Core Industrial REIT—established to invest in Irish-based industrial properties, predominantly located in the Greater Dublin Area . Vendor placing and new funds to a total of €225m, Target gross proceeds €207m. | TruFin—holding company of an operating group comprising three growth-focused FinTech and banking businesses operating in three niche lending markets: supply chain finance, invoice finance and dynamic discounting. Offer raising £70m at 190p with market cap of £185m, expected 21 Feb | Polarean - The medical drug-device combination companies operating in the high resolution medical imaging market. Offer TBC.
Due 22 Feb | Block Energy—a NEX Listed UK based oil exploration and production company whose main country of operation is the Republic of Georgia, looks to join AIM end of February 2018. Offer TBC
Companies: CVSG ACSO GRPH PIM FARN TRE ANG SRES CTG
The stock dove 75% after it announced its agreement with Bayer had fallen through.
Companies: Plant Impact
Companies: RWS G4M SRC PIM GAN ARTA
Totally (TLY) - Sch 1 for £11m RTO of Vocare, a provider of integrated urgent care services to the NHS throughout the UK. £76.8 million rev in the year ended 31 March 2017. Totally to address Care Quality Commission concerns. Due 24 Oct.
Central Asia Metals (CAML) -RTO of Lynx Resources. Anticipated market capitalisation at Admission: £404.8m. Raising £113m at 230p. Acquiring the SASA zinc-lead mine in Macedonia from Solway Industries. Due 15 Dec.
Alpha Financial Markets Consulting— Global provider of specialist consultancy services to the asset and wealth management industry. Due Oct. Revenue of £6.7 million for the year ended 31 March 2011 to £43.6 million for the year ended 31 March 2017. Offer TBA. Due 11 Oct.
Springfield Properties—Scottish housebuilder. “Our turnover exceeded £100 million for the first time this year and now we employ around 500 people. This IPO is the next step in our growth.” Expected Mid October. Offer TBA.
OnTheMarket—Intention to float on AIM to raise c.£50m which will be used to fund the growth of the OnTheMarket.com portal, already the third biggest UK residential property portal provider. Expected valuation £200m to £250m.
Glenveagh Properties— Dual Dublin and London IPO. Irish homebuilder with a principal focus on the Greater Dublin Area. The Group will combine an attractive land bank with a Gross Development Value of c.€1.1 billion. Seeking to raise gross proceeds of up to €550 million. Due 10 Oct
Russia’s En+, owned by Russian aluminium tycoon Oleg Deripaska, has assets in metals and energy, including hydropower. reported to be seeking dual London and Moscow listing raising $1.5bn TMF Group , which provides tax, admin and legal support services, reported to be seeking London IPO to raise c. £200m.
People’s Investment Trust—Objective of sustainable wealth creation. Also to list on the Social Stock Exchange. Targeting £125m raise on 17 Oct. No performance fees or executive bonuses in order to focus on long term rather than short term performance.
ContourGlobal LP—Report on Bloomberg that the thermal energy power generator is considering a London listing.
Companies: UJO PIM KOD PPC CPX EPO DX/ MOGP JOG BEM
Inventories of Ag Chem products in Brazil higher than expected, hitting sales in Q4 and 2018
On Friday we hosted our third “speed dating” lunch with the management of five very interesting and contrasting companies not under our formal coverage: Be Heard, Byotrol, Gfinity, Oxehealth and Plant Impact. Each company gave a concise and punchy overview of its business and investment case to a group of fund managers, before rapid fire Q&A. Below we summarise our thoughts on each company with more details inside the note, plus some relevant slides. We believe that all five companies are well-managed and well worth a closer look - we intend to repeat this efficient and popular format for engaging with management teams.
Companies: PIM BYOT BHRD GFIN
Futura Medical (FUM LN) Multiple licensing discussions underway | Low & Bonar (LWB LN) Solid Q1, trading in line | Nuclear options Significant long-term opportunities for UK companies | RhythmOne (RTHM LN) Trading update – profit and cash ahead | Uncovered Gems - Speed Dating Lunch A Famous Five for the future?
Companies: AUG FSJ WYG LWB FUM DRV PIM BYOT CARR SFR PRV BHRD GFIN RHL RTHM
Just as it looked like Indonesian palm oil producer MP Evans (MPE LN) had seen off the hostile intentions of Kuala Lumpur Kepong (KLK MK) for at least 12 months, KLK has begun a stakebuilding process by looking to pick off willing sellers. First to go was Fidelity, an unsurprising sale given its removal from the Board supporters list on the improved 740p bid from KLK. Having picked up additional shares in the market since then, KLK now holds 11.19% of the company.
Companies: CWK MPE SIP PIM NWF DKL CARR WYN
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
Companies: MAYA MTR ABBY PIM LION IDEA SYS1 PLUS FDEV CNR
VSA Agri Thought for the Month
Companies: DKL PIM RE/ CARR MPE CWK GNS ZAM
Hutchison China Medi (HCM.L) | Petards Group* (PEG.L) | Milestone Group (MSG.L) | Limitless Earth (LME.L) | Range Resources (RRL.L) | European Metals Holdings (EMH.L) | Stellar Diamonds (STEL.L) | Plant Impact (PIM.L) | Proteome Sciences (PRM.L) | Premier African Minerals (PREM.L)
Companies: PEG RRL PIM STEL PRM PREM LME EMH HCM CTEA
Leading Brexiteer Andrea Leadsom was appointed Secretary of State for the Department of Environment, Food and Rural Affairs (DEFRA) this month. Perhaps one of the most unenviable jobs in the new UK government, given the importance of EU subsidies to the country’s farming sector. Agra Europe estimated last year that up to 90% of UK farms would not survive without them.
Companies: WYN PIM CARR MPE CWK GNC GNS DKL
VSA Agri Thought for the Month
It is hard to forecast the precise impact on UK farming from the recent Brexit vote but we would highlight a few areas:
Subsidies: Annual subsides of c£3bn are currently paid to UK farmers. Farming Minister George Eustice has previously said that support would be maintained following a Brexit vote. Farmers will be anxious to see this happen. However, money may be saved through a cap on the maximum payout
for the largest farms.
Regulation: How will regulations change as we exit the EU Common Agricultural Policy? Farmers will look for regulations to be simplified and more tailored to the UK.
Exports: A weaker currency should increase the attractiveness of UK farming exports, offset by any increased cost from raw material imports and any newly imposed trade tariffs.
Labour: UK farming is heavily reliant on seasonal agricultural workers, many from other EU states. The UK government has previously looked to encourage the employment of more UK workers on-farm but how will things change for those bringing in workers from abroad?
Companies: ZAM MPE PIM CWK CHOC NWF AEP DKL
Byotrol is an Aim-listed anti-microbial play which floated in 2005 and underwent reorganisation, including appointing experienced new management, in Q4 2013. We had an initial presentation from the company on its trading statement on 25th February and look forward to learning more. Byotrol’s USP is in developing and commercialising hygiene products with IP protection and superior characteristics, especially in terms of long-lasting action. Byotrol addresses the B2B market in areas like surface sanitisers in food retail (eg used in 560 M&S stores), food production and hospital healthcare (in trial with NHS/ISS) - all areas with clear regulatory drivers and high profile problems like MRSA. Key initiatives which could transform the group include: seeking US EPA registration for surface care and a marketing/development agreement with Solvay. In the B2C market, Byotrol has a number of existing products.
Companies: BYOT AGM ELM SCPA SYNT VCT ZTF PIM SYN ITX VRS CRDA
There are plenty of things to worry about at the start of 2016: a subdued and recently downgraded global growth outlook; oil price volatility and a still-falling rig count; the potential for a hard landing in China; the Brexit vote and its implications for sterling. Nevertheless, we think this should be a positive year for the UK chemicals sector. There is plenty of evidence that consumer-driven chemicals demand is picking up and, to a degree, offsetting weaker industrial demand. Meanwhile, a significant currency tailwind is developing for sterling reporters. This may be short-lived but it is not yet fully factored into forecasts. At an individual company level, 2016 should provide initial answers to some intriguing questions: Will Victrex see off the competitive threat from Solvay? How will Paul Waterman refine and reinvigorate Elementis’ strategy? How great are Calum MacLean’s ambitions for Synthomer? Our BUY recommendations are Croda, Victrex and Zotefoams and we are positive on both Elementis and Scapa (both Corporate).
Companies: AGM ELM SCPA SYNT VCT ZTF BYOT PIM SYN ITX VRS CRDA
Research Tree provides access to ongoing research coverage, media content and regulatory news on Plant Impact.
We currently have 15 research reports from 4
Treatt demonstrated its strength and resilience in H120, as so far the COVID-19 pandemic has not had any adverse impact on trading performance. Of course, this is in part due to the categories in which Treatt operates, with some of its products being used in household cleaners, which have witnessed a global spike in demand. Nevertheless, the steady performance is testament to the management and culture of the business, which have been able to withstand the unexpected and exogenous shock. H219 and H120 were affected by a global weakness in citrus raw material prices, which in turn affected revenue growth. Citrus prices have now started to firm and we expect growth in this category to return in H2. We leave our forecasts mostly unchanged but roll forward our DCF and hence our fair value rises to 560p (from 530p previously).
COVID-19 update – continuing to operate, div. suspended
Companies: Scapa Group
Byotrol provided a positive trading update for the year ending 31 March, with (i) revenues in line with expectations at £6.0m, (ii) a positive adjusted EBITDA of c.£0.25m, which excluded a material but delayed licence contract that was closed in mid-April and (iii) cash at 31 March of £1.7m (ex-£0.3m that slipped into April). Despite the supply chain challenges that country lockdowns have had to fulfilling the order book, which stood at a record £2m at the year-end, Byotrol expects to generate record product sales in the first quarter of the year. Whilst we are not introducing FY 2021 forecasts at present, we raise our target price to 9p to reflect the enhanced outlook and prospect for growth. At 9p, the EV is £37m. A 4.0x EV/Sales would imply revenues of c.£9m, which given the outlook and fundamental shift that we are seeing in disinfection, is achievable in our opinion.
There has been much comment on the fact that equity markets in the US and Europe have been shrinking for some years now, certainly in terms of the number of quoted companies, if not in total market capitalisation (MCap). This paper has been written with the assistance of the Quoted Companies Alliance (QCA) and focuses on the evidence for such in the London market and, in particular, that for smaller and midcap companies. It assesses that evidence and considers explanations. Finally, we ask why it matters, and assuming that it does, what practical steps can be taken to reverse the trend. Successful public markets have been a key part of the United Kingdom’s economic success for generations, even centuries, and we should not allow them to wither on the vine.
Companies: AVO AGY ARBB ARIX ASAI DNL GDR HAYD NSF PCA PIN PXC PHP RE/ RECI RMDL STX SCE TRX TON SHED VTA
Covestro’s management gave some further insights on Q2 developments during its virtual sellside round table. Having gone 2/3rds through the second quarter, management indicated some recovery was to be seen in its core volumes in June having looked into the order book.
Management’s recovery scenario is based on getting back to the pre-crisis GDP level in 2023, which is rather more moderate than our picture but does not force us to take immediate action.
When is a bubble not a bubble but a fundamental and lasting shift in investor sentiment towards a sector? Despite repeated calls from the biotech bear camp that the end is in sight for the continued optimism enjoyed by the sector we continue to enjoy a burst of IPOs, fundraisings and M&A deals.
Companies: EDEN MTFB TILS SDI GDR IMM BMK AVO AVCT
Interim results to 30 September pointed to a substantial narrowing of EBITDA losses and provided comfort that the company is on track to deliver a positive full year EBITDA. The company is in early discussions with parties in the US to replace Byotrol24’s in-store Target trial with one in which it is not funding the up-front marketing costs. Additionally, it is working on a number of monetisation opportunities that should contribute to H2. We make no changes to forecasts and reiterate our price target of 7p, mindful of the value of its IP and the fact that the business is expected to be cashflow-positive in FY 2020.
The announcement of renegotiated contingent payments to the vendors of Medimark Scientific is seen very positively as it enables the integration of the two businesses to begin immediately, rather than waiting until April. We expect the integration to generate both cost synergies as well as revenue synergies as the established salesforce at Medimark cross-sells some of the Byotrol product range. A final payment of c.£290k will be paid, in addition to the issuance of 9.36m shares, comparing favourably with our forecasts that assumed a £450k payment and issue of c.11m shares. We make only modest changes to forecasts and reiterate our target price of 7p.
US & German manufacturing PMI hits lowest readings since 2009, UK manufacturing PMI heads below 50, BorgWarner expects material financial impact from customer production halts
Companies: AVON CGS HAYD HEAD HILS JHD RNO SCPA TWD TRI ZTF SOM GHH
COVID-19 Trading Update
Companies: Haydale Graphene Industries
Against a backdrop of generally negative company announcements, Hardide bucked the trend by releasing solid interim results for the 6 months ended March 2020, noting limited impact to date from COVID-19 and a positive trading outlook. Furthermore, the allimportant move to new facilities and corresponding capacity expansion is both on track and on budget. Several of Hardide’s end markets will clearly be feeling the impact of COVID-19. However, we feel the importance of Hardide’s technology to its customers by extending the useful life of components and its diversity of end markets across multiple sectors including oil & gas, aerospace, flow control, power generation and precision engineering is enabling it to weather the storm. We leave our forecasts unchanged and see potential for an upgrade should end markets maintain strength and H2 margins match those of H1.