Demystifying blockchain: blockchain creates a decentralised, trusted system without individual participants needing to trust each other – In its simplest terms, blockchain is a method to store and manage information in a decentralised and synchronised state. It is fundamentally different to the traditional, centralised structures that we have historically used to create trust in transactions because it does not require the costs of monitoring and enforcing sanctions. Instead, through its use of economic incentives and cryptography, blockchain is able to create a trusted network of trusted and recorded transactions.
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13 Mar 20
Solid H1 results demonstrate continued growth
Arcontech has reported a strong set of H1 results that demonstrate robust organic revenue growth of +7.5% (fC estimate +7%), adjusted EBIT of £0.55m that is materially ahead of our H1 estimate of £0.37m due to tight control of opex, and strong cash generation. Arcontech has also announced that it is returning to its previous and more conservative revenue recognition approach. Despite the reduction in our revenue forecasts that this change causes when combined with conservative assumptions on the potential impact of Coronavirus, we leave our FY 2020-21 adjusted EBIT and EPS forecasts broadly unchanged and upgrade our EFCF forecasts due to lower working capital. Overall, we continue to like the potential for Arcontech’s organic business, and its strong balance sheet creates options for M&A or shareholder returns. We upgrade our price target to 220p as we roll forward our valuation, and Arcontech trades on 12m fwd multiples of 23x P/E, an EFCF yield of 4%, and a dividend yield of 1%.
05 Mar 20
Four plays for growth
Summary – In this report we outline the investment case for four companies that we believe have transformative growth potential: Bigblu Broadband, Audioboom, ULS and Beeks. We also include the current sector valuation, our recent research, and a profile of all of the companies covered by the 4-strong Tech Research team at finnCap.
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29 Nov 19
Strong FY19 results, strong structural position
Arcontech has reported a strong set of FY19 results that have driven large but still conservative upgrades to our existing 2020 estimates. In this report, we also present an in-depth review of the Arcontech investment case, which we split into two parts. For Arcontech’s organic business, we expect that the company’s robust structural position can continue to deliver at least 6% revenue growth (FY19 +12%) and at least 7% EPS growth (FY19 +26%) in 2020-21. Meanwhile, we believe that Arcontech’s strong balance sheet creates a range of options for Arcontech as an acquirer or target, or could alternatively facilitate greater shareholder returns. We upgrade our price target to 200p based on 25x 2020 EPS, and Arcontech trades on 12m fwd multiples of 19x P/E, an EFCF yield of 3.8%, and a dividend yield of 1.4%.
22 Aug 19
Strong final results
The group has a very high level of revenue visibility through its existing contract base, and with an expanded product group, additional sales resource added and a high level of operational gearing, we forecast two-year growth in profitability of 35%. We increase our 2019 forecast PBT by 25% and raise our target price to 145p.
23 Aug 18
Small Cap Breakfast
Path Investments (PATH) -RTO of a 50 per cent. participating interest in the producing Alfeld-Elze II gas field located 22 kilometres south of Hannover in Germany. Offer TBA. Due late Aug. Kropz PLC-Intention to float by the emerging plant nutrient producer with an advanced stage phosphate mining project in South Africa and exploration assets in West Africa
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23 Aug 18
Ticking along nicely
Prelims to June are in line with expectations, with sales and adj. net income up 8% and 24% respectively. Cash conversion was also typically robust at 181% (FCF/adj. PAT), resulting in year-end net cash of £2.6m. We leave FY18 forecasts essentially unchanged – suggesting top-line growth of 9% and, in combination with continuing margin expansion, EPS +13%. Maiden FY19 forecasts reflect a continuation of this theme and form the basis of our valuation methodology and as such, we increase our target to 85p – equivalent to an undemanding 8% FY19E FCF yield.
14 Aug 17
Small Cap Breakfast
Big Sofa Technologies— Schedule 1 from the b2b technology company providing video analytics at an enterprise level. Seeking to complete RTO of unlisted HubCo investments. Raising £6.1m. Target date 19 December. ECSC—Schedule 1 from provider of cyber security services. Raising £5m. Vendor sale £0.8m. Target date 14 Dec. Expected market cap £15m. RM Secured Direct Lending - The secured direct lending fund intends to float on the Main Market on 15 December raising up to £100m Creo Medical Group - UK based medical device company focused on surgical endoscopy, a recent development in minimally invasive surgery. Admission due 7 December. Fundraising details TBA.
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02 Dec 16
Joy of Techs
ICT evolution is driven by technological development as advances are made which both meet and shape customer requirements. Our 2011 note No such thing as a telco described the modern reality in that former ‘telcos’ now deliver varying elements of a range of managed services. We built on this theme last year, exploring in further detail their evolutionary paths, operating fundamentals, and cashflow yield similarities. In the consumer environment, demand for bundles of technology is complemented by demand for content. Across the pond, the mooted combination of AT&T and Time Warner typifies the bundled need of ‘pipe’ and content, since unbundled alternatives such as FaceTime and WhatsApp can be easier and clearer to chat over, and Amazon and Netflix are easier to watch anywhere. In the UK, BT’s defensive actions cover delivery, content and capabilities, acquiring EE yet also buying football rights. While TV was long ago added to triple play to become quad play, voice is now merely an app, and fixed and mobile seen as just dumb pipes: it's the content that will influence consumer choices. Growth of TV and film as well as music and gaming over IP leads to UK small cap opportunities. In context of the drive to maximise value from pipes and access by offering content and data, we look at some amongst the potential tech small cap beneficiaries: Amino*, Keyword Studios, ZOO Digital*, 7digital*, KCOM* and CityFibre*.
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21 Nov 16
The Joy of Techs
Mobile money has been slow to deliver but investors need to stay engaged as there are plenty of reasons as there are plenty of reasons for success. Mobile penetration and network coverage are growing inexorably and where communication leads, transactions follow, as e-commerce has proven. Banking and payments lead the way but it will embrace other financial services too, from insurance to cross-border remittance. Slowly but surely, mobile money is coming of age.
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15 Aug 16
Arcontech* (ARC): Tier 1 banks please sign up (CORP) | Parkmead Group (PMG): Analyst interview (BUY) | Parkmead Group (PMG): UKCS acquisition and Netherlands gas update (BUY) | Gem Diamonds (GEMD): Operations update (BUY) | Sound Energy (SOU): Analyst interview (BUY)
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10 Aug 16
The Joy of Techs
This quarter's topic: Feasting on Red Tape. 2016 harbours every chance of being a stultifying year, given the imminent local and London mayoral elections, the looming hurdle of Brexit, the summer doldrums, the bizarre potential outcome of the US presidential election and then the home strait to Christmas. Excuses for inactivity abound with regard to spending IT capex budgets.
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04 May 16
The Joy of Techs
This quarter’s topic: Automotive Technology. With the Mobile World Congress approaching at the end of this month and likely to feature so many automotive applications to the extent it should perhaps be renamed the Mobile World of Cars, we examine the growing impact of technology in the automotive industry, from telematics to connected cars and autonomous vehicles.
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03 Feb 16
Arcontech provides a range of software solutions which facilitate the formulation, aggregation and distribution of financial data primarily for the OTC market. The company is best known for its Multi Vendor Contribution System (MVCS) which enables the collection and aggregation of financial data for distribution to data vendors (e.g. Bloomberg and Thomson Reuters). A range of complementary software products support MVCS, the most important being Excelerator – an Excel spreadsheet product which enables the generation, auditing and viewing of prices. We initiate coverage with a target price of 0.27p.
02 Jul 15