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We believe recent M&A activity has complemented and strengthened Brave Bison’s already compelling and differentiated tech-enabled digital content and services offering and enhanced its long-term growth prospects. We forecast an attractive EPS and DPS progression as an ambitious management team with a record of transformational change pursues multiple growth opportunities. Our 12-month target price of 155p suggest >90% upside potential. BUY.
Brave Bison Group Plc
Brave Bison has released very positive interim results and a new bolt-on acquisition. 1H25A showed solid underlying performance across divisions including SocialChain winning a large competitive global mandate with Primark. The integration of the acquisitions so far this year continues at pace, and all are expected to positively contribute to profitability in 2H25E. Today, the acquisition of MTM adds new audience insights and data consulting capabilities to its offering. The initial consideration is £6m (£5m cash, £1m shares) giving an initial consideration/EBITDA multiple of 4.6x, before potential cost synergies. A further £2m deferred shares and £4m self-funding contingent consideration takes a maximum total consideration to £12m over five years. This, along with strong underlying performance, means our maiden FY26E represent a 13% uplift to previous FY25E pro forma basic adj EPS. FY26E also shows 42% YoY net revenue growth to £44.8m basic adj EPS growth of 20% YoY to 8.35p. As such, we have raised our 12-month price target from 120p to 150p.
Brave Bison has raised £13.5m of equity funding at 2.45p for the £19m cash purchase of MiniMBA, a marketing skills and training platform. It is structured as a carve out deal from Centaur Media plc, representing a buyout on an adj P/E multiple of 5.5x. The transaction will see the MiniMBA founder and industry titan, Professor Mark Ritson, invest £2m in the placing and a further £2m within 24 months of completion. We upgrade FY25E revenue by £3.7m to £29.2m and adj EPS by 9% to 0.31p. On an FY25E pro forma basis, adj EPS accretion would be 21% to 0.34p, and on an unlevered basis adj EPS accretion would be 28% to 0.36p. On the latter basis, Brave Bison trades on an FY25Epf-ul adj P/E of 8.3x versus peers on 16.2x. We raise our 12-month price target from 4.7p to 6p.
Brave Bison has released a strong set of FY24A results, which marked the fourth consecutive year of growth in net revenue and adj PBT, in-line with expectations and the January trading update. In addition, Brave Bison has released a variety of announcements including: 1) The acquisition of News Corp’s UK-based influencer marketing agency, called The Fifth, which will also see News Corp becoming a top 10 shareholder in Brave Bison, 2) confirmation that FY25E trading will be ahead of expectations, 3) a dividend of 0.023p per share (c.1% divi yield) and the first in the company’s history, and 4) a proposed 100:1 share consolidation to be voted on at the AGM. Brave Bison’s valuation looks highly compelling given it trades on an FY1 adj P/E of just 8.1x versus peers on 9.3x, whilst retaining significant net cash and growing net revenues by 20% in FY25E.
Brave Bison has released a positive trading update for the period ending 31 Dec 2024. The year represented one of great progress as management powered on with integrating SocialChain, expanded its AI toolset and continued building its digital-era proposition for advertisers. FY24E net revenue increased 2% to £21.3m (FY23A: £20.9m) and by 8% when excluding mothballed US operations. This fed through to a 7% YoY increase in Adj PBT to £3.9m (FY23A: £3.6m), which was 5% ahead of forecasts. Basic Adj EPS was also a healthy 5% ahead of forecasts at 0.30p (FY23A: 0.29p), marking the fourth year running that Brave Bison has beaten expectations at year-end. Brave Bison remains one of the few in the sector to not profit warn, and we believe FY25E will mark another exciting year for the company as it continues to take market share. In December, it acquired Engage Digital Partners, a specialist sports marketing company focused on fan engagement and monetisation for the world’s leading sports brands and federations. We see significant cross-selling opportunities in an enlarged sports and entertainment segment with greater operational scale and broader service offering. Similarly to the SocialChain acquisition, management intends to carry out a restructuring and integration strategy to unlock earnings accretion. This process has begun in earnest and the London office move has already been completed, whilst the systems migration is expected to be finished by the end of June 2025. With significant net cash remaining on the balance sheet (FY24E updated to £7.5m post-acquisition) and a £3m revolving credit facility, we see potential for additional acquisitions in the year ahead, which could drive further revenue and profit growth beyond any organic growth. Brave Bison’s valuation looks highly compelling given it trades on an FY25E EV/Adj EBIT of just 4.8x versus peers on 9.5x.
9th September 2024 * A corporate client of Hybridan LLP ** Arranged by type of listing and date of announcement *** Alphabetically arranged **** Potential means Intention to Float (ITF) has been announced, or it is a rumour Dish of the day Admissions: None Delistings: None What’s baking in the oven? Our daily digest of news from UK Small Caps If you would like to unsubscribe, please email enquiries@hybridan.com with “unsubscribe me”. Hybridan Chefs research@hybridan.com Banquet Buffet*** Brave Bison Group 2.5p £32.3m (BBSN.L) The digital advertising and technology services company today reports its unaudited interim results for the six months ended 30 June 2024. Revenue increased 1% to £10.1m (H1 2023: £10.0m), Adjusted profit before tax increased 20% to £1.8m (H1 2023: £1.5m) and net cash exclu Lease Liabilities increased 57% to £6.8m (H1 2023: £4.3m). The Board expects to exceed current market forecasts for FY24 as a result of better than anticipated trading at Brave Bison Performance and increased profitability at SocialChain. European Green Transition 13p £18.8m (EGT.L) A company developing green economy assets in Europe which aims to capitalise on the opportunity created by the green energy transition announces that it has completed the low-cost drill programme at its Olserum Rare Earth Element (REE) Project in Sweden. Successful completion of 13 holes for c.1,500 metres of diamond core drilling ahead of schedule and below budget at the Olserum REE project in Sweden. The Directors are encouraged by the work performed with visual inspection of the drill core indicating broad alteration zones and intervals with intersections of visible phosphate mineralisation, which the Directors believe host the REEs. Core logging is now complete and lab-based analysis to assess REE concentration is due to commence in late September 2024, with results expected later in H2-2024. EQTEC 0.975p £2.5m (EQT.L) The technology innovator powering distributed, decarbonised, new energy infrastructure through its waste-to-value solutions for hydrogen, biofuels, and energy generation announces further to the announcements of 4 September 2024 of the Fundraise, the completion of the WRAP Retail Offer at the Issue Price. The WRAP Retail Offer, which closed at 4:30 p.m. on Friday 6 September 2024, has raised gross proceeds of £72,528.15. The net proceeds of the Fundraise, along with the Company's existing cash resources, will be deployed for general working capital purposes and to accelerate the implementation of its strategy. ImmuPharma 1.48p £6.2m (IMM.L) The specialist drug discovery and development company announces its interim results for the six months ended 30 June 2024. Loss for the period decreased to £0.4m (30 June 2023: £0.8m), research and development costs decreased to £0.5m (30 June 2023: £0.8m) and the cash balance of £1.1m as at 30 June 2024 (30 June 2023: £0.2m). The Company have continued their focus on tight cost controls and maximising the use of outsourcing to keep their committed overhead costs to the minimum. This is illustrated very clearly in the reduction of their operating loss for the period to £0.4m down from £0.8m for the same period last year. They have also strengthened the balance sheet and extended their cash runway by successfully selling their shareholding in Incanthera, whilst still retaining a further 7.3m warrants. Norman Broadbent 6.875p £4.6m (NBB.L) The Executive Search and Interim Management firm announces its unaudited interim results for the six months ended 30 June 2024. Revenue decreased 18% to £5.0m (H1 2023: £6.1m), Underlying EBITDA of £0.13m, £0.1m bad debt provision (H1 2023: £0.27m) and cash and cash equivalents of £48k (30 June 2023: £81k). While the market remains tough, as reported in recent announcements by virtually all companies in our sector, several industry indicators suggest a gradual stabilisation is underway. They are seeing pockets of increased activity and are encouraged by the gradually improving retainer income so far in Q3 2024. Oncimmune Holdings 22.6p £16.8m (ONC.L) The autoantibody profiling Company providing research services to the pharmaceutical and biotechnology industry to enable the delivery of precision medicine provides a trading update following strong commercial progress since its last update on 21 May 2024. As announced on 9 August 2024, following a successful pilot carried out for a major pharmaceutical company, Oncimmune has entered into an agreement for a major new project with that pharmaceutical company, with a contract value of at least US$1.5m, which will utilise a technological breakthrough achieved by Oncimmune's scientific team. As further announced on 2 September 2024, another major pharmaceutical company, for whom Oncimmune is already a preferred supplier, has entered into a new $0.7m project, focused on a rare immune related disease, with the initial samples to be analysed already being held by Oncimmune. Oncimmune has also entered into contracts for three other new projects since its last update. Two contracts are with a US biotech to analyse multi-omic data from its clinical trials. This is a new area for Oncimmune and a testament to its strong data analytics capability. The third contract is through a contract research organisation with whom Oncimmune has a long standing relationship, with the project providing IgA autoantibody analysis for a European biotech as a follow on to previous work carried out for that customer. Sunda Energy 0.075p £19.1m (SNDA.L) The exploration and appraisal company focused on gas assets in Southeast Asia announces its unaudited interim results for the six months ended 30 June 2024. Loss before tax £996k (30 June 2023: £847k), cash and cash equivalents £4.55m (30 June 2023: £4.62m). In February 2024, the Company raised £2,993,000 net (£3,264,000 gross) from the issue of new share capital by way of a Placing, Subscription and WRAP Retail Offer. During June 2024, the Bank Guarantee for the Chuditch PSC was increased from US$1.0m to US$2.5m (net US$2.0m) as the Company prepared to enter Contract Year 3 of the PSC, with its increased work commitments. Synectics 195p £34.7m (SNX.L) The advanced security and surveillance systems announces that it has been awarded a further contract, worth approximately US$3.2m, relating to the upgrade and expansion of the surveillance system at a major gaming resort in South-East Asia. This Contract is in addition to the US$10m contract award announced on 18 June 2024. The Customer has been using Synergy, the Company's proprietary software platform, since 2014 and the Contracts will expand and upgrade the Customer's existing system to the latest version of Synergy. The Contract is expected to be delivered in the year ending 30 November 2025. SulNOx Group 31p £37.7m (AQSE: SNOX) A greentech Company which specialises in providing responsible solutions towards decarbonisation of liquid hydrocarbon fuels announces its Final Results and Audited Annual Report and Accounts for the Year to 31 March 2024. Revenue increased to £544k (2023: £203k), loss before tax decreased to £1.86m (2023: £1.90m) and cash at bank and in hand was £2.15m (2023: £649k). The Pebble Group 60p £99.4m (PEBB.L) The provider of digital commerce, products and related services to the global promotional products industry announces its unaudited results for the six months ended 30 June 2024. Revenue decreased 4% to £60.8m (H1 2023: £63.3m), adjusted EBITDA decreased 1% to £7.4m (H1 2023: £7.5m) and net cash increased to £4.9m (H1 2023: £4.2m). The Board expects FY 24 results to deliver on its market expectations .
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Brave Bison has released strong H1/24A results. Innovative AI-driven solutions have helped win a record number of new client engagements and the careful management of staff utilisation through automated resource planning systems has driven Adj PBT/net revenue margins to within the medium-term target range of 18-20%. The encouraging performance has led us to upgrade our FY24E Adj EPS forecast by 15%. We have released our FY25E forecasts which show the sixth consecutive year of profitable growth with Adj PBT increasing 4% YoY to £3.8m. Brave Bison’s valuation looks compelling given it trades on an FY2 EV/Adj EBIT of just 6.3x versus peers on 10x. We update our 1-year price target to 4.7p based on Brave Bison trading in-line with the peer’s FY1 EV/EBIT multiple of 13.6x.
Brave Bison has released a positive H1/24E trading update that shows the SocialChain acquisition continues to add value to the business. Adj PBT increased 20% to £1.8m, which also represents a 3pp increase in Adj PBT/net revenue margin to 18%. We conservatively leave forecasts unchanged for now, but note that the Group has achieved over 50% of the FY24E Adj PBT and H2/24E should benefit from the typical seasonality of advertising expenditure. Brave Bison’s valuation looks compelling given it trades on an FY1 EV/Adj EBIT of just 6.2x versus peers on 12.0x.
Brave Bison has released its FY23A results which are in-line with the upgraded expectations at the recent trading update. The acquisition of SocialChain has transformed The Group’s offering in the fast-growing social and influencer segment of the market leaving it well-positioned for the expected pick-up in marketing spend in 2024. Management have continued to drive operational efficiencies in The Group, for example rolling out an advanced resource planning tool, which has contributed to Adj EPS growing 16% YoY. Brave Bison’s valuation looks very compelling given it trades on an FY1 P/E of just 12.2x (9.4x ex-cash) versus peers on 13.9x.
10 for 2024 10 investment ideas for 2024 2023 was the year that defied expectations. Global recession risks loomed but were averted as demand proved more resilient than expected, and despite the most aggressive hiking cycle in history, stock markets recorded their strongest year since 2019, with the gains driven by a dramatic shift in interest rate expectations in the fourth quarter following better inflation data. However, UK equities underperformed, with the market up just 4%, as continued heavy outflows weighed, with domestic investors unsettled by volatility and lured by high returns on offer from cash products. But – there is a growing body of evidence that we may now have passed the point of maximum pain, with recent sharp falls in UK government bond yields easing some of the headwinds. With a busy election calendar, it could prove another volatile 12 months for markets, but recent large moves in equity prices and rate expectations have also created opportunities for stock picking, in our view. With this in mind, we have chosen 10 investment ideas for 2024, companies that potentially offer strong upside, be it from organic growth, restructuring or M&A. But first, a look back at 2023 and some of the lessons learnt…
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Brave Bison has released its interim results for the period ending June 2023. The update shows the SocialChain integration has been materially completed, with synergies mostly realised and new client wins taking place as a combined business. Gross revenue increased 15% YoY to £16.9m and net revenue increased 23% to £10m, both driven primarily by the new contribution from SocialChain. Adj EBITDA increased by 20% to £1.9m and Adj PBT increased 16% to £1.5m, both in-line with expectations. We have reduced our net revenue forecast from £22.9m to £20.5m to reflect the challenging macroeconomic environment highlighted in the statement. However, ongoing admin expenses are also lower by a similar amount leading to Adj EBITDA and Adj PBT remaining unchanged at £4.1m and £3.1m respectively. We have released FY24E forecasts for the first time which show modest growth and is discussed further in the report. We have iterated a price target of 3.4p by applying the peer FY1 P/E multiple to Brave Bison’s FY2 Adj EPS.
Brave Bison has released a record set of annual results with FY22A revenues and PAT ahead of expectations at £31.7m (£29.2m forecast) and £2.1m (£2.0m forecast) respectively. The Group continues to deliver on all aspects of its business plan and is reaping the rewards. The valuation remains compelling with an FY1 Adj P/E of 12.6x and a future top line growth rate of over 35%.
Brave Bison has raised £4.75m of equity capital at 2.3p, to help fund an acquisition of a complementary business, called Social Chain. The target will bring significant brand recognition and cross-selling opportunities to blue-chip clients. We forecast an increase in FY23E revenues of £12.4m to £42.9m, a £1.0m increase in Adj EBITDA to £4.1m and an 11% increase in Adj EPS from 0.22p to 0.25p. Post-acquisition, Brave Bison would trade on a discount to the peer group median across EV/Sales, EV/EBITDA and P/E multiples. The implied upside based on FY2 P/E multiples is 47%, an implied fair value share price of 3.9p.
Brave Bison released its interim results for the period ending 30 June 2022 and is ahead of the strong trading update released in July. The business continues to perform well despite economic headwinds and is making strong progress in hitting the business plan objectives, which we discuss in further detail in the report. In total so far this year Brave Bison have won 12 new clients, including Paperchase, Rapyd and Viking Direct. We have released forecasts for FY23E which show a continuation of growth with c5% revenue growth and 14% Adj PAT growth. Brave Bison currently trades on an inexpensive FY2 EV/EBITDA ratio of 5.4x compared to 7.8x for its peer group.
Brave Bison has continued to demonstrate its resilient growth trajectory with a positive trading update pointing towards full-year results ahead of expectations. They have doubled first half revenues compared to last year as a result of both organic and inorganic growth, and now have finalised the integration of all past acquisitions under the Brave Bison brand. We have raised our FY22E forecasts on a top-line and bottom-line basis reflecting the strength of their current trading. We have undertaken a review of their business plan objectives in light of today's trading update and confirm good progress.
Brave Bison has released its full-year results in-line with previous guidance. The company has had a transformational year with the new management team putting the business on a firmly profitable path having turned a statutory profit in FY21A for the first time along with 50% revenue growth. They carried out their valuable acquisition of Greenlight, a UK digital advertising and technology firm, which broadened and complemented the Brave Bison offering. Today, the company have announced a further acquisition of Best Response Media, which is an important bolt-on to their Commerce division.
Brave Bison has provided a very positive trading update for FY21E and confirmed the successful integration of Greenlight. Previously identified synergies have been achieved for FY21E, and Adj PBT is expected to be approximately double our previous estimate. Brave Bison reported several new customer wins and announced an upcoming brand re-launch in 2022 to accelerate growth. We have increased our Adj EPS forecasts for FY21E and FY22E by c87% and c42% respectively to reflect this positive momentum. We believe Brave Bison offers value to investors given its growth, operational profitability prospects, and strong net cash position. We reaffirm our Buy rating.
Brave Bison has raised c£6.2m via a placing of new ordinary shares to acquire Greenlight, a digital advertising and technology company, for a total consideration of £6.8m, c9x FY21E EV/EBITDA or c6x post synergies. This deal will substantially diversify and significantly strengthen Brave Bison's existing digital services offering, increasing its exposure to the rapidly growing demand for Paid & Organic Media and Influencer Marketing. We update our forecasts for the earnings enhancing acquisition (FY22E Adj EPS doubles), and the recently announced Brave Bison upgrade in profitability, and reaffirm our Buy rating.
Dr.Martens DOCS.L — Dr. Martens is an iconic global brand and one of the most recognised footwear brands in the world, selling in excess of 11 million pairs of footwear annually in more than 60 countries with revenues of £672m in the year ended 31 March 2020. Offer Price set at 370 pence per Share . Dr. Martens' total market capitalisation at the commencement of conditional dealings on the main market of London Stock Exchange today will be approximately £3.7 billion based on the Offer Price. Partial sale by existing shareholders. No new monies being raised. Total offer size of £1.295 billion
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Brave Bison is a new-era media and marketing group that specialises in social media, with offices in London and Singapore. The Group has recently completed a restructuring, strengthened its Board and materially reduced operating costs. The new strategy, combined with strong long-term market dynamics, presents compelling growth opportunities for the Group. We initiate with a Buy recommendation.
Brave Bison Group plc* (BBSN.L, 1.3p/£8.0m) | Blackbird plc* (BIRD.L, 15.25p/£51.3m) | The Panoply Holdings (TPX.L, 75p/£41.3m) |1Spatial plc* (SPA.L, 26.5p/£29.3m)
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Brave Bison Group plc* (BBSN.L, 0.975p/£6.0m) | ECSC Group plc* (ECSC.L, 67.5p/£6.1m) | Gfinity plc* (GFIN.L, 1.30p/£7.0m)
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FY19 at Brave Bison, the social video company, was dominated by Facebook’s changes in content policy that resulted in BBSN’s four largest pages being demonetised but the company increased APAC revenue by 90%, YouTube channel management services by 66% and there was substantial growth in Snapchat. All the Facebook channels have now been remonetised. BBSN has also retained its largest contributors to YouTube and has undertaken branded content and influencer campaigns for a number of multinational clients. The new management has focused resources on a smaller number of channels, rebranded and re-oriented as necessary, and diversified onto other platforms. The emergence of COVID-19 and the postponement of the Olympics will impact BBSN’s growth ambitions for its JAPAC division and there is the wider question for global marketing spend. On the plus side, more digital content is being consumed at home and BBSN remains well capitalised. Forecasts remain under review.
FY19 revenue performance at Brave Bison Group, the social media company, is expected to be c. £16m (FY18: £21.2m). This is significantly below management and market expectations (ACLe: £20.1m). This is a function of the ongoing impact of adapting to Facebook’s new content policies announced in April and a H2 shortfall in BBSN’s APAC branded content division although revenue here will have doubled over FY18. As a result, there is expected to be a £1.5m negative swing in adj. EBITDA to a loss of £0.7m (FY18: £0.8m profit; ACLe FY19: £0.4m profit). Management has reviewed its cost base and made savings by restructuring its UK Commercial and Creative teams and closed its studio facility. As at 31 October 2019, BBSN had net cash of £3.8m and management believes the company is funded through to profitability. Given the uncertainty on the timing of the recovery of the Facebook-related revenue and the growth in other revenue streams, we place our forecasts under review.
Brave Bison Group plc* (BBSN.L, 1.45p/£8.8m) Interims: Swift response to Facebook content policy changes (31.07.19) | Mobile Tornado Group plc* (MBT.L, 5.2p/£18.1m) Subscription: Additional working capital to fund bundled PTT growth (31.07.19)
Brave Bison Group Plc Mobile Tornado Group Plc
Interims from Brave Bison Group, the social media company, saw further growth in Fee Based Services, primarily branded content in APAC. Group revenue increased 8.5% to £10.1m, gross margin +190bps to 33.4% reflecting the change in revenue mix, adj. EBITDA +£168k to £247k and net cash remains a healthy £3.7m. Performance in Advertising was weaker, however, down 10.4% to £6.6m, following changes to Facebook’s publishing guidelines. This resulted in BBSN’s four largest pages being demonetised. The new management team under Kate Burns, who joined in April, has responded quickly: rebranding and investing in these pages; publishing more content on alternative platforms and introducing new processes around licensing, creating and commissioning content. Two Facebook channels are live again and there is growth on alternative platforms. That said, it will take time to recover and we reduce FY19 and FY20 forecasts and move to a FV of 3.0p (4.6p) on a lower EV/EBITDA multiple.
Audioboom plc* (BOOM.L, 2.45p/£31.6m) Q1 Update: Positive KPIs (03.04.19) | Brave Bison Group plc* (BBSN.L, 2.1p/£11.4m) Management changes: New CEO appointed (03.04.19) | Brave Bison Group plc* (BBSN.L, 2.1p/£11.4m) Management changes: New CEO appointed (03.04.19) | Forbidden Technologies plc* (FBT.L, 6.5p/£19.2m) Partnership agreement and contract renewal (28.03.19) | Tern plc* (TERN.L, 8.5p/£20.1m) Placing (03.04.19) | Mirada plc* (MIRA.L, 0.8p/£6.9m) Commercial launch of Iris in Bolivia (02.04.19) | Starcom plc* (STAR.L, 1.35p/£4.3m) Commercial launch of Lokies (05.04.19)
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Brave Bison, the social video company, has delivered the first FY EBITDA profit in its history as advertising revenue grew significantly on the back of the success of its twenty Owned and Operated channels on Facebook and other platforms combined with operating cost control. These offer advertisers brand-safe access to targeted audiences. Brave Bison ranked as the seventh largest media and entertainment digital publisher globally and ended the year as the biggest Facebook publisher based on views with the biggest Facebook page with Viral Trnd. Brave Bison has continued to invest in its portfolio and launched two channels during the year and more will follow in 2019. APAC remains a focus for strategic growth and BBSN appointed a new General Manager and expanded the team with hires in Indonesia and South Korea. The company is comfortably capitalised with net cash of £5.4m to fund further investment. For 2019, we expect Fee Based Services revenue to return to the levels seen in 2017 and the growth rate of Advertising to moderate and further opex/capex investment. This points to an FY19 EV/adj. EBITDA of 14.8x falling to 9.2x in FY20. Applying an EV/Adj. EBITDA multiple of 15.0x to FY20 would suggest a fair value of 4.6p.
Audioboom plc* (BOOM.L, 1.775p/£23.2m) F1 podcast successfully launched (06.07.18) | Brave Bison plc* (BBSN.L, 1.775p/£10.3m) NED appointment and further growth for owned and operated channels (06.07.18)
Brave Bison Group Plc Audioboom Group PLC
Brave Bison plc* (BBSN.L, 0.78p/£4.5m) Note published: Much needed focus brought to strategy
Brave Bison, the social video company, has focused on three core business pillars (Strategy, Origination and Distribution) under the new management team led by Claire Hungate (CEO) and Paul Campbell-White (CFO). The team has simplified the business, moved the company up the value chain and made a number of key hires as the company looks to capitalise on the substantial growth opportunity around social video. Although revenue fell in FY17, gross margin increased and losses were substantially reduced. The company ended the year with £4.8m in net cash (similar to its market cap) and this should be sufficient to fund the current growth strategy that should see the company move into profit during FY18 and cash generation in FY19.
The London listed technology sector has had a very good summer. Two companies were promoted to the FTSE 250 index: FDM* and more recently Alfa, boosting the number of technology companies in the FTSE 250 by 40% since the start of the summer. Three new tech companies were listed during the course of the summer: Alfa, Ethernity and GetBusy*. All three have performed robustly, with an average gain of 33%, by far outperforming the AIM All Share Index, which was the best performing major index, posting a 1.8% gain over the summer period.
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The last edition of our 2017 summer biweekly has an unmistakably Asian flavour. The recently published Fortune Global 500 rankings for 2017 showed that of the 47 tech companies that made the grade, a little over half (24) were from Asia. The sector was far more dominant in profitability, with a number of tech companies outdoing Exxon Mobil. Chinese tech giants Alibaba and Tencent’s forecast beating quarterly results, added to their robust share price performance since the start of the year, catapulting both into an exclusive club of mega tech companies, which until recently was all American
The past fortnight has seen a number of records broken in the technology sector, both in the UK and abroad. FDM* share price set a record, going past the £10 mark, after beating market expectations. Sage made its biggest ever acquisition. Samsung set a record for net profit in a quarter, making it the world’s most profitable company. Apple’s cash pile grew to a record US$262bn. Google’s record US$2.7bn fine meant it had a rare decline in profitability. GetBusy* had a strong debut on AIM, increasing 22% on its first day, adding to the track record of recent tech company listings in London.
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Brave Bison’s H1, reported this morning, includes a first-ever positive adjusted EBITDA for the period, and a dramatically reduced cash outflow. Revenues were lower, as expected, but gross margins were significantly improved, and the business appears to be stabilised in advance of further delivery on its strategic transition. Much remains to be done, but the incoming CEO at least benefits from a stronger revenue pipeline and a solid net cash position. We make no changes to forecasts, target price or recommendation.
Last week the S&P 500 Information Technology Index set an all-time high, finally surpassing its prior record set way back in March 2000, at the peak of the dot com bubble. Far from being greeted with euphoria, the new high was seen as a red flag that the technology sector was once again overvalued and in the midst of tech bubble 2.0. We examine if these fears are indeed warranted. 2017 is shaping up to be a great year for Amazon. We see how Amazon’s 2017 Prime Day event fared and how its share price has performed since the start of the year
With half the year behind us, we evaluate the performance of the tech sector versus the broader market, and look across the Atlantic to see how the London listed technology universe compares to its larger and better known counterparts. The UK tech sector has outperformed the broader UK market and the Nasdaq and S&P 500 over the past year. Last week saw another successful technology company listing- Ethernity Networks- demonstrating that there continues to be a strong appetite for quality tech companies in London.
The last fortnight was a big one for the UK technology sector, with a successful IPO and an increased representation in the FTSE 250 index. Alfa Financial Software successfully listed on the Main Market, in what was the largest IPO on the London market in 2017. It was the biggest technology IPO since the summer of 2015, when Sophos came to market. A few days after the Alpha IPO, it was announced that FDM Group* was going to be included in FTSE 250 index, joining an exclusive group of only five companies currently in the index.
The last fortnight in technology has been highly eventful to say the least, giving us a lot to discuss in our maiden Tech Biweekly. Amongst the highlights of the past couple of weeks was the WannaCry ransomware attack, which was unprecedented in its scope and scale, the Chinese state backed Tsinghua Unigroup buying a minority stake in Imagination Technologies, SoftBank’s record US$93bn technology fund (and what could it buy!) and Blue Prism’s Capital Market Day.
EJF Investments— Publication of prospectus from the closed-ended investment company investing in assets benefitting from regulatory and structural change in the financial services sector. To join Specialist Fund Segment of the Main Market | ADES International Holding— Intends to join the Standard List in May raising up to $170m plus a vendor sale. Provider of offshore and onshore oil and gas drilling and production services in the Middle East and Africa. | Franchise Brands—Schedule 1 detailing £28m reverse takeover of Metro Rod. Admission expected 11 April. | Alpha FX Group— Schedule 1 update from the foreign exchange provider focused on managing exchange rate risk for UK corporates that trade internationally. Raising £30m. Expected market cap £64.2m and admission 7 April. | K3 Capital Group—Schedule 1 from the Group of business and company sales specialists across business transfer, business brokerage and corporate finance. Admission date and fundraise details TBC. | Tufton Oceanic Assets– Offer extended to 9 May to enable investors to complete further due diligence.
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Brave Bison’s 2016 results, published this morning, were materially in line with expectations, following the February trading update. Performance was strong at the gross profitability level (+15% versus SSL forecast), and the company ended 2016 with £7.1m cash on hand, giving significant scope for the business to effect its current transition. The migration away from low margin revenue in 2017 was highlighted in the February update. We leave our forecasts and recommendation unchanged following todays update.
Brave Bison on Friday published a trading update for 2016, and described the outlook for 2017. The 2016 outturn was ahead of our expectations in terms of revenue, materially in line with our EBITDA loss forecast, and with a far better-than-expected cash balance. The RNS highlights slowing growth in H2, the loss of two contracts, and a decision to migrate the model away from low-margin revenues. We materially downgrade expectations for 2017E. We downgrade our Target Price from 9p to 4p but retain our Buy recommendation.
Brave Bison (formerly Rightster) has announced a strong H1, in line with the recent update and clearly at least on track for our full-year forecasts. The group is benefiting from strong revenue growth (up 38% y/y) and tight cost control, giving outperformance in terms of reduced EBITDA losses and betterthan-expected cash. We alter our forecasts to reflect a change in mix of spend (and more-prudent approach to capitalisation of costs) but the only underlying change is an upgrade to forecast cash. Reiterate Buy and Target Price of 9p.
Rightster has announced FY15 numbers modestly ahead of our expectations, suggesting that the new management team delivered a reasonable end to 2015. More importantly, there are some very positive signs of stabilisation despite significant cost reductions; Q1 2016 has seen continued (albeit unspecified) revenue growth, and delivered a much-reduced EBITDA loss (£0.9m for the quarter). Combined with a stronger-than-anticipated cash balance at the end of Q1 (some £9.7m) this suggests a business being managed towards breakeven, although the planned investment in the new strategy is likely to commence in earnest later in the year. We make no changes to our P&L expectations for FY16, but nudge our year-end cash estimate up from £0.4m to £1.4m to reflect the progress to date.
Rightster has undergone a major change in strategy and management in recent weeks. The “new” CEO and COO are, in fact, returning founders of Base79, which the group acquired in 2014 and has been a highly successful business. Cost control forms a natural part of the plan, but the new strategy also involves an intelligent extension of the way the group interacts with online “talent” and its corporate client base. Following the recent raise, we initiate coverage with a Buy recommendation and target price of 9p.
