Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on Scisys. We currently have 76 research reports from 3 professional analysts.
The Canadian IT services company CGI is acquiring SCISYS for 254.15p in cash. The offer price represents a 24.6% premium to Thursday’s closing price and values the entire issued and to be issued ordinary share capital of SCISYS at c £78.9m. In addition, SCISYS shareholders will receive the final dividend of 1.73p. The offer price translates to c 20x our FY19 earnings forecast, which falls to c 19x in FY20e and 18x in FY21e. Alternatively, the offer values the business at 1.2x FY20e revenues and 11x EBITDA.
In an in-line update, SCISYS says it has made a positive start to FY19, with all divisions continuing to expand. Consequently, we are maintaining our forecasts. Management expects FY19 performance to revert to the traditional pattern of a significantly stronger H2 after the more balanced profile in FY18. Noting management’s new goal to achieve revenue of £75m and operating profit of £7.0m by the end of FY22, we believe the stock is attractive on c 14x our FY20e EPS.
Amino Technologies (AMO): Corp Positive interim trading update | eServGlobal (ESG): Corp HS drawdown begins as its A2A business grows | Ideagen (IDEA): Corp Capital Markets Day | PPHE Hotel Group (PPH): Corp Into the FTSE 250 | SCISYS (SSY): Corp Positive start to 2019 highlights the value in the stock
Companies: AMO ESG IDEA PPH SSY
Renold plc—a leading international supplier of industrial chains and related power transmission products, announced that it will cancel the listing of the Company from the premium segment and apply for admission on AIM. Expected 06 June 2019. Alumasc Group plc, the prem ium building products, system s and solutions group, has announced its intention to m ove from the Premium Segment of the main market to AIM. Expected market cap of £33.4m. Expected 25 June 2019
Companies: ANR AMO TPG XPD SSY AAU CLNR PANR THR AUTG
Anglo African Oil & Gas (AAOG): Corp Formal offer of new Tilapia licence | PPHE Hotel Group (PPH): Corp Strong start to the year | SCISYS (SSY): Corp Additional orders cement SCISYS position with the ESA | Solid State (SOLI): Corp Encouraging FY trading update
Companies: PPH SSY SOLI AAOG
SCISYS delivered another good year and slightly beat our FY 2018 revenue and earnings expectations. Adopting IFRS 15, headline revenue rose 10% YoY on a LFL basis but – driven by strong performances in the ESD, Annova and Space businesses – core Professional Services fees actually enjoyed 16% YoY organic growth to deliver a record year. Ignoring IFRS 15, SCISYS would have hit its mid-term sales target of £60m well ahead of plan and now looks to target revenue of £75m. Stripping out £1.3m exceptional costs of re-domiciling to protect Space against Brexit, the Annova earn-out and German restructuring, we see adj. operating margin edged forward to just under 9%, in line with the long-term aspiration of over 9%. Operational gearing translated that into 40% uplift in adj. FD EPS at the bottom line, while the usual healthy cashflow further reduced net debt and underpinned a 10% uplift in dividend. The outlook is for continued strong growth with the order book just short of £100m; notably the re-domiciliation triggered a raft of Space contracts totalling over €20m. We expect a significant element of low-margin 3rd-party revenue in Space this year, so we nudged forward the FY 2019 revenue forecast although earnings are unchanged. We have released FY 2020 forecasts and reiterate our 210p target price.
SCISYS reported strong performance in FY18, led by the UK-focused Enterprise Solutions and Defence (ESD) division, which benefited from a reinvigorated sales team. We expect the Space division to lead growth in FY19, following the recent spate of contract wins, while the enlarged Media Solutions division has strong potential for margin recovery. We have upgraded our revenue forecasts but maintained profits as the group needs to invest in its infrastructure to sustain growth. Noting management’s new goal to achieve revenue of £75m and operating profit of £7.0m by end FY22, we believe the stock is attractive on c 13x our FY20e EPS.
Pelatro (PTRO): Corp Thai-ing down another contract with SingTel | SCISYS (SSY): Corp SCISYS reveals a record year and order book | Sopheon (SPE): Corp Asia-Pac contract win
Companies: SSY SPE PTRO
Destiny Pharma (DEST): Corp UK-China AMR £1.6m grant award | Elecosoft (ELCO): Corp FY 2018 results comfortably in line | Europa Oil & Gas (EOG): Corp And the fight goes on | Mporium Group (MPM): Corp Strategic collaboration | SCISYS (SSY): Corp FY 2018 meets guidance with strong order book at YE
Companies: ELCO EOG SSY DEST MPM
Anglo African Oil & Gas (AAOG): Corp Funding secured to complete TLP-103C | InnovaDerma (IDP): Corp Trading update – Boots purchase order expected shortly | Proactis (PHD): Corp Board changes; trading in line | Quartix (QTX): Corp FY 2018 results in line with forecasts | SCISYS (SSY): Corp Contract wins underpin wisdom of Brexit protection
Companies: IDP PHD QTX SSY AAOG
Greenfields Petroleum (TSX-V:GNF) production focused company with operated assets in Azerbaijan seeking AIM dual listing including $60m private placement. Mkt cap $12.6m CAD. Expected late January 2019.
Companies: PYC RBD SRES AFX GTC AVAP WAND SSY TRCS INX
Anglo African Oil & Gas (AAOG): Corp TLP-103C hits oil and gas at the first target | K3 Business Technology (KBT): Corp Positive year-end trading update | LiDCO (LID): Corp Full-year trading update and HUP progress | Savannah Resources (SAV): Corp Exploration update – Portugal | SCISYS (SSY): Corp New contract win
Companies: KBT LID SAV AAOG SSY
Green Man Gaming—pure play e-commerce and technology company in the digital video games industry. revenue CAGR growth of 26.7% in the last three years to £47.5m. Due 28 Sep. EBITDA Profitable. Offer TBA Crossword Cybersecurity PLC* (NEX:CCS)—the technology commercialisation company focusing exclusively on the cyber security sector is exploring its options in relation to a potential move to the AIM market of the London Stock Exchange which, if it were to proceed, would likely take place over the next few months. 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
Companies: PEG MWG TIDE COG RBD NTBR AST NSCI FPO SSY
SCISYS has reported a strong H1 with professional fees jumping 24%. However, this was off a weak H117 and some business was brought forward from H2. Consequently, we are forecasting a more balanced H1/H2 in FY18. We have increased our FY18 revenues by £3.0m to reflect this balancing, but we have maintained our profit forecasts. All divisions posted record revenues, the order book remains robust at close to £100m and net debt continues to decline. Management’s goal of £60m in revenues and double-digit margins within the next few years looks increasingly conservative and we believe the stock is solid on c 14.6x our FY19e EPS.
Armadale Capital (ACP): Corp Interim results | Cambridge Cognition (COG): Corp Interims – strong leading growth indicators and IFRS15 | Iofina (IOF): Corp Interim results – steady as she goes | Savannah Resources (SAV): Corp Drilling programme in Oman
Companies: ACP COG IOF SAV SSY
Research Tree provides access to ongoing research coverage, media content and regulatory news on Scisys. We currently have 76 research reports from 3 professional analysts.
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We highlight this morning’s profit warnings from IQE (no coverage) and Nanoco (no coverage) as further support of: (1) our Year Ahead 2019 thesis to avoid hardware exposure as the most likely source of downgrades, and gain exposure to high-visibility recurring revenues and stronger balance sheets; and (2) the apparent end of the smartphone supercycle. We reiterate our Buy ratings on CloudCall* (CALL LN, PT 270p), Vianet (VNET LN, PT 142p) and Kape (KAPE LN, PT 120p) as our preferred names to exploit our key themes for 2019.
Companies: CALL VNET KAPE
IQE has cut its FY19 revenue and profit guidance in response to reduced demand from wireless customers and an internal issue affecting a major photonics (not VCSEL - vertical cavity surface emitting laser) customer. Following a 25% share price fall, the shares are trading within the range created by photonics peers on most metrics.
The leading supplier of subscription-based vehicle tracking systems has enjoyed a strong H1 performance driven by the Fleet operation, which has seen vehicles under subscription rise 11%, from 123k in January to 137k by the end of June; new telematics installations are currently running 45% ahead of last year. Pleasingly, the Fleet growth is coming from all regions and encouraging results from the new markets, offsetting some of the continuing decline in Insurance business. Due to Insurance, H1 results will be down on LY as flagged, but are ahead of forecasts. We are thus upgrading our FY revenue expectations but leave the earnings unchanged in anticipation of additional growth investment.
Following the announcement on the 23rd May that the group was seeking to raise a 4-year senior secured non-convertible bond issue with a volume of approximately €50m the group has confirmed this morning that they have successfully raised the full amount, showing good investor appetite for the issue. The settlement date is expected to be in early July, we leave forecasts unchanged until this happens, and the acquisition is complete. The acquisition of TPP Wholesale is the group’s third acquisition in 12 months as they continue to execute their consolidation strategy. We see this is a positive announcement and a clear sign that the management team are continuing to execute the stated acquisition strategy successfully. The group has also confirmed strong trading in the first four months of the year and management now expect the full year performance to be ahead of consensus expectations. At the current share price, the group trades on a 2019E EV/EBITDA of 9.0x and a P/E of 14.9x.
Companies: Centralnic Group
Castleton’s prelims report performance in line with the trading update: EBITDA of £6.3m (vs £6.3mE) from revenue of £26.4m (vs £26.5mE), with operating cash conversion of 97%, and free cash flow of £4.8m. With the maiden dividend reaffirming the board’s confidence in cash flow and net debt approaching breakeven, the balance sheet retains capacity for acquisitions to complement 7.3% organic growth achieved in FY19, and expected to persist into FY20 and FY21. EBITDA margin expansion from 24% (FY19) to 26.5% (FY21) is expected to derive from continuing improvement in cross sales, and the integration of the now unified Software and Managed Services divisions. With operating fundamentals consistently positive and improving, we lift our target price to 140p (125p), representing a 16.4x EV/EBITDA multiple and 4.5% target free cash flow yield.
Companies: Castleton Technology
Sopheon continues to broaden its offering within enterprise clients, extending the applicability of Accolade outside its R&D stronghold, and towards the strategic direction-setting of entire organisations. Progress has been strong, and the good pipeline gives confidence that, although visibility of contracted orders is roughly flat on last year, the forecast sales growth should be delivered with the typical H1/H2 seasonality. We make no changes to estimates.
Zoo Digital has announced the appointment of Ms Gillian Wilmot to the board as the new Chairwoman, replacing Roger Jeynes following his nine year tenure. The release highlights Ms Wilmot’s extensive experience in a number of bluechip institutions in the past across a range of sectors, with some exposure to disruptive technology. We take the opportunity to highlight the value proposition given the shares remain 34% below its starting point this year, with some signs of positive momentum in the wake of the results update. We reiterate our Buy rating on Zoo
Companies: Zoo Digital Group
StatPro has announced a partnership with JP Morgan which it believes will be a significant contributor to growth in the future. We see the announcement as both another endorsement of StatPro’s cloud-based Revolution platform and an important new distribution channel for the Group. Initially for five years, the partnership will develop Risk and Performance Attribution capabilities for portfolio managers through J.P. Morgan's data and analytics platform. When launched, the service will be immediately available to J.P. Morgan’s European and Asian multi-asset clients and there will be an early adopter programme for its clients in North America. JP Morgan’s clients will have access to StatPro’s Revolution platform in tandem with JP Morgan’s Fixed Income Benchmark Indices. While we make no immediate changes to estimates given that this partnership has only just been announced, we expect it to support our current estimates as it gets under way.
Companies: Statpro Group
LoopUp has developed a software-as-a-service product for remote business meetings which combines advanced technology with extreme simplicity and ease of use. The group is seeing good traction with enterprise customers, and its process-centric and team-based sales approach lends itself to rapid scaling. The acquisition of MeetingZone in 2018 added very significant scale and brought synergy opportunities. With strong gross margins and powerful growth metrics, the group has material expansion plans for the short to medium term and should be able to deliver material dividends to investors in the long run.
Companies: Loopup Group
Blue Prism Full year results are in line with the 27th November trading update as you would expect. Revenues were £55.2m vs £54.1m. Cash was in line at £50m and adjusted EBITDA was in with a loss of £21.6m. Exit MRR was £5.6m, an ARR of £67.2m. No change to recently upgraded outlook for this year, BUT now expect the 2020 revenue number to be above the top end of range which is £154m we were on £114m. The EBITDA loss will increase significantly as half the placing proceeds will be invested in opex. We upgrade our forecast and retain Buy PT2200p.
Companies: Blue Prism Group
Beeks Financial Cloud Group (“Beeks”) provides scalable, cloudbased ultra-low latency connectivity and infrastructure services for the automated trading of all key financial asset classes. Founded in 2010, in our view the business has a strong track record of growth and profitability and enjoys a solid financial position with high levels of recurring revenue and positive monthly cash generation. This has all been delivered while investing in the platform - the benefits of which have been demonstrated in the impressive revenue growth reported over recent periods. The experienced management team has positioned the Group well to benefit from the growth in its chosen markets.
Companies: Beeks Financial Cloud
IQE has assessed the potential impact on its business of the decision by the US Department of Commerce’s Bureau of Industry and Security to prohibit the sale to Huawei, by certain of IQE’s customers, of products covered by the Export Administration Regulations without obtaining an appropriate export licence. Following discussions across its customer base, IQE estimates that its current maximum risk exposure with regards to this ban is less than 5% of its total FY19 revenue guidance. We therefore leave our estimates and indicative valuation of 91–99p/share unchanged.
There are few principles in life that work consistently through ‘thick and thin’. One of the most important (& usually hardest to find) for investors is purchasing ‘quality growth stocks at attractive prices’. Enter ClearStar, who this morning (ahead of its AGM) said that LFL sales had climbed 14% in the first 5 months of 2019.
We’re just over three months in to 2019 and we’ve seen a 10% UK market rally, retracing much of the Q4 decline, such is the nature of fickle market sentiment. That said, many of the issues we wrote about three months ago that were impacting markets remain: notably Brexit, trade wars, geopolitics and global monetary policy. The 2019 rally thus far feels somewhat fragile, with competing forces of optimism on a potential trade deal which could underpin the rally, against the deterioration in underlying economic data that could ultimately undermine the recent market gains. In this context, we look at what the lead indicators and the market are telling us about the industrial cycle and the stocks most exposed to various industrial trends. The Q4 derating in short cycle industrials and autos had been vicious and while these sectors have seen a more solid footing in 2019, with earnings downgrades being priced in, it will likely take a trough in lead indicators before short cycle stocks can start to perform again and re-rate relative to the market.
Companies: ARS CYAN HYR LIT SOM ABBY AMS AMER ANX ATYM AVON BLVN PIER BUR CGS CAML CALL CSRT TIDE DTG DEMG EMR FPO FST GTLY GENL GOR GRI GEEC HDY HMI HAYD HEAD HILS HTG HUR IBPO INDI JHD JOG KEYS KCT KGH LAM LOK MACF MNO MANO MOD MKLW OXIG PCA PANR PARK PGM PHC PMO RBW RMM REDD RSW RNO RKH RBGP ROR SUS SCPA SHG SOLG TRAK TRI VNET VTC ZOO ZTF
Seeing Machines has announced that its New Zealand distributor AutoSense has signed four new deals with commercial fleets across the country for Seeing Machines' Guardian fleet retrofit product. The distributor has been seeing significant momentum across the country to install the Group's fleet solution and the deals cover a total of more than 1,400 units with TIL Logistics Group (a publicly listed company and one of New Zealand's leading domestic freight and logistics companies) and three other major transport operators. AutoSense has renewed distribution terms with Seeing Machines and intends to treble its current installed base by the end of 2019.
Companies: Seeing Machines