SMRT has delivered a highly encouraging 1HJul21 today, with key asset SwipedOn delivering >60% revs growth, >70% ARR growth and moving to EBITDA b/e. This note reviews in detail the value proposition for both SwipedOn and Space Connect as well as the opportunities ahead. We believe that increased flexible working and contactless check-in will provide a tailwind to an already high growth business. SwipedOn is delivering best-in-class SaaS metrics, while Space Connect has inked promising reseller agreements with Softcat and Evoko. We look at scenario’s where SmartSpace could be worth almost twice the current mkt cap.
Companies: Smartspace Software Plc
Wheaton precious Metals (TSE:WPM) - Proposed secondary listing on bringing one of the world’s largest precious metal streaming companies to the London Stock Exchange. Due Q 2020 AB Ignitis grupe—leading utility and renewable energy company in the Baltic region. Admission of its Shares to the Main Trading List of Nasdaq Vilnius and admission of its GDRs to the Official List of the FCA. Offer Price Range corresponds to a market capitalisation of approximately EUR1,691.7 - EUR2,105.2 million. Due 7 Oct. Calnex, an established provider of test and measurement solutions for the global telecommunications sector, will raise a total of £22.5 million (before expenses), comprising £6.0 million for the Company and £16.5 million for existing shareholders . Due 5 October 2020, under the ticker CLX. Based on the Placing Price, the market capitalisation of the Company will be £42.0 million on Admission. Various Eateries to float on AIM. Admission is expected to take place end of September/early October 2020. The Company intends to raise up to £25 million by way of a placing . Established platform business operating two core brands, Coppa Club & Tavolino, both positioned to benefit from the post-Covid environment. The Directors believe site availability, acquisition opportunities, reduced competition, availability of talent and changes in consumer behaviour provide opportunities to accelerate the Group's growth . Mode Global Holdings to join LSE (standard). Mode is a UK-based Fintech Group, building a modern financial services business to support an increasingly digitised economy and financial system, combining the best of banking, payments, investment, loyalty and digital assets. Targeting £7.5m raise. Guild Esports a UK-based owner and developer of esports teams, has announced its intention to seek a listing of its ordinary shares to the Standard Listing segment of the London Stock Exchange this autumn. its founding shareholders include David Beckham, former football player and captain of England, and now co-owner of new MLS team Inter Miami CF. HOME REIT intends to float to the Main Market raising up to £250m. The Company will seek to contribute to the alleviation of homelessness in the UK, whilst targeting inflation-protected income and capital returns, by investing in a diversified portfolio of assets across the UK which will be dedicated to providing accommodation to the homeless. Due Mid October Sativa Wellness Group—(Canadian Securities Exchange: STIL) renamed from Stillcanna Inc following the conditional acquisition of Sativa Group (AQSE:SATI) to list on the AQUIS Exchange. A fully integrated European seed to consumer CBD group with the pricing, products, and stability to meet the CBD market demand in the medium term. With world-class extraction and formulation experts, an agricultural team that has over 20 years’ experience farming hemp, along with laboratory testing capabilities, the group has established itself globally as a trusted source of high-grade, premium wholesale CBD brands and products. Umuthi Healthcare Solutions Plc, the technology led healthcare business focused on the distribution of pharmaceuticals and the provision of medical facilities in remote areas, seeking admission to the Standard Listing segment of the Official List Kibo Energy PLC, the multi-asset Africa focused energy company, is seeking admission for its 100% owned UK subsidiary Sloane Developments Ltd , which will be renamed Mast Energy Developments PLC (MED), to the Standard List of the London Stock Exchange plc . Targeted for Q4 2020. The MED business strategy is to acquire and develop a portfolio of flexible small-scale power generation assets, exploiting a growth niche market in the UK for Reserve Power generation to balance out the national grid at critical times.
Companies: PEG GYG VDTK SMRT ORR BIOM BLOE IXI TRR CPP
With today’s sale of Enterprise software for £5m cash, SmartSpace completes its transition to a fast growing SaaS business focused on meeting room and visitor management for the SME market. The new focused business has modest burn and is amply funded for many years to come (pro forma net cash c. £5.7m). SMRT also updates today that strong (c. 80% yoy) SwipedOn growth has continued in July and that the first SoftCat reseller Space Connect deals are coming through. We detail below our long standing belief that the constituent businesses could be worth well in excess of the current market capitalisation of £17m. We see a long runway ahead for SMRT which presents an opportunity for a stock that is still largely off the market’s radar.
Smartspace released positive news for both Space Connect and SwipedOn on Friday, sending the stock nearly 50% higher. Space Connect has signed a distribution agreement with Softcat and the SwipedOn has posted 80% yoy growth in AAR. Encouragingly too, SMRT also flagged current net cash at £1.7m (vs. £1.9m in April) demonstrating impressive reliance despite a challenging macro backdrop. In fact, SMRT has adapted quickly and is proving a ‘Covid beneficiary‘, seeing strong inbound demand as customers look for safe news ways to conduct business. Reassured by this, we continue to believe that Space Connect and SwipedOn could be worth considerably more than the current market cap.
Caribbean Investment Holdings. Incorporated in Belize. Readmission to AIM. CIHL.L 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. 2019 net profit US$ 10.7m. Mkt cap £38.6m.
Companies: SAR ROCK DFCH TPX FAB UKOG AEG SMRT IRR
SMRT has updated the market on current trading – the company is seeing resilience and robust trading in certain parts of the business while solutions serving meeting room and visitor management have understandably seen some disruption. With the group now capitalised at just £5m, we think the market has (wrongly) assumed fundamental challenges. From our perspective the situation and outlook are considerably more positive – we continue to see two exciting businesses (in SwipedOn and Space Connect) which could actually be long-term CV-19 beneficiaries and with little doubt, in our opinion, worth considerably in excess of the current market cap.
Evoko is today announcing the launch of its next-gen Naso meeting room panel. SmartSpace’s Space Connect is the exclusive software provider for this panel and is set to benefit from royalties and associated SaaS revenues for a product that may have a TAM of up to €30m for SmartSpace. We think the value of the Space Connect and SwipedOn acquisitions have not remotely been factored into SMRT’s mkt cap.
Intention to float by Gemfields Group. No Capital Raise. Currently listed on JSE. (GML:JNB) at circa £122m. The Group's key producing assets, the Kagem emerald mine in Zambia (believed to be the world's single largest producing emerald mine) and the Montepuez ruby mine in Mozambique (one of the most significant recently discovered ruby deposits in the world), are both expected to have long mine-lives with potential for expansion. Also owns the Faberge brand. Due Valentines Day 2020.
Companies: PHE AGL CORA GMR UFO OPG SMRT DNL PRES AFS
SMRT has today provided a year-end trading update, stating that sales and EBITDA will be below our previous expectations. We therefore revise FY20E sales from £11.4m to £6.3m and EBITDA from £-1.2m to £-6.2m. We also adjust FY21E sales from £15.9mm to £14.0m. While this is undoubtedly disappointing news, it is worth stressing three key points: 1) the downgrade has been caused by hardware supply chain constraints (rather than falling demand for SMRT’s products) 2) the impacted business has not fallen away, but is rather now expected to be delivered in H1FY21 and 3) SwipedOn – which alone could be worth more than the group’s current market cap – is said to be trading strongly.
SmartSpace has announced the acquisition of Space Connect. The £3.2m acquisition significantly enhances the group’s mid-market capability and results in substantial R&D savings going forwards. H1’20 results, published alongside the acquisition, show progress with the group’s new software led strategy, with software revenue up 53% and total revenue up 57% to £3.0m. FY’20 is now expected to be significantly second half weighted, however our full year expectations are underpinned by a qualified pipeline of nonrecurring software opportunities. We continue to believe the group is well positioned in the high growth ‘space & workplace management software’ market (15% CAGR forecast to 2022) and expect further progress through our forecast period.
Facebook has been working to develop augmented reality glasses out of its Facebook Reality Labs in Redmond, Washington, for the past couple of years, but struggles with the development of the project have led the company to seek help. Now, Facebook is hoping a partnership with RayBan parent company Luxottica will get them completed and ready for consumers between 2023 and 2025, according to people familiar. Needless to say, we highlight a potentially substantial threat to Snap Inc, and a potentially huge opportunity for developers within the Facebook ecosystem.
Companies: MVR ESYS BGO BOKU EQLS IMMO SMRT TECH VRE
SmartSpace has provided a positive update on its recently acquired subsidiary, SwipedOn. The group’s stated objectives for SwipedOn are to continue to drive new customer acquisition and increase ARPU. Management are delivering on both counts. Total customer numbers are up by 50% since acquisition to over 3,300 and additional modules and versions have been delivered as planned. We are encouraged by the progress at SwipedOn and see today’s update as a further positive signal that the group is delivering on its plan to transform the group into high quality recurring revenue business. The shares trade on just 1.3x EV/Sales, which we believe is highly attractive for a software led business with an increasing focus on high margin SaaS revenue.
Interswitch, a Nigeria-based payments firm, has hired advisers to resurrect plans for a stock-market listing in London and Lagos later this year, which may value the financial technology company at $1.3 billion to $1.5 billion. Voyager AIR The Company will focus on the acquisition, leasing and management of primarily widebody aircraft, with asset management services to be provided by Amedeo Limited the IPO will comprise a Placing and Offer for Subscription of Shares to raise up to approximately US$200m. Roxi Music UK music streaming service plans London IPO as it goes up against Spotify. They have appointed investment bank Arden Partners for an initial public offering (IPO) on the London Stock Exchange later this year.
Companies: DX/ BKS SIR SMRT DOTD SEE GAN UOG RENX CHRT
CentralNic plc (CNIC.L, 57p/£97.3m) FY results and acquisition: Executing buy and build strategy (13.05.19) | SmartSpace Software plc (SMRT.L, 84p/£18.5m) Management meeting: Targeting space management (08.05.19) | Blackbird plc/Forbidden Technologies plc* (BIRD.L, 6.0p/£17.9m) Formal name change (14.05.19)
Companies: CNIC SMRT BIRD
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FY’20 results are slightly ahead of our expectations, and cap an excellent period with strong news flow. KidneyIntelX has now launched at Mount Sinai and is cleared to report results in all 50 US states. We continue to believe KidneyIntelX could represent the future standard-ofcare for early detection of chronic kidney disease progression and kidney failure in patients with Type II Diabetes, affecting an estimated 11m. Focus is now on building out the platform with expanded indicated uses, win national reimbursement and drive testing adoption. One significant catalyst ahead is Medicare coverage, which come as early as H1 2021 under new proposed rules. Whether or not this rule is finalised, the company is moving forward towards broader insurance payor coverage. In this note, we have refreshed our forecasts and valuation reflecting the deployment of IPO proceeds.
Companies: Renalytix AI 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.
Companies: Eckoh plc
Proactis has delivered finals to July in line with the August trading update, revealing EBITDA of £11.8m from revenue of £49.6m and pre-IFRS16 net debt of £45.1m (net bank debt of £37.1m). The focus remains on annual recurring revenue (ARR), total contract value (TCV), and bePayd, with positive news on all three: core ARR increased by 1.3%, TCV won in the period surpassed all previous highs despite COVID, and bePayd engaged with early adopters. While COVID has had an effect on sales cycles, the application of the UK and NL mid-market sales methodology across a consistent target market in France, Germany and the US has already demonstrated results with contract wins and the establishment of a record pipeline. The group has reshaped in favour of efficiency and visibility, delivering credibility with proof of execution and offering substantial upside. Target 80p reiterated, with a long run target of 180p applying reasonable peer group multiples to maiden FY22 forecasts.
Companies: PROACTIS Holdings PLC
Positive update today – reporting that as a consequence of recent SITS contract wins, careful cost management and the efficiency of remote delivery, TRB is tracking “comfortably ahead” of current profit estimates. As a consequence, we upgrade EBITDA and AOP to £14.8m and £11.5m, equivalent to 8% and 10% upgrades respectively. FCF is tracking better also, as implied by current net cash: £11.2m – already exceeding our FY20 estimate. Accordingly, we upgrade u/l FCF (i.e. ex the royalty dispute) to £5.7m. Also announced today - Q3 ARR now stands at £44.5m, up £1.3m on 2H20. While only using 3 months of data, we highlight that this run-rate equates to +12% annualised growth i.e. a significant step-up vs. the +3% y/y achieved to 2H20. To us, this is a clear reflection of how TRB’s on-prem SITS product continues to sell, TRB’s significant cloud hosting opportunity with existing customers and lastly, we’re also starting to see the financial benefits from Tribal Edge, as the first module went live earlier this year. In view of progress, we also make modest upgrades to FY21 estimates, whilst leaving scope for outperformance, should current momentum be maintained. On valuation, whilst the share price has recovered somewhat, TRB still trades on a 7% earnings yield or alternatively, just 2.7x ARR. On either metric, this looks attractive vs. peers…so would suggest TRB’s very real growth opportunities are still not priced in.
Companies: Tribal Group plc
Allergy Therapeutics (AGY.L): Initiation of field trial | Sensyne Health (SENS.L): Research agreement with Milton Keynes University Hospital
Companies: Allergy Therapeutics plc (AGY:LON)Sensyne Health Plc (SENS:LON)
GB Group (GBG) expects to report underlying revenue growth of 10% y-o-y for H121, with a one-off contract in the US making a material contribution to revenues. Combined with strict cost control this resulted in adjusted operating profit growth of 26% y-o-y and a £32m h-o-h reduction in net debt. With management guidance for revenue well ahead of our and consensus forecasts for FY21, we have upgraded our revenue and EPS forecasts for FY21–23. Despite COVID-19 related pressure on new business in the short-term, we view GBG as well placed to benefit from the accelerated shift in the digitalisation of business processes.
Companies: GB Group PLC
Gaming Realms is a creator and licensor of innovative games for mobile, with operations in the UK, U.S. and Canada. Flagship brand Slingo® is a highly popular and unique game genre which combines elements of slot, bingo and table gameplay. These games are licensed by some of the biggest online gaming operators in the world, including DraftKings, Sky Betting & Gaming and GVC, and distributed directly to operators or via global partners such as Scientific Games & Relax Gaming using the company's proprietary Remote Game Server platform.
Companies: Gaming Realms PLC
Microsoft has begun marketing LiveData as its ‘preferred solution’ to migrate Hadoop data into the cloud. The announcement represents a culmination of years of development work from WANdisco and finally proves beyond doubt the capabilities of its technology. As highlighted previously, we expect this launch to drive a significant uptick in financial performance. The exact timing and pace of this uplift is uncertain, but the company has reaffirmed the guidance given to the market at its interims.
Companies: WANdisco 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
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
Gamesys Group’s Q320 trading update is ahead of expectations with pro forma revenue growth of 31% and an improved financial position. As in previous quarters, the company increased the active player base responsibly and benefitted from new game launches. We increase our revenue forecasts for FY20–22 by 5.7–7.0%, and EBITDA forecasts by a slightly lower 2–3% as management further invests in growing a sustainable and repeatable business, while ensuring revenue growth is done responsibly. This follows an EBITDA upgrade of 7.8% for FY20 at the time of the interim results. For FY21e, the free cash flow yield is 9.2% and the dividend yield is 2.9%.
Companies: JP7 GYS JKPTF
AGM statement as expected; Resume with a Buy
Companies: CloudCall Group PLC
Idox has reported strong financial and operational progress in its H1 FY20 (the six months to April, only latterly affected by COVID-19) with headline numbers in line with its recent trading update and notable cost control and margin improvement. H1 20 reflects a good performance by a business that has been revitalised, with a ‘cloud-first’ approach, by the current management team. The Group also introduced new marketing strategies which are more closely aligned with product management. Idox continues to trade in line with market expectations and cash collection has been better than expected while the Group continues to win new business and deliver services. Management states that Idox remains in line with its existing forecasts and we note the resilience shown by the business in the current environment. We leave estimates unchanged.
Companies: Idox plc
GHT is acquiring Inforalgo for £2.3m cash and £1.3m deferred, an attractive <2x ARR. We adjust our FY20 forecasts for modest accretion. This strengthens GHT’s nascent Regulatory business, allowing it to offer end-to-end solutions and significantly extends its real-time cloud connectivity services such that it can provide a potentially transformative STP capability. Adjusting for the acquisition, for cash, valuing Clareti Services at 2x sales and Legacy at 1x, leaves Clareti valued at just 4.1x ARR.
Companies: Gresham Technologies plc
Interims reveal a robust trading period, with sales holding up better than expected, meanwhile costs have been carefully managed. As a consequence, we lift FY20E sales by +3% and adj. FCF (ex. s/w settlement fee: £8.1m) from £2.1m to £4.4m. We leave FY21E numbers essentially unchanged. Headline numbers reveal -4% sales decline (-6% organic), meanwhile AOP grew +5% to £6.6m. As expected, Covid principally impacted Education Services (sales: -17%) but by less than expected. Also, revenue ‘lost‘ should be recovered as schools reopen. SIS sales were steady (+1%), as TRB benefitted from high recurring sales and its established customers. TRB also added to this base, with two new wins – demonstrating SITS continues to sell. The first Tribal Edge module is off to a good start – all 12 Australian HE customers separately took ‘TCSI‘. The second module (‘Admissions’) is due in H2 - we see the backdrop as favourable, anticipating high demand for international students – a challenge this product can help satisfy. More broadly, Covid could be an accelerant for Tribal Edge – as it allows universities to modernise and reduce costs as they are forced to adapt to potentially lower student numbers and tuition fees.
