Bango (BGO.L): Corp | BOTB (BOTB.L): Corp | Evgen Pharma (EVG.L): Corp | Lok'nStore (LOK): Corp | Open Orphan (ORPH.L): Corp | President Energy (PPC): Corp
Companies: BOTB LOK PPC EVG BGO ORPH
Alumasc (ALU): Corp | Byotrol (BYOT): Corp | Lok'nStore (LOK): Corp | Omega Diagnostics (ODX): Corp | Quartix (QTX): Corp
Companies: ALU BYOT LOK ODX QTX
Lok’nStore has reported continued strong trading in H1 (to January 2020) with sales up +5.3% and EBITDA +6.4%. Trading since the lockdown has softened, but April revenue will still be up on last year and all the stores remain open. Reflecting the resilience of the model, operating cash flows and the strength of the balance sheet, the group’s progressive dividend policy continues and the interim dividend has been raised by 9%. We continue to believe the shares materially undervalue the prospects for creating value in the undersupplied UK self-storage market. COVID-19 is simply introducing a delay into a long-term trend.
Companies: Lok'n Store Group
Underlying resilience warrants upgrade
ClearStar (CLSU): Corp Entering the facilities management market | Lok'nStore (LOK): Corp Financial strength, capacity and opportunity to grow
Companies: CLEARSTAR Lok'n Store Group
H1 20 update – strong trading and another pipeline store
Avacta (AVCT): Corp Cell therapy JV with Daewoong Pharmaceutical | Lok'nStore (LOK): Corp Second collaboration with Lidl | Shield Therapeutics (STX): Corp China licence - $62.8m bio-dollar deal | Shoe Zone (SHOE): Corp FY19 better than expected; reinvigorated focus evident
Companies: AVCT LOK SHOE STX
Regional expansion with new store pipeline
Aukett Swanke (AUK): Corp Positive trading update | Lok'nStore (LOK): Corp Sales, EBITDA and asset values up at double-digit rates | ZOO Digital (ZOO): Corp Interims | 4imprint (FOUR): Corp H2 strong, strategy continues to deliver
Companies: FOUR AUK LOK ZOO
NAV per share increased by +11% (our forecast +6%) to 533p in FY 2019 and EBITDA grew by +12% (our forecast +8%) as both existing and new stores traded well. There are 8 new stores in the secured pipeline that will take the portfolio to 42 stores and another 6 progressing through legals. With the UK market still undersupplied, the outlook for value creation from both the existing stores and potential new ones remains very strong. We have raised our NAV-based target price to 697p from 617p, factoring in the latest external valuation and rolling forward a year.
Following continued delays of a Brexit agreement, few sectors within the UK market have remained attractive to investors despite low valuations. One sector which has continued to outperform despite the political drama has been the UK video gaming sector (henceforth UK gaming), which we are fans of. We believe a combination of sector-leading growth, strong cash conversion and timely cyclical positioning support our positive view on the UK video gaming sector.
Companies: ABBY AMS ANX ARS ATYM AVON BLVN PIER BUR CGS CAML CDM CSRT TIDE CYAN DTG DEMG ELM EMR FPO FDEV GTLY GENL GHH GRI GEEC GKP HMI HAYD HEAD HILS HTG HUR IBPO IOG INDI JHD JOG KAPE KEYS KWS KCT KGH LAM LIT LOK MACF MANO MOD OXIG PCA PANR APP SRE PHC PMO RBW RMM RBGP REDD RSW RNO ROR SUS SCPA SEN SHG SOLG SOM SUMO TM17 INCE TWD TRAK TRI VNET VTC ZOO ZTF
Cambridge Cognition (COG): Corp China offers new opportunities – first contract | Europa Oil & Gas (EOG): Corp FEL 2/13 licence extension | Lok'nStore (LOK): Corp Recycling into faster growing assets
Companies: COG EOG LOK
Lok’nStore will release a pre-close trading statement in coming days. We expect this to be reassuringly positive, anticipating y/y growth in group revenues (APe: 9.0% FY19e vs. 6.6% in FY18) with scope for the shares to tick upwards if we see additions beyond its stated pipeline of 8 new stores. We continue to believe Lok’nStore offers compelling exposure to a sound growth strategy and favourable market dynamics. However, given recent outperformance (+31% YTD) that has reduced a previously excessive valuation gap relative to peers (re-rating from a 7% NAV discount to an 8% NAV premium since we assumed coverage), we believe the shares are now up with events. We move to Neutral, leaving our 530p PT unchanged.
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.
Companies: AMS ANX ARS ATYM AVON BLVN PIER BUR CGS CAML CALL CSRT TIDE CYAN DTG DEMG ELM EMR FPO FST GTLY GENL GRI GEEC GKP HMI HAYD HEAD HILS HTG HUR HYR IBPO IOG INDI JHD JOG KAPE KEYS KCT KGH LAM LIT LOK MACF MANO PCA PANR PXC PHC PMO RBW RMM REDD RSW RNO RKH RBGP ROR SUS SCPA SHG SOLG SOM TWD TRAK TSG TRI VNET VTC ZOO ZTF
We update our numbers post the group’s interims last month to account for i) presentation of Saracen disposal as a discontinued op. in FY19, ii) increased finance charges of £0.1m annualised from the debt facility extension, and iii) the decision to operate Ipswich as a freehold store (previously intended to be a managed). Our forecast changes are presented below. We remain buyers of LOK, seeing moderate upside relative to peers in the context of sound market fundamentals underpinning the UK self-storage market.
Research Tree provides access to ongoing research coverage, media content and regulatory news on Lok'n Store Group.
We currently have 81 research reports from 4
A number of REITs have the ability to thrive in current market conditions and thereafter. Not only do they hold assets that will remain in strong demand, but they have focus and transparency. The leases and underlying rents are structured in a manner to provide long visibility, growth and security. Hardman & Co defined an investment universe of REITs that we considered provided security and “safer harbours”. We introduced this universe with our report published in March 2019: “Secure income” REITs – Safe Harbour Available. Here, we take forward the investment case and story. We point to six REITs, in particular, where we believe the risk/reward is the most attractive.
Companies: AGY ARBB ARIX BUR CMH CLIG DNL HAYD NSF PCA PIN PXC PHP RE/ RECI SCE SHED VTA
Accelerating activity in to FY21
Companies: Manolete Partners
With a new CEO, Amanda Blanc, Aviva’s shareholders could dream of a possible change in the group’s strategy, with a more focused insurance business. The new Chief has an opportunity to take painful decisions in a year where no one will require a high operating performance.
Companies: Aviva Plc
Equals' FY19A results confirm another year of strong, double-digit revenue and adj EBITDA growth. The move to a B2B focused offering continues to progress and looks well timed in view of Covid-19's impact on overseas travel. While the pandemic impacted Q2/20E trading early on, we note June KPI's indicate a positive rebound. Given the continued uncertainty as to Covid's full impact upon FY20E trading, we refrain from reissuing forecasts and thus leave our recommendation under review.
Companies: Equals Group
Trading Well in Tough Market
Companies: Palace Capital
Record delivered full year results matching expectations with assets under management equivalent (AUME) slightly ahead as positive inflows more than offset the impact of market moves and fee margins were broadly stable. The group also demonstrated its operational resilience and expertise to clients during the onset of COVID-19 and accompanying volatility. Looking ahead, the group has a fresh focus on growth and to support this is investing in a measured way in IT and its staff.
S4 Capital has announced the merger of Lens10, a leading Australian digital strategy & analytics consultancy, with MightyHive, its data & programmatic media practice. Founded in 2010, Lens10 provides a range of data services including digital strategy, digital analytics, optimisation and tag management. It is a certified Google Partner in Google Analytics, Google Cloud & Google Marketing Platform and is an Adobe Analytics partner. It has 25 data specialists in Melbourne and Sydney, and has a blue-chip client list including CottonOn, National Rugby League, Australian Ballet and ME Bank. Data analytics continues to grow in importance as marketers accelerate their digital transformation and S4 Capital indicates it has seen explosive demand for these services. No financial information has been disclosed, though we note the group reiterates its commitment not to compromise its balance sheet, which remains net cash. Separately, the group has announced that Miles Young, previously Chairman & CEO of Ogilvy, is joining the board. He has particular expertise in creative work and talent, new technologies and Asia Pacific developed over 35yrs at Ogilvy
Companies: S4 Capital
ICGT, the 39-year listed private equity (PE) investor, has delivered a total NAV return of 178% over 10 years (comparable FTSE All Share return 61%). Since Intermediate Capital became the manager in 2016, ICGT has earned mid-teen p.a. underlying returns every year. This has been achieved by leveraging the attractive PE market with incremental manager synergies. It has a concentrated portfolio of “high-conviction” investments (19% p.a. average returns over five years, 42% of portfolio, defensive growth focus) and a diversified third-party PE funds book. ICGT manages over-commitment tightly. The 33% discount to NAV is above peers.
Companies: ICG Enterprise Trust
The covid-19 pandemic has had a devastating effect on the share price of property companies, with 31% wiped off the value of their total market capitalisation during the first quarter of 2020.
Companies: AEWU CREI CSH BOOT INL HLCL THRL SUPR RESI RGL DIGS GR1T SOHO PHP BOXE ASLI UTG AGR UAI BLND UANC CAL SHED CWD WHR EPIC WKP GRI YEW HMSO PCA INTU NRR
The impressive full year 2019 results included some eye-catching numbers, including a record PBT of £40.1m (nearly 3x FY18 @ £14.3m), £620m of reserves acquired over 16 legacy deals, and $842m of (estimated) Contracted Premium in the Program business – on track to breach $1bn in FY20 as previously guided and $1.5bn-$2bn in 2022-2023.
Companies: Randall & Quilter Investment
Hipgnosis Songs Fund (SONG LN) has today announced a trading update for the full year ending 31 March 2020. The unaudited NAV has risen 13% YoY to 116.7p, up 14.3% since the last published NAV of 102.2p as at 10 January 2020. This represents a like for like valuation uplift of 11.4%. All equity has been fully deployed and shareholder approval has been sought to increase net debt from 20% to 30%. Revenue is strong with £64.7m generating an EPS of 10.7p (more than 2x the annual 5p dividend target). NAV growth has been driven by revenue statements which were up 2%, and an increase in streaming growth rate assumptions by the independent valuers. The portfolio comprises 54 catalogues, with 13,291 individual songs, now valued at £757m which was acquired at purchase price of £697m on an acquisition multiple of 13.9x – now valued on 15.0x historical earnings.
Companies: Hipgnosis Songs Fund Ld
Wirecard UK’s suspension by the FCA has been lifted, allowing U Account business through Shelby Holdings and Morses Club to resume as normal, permitting customers full access to cash, which was previously frozen, albeit ring-fenced in a safe Barclays UK account. Morses Club has offered its U Account customers free use of the previously affected U Account accounts in July as compensation for the issue, helping to mitigate any negative impact and ensuring the relationship with customers remains strong.
Companies: Morses Club
Ground Rents Income Fund (GRIO) has today released its interim results for the period ending 31 March 2020. The fully diluted NAV is 110.1p down marginally from previous NAV of 111.3p as at 30 September 2019 year-end. This valuation included a material valuation uncertainty clause as a result of the COVID-19 pandemic, which has subsequently been removed since the period end for long dated ground rent valuations given the defensive nature of the income streams and continued market/transactional activity. The latest valuation represented a decrease on a like for like basis of £0.36 million or -0.3%. Two Interim dividends were paid during the six-month period ending 31 March totalling 1.98p, and a further dividend of 0.99p has been declared today (ex 16 July / payable 10 August). Dividend cover excluding the non-recurring litigation costs on Beetham Tower was 90%. Assuming a full year dividend of c4p this puts the shares on a flat yield of 4.9% and a discount of 26%.
Companies: Ground Rents Income Fund
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
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