eve Sleep (EVE): Corp Good strategic and financial progress | Gateley (GTLY): Corp Prudently managing the business in uncertain times | K3 Business Technology (KBT): Corp Deferral of results; FY19 dividend cancellation | Minds + Machines (MMX): Corp FY 2019 beats forecasts and sets course for dividends | Pebble Beach Systems (PEB): Corp FY19 results postponed and extended loan facility | Pelatro (PTRO): Corp Postponement of results reporting | Quartix (QTX): Corp A strong start to 2020 curtailed by COVID-19
Companies: KBT MMX QTX PTRO GTLY EVE PEB
This was another very good year for MMX, with a comfortable beat of forecasts as management continues to execute its strategy of improving both the ‘quantum and quality’ of its revenue base. The one-off brokered sales (many from .vip in China) are steadily being replaced by rapid growth in new registrations of a much wider range of gTLDs and growing renewal revenue, all automated through the global registrar network – but more in Europe and the US. Group revenue jumped 25% YoY, assisted by strong new sales across the portfolio, the launch of a new brand protection product, and a FY (an extra five months) of the ICM acquisition while the outsourced platform model is keeping the cost base relatively flat so margins and profits are rising. MMX ended the year with $6.6m net cash and will revisit the intended maiden dividend in September, after the pandemic subsides. Given its automated business model and the switch of business and leisure online, this global issue may well be beneficial to MMX. However, with the current level of uncertainty in the global economy, we place forecasts Under Review.
Companies: Minds + Machines Group
Minds + Machines (MMX): Corp Strong H2 underpins forecasts and maiden dividend | Quixant (QXT): Corp Market weakness impacts H2 and cautions on FY 2020 | Tremor (TRMR): Corp Reassuring trading update after a transformational year
Companies: MMX QXT TRMR
Kingswood Holdings (KWG): Corp Rapid growth strategy well underway | Minds + Machines (MMX): Corp Legacy onerous contract settled as expected | NAHL (NAH): Corp PI marginally ahead, Property behind
Companies: MMX NAH KWG
Facebook Inc's ambitious efforts to establish a global digital currency called Libra suffered severe setbacks on Friday, as major payment companies including Mastercard and Visa Inc quit the group behind the project. The latest exodus leaves the Libra Association without any remaining major payments companies as members, meaning it can no longer count on a global player to help consumers turn their currency into Libra and facilitate transactions. Uber is buying a majority ownership stake of Cornershop, an online grocery delivery business serving Latin America in the latest step to diversify its revenue stream. The deal is expected to close in early 2020, according to a press release, with the current leadership at Cornershop continuing to lead the business and reporting to a board with majority Uber representation. Cornershop currently operates in Chile, Mexico, Peru and Toronto, according to the release. SoftBank CEO Masayoshi Son is considering changing his Vision Fund investment strategy to concentrate on companies with clearer pathways to profitability and public offerings, according to people familiar with the matter. Son plans to slow the pace of investment for Vision Fund 2 compared with his first $100 billion Vision Fund, which has deployed about $80 billion in less than three years.
Companies: TRAK ARB CPX MMX QTX SEE TECH TEK TCM TRCS TRCS
This has been a good half, seeing growth in registrations, group revenue and renewals, assisted by a full six months of ICM. The increased sales at higher margin has meant H1 adj. EBITDA jumped over 300%; moreover, a key point is approached as renewal revenues now cover almost all costs: partner payments, cost of sales, and opex. Operationally, progress has also been made in resolving the legacy contract issues. MMX remains comfortably on track for our FY 2019 expectations, which remain unchanged. The company remains wary of giving FY 2020 guidance at this stage. However, looking ahead, this is a much more stable operation; a much better quality to the revenue stream, a controlled cost base, legacy issues addressed; and exciting and innovative growth opportunities.
In-game spending should be regulated by gambling laws and so-called loot boxes banned entirely for children, MPs say. The industry's UK trade body responded it would "review these recommendations with utmost seriousness". Free video games often encourage players to buy virtual loot boxes, which contain an unspecified number of items to improve further game-play. This could have an impact on mobile game economics.
Companies: CDM FDEV KWS SUMO TM17 ARB BIDS GFIN MMX TECH TEK
Streaming company Roku, whose software runs one in three smart TVs in the United States, is turning to the British market as competition with Silicon Valley giant Amazon goes international. Chinese manufacturer Hisense will market televisions with Roku TV in the United Kingdom from the fourth quarter, with other European markets to follow, Roku's founder and chief executive Anthony Wood told Reuters in an interview.
Companies: 7DIG ZOO AMO ARB MMX TECH MIRA
Alan Howard’s push into crypto is a badly kept secret that appears to be crystallising into reality. In our view, the crypto space has undergone a very interesting transition from rampant retail speculation to, well, rampant retail speculation underpinned by a broad base of institutional interest. Google search volumes have fallen, transaction sizes appear to be escalating and the latest wave of equipment upgrades suggest consumer interest and potential to participate is now very low. Meanwhile, increased macro risk, currency controls and privacy concerns may be fuelling increased interest. We await further signs of whether we are at a turning point or whether this is (another) flash in the pan. Apple’s woes appear to be mounting as the group undergoes a difficult transition from a lifetime of focus on aesthetically pleasing hardware with a highly refined user experience, to a services focus. On one hand, the group’s key product the iPhone (which accounted for most revenues until very recently) is rapidly entering commoditised territory. Consumers have the option of a powerful and near fully-featured £160 generic Android handset or a cutting-edge iPhone for £1,000; for many, the choice is a simple one. The supply chain woes of having massive exposure to China in the context of the US-China trade war is also likely to weigh heavily on short term strategy. On the other hand, the group’s services are consumer focused and face strong competition from the likes of Amazon, Spotify, Microsoft and Netflix. If the thesis was to build the services on a firm foundation of the Apple hardware base, the cracks in security are worrying.
Companies: KAPE ARB AVST CNS DFX ECSC FLX IGP MMX NCC OSI SOPH TECH TEK
eve Sleep (EVE): Corp H1 FY19 pre-close: Good broad-based progress | Minds + Machines (MMX): Corp Positive H1 trading update with new buyback announced | NAHL (NAH): Corp On track, evidence of success building gently | Photo-Me (PHTM): Corp Laundry remains the core growth driver | Scientific Digital Imaging (SDI): Corp FY results; acquisitions to fully benefit FY 2020 | SRT Marine Systems (SRT): Corp FY 2019 confirms step change from projects business
Companies: MMX PHTM SDI SRT NAH EVE
Research Tree provides access to ongoing research coverage, media content and regulatory news on Minds + Machines Group.
We currently have 73 research reports from 4
One Media's strong H1/20A financial performance is testament to the resilience of its business model and the market in which it operates. The Group generated material top line growth (+28%), driven through both organic channels (+9%) and acquisitions (+19%), whilst improving its margin profile. This financial strength culminated in the recommencement of its cash dividend policy. One Media trades at a discount relative to its peer group, our fair value per share scenario analysis and DCF valuation. We reiterate our Buy recommendation.
Companies: One Media Ip Group
Blackbird plc* (BIRD.L, 19.25p/£64.7m) | Mirada plc* (MIRA.L, 92.5p/£8.2m) | Tern plc* (TERN.L, 10.75p/£29.0m) | Checkit plc (CKT.L, 39.5p/£24.5m)
Companies: BIRD MIRA MIRA TERN CKT
A well-attended virtual CMD highlighted the continuation of attractive market dynamics within the Group’s core Data Privacy segment, as well as offering insight into PIA integration progression and the Group’s product roadmap. The launch of the Kape’s customer dashboard further improves customer experience (‘CX’), providing an easy-to-use interface and attractive upsell/ cross-sell optionality. We have taken the opportunity to introduce FY’22E forecasts on the back of the CMD, with strong customer retention and in-market consolidation improving the competitive landscape. FY’22E sales of $150m (FY’20E: $123m) are forecast to deliver adj FCF of $39m (FY’20E: $19m), generating a FCF yield of 8.4% in FY’22E. The Group has a number of levers for outperformance against conservative forecast KPIs.
Companies: Kape Technologies
Capital markets day a potential catalyst; Buy
What’s new: Since 27 April 2020, when OnTheMarket started offering new “welcome contracts” almost 500 estate agent branches have signed up, with each business owner receiving welcome shares and over 60% either listing exclusively with OnTheMarket or on a “one other portal basis“.
The Coronavirus pandemic is a human tragedy of vast proportions – as well as the terrible human toll, COVID-19 has led to economies across the globe going into physical lockdown and financial freefall. Entire populations are adapting to the “stay at home” edict, to safeguard the vulnerable – and some of these changes will lead to long-lasting or perhaps permanent changes in the way we live or work. This note describes some of our client companies whose business models are well adapted to these changes, or who might see a change in long-term structural demand.
Companies: AMO BGO FDM GAMA KAPE LOOP TERN ZOO
What’s new: OnTheMarket plc (65% agent-owned and has almost 40% of independent UK estate and letting agents as shareholders) has released its January 2020 results revealing:
+ 32% rise in average branches listed to 12,497 (over 8,000 paying at year end; over 9,000 paying on 31 May 2020);
+ 12% rise in advertisers during FY20 to 13,364 (31 May 2020: 13,605);
+ 49% rise in mobile site traffic or portal visits to 237m;
+ 75% rise in average monthly leads per advertiser to 96.
Cello Health (CLL.L): Recommended Cash offer
Companies: Cello Health
We are introducing our Best Ideas for 2019 and also review the performance of last year’s picks. We suggest ten solidly financed stocks with good business dynamics that ought to be considered for core portfolio holdings and six UK domestically focused stocks that our analysts believe should perform strongly in the event that uncertainties unwind. We also introduce a new style of research from N+1 Singer which presents a Company’s dynamics and metrics in a clear and concise manner and concentrates on the pivotal issues affecting that Company and an investment decision.
Companies: BCA CLIN CLG CBP DNLM EAH STU FCRM FUTR GTLY INS GLE NICL SDL SPR TRI
Warren Buffett once said that as an investor, it is wise to be ‘fearful when others are greedy and greedy when others are fearful’. Fear is not in short supply right now.
Companies: OPM ALU ANCR BLV CONN CRC STU GATC HAT LEK MMH MCB MWE NXR NTBR NOG PAF PEG RFX SRC TEF TEG TPT VTU WYN XLM
4imprint’s order volumes are starting to recover as the US economy reopens. The company has been diligent at updating the market and the latest update shows order levels improving towards 50% of prior year, having dipped as low as 20% in early April. Cash conservation measures are having the desired effect and the group still had $28.1m cash (with lease debt only) at the end of May, despite having paid out $9.4m as a one-off lump sum into the pension scheme as scheduled. Based on assumptions over the speed and extent of the recovery but in the absence of formal management guidance, we have reinstated provisional forecasts.
Companies: 4Imprint Group
What’s new: OnTheMarket is extending its “COVID-discount” which was due to expire on 25 July for a further 2 months to 25 September 2020.
The discount will remain at 33% for the first month and will be 20% for the second month. These discounts will be given to all OnTheMarket agent customers who are paying on full-tariff listing agreements.
While revenues will be impacted in the short term, the Group will continue to conserve cash through the careful management of costs.
We have refreshed our momentum style screen for the first time since inception on 26 July 2016. As before, the screen selects the 25 stocks exhibiting the most extreme momentum characteristics, according to our measurement method. From these we have selected 10 to focus on. Since inception the screen has underperformed both the main small-cap and micro-cap indices against a background of generally rising momentum. We have noted a subset of the basket, where decelerating momentum at the time of measurement appears correlated with significant share price falls since selection. We shall monitor this factor with the new screen, albeit there are only two such stocks showing this pattern, namely Lamprell (not rated) and Gear4music (not rated).
Companies: IQE SDY SUN ERGO NETD G4M GFIN ULS FUTR
OnTheMarket (“OTM”) is the largest majority-agent owned UK Property Portal. In its previous form Agents' Mutual, its agents with Board membership included SpicerHaart, Savills, Knight Frank, KFH, Strutt & Parker and Chestertons. OTM recognises that Agents’ listings provide the content for Portals to monetise, and Agents are the main source of Portal income. In recent years Agents’ shareholdings in the two large Portals, Rightmove and Zoopla, have fallen, while their prices have risen sharply. Duopolistic* pricing and reduced agent ownership within the two leading portals create the conditions for the next stage of OTM’s growth. OTM offers agents competitive prices with benefits of “mutual” ownership supported by external capital to fund marketing and growth plans. This includes use of 36.4m shares to attract agents with over 5,000 offices.
Agent-backed portal OnTheMarket’s first interim results since its admission to AIM show continuing growth in branch numbers, web traffic and business leads to estate agents. The financial performance for the H1 to July is in line with our FY profit and cashflow estimates. Net cash at end-HY 2018 was £24m. Comparisons with the only quoted rival, Rightmove, are difficult, since we estimate OTM will not turn profitable until 2021. Although the investment case still appears largely binary, based on our new DCF, we conservatively value the shares at 186p – 35% upside.