Material acceleration of strategic plan
Companies: MelodyVR Group PLC
EVR partners with Live Nation for virtual festival
NextVR acquired by Apple for speculated US$100m
Major new exclusive concert series launched; Buy
EVR announces ‘On Stage' concert series
Accelerated book build, board change and JSOP
Management initiatives in response to COVID-19
O2 report expects entertainment to drive 5G growth
Best Ideas 2020: Key changes already in motion
JGO option exercise values company at £220m
JGO partially exercises option; co valued at £220m
Disney+ hits 22m mobile users, SoftBank backed firm downsizes IPO, German mobile carrier selects Huawei
Companies: ENET 7DIG MVR ZOO AMO BOOM MIRA MWE
Extension of O2 Partnership – Positive Catalyst
Facebook on Tuesday announced its acquisition of Beat Games, the studio behind hit virtual-reality game "Beat Saber." Beat Games will join the Oculus Studio division of Facebook, but it will operate independently out of Prague, the company said. "Beat Saber" is one of the most popular VR games. In the game, players swing virtual sabers at incoming blocks in sync with music, akin to that of the popular "Guitar Hero" series of the 2000s. The game is available on the Oculus Store for $29.99.
Companies: MVR IMMO VRE
We note two supportive items of newsflow overnight that add to our conviction on EVR Holdings: (1) Apple’s feature of the MelodyVR app on the UK App Store; and (2) interesting statistics on live music activity in a freshly published industry report. Feedback from the company highlighted strong momentum on downloads, one of the KPIs driving the market model behind our forecasts in the wake of recent publicity. We believe the broader Millennial theme of strong interest in live music coupled with the beginnings of mass adoption in VR is likely highly supportive of our mid-term thesis on the stock. We reiterate our Buy rating.
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As a nation, we love knocking ourselves. However in truth, we’re actually a pretty pioneering bunch. For instance, the experts at Oxford University & AstraZeneca have developed one of the world’s 3 most important vaccines in double quick time. Plus, many other British firms are creating similar breakthrough Covid inventions, such as Kromek.
Companies: Kromek Group Plc
H1A delivered a very resilient performance given the backdrop of halted deliveries and reduced manufacturing capacity. Orders and shipments are resuming and a ramp up in activity levels is expected in H2. A cash outflow in H1A has been supported by new committed facilities and gross cash levels look set to support the business successfully through the second half and beyond.
Gamesys has reported a positive pre-close trading update. Strong momentum continued into Q420 and management now expects FY20 pro forma revenue and adjusted EBITDA will be at or above the upper end of current market expectations. We increase our FY21 and FY22 adjusted EBITDA forecasts by 4–6% due to higher revenue growth from a larger active customer base, and a higher and stable EBITDA margin that reflects ongoing investment in growing a sustainable business with a focus on responsible gambling. On our new forecasts, the free cash flow (FCF) yield for FY21e is 10.1% and the dividend yield is 3.0%.
Companies: Gamesys Group PLC
WEY Educaon (WEY) – Corporate – Trading significantly ahead; strong momentum prompts new ’21/’22E forecast
Touchstar (TST) – Corporate – Update points to a robust trading performance and strong cash generaon in the year
Companies: Wey Education PLC (WEY:LON)Touchstar plc (TST:LON)
Instem has delivered a positive trading update for the year to 31 December 2020 – revenue growth was “in excess of 11%”, suggesting a performance in line with our estimates, and net cash appears to have ended the year extremely strongly, with a figure of £26.7m vs our expectation of £22.4m.
Companies: Instem plc
iEnergizer announced the proposed payment of a special dividend worth 49.4p ($0.668) per share. The group has stated the stock will go ex-div on 14th January 2021, with a pay date of 5th February 2021. At a total value of £94m ($127m), this dividend represents a significant payout for shareholders, c.13% of Group's market cap of £730m. We acknowledge this to be a clear signal of confidence in the growth trajectory and current operations.
Companies: iEnergizer Limited
Instem has delivered another year of double digit revenue growth, in line with expectations. Progress has been made across all three business streams, buoyed by strong demand from new and existing customers. A key highlight is cash generation, with Y/E net cash £3.2m better than expectations at £26.7m (pre-IFRS16). The outlook remains positive, with further organic growth opportunities in areas such as SEND exploitation and Informatics. The company remains in active discussions with a number of acquisition targets following the £15.0m fundraise in July. The valuation remains extremely undemanding and we continue to see significant upside potential for a business with multiple organic and acquisitive growth opportunities.
Strong Q4 performance from Audioboom plc, the leading global podcast company, as it continues to outpace the global podcasting market. Audioboom bounced back from the Q2 CV-19 lull in Q3 and growth accelerated in the final quarter. Q4 revenue of c. $8.5m was a record, up 25% on the same period last year and the previous record, and FY20 revenue of c. $26.8m (+20%) was comfortably ahead of forecast (ACLe: $25.5m). There were also record KPI performances (brand count, eCPM and available ad inventory). Coupled with continued cost control, adj. EBITDA loss fell to c. $0.2m in Q4 and c. $1.8m for FY20 (FY19: $2.9m, ACLe: $1.9m). The company has good access to capital ($6.6m at year end) and management expects to achieve a maiden positive adj. EBITDA for FY21. We introduce FY21 forecasts and set a fair value of 420p/share, equivalent to an FY20 EV/Revenue of 3.3x and 2.5x FY21. Although a premium to the current price, this still represents a significant discount to recent industry transaction multiples.
Companies: Audioboom Group PLC
Touchstar is a supplier of mobile data computing solutions and managed services to a variety of industrial sectors. The group has this morning released a year-end update, pointing to the fact that the Board expects to report a profitable outcome for the year (H1 2020A PBT £130k, PAT £150k). Importantly, the positive cash generation seen in H1 2020A has continued into H2, with Touchstar ending the year with a net cash position of £1.6m (gross cash £1.9m), a further increase of £300k from that reported at 30th June.
Companies: Touchstar plc
Cornish Metals (TSX-V: CUSN) intends to list on AIM. The Company is proposing to raise £5 million by way of private placement of new Common Shares (the "Fundraising") to advance the United Downs copper-tin project. The Company expects that Admission will become effective in February 2021. The Company's Common Shares will continue to be listed and trade on the TSX-V in Canada. Further media reports that Dr Martens, the British Boot brand is planning an IPO on the LSE. It is currently owned by PE group, Permira who is expected to sell down its stake at the IPO. March 2020 YE the group had revenues of £672m and EBITDA of £184m. Deal size TBC. VH Global Sustainable Energy Opportunities plc, a closed-ended investment Company focused on making sustainable energy infrastructure investments, today announces intends to launch an initial public offering of shares on the Official List (Premium) of the Main Market of the London Stock Exchange. Due by Early Feb. Moonpig, the digital greeting card company, is planning an IPO with a potential valuation of £1bln, according to multiple media reports. Further details expected to be announced over the next two weeks.
Companies: ZPHR PANR PRSM SENS CYAN G4M ITX CRCL FEN ZIN
Tern plc* (TERN.L, 7.1p/£23.5m) Portfolio update: Strong business momentum (12.01.21) | Audioboom plc* (BOOM.L, 276p/£43.3m) Expanded content network (15.01.21)
Companies: Tern Plc (TERN:LON)Audioboom Group PLC (BOOM:LON)
ZOO’s H1 FY21 included a tumultuous few months as COVID-19 effectively shut off work on new media content production which impacted subtitling projects, but studios rapidly adopted Cloud-based dubbing and the group’s digital packaging business enjoyed a dramatic rebound in fortunes. We note the positive commentary in today’s RNS and upgrade our FY21E and FY22E estimates to reflect the recent performance and, in particular, the exceptionally strong H2 trading that the group is enjoying.
Companies: ZOO Digital Group plc
Earnings in H1A were better than flat and H2E has got off to a good start. Margins are up and so too is recurring revenue as proportion of total business. First half order deferrals are now materialising and renewals are positive. Free cash generation was strong and the outlook is positive. We see no fundamental reason for the recent share price underperformance and we reiterate our Buy recommendation.
Companies: Shearwater Group plc
GB Group (GBG) has sold its marketing services business to HH Global Group for an undisclosed amount. This was not an area of focus for GBG and has been in managed decline for several years. Just before Christmas, GBG boosted its Fraud business with the acquisition of fraud investigation automation software from HooYu for £4m in equity. We have revised our forecasts to reflect the disposal and acquisition, leading to small upgrades to our EPS forecasts. Both deals emphasise the company’s strategy to focus on Identity, Location and Fraud.
Companies: GB Group PLC
Crimson Tide has reported a strong set of H1 results evidencing very strong sales momentum backed by long-term contracts and cash flow. H1 sales grew by 40% and EPS by 154%. Net cash has improved to £0.8m at June 2020 from nil at December 2019. The strategic focus on transportation and supermarkets is working well, partnerships are improving routes to market, and there is growing traction from investments in innovation. We have left our forecasts unchanged for now, but recognise positive pressure and have upgraded our target price from 3.1p to 4.3p. We reiterate our view that Crimson Tide’s valuation will be dictated by its ability to convert the significant opportunity rather than short-term metrics. H1 results show the group is nicely on track to do exactly that.
Companies: Crimson Tide Plc