to be renamed Ovoca Bio PLC) - RTO of IVIX, a Russian com pany developing a drug candidate for the treatment of female sexual dysfunctions. No monies to be raised, market cap of £8.5m, due 30 July Nucleus Financial—independent wrap platform provider . FYDec17 revs £40.36m and PBT of £5.1m. Offer TBA. Due late July. Kropz PLC-Intention to float by the emerging plant nutrient producer with an advanced stage phosphate mining project in South Africa and exploration assets in West Africa
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16 Jul 18
Resetting for a higher pace of growth
Duke has provided an operational update on its inaugural royalty investments in Temarca and Lynx Equity (UK). Temarca has been confirmed as achieving its +6% royalty reset, while Lynx is also on course to achieve the full reset with four months remaining. We see this as initial evidence of the group’s ability to pick winners and the compounding effect of royalties, providing upside to future dividends.
08 May 18
Small Cap Breakfast
Team17 Group -video games label and creative partner for independent developers. Since 2014, delivered a revenue CAGR of 69% (31 December 2015 to 31 December 2017), with revenues of £29.6m and Adjusted EBITDA of £12.9m. Offer TBA Urban Exposure, a newly formed company which been established to pursue two main strategies in the residential development finance market - asset management of development finance loans and direct lending into development finance loans, looking to join AIM. Offer raising £150m at £1, market cap of £165m, expected 9 May 2018 Supreme, POSTPONED a leading manufacturer and supplier of branded consumer batteries, a manufacturer and supplier of branded and licensed consumer lighting and a leading manufacturer and supplier of vaping products in the United Kingdom, is looking to join AIM. Offer TBC, expected May 2018 Serinus Energy -international upstream oil and gas exploration and production company. Its principal assets are located in Romania (development phase) and Tunisia (production phase). Raising c.£10m. Offer TBA. Due mid May.
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08 May 18
Small Cap Breakfast
Rosenblatt Group -specialist litigation and contentious restructuring law firm established in 1989 based in the City of London. Offer TBC. Due 8 May. Supreme, a leading manufacturer and supplier of branded consumer batteries, a manufacturer and supplier of branded and licensed consumer lighting and a leading manufacturer and supplier of vaping products in the United Kingdom, is looking to join AIM. Offer TBC, expected early May 2018 KRM22, a closed-ended investment company with a particular focus on risk management in capital markets, is looking to join AIM. Offer tbc, expected 30 April 2018 Serinus Energy -international upstream oil and gas exploration and production company. Its principal assets are located in Romania (development phase) and Tunisia (production phase). Raising c.£10m. Offer TBA. Due mid May.
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24 Apr 18
Extending the royal(ty) family
Having fully deployed capital into its first two royalty partners, Duke is seeking to deepen and broaden its royalty portfolio. It will add two new partners, both established UK manufacturing businesses, in addition to a follow-on investment in Temarca. As a result, annuity-like royalty income should exceed £4.3m, benefit from greater diversification and be met by a lean operating model. This funds the payment of dividends in both FY19E & FY20E at market leading dividend yields of c8%.
07 Dec 17
Rewarding shareholders royally
Duke Royalty (Duke) is executing a first mover strategy by bringing the successful royalty financing offering to European markets. The company is seeking to be a recognised alternative source of capital for established, cash generative SMEs, whose founders wish to retain control and have long-term finance in place. As the portfolio scales, stable royalty earnings will build, be increasingly diversified/de-risked and distributed to shareholders through a market leading dividend yield.
23 Oct 17
Small Cap Breakfast
Alpha Financial Markets Consulting— Global provider of specialist consultancy services to the asset and wealth management industry. Due Oct. Revenue of £6.7 million for the year ended 31 March 2011 to £43.6 million for the year ended 31 March 2017. Offer TBA. Due 11 Oct. Cora Gold— West African focused gold exploration business, significantly enlarged by the amalgamation of the gold exploration assets in Mali and Senegal of Hummingbird Resources and Cora Gold's former parent, Kola Gold. Raising £3.45m at 16.5p. Mkt Cao £9.07m. Springfield Properties—Scottish housebuilder. “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.” Expected Mid October. Offer TBA. 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.
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06 Oct 17
Small Cap Breakfast
Tobago. Interests of approximately 90,000 gross acres. Production c. 1,300 boepd. Raising £1.45m. Expected mkt cap £7.5m. Due 26 June. I3 Energy –Schedule 1. Independent oil and gas company with assets and operations in the UK. Offer TBC, 7 June admission. Verditek— Schedule 1 update. On Admission, the Company's subsidiaries will be involved in advanced solar photovoltaic, filtration and absorption technologies specialising in providing environmental services. Issue price 10p. Admission in Early June Tiso Blackstar Group—Schedule 1 update. Media, entertainment and marketing solutions group/ £160m mkt cap. Admission only. Expected late June. ScotGems—Admission due 26 June. Seeking £50-£100m. To investing in a diversified portfolio of Small Cap Companies listed on global stock markets DP Eurasia—Intention to float from the exclusive master franchisee of the Domino's Pizza brand in Turkey, Russia, Azerbaijan and Georgia . £20m primary raise plus a partial vendor sale. Film Finances—Sky News reports that ‘movie financing company with credits including the Hollywood hits La La Land and Nocturnal Animals is plotting a blockbuster premiere on the London stock market that will value it at several hundred million pounds.’ Expected ‘during the summer’. AIB—Intention to float from AIB, Ireland's leading retail and commercial bank . The Minister for Finance intends to sell approximately 25% of the Ordinary Shares of AIB. Prospectus and announcement of the price range due in mid-June 2017. Curzon Energy—Report on Proactive Investors of intended LSE float this year with acquisition of coal bed methane assets in Oregon. Looking to raise £3m plus. NLB Group—financial and banking institution based in Slovenia, with a network of 356 branches. Seeking Ljubliana Stock Exchange listing with GDRs on the LSE. Expected mid June. Flying Brands (FBDU.L)—Prospectus approved by FCA. RTO of Stone Checker Software, supplier of technology solutions in the field of kidney stone analysis and prevention. Has raised £550k at 3p. Subject to GM on 15 Jun. AEW UK Long Lease REIT—Intention to Float. Up to £150m raise. Admission early June. UK specialist and alternative property Kuwait Energy— $150m raise plus vendor offer. Admission due June. 2p reserves 810.0 mmboe
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09 Jun 17