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The group’s year-end update points to stronger than expected Q4 trading, boosted by robust sales in North America that translated efficiently to upside on profitability expectations. Cash performance has once again been stellar, resulting in net cash of $35m, considerably higher than forecast, partly profit drop-through and partly from tight working capital management. We are therefore upgrading our FY 2020 EPS by 25% to 33.2ȼ. The strong cash position also results in a boost to the total dividend, giving a dividend yield of 6.7%. We raise our price target from 285p to 435p, based on a target P/E of 17.0x offering upside to the current P/E of 13.8x.
Companies: Somero Enterprises, Inc.
Last night, Qualcomm delivered a keynote speech at its Automotive Redefined event where it iterated its partnership with Seeing Machines for DMS on its ‘Snapdragon Ride' platform. In the same keynote speech Qualcomm noted that it has won 20 different OEMs (through many different tier 1 suppliers and partners, including Seeing Machines) which are going into production in 2021 with its Gen 3 Snapdragon Ride platform. We do not see this as meaning that these OEMs will automatically adopt Seeing Machines DMS in 2021 for these platforms (other PR materials imply the optimised DMS solution is not yet ready), but the implication from the Qualcomm slide (on the page 2) is that a number will. We also believe it is unlikely that these OEMs will chose an alternative DMS solution for these vehicles when they want or require it. With regulatory compliance needed for NCAP and EC by 2024, it is our view that most of these OEMs will eventually source Seeing Machines DMS for at least their EU sales using the scalable Gen 3 Snapdragon Ride platform. In a separate press release Seeing Machines and Qualcomm have also announced a deepening collaboration with Seeing Machines further optimising its technology stack for the Snapdragon Automotive Cockpit Platform architecture as the two companies market the combined framework to automotive Tier-1s and OEMs. In addition, Seeing Machines's previously announced Embedded Development Kit (EDK) for Qualcomm's Snapdragon Automotive Cockpit Development is now available to select Tier 1 and OEM customers. We increase our target price to 12.9p from 8.6p based on increased confidence in our long-term automotive market share expectations.
Companies: Seeing Machines Limited
Today’s FY20 trading update indicates that the business did not miss a step in FY20. Underlying profitability was very marginally ahead yoy and net debt has peaked and, with the factory move completing later this year this, will fall increasingly quickly. Looking forward, FY21 will see significant growth, underpinned by the LAICA contribution, but importantly underlying organic growth is expected to be c.10%. Trading has started well in the new financial year providing confidence in forecasts at this early juncture. Strong organic and acquisitive growth drives an 10% increase in profitability and the dividend for FY21. With the platform to deliver significant growth in revenue and earnings over the next five years, 15.5x current year earnings is appealing. Particularly for a business with such defensive cash flows. This is evidenced by a prospective dividend yield of 3.6%. We increase FY20 profit forecasts marginally to reflect guidance in today’s statement and lower net debt.
Companies: Strix Group PLC
Inspiration Healthcare has announced it expects revenues and profits for the year ending January 2021 to be ahead of market expectations. Revenues are expected to be at least £36.5m and adjusted EBITDA at least £4.9m. We have moved our FY21E forecasts into line with these expectations, which are c3% and c11% ahead of our previous forecasts for sales and adjusted EBITDA, respectively. We note the key driver of the upgrade was performance at S.L.E., which Inspiration Healthcare acquired in July 2020. We reiterate our Buy recommendation on Inspiration Healthcare.
Companies: Inspiration Healthcare Group PLC
TP Group experienced a material improvement in trading in H2/20, with the period accounting for nearly two thirds of the group's £3.8m FY20 Adj EBITDA, mainly due to the timing of some larger contracts. The order book remains robust at c£69m (up c20% YoY); however, the pandemic continues to create uncertainty around the timing of contract deliveries, and consequently, our forecasts remain withdrawn and our rating Under Review. Notwithstanding, we believe the significant operational changes made over the past year help to accelerate the business' software and consulting services, and leave the group well positioned for future growth.
Companies: TP Group Plc
Although 2020 will probably go down in history as one of the most challenging years experienced during our lifetime, it will also likely be chronicled as one of the best years for the recognition and appreciation of science. As we entered 2020, the COVID-19 pandemic was in its infancy. However, it rapidly evolved through the exponential rise in infections and mortality globally. Much has been achieved during the past 12 months in the fight against COVID-19, but, as we enter 2021, there are considerable concerns about the emergence of a mutant version of the virus and the second wave that we are now facing.
Companies: AVO ARBB ARIX BBGI CLIG DNL FLTA ICGT OCI PCA PIN PHP RECI STX SCE TRX SHED VTA YEW
Itaconix has confirmed a positive conclusion to FY20, with revenue, EBITDA and net cash all slightly ahead of expectations. This builds on the positive trends reported in October’s interims, driven by successful customer product launches. Itaconix enters FY21 with good momentum and strong sustainability credentials. We plan to introduce FY21 forecasts alongside full year results.
Companies: Itaconix plc
Filta's FY20 trading update confirms a much stronger performance for the group in H2 versus that in H1, boosted by an increasing number of customers opening up during the summer period. Despite Covid-19 significantly affecting the restaurant and leisure sector, a strong focus on cash management meant that Filta reduced its net debt (excluding leases) by £0.4m YoY to £0.5m. With a healthy sales pipeline, solid balance sheet cash position (£4.2m), and vaccine roll-out progress, management has more certainty in the business' outlook than at any time over the past 12 months. Notwithstanding, the speed at which trading conditions will return to normal remains unclear (eg potential impact from new strains of the virus emerging, unexpected delays in vaccine production etc). As such, we refrain from reinstating forecasts, and maintain our Hold rating.
Companies: Filta Group Holdings PLC
Directa Plus has had its contract with OMV Petrom extended and increased. The contract, initially awarded in July 2019, was for the provision of decontamination and oil recovery services using the Company's proprietary Grafysorber® technology. The initial value of the contract was €150k (of which €75k was delivered and invoiced in 2020) and this has now been increased to €410k, the balance of which is expected to be fulfilled by June 2021.
Companies: Directa Plus Plc
The Group made strategic progress in FY20A despite the onset of COVID-19. Management acted swiftly implementing a strict cost reduction programme, ensuring robust cash management. This combined with strengthening the Board and management teams, exploring new revenue streams and investing in technology to drive efficiency gains has positioned the Group to overcome short-term demand fluctuation. We are confident the Group will capitalise on the operational gearing within the business as demand levels revert to pre-pandemic levels. Corollary to this we expect financial performance to materially improve in H2/21 and beyond.
Companies: Velocity Composites Plc
Journeo is a specialist provider of information systems and technical services to the transportation sector. Following on from Friday's announcement confirming a further £1.3m order under the Transforming Cities Fund framework, the group has this morning announced a 1-year extension to its existing framework agreement with First Bus, worth an estimated £1.8m, the majority of which is expected to fall into the current financial year.
Companies: Journeo plc
Initiating with a Buy rating. We initiate our coverage of Proton Motor Power Systems (“Proton Motor”) with a BUY rating and a target price of 201p. Our valuation equates to a market capitalisation of £1.47bn, compared to a current share price of 65.5p and a market cap of £479m.
Companies: Proton Motor Power Systems Plc
Capital Limited has released its Q4 and FY2020 trading statement this morning. Overall it shows 2020 was a strong year for the company with revenue growing 18% and most other operating metrics growing positively with it – see Fig 1. We have adjusted our forecasts accordingly and also to take into account the mining services contract for the Sukari Mine which the company won late last year. The latter is a game changer for Capital and its investment case in our view; turbo charging revenue growth, enhancing margins and diversifying cashflow all of which should lead to materially higher valuation multiples. We raise our PT to 127p.
Companies: Capital Limited
Journeo is a specialist provider of information systems and technical services to the transportation sector. This morning, the group has announced that under its existing Transforming Cities Fund framework contracts, it has received further orders for its advanced public transport information systems.
Seeing Machines has announced that it has licensed its Occula® Neural Processing Unit to OmniVision Technologies Inc. This advances the relationship from the MOU announced in September 2020 and builds on a relationship that is over five years old, with the two organisations having worked on multiple automotive programmes with a number of Tier 1 customers.
