Interims – no change to forecasts
LiDCO reported interims to 31 July 2019, which contained no surprises in light of the 20 August trading update, although the revenue mix was slightly different to the anticipated figure. H1 performance continued to be influenced by the transition, particularly in the UK, from capital sales to SaaS licenced High Usage Programme (HUP) monitors, which typically results in destocking of older smartcard consumables ahead of the transition, as well as being able to recognise only part of the annual licence fee depending on timing. Despite this, LIDCO product revenues increased 10%, resulting in substantially reduced adjusted LBITDA and pre-tax loss of £0.2m (vs. -£0.8m) and £0.8m (vs. -£1.3m), respectively, demonstrating the operational leverage within the business. We remain confident that the pipeline of HUP interest, given the inherent economic benefits that HUP offers to high volume users, will convert to long-term licence revenue. We leave our adjusted pre-tax forecast unchanged and reiterate our 11p price target.
15 Oct 19
Small Cap Feast
MRYT 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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12 Sep 19
Half-year trading update: on track to meet FY forecasts
LIDCO provided a trading update for the six months to 31 July, indicating to us that it is on track to meet full-year expectations. LiDCO product revenues grew by 10% to £3.3m, driven by the US, up 47% (42% CER), with High Usage Programme (HUP) licence revenue up 119%. Net cash at 31 July was £1.2m, implying an outflow of £0.5m but substantially down from £1.2m in H1 FY 2019. Cashflow is on track to break even in the second half, benefiting from a c.£0.2m tax credit, and in FY 2021. HUP progress has been seen in both the US and UK, with 241 licences (+77) and is on track to hit c.300 by year-end. Positive developments in China and South Korea, following recent regulatory clearance, could be additive to our forecasts. We make no forecast changes and reiterate our 11p price target.
20 Aug 19
Morning Note – 20 August 2019
Kingswood Holdings (KWG): Corp - Growth capital due for next stage of development | LiDCO (LID): Corp - Half-year trading update: on track to meet FY forecasts | Omega Diagnostics (ODX): Corp - Purchase order for VISITECT Advanced Disease test | Tracsis (TRCS): Corp - Full year trading update
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20 Aug 19
Morning Note – 16 July 2019
Armadale Capital (ACP): Corp Mahenge Liandu project update | Frenkel Topping (FEN): Corp Improved rate degrades present value, but insignificant | Gateley (GLTY): Corp Strong momentum and investment for growth | LiDCO (LID): Corp China approval | President Energy (PPC): Corp Frac on | Surface Transforms (SCE): Corp SCE lands breakthrough contract with OEM 5
LID ACP FEN SCE PPC GTLY
16 Jul 19
Small Cap Feast
Essensys plc—a provider of mission-critical SaaS platforms and on-demand cloud services to the high growth flexible workspace industry, plans to join AIM. Offer TBC, expected 29 May 2019. Induction Healthcare Group plc—a healthcare technology company focused on streamlining the delivery of care by Healthcare Professionals looking to join AIM. Expected raise of £14.58m at 115p, market cap of £34.07m. Expected 22 May 2019. SDX Energy plc—a North Africa focused oil and gas company, announces its intention to complete a Canadian plan of arrangement under section 192 of the Canada Business Corporations Act and will have shares de-listed from the TSX-V and admitted to trading on AIM. Expected 28 May 2019, anticipated market cap of £76m 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 premium building products, systems and solutions group, has announced its intention to move from the Premium Segment of the main market to AIM. Expected market cap of £33.4m. Expected 25 June 2019
LID SAR MYSL SEE BLV IND ERGO DDDD AEO
16 May 19
Morning Note – 17 April 2019
Iofina (IOF): Corp Q1 2019 market update | LiDCO (LID): Corp South Korean approval | Omega Diagnostics (ODX): Corp Trading update – in line implying H2 profitability | Universe Group (UNG): Corp Robust prelims | ZOO Digital (ZOO): Corp Year end trading update
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17 Apr 19
Small Cap Feast
Techniplas –global producer and support services company providing highly engineered and technically complex components, making the supply chain to original equipment manufacturers more efficient. FYDec17 rev $515m. Loungers plc—the operator of 146 café/bar/restaurants across England and Wales under the Lounge and Cosy Club brands, announces its intention to seek admission on AIM, offer TBC, expected late April. SDX Energy plc—a North Africa focused oil and gas company, announces its intention to complete a Canadian plan of arrangement under section 192 of the Canada Business Corporations Act and will have shares de-listed from the TSX-V and admitted to trading on AIM. Expected 28 May 2019, anticipated market cap of £76m 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.
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17 Apr 19
LiDCO - FY 2019 results
LiDCO reported revenues in line with the 20 February trading update but adjusted pre-tax losses were c.£0.1m better than expected at £1.9m, helped by active cost management to offset the slower than expected transition to HUP SaaS licences in the US. We remain confident that LiDCO is pursuing the right course of action, given the recent HUP contract wins and recognition by leading hospital groups that the use of HUP is having a positive effect on both patient outcomes and haemodynamic monitoring costs. The company ended the year with £1.7m of net cash, which we expect to be sufficient to execute on its strategy. We expect this to fall to £1.2m by year-end FY 2020 before rising, as the company becomes adjusted EBITDA positive. We make minor changes to forecasts reflecting slower HUP adoption rates and UK growth, but reiterate our target price of 11p, at which level the stock would trade on 3.3x EV/Sales.
26 Mar 19
Morning Note – 26 March 2019
LiDCO (LID): Corp FY 2019 results | Pelatro (PTRO): Corp FY 2018 was a year of profitable growth and expansion | Quartix (QTX): Corp The recovery in UK Fleet growth continues in Q1 | Quixant (QXT): Corp A record half and year despite market softening | STM (STM): Corp A strong, simple business; well-positioned and ambitious
LID QTX QXT STM PTRO
26 Mar 19
Small Cap Feast
Techniplas –global producer and support services company providing highly engineered and technically complex components, making the supply chain to original equipment manufacturers more efficient. FYDec17 rev $515m. Diaceutics, a data analytics and implementation services company which services the global pharmaceutical industry, is looking to join AIM late March, offer TBC.
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08 Mar 19
Sector Note -
AIM Healthcare Index is up 10% year to date, outperforming the AIM All Share (+6%) and FT All Share (+7%), having suffered with the broader market pull back in Q4 2018, in which AIM Healthcare fell 18%. This compared with a 22% decline in the AIM All Share and 11% decline in the FT All Share. In the past quarter, the AIM Health sector has fallen 1%, not helped by the FDA’s rejection of Motif Bio’s NDA for iclaprim. However, there were 14 finnLife 50 stocks that exhibited double-digit percentage increases, most notable of which are Futura Medica (+112%), Avacta* (+82%), OptiBiotix* (+35%), hVIVO (+34%), Instem (+34%) and ANGLE* (+29%) in the past three months
LID AGY APH AVCT BVXP BYOT COG CTH IDP IHC MTFB ODX OPTI YGEN SDI SNG TSTL AGL DEST AKR
05 Mar 19
LiDCO - Full-year trading update
The transition from a capital purchase to HUP SaaS model is proving harder than expected. The level of interest in HUP remains strong, with no evidence of pipeline withdrawals. The active pipeline of contracts in the US as well as feedback from key customers in the US and UK, who report increased haemodynamic monitoring usage and commensurate consumable savings, gives us confidence in the future. Full-year revenues were £0.4m lower than expected at £7.3m, but with lower costs (c.£0.3m), we expect the adjusted pre-tax loss to be c.£2.0m. Net cash at year-end was £1.7m and is considered sufficient to execute on strategic objectives. We reiterate our target price of 11p. At this level, the stock would trade on a FY 2020 EV/Sales of 3.0x, falling to 2.5x in FY 2021.
20 Feb 19
Full-year trading update and HUP progress
The slower conversion of its pipeline in High Usage Programme haemodynamic monitors in the US and the decision to transition its largest UK customers to HUP has prompted today’s trading update. Under IFRS15, revenues and profits for FY 2019 will not be met and accordingly we have reduced revenues and adjusted pre-tax profit by c.£0.9m and c.£0.8m, respectively. Strategically, we consider the decision to build a UK HUP user base to be the correct long-term one as it improves long-term revenue visibility and the quality of earnings. From a US perspective, the level of interest in HUP remains strong, with no evidence of pipeline withdrawals, but it is taking longer than expected. We expect year-end cash to be c.£1.5m. We reduce our target price to 11p as a consequence, which would imply the stock trading on a CY 2019 E/Sales multiple of 3.2x.
17 Dec 18
Morning Note – 17 December 2018
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
LID KBT SAV AAOG SSY
17 Dec 18
AIM Healthcare Index fell 10% in the past three months, compared with an 8.5% decline in the FT AIM All Share. The performance stats in the past month were more balanced, with AIM Health down 1.5% compared with a 3% decline in the AIM All Share. Despite this, ten finnLife 50 stocks showed positive gains with four rising by 15%+: namely Tiziana Life Sciences (+89% – FDA clearance to start Phase I trial with foralumab, an orally delivered antibody, and the announced intention to IPO on NASDAQ); Sinclair Pharma (+46% – agreed takeover); Omega Diagnostics (+28% – strategic update); and Creo Medical (+28% – product launch). Conversely, Diurnal shares fell c.80% on the back of a failed Phase III trial for Chronocort in chronic adrenal hyperplasia
LID AGY APH AVCT BVXP BYOT COG CTH IDP IHC MTFB ODX OPTI YGEN PRM SDI SNG TSTL AGL SUN DEST AKR
14 Nov 18
Interims – new HUP licences and UK distribution deals
LiDCO reported interims to 31 July 2018, which contained no surprises, given the 20 August trading update. The first half performance was influenced by the transition, particularly in the US, from capital sales to SaaS-licenced High Usage Programme (HUP) monitors. Revenues declined 8% to £3.6m with adjusted LBITDA and pre-tax loss of £0.8m (-£0.6m) and £1.2m (£1.0m), respectively. Further HUP licence wins were announced today, taking the total in the US to 92 and 137 globally, which together with a strong pipeline of interest should drive the business to £0.5m of EBITDA in H2. We maintain a target price of 14p, which implies FY 2019 EV/Sales of 3.6x, falling to 2.8x in FY 2020. Strong cash generation is reflected in the FCY yield of 12% in FY 2020, driven by HUP licence income.
09 Oct 18
Interim trading update and HUP progress
The transition of LiDCO from a razor/razor blade model into a SaaS operating model, selling High Usage Programme (HUP) hemodynamic monitors, continues, albeit the sales cycle remains a long one. Three new US HUP wins announced today (21 monitors) takes H1 customer wins to five and seven in total, with scope for these hospitals to build their HUP installed base given their sizes. First half revenues are 8% lower than last year, affected by lower third-party revenues and less capital sales as customers look to the SaaS HUP model; however, encouragingly, recurring revenues rose 11%, with US up 59%. The outlook is for a much stronger second half with revenue growth dependent on timing of new HUP customers and the quantum of capital sales in the UK. We have reduced revenues by c.£1m and PBT by c.£0.2m, but given our unchanged year-end cash and future recurring revenues, target price remains 14p, underpinned by a 10-year DCF of 21p.
20 Aug 18
Small Cap Breakfast
Path Investments (PATH) -RTO of a 50 per cent. participating interest in the producing Alfeld-Elze II gas field located 22 kilometres south of Hannover in Germany. Offer TBA. Due late Aug. 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.
LID AUTG ADT RED MUL KWS KMK GKP CAS ADL
20 Aug 18
Be Heard (BHRD LN) H1 shows strong revenue growth, but profit shortfall | dotdigital Group (DOTD LN) Another year of strong growth & cash generation | EKF Diagnostics (EKF LN) Manufacturing agreement with Oragenics Inc | Goals Soccer Centres (GOAL LN) Profit warning | LiDCO Group (LID LN) UK distribution deal with Maicuff Technology | Nichols (NICL LN) Solid interims with a 3% PBT beat | Speedy Hire (SDY LN) In line Q1 update, with ROCE continuing to move forwards |
LID BHRD DOTD EKF GOAL NICL SDY
19 Jul 18
Small Cap Breakfast
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 company 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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19 Jul 18
Augean (AUG LN) Consultation on Colt; group trading in line | Brewin Dolphin Holdings (BRW LN) Solid outturn, margin maintained in H1 | Itaconix (ITX LN) Joint marketing effort defined with AkzoNobel | LiDCO Group (LID LN) Trading update points to increased US traction | Marston’s (MARS LN) Broadly in line interims | Speedy Hire (SDY LN) Earnings momentum continues with results ahead of expectations | Zotefoams (ZTF LN) Placing to invest in (even more) new capacity
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16 May 18
FY results – HUP HUP and away
A higher-than-expected adjusted pre-tax loss for FY 2018 (£2.2m vs £1.8m) was largely due to a c.£0.3m write-off of inventory obsoleted because of new product introductions, although year-end cash was in line at £3.2m. We remain optimistic that a successful launch of the High Usage Programme (HUP) licence model will create a more dynamic and competitive business with greater revenue visibility, more predictable cashflows and, consequently, higher quality earnings. Early signs are that HUP is leading to increased patient use, with 96 monitors placed in the year (c.£0.73m of annualised revenue). We make minor changes to our FY 2019 and 2020 forecasts and introduce a 2021 forecast, which demonstrate the impact of the expected HUP installed base (c.700 monitors) and recurring high-margin licence revenues. Our target price of 14p remains unchanged. It would imply the stock trading on FY 2019 EV/Sales multiple of 3.3x, falling to 2.4x in FY 2020 and a FY 2020 EV/EBITDA of 16.7x.
10 Apr 18
Disruptive model gaining traction
After a slower than expectated start, progress with LiDCO’s innovative High Usage Program is beginning to gain traction. Conversion of the strong pipeline is key to triggering a re-rating, which our analysis suggests could be substantial. LiDCO is effectively transitioning to a SaaS-model and should be valued accordingly. In the meantime, the valuation looks very attractive, underpinned by an increasingly cash generative model (FY20 FCF yield 8.5%). We stay at Buy with an increased TP of 14.6p.
10 Apr 18
Abzena (ABZA LN) Halozyme terminates agreement, no impact on outlook or valuation | Applied Graphene Materials (AGM LN) Signs of increasing commercial momentum | EKF Diagnostics (EKF LN) FDA 501k/CLIA Waiver for DiaSpect Tm | Elektron Technology (EKT LN) Growth milestone for Checkit | LiDCO Group (LID LN) Disruptive model gaining traction | The PRS REIT (PRSR LN) Q3: Maintained trajectory, new construction partner
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10 Apr 18
Cambridge Cognition (COG): Corp Recruit – relevance, reach and results | CyanConnode (CYAN): Corp Uncertainty on timing remains an issue | D4T4 Solutions (D4T4): Corp Deals deliver a strong H2 performance | LiDCO (LID): Corp FY results – HUP HUP and away | Omega Diagnostics (ODX): Corp Trading update and strategic review | Zambeef (ZAM): Corp Zampalm disposal and H1 trading update
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10 Apr 18
Termination of low margin distribution contract
The termination of a low margin distribution deal does not change the investment case for LiDCO and we make no change to our estimates as a result. At the recent trading update, there were positive signs that LiDCO’s innovative High Usage Program is now beginning to gain traction. It is this, ultimately, that will transform the company’s prospects. We look forward to more detail at the prelims on 10th April.
20 Mar 18
Centaur Media (CAU LN) Investor Day | IQE (IQE LN) Joint Venture starting to deliver | LiDCO Group (LID LN) Appointment of French distributor | Northgate (NTG LN) Complex update – change to fleet strategy | Rathbone Brothers (RAT LN) Solid FY17 outturn, some additional cost investment flagged | Surgical Innovations Group (SUN LN) Prelims to show strong growth | Wilmington (WIL LN) Interim results & new Chairman | Zinc Media Group (ZIN LN) Update and contract awards | Zytronic (ZYT LN) AGM Update
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22 Feb 18
Trading update – it’s all about revenue recognition
The trading statement for the year to 31 January 2018 indicated 1% growth in revenues to £8.3m, with direct-sales led markets (UK and US) offset by weaker distributor markets and the lack of revenues from China (-£0.5m). Year-end cash was in line at £3.2m. Encouraging progress seen in the US for its HUP programme and a strong pipeline of evaluations, which we expect to complete in 2018, should create a fundamentally stronger and more predictable revenue stream, eliminating the period- end loading that has historically affected the business. However, the transition to IFRS15 accounting does affect the P&L in the short term, although cash balances are expected to be higher as a result. Taking into account IFRS15 as well as FX headwinds and weaker distributor-led markets, we reduce forecasts for FY 2018. The higher quality revenue stream and ultimately earnings, however, warrants no change to target price.
15 Feb 18
FY trading update & new HUP wins
FY18 results are broadly in line and reflect the challenges of establishing a new disruptive commercial model into an inherently conservative market. There are however positive signs that LiDCO’s innovative High Usage Programme is now beginning to gain traction. It is this, ultimately, that will transform the company and on this basis, we encourage investors to stick with it. We stay at Buy with a 14p TP.
15 Feb 18
Avon Rubber (AVON LN) UK MoD agreement confirmed | Earthport (EPO LN) Underlying progress in H1 | LiDCO Group (LID LN) FY trading update & new HUP wins | N Brown Group (BWNG LN) Valuation anomaly at 2008 levels (9x P/E, 7% yield) | Realm Therapeutics (RLM LN) Positive clinical and business update | Sanderson Group (SND LN) Good start to year, on track | Trifast (TRI LN) Q3 trading update in line | Zinc Media Group (ZIN LN) Board changes
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15 Feb 18
Small Cap Breakfast
Core Industrial REIT—established to invest in Irish-based industrial properties, predominantly located in the Greater Dublin Area . Vendor placing and new funds to a total of €225m, Target gross proceeds €207m. TruFin—holding company of an operating group comprising three growth-focused FinTech and banking businesses operating in three niche lending markets: supply chain finance, invoice finance and dynamic discounting. Offer raising £70m at 190p with market cap of £185m, expected 21 Feb Polarean - The medical drug-device combination companies operating in the high resolution medical imaging market. Offer TBC. Due 22 Feb Block Energy—a NEX Listed UK based oil exploration and production company whose main country of operation is the Republic of Georgia, looks to join AIM end of February 2018. Offer TBC
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15 Feb 18
The AIM Healthcare index has shown positive returns in all but three out of the past 11 years (2007, 2008 and 2011), growing at a CAGR of 7.6% over the period. This compares with a CAGR of -0.3% for the broader FT AIM All Share, +0.6% for the AIM 100 and +3.5% for its more senior FT All Share Health index. Sector growth and relative performance to the AIM All Share index has accelerated over the past five years; the sector having risen 19.19% CAGR since 1 Jan 2012. This compares with 6.8% growth in the AIM All Share and 6.1% in the FT All Share. This outperformance can be attributed to the increasing success amongst the Healthcare constituents which have progressed their business plans to a point where substantial value has been/is being created and where many companies have successfully scaled their businesses to sustain future growth. We highlight four companies that have different business models but exemplify the opportunities that are increasingly becoming evident within the sector.
LID ABZA AGY APH AGL AVCT BVXP COG CTH IHC MTFB ODX OPTI YGEN PRM SDI STX SNG TSTL AKR
21 Nov 17
Interims – period of investment bearing fruit
LiDCO reported interims to 31 July 2017 which contained no surprises, given 10 August trading update. Total revenues increased 4% to £3.9m, with adjusted LBITDA and pre-tax loss of £0.6m and £1.0m (£0.3m), respectively, reflecting the 47% (£0.6m) increase in sales & marketing costs to support expansion of its direct sales presence in the US. Its first High Use Programme (HUP) win (44 monitors), post-period end, and today’s confirmation that the same customer wants 25 monitors on a regular placement basis for its ICU department provides comfort that the revitalised product offering and expanded sales footprint are delivering the anticipated results. We retain our 14p target price (calendar 2018 EV/Sales of 2.7x) and leave forecasts unchanged.
10 Oct 17
Topic of the quarter: Many recent news articles have highlighted the growing opiate addiction rates across the world, particularly in the US where new president Donald Trump has declared a national emergency with regard to prescription drug abuse. We look at the underlying trends in this growing space and potential opportunities for investors in the coming years both here in the UK and in the US.
LID ABZA AGY APH AVCT BVXP MTFB OPTI YGEN PRM SNG AKR COG CTH IHC ODX SDI TSTL
24 Aug 17
Small Cap Breakfast
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. Wilmcote Holdings plc—Sch1 from the Company established with the objective of creating value for its investors through the acquisition and subsequent development of target businesses in the downstream and specialty chemicals sector. Offer raising £15m at 120p with market cap of £25m. Expected 17 August 2017 Xpediator Plc—Sch 1 from the holding Company for an integrated freight management business operating in the supply chain logistics and fulfilment sector across the UK and Europe with a strong presence in Central and Eastern Europe. Offer details TBC, expected Admission early August 2017. Hipgnosis Songs Fund investment Company offering pure-play exposure to Songs and associated musical intellectual property rights. Offer raising £200m at 100p. The Company has decided to extend the closing date for the Placing, Offer for Subscription and Intermediaries Offer to 1 August 2017. The Company may bring forward this closing date at any time. Admission 15 September 2017
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10 Aug 17
Small Cap Breakfast
Altus Strategies—African focused natural resource Company. Offer TBC. Expected Mid July. Harvey Nash Group— Provider of professional recruitment and offshore solutions moving to AIM from Main. No capital to be raised. Mkt Cap c. £57.8m. AnimalCare—RTO of Ecuphar NV, a European animal health company. £30m raise. Ecuphar FY16 rev £68.4m, underlying EBITDA £8.9m. Due 13 July. Angling Direct -Schedule 1 from the specialist fishing tackle retailer in the UK . Raising £9m of which £7.4m new money. Mkt cap c. £27.4m. Due 13 July NEXUS Infrastructure—Offer TBA. Provider of essential infrastructure services to the UK housebuilding and commercial sectors. Expected 11 July. FYSep16 rev £135.7m. Greencoat Renewables - Schedule 1. Targeting a portfolio of operating renewable electricity generation assets, initially investing in wind generation assets in Ireland. Offer TBC. Due Mid July. QUIZ— Omni-channel fast fashion womenswear Company intention to float. Due July 2017. Offer TBA I3 Energy –Schedule 1 Update. Independent oil and gas company with assets and operations in the UK. Offer TBC, Mid July admission. Verditek— Sch 1 update. The Company's subsidiaries will be involved in advanced solar photovoltaic, filtration and absorption technologies specialising in providing environmental services. Issue price 10p. Admission late June Rockpool Acquisitions—Northern Ireland based Company seeking strong NI acquisition with an international outlook. Raising £1.5m at 10p. Due 5 July. Hipgnosis Songs Fund investment company offering pure-play exposure to Songs and associated musical intellectual property rights. Prospectus yet to be published. Impact Investment Trust—Exposure to a diversified portfolio of funds providing SMEs across developing economies with the growth capital they need to have a positive impact on the lives of the world's poorer populations. Raising up to $150m at $1.00 Residential Secure Income - social housing REIT raising up to £300m Admission due c.12 July. 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. Kuwait Energy— has not been able to complete its initial public offering as announced in its Intention To Float of 3 May 2017. However, in light of positive feedback from potential investors, the Company remains committed to obtaining a London listing and continues to explore its options. Supermarket Income REIT– Up to £200m raise to acquire a diversified portfolio of supermarket real estate assets in the UK, providing long-term RPI-linked income. Due 21 July.
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06 Jul 17
N+1 Singer - Uncovered Gems - Speed Dating Lunch - Another five sparkling gems
Last Friday we reprised our successful speed dating format with excellent presentations from the CEOs of Access Intelligence, Corero Network Security, LiDCO Group, OrganOx and Yu Group. Each company gave a ten minute overview of its business and the investment case and we had quick-fire Q&A from a group of fund managers. Below we summarise our thoughts on each company, with more details inside, plus we include the slides presented by each management team. We believe all five companies have excellent potential and are happy to arrange further contact. We also look forward to setting up our next speed dating event.
LID CNS YU/ ACC
22 Jun 17
N+1 Singer - Morning Song 22-06-2017
Carador Income Fund (CIFU LN) Level of refinancing and reset activity remains high | Imagination Technologies Group (IMG LN) No progress with Apple; Whole group for sale | Uncovered Gems - Speed Dating Lunch Another five sparkling gems
LID IMG CNS YU/ ACC CIFU
22 Jun 17
Motif Bio (MTFB): Remain positive on REVIVE-2 readout (BUY) | LiDCO* (LID): US FDA approves latest monitor (CORP) | Zambeef* (ZAM): Still not firing on all cylinders (CORP) | Cambridge Cognition* (COG): Speech recognition clinical trial software (CORP) | Water Intelligence* (WATR): locking in growth potential (CORP) | Shoe Zone (SHOE): Disappointing H1 (HOLD) | Minds + Machines* (MMX): Valuing renewals (CORP) | Intercede* (IGP): Prelims on track (CORP)
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07 Jun 17
Significant uptick in R&D output. After a very disappointing 2016, as measured by the number of new drugs approved by the FDA (23), we have seen 22 new product approvals year-to-date. We now expect the 2017 output to be above the 16-year median of 22 NDAs (New Drug Application) and 5 BLAs (Biologic Licence Application). As previously commented on, BLAs are expected to represent an increasing proportion of overall approvals. The most notable approval in the past quarter was AstraZeneca’s Imfinzi (durvalumab), not because of its use in metastatic bladder cancer but for its potential use as a first-line therapy in surgically unresectable Non-Small Cell Lung Cancer (NSCLC) following an interim analysis of a Phase III trial (PACIFIC), which showed a statistically significant increase in progression-free survival.
LID ABZA AGY APH AVCT BVXP BYOT COG CTH MTFB ODX OPTI YGEN PRM SDI TSTL AKR
30 May 17
Small Cap Breakfast
I3 Energy –Schedule 1. Independent oil and gas company with assets and operations in the UK. Offer TBC, 26 May admission. | Opera Investments – Reverse Takeover of Kibo Mining’s subsidiary Kibo Gold. Raising £1.5m. Expected mkt Cap £6.5m. 23 May. | Eve Sleep— Schedule 1 from the e-commerce focused, direct to consumer European sleep brand. Offer details TBC. Expected Mid May | Velocity Composites—Schedule 1. Manufactures advanced carbon fibre and ancillary material kits (predominantly carbon fibre) for use in the production of aircraft. Mid May admission expected. Offer details TBC.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 May. | Alfa Financial Software –Intention to float. Mission-critical software platform purpose-built for asset finance enterprises. Vendor sale of 25% plus. FYDec16 rev £73.3m (CAGR of 24% from 2012). Adjusted EBIT £32.8m. | Kuwait Energy— $150m raise plus vendor offer. Admission due June. 2p reserves 810.0 mmboe | ADES International— Provider of offshore and onshore oil and gas drilling and production services in the Middle East and Africa, seeking raise up to $170m plus vendor sale under a Standard Listing of the Main Market. Admission due May 2017. Global Ports Holding—Intention to float on Standard List of the Main Market. International cruise ports operator. Seeking $200m+ raise including $75m primary offer. Expected price range 735p to 875p. Mkt cap up to £539m.| Tufton Oceanic Assets– Offer extended to 9 May on specialist funds segment of Main Market to enable investors to complete further due diligence. | PRS REIT—Private rental sector REIT raising up to £250m. Admission due 31 May
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10 May 17
Small Cap Breakfast
Opera Investments –Reverse Takeover of Kibo Mining’s subsidiary Kibo Gold. Raising £1.5m. Expected mkt Cap £6.5m. 23 May. Eve Sleep— Schedule 1 from the e-commerce focused, direct to consumer European sleep brand. Offer details TBC. Expected Mid May Velocity Composites—Schedule 1. Manufactures advanced carbon fibre and ancillary material kits (predominantly carbon fibre) for use in the production of aircraft. Mid May admission expected. Offer details TBC. 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 May. Alfa Financial Software –Intention to float. Mission-critical software platform purpose-built for asset finance enterprises. Vendor sale of 25% plus. FYDec16 rev £73.3m (CAGR of 24% from 2012). Adjusted EBIT £32.8m. Kuwait Energy— $150m raise plus vendor offer. Admission due June. 2p reserves 810.0 mmboe ADES International— Provider of offshore and onshore oil and gas drilling and production services in the Middle East and Africa, seeking raise up to $170m plus vendor sale under a Standard Listing of the Main Market. Admission due May 2017. Global Ports Holding—Intention to float on Standard List of the Main Market. International cruise ports operator. Seeking $200m+ raise including $75m primary offer. Expected price range 735p to 875p. Mkt cap up to £539m Tufton Oceanic Assets– Offer extended to 9 May on specialist funds segment of Main Market to enable investors to complete further due diligence. PRS REIT—Private rental sector REIT raising up to £250m. Admission due 31 May
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09 May 17
2017 should be a transformative year
LiDCO reported full-year results to 31 January 2017 in line with expectations. Following our change to forecasts after its £3m placing in December, there were no surprises and we make only minor changes to forecasts for FY 2018-20. FY 2018 should be a transformative year, benefiting from the company’s recent fundraise, which will support the build-out of its sales capabilities, but coupled also with the introduction of a new monitor platform and high usage pricing model that is expected to position the business very competitively. Our target price of 14p remains unchanged, which implies FY 2018 EV/Sales multiple of 3.0x, falling to 2.0x in FY 2020 as the company exploits overseas expansion, underpinned by a solid and growing domestic market.
28 Mar 17
Small Cap Breakfast
Path Investments—Publication of prospectus from the Energy Investment Company. Raising £1.4m. Admission due on or around 30 March | Franchise Brands—Schedule 1 detailing £28m reverse takeover of Metro Rod. Admission expected 11 April | Alpha FX Group— Schedule 1 from the foreign exchange provider focused on managing exchange rate risk for UK corporates that trade internationally. Fundraise TBC. Admission expected 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. | Integumen— Schedule 1 from the personal health company developing and commercialising technology and products for the human integumentary system. Raising £2.16m at 5p. Expected market cap £8.16m. Admission expected 5 April. Tufton | Oceanic Assets– Offer extended to 9 May to enable investors to complete further due diligence.
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28 Mar 17
ClearStar* (CLSU): Building a background for growth (CORP) | Sound Energy (SOU): TE-8 results (HOLD) | LiDCO* (LID): 2017 should be a transformative year (CORP) | Proteome Sciences* (PRM): FY 2016 in line. Moving towards breakeven (CORP) | Fulcrum (FCRM): Significant market potential, rising margins and a strong balance sheet (BUY) | Mortgage Advice Bureau (MAB1): Strong and growing intellectual property (BUY) | 7digital* (7DIG): Open offer result (CORP)
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28 Mar 17
Ideagen* (IDEA): Acquisition of IPI Solutions (CORP) | Lombard Risk Management* (LRM): Atos deal improves routes to German market (CORP) | Photo-Me* (PHTM): Upgrade to FY forecasts (CORP) | Frontier Developments* (FDEV): ED coming to Xbox and Planet Coaster update (CORP) | LiDCO* (LID): Analyst interview (CORP) | Rude Health: Analyst interview
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09 Dec 16
£3m placing to fund US expansion
The company has conditionally raised £3m with the explicit intention of accelerating growth across all markets, but particularly the US in which it will launch a potentially disruptive business model – its High Usage Program (HUP) whereby customers are able to use a hemodynamic monitor on a high-usage basis for an up-front fee. With evidence that a focused approach to sales in the US has already generated improved results as illustrated by the +37% US growth in 1H FY 2017, LiDCO intends to scale up its US sales and marketing activities to exploit this model. Although dilutive to earnings in FY 2018/19, our new forecasts show a 23% enhancement in earnings in FY 2020 and substantially stronger recurring high-margin revenue business going forward. Our target price of 14p implies FY 2018 EV/sales multiple of 3.0x, falling to 2.0x in FY 2020.
07 Dec 16
Small Cap Breakfast
Creo Medical group—Schedule 1 update.. £20m raise. Expected market cap £61.2m, admission expected 9 December. ECSC—Schedule 1 from provider of cyber security services. Raising £5m. Vendor sale £0.8m. Target date 14 Dec. Expected market cap £15m. RM Secured Direct Lending - The secured direct lending fund intends to float on the Main Market on 15 December raising up to £100m
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07 Dec 16
The prospect of Hilary Clinton creating an oversight panel with the power to impose a set of harsh enforcement rules to control aggressive pricing of pharmaceuticals in the US fell away with the election of Trump, leading to a 16% bounce in the NASDAQ Biotech index and an 8% increase in the US Pharma & Biotech index, some of which has already been given back.
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29 Nov 16
Like Interims – Deserve Closer Observation
2016 interim results show signs that management’s pursuit of growth via a global sales model is beginning to deliver results, as interim results are in line with our expectations. Exports now account for 43% of LiDCO product sales with comparative H1-16 revenues up 10% to £3.1m (H1-15 of £2.8m). US revenues grew 37% whilst UK sales grew 1% (disposables units up 13%). Of note was the publication of numerous independent surgical trials in leading surgical journals demonstrating LiDCO’s ability to improve patient outcomes in a diverse range of indications. A tendency for revenues to be second half-weighted keeps us confident of our full-year numbers, and we reiterate our 14p target price.
11 Oct 16
Rude Health - Life Sciences quarterly sector note
In light of the Brexit vote, we reflect upon the implications for the NHS and the wider healthcare industry. We take a pragmatic approach to how the referendum result will affect staffing, recruitment, clinical trials, drug pricing and small company grant funding in the coming months and years.
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30 Aug 16
AKERS BIOSCIENCES INC (AKER US) | ASA RESOURCE GROUP PLC (ASA LN) | BLUR GROUP PLC (BLUR LN) | GRIFFIN MINING (GFM LN) | LIDCO GROUP (LID LN) | NORICUM GOLD LIMITED (NMG LN) | PREMIER TECHNICAL SERVICES GRP LTD (PTSG LN) | PROACTIS HLDGS (PHD LN) | VALIRX PLC (VAL LN)
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11 Aug 16
Hybridan - Small Cap Wrap
TTR Agreement, 7DIG Contract, ALSP Director Change*, CLIN Agreement, CRX Launch, DEMG New Accounts, DSG Partnership, GLID Share Sale, HZD Agreements, LID Agreement, MDZ Placing*, SAR Board Changes*, SEE Term Sheet, SNTY Contract Win, TAL Trading Update, VRS MoU
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23 May 16
Hybridan - Small Cap Wrap
ABDP Interim Results, ALSP Interim Dividend*, CGNR Financing Update*, COG FDA Clearance*, CNIC World's First, ELA Placing, ITM Grant, LID Launch, LRM Trading Update, , MSG Contract and Agreement*, PLI New Data*, TPG Final Results, TRAK Trading Update, VLG Agreements, VENN Final Results*, VER Fundraise, VIP Results
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10 May 16
Positioned for growth
FY 2016 was a year of stabilisation, destocking and some delays to product introductions, especially in China. The outlook for FY 2017 and 2018 is expected to be one of growth, executing on the strategies put in place to exploit the c$2bn hemodynamic monitoring opportunity, particularly in the US, China and Japan. Our forecasts reflect a stable UK business, with upside potential if the company is able to gain greater traction in an underpenetrated high risk surgery market, but with three levers of growth in the US, its recent approval in China and resumption of sales to Japan. Our target price is 14p, representing FY 2017 EV/Sales of 3.0x and an EV/EBITDA of 27.6x, implying an upside of 60%.
12 Apr 16
Gemfields*: Emerald and amethyst auction result (CORP) | Ithaca Energy: FY 2015 results and 2016 outlook (BUY) | Cambridge Cognition*: Joint venture – wearable device (CORP) | LiDCO*: US clearance for new monitor (CORP) | Castleton Technology*: 365Agile relationship (CORP)
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04 Apr 16
Small Cap Wrap - A* for AB Dynamics and “bingo” for Bango
The Hybridan Small Cap Wrap is a weekly review of some of the most interesting small cap stories of the past week. Our review will usually be of those companies whose market capitalisations are less than £50m although we may occasionally cover larger companies.
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21 Oct 15
dotDigital*: Strong final results; target price raised (CORP) | Weatherly International*: Quarterly operations update (CORP) | LiDCO*: US purchasing agreement for 38 hospitals (CORP) | LiDCO*: Interims in line (CORP) | Staffline: Prospects strengthened (BUY) | Proactis*: Growth and potential (CORP)
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13 Oct 15
Post-trading update forecast revisions
Following yesterday's trading update we have revised our forecasts for FY 2016 and FY 2017. We project the current financial year will be breakeven or better (at the adjusted PBT level) and the company will end the year with £1.4m of net cash on the balance sheet. There are several key items that we believe will return LiDCO to a growth trajectory; however the timing of them is out of LiDCO’s control. Based on our revised FY 2017 estimates, we have reduced our price target to 13p from 16p. This still provides investors with significant upside to the current share price and would place LiDCO on multiples that are undemanding for a profitable medical device company.
03 Sep 15
Castleton Technology*: Initiation of coverage – analyst interview (CORP) | BTG: Reassuringly expensive? (SELL) | LiDCO*: Japanese reimbursement for LiDCOrapidv2 disposables (CORP) | Volex: Encouraging FY results (BUY) | Avesco*: Strong interims; good progress (CORP)
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11 Jun 15