Avesoro Resources (ASO): Corp Q2 and H1 financial results with updated forecasts | Europa Oil & Gas (EOG): Corp Holmwood drill site lease renewal denied | Lighthouse Group (LGT): Corp H1 ahead of expectations | Taptica (TAP): Corp Improving margins lead to another upgrade | Telit (TCM): Corp Interims suggest recovery is on course | Utilitywise (UTW): Corp Challenging H2
Companies: ASO EOG LGT TRMR UTW TCM
Nucleus Financial—independent wrap platform provider . FYDec17 revs £40.36m and PBT of £5.1m. Offer TBA. Due late July.
Kropz PLC-Intention to float by the emerging plant nutrient producer with an advanced stage phosphate mining project in South Africa and exploration assets in West Africa
Immotion Group - aims to become the market leader in "out of home" Immersive Entertainment Experiences. Offer TBA. Due 12 July
Yellow Cake will use its expertise to generate value through the ownership of physical U3O8 (Uranium) together with a range of activities and opportunities connected with owning physical U3O8. Acquiring supply contract for up to $170m. Due Early July.
Strongbow Exploration (TSX:SBW) intends to dual list on AIM. Holds rights to the South Crofty underground tin mine, a former producing tin mine located in the towns of Pool and Camborne, Cornwall . The project is estimated to require the Company to raise £25 million over the next 18 months to progress to a production decision. Offer TBS. Due June.
Companies: AST BST MMH EUA ANGS IMO APC UTW
D4T4 Solutions (D4T4): Corp Strong H2 lifts EPS forecast and quality of earnings | Lok'nStore (LOK): Corp Pipeline of new stores in an undersupplied market | Paragon Entertainment (PEL): Corp Trading update | Savannah Resources (SAV): Corp Mutamba mineral sands project update | Tax Systems (TAX): Corp Prelims on track | Tristel (TSTL): Corp EPA approval – on track to launch in 2019 | Utilitywise (UTW): Corp Legacy issues being dealt with | ZOO Digital (ZOO): Corp Further positive trading update
Companies: D4T4 LOK PEL SAV TAX TSTL UTW ZOO
Avesoro Resources (ASO): Corp High grade intersections from infill drilling at New Liberty | Cambridge Cognition (COG): Corp FY results – R&D will drive value | Cello (CLL): Corp Core global brand leveraging digital expertise into health | CityFibre (CITY): Corp Third FTTH City - Peterborough | Quixant (QXT): Corp Place your bet on this ecosystem | Sopheon (SPE): Corp Strong momentum continues | Utilitywise (UTW): Corp Focus on the cash flow
Companies: ASO COG CLL CITY QXT SPE UTW
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 | 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. Offer raising £30m at 165p with mkt cap of £100m . Due 9 Feb.
Companies: NTBR SDI MAI AUTG KOD ARE GFIN UTW AVN SDX
Netcall* (NET): Strong trading update (CORP) | Sopheon* (SPE): Another strong trading update (CORP) | Nasstar* (NASA): positive trading update (CORP) | Utilitywise* (UTW): Temporary suspension of trading (CORP) | Altitude* (ALT): Positive progress (CORP)
Companies: NET SPE NASA UTW ALT
2018 is the year of the Great Exhibition of the North. This summer, Newcastle and Gateshead will play host to a government-sponsored, 80-day marathon of events. Billed as the largest event in England this year, the Great Exhibition will showcase the best of the North East’s art, culture, design and innovation and we expect it to highlight the region’s ongoing success in high-end engineering, technology and life sciences. It may also reflect on the success of the North East’s plcs, the most striking example of which is Sage’s transition from 1980’s start-up to £9bn FTSE100 stalwart. We remain on the look out for the next Sage and expect the region to continue to produce attractive IPO candidates following Ramsdens’ success last year. Overall 2017 was a positive year for the region’s listed companies, one highlight of which was the takeover of Quantum Pharma, an N+1 Singer client, by Clinigen for £150m. We are confident that 2018 will be another successful year. Our top regional picks this year are Hargreaves Services, Zytronic and Applied Graphene Materials.
Companies: AGM BWY GRI GRG HSP IDH KMK REDD RFX UTW VNET ZYT
Dechra Pharmaceuticals (DPH LN) Significant European acquisition | Northern lights The year of the Great Exhibition
Companies: DPH AGM BWY GRI GRG HSP IDH KMK REDD RFX UTW VNET ZYT
Utilitywise* (UTW): Accounting policy change (CORP) | LiDCO* (LID): Japan – new distributor and new monitor (CORP) | 4imprint* (FOUR): Strong growth continues (CORP)
Companies: UTW LID FOUR
Edison Investment Research is terminating coverage on Utilitywise (UTW). Please note you should no longer rely on any previous research or estimates for this company. All forecasts should now be considered redundant.
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Topic of the quarter: It’s alive! Infrastructure and assets in general have traditionally been built to provide a fixed service and are maintained and renovated to a fixed schedule – dead
and dumb. Technology will completely change this. Sensors and wireless networks have the potential to allow assets to ‘talk’ to us. These living, smart assets will be able to tell us when
they need maintenance, how efficient they are being and provide the data that will directly influence their construction, availability and use. The implications for construction costs through to operating costs and the ability to service changing user needs are very significant. The Support Services, Construction and Technology sectors need to work together to maximise this potential, recognise and harness the power of data, and invest in and embrace change. These are daunting challenges in highly competitive markets where politics play a
role, different skill sets (that are currently in short supply) are needed and shareholders are looking over management's shoulders. However, the prize for those companies who get it right is significant, and the risk from not changing much greater. There are positive early signs with Crossrail providing tangible examples of Smart Infrastructure using innovative sensors.
Companies: FOUR DSCV BOOT CLL CNCT FCRM LOK PPH RNWH STAF UTW WATR VANL WYG
Since our first quarterly at the end of 2015, 12 of the 59 companies we included in our valuation tables have been bid for. Given those tables were simply designed to show the range of companies present within the sector, not a hit-list of undervalued opportunities, the fact that 20% of them have been taken over is worth looking at in more detail. At a time when warnings and share price collapses from the likes of Interserve, Carillion, MITIE, DX and Capita and Serco have dominated newsflow, it should be remembered that the sector is broad and highly varied both in terms of business model and performance. If the troubles of a minority of the sector drag down wider valuations then the evidence is that there is an army of potential bidders (reinforced by the weakness of sterling) ready to take advantage.
Companies: FOUR DSCV BOOT CLL CMS CNCT FCRM LOK PPH RNWH STAF UTW WATR VANL WYG SVCA
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Seeing Machines has released a trading update demonstrating the business is performing better than expected on key metrics: Revenues of A$39.7m were 13% ahead of our expectations of $35.1m and cash of A$38.7m was 21% ahead of our expectations of A$32.0m. We believe this strong end to the financial year reflects the continued demand for the company's Fleet product by sophisticated fleet owners and that the key home markets of Australia and New Zealand have been less affected by COVID than feared. We believe this strong cash performance should reduce the perceived funding risk weighting and help the valuation recover towards previous levels. We iterate our Buy recommendation and 7.2p price target.
Companies: Seeing Machines Ltd.
Byotrol released a further positive trading on the back of a strong Q1 FY 2021, citing product sales in excess of £3.4m in the quarter and for the business to significantly exceed full-year market forecasts. With the order book at the end of June still being c.£2m (similar to at 30 April) and continued improving supply chain management for biocidal ingredients, we have upgraded forecasts to reflect this outlook. We increase FY 2021 revenues, adjusted EBITDA and EPS by 15%, 38% and 55%, respectively. Consequently, we upgrade our target price to 10p, at which level the stock would trade on 3.7x sales. As previously indicated, we think the pandemic should result in a secular shift towards improved disinfection prevention, reducing the prospect of FY 2021 being a one-off exceptional performance. The prospect for further upgrades should current monthly revenues extend for longer than anticipated and additional IP monetisation events should not be discounted, in our view, either.
Companies: Byotrol Plc
While Ince's FY20 results are complex given the various movements in reported figures associated with accounting for the Ince International consolidation, our assessment is that there are emerging signs of increasing operational effectiveness and reasons for optimism for investors. The operating environment and outlook remains opaque and thus we keep our forecasts and recommendation for the Group withdrawn at this time.
Companies: The Ince Group plc
2019 has been a transformative year for Velocys, setting the company up for further progress in the current year and beyond. Despite COVID 19 restrictions the company has continued to develop with the current year seeing further funding secured, the delivery of reactors to Red Rock Biofuels and the securing of planning permission at the Altalto sustainable aviation fuel project. The JDA at Altalto has also been strengthened with British Airways and Shell providing a further £1m funding. Demand for sustainable fuel, especially for aviation, and for negative carbon solutions is growing and Velocys is one of the few companies able to deliver here.
Companies: Velocys Plc
XPP announced interim results for the period ended 30 June 2020 with record order intake, strong revenue growth and a stable financial position. XPP has reinstated its dividend for Q220 of 180 per share. The Company has available resources of ~GBP61m through bank facilities and cash balances should it be required.
Companies: XP Power Ltd.
The successful delivery of reactors to the Red Rock Biofuels project demonstrates the company’s ability to manufacture to specification and on time in our view. Progress on this project represents a key milestone and, with commissioning expected next year, will provide further evidence of the ability to create sustainable road and aviation fuel from biomass using Velocys technology.
XP Power reported a strong performance in H1 considering the challenges presented by COVID-19 and a material uplift in orders provides a record backlog at the start of H2. With its diversified production capacity, a focus on higher complexity product targeted at growth markets and the ability to provide customer support globally, XP believes it will be in a stronger position post-COVID-19 than before. We have revised our forecasts to reflect the strong order intake, higher operating costs and higher share count.
FY20A results are broadly in-line with forecasts set prior to Covid-19, evidencing a far stronger H2A delivery to the year. Fulcrum has now refocused on a number of growth opportunities based on long-term strategic priorities for the UK, including the move to a net zero economy. MoM momentum is building so far in FY21, such that pre-Covid trading levels are expected to be met in Q2/21. Given this, a record order book and strong balance sheet, we see a brighter future for Fulcrum ahead.
Companies: Fulcrum Utility Services Ltd.
The investment in feedstock provision for the Uskmouth power station conversion adds an element of de-risking at a crucial time for financing the project in our view. The deal increases feedstock options and allows SIMEC Atlantis exposure to additional profit in a potentially improving waste management market. The proposed c.£6m funding also provides additional resource to the £9.4m cash announced at the end of June, allowing the company to continue to move forward on several fronts.
Companies: SIMEC Atlantis Energy Ltd.
Trading in both divisions has clearly improved post the COVID-19 lockdown and Norcros’s robust liquidity position has been maintained. Equally, the focus on cash/cost management, new product innovation and taking market share is undiminished, leaving the company well placed to navigate market conditions. Our estimates remain suspended pending further normalisation of market conditions.
Companies: Norcros Plc
Drax is a major enabler of the energy transition. It is the only UK investment opportunity of scale that can offer exposure to BECCS, long duration storage and low carbon spinning reserve, all essential to deliver what is now a legal requirement for net zero emissions by 2050. We initiate coverage with a central case valuation of 505p.
Companies: Drax Group Plc
Journeo is a specialist provider of both on and off-vehicle tailored solutions to the transport community. This morning, the group has announced a three year framework renewal with Abellio bus London for the provision of CCTV and associated equipment. The contract is expected to be worth c.£2m over the course of the three year period, with the potential for additional orders of on-vehicle technology solutions worth up to £1.2m over this time.
Companies: Journeo Plc
The FY20 results report that after a challenging H1, the Group’s performance had started to improve, with a substantial increase in order inflow. This was disrupted by the impact of COVID-19, which impeded operations towards the end of FY20. Despite this, EBITDA (postIFRS 16) of £4.6m was broadly in line with pre-COVID-19 guidance (c.£5m). Given continued economic uncertainty, guidance is still withdrawn. Whilst valuation is challenging in the absence of forecasts, if management can deliver a recovery in earnings to historic levels, we believe the current valuation looks undemanding. We see no reason why the improving trajectory of the business should not resume once the economy is on a more stable footing. Indeed, trading has started to improve, with revenue expected to return to pre-COVID-19 levels in Q2, and medium term prospects are positive.
The ‘Moving Forward Act', the strongest automotive safety bill in decades, has now been passed in the House of Representatives. The bill is focused on advancing safety technologies proven to reduce crash and harm and to make sure strong safety standards are in place to save lives. The bill, which now needs to be passed in the Senate, will mandate automatic braking, lane-keeping, blind-spot detection, event data recorders as well as DMS in all cars and trucks sold in the US from 2024. This aligns with the European General Safety Regulation, which passed into law in November 2019.
However, in the EU, the European Association of Automobile Manufacturers (ACEA) has requested a 2‐year delay for the introduction of the 2022 Euro-NCAP protocols due to the projected lengthy time that will be needed to recover from the effects of COVID-19. Euro NCAP has agreed, and a delay is now expected to the 2022 and 2024 rating. The new dates will give automakers and Tier 1 suppliers more time to incorporate the necessary changes given the events of recent months with a number of manufacturers announcing 12 month delays to new models.
RMI demand, c. 75% of Epwin’s revenue, has been stronger than expected since the recommencement of operations. Extrusions revenue in June and July were up +10% yoy. The New build and Social markets have been slower to return but have picked up pace in early August. Working capital build up has been well managed, net debt is down £10.0m to c. £21.0m, since March. The strength in Epwin’s end markets mirrors what other companies in the sector have experienced recently. It implies that the positive dynamic seen is more than just catch up in demand and might be a structural shift in consumer behaviour. As a result, FY20 performance will be materially better than might have been feared back in March. It remains too early to predict the longevity of the trend and guidance remains withdrawn, but with visibility steadily improving it can be hoped that it might be reintroduced in the coming weeks.
Epwin is a professionally managed, well invested business with market leading share and operational improvements driving future returns. The balance sheet is robust with net debt not exceeding c. 1.0x normalised EBITDA during lockdown and the business will not need additional funding. On historic numbers, the shares are trading on just 6.8x earnings.
Companies: Epwin Group Plc