Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on Future. We currently have 53 research reports from 5 professional analysts.
Future Plc has today announced the achievement of accelerated earn-out payments related to the acquisition of Mobile Nations in March’19. Deferred consideration of $55m (50% cash/ 50% new shares) becomes payable, with management assuming the achievement of an $11.5m EBITDA contribution from Mobile Nation operations to March’20. Mobile Nations management team will continue to work within Future within the newly created Future Labs, tasked with driving additional organic growth by integrating new initiatives, businesses, tools and processes once they reach a suitable maturity level. Future management continue a strong record quickly bedding down new acquisitions. The modest outperformance in Mobile Nations performance is largely offset by a marginally bigger than expected share base increase. We make no changes to our forecasts however at this time.
Future Plc has announced better than expected performance in its FY’19E pre-close trading update driven by a mix of Amazon Prime Day activity and positive underlying momentum in US operations, supported in part by a strong dollar. Integration of recent acquisitions has further increased capacity, supplementing already positive organic audience growth and benefitting margin performance. Top-line outperformance means full year EBITDA is now expected to be materially ahead of current market expectations, and leads us to upgrade forecasts for the second time since July. Revenue expectations for FY’19E are raised 6% to £210m, with EBITDA upgraded to £53.2m (up 10%). We prudently leave FY’20E and FY’21E sales forecasts broadly unchanged for now, although we raise our EBITDA margin expectations by +80bps and +50bps for FY’20E and FY’21E respectively. EPS expectations rise 11%, 4% and 2% for FY’19E, FY’20E and FY’21E respectively. An FY’20E intrinsic value of 1,356p/share offers an attractive 14% upside from current levels, although we now see potential headroom in FY’20E forecasts.
Future has announced this morning the acquisition of SmartBrief for $45m and paid for using a mix of cash from facilities and shares. The Company indicates, and we estimate, the deal is immediately earnings enhancing and adds 5% to FY20 EPS. SmartBrief is a digital publisher specialising in curating and delivering targeted industry news from over 1,500 sources. We see this as another logical step in the expansion of the complementary B2B activity. More over this deal expands the number of existing verticals (adds Healthcare & Medical and Finance & Insurance), increases the depth of some existing verticals (Tech & Telecoms), adds B2B content services and adds a capability in marketing services (email) that can be leveraged across the wider group including B2C. This is another textbook multi-vector growth acquisition that not only boosts earnings but enhances the group in several ways strategically. The shares look cheap based on our 1,231p FY20 intrinsic value estimate and even better value on an FY21 basis at 1,322p.
The trading update, effectively covering Q3, signals that the Media division is outperforming expectations with audience growth remaining strong. There has been a misplaced concern in some quarters about audience growth but Future has signalled that growth has remained strong (H1 same site audience growth was 25%). We lift our FY19 EPS by 7%. The evolution of the management team and strengthening capacity remains an important focus for Future. After adding extra capacity within the leadership teams Penny will move to a Chief Strategy Officer role and another person appointed to be CFO. This should be beneficial given how the business has scaled significantly and has greater ambitions. Higher forecasts mean there is now a highly attractive 22.4% upside to our FY20 intrinsic value estimate.
Future’s shares have eased back to 970p after an incredibly strong run (from 845p to 1250p/+48%) in response to the Interim results. Arguably the shares had got ahead of themselves, but are now looking good value again from a near term perspective and for the long term. Execution momentum has remained very strong and with our forecasts positioned conservatively we see the probability of upgrades as high. We reaffirm our strong view on the fundamentals of the Future model and the significant scope for material improvement with the existing asset portfolio and to add additional assets over time that Future can apply its proven enhancement skills to. Those who have missed out or wish to bolster their positions should take advantage of this weakness before the next news flow (September or possibly earlier) in our view.
H1 Revenue is ahead of our not long ago increased expectation driving a better profit result. Cash is also £10m ahead. The business has good momentum and despite the ever present spectre of Brexit there is still significant scope for us to prudently raise revenue, EBITDA and EPS estimates. Acquisitions integrations and performances are on plan and the online advertising technology changes in place to benefit. The shares have re-rated again in line with the changing fundamentals. We see a path to 20x EBITDA leaving significant upside potential without the need for further upgrades.
Future has made another key acquisition this time consolidating its recent expansion in the US technology orientated segment. The Mobile Nations brands add an extra online audience of over 40m per month. The acquisition also further increases the weighting of Media (online advertising and eCommerce) boosting growth and valuation potential. We lift EPS 4.7% for FY19 and 13.1% for FY20. The 3 year earnings CAGR rises to a highly attractive 24.2%.
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.
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Future has seen a fast start to the year with strength in online revenues (advertising and eCommerce) leading to outperformance. With high gross margins the effect on profits is significant. Our FY19 EBITDA estimate leaps 14.3% and FY20 11.3%. The effect at the earnings level is amplified by lower future depreciation and amortisation charges due to clarity over future technology requirements. Our EPS estimates rise 19.0% and 17.2% for FY19 and FY20 driving a 3 year earnings CAGR estimate of 18.5%.
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.
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In this note we delve into the full year results detail, look at how the business mix is developing and refine our forecasts. Revenues soared in FY18, in part due to acquisitions, but it was organic growth of 11% that underlined the strength of the business. The key long term driver, Media, saw organic revenue growth of 40% driving mix change which is set to continue to change fast. We estimate Media will rise to 71% of gross contribution this year and demonstrate a path to 87% without any additional acquisition assumptions. We expect the rating to expand further and earnings to grow boosting the share price potentially to £10 in the medium term.
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Future has delivered a very good set of FY18 numbers – better than the upgrades put in place with the September update. This came through both the acquisitions and the organic growth as the group leverages its platform, with Media showing organic growth of 40%. There is plenty still to go for and we have again raised our FY19 expectations and published indicative FY20e forecasts. The group now has scale in the important US market, accounting for nearly half of group revenues on a pro-forma basis. In our view, the valuation does not reflect the premium growth or expanding margins.
The acquisition of Purch not only scales Future in group terms but also extends its consumer technology vertical leadership further geographically into the US. It is an excellent strategic deal with a strong financial returns profile. Aside from rudimentary cost savings which support the returns guidance, there is the additional revenue potential of deploying the Future Hawk e-commerce technology in Purch and applying the Purch Ramp programmatic technology to Future media. Driving average revenue per user through revenue model optimisation is a constant objective that helps focus on creating the right content to build valuable audiences. This remains a successful model and drove the recent positive trading update demonstrating continuing execution momentum. The business and share price have a bright outlook.
Research Tree provides access to ongoing research coverage, media content and regulatory news on Future. We currently have 53 research reports from 5 professional analysts.
|18Oct19 14:54||RNS||Holding(s) in Company|
|16Oct19 17:07||RNS||Holding(s) in Company|
|16Oct19 15:50||RNS||Holding(s) in Company|
|11Oct19 07:00||RNS||Accelerates Mobile Nations earnout payment|
|09Oct19 10:00||RNS||Notice of Results|
|02Oct19 13:35||RNS||Total Voting Rights|
|25Sep19 08:51||RNS||Holding(s) in Company|
In January, we provided a list of 11 stocks for 2019 that we believed would perform strongly with attractive catalysts that could lead to material outperformance. In this Quarterly Research Outlook, we revisit these views, analysing what has happened and how the remaining six months of the year could play out.
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Microsoft unveiled the new Surface Duo, which runs on Android, at its annual hardware event on Wednesday. The folding phone features two side-by-side 5.6-inch displays that are connected by a 360-degree hinge. Microsoft said it partnered with Google to “bring the best of Android” to the device, while incorporating elements of Windows 10X, a new operating system meant for hybrid devices. It can also run two different apps at the same time. Specifically, the Surface Neo will rely on a new "Expression" of its Windows 10 operating system called Windows 10X.
Companies: KAPE EYE IMO
The NFC rating has come under pressure due to a combination of macro concerns and a 1% organic revenue decline just reported for H1 FY2109. The organic decline is largely driven by two of the seventeen portfolio businesses with organic growth elsewhere in the portfolio improving from previous data points. We expect the issues at Beyond to correct through H2 which, combined with healthy organic growth elsewhere in the portfolio and a full contribution from Health Unlimited, leads us to upgrade our FY 2020 expectations. NFC now trades at a PE discount to both the Agency and Small Cap Media peer groups despite a superior growth profile. The balance sheet remains comfortable.
Companies: Next Fifteen Communications Group
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.
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Interims revealed broadly flat underlying revenue performance, with adjusted operating losses narrowing to £1.3m (H1’18: (1.8m)). Financial performance was secondary however, to the news that management have now completed the strategic disposal program, receiving £16.0m of net proceeds in the period. £5m of disposal proceeds are due to be returned to shareholders as part of a 3.5p/share dividend payable on 25 October (inclusive of 2p/share special dividend), with further returns to shareholders in 2020 subject to performance. Management expect the completion of the disposal program and simplification of the business model to enable a £5m reduction in annual costs. The Group has also announced its MAP22 strategy targeting revenue acceleration and cost efficiencies alongside a new progressive dividend policy targeting a 40% pay-out ratio of adjusted earnings or 1p/share, whichever is higher. We have no forecasts in the market at this time; however with the disposal program complete and new strategy outlined we will look to update the market in due course.
Companies: Centaur Media
GlobalData has reported EBITDA of £12.0m in line with our expectation for 2015, rounding out another good year of development. The group’s step change in maturity leads to a maiden dividend 5x our estimate. More importantly the business made major strategic progress; Health has been added as a third major vertical and smaller sector units lacking critical mass have been sold. This leaves a focused business intelligence group targeting a combined US$10bn information market through three sectors. Visibility has leapt; pro-forma deferred revenues are £36m (c40% of FY16 N1Se revenues). As the group increases its exploitation of assets through sales expansion globally and enhances its products further we expect delivery against our 3 year earnings CAGR of 26.1% (100.4% over 3 years). GlobalData shares look good value now and for the medium term.
M&C held a very positive meeting highlighting the strong entrepreneurial culture and success of dynamic units that stand profitably on their own two feet. M&C is able to differentiate itself from the large global agencies who are struggling to grow at present. Their targeted approach to offices, lower exposure to FMCG/broad sector diversification and minimal exposure to traditional media buying is proving itself. The growth dynamics of the services they offer was on show with Mobile, Talent and Sports & Entertainment units explaining their positioning and attractive dynamics. M&C has continued to deliver over the long term; it weathered the credit crisis and has gone on to outperform the market. The shares look good value and we see 400p as the next objective. Quality and consistency remain highly attractive traits. M&C is on the path to becoming a rare beast, a mid-cap agency. BUY.
Companies: M&C Saatchi
GlobalData's 2017 final results highlighted three important elements which inform our positive view of its prospects; organic growth, acquisition integration and visibility of its revenues (c75%). In combination, this allows for upgrades to our 2018 and 2019 forecasts. GlobalData's proprietary data and content, alongside its knowledge within each of its industries enables it to support clients. It has a large addressable market and is not limited by opportunity. Potentially adding further industries would further increase its footprint. We believe that the Group will make further progress in this regard during 2018. On valuation, our DCF model suggests a theoretical value more than 10.0% higher than the current level.
Parliamentary and Brexit developments continue to hold centre stage, although the precise path forward remains as unclear as ever. The uncertainty over Brexit, worries over a possible slowdown in the US and the outlook for global economic growth generally have all contributed to the recent falls in markets. While the rally seen since the start of the year has petered out, most indices have still made progress. In Share News & Views we comment on Bloomsbury Publishing, Bonhill Group*, Braemar Shipping Services*, Burford, Clarkson, LightwaveRF*, Marshall Motor Holdings and Synectics*.
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The Company is holding a Capital Markets Day today. DATA is seeking to become the Bloomberg of a number of vertical markets and the worlds trusted source of strategic industry intelligence. This will be an excellent opportunity to hear about data sets, product innovation and growth/execution drivers within a very large market. In addition it is likely we will hear about how the more recent acquisitions, MEED and Research Views, have fitted in. The stock has tended to trade around the mid-twenties EV/EBITDA level on a prospective basis. With the acquisition on track and a good organic growth outlook the stock is likely to continue to re-rate back to this level.
ReAssure Group plc - The Group is a leading closed book life insurance consolidator in the United Kingdom with 4.3m policies, £68.7 billion of assets under administration on a Post-L&G Illustrative Basis. It is considering a premium listing segment of the main market. Voyager AIR The Company will focus on the acquisition, leasing and management of primarily widebody aircraft, with asset management services to be provided by Amedeo Limited he IPO will comprise a Placing and Offer for Subscription of Shares to raise up to approximately US$200m· IMC Exploration Group (NEX: IMCP), focused on acquiring and exploring prospecting licence areas which have high potential for natural resource, is looking to admit its shares to the standard list and will withdraw for the NEX Exchange. TBC Uniphar, a diversified healthcare services business with a workforce of over 2,000, is looking to join AIM. Raise TBC, expected mid-July 2019
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H1 revenue and EBITDA are ahead and underpinned by healthy cash generation. The 25% EBITDA margin objective has been achieved and the Company is now targeting 30% and we expect even higher in the long term given the likely maturity profile of a data business with a highly efficient model. Turning to trading the outlook appears well underpinned with 15% total deferred revenue growth and a very impressive 13% organic rate which implies a sharp acceleration from an already healthy 7% in H1. If it were not for an expected cost ramp in H2 (slightly delayed from H1) and the shaky macro picture we would likely be upgrading given the underlying strength of trading. The stock has begun re-rating again and we expect this to continue as trading confirms a robust picture. Peer valuations have been rising, in part due to the potential part disposal of Argus Media for c10x sales. Using the current 2019 peer multiple average of 8.6x EV/Sales suggests a value per share of 1,247p for 2019 and applied to 2020 1,330p.
Cello has acquired Innovative Science Solutions LLP (ISS) for an initial $6.4m in cash (maximum $10.5m). ISS is a scientific consulting firm specialising in strategic counsel and regulatory support for the healthcare industry in the US. It adds a new and key component to Cello’s offering of technical services along critical drug development pathways. The addition of ISS is in line with the group’s strategy of growing its technical services offering in the US healthcare market and we have upgraded our FY 2019E EPS by 2% and FY 2020E by 7%, after allowing for investment in headcount to support growth. We continue to expect the group to have net cash at December 2019E, meaning further enhancing additions could be financed from existing resources if opportunities can be found. We have raised our target price to 160p from 145p, valuing Cello at a 30% discount to peers on a P/E basis.
Companies: Cello Health
The update on the West Newton is notable in detailing a potentially material oil discovery, as well as the long-mooted gas discovery. In particular, the operator (Rathlin Energy) has now confirmed that the West Newton project contains an estimated gross 151 feet oil column located below a gross 66 feet gas column within the Kirkham Abbey formation. Deloitte will now be commissioned to prepare a CPR to assess volumetrics at West Newton and to undertake an economic evaluation applicable to a material oil development with an associated gas cap. This exciting news will inevitably result in changes to the development programme for the asset.
Companies: Reabold Resources
Mobile Tornado Group plc* (MBT.L, 4.7p/£18.2m) Interims: Revenue growth and moving toward profitability (18.09.19) | Newmark Security plc* (NWT.L, 0.8p/£3.7m) Prelims: Revenue growth and return to profit (19.09.19) | Blackbird plc* (BIRD.L, 11.0p/£32.7m) Further expansion of TownNews deployment (19.09.19) | MTI Wireless Edge Ltd* (MWE.L, 30.5p/£26.2m) Contract win: Military antennas (23.09.19) | Gfinity plc* (GFIN.L, 4.2p/£20.4m) Update: Community growth (23.09.19)
Companies: MBT NWT BIRD MWE GFIN