Companies: DSCV K3C ODX PHD STM TRMR CIN
Recognise has been awarded a banking licence with restrictions (Authorisation with restriction, or AwR) from the PRA / FCA, delivering on a major milestone on the road to implementing its strategy to provide SMEs with the credit and service they desperately need. The next step is to meet demands of mobilisation (systems and infrastructure), which is well advanced, leading to the removal of deposit restrictions (up to £50,000) and then on to the full licence. This could be as early as Q1 2021. High barriers to entry, struggling competition and high demand for the product/service offering suggest high growth capabilities, alongside a rapid path to profitability. Compare this against many of the struggling fintech or challenger bank offerings and the investment thesis becomes ever more compelling.
Companies: City of London Group plc
City of London Group (CIN): Corp Completion of capital raise | Minds + Machines (MMX): Corp Revenue recognition issue requires clarification
Companies: Minds + Machines Group Limited (MMX:LON)City of London Group plc (CIN:LON)
What’s cooking in the IPO kitchen?
Guild Esports a UK-based owner and developer of esports teams, has announced its intention to seek a listing of its ordinary shares to the Standard Listing segment of the London Stock Exchange this autumn. its founding shareholders include David Beckham, former football player and captain of England, and now co-owner of new MLS team Inter Miami CF.
HOME REIT intends to float to the Main Market raising up to £250m. The Company will seek to contribute to the alleviation of homelessness in the UK, whilst targeting inflation-protected income and capital returns, by investing in a diversified portfolio of assets across the UK which will be dedicated to providing accommodation to the homeless. Due Mid October
S-VENTURES - The Company will look to identify investment opportunities in the wellness sector within the UK and Europe. Due 16 Sep on the Aquis Exchange.
Sativa Wellness Group—(Canadian Securities Exchange: STIL) renamed from Stillcanna Inc following the conditional acquisition of Sativa Group (AQSE:SATI) to list on the AQUIS Exchange. A fully integrated European seed to consumer CBD group with the pricing, products, and stability to meet the CBD market demand in the medium term. With world-class extraction and formulation experts, an agricultural team that has over 20 years’ experience farming hemp, along with laboratory testing capabilities, the group has established itself globally as a trusted source of high-grade, premium wholesale CBD brands and products.
Umuthi Healthcare Solutions Plc, the technology led healthcare business focused on the distribution of pharmaceuticals and the provision of medical facilities in remote areas, seeking admission to the Standard Listing segment of the Official List
The Hut Group. Expected intention to float on the Main Market. THG is a vertically integrated digital-first consumer brands group, retailing its own brands in beauty and nutrition plus third party brands, via its proprietary technology platform to an online and global customer base. For the year ended 31 December 2019, THG's revenue was £1.1 billion, up 24.5 per cent. year-on-year, and its Adjusted EBITDA was £111.3 million, representing an Adjusted EBITDA margin of 9.8 per cent . The Company has experienced an acceleration in growth during 2020, with revenue of £676 million, up 35.8 per cent. on the equivalent prior year period , achieved in the 6 months to 30 June 2020, which the Directors believe evidenced the non-discretionary nature of the nutrition and beauty categories .
Kibo Energy PLC, the multi-asset Africa focused energy company, is seeking admission for its 100% owned UK subsidiary Sloane Developments Ltd , which will be renamed Mast Energy Developments PLC (MED), to the Standard List of the London Stock Exchange plc . Targeted for Q4 2020. The MED business strategy is to acquire and develop a portfolio of flexible small-scale power generation assets, exploiting a growth niche market in the UK for Reserve Power generation to balance out the national grid at critical times.
Companies: MIRI VAST VCP AEO GFIN DX/ BREE CIN LOOP PALM
Chariot Oil & Gas (CHAR): Corp Reboot | City of London Group (CIN): Corp Clearing the runway for take-off
Companies: Chariot Oil & Gas Limited (CHAR:LON)City of London Group plc (CIN:LON)
Placing to raise gross proceeds of up to £30m at 80p (conditional upon AGM authorities and FCA controller approval) with £25m secured from a prestigious global family office. This paves the way for the full banking licence and allows Recognise to implement its strategy to provide SMEs with the credit and service they desperately need. The highly experienced management team stands ready to serve the client base once the full licence has been awarded (expected to be in H1 CY 2021) and we reiterate our positive outlook and target price of 300p.
Avacta (AVCT): Corp | City of London Group (CIN): Corp | Robinson (RBN): Corp | Telit (TCM): Corp
Companies: AVCT RBN TCM CIN
Full-year results to 31 March 2020 show lower-than-expected adjusted PBT before bank license costs (-£6.3m vs. our estimate of -£3.1m) as Milton Homes revenue fell £0.9m to £3.6m, bad debt provisions increased £1.3m to £1.6m and provisions for goodwill impairment increased £1.5m to £1.6m. However, the investment thesis continues to revolve around the banking licence application for Recognise, with the subsidiary reaching a major milestone (23 July) by receiving a Total Capital Requirement from the PRA. We price the shares on what we believe the sustainable ROE would look like (19.6% at £1.1bn of lending) as the bank begins to operate normally from 2024, serving an SME sector in desperate need of credit that is issued quickly alongside customer service from dedicated relationship managers and an allowance for flexibility in structuring (the Big Four banks in this pocket of the market are slow, understaffed and increasingly pulling out of SME lending). A lack of a legacy lending book will also be a huge positive.
Alumasc (ALU): Corp FY trading statement | City of London Group (CIN): Corp Recognition of a resilient potential operating model | dotDigital (DOTD): Corp FY20 trading update | Frenkel Topping (FEN): Corp A creative, niche acquisition strategy to secure growth | NAHL (NAH): Corp Net debt reducing and cost savings identified
Companies: ALU DOTD FEN CIN
Access Intelligence (ACC): Corp | Avacta (AVCT): Corp | City of London Group (CIN): Corp | InnovaDerma (IDP): Corp | Quixant (QXT): Corp
Companies: AVCT IDP QXT ACC CIN
City of London Group (CIN): Corp Ready steady go | ClearStar (CLSU): Corp Trading update | Destiny Pharma (DEST): Corp Asian Pacific guidelines support XF-73 future use | Evgen Pharma (EVG): Corp Interims – cash to Q3 2021 | SDI Group (SDI): Corp Interims on track for strong FY 2020 | Tristel (TSTL): Corp AGM and trading update
Companies: SDI TSTL DEST EVG CIN
City of London Group’s (COLG) interim results underlines that the current group forms a solid base for the banking operations, Recognise, which is expected to start operations in H2 2020. We see COLG as an attractive way to get exposure to the UK SME banking market, where a large market share is up for grabs as the current market leaders struggle to provide the service the customers want. We maintain our 300p target price.
There is at present a significant opportunity to gain a share of the UK SME banking market as the ‘Big Four’, which have historically dominated this market, increasingly struggle to meet SMEs’ service demands and generate sufficient profitability from their SME operations. City of London Group (COLG) has spent time, money and effort over recent years to set up a focused, licensed UK SME bank, Recognise, to target the UK SME market. Key regulatory and operational hurdles have now been cleared, the application has been sent and Recognise looks set to start operations in 2020. All indications point to a high return on the capital in the bank, supporting future capital raises. We initiate coverage of COLG with a 300p target price.
Allergy Therapeutics (AGY): Corp | City of London Group (CIN): Corp | discoverIE (DSCV): Corp | DX (DX): Corp | Redcentric (RCN): Corp
Companies: DSCV AGY RCN CIN DX/
Cambridge Cognition (COG): Corp eCOA contract worth $225,000 | City of London Group (CIN): Corp Harvest time | D4T4 Solutions (D4T4): Corp H1 as expected but with growing SaaS prospects | Gateley (GTLY): Corp Double-digit sales growth in H1 | Intercede (IGP): Corp Costs, tick, now for revenue | Omega Diagnostics (ODX): Corp Grass allergy test – first of screening assays | Wameja (WJA): Corp Strong Q3 momentum on the HomeSend network
Companies: COG D4T4 IGP ODX GTLY CIN
Research Tree provides access to ongoing research coverage, media content and regulatory news on City of London Group plc.
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Today's news & views, plus announcements from TSCO, AVON, BGO, MERC, BOXE
Companies: Bango plc
Gateley’s H1 update is highly impressive, confirming a year on year improvement in activity levels in September and October and a strong sense of optimism at the beginning of H2. The Platforms continue to drive new business, whilst operating margins have benefited from cost actions taken in response to the pandemic (H1 PBT will show growth year on year). In light of the confident tenor of the statement, we reintroduce headline forecasts this morning, assuming stable revenue this year - which would be a considerable achievement - with profits returning to pre-pandemic levels by FY23.
Companies: Gateley (Holdings) Plc
In an encouraging H1 update, Gateley has detailed that the Group’s activity levels and revenue generation continue to follow an improving trend with monthly activity during September and October being in excess of prior year. Sales in H1 2021E are expected to be not less than £50.0m (-3.5% on H1 2020) but adj. PBT is expected to be not less than £7.0m, up from £6.6m as cost-reduction initiatives benefited. Net cash was £9.6m at October 2020. We have reinstated forecasts, assuming H2 sees some increase in costs as salaries normalise and a bonus is accrued before more normal growth rates resume. Similarly, we assume dividends resume with a final in FY 2021E. We reiterate our view that Gateley’s proven model provides good growth prospects, supported by the addition of high-quality staff and acquisitions, strengthening the range of services offered.
Boku has released a trading update confirming that EBITDA is likely to be ahead of consensus expectations for FY20. As most of the upside is due to COVID-19-related cost savings, we have upgraded our FY20 EBITDA and EPS forecasts by 10% and 15%, respectively. We leave our FY21/22 forecasts unchanged, pending a more detailed trading update in January that will cover the busy December holiday season.
Companies: BOKU, Inc.
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
Pressure Technologies has announced that it has raised £7.5m through a Placing, via an accelerated bookbuild, and PrimaryBid offer at 60p/share, a 4% discount to the closing midmarket price on 27th November 2020. The net proceeds of the fundraise will be used to accelerate growth in the fast developing hydrogen market, build the group’s capability in Integrity Management and to strengthen the balance sheet. As Nomad and Broker to the fundraise we are restricted and can therefore provide factual comment only. The Placing and PrimaryBid offer are subject to shareholder approval at a General Meeting to be held on 17th December 2020.
Companies: Pressure Technologies plc
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
FY2020E has been a challenging year on a number of fronts and a significant loss is expected on revenues down 12% at c.£25m and also impairment charges of c.£14m. Nevertheless, the Group enters FY2021E in better underlying shape, with benefits to follow from reorganisation and restructuring, and investment in sales, engineering capability and systems. This provides a platform to capture growth, albeit that no recovery is expected in the next 12 months in the oil & gas market, now c.35% of FY2021E revenue. Efforts to diversify both its customer base and end markets have been successful, with growing opportunity in the defence, industrial and hydrogen sectors in particular. Our forecasts anticipate profitable growth in both FY2021E and FY2022E, leaving the shares on forward PERs of 21.8x and 12.1x for FY2021E and FY2022E respectively.
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
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
Keystone Law has announced a trading update indicating that the Group has performed well through the second half of the year and that like-for-like performance has returned to near pre-COVID levels. This results in the Group expecting to see results “comfortably ahead of current market expectations” for FY21 which we see as a strong message and reiterate our buy rating.
Companies: Keystone Law Group Plc
Rhino’s second series of 5-year bonds offers exposure to a private company with an enticing set of characteristics, combining significant growth potential with proven ability to deliver over a 40-year history. Having spent several years shifting its business model away from capital-intensive production towards closely controlled licensing, and then investing heavily in increasing exposure at the top level of international rugby, Rhino is in a position to generate significant free cashflow to service this 5.5% coupon and offer attractive growth potential, further strengthening debt serviceability ratios.
Companies: Rhino Rugby Bonds 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: Braemar Shipping Services plc
WEY has delivered an impressive set of results this morning, significantly ahead YoY, meaningfully outpacing our expectations on the revenue, profit and EPS lines. With strong revenue growth of 38% feeding through to 103% EBITDA growth and adj. EPS up 100%, the inherent efficiency of the model, supported by rising student numbers, is manifest. Educating ‘3,000' students, WEY is larger than any UK secondary school. Moreover, while providing a collegiate, online education, WEY is a clear beneficiary both of long-running and fundamental drivers, and of the current Covid-focused environment. With the benefits of past investment effectively displayed in today's results, the company continues to do more to grow its platform, present and future, and has highlighted an ongoing commitment to investing in the business to provide further support for future profit acceleration. Our Fair Value assessment is 34p per share.
Companies: Wey Education PLC
ValiRx (VAL.L*): VAL201 Clinical Trial Full Data Results | Omega Diagnostics (ODX.L): Interim results
Companies: ValiRx PLC (VAL:LON)Omega Diagnostics Group PLC (ODX:LON)