Eckoh’s fast growing US SecPay business and robust UK business model have minimised the impact of lockdowns with u/l H1 revs down just 3% yoy and profits flat. ECK reintroduces FY21 guidance, expecting H2 revenues comparable to H1 and FY21 AOP comparable to FY20. US SecPay is now a meaningful >30% group revs, growing 80% in H1 and with larger customers now re-engaging. We expect growth to continue in FY21 and beyond; the opportunity is multiples of current sales (FY21E $13m- +60% yoy). We similarly expect the cash cow UK business to continue to recover and return to c. 5% secular organic growth over time. It is especially continued success with US SecPay that is likely to lead to group FCF exceeding that of £5-6m achieved in FY20/19 over time and a FCF yield well above 5%. That’s attractive.
Companies: Eckoh plc
An H1 update to September reveals a robust performance notwithstanding a challenging macro backdrop - sales (ex. Coral) are just “slightly lower” y/y, indeed if also excluding an intentional move away from hardware-based Support, we estimate core revenue grew c.+7%. This was underpinned by continued strong growth in US SecPay: +80% y/y, now ~32%/group sales, while in the UK, we estimate sales fell by c.-11%. Here, Covid impacted transactional sales (rather than any permanent loss of business) such that a future recovery is likely in our view. Despite the lower sales and GP, it‘s impressive to note profitability is expected to be in line with 1H20 (AOP: £3.4m) following tight cost management. Looking ahead, there’s reason to be optimistic, as in US SecPay, large enterprise tenders that were paused in H1, may resume in H2. Meanwhile in the UK – and despite the headline sales figure – business activity is already reassuringly strong: total new business won grew 8% y/y in H1, this includes the major £4m/6yr contract with Capita and TfL announced in August. In addition, closing net cash of £12.9m (£2m FCF) continues to offer strategic options. We reiterate that this a high quality company, with a robust and cash generative UK business, while leadership position in a nascent and fast growing US market.
Following on from Capita’s announcement earlier this week, Eckoh announces it has secured a 6-year £4m contract renewal with Capita for the provision of Congestion Charge Services to TfL. Such contracts typically consist of minimum guarantees and volume related elements. Given the far greater reach of the LEZ and ULEZ and their 24/7 operating times, we imagine volume related elements could mean the contract ends up significantly in excess of the £4m mooted today over time. The high repeat revenue element of Eckoh’s UK business has helped it weather lockdown headwinds, with revenues and profit in April/May at comparable levels to the prior year. Today’s announcement is further validation of both repeatability and the ability to upsell in its highly cash generative UK business.
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
We are impressed that trading in the tough April/May period has been on a par with last year. Some delayed US SecPay deals have gone live and others are still in the pipeline, temporarily on hold. Volumes in UK consumer-facing businesses are picking up. FY20 results show a business firing on all cylinders and after the initial CV19 shock, we see numerous opportunities for growth, notably in the US, but also in the UK.
Eckoh’s trading update today implies record FYMar20 results in line with market expectations. While not disclosed today, we estimate that the US saw u/l organic revenue growth of c. 18%, and within that, Secure Payments estimated growth of c. 70%, driving EPS growth of some 80% yoy. These results and today’s CV19 update are in line with our update from 31st March. Some delays have emerged in US SecPay decision-making, but deals should conclude in due course. As we flagged, the UK has seen some volume declines, but expect a rapid recovery when lockdown ends. Looking beyond short-term disruption, the stand-out opportunity for Eckoh is US SecPay. Here Eckoh has momentum and is market leader in a nascent market with a patent-protected solution. All that for an historic FCF yield of c. 5.5%.
Interims reveal a particularly strong trading period for the group, with underlying organic sales growth accelerating to +20% c/c (previously mid-single digit), underpinned by both strong trading in the US (+c.50% u/l) and the UK (+11%). Additionally, Eckoh benefitted from a large perpetual Coral licence deal, bringing reported sales growth to +37%. In our view, these results speak to the strong proposition, opportunity and momentum Eckoh across its markets. We leave FY u/l forecasts unchanged but acknowledge they look more than achievable. Currently trading on a 5% FCF yield, rising to 6% in FY21E, we think Eckoh offers a unique investment opportunity.
Eckoh’s H1’20 trading update confirms another period of strong delivery, with the group trading in line with recently upgraded expectations. The board expects to report double digit revenue growth in both the UK and the US alongside “excellent” levels of contracted business. We are particularly encouraged by the increase in total business contracted in the US ($14.4m, +15% y-o-y) given the comparative period included the $7.4m US Secure Payments contract. With the recently launched Eckoh Experience Portal stimulating growth in the UK and a large untapped opportunity in US Secure Payments, we see no reason why the current positive momentum should not continue going forwards.
African Export-Import Bank a supranational financial institution w hose purpose is to facilitate, prom ote and expand intra- and extra- African trade, of its potential intention to publish a registration document, the Bank hereby confirms its intention to proceed with an Initial Public Offering. The GDRs are expected to be admitted to the standard listing segment of the Official List of the FCA and to trading on the Main Market of the LSE. DNEG Limited intends to apply for adm ission of its Shares to the premium listing segment of the Official List of the FCA and to trading on the London Stock Exchange's main market for listed securities. The Offer will be comprised of new Shares to be issued by the Company (to raise expected gross proceeds of £150m). Admission is expected to take place in November 2019.
Companies: ECK KOOV PLUS TSI GWI ORR ANIC TCM KEFI SIS
Eckoh’s Capital Markets Day yesterday highlighted the progress which has been made on the Customer Engagement side of the business. With all products now successfully integrated into the Eckoh Experience Portal, the group is uniquely placed to enable digital transformations within their customers. We were shown several live case studies where the group has been able to deliver both an improved experience for end users and significant cost savings for clients by implementing a connected cross-channel customer experience. Last month’s AGM Statement and Trading Statement confirmed strong underlying momentum in both divisions and we see plenty of scope for growth within Customer Engagement, which will augment the large untapped opportunity in US Secure Payments.
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LoopUp has announced a very strong H1 period, in line with the previous trading update and reflecting a number of months of exceptional performance. This is allowing the business to invest in the major identified new opportunity, to provide telephony within Microsoft Teams, where the early signs are extremely positive. We look forward to further detail on the Teams pipeline and sales levels over time.
Companies: LoopUp Group PLC
H1 Results: Ready to reinvest
Companies: First Property Group plc (FPO:LON)First Property Group plc (GXZ:BER)
After a challenging 2H21 for the events and traffic data business, Tracsis has delivered FY results to July in line with the reassuring August trading update. With £48m (FY19: £49.2m) revenue, the group has quantified an estimated £10m set back to COVID-affected activities within the Traffic & Data Services (T&DS) Division, implying underlying outperformance compared with expectations for the higher-margin Rail Technology & Services (RT&S) Division. Forecasts describe prospects: continuing growth in FY21 and FY22 for RT&S, with two major contracts identified in latter stage of negotiation; and a still hampered FY21 for events and traffic surveys within T&DS – but forecasts for FY22 show a return to an ex-COVID environment, regaining the original growth path. With £17.9m of cash (no debt) and delivering multiple fundamental elements of the UK rail ecosystem, Tracsis has weathered the storm better than expected, with organic and acquired growth prospects as strong as ever. Target 900p reiterated.
Companies: Tracsis plc
The H1 results are as announced in the October update; COVID delayed several new contracts until earlier this month, leaving H1 revenue at £5.1m. However, management remained comfortable with a FY sales forecast of £21.7m on the basis of a strong pipeline and the substantial tranche of annually renewed revenue billed each H2. Reassuringly, the new contracts have now been signed for both the Celebrus Customer Data Management (CDM) solution and the Celebrus Customer Data Platform (CDP), and they cover a range of verticals from financial services to automotive manufacture and ecommerce provision. With significant net cash, D4t4 is in a strong position for long-term sustainable growth on the back of rapidly growing global demand for CDP/CDM. It remains confident on prospects in new geographies (N America and APAC) and new use markets (fraud, risk analysis and healthcare) plus a high level of recurring revenue. Our forecasts and target price remain unchanged save for a tweak to cashflow and raised dividend expectation. We reiterate our 310p target price.
Companies: D4t4 Solutions plc
The Panoply has reported very robust interim results and we upgrade our FY21 PBT/EPS estimates by +5%/+10%. Revenues leapt +58% to £21.2m with LFL growth of +18% (Q1 +10%, Q2 +26%). EBITDA more than doubled to £2.9m, with LFL growth of +37%. Cash conversion was strong and the group has declared a maiden interim dividend of 0.2p. The group had a strong sales backlog of £17.5m at 1st October and we are pleased to note that it is increasingly winning large, multi-disciplinary contracts notably Bloomberg Philanthropies, Land Registry and Planning Inspectorate. These contracts would have beyond the capabilities of the individual businesses before they joined The Panoply and therefore in our view securing these £4m+ contracts vindicates the group strategy. We raise our PBT forecast by +5% to £4.9m (£4.7m). On a maximum deferred consideration basis, EPS is 5.1p (4.8p) while assuming shares are issued at 150p rather than our previous assumption of 120p gives EPS of 6.4p (5.8p). We have re-run our sensitivity analysis using the current share price of 200p and this indicates PF EPS of 10p could be delivered in 2023. We raise our target price to 220p (was 180p) and retain our Buy recommendation.
Companies: Panoply Holdings Plc
LoopUp has published a trading update detailing a modest miss for FY20, but a materially lower-than-expected run rate as the business moves towards FY21. The shortfall is attributable almost entirely to a faster-thanexpected and more dramatic decline for the LoopUp meetings product in sectors outside the core focus Professional Services segment. We make reductions in estimates to reflect this revised outlook – clearly this is disappointing, but there are a number of positives within the parts of the business likely to drive long-term value.
Nanoco has secured just under £1m grant funding for a life sciences project to develop a heavy metal-free quantum dot testing kit to detect COVID-19. The project will last 18 months and represents a potential third segment for generating future revenues in addition to established activities in sensing and display applications. We make minor adjustments to our estimates, although there is no impact on EBITDA or cash flow.
Companies: Nanoco Group PLC
Digital transformation services provider The Panoply has reported a strong H1 21A financial performance in our view. Revenue grew 58% YoY during the period (+18% YoY organically) and adjusted EBITDA by 142%, reflecting the impressive commercial progress made and the impact of acquisitions. Client billings showed a solid improvement on H1 20. Commentary on the outlook is positive and underpinned by a £17.5m sales backlog to March 2021. Overall, we believe this is a very positive release from The Panoply and that the group remains well placed to achieve its targets.
Location Sciences (LON:LSAI), a world leader in location verification for mobile advertising, recently released a trading update for the current year (year-end Dec). The update covers the three product lines — Verify, GeoProtect, and Insights. We provide an overview of these on p2.The update outlin
Companies: LSAI PXAMF 59LA
Interims describe a steady business where existing clients are generating typically high levels of recurring income but new clients are hard to come by and discretionary spend is under lockdown pressure. Complex managed hosting is fundamental to online processes or presence for many, but the decision to undergo the inevitable digital transformation was too risky for many clients to consider in an obviously disrupted 1H21. Digital transformation acceleration is likely post-COVID, with the need for remote cloud services being all too clear – and iomart’s prospects remain firm, just currently muted, which has restrained the impact of new customer wins and continuing attempts to drive enterprise sales. We trim forecasts, joining consensus, which was already lower, taking revenue and EBITDA down 2% in FY21 and FY22, and adj. dil. EPS down 4% and 6%. We look to robust performance and new CEO Reece Donavan’s current actions, to pick up the pace in 2H21 – benefitting FY22 & FY23, with a simplified structure and renewed vigour one expects from management change. Organic prospects will gain strength as normality returns, while acquisitions are unusually absent but will inevitably return. Target 400p reiterated.
Companies: iomart Group plc
Mirriad Advertising’s H120 numbers show strong top-line progress, up 109% on H119 and 26% ahead of H219. H120 revenues were up over 185% year-on-year in China and Singapore, with market confidence rebuilding. There are very promising new agreements in place with US media owners, with early moves in large adjacent markets, such as music video. There are advanced negotiations ongoing with Tier 1 entertainment platforms. These prospects significantly increase the attraction of Mirriad’s proposition to advertisers. Cash burn is now under £1m per month, with end-August cash of £13.3m (no debt). Market forecasts for FY20–22 are unchanged.
Companies: Mirriad Advertising plc
IQE has announced that the strong performance in H120, which resulted in record first-half revenue, has continued into the second half. It has updated FY20 revenue guidance from at least £165m to over £170m, with adjusted EBIT guidance remaining at the mid-single-digit million level. We have updated our FY20 and FY21 forecasts accordingly, giving adjusted PBT upgrades of 34% and 10% for FY20 and FY21 respectively.
Companies: IQE plc
ACT announces today that it has received a PO for the first large scale deployment of its HXM offering for a leading global energy supplier, and this on a c. 3 months sales cycle. We believe this has the potential to grow into a multi-million contract over time and validates ACT’s decision to change its go-to-market model back in Jan 2020. Perhaps even more significantly ACT reports that channel partners have established a pipeline of >4m addressable employee seats just since August. Our best estimate is that this pipeline could be worth high single digit tens of millions of recurring dollars p.a . For a company capitalised at £37m that is very material. This is a company/story worth getting to know.
Companies: Actual Experience plc
CAP-XX Ltd* (CPX.L, 6.8p/£30.1m) | Tern plc* (TERN.L, 6.85p/£20.6m) | Location Sciences Group plc* (LSAI.L, 0.45p/£1.0m)
Companies: CPX TERN LSAI
WANdisco has announced a $3m initial contract with a major US telecoms company to migrate a 13PB on-premise Hadoop cluster to the Microsoft Azure cloud using its LiveData Migrator. Most of this will be recognised in 2020 but it also has an opportunity to migrate a further 30PB of data stored by the company in the coming years. We make no change to forecasts, as we believe WANdisco still needs to sign further deals to reach our FY20 estimate, but see the current acceleration in commercial activity as very encouraging.
Companies: WANdisco Plc
