Morning Note – 10 September 2024

Tialis Essential IT - Profitable and cash generative 1H24 despite challenges

Tialis Essential IT’s 1H24 results to June continue to show the impact of a fall in project revenue from its largest customer as reported in FY23, combined with continued delays in new contract awards. While the group delivered revenue -7% lower yoy at £10.7m, strategic focus on growing the higher-margin Lifecycle Management division delivered strong +37% growth to £2.0m, with a significant potential partner for Lifecycle Management still in final stages of agreement, which would accelerate grow

Morning Note – 10 May 2024

Tialis Essential IT - FY23 benefits from restructure, maiden FY24 forecasts

In FY23 results to December, UK-based managed services provider Tialis Essential IT has reported +55% revenue growth in-line at £22.4m (was £22.0mE), profitability at the adj PBT level of £1.1m (FY22: £-0.6m) despite higher-than-expected exceptional costs and £3.7m net debt, demonstrating the benefits of previous restructuring across the Group. The successful acquisition and integration of lower-margin, revenue-accretive Allvotec contracts led to lower than expected 30% gross margin, which we ex

Morning Note – 17 January 2024

The Joy of Techs - Cavendish Technology quarterly sector note

£23.3bn in enterprise value has been returned to AIM technology shareholders over the past six years in the form of 51 public to private takeouts, including 10 in 2023 alone with the takeovers of Smoove* and Tribal announced in early October. With UK valuations appearing cheap and looking more attractive to potential acquirers, we take a moment to reflect on the trends of corporate and private equity bidders targeting AIM-listed technology companies going back to 2017, through the uncertainties

Morning Note – 17 August 2023

Tialis Essential IT - 1H23 results in line, FY23 adj EBITDA nudged down

Tialis Essential IT reported 1H23 results to June 2023 last week, in line with updated FY23 expectations that demonstrate tangible benefits of the operational and debt restructuring programme. It has reported +72% yoy revenue growth to £11.6m, +28% yoy adj EBITDA growth to £1.2m, positive adj PBT to £0.8m (1H22: £-0.6m) and a managed £3.4m net debt position (FY22: £3.2m). One-off £0.4m restructuring costs reduced FCF to £0.04m (1H22: £0.5m). Frustratingly, Tialis received an unexpected notificat

Morning Note – 26 July 2023

Morning Note – 9 May 2023

Tialis Essential IT - FY22 sees benefit of restructuring

UK-based managed services provider Tialis Essential IT’s FY22 results describe £2m in adj EBITDA (FY21: £3.1m) from revenue of £14.5m and year-end net debt of £3.2m, demonstrating the benefits of a busy four-year period of restructuring across the whole Group. Improved working capital led to positive £0.7m FCF, which, combined with the November loan note conversion, reduced net debt to £3.2m from £16.9m in FY21, equivalent to 1.7x FY22 net debt/EBITDA. 85% revenue visibility of £22m in FY23E is

Morning Note – 2 February 2023

Morning Note – 20 December 2022

Morning Note – 1 July 2022

The Joy of Techs - finnCap Technology quarterly sector note

In previous quarterlies, we have focused on valuations, considering our tech indices for stocks below £1.5bn market cap and their performance as a herd. This time we focus on individual “zeitgeist” stocks: the stocks which confront a current theme – the indices over the period since the beginning of the year (finnCap Tech 40: -18%; finnCap Next 50: -17%) have shown unfortunate decline, therefore stock picking is more important now than ever. Median P/Es have declined 29x to 22x for the larger fC

Zeus Industrials Round-Up - 13 September 2024

The UK industrial sector continues to show promising signs of recovery, with manufacturing PMI reaching a 26-month high of 52.5 in August as all survey indicators but one expanded. Economic data has also been encouraging, with UK pay growth cooling to a two-year low and inflation rising only slightly in July – supporting the case for further interest rate cuts this year by the BoE.

Allenby Capital: EnSilica plc - Update

EnSilica plc announced it has won a Design & Supply contract with Siemens AG. Financials were not disclosed but the Company notes that the Design component of the contract (non-recurring engineering work) will commence in calendar year 2025, with the Supply (initial production phase) expected to start in Q4 2027. We make no changes to our forecasts but note that the new contract win: a) further underpins our FY 2025 and FY 2026 forecasts where we are expecting top line growth of 21% and 28% resp

NCC Group (NCC LN) - Transformation continues to outperform

NCC continues to deliver ahead of internal and market expectations. The four months to September period end indicate adj. EBIT of £6.0m, almost double the prior guidance (£3.5m) and a £7.0m swing from this time last year (-£1.0m). The summer months are typically a quieter period for NCC, but today’s announcement highlights the impressive execution by management on its turnaround plan. Cyber Security performed ahead of expectations, and whilst today’s announcement doesn’t provide any further deta

Morning Note – 30 August 2024

Hybridan Small Cap Feast - 12 September 2024

12th September 2024 * A corporate client of Hybridan LLP ** Arranged by type of listing and date of announcement *** Alphabetically arranged **** Potential means Intention to Float (ITF) has been announced, or it is a rumour Dish of the day Admissions: None Delistings: None What’s baking in the oven? Our daily digest of news from UK Small Caps If you would like to unsubscribe, please email enquiries@hybridan.com with “unsubscribe me”. Hybridan Chefs research@hybridan.com Banquet Buffet*** Andrad

Eleco - Robust H1, FY24-26E reiterated, TP upgraded to 200p

Eleco’s H1 results show robust organic revenue growth of +12% driving group revenue growth of +21% to £16.3m, adj EBITDA +27% yoy to £3.3m, and strong net cash of £12.0m vs our FY24E forecast of £12.3m. A confident outlook leads us to conservatively reiterate our FY24-26E forecasts at this point, where Eleco has already achieved over 50% of FY24E revenue, we expect adj EBITDA growth of +7% yoy in H2 24E after +27% yoy in H1, and FY24E EFCF of +£3.1m compares to +£3.0m delivered in H1 24. Excelle

Checkit - Contract expansions drive order intake

In H125, Checkit reported year-on-year growth in annual recurring revenue (ARR) of 9%, with strong order intake partially offset by higher churn. Existing customers contributed more than half of ARR growth, evidence of the land and expand strategy at work. The company maintains its short- and medium-term outlook, including its target to reach EBITDA break-even in FY27, with the narrowing H125 EBITDA loss confirming progress towards this. We maintain our ARR, revenue and EBITDA forecasts and redu

LIBERUM: Cirata plc: Cirata from the flames

Alphawave Semi: Initiation - accelerating to the speed of light

Alphawave Semi supplies cutting edge connectivity solutions for the world's most demanding applications in digital infrastructure. Over the last two years the business has been transformed and it now licences its Intellectual Property (IP), supplies custom silicon and, from 2024, should supply optical connectivity silicon. The company generated revenue of US$185m in 2022 and is targeting growth to cUS$500m by 2025 with a consensus forecast of 102% pa growth in pre-tax profit over the period. Whi

Alphawave Semi | CMD - Reasons to be cheerful

Alphawave's shares have recovered almost half of the losses experienced when forward guidance to 2025 was reduced in April. Following what was a difficult set of FY23 results, the company's recent Capital Market's Day (CMD) set out a powerful case for a continuation of the recovery in the share price, amplifying the group's potential to ride the magic carpet of hyperscaler driven demand for its connectivity Intellectual Property (IP) and its products. Not only were estimates for total addressabl

SysGroup (SYS LN) - Catalyst for AI adoption

SysGroup has delivered FY24 results exactly in line with expectations. We do not make any changes to forecasts, except the effect of the recent capital raise and lower debt levels. FY25 should be a transition year, with the company beginning to implement an innovate AI strategy with a new management team. To catalyse adoption of AI, SysGroup plans to implement transformative AI projects internally that should provide compelling live case studies and accelerate the company’s sales momentum over t

PROGRESSIVE: Beeks Financial Cloud Group: Contract extension at JSE – ‘Please, sir, I want some more’

Beeks inks a multi-year contract extension at the Johannesburg Stock Exchange. The contract was first signed in September 2023, with the first extension in March 2024; the momentum reflects stronger-than-expected customer demand from JSE clients – this is a profit centre for JSE. The service is available at the JSE's Teraco data centre, addressing additional regulatory requirements for dual location disaster recovery (customer upselling). The value was not disclosed; guidance is that the contrac

SHORE CAPITAL - iomart^ (IOM) - Buy at 133p

Synectics+ (SNX, House Stock at 185p) - H1 shows sustainable profit building

Rosslyn Data Technologies - Transformative new customer signing & trading update

Rosslyn has announced a new three-year customer contract signed with one of the world’s largest technology companies, headquartered in the US. The contract has a minimum value of £2m, with substantial scope for this to increase. Rosslyn has also announced a trading update indicating that FY24E EBITDA losses are expected to better current expectations. FY24E revenue is expected to be £2.9m (FY23: £3.0m) with an annual recurring revenue (ARR) of £2.3m (FY23: £2.4m). Although negotiations with pote