GlobalData has given an update regarding Covid-19. Minimal disruption has been noted during the transition to a remote working model, demonstrating the strength and agility of the Group’s centralised operating model. Covid-19 specific content has also been developed, offering customers unique insight into impact (current and forecast) by sector and geography, creating potential project-based/ bespoke opportunities. The events stream (<10% of forecast FY’20E sales) has seen some impact driven by travel restrictions, although so far events have been delayed to Q4, whilst we see opportunities for virtual events as an attractive substitute. GlobalData enjoys a high degree of contracted recurring sales (>75% of sales) and a diverse, blue-chip customer base enabling strong visibility over forecast earnings. The Group is well placed to emerge post Covid-19 disruption in a strong position by retaining current opex investment made into headcount, although we note management has taken the sensible near-term decision to pause further sales headcount investment and delay the dividend by 30-days to 9th June. Cost savings from the paused sales investment, as well as the natural savings related to reduced commissions, lower discretionary and reduced travel expenditure give us confidence in full year profit forecasts. We make no changes to forecasts, with previous FY’21E sales having included sales cost investment, but conservatively none of the upside. The Group offers an FCF yield of >3%, higher than peers.
GlobalData delivered another set of strong results in a year which also saw completion of transition to a centralised operating model and single product platform. The Group enters FY’20E with its broadest ever sectorial reach, enhanced product capabilities and user experience, and a simplified pricing structure. GlobalData continues to execute on its mission to become the world’s trusted source of industry data, analytics, and insight, embedding its product into customer workflows to help support decision making through provision of rich data, analytics and insights. The Group looks exceptionally well placed to build value, benefitting from strong incremental revenue margins against an increasingly static cost base.
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.
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.
GlobalData has delivered another strong year of growth; the integrations of MEED and RV are on plan and sales are continuing to grow at a healthy level. GlobalData’s unwavering vision and execution, to become the Bloomberg of the vertical markets by being the world’s trusted source of strategic industry intelligence, is producing strong financial results and continues to build value.
Interim results confirm several positives for GlobalData. It has reported significant organic growth in key metrics. This should continue given the increase in deferred revenue, much of which will contribute to H2. Integration of the recent acquisitions (MEED and RVL) appears to be going well, bringing new addressable markets to bear. Finally, cashflow dynamics are positive, supporting the ability to make further acquisitions in a sector with scope for consolidation. The Group's growth status is reflected in relatively high short-term ratios. However, on longer term cashflow analysis, theoretical values are all higher than the current level.
Clipper Logistics (CLG LN) Retail headwinds prompt downgrades despite strong pipeline | Dialight (DIA LN) H1: Getting to grips with manufacturing issues | GlobalData (DATA LN) Ahead on revenue, profit and cash | River and Mercantile Group (RIV LN) AuM +3% in Q4, plenty of positives | RM Secured Direct Lending (RMDL LN) Critical mass achieved | Springfield Properties (SPR LN) Significant land agreement increases GDV by 17%
Companies: CLG DIA DATA RIV RMDL SPR
GlobalData has acquired the Research Views Group (RV) business for £90m in shares and assumed c£8.4m of debt. GlobalData will be able to exploit the RV sector datasets through its highly efficient platform. This includes leveraging RV by selling to a wider range of customers (professional and public body as well as existing industry) and by adding additional products that GlobalData has developed. This creates a multi-dimensional growth profile for the acquired assets and leverages GlobalData’s investment. While there will be some immediate accretion to earnings for 2018 that grows in 2019, we expect the long term will yield considerably more as each sector is optimised. This is yet another strong move to advance GlobalData’s growth potential. Based on our peer based EV/Sales valuation approach the intrinsic value of GlobalData is on its way to £10 per share.
Centaur Media (CAU LN) AGM statement – trading in-line | Elektron Technology (EKT LN) Hidden value | GlobalData (DATA LN) Exploiting the GlobalData model |Horizon Discovery Group (HZD LN) Possible offer by Abcam illustrates attractive growth prospects | James Fisher & Sons (FSJ LN) Trading in line; good contract momentum | Springfield Properties (SPR LN) Acquisition of Dawn Homes to accelerate growth
Companies: CAU CKT DATA HZD FSJ SPR
The Company has followed up its initial announcement with regard to the acquisition of Research Views Limited. The key extracts from the announcement are set out below. We do not expect to formally review our forecasts until after the completion, which is expected to follow the General Meeting on 24 April 2018.
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.
Revenue and EBITDA results for the full year are ahead of expectations on the back of strong trading. Revenues rose a total of 22% (15% organic) driven by sales execution. Strong sales has also boosted the deferred revenue balance by 32% to over £60m, supporting a strong outlook for 2018 and underlining the quality of revenues. The group is pushing ahead with commercialising its product by extending its addressable market yet again, boosting the ultimate growth potential of the business. EBITDA growth was 14% despite investment. Healthy trading and visibility (c75% estimated by Company) helps offset the likely US$ headwind likely in H2’18 meaning we have maintained our recently upgraded forecasts. Based on our peer-based approach to valuation we estimate an intrinsic value of 914p, thus implying some further significant upside potential for the stock. Another material acquisition could add more value.
Dechra Pharmaceuticals (DPH LN) Interims contain no surprises, AST/Le Vet acq now complete | Dialight (DIA LN) Are we nearly there yet? | Eckoh (ECK LN) US secure payments win and new US partnership | GlobalData (DATA LN) Results driven by strong trading | Photo-Me International (PHTM LN) Appointment of CFO | Senior (SNR LN) Solid results and outlook | Sigma Capital Group (SGM LN) REIT placing complete, 140p+/share intrinsic value
Companies: DPH DIA ECK DATA PHTM SNR SGM
GlobalData has made a small acquisition of some construction project market focused assets. The information business operates a similar data subscription model and also has some journalists which will help bolster the small expansion (to c70) that GlobalData has made in this area. This helps support the army of analysts and researchers (c2,000) underpinning the group data products. There is also a favourable overlap with the existing GlobalData sectors as the business has information on health, technology and consumer market related projects. In addition the acquisition will help enhance the group sales capacity and capability in the region. We expect the transaction to be enhancing in 2018 and put our forecasts under review pending formal revision.
Abzena (ABZA LN) US contract win highlights successful services integration | CVS Group (CVSG LN) Still top pedigree | First Derivatives (FDP LN) Acquisition in telco vertical | GlobalData (DATA LN) Acquisition of MEED Media | Photo-Me International (PHTM LN) Growth at inflection point, no need for cold towel in Laundry
Companies: DATA CVSG ABZA FDP PHTM
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Kape’s recent Capital Markets Day (CMD) was an extremely useful update on the many benefits of integrating complementary acquired businesses (including the collaboration between engineering teams) and the opportunities for upselling that new product development brings. Over the last six months, Kape has proceeded with the integration of PIA, expanding the growth of new users through the application of the Group’s user acquisition knowhow and technology. It has also made further enhancements to its product offering which, inter alia, will improve user engagement and retention. This note looks to bring out the main points from the CMD and highlights the significant progress that has been made this year.
Companies: Kape Technologies
U.S. futures and European stocks dropped on Friday as investors mulled a reported conflict among policy makers over a stimulus package for the single-currency region, as well as political upheaval in France.
The Stoxx 600 Index fell after Bloomberg News reported the European Central Bank is facing a potential rift over how much their emergency bond-purchase program should stay weighted toward weaker countries such as Italy. The euro fluctuated following French President Emmanuel Macron's decision to name a new prime minister after asking his government to resign. Rolls-Royce Holdings Plc slumped after the British jet-engine maker said its exploring options to raise funds to strengthen its balance sheet.
The dollar was slightly down, posting its first weekly drop in a month, while American cash equity and bond markets were shut for Independence Day. President Donald Trump will attend an early July 4 celebration at Mount Rushmore with thousands of guests who won't be required to wear masks, while his U.K. counterpart Boris Johnson urged Britons to act responsibly as pubs prepare to re-open and the government lifts quarantine rules on travel for 60 countries.
The friction at the ECB highlights the risk to markets should promised stimulus measures fall short. Investors continue to weigh policy support and upbeat economic data against relentless new outbreaks of the virus. U.S payrolls figures Thursday fuelled optimism of a V-shaped recovery in the world's biggest economy, even as Florida reported that infections and hospitalizations jumped the most yet, and Houston had a surge in intensive-care patients. Emerging-market stocks posted the biggest weekly gain in a month.
Elsewhere, crude oil dipped but remained on track for a weekly gain.
Companies: TGL JSE IAE ADME BP/ DGOC ENOG NTQ NTOG PMO RBD ROSE RDSA UKOG TRIN
Gfinity plc* (GFIN.L, 1.625p/£14.0m) | Blackbird plc* (BIRD.L, 16.5p/£55.4m) | Tern plc* (TERN.L, 11.5p/£31.1m) | The Panoply Holdings (TPX.L, 72.5p/£39.9m)
Companies: GFIN BIRD TERN TPX
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
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
Interims from Gfinity, the leading international esports business, saw progress with gross profit growth and cost control resulting in reduced operating losses. Going forward, Gfinity is focusing on three core areas where it has a competitive advantage (eMotorsports, own community and building communities for others) and exiting other areas. As flagged in March, Gfinity has undertaken a strategic review and has started a series of major cost reduction measures including board and senior leadership changes and is adopting a more flexible operating cost model. It is also strengthening its balance sheet with a conditional raise of £2.25m at 1p/share plus a 1:1 warrant. COVID-19 has driven a surge in video gaming and in traffic to Gfinity’s own platforms and has created opportunities, such as the F1 Esports Virtual Grand Prix series. It has also created an increased level of uncertainty for the rest of FY20, however, with major live physical events deferred. Consequently, we are withdrawing forecasts in the interim.
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
Gfinity (LON:GFIN) is a world leader in the fast-growing market for esports. The company designs, develops and delivers full end-to-end esports solutions. This includes bespoke content, tournament and event solutions for commercial partners via the company’s proprietary online platform, live broadc
The H1 trading update from Gfinity, the leading international esports business, demonstrates further progress in the refocusing on a Strategic Client Management model where Gfinity acts as the trusted independent partner to games publishers, sports rights holders, brands and media companies in the development and delivery of their esports strategies. Gfinity is reallocating resources towards its community, consulting and content creation streams to supplement delivery of end-to-end esports programmes. As part of this, the Company has taken the decision not to progress a material opportunity for a new contract with a customer where it has recently completed a major project. This results in a significant reduction in FY20 revenue forecasts but improved mix and ongoing cost control means that adj. EBITDA loss actually reduces. We have also reduced our revenue growth assumption for FY21 and now expect that Gfinity will move into EBITDA profit in H2 FY21. This change has implications on our cash forecasts however we note the company is in discussions with several potential strategic investorsthat would create new opportunities for the Group.
The Mission’s trading update indicates some early signs of increasing activity among clients in the technology, healthcare and property sectors. The overall trading background remains difficult, but the group has adapted its ways of working relatively smoothly, with the benefit of earlier moves to centralise IT and support functions. Group agencies have also been doing some COVID-19-specific work and community support, including a promising wearable proximity monitor from Pathfindr, developed within the group’s business incubator, fuse. Cost savings, including reduced salaries and non-payment of the FY19 final dividend, are helping preserve cash. Guidance and our forecasts remain withdrawn.
Companies: The Mission Group
CAP-XX Ltd* (CPX.L, 3.1p/£10.1m) | Gfinity plc* (GFIN.L, 1.675p/£12.0m) | MTI Wireless Edge Ltd* (MWE.L, 38.5p/£33.8m) | Newmark Security plc* (NWT.L, 1.05p/£4.9m) | Mirada plc* (MIRA.L, 95.0p/£8.5m)
Companies: CPX GFIN MWE NWT MIRA
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“.
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
The Court of Appeal yesterday issued judgment “comprehensively” in favour of property portal owner OnTheMarket’ssubsidiary, Agents' Mutual, regarding all the competition issues in its legal proceedings against Gascoigne Halman, part of the Connells estate agent chain. While the non-competition issues relating to OTM’s claim remain to be resolved, we see this as a positive in terms of investor sentiment and allows senior management to focus more on the delivery of its growth strategy.
This morning OnTheMarket (“OTM”) management confirmed that “as of 31 January 2019, it has listing agreements with UK estate and letting agents with more than 12,500 branches. This is an increase of more than 7,000 branches in just under a year since Admission to AIM in February 2018.”