02 May 17
THE NAKED FUND MANAGER - Why the best businesses have great cash conversion
The top 20 companies using the CF Growth Profile beat the bottom 20 by 16% pa over last two years
24 Jan 17
Our users' top Tech, Software, and Telecoms stocks for 2017
Whilst it's only early days, our users are already comfortably beating the market
08 Jan 17
Implications of Trumponomics for equities
Attractive corp tax regime, and dovish on energy, infrastructure, and bank regs
15 Dec 16
Yellen yesterday delivered a dose of reality to the market! It was not the FOMC's unanimous decision to hike short-term rates by 25bp, taking federal-funds rate range to between 0.5% to 0.75% due to near full employment as inflation creeps toward the target level, that was the surprise but the fact officials are now predicting three similar moves during 2017. Furthermore, the Fed stuck to its forecast for three further hikes in both 2018 and 2019, in the process nudging its long-run target for fed funds back up to 3% from 2.9%. The net result was for the already surging US$ Index to spike to a 13-year high, rising by 0.7% during the Asian session while also reaching a 20-month peak against the Euro. US equities took fright, having got close to testing the 20,000 barrier on Tuesday, the Dow Jones suffered its worst drop since October, with broad sector-wide selling knocking all principal indices similarly. Macro data due from the States this afternoon may provide further grounding for the Fed Chair's aggressive decision, with release of Consumer Prices, Jobless Claims and the Philadelphia Fed Business Outlook Survey; beyond this, of course, is the understanding that Trump's 'Make America great Again' campaign was predicated on his ability to ensure the working class vote that powered him to the White House can deliver both the employment and wages boost required to make his vision a reality or, presumably, he will pay the price. Asian equities followed the US lead, with almost all regional bourses under pressure, led sharply by the Hang Seng as the US$-based territory's central bank followed the Fed's lead by also raising rates, knocking its recently booming property shares in the process. The Nikkei stood out from the crowd with a fractional gain, as traders focussed in on the benefits of US$ strength against the Yen for it's export dependent businesses. Today London will receive both the Bank of England's interest rate decision and MPC Minutes. No change in the figure itself is expected, but yesterday's higher than expected November inflation data does suggest that Brexit devaluation effects continue to filter through, against which it must be realistic to expect a slightly more hawkish tenor coming through the text in order to keep a floor under Sterling. The ONS will also release Retail Sales figures, while the CML provides lending data and the CBI publishes its Industrial Trends Survey. UK corporates expected to release earnings or trading updates this morning include Bunzl (BNZL.L), Centrica (CNA.L), Go-Ahead (GOG.L), Petrofac (PFC.L), PZ Cussons (PZC.L) and SyQic (SYQ.L). Traders will also be keeping a cautious eye on oil prices despite yesterday's encouraging US crude inventory report, with Iraqi government reports suggesting plans to increase its exports in January while Libya also restarts operations at its key oil fields, creating further doubts as to OPEC's ability to enforce the wide-ranging international production cuts agreed earlier this month. London is seen opening nervously this morning, with the FTSE-100 expected down some 15 points during early trading.
Companies: ORE BOO DC/ MCRO
23 Nov 16
HPE Software reports lower revenues in final year before Micro Focus acquisition
Software specialist saw revenues decrease due to divestitures and currency headwinds
Companies: Micro Focus International
09 Sep 16
"Overnight markets ended mostly weaker in relatively quiet trading. The principal drivers were yesterday's decision by the ECB to leave its €1.7 trillion stimulus package unchanged and a continuing sell off of technology stocks, following Apple's launch of its rather less than inspiring iPhone 7 and Hewlett Packard Enterprise's plan to spin off and merge most of its software operations with the UK's Micro Focus international (MCRO.L). As a result, the NASDAQ took the biggest hit amongst the main US equity indices, while elsewhere energy stocks took confidence from the largest one-day gain in the benchmark Nymex contract for almost six months after the US Energy Information Administration data revealed the steepest fall in crude stockpiles since 1999. Interesting also, the Fed Funds futures appear to finally be forming a consensus regarding rate expectations, with bets now indicating the chance of a September rise has fallen to just 24%, while expectation of one in December is now put at 60%. The Hang Seng was the only winner amongst Asia's major equity markets, celebrating news that the Chinese regulator had finally confirmed it will allow domestic insurers to invest in Hong Kong-quoted shares through a trading link with Shanghai. This further opening follows last month's go-ahead for the Shenzhen-Hong Kong Stock Connect, which is due to open by the end of this year and create a second portal for foreign investors looking to access China's US$6.5tn equity market. This news was tempered on the Composite index, however, as CPI data released for August showed prices slowing for the fourth month in a row and remaining firmly below Government target. The UK this morning is expected to provide Trade Construction figures, while EU finance ministers will meet in Bratislava to discuss, amongst other things, the ECB's continuing policy inaction. The Fed's Eric Rosengren is scheduled to make a speech this afternoon which could further help traders firm expectations regarding the FOMC meeting now due in less than two weeks. Corporates due to release earning figures this morning include Comptoir Group (COM.L), Richoux Group (RIC.L) and JD Weatherspoon (JDW.L). Investors will also remain sensitive to further disclosures regarding North Korea's reported fifth nuclear test this morning and the planned meeting between Saudi, Algerian oil ministers and OPEC's general secretary. The FTSE-100 is seen modestly weaker, losing perhaps 10 points in opening trade." - Barry Gibb, Research Analyst
Companies: AERO DC/ MCRO ZPLA
08 Sep 16
Micro Focus announces $8.8bn HP Enterprise merger
HPE valued at 11.4x EBITDA, giving MCRO access to HPE's 50,000 customers
Companies: Micro Focus InternationalHP INC
01 Aug 16
Gains on repayments – Good housekeeping
All the details are important. Re-pricing debt means that the revised terms provide a cash interest benefit in the first year of cUS$8.3m. This gives cause for a small earnings upgrade. Hat tip to Micro Focus for good housekeeping and remembering to sweat the small stuff. We retain our Buy, with a target price of 2052p.
Companies: Micro Focus International
29 Jul 16
“I don’t hear any music.”
So replied the violinist Fritz Kreisler to the lady who said “your violin makes such beautiful music.” And so we learn that the instrument (ie the hardware) is of no use whatsoever without the human element. This week we saw Sage debut a rack of new products at SageSummit, there was the US$9.3bn Netsuite acquisition by Oracle, which in the wake of ARM plc acquisition pushed share prices up as M&A thoughts drove thinking. We frame all of these moves relative to our SMAC stack scenario. However our Compliance Officer David Langshaw (off to read for an MSc in History of Science, Medicine and Technology at Kellogg College, Oxford - whatever) tells me that I have missed the essential truth – namely Kranzberg’s Six Laws of Technology. Kranzberg’s core message is, ‘Technology merely presents an opportunity: the choice of what to do with it remains ours’ – and so the thing is the intercourse of people with the product. ‘People’ have pushed equity values higher and people will throw up some lucrative opportunities as the economy struggles to generate growth and so looks to technology to be the growth driver. Furthermore the rash of new products show us that technical developments have environmental, social, and human consequences that go far beyond the immediate purposes of the technical devices and practices themselves – note the seemingly sudden burst of interest in IoT and in PokemonGo this month – and this reminds us that “software is eating the world”. As always tech bounces up and down through the Summer months – July was an ‘up’ month. It is still too early to know the operational ramifications of Brexit. But so far the mood music has been more positive than expected, even if I am playing second fiddle to Mr Langshaw. Enjoy the Summer break.
Companies: AVV ESCH CCC FDSA FTC TUNE FXI MCRO NETD OSI SGE SND SDL SPT SOG
15 Jul 16
"The devastating incident that took place in Nice late yesterday, sadly bearing all the hallmarks of terrorism, will likely keep European markets in the red today. The FTSE-100 is seen opening down around 35 points. London equity investors will also reflect further on the Bank of England surprisingly keeping its benchmark lending rate unchanged at 0.5%, when investors had been expecting to policy loosening by 25bp. With the Governor, Mark Carney, continuing to warn of postBrexit UK entering a phase of slower growth, however, the MPC is now expected simply to gathered more evidence before taking the inevitable step in August. US equity indices were stronger across the board yesterday, as financials took confidence from J.P. Morgan Chase's strong half-year results while the Fed's James Bullard suggested there was now no rush to push rates higher, pointing at a preferred 'wait-and-see' approach in his various press comments. Asian shares also continued to move positively with the Nikkei again leading the way, taking its weekly gain to almost 10%, the largest such rise since December 2009, driven once again by Nintendo but also by messaging-app operator, Line, which surged sharply upward on its Tokyo debut. The Shanghai Composite also celebrated release of economic data showing better than expected Q2'16 growth in response to massive stimulus provided since the start of the year, although it had given all its early gains back by the close. Macro data due for release today includes UK Construction Output figures and Trade and Inflation data from the EU. The US is scheduled to provide a plethora of important statistics, including Retail Sales, Industrial Production and Inflation data; the Fed's Kashkari is also expected to be the latest to muse on US rate and growth expectations. No major UK corporates are due to release trading updates or results today, although investors will be listening intently for any further statements from BP regarding costs for the 2010 Gulf of Mexico oil spill disaster which, post-yesterday's market close, it indicated will rise a further US$5.2bn, taking the total cost to almost US$62bn, in order to bring the event to a final close." - Barry Gibb, Research Analyst
Companies: CYAN EXPN HFD MCRO
14 Jul 16
No sign of headwinds a as Micro Focus delivers a banner set of results. Micro Focus has already pre-announced the headlines from its 14 July financials, and shares have regained their upward move. We are relaxed about guidance; there was of course be a caution on currency (it reports in dollars) but the company upgraded guidance to -2% to 0% in the core, balanced with appreciably faster growth at SUSE at 18% vs our 6% growth. Micro Focus is the sector’s TSR all-star – we still see a return this year (NetDebt/EBITDA of 2.3x) on our return assumption. In our view the rating is too cheap, with EV/EBITDA 10.3x and dividend yield 6.0%. We are relaxed with our on-going Buy and increase our target price to 2052p (2034p).
Companies: Micro Focus International
12 Jul 16
Panmure Morning Note 12-07-2016
Our Conviction List returned -3.2% over the last 12 months; this was set against the DS Small Companies index that returned -15.5% over the same period. Since its inception in 2010, the Conviction List has outperformed the market in 13 of 17 periods and a reinvested Conviction List would have returned 235% since its inception against a reinvested DS Small Companies index that would have returned just 22%. Our Q3 portfolio reflects our outlook for a slowdown in UK growth during the second half of 2016. Downside risks to domestic growth stem from the uncertainty of the EU Referendum result, but cyclical growth was already slowing as a rebound in energy costs and ongoing austerity was set to weigh on growth. A bright spot for equities is the increasingly dovish Federal Reserve, now expected to leave US rates unchanged throughout 2016. The relentless drive lower in corporate and non-corporate fixed income yields continues to provide a valuation underpin for global equities.
Companies: AGY BOY CTH HFG INF MERL MCRO MCL SMS RR/ TED WEIR ZPLA PANR
11 Jul 16
Conviction List Q3 2016
Our Conviction List returned -3.2% over the last 12 months; this was set against the DS Small Companies index that returned -15.5% over the same period. Since its inception in 2010, the Conviction List has outperformed the market in 13 of 17 periods and a reinvested Conviction List would have returned 235% since its inception against a reinvested DS Small Companies index that would have returned just 22%.
Companies: AGY BOY CTH HFG INF MERL MCRO MCL PANR SMS RR/ TED WEIR ZPLA
05 Jul 16
Panmure Morning Note 05-07-2016
We learn that the UK Cabinet Office is finally to shut down its Millennium bug website as part of a cleaning up exercise. It is a nice reminder that the Millennium systems have not gone away (c70% of the world’s processing etc.) and as we noted in our latest valuation monthly Cobol is back on the Tiobe top 20 software list. Micro Focus has already pre-announced the headlines from its 14 July financials, and shares have regained their upward move. We are relaxed about guidance, there will of course be a caution on currency (reports in dollars) but we expect the company to reiterate the -2 to 4% decline in the core, balanced with appreciably faster growth at SUSE (caution our 6% growth there looks conservative). Micro Focus is the sector’s TSR all-star – we still see a return this year (NetDebt/EBITDA is 2.4x on our return assumption). In our view the rating is too cheap, EV/EBITDA 10.3x div yield 5.4% we are relaxed with our on-going Buy.
Companies: Micro Focus International
01 Jul 16
“Never let a good crisis go to waste”
History tells us that the way to make money from shares is to “sell when others are greedy and to buy when others are fearful”. Yet for many investors the current market is less Churchill, less Buffet and more ‘Texas hold 'em’. Our soundings through the industry in the wake of the UK decision to Brexit are mixed; there are currency translation winners, there are whispers of projects being iced, there are concerns about the UK being a less attractive destination for staff and some EU tech workers (a third of IT staff in London) unsure of whether to stay or go. There is a vacuum of leadership – regular compass points don’t seem to work right now. This should throw up some lucrative opportunities as the economy struggles to generate growth and should be a positive as the stock market appetite for tech – the growth guys - will then be whetted. Whilst the retreat in valuations is partly healthy – too high for too long (see table), in truth we find the latest ‘spring back’ a surprise. As always tech bounces up and down through the Summer months – and in that respect there is some ‘continuity’. To reprise – Sell in May usually works.
Companies: AVV CCC ESCH FDSA FTC TUNE FXI MCRO NETD OSI SGE SND SDL SPT SOG
Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on Micro Focus International. We currently have 44 research reports from 2 professional analysts.
|26May17 14:40||RNS||Results of General Meeting|
|09May17 15:03||RNS||Circular and Notice of General Meeting|
|09May17 07:00||RNS||Trading and Transaction Update|
|28Apr17 14:58||RNS||Total Voting Rights|
|25Apr17 07:00||RNS||Board Changes Pursuant to HPE Software Merger|
|21Apr17 17:43||RNS||Successful Syndication of New Facilities|
|11Apr17 16:14||RNS||Replacement: Director/PDMR Shareholding|
Frequency of research reports
Research reports on
Micro Focus International
Micro Focus International
25 May 17
N+1 Singer - Small-cap quantitative research - Momentum screen refresh + 9 focus stocks
We have refreshed our momentum screen for a second time, the previous refresh having been in January. As before, the screen selects the 25 stocks exhibiting the strongest momentum, according to our measurement method. From these we selected 9 to focus on. Since the last refresh the screen has significantly outperformed both the main small-cap and micro-cap indices against a background of strong and stable momentum generally. We also present here a wider study of accelerating and decelerating momentum stocks, because of interesting behaviour noticed previously. The interim conclusion is that these two characteristics are a significant differentiator of performance. We show on pages 7 and 8 the current most accelerative and decelerative stocks.
Companies: SDM EYE SOG MAB1 GFIN FARN LRM W7L TET
23 May 17
Deleted but not forgotten
Blancco Technology is a leader in data erasure. Data erasure is being increasingly driven by concerns over privacy, increased requirements for security and substantially tougher regulations. Despite some recent issues we initiate with a BUY rating PT 230p.
Companies: Blancco Technology
25 May 17
N+1 Singer - Morning Song 25-05-2017
Clipper Logistics (CLG LN) Earnings enhancing acquisition | Conviviality (CVR LN) Raising a glass to a positive YE update | Halfords Group (HFD LN) Confidence in FX mitigations + staycation benefits | Sigma Capital Group (SGM LN) Successful launch of the UK’s maiden PRS REIT, raising £250m | Small-cap quantitative research Momentum screen refresh + 9 focus stocks
Companies: HFD SGM SDM EYE SOG CLG MAB1 CVR GFIN FARN LRM W7L TET
22 May 17
N+1 Singer - Morning Song 22-05-2017
Carador Income Fund (CIFU LN) Strong primary and secondary market CLO activity | Future (FUTR LN) Delivering monetisation for investors | Horizon Discovery Group (HZD LN) New gene editing platform broadens capability; reiterate Buy | Midatech Pharma (MTPH LN) Lead candidate selected in glioma programme | Restore (RST LN) Positive start to 2017, lifting Target Price to 470p | StatPro Group (SOG LN) Trading in Q1 in line with expectations | Vectura Group (VEC LN) Positive Phase I VR942 data to be presented
Companies: VEC CIFU RST HZD MTPH SOG FUTR
24 May 17
Abzena (ABZA): TNT009 bought by Bioverativ for $400m (BUY) | Europa Oil & Gas* (EOG): Placing and open offer (CORP) | STM* (STM): A strong base with optionality (CORP) | Trakm8* (TRAK): Telematics contract win underpins FY 2018 (CORP) | Lombard Risk Management* (LRM): Lombard delivers the promised growth (CORP) | Mortgage Advice Bureau (MAB1): In-line trading update (HOLD) | Ideagen* (IGP): New hires demonstrating the sales focus (CORP)
Companies: ABZA EOG STM TRAK LRM MAB1 IGP
22 May 17
Water Intelligence* (WATR): Building a market leader (BUY) | Mortice* (MORT): Contract wins (CORP) |Avacta* (AVCT): Momentum building… Two reagent licences (CORP) | Revolution Bars (RBG): Forecast downgrades (BUY) | Shanta Gold (SHG): Completion of US$10.0m equipment financing (BUY) | Artilium* (ARTA): Small customer-base acquisition (CORP)
Companies: WATR MORT AVCT RBG SHG ARTA
22 May 17
N+1 Singer - StatPro Group - Trading in Q1 in line with expectations
StatPro has issued a brief but positive trading update to accompany today’s AGM, indicating that trading in Q1 is in line with expectations. Sales of both StatPro Revolution and StatPro Seven are progressing well and the pipeline for the remainder of the year is solid. As previously announced, today’s AGM will be outgoing Chairman Carl Bacon’s last. We make no changes to our forecasts, recommendation and target price.
18 May 17
Capital Markets Day
We attended the Blue Prism Capital Markets Day yesterday. There was no commentary on the current financials, they had provided a pre (April HY) close update on 13th April. Half year results will be released on the 27th June. With yesterday’s UK unemployment release showing a multi-year low in unemployment and another poor performance for productivity, the need for productivity improving technology is clearly very pressing.
Companies: Blue Prism
26 May 17
The last fortnight in technology has been highly eventful to say the least, giving us a lot to discuss in our maiden Tech Biweekly. Amongst the highlights of the past couple of weeks was the WannaCry ransomware attack, which was unprecedented in its scope and scale, the Chinese state backed Tsinghua Unigroup buying a minority stake in Imagination Technologies, SoftBank’s record US$93bn technology fund (and what could it buy!) and Blue Prism’s Capital Market Day.
Companies: BBSN ECSC EUSP FDM PPIX QRT SPRP SQS SNX
24 May 17
Record order book, sales and top line growth
‘You ain’t seen nothing yet’ was a phrase famously coined by US President Ronald Reagan back in 1984. 33 years on, it could equally apply to today’s hugely impressive FY17 prelims from Lombard Risk
Companies: Lombard Risk Management
17 May 17
N+1 Singer - Morning Song 17-05-2017
ATTRAQT Group (ATQT LN) Integration progress; potential for significant cost savings | Bodycote (BOY LN) Good trading, in line with management expectations | Brewin Dolphin Holdings (BRW LN) Positive interims showing Q2 FuM growth and margin accretion | Grafenia (GRA LN) Net cash clarification | Listed Law Conference More listed legal services companies expected | Raven Russia Ltd (RUS LN) Raising funds for further opportunities | Synairgen (SNG LN)Full year results; LOXL2 inhibitor due to commence Phase I in H2 2017 | Zotefoams (ZTF LN) Positive start to the year
Companies: RUS BOY BRW MUR GRA SNG ATQT BUR DRV GTLY ZTF
22 May 17
Next generation display collaboration
Nanoco has announced via RNS Reach a collaboration and joint development agreement with Kyulux to co-develop next generation display technologies. The aim of the collaboration is to combine Nanoco’s cadmium free quantum dots with Kyulux’s next generation OLED technology. The goal is to create supercharged hybrid OLED/Quantum dot devices able to emit greater amounts of light, which are required for the future generation of QLED/OLED televisions.
24 May 17
N+1 Singer - Sanderson Group - Solid first half and good visibility of full year targets
Sanderson has delivered interim numbers in line with the 4 May update. Group revenue increased 11% to £10.9m, driven by 20% growth in Digital Retail revenue and 7% growth in Enterprise Software revenue. Management does highlight a slightly more considered approach from some customers and protracted sales cycles with bigger projects. However, healthy recurring revenue (£5.4m to be recognised in H2) and a good order book (£2.8m) provide decent visibility of our full year targets. We therefore make some adjustments to our segmental profit assumptions, but leave headline group and profit estimates unchanged. The shares are trading on a FY 2017 EV/EBITDA multiple of 10.9x, which we think represents an unfair discount to peers (13.0x) given a robust business model, decent sales momentum and strong cash generation.
23 May 17
N+1 Singer - Morning Song 23-05-2017
accesso Technology (ACSO LN) Strong start to FY 2017 | Avon Rubber (AVON LN) Contract award helps underpin forecasts for FY18 | eg solutions (EGS LN) Clear visibility of full year targets | Entertainment One Ltd (ETO LN) EPS and DPS in-line, Debt rises in line with last update | Scapa Group (SCPA LN) Forecast upgrades; momentum strong | UDG Healthcare (UDG LN) Strong interims, FY guidance raised 2% | 1Spatial (SPA LN) Onwards and upwards | Driver Group (DRV LN) Turnaround on track |
Companies: ETO AVON SCPA UDG SPA DRV EGS
25 May 17
Lombard delivers on promised growth
The new management team has more than delivered in the first of the two year plan to transform LRM into a profitable and cash generative, leading-edge software supplier to the global financial services industry. That plan is predicated on the belief that development costs were not too high for the size of business, but rather the business was too small for the proper investment required to develop regulatory and compliance solutions for Tier-1 banks. Funds raised last summer are being utilised to step up sales to a more sustainable level, and this will allow the operational gearing of a software business to deliver profit and cash. In this first year we have seen revenues and earnings beat even upgraded expectations, and the £7.0m year-end net cash position is impressive after excellent H2 cash generation. The share price has responded but has a long way to go, and we increase our target price to 18.75p in line with the progress on delivery.
Companies: Lombard Risk Management