RBG Holdings pre-close trading update to June 30th confirms a strong H1 performance for RBL, the Group’s law firm, with revenues up 36% like-for-like to c.£11.4m YoY. Convex, the CF boutique, understandably has faced COVID headwinds, with most of its H1 pipeline deferred indefinitely, whilst Litigation Finance continues to grow its pipeline and financing commitments on a longer term view. Due to continued uncertainty from COVID we withdraw our forecasts this morning, with a view to reinstating once more clarity on H1 outturn and momentum into H2 is available.
Companies: Rosenblatt Group
We initiate coverage on RBG Holdings (formerly 'Rosenblatt'). The Group floated in May 2018 and has since evolved into a consolidator of high margin professional services businesses. Amongst its peers, the Group is the only to operate a 'hybrid model; it owns Rosenblatt “RBL” – a litigation-focused law firm, Convex – a sell-side CF boutique acquired in September 2019, and a nascent litigation finance arm. Exposure to contingent fees and litigation assets offers upgrade potential beyond forecasts, whilst the contentious nature of the core services provided should support margins and growth. The shares currently trade on a 4.6x FY20E EV/EBITDA multiple (7.5x P/E), with a dividend yield of 8.0%.
FY19 results – well positioned
Caribbean Investment Holdings. Incorporated in Belize . CIHL primarily operates financial services businesses through its subsidiaries The Belize Bank Limited and Belize Bank International Limited, both located in Belize and international corporate services through Belize Corporate Services Limited. CIHL shares are also traded on the Bermuda Stock Exchange. Lord Ashcroft holds 75%. No capital raise. Due 28 April. £36m . 2019 net profit US$ 10.7m
Companies: PANR TON PRSM TAM KMK RBGP LID MERC BARK TM17
Solid Trading Update
Trading Update Inline – Signs of life in the market
We update our model and forecasts following RBG Holdings’ interim results and the acquisition of Convex. Discretionary sale of participation rights in DBAs introduces a hedge against downside risk on forecasts, whilst upside risk exists in the group’s litigation funding and exposure to potential DBA/CFA wins – something we attempt to quantify. On new forecasts we set a price target of 145p (from 120p), and retain our Buy recommendation.
Following continued delays of a Brexit agreement, few sectors within the UK market have remained attractive to investors despite low valuations. One sector which has continued to outperform despite the political drama has been the UK video gaming sector (henceforth UK gaming), which we are fans of. We believe a combination of sector-leading growth, strong cash conversion and timely cyclical positioning support our positive view on the UK video gaming sector.
Companies: ABBY AMS ANX ARS ATYM AVON BLVN PIER BUR CGS CAML CDM CSRT TIDE CYAN DTG DEMG ELM EMR FPO FDEV GTLY GENL GHH GRI GEEC GKP HMI HAYD HEAD HILS HTG HUR IBPO IOG INDI JHD JOG KAPE KEYS KWS KCT KGH LAM LIT LOK MACF MANO MOD OXIG PCA PANR APP SRE PHC PMO RBW RMM RBGP REDD RSW RNO ROR SUS SCPA SEN SHG SOLG SOM SUMO TM17 INCE TWD TRAK TRI VNET VTC ZOO ZTF
RBG Holdings (formerly Rosenblatt Group plc) released their interims for the six months to June 19, showing revenues of £10.2m, Adj EBITDA of £3.8m, and Adj EPS of 3.2p. As expected, the Group’s Dispute Resolution and Employment divisions have performed well in the current market, whilst Corporate and Real Estate have seen a slowdown. We are encouraged by developments in the Group’s litigation funding arm and we maintain our 120p PT. The post-period opening of a White Collar Crime division and acquisition of Convex, an M&A boutique supports the investment case. Buy
Rosenblatt has announced the acquisition of Convex Capital Limited, a specialist corporate finance boutique, for total consideration of £22m. In line with the Group’s acquisition approach, most of the consideration (c.60%) is to be paid in shares, and we highlight these are to be issued at a premium to the current share price (first tranche at 120p). The high margin (>50% EBITDA) profile of Convex should prove immediately earnings enhancing, and the opportunity for cross-selling and diversified earnings supports the investment thesis on the shares. We make no changes to numbers this morning. Re-iterate Buy.
AMRYT PHARMA PLC— a biopharmaceutical company focused on developing and delivering innovative new treatments to help improve the lives of patients with rare or orphan diseases have raised $60m before expenses and will relist on the AIM Market on the 25/09/2019. VAALCO Energy, Inc. (NYSE: EGY), an independent energy com pany focused on developm ent and production assets in West Africa, today announces its formal intention to seek a Standard Listing on the Main Market of London Stock Exchange ("LSE"), to complement its existing Listing on the New York Stock Exchange. Kaspi.kz, the largest Paym ents, Marketplace and Fintech Ecosystem in Kazakhstan w ith a leading m arket share in each of its key products and services, announces today the expected publication of a registration document that has been submitted for approval to the FCA and its potential intention, subject to market conditions, to undertake an initial public offering. Registration document approved for Helios Towers. The Group provides essential network services, flexible infrastructure solutions and reliable power supply to mobile network operators in five African growth economies. Revenue increased 7 per cent. year-on-year to US$191m (H1 2018: US$178m), with Adjusted EBITDA up 15 per cent. year-on-year at US$99m (H1 2018: US$86m) for the six months ended 30 June 2019.
Companies: ANG LSAI OVB ADAM OEX ODX MPE MWE SAV RBGP
Rosenblatt have this morning announced the launch of its new White Collar Fraud & Financial Crime division. The division will sit within the group’s Dispute Resolution practice (c.73% of FY18A revenues) and will be headed by Manraj Somal – the previous UK head of Corporate Crime Legal at KPMG LLP. We see this news as a positive; opening up the possibility of cross-selling of services to Rosenblatt’s clients and building the group’s market position, whilst reducing revenue concentration. The shares currently trade on 10.9x FY20E P/E, offering a compelling entry point, with upside optionality beyond our forecasts. Reiterate Buy – 120p PT.
We note recent share price weakness, driven by thin volumes on non-company-specific news. Rosenblatt’s shares were off 7.9% yesterday (down 33.3% from recent highs of 123p) , which we believe is an errant overreaction to the release of a short report on a different stock. Rosenblatt remains one of our top picks for 2019, as included in our Arden Best Ideas note in January. Our investment thesis remains wholly intact and unchanged, and we reiterate our buy recommendation with a 120p PT; 35% upside.
Due to a change in sector focus Cenkos Securities plc has suspended coverage of Rosenblatt Group Plc. Our previous recommendation and forecasts can no longer be relied upon.
Please contact Cenkos for further information.
Research Tree provides access to ongoing research coverage, media content and regulatory news on Rosenblatt Group.
We currently have 47 research reports from 5
Successful businesses ‘never let a crisis go to waste’. Indeed since an otherwise strong Q1’20 was interrupted by COVID-19, Mpac has further streamlined operations, accelerated R&D and launched new remote equipment diagnostic/acceptance testing, virtual reality & other ‘Industry 4.0’ services.
A number of REITs have the ability to thrive in current market conditions and thereafter. Not only do they hold assets that will remain in strong demand, but they have focus and transparency. The leases and underlying rents are structured in a manner to provide long visibility, growth and security. Hardman & Co defined an investment universe of REITs that we considered provided security and “safer harbours”. We introduced this universe with our report published in March 2019: “Secure income” REITs – Safe Harbour Available. Here, we take forward the investment case and story. We point to six REITs, in particular, where we believe the risk/reward is the most attractive.
Companies: AGY ARBB ARIX BUR CMH CLIG DNL HAYD NSF PCA PIN PXC PHP RE/ RECI SCE SHED VTA
Caledonia's Q2 2020 production from its 64% owned Blanket mine in Zimbabwe was 13.5koz gold. This was an increase over the same period last year of 6.2%, leaving Caledonia with a first half production of 27.7koz – well ahead of this time last year (24.7koz) and on track to meet its 2020 full year guidance of 53-56koz (WHI etc. 55.5koz).
Spectra Systems Corporation is a provider of machine-readable high-speed banknote authentication, brand protection technologies and gaming security software. The company has announced that it has executed a new contract with a major world central bank to ‘enhance existing authentication sensors to detect a unique type of counterfeit notes'.
Companies: Spectra Systems Caledonia Mining Corporation Plc Com Shs Npv
Marlowe delivered a strong performance during FY20A, with +7% organic revenue growth, and improved Adj EBITDA margins. Integration of acquisitions is progressing well, and with receipt of c£40m gross proceeds, Marlowe is well placed to accelerate the consolidation of its markets. We leave our forecasts unchanged and reaffirm our Buy rating.
Jubilee today takes us through its H1 2020 numbers, which, importantly, cover the critical COVID-19 initial lockdown period in South Africa. The numbers continue to show growth and progress, with headline H1 2020 operational earnings up 54% to GBP 12.8 million – the sixth consecutive, six-monthly period of double-digit growth. The cash position increased to £10.8m despite settling the final payment of £1.4m for the acquisition of additional PGM and chrome rights as well as settling historical debt of £2.5m, all while commissioning the Zambian Sable Refinery.
Following the appointment two months ago of new CEO Rob Richards, VDTK's newsflow has been encouraging in recent weeks, and we view this morning's announcement as a further affirmation of the company's renewable energy solution. Today's RNS highlighting a contract to supply ultra lightweight, flexible solar panels to Black Tulip Minerals SA, of Peru, is, at over €200,000, the latest in a string of recent positive announcements, while also taking the company into a completely new sector which it had announced as a target area.
Image Scan is a specialist in the field of X-ray imaging for the security and industrial inspection markets. The company has announced, as part of its organic growth strategy, a new partnership agreement with a major security technology company that will lead to the launch of a new range of security X-ray screening systems for the international market. Competitively priced, and leveraging Image Scan's IP and direct and indirect international channel partners, the new system will be a high performance, competitive conveyor X-ray machine, suitable for security checkpoints in government and commercial buildings around the world. Importantly, these systems will also allow the company to increase its recurring service and support revenue.
Companies: IGE JLP VDTK
Scotland’s only quoted housebuilder recorded its highest ever weekly number of reservations following the reopening of its sales offices after the prolonged construction lockdown north of the border. As a result, Q1 2021 sales are expected to be “significantly higher” Y/Y, after the inevitable disruption caused by Covid. In this morning’s FY 2020 trading update, the Group also highlighted the widely reported trend across the housing market to larger homes with gardens, Springfield’s ‘sweet spot’ in our view.
Companies: Springfield Properties
Tipping point: Proven, revenue generating, now scaling
Successful K3 Capital placing to raise £30.45m (gross) at 150p to fund the £9.3m acquisition of Randd UK Ltd, an R&D tax credit specialist with an LTM EBITDA of c.£2.0m, with a margin of c.50% and revenues typically contracted for 5 tax years with many recurring thereafter, followed by future potential deals in SME exposed markets. K3 has established itself as an innovative company that is able to effectively gather, generate and mine large quantities of data in order to scale up M&A services to SMEs. Transferring these lead generation capabilities to adjacent SME markets can allow rapid growth from proven models, at scale.
Companies: K3 Capital Group
The group has issued a trading update for the year ended 31 May 2020 highlighting an adjusted EBITDA of at least £11.5m which is close to the group’s original expectation, despite widespread disruption to operations in the second half. The statement notes ample liquidity headroom in excess of £10m with net debt (excluding IFRS 16 lease liabilities) reducing in H2 to £7.5m as planned. The Group’s order book and prospect pipeline remains strong overall and the update is accompanied by the announcement of two meaningful contract wins in the nuclear sector. A further significant positive development is the grant of outline planning permission for the conversion of the group’s 7 acre Hayward Tyler site in Luton into residential housing for up to 1000 dwellings. Whilst financial guidance for FY2021E remains withdrawn at this point due to on-going uncertainties around the impact of COVID-19, we see the group continuing to demonstrate good resilience, operating at close to normal levels, supported by exposure to multiple markets and a strong customer base that includes governments and their agents.
Initiation of coverage and introduction of FY 2020E forecasts
Image Scan is a specialist in innovative X-ray technology. The company operates in the security and industrial inspection sectors supplying high-quality portable and fixed image acquisition systems for non-destructive testing to governments, security organisations and law enforcement agencies worldwide. Despite the macro backdrop, FY 2020E is expected to see a return to revenue growth, with a strong interim performance and second half order book underpinning our expectations for the financial year to September 2020. The sales outlook beyond is more uncertain due to COVID-19, hence we will introduce estimates for FY 2021E in due course. However, the investment the company has made in product development alongside sales and marketing, particularly into North America, bodes well in our view for the business once a degree of normality returns.
Companies: Image Scan
Much has been written about the effects of the virus on the world and on the stock market. Here is one analyst’s take on some of the likely impacts on the way we should look at companies. This article was originally produced as a blog, “10 Changes Post Virus”, which was published a few weeks ago.
Companies: AGY ARBB ARIX DNL GDR NSF PCA PIN PHNX PHP RE/ RECI STX SCE SIXH TRX SHED VTA
Updating forecasts following 2019 results
Companies: Trackwise Designs
The Norcros operating companies largely performed relatively well in challenging market conditions (in both the UK and South Africa) in FY20 though year end trading was affected by COVID-19 lockdowns, as flagged previously. The group’s financial position appears robust following management actions (including foregoing an FY20 final dividend) and well-placed to both contend with weaker near-term markets and the pursuit of market share gains from a position of relative competitive strength. Our estimates remain suspended at this time.
Revenue for FY 2020 is ahead of expectation and we adjust our forecast accordingly. Sales are growing at an impressive rate; >50% pa despite COVID-19 and the virus had no effect on the company’s ability to deliver projects with 23 new customers live in Q4. We note COVID concerns are causing some delay on contract decisions, and sales would have been even stronger but for that. These delays do lead to caution on FY 2021, and we ease back our forecasts on more prudent management guidance. However, with the recent £5m equity placing, PCIP has plenty of cash to continue to invest in rolling out its exciting secure payments proposition. This cloud-based solution can be deployed remotely and assists call centres in moving agents to WFH and still collect payments securely. The outlook remains very bright with continued rapid growth expected.
Companies: PCI Pal
Today’s full year trading update highlights the severe impact of the lockdown at what is traditionally Springfield’s busiest time of year. More importantly, looking forward, construction has now recommenced on all sites and all sales offices reopened last week. It proved to be a record week for reservations, suggesting significant pent up demand and brighter prospects for FY21. Springfield is now focusing on delivering its strong order book and growing its sales pipeline. We believe the Group will rebound strongly, noting its reputation for building high quality family homes in good locations and an excellent track record of growth over many years.