K3 Capital (K3C): Corp
Companies: K3 Capital Group Plc
Cambridge Cognition (COG): Corp | Frenkel Topping (FEN): Corp | Ideagen (IDEA): Corp | Iofina (IOF): Corp | K3 Capital (K3C): Corp | NAHL (NAH): Corp | President Energy (PPC): Corp | Tremor (TRMR): Corp | Trifast (TRI): Corp
Companies: COG FEN IDEA IOF K3C TRMR TRI PPC NAH
Full-year results to 31 May 2020 deliver revenue of £15.0m (+10.3%) and EBITDA of £6.8m (+36.0%) as noted at the acquisition of Quantuma Advisory. We continue to believe a key value driver of owning K3 shares is an investor’s exposure to the positive disruption being wrought by the company’s model, which now has the ability to be applied to synergistic markets across the addressable professional services SME sector as a result of the two recent acquisitions. The already proven restructuring and insolvency practice specifically has the potential to deliver significant upside in the current environment. We reiterate our estimates, noting EPS growth of 63% between 2020A and 2023E. Target price remains 300p, offering 100% upside from the placing price of 150p.
Byotrol (BYOT): Corp | K3 Capital (K3C): Corp
Companies: Byotrol plc (BYOT:LON)K3 Capital Group Plc (K3C:LON)
As is characteristic of this company, management has acted swiftly to execute an additional acquisition, putting the placing proceeds to work with another immediately earnings-enhancing acquisition, creating a Group with diversified revenue and profits, significant growth potential and greater visibility in a post-COVID world. We reintroduce estimates with CAGR in revenues of 29% between FY 2021 and FY 2023 and a CAGR in EBITDA of 34%. Quantuma, an insolvency and restructuring specialist targeting SMEs, is being acquired for £26.95m from existing resources to give an EBITDA multiple of 7.47x (EBITDA March 2020: £3.6m). Our forecasts take into account the greater visibility and predictability that the recent acquisitions bring to the Group. Our new SOTP valuation arrives at a reinstated price target of 300p.
Successful K3 Capital placing to raise £30.45m (gross) at 150p to fund the £9.3m acquisition of Randd UK Ltd, an R&D tax credit specialist with an LTM EBITDA of c.£2.0m, with a margin of c.50% and revenues typically contracted for 5 tax years with many recurring thereafter, followed by future potential deals in SME exposed markets. K3 has established itself as an innovative company that is able to effectively gather, generate and mine large quantities of data in order to scale up M&A services to SMEs. Transferring these lead generation capabilities to adjacent SME markets can allow rapid growth from proven models, at scale.
Gemfields (GEM): Corp | K3 Capital (K3C): Corp
Companies: K3 Capital Group Plc (K3C:LON)Gemfields Group Limited (GEM:LON)
Alumasc (ALU): Corp | Barkby Group (BARK): Corp | DX (DX): Corp | K3 Capital (K3C): Corp
Companies: ALU K3C BARK DX/
Despite Brexit uncertainty and the calling of a general election, K3 has delivered a strong performance in a challenging environment, suggesting the company will benefit from the political stability brought about by the recent Conservative majority. Some market-wide uncertainty remains, but the board is confident that FY20 expectations will be successfully achieved. Results to 30 November are in line with our forecasts, as EBITDA is 47% of our full-year number (H1 three-year average: 55%). We also note that December alone (first month in H2) generated £2.4m of revenue and £1.3m of EBITDA (taking K3 to 57% of our revenue estimate and 64% of EBITDA with five months remaining). We increase our target price to 298p, using a 20x multiple on our 2021E EPS of 14.9p.
Intention to float by Gemfields Group. No Capital Raise. Currently listed on JSE. (GML:JNB) at circa £122m. The Group's key producing assets, the Kagem emerald mine in Zambia (believed to be the world's single largest producing emerald mine) and the Montepuez ruby mine in Mozambique (one of the most significant recently discovered ruby deposits in the world), are both expected to have long mine-lives with potential for expansion. Also owns the Faberge brand. Due Valentines Day 2020. 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.Ninety One –proposed demerger and public listing of Investec’s global asset management business on LSE and JSE. 30 Sep 2019 AUM £121bn. Sale of existing shares. Expected free float of >60%. Due 16 march. Cabot Square—Closed ended investment fund focussed on alternative assets and asset manager. Looking to raise £200m. Will target investment opportunities that are expected to generate an attractive risk adjusted return and that can also make a positive ESG impact by focusing on some of the biggest challenges facing societies and economies. Due 14 Feb. Calisen Group. Potential Intention to Float. Owner and manager of essential energy infrastructure assets through its subsidiaries Calvin Capital and Lowri Beck . Consolidated FY Dec 18 revenue £162.1m and operating profit £25.4m. Raising up to £300m in primary plus partial vendor sale. Expected Admission February 2020. The Global Sustainable Farmland Income Trust will invest in a diversified portfolio of operational farmland assets located in major agricultural markets including the United States, Europe, New Zealand, Australia and certain countries within Latin and South America. Raising up to $300m. Due 28 February. Investment firm Nippon Active Value fund is seeking to raise up to £200m at an issue price of 100p per share via an IPO. The company aims to invest in a portfolio of quoted Japanese stocks with market capitalisations of up to $1bn. First day of dealings expected early February.Zapp Scooters, a developer and manufacturer of electric two-wheeled vehicles announced its intention to IPO on the NEX Exchange Growth Market. The Company intends to raise up to £3.5m. Admission is expected to occur on NEX in February 2020.
Companies: SECG MTW UPR ZYT HZD JAY TRX GLIF BEM K3C
Anglo African Oil & Gas (AAOG): Corp Board changes | K3 Capital (K3C): Corp Impressive performance in a difficult environment | Netcall (NET): Corp Test Studio launched in Liberty Create | Wameja (WJA): Corp Third equity tranche invested in HS as expected
Companies: WJA K3C AAOG
SulNOx Group - The Group has developed a methodology and process capable of emulsifying hydrocarbon fuels such as diesel and heavy fuel oil . By January 2014, following preliminary laboratory testing, SulNOx was in a position to suggest that its products resulted in up to a 50% reduction of Nitrogen Oxide (NOx) and a 90% reduction in particulate matter Due 17 Dec, mkt cap £42.3m.
Companies: SRES K3C SENS MSYS PTAL RLD TSG FUL BHRD AUTG
K3 Capital’s full-year results to 31 May 2019 showed that the group continues to build the business, further strengthening its unique position in the UK small and midcap M&A market. Group revenue split points to reduced sensitivity to the large-value, lower-volume M&A market, with an increasing share of revenue coming from the more stable low and mid-market M&A deals in KBS Corporate, where the group’s unique position and approach point to continued strong value creation. We note Q1 FY 2020 has already seen the Corporate Finance division exceed the £0.8m revenues achieved in the entirety of FY 2019.
Bango (BGO): Corp A wheel of fortune | K3 Capital (K3C): Corp Continuing to build a unique business model | KRM22 (KRM): Corp Interims | NAHL (NAH): Corp Transformation on track | Quixant (QXT): Corp Market share loss at key customers will leave H2 short
Companies: K3C QXT NAH KRM BGO
ANGLE (AGL): Corp Ovarian cancer study update – positive first step | Intercede (IGP): Corp Delivering on promises | K3 Capital (K3C): Corp Timing of growth should not detract from inherent quality
Companies: IGP K3C AGL
Research Tree provides access to ongoing research coverage, media content and regulatory news on K3 Capital Group Plc.
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Oxford University and AstraZeneca announced the first interim analysis from the Phase III study of its COVID-19 vaccine candidate, which was found to be 70% effective in preventing COVID-19. This follows similar announcements from Moderna, and Pfizer/BioNTech in the previous two weeks, and the caveats we mentioned at the time remain the same. While all of these results have been highly encouraging, we reiterate that they do not diminish the urgent need for COVID-19 treatments and testing, which will be required for years to come. We consider Synairgen, Avacta, genedrive, Omega Diagnostics and Open Orphan to offer good buying opportunities.
Companies: AVCT ODX SNG GDR ORPH
Appreciate is the UK's leading voucher, gift card, and e-code provider, working with brands from Iceland to Halfords to Boots. It sells its pre-paid products to corporates as well as directly to consumers. It also runs the UK's largest Christmas Savings scheme, having helped some 2.7m families put money aside for Christmas expenses over the years.
In Appreciate, we see a business that's undergone significant change and modernisation since 2018. Under its highly competent and dynamic management team it has transformed from a Christmas savings business that physically produced hampers, to a pure play financial services business with material growth prospects in the longer term.
Companies: Appreciate Group plc
In its trading update, management confirmed that adjusted FY20e PBT is expected to be c €52m, a 27% increase y-o-y and 12.7% ahead of our prior estimate, with revenues of €367m, 0.5% ahead of our prior estimate. FY20e margins of 14.2% vs 12.5% in FY19 are driven by improved operational leverage and tight cost control, together with COVID-19 related cost reduction (eg marketing, travel). Having pared back our forecasts at the start of the COVID-19 pandemic, we now upgrade our FY20 estimates for a second time to reflect the significantly stronger margins in H220e, raising our FY21 estimates and introducing our FY22 estimates. We have also incorporated the US$32m acquisition of the LA-based marketing services business, gnet. With substantial financial resources following its £100m placing in May, management remains focused on its M&A agenda.
Companies: Keywords Studios plc
Braemar’s associate AqualisBraemar (AQUA-OSL) announced an acquisition and equity raise yesterday that was very well received by investors. The AQUA share price finished the day up +25%, meaning Braemar’s stake (which is on the balance sheet at £7m) is now worth £13.4m. This provides increased support to Braemar’s valuation and a significant potential source of funds if the stake were to be realised in the future. In the meantime, it provides a useful and increasing source of dividend income (prior to yesterday’s deal, we had forecast £0.6m dividend income p.a.) and we continue to highlight the strategic progress the new management team at Braemar is making and the very significant valuation gap to closest peer Clarkson (December 2021 P/E 22x).
Companies: BMS BSEAF 5K9
Moderna announced the first interim analysis from the Phase III study of its COVID-19 vaccine candidate, which was found to be c.95% effective in preventing symptomatic COVID-19 disease. This follows a similar announcement from Pfizer/BioNTech last week, and the caveats we mentioned at that time remain the same. AstraZeneca-Oxford University are also due to announce initial results this month. While these results are highly encouraging, we reiterate that they do not diminish the urgent need for COVID-19 treatments and testing, which will still be required for years to come, and we outline why. We consider Synairgen, Avacta, genedrive, Omega Diagnostics and Open Orphan to offer good buying opportunities.
President Trump likes to project himself as a highly successful businessman, but surprisingly little is known about his true financial position. Various articles, including a 2016 in-depth analysis by The Wall Street Journal, have speculated about his income and asset base. All sorts of claims and counter-claims have been made about his wealth – by Trump himself, pitching his fortune at some $9bn, and by journalist Timothy O'Brien, suggesting that it is as “low” as $150m-$250m. It is doubtful whether we shall ever know the truth, but we can use Trump’s UK corporate filings to gain an insight into his businesses in Scotland.
Companies: AVO ARBB ARIX CLIG DNL FLTA ICGT PCA PIN PHP RECI STX SCE TRX SHED VTA YEW
Thruvision has reported results for the six months to end-September 2020, showing a steady financial performance, with cost control enabling EBITDA break-even to be achieved in the half year, despite the challenges presented by the COVID-19 pandemic. H1 FY21 revenues were steady year-on-year at £4.7m, with gross margin being held at 48%. Net cash has increased from £5.0m at 30 September 2020 to £7.8m at 20 November, following payment from US Customs and Border Protection (CBP), which made a substantial £2.9m follow-on order in the half year. Near-term uncertainty means management are not in a position to provide full-year guidance for FY21, but they report a strengthening sales pipeline and their growing confidence in medium-term prospects is evidenced by investment in sales and pre-sales resource in both the US and Europe to support increased demand.
Companies: Thruvision Group PLC
Strong trading has continued through October and we raise FY21 revs forecasts by 6% to £56m. With much of the upside from lower margin SMS, we leave profits forecasts unchanged. H2FY20 revenue growth was impacted by the pandemic and dropped to 9% after 2.5 years of 15% growth. Our new FY21 forecast imply a return to c. 18% growth as dotdigital makes a strong recovery and benefits from the shift to omnichannel online marketing driven by booming e-commerce. FY20 growth was strongly assisted by International revenues up 19% and Functionality up 16% and yet there is still plenty of room for growth here with the former just 31%/revs and the latter just 30%. We see a significant and extended growth runway leading to consistent progress for the company over the foreseeable future.
Companies: dotDigital Group plc
Open Orphan PLC, a specialist pharmaceutical services company, and the world leader in the testing of vaccines and antivirals using human challenge studies, continues to make excellent progress towards maximising the capacity utilisation of its unique clinical facilities and services capabilities.
Companies: Open Orphan Plc
Following on from the well-received interim results (29th September), Next Fifteen has provided a further Q3 trading update. The key headlines are that positive recent trading trends continue and, allied to strong cost control measures taken throughout the year, have resulted in profit expectations being raised for the current year. We have upgraded our estimates accordingly; marking the second material upgrade we have made since September. Initial concerns that the pandemic would materially disrupt client demand and spending patterns have proven largely overstated. The speed at which revenue has been recovered has been matched by impressive cost actions; not least around the fixed property overhead within the group, which has resulted in higher drop through rates than the group has experienced in the past. The key question looking forward is whether the legacy of the pandemic will be a lower fixed cost base for the group. Revenue mix effects are likely to continue to cloud the answer but our sense is that Next Fifteen has been successful in laying the foundations for structurally higher margins looking forward. Despite a strong recent run (+37% since late August), Next Fifteen still trades a material PE discount to its immediate peer group. Given the positive trading and margin momentum evidenced today, this looks harder to justify.
Companies: Next Fifteen Communications Group plc
RBG Holdings has updated on significant transactions completed in the Group’s Convex and LionFish divisions since its last market update in mid-September. With the Group’s legal division – RBL – continuing to trade well, management now have considerably improved visibility on financial performance, and so reinstate guidance with an expected FY20E revenue range of £24m-£26m (FY19A: £23.7m). For FY21E we anticipate revenue in the range of £26m-£29m We take this opportunity to reinstate our forecasts for both FY20E and FY21E; revenues of £24.6m / £26.9m, adj EBITDA £6.8m / £8.9m, adj EPS 5.0p / 6.8p respectively. Our forecasts are cautiously positioned towards the bottom end of guidance, with scope for upgrades when discretionary litigation asset sales or Convex transactions complete. On our FY21E forecast of 6.8p adj EPS, a mid-teens multiple of 15x PER implies the shares could be worth 100p.
Companies: RBG Holdings Plc
Today's news & views, plus announcements from Compass Group, CRH, Carnival, AO World, Pets at Home, Appreciate Group*, ImmuPharma and IG Design.
*We have also initiated coverage on Appreciate Group, with the note linked in this edition.
Timing is everything when it comes to innovation. Too early, and even ground-breaking technology can struggle to gain traction. Too late, and the opportunity might be lost. A tricky balance. However for Rosslyn Data Tech, we think this ‘battle-hardened’, cash-rich (Est Apr’21 net funds of £6.1m) & now profitable SaaS firm is ideally placed to benefit from strong secular demand for its cutting-edge & fully integrated Big Data, AI, spend analytics, SMDM (Supplier Master Data Management) & customs/duty handling applications.
Companies: Rosslyn Data Technologies PLC
Despite the challenges of the past few months, XLMedia remains profitable on a run-rate basis. The interim results have delivered a much more robust performance than expected, in our view. With work progressing on recovering its position in its Casino vertical expected to yield results from Q4 onwards, there is a visible recovery profile ahead. With the >50% of the market cap in cash we are Buyers.
Companies: XLMedia Plc
Pfizer and BioNTech announced the first interim analysis from the Phase III study of its COVID-19 vaccine candidate, which was found to be >90% effective in preventing COVID-19. While the results are very promising, we believe there was a large over-reaction in the market in response to the news. It should not have been unexpected – we hoped for positive results from vaccine manufacturers this month, and we hope there is more to come, as AstraZeneca-Oxford University and Moderna are also due to announce initial results this month, and overall there are 11 vaccines in Phase III testing. However, these early results do not diminish the urgent need for COVID-19 treatments and testing, which will still be required for years to come, and we outline why. We consider the price falls to stocks such as Synairgen (-39%), Avacta (-36%), genedrive (-38%), Omega Diagnostics (-25%) and Open Orphan (-9%) to offer good buying opportunities.