Circassia Group (CIR): Corp | Gooch & Housego (GHH): Corp | Intercede (IGP): Corp | Quartix (QTX): Corp
Companies: GHH IGP QTX CIR
Alumasc (ALU): Corp | Byotrol (BYOT): Corp | Lok'nStore (LOK): Corp | Omega Diagnostics (ODX): Corp | Quartix (QTX): Corp
Companies: ALU BYOT LOK ODX QTX
eve Sleep (EVE): Corp Good strategic and financial progress | Gateley (GTLY): Corp Prudently managing the business in uncertain times | K3 Business Technology (KBT): Corp Deferral of results; FY19 dividend cancellation | Minds + Machines (MMX): Corp FY 2019 beats forecasts and sets course for dividends | Pebble Beach Systems (PEB): Corp FY19 results postponed and extended loan facility | Pelatro (PTRO): Corp Postponement of results reporting | Quartix (QTX): Corp A strong start to 2020 curtailed by COVID-19
Companies: KBT MMX QTX PTRO GTLY EVE PEB
discoverIE (DSCV): Corp | Quartix (QTX): Corp | Sopheon (SPE): Corp | Xeros (XSG): Corp
Companies: DSCV QTX SPE XSG
FY 2019 is in line with last month’s trading update; the ongoing withdrawal from low-margin Insurance telematics being offset by excellent growth in Fleet which is now >80% of group business. New Fleet installations jumped 39% to 43,837 and clients grew 24% to 16,394. Continued investment in the US and France saw total subscriptions jump an impressive 37% and 36% respectively, while UK growth has accelerated again to 16%. Significant enhancements to web and mobile applications have supported a recent rollout across Europe; in Poland, Spain, Italy and Germany. Insurance continues to decline in line with the strategy of avoiding highly competitive contracts. The high levels of recurring revenue make an excellent base for future Fleet growth in the new and existing territories with a strong start to the year in all markets. We lift our TP to 475p.
Gemfields (GEM): Corp | Quartix (QTX): Corp | Trackwise Designs (TWD): Corp | Tristel (TSTL): Corp
Companies: QTX TSTL GEM TWD
KRM22 (KRM): Corp | Quartix (QTX): Corp
Companies: Quartix KRM22
This is an impressive post-YE trading update with raised guidance for FY 2019. We lift our estimates in response and extend our forecasts out to FY 2021. Fleet telematics continues to demonstrate strong growth, offsetting the ongoing transition away from low-margin Insurance business. Provisionally, group revenue will thus be in line with LY but with >80% from Fleet (FY 2018: 73%). Our adj. EBITDA expectations rise from £6.8m to £7.0m (FY 2018: £8.3m) and this generates an excellent FCF of £5.9m (FY 2018: £5.6m). Looking ahead, we lift FY 2020 revenue hopes but ease profit as Quartix signposts further investment to capitalise on the success in Fleet. As shown in the year just gone, investors can expect continued growth in Fleet subscriptions and revenue allied to strong cash generation over the next two years, driving the share price up towards our target.
Calisen Group. Potential Intention to Float. Owner and manager of essential energy infrastructure assets . Consolidated FY Dec 18 revenue £162.1m and operating profit £25.4m. Raising up to £300m in primary plus partial vendor sale. The Global Sustainable Farmland Income Trust will invest in a diversified portfolio of operational farmland assets located in major agricultural markets including the United States, Europe, New Zealand, Australia and certain countries within Latin and South America. Raising up to $300m. Due 28 February. Investment firm Nippon Active Value fund is seeking to raise up to £200m at an issue price of 100p per share via an IPO. The company aims to invest in a portfolio of quoted Japanese stocks with market capitalisations of up to $1bn. First day of dealings expected early February.
Companies: VRP TERN HMI QTX IND DXRX ERGO FARN AUG AVG
Indian ride-sharing firm Ola says it has started registering drivers in London as it prepares to launch in the U.K. capital. The company, which is backed by Uber investor SoftBank, said it would look to launch its services in the city "In the coming weeks." The announcement comes just a day after Uber was stripped of its London license by the local transport regulator. London is Uber's largest European market, where it counts 45,000 drivers and 3.5 million passengers.
Companies: TRAK SEE TCM TRCS QTX
Uber was stripped of its license to operate in London on Monday by the city’s transport regulator, which cited a “pattern of failures” that “placed passenger safety and security at risk.” TfL had first suspended Uber's license back in 2017, flagging concerns with the company's approach to safety. In its announcement, London's transport authority said it held issue with a change made to Uber's identification systems that allowed unauthorized drivers to upload their photos to other Uber driver accounts. This was a big event in mobility. We expect more pushback as themes of sustainability and consumer protection overtake convenience.
Big Tech is working on some form of smart glasses or headset that will change how we view the world around us. If glasses replace common gadgets like our phones or computer screens, it will mean big business to the company that comes out on top. We agree – we are enthused by the take-up of AR/VR over the long-term.
Companies: MVR TEK IMMO TERN TRAK CPX SEE TCM TCM TRCS QTX
Uber announced earnings Monday that beat analyst estimates on the top and bottom lines for its third quarter of 2019. But the stock fell as much about 5% after the company reported over $1 billion in net losses, topping its $986 million loss during the same quarter last year. The loss includes $401 million in stock-based compensation. Following the results, in an interview with CNBC’s Deirdre Bosa on Monday, Khosrowshahi (CEO) said the company is targeting adjusted EBITDA profitability in 2021. We believe Mobility companies will continue to struggle to convince the capital markets until investors see the model proven.
Companies: TRAK AMO CPX IQE MIRI QTX SEE TCM TRCS TRMR
The recent run-up in semiconductor stocks hit a speed bump Tuesday afternoon that could turn into much more. Texas Instruments gave a forecast that was much worse than expected in a Tuesday earnings report, raising questions over whether the cycle is anywhere near the trough as was widely expected.
Companies: ENET TRAK BGO BOKU CAPX CML EQLS IQE SEE TCM TRCS QTX XPP FIN NETW
Facebook Inc's ambitious efforts to establish a global digital currency called Libra suffered severe setbacks on Friday, as major payment companies including Mastercard and Visa Inc quit the group behind the project. The latest exodus leaves the Libra Association without any remaining major payments companies as members, meaning it can no longer count on a global player to help consumers turn their currency into Libra and facilitate transactions. Uber is buying a majority ownership stake of Cornershop, an online grocery delivery business serving Latin America in the latest step to diversify its revenue stream. The deal is expected to close in early 2020, according to a press release, with the current leadership at Cornershop continuing to lead the business and reporting to a board with majority Uber representation. Cornershop currently operates in Chile, Mexico, Peru and Toronto, according to the release. SoftBank CEO Masayoshi Son is considering changing his Vision Fund investment strategy to concentrate on companies with clearer pathways to profitability and public offerings, according to people familiar with the matter. Son plans to slow the pace of investment for Vision Fund 2 compared with his first $100 billion Vision Fund, which has deployed about $80 billion in less than three years.
Companies: TRAK ARB CPX MMX QTX SEE TECH TEK TCM TRCS TRCS
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The FY 2020 results are in line with our expectations and reflect the impact of the previously announced switch from large perpetual licences to recurring annual term licences during the year. Despite the COVID strictures, with its large global partnerships, D4t4 continues to close numerous lucrative data gathering and data management contracts with major blue-chips around the world. It is successfully converting a high proportion of its new sales to recurring revenue contracts, but this will sacrifice growth and earnings in FY 2020 and FY 2021. Nevertheless, with growing recurring revenue base, an exciting pipeline and a very strong balance sheet, D4t4 is very well positioned for continued long-term growth and security.
Companies: D4T4 Solutions
CentralNic's CMD gave us new positive insights into the company's investment case. CentralNic's organic growth is stronger than we thought, the Direct division generates high ROI, the monetisation market was shown to be critical to the domain name market, Team Internet's market leadership was further reinforced and acquisition opportunities were shown to be larger than anticipated. These investment views are not reflected in CentralNic's low valuation multiples, in our view.
Companies: Centralnic Group
CentralNic’s capital markets day (CMD) on 24 June 2020 introduced the divisional management team and provided insight on each of the three key segments as they will report in FY20: Indirect (Wholesale, Registry); Monetisation (Team Internet); and Direct (Retail, Corporate). We have picked out what we believe are the four key themes from the CMD: FY20 performance, COVID-19 and seasonality; organic growth; M&A; and, pulling it all together, the benefit of scale. CentralNic continues to trade on an FY20 EV/EBITDA of 9.1x and a P/E of 15.8x, a material discount to its peer group, with our DCF indicating further share price upside. M&A could bring CentralNic’s multiples down further.
GB Group reported strong performance in FY20 and started taking measures to preserve cash in Q420. Trading in Q121 has been mixed and while management is unwilling to provide guidance for FY21, it has confidence that in the longer term it is well positioned to benefit from the acceleration in digital transformation that should drive demand for its identity data intelligence services. We have upgraded our EPS forecasts by 5% in FY21 and 3% in FY22.
Companies: GB Group
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
LoopUp has provided an update on trading to coincide with today’s AGM…in essence, the group continues to see activity “materially” above pre-COVID levels, and is confident of exceeding expectations for 2020. We choose to leave our forecasts (that we believe to be roughly in line with consensus estimates) unchanged for now, in advance of further detail likely with a fuller H1 update in early July.
Companies: Loopup Group
FY20 results: inline with guidance
Redcentric has agreed a settlement with the FCA whereby net purchasers of stock between November 2015 and November 2016 will be compensated at the equivalent of approximately 17p per share, payable as preferred as part shares/part cash, all shares, or all cash. To assist in funding the compensation in the event of an all cash settlement, the group has agreed a provisional placing for £5.8m at 110p, in addition to use of treasury shares and existing cash resources. The relief from the shadow of the FCA investigation will be a welcome fillip to business prospects, re-opening opportunities with the private sector and confirming no further action, which would have adversely affected public sector bid prospects, and M&A. With the accompanying trading update, 1Q21 performance in recurring revenue sales orders is mildly ahead of 1Q20, and further cost savings lead us to nudge March FY21 EBITDA expectations from £23.6m to £24.0m (+1%) despite trimming revenue 3% due to a COVID-based slowdown in lower-margin non-recurring revenue. With relief from the uncertainty of the FCA investigation, we lift our target price to 160p, as the group can finally return to business as usual.
Touchstar is a supplier of mobile data computing solutions and managed services to a variety of industrial sectors. This morning, the group has provided a trading update to coincide with its AGM.
Encouragingly, the business continues to perform in line with the trends seen at the time of the full year results in May and the Board anticipates Touchstar will be profitable in the six months to 30 June. Cash generation is again reported to have been good, with ‘significantly higher cash balances' expected to be reported than at the beginning of the year (FY 2019A £850k). The group has drawdown a CBIL of £150,000, which provides additional liquidity alongside its undrawn banking facilities of £300,000. Looking ahead, the order book is a more normal level than last reported at over £500,000 at the end of June, which compares to an exceptionally strong £1.2m at the beginning of the year.
Oxford Metrics has delivered solid 1HMar20 results, with sales of £15.0m (PY: £16.1m) and adj. PBT £0.3m (PY: £1.7). Within this, Yotta demonstrated continued ARR progression (up +15% to £6.8m) while at Vicon, the division added additional bluechip customers, further validating its industry leading position. Progress was, however, held back by lockdown restrictions. £1.1m of expected orders slipped to post period, but have now largely been fulfilled. Had they occurred as expected group sales would have been flat y/y. Looking ahead, CV19 related uncertainty leads us to withdraw forecasts. At this stage we expect disruption to be short-lived. As such – and considering OMG’s persuasive track record - we continue to view the company as a long-term winner in this growth industry.
Companies: Oxford Metrics
The YE trading update reveals that management has actioned its proposed switch from a perpetual licence to a SaaS business during FY 2020. We therefore adjust our forecasts as moving customers from one-off perpetual licence contracts to recurring revenue contracts takes longer to implement and revenue is recognised over a longer period. Despite COVID-19, D4t4 made good progress in Q4 since the January update (with its own raft of contract wins), and several more contracts have been secured on a multi-year ‘as-a-service’ basis, providing additional recurring revenue visibility (now 46% of total sales) over the next three years. Management does not expect any significant interruptions in customer service or its distribution channels. However, actions taken to mitigate the impact of the virus include home working; preserving cash; and securing additional liquidity from the bank if required. The final dividend and FY 2021 forecasts are under review, however the £0.5m share buyback programme continues.
A concerted move into managed services is improving the quality of revenues. Management is targeting the growth in recurring revenues to cover the cash cost base of the company by 2022. This event will mark a material derisking of the investment case and is the pathway to the share price doubling or more over the next 2-3 years. Buy.
Blackbird plc* (BIRD.L, 15.0p/£50.4m) | Brave Bison Group plc* (BBSN.L, 1.375p/£8.4m) | CML Microsystems plc (CML.L, 258p/£44.2m) | Eckoh plc (ECK.L, 61.5p/£156.2m)
Companies: BIRD BBSN CML ECK
OMG has today announced a “significant multi-year” Alloy contract win with South Gloucestershire Council, this being the company’s cloud-based asset management solution. A differentiating feature of Alloy is the range (or variety) of assets it can handle, and consequently, Alloy will able to provide a single view from which all relevant public infrastructure can be managed and maintained. No numbers are given, but we remind (as at prelims) OMG had a pipeline consistent with adding £1m of ARR in FY20. We therefore assume that this contract contributes to this figure, and so make no changes to either divisional or group forecasts. Similarly, we note that following FY19 (which saw some delayed ‘go-lives’) it is pleasing to see a major contract win announced relatively early in this financial year.