Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on Sigmaroc. We currently have 37 research reports from 4 professional analysts.
SigmaRoc has announced its first acquisition in mainland Europe, acquiring Stone for €2.2m. We estimate that the transaction should be earnings enhancing by around 1%, with leverage not rising above 2.0x in 2020.
AMRYT PHARMA PLC— a biopharmaceutical company focused on developing and delivering innovative new treatments to help improve the lives of patients with rare or orphan diseases have raised $60m before expenses and will relist on the AIM Market on the 25/09/2019
Companies: SRC SIS 88E CTR EAH ACP KRM RGO CGNR ALTN
SigmaRoc is building a strong track record of improving acquired businesses, raising EBITDA at the first three acquisitions by over 33%. The 2019 acquisitions of CCP and GD Harries bring strong local market presences, and offer scope for improvement; and there are still many other opportunities to pursue in the UK and Europe.
Warren Buffett once said that as an investor, it is wise to be ‘fearful when others are greedy and greedy when others are fearful’. Fear is not in short supply right now.
Companies: OPM ALU ANCR BLV CONN CRC FDL GATC HAT LEK MMH MCB MWE NXR NTBR NOG PAF PEG RFX SRC TEF TEG TPT VTU WYN XLM
SigmaRoc's second year of operation extends its track record of significantly improving the profitability of acquired businesses. It improved EBITDA at Ronez by 37% in its first full year and later acquisitions of Allen and Poundfield showed 30% better EBITDA in 2018.
The announced acquisition of GDH for an EV of £29m brings critical mass to SigmaRoc's third platform. The acquisition structure means that it is being acquired without issuing equity and this helps boost EPS by around 10% by 2021.
Techniplas –global producer and support services company providing highly engineered and technically complex components, making the supply chain to original equipment manufacturers more efficient. FYDec17 rev $515m. Loungers plc—the operator of 146 café/bar/restaurants across England and Wales under the Lounge and Cosy Club brands, announces its intention to seek admission on AIM, offer TBC, expected late April. SDX Energy plc—a North Africa focused oil and gas company, announces its intention to complete a Canadian plan of arrangement under section 192 of the Canada Business Corporations Act and will have shares de-listed from the TSX-V and admitted to trading on AIM. Expected 28 May 2019, anticipated market cap of £76m Renold plc—a leading international supplier of industrial chains and related power transmission products, announced that it will cancel the listing of the Company from the premium segment and apply for admission on AIM. Expected 06 June 2019.
Companies: CCS JOG CIN FLTA EDR GAN LOOP SRC RCN AST
Hydrominer GmbH, An Austrian cryptocurrency miner, is considering an initial public offering (IPO) on the London Stock Exchange AIM during 2018 according to an article on Bloomberg. 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. Expected valuation £200m to £250m.
Companies: GTC BRY ERGO HAYD QXT INFA SMRT MYSL ACSO SRC
We estimate that SigmaRoc’s recently announced acquisition of pre-cast concrete products business Topcrete should be earnings and margin enhancing to the group this year, with further benefits in 2018. Assuming Topcrete continues to perform at past levels (conservative – SigmaRoc sees scope for better optimising certain commercial aspects of the business), we estimate it will lift group-level EBITDA by 7% compared with our pre-deal estimate for the current year, and by 37% for 2018. EBITDA margins could rise from 20% to 23%. After adjusting for positive working capital within the business, the acquisition price equates to just 6x incremental EBITDA – excellent value given SigmaRoc’s pre-deal market EV/EBITDA multiple of 10x, and illustrating the merits of its niche-asset buy-and-build growth strategy. Adjusting our EV estimate for debt taken on to fund the transaction, SigmaRoc is now trading at just 8.7x our revised 2018 EBITDA estimate for the enlarged group. This represents an attractive valuation relative to the peer-group median of 10.4x, notwithstanding the potential for more earnings growth as the group further rolls out its deal pipeline.
Progressing its buy-and-build growth strategy, SigmaRoc has negotiated the acquisition of Topcrete Ltd, a supplier of high-quality pre-cast concrete products to the construction industry with operational facilities in the Midlands and London. The initial cash consideration is £9m (to be funded from SigmaRoc’s term loan facility), with a further £3.5m deferred and a conditional amount payable over the next 12 months Management believes the acquisition will prove earnings accretive immediately – in 2016 the business generated EBITDA of £2m from revenue of £5.2m, a margin of 38% (versus our preacquisition estimated 2017 EBITDA and margin for SigmaRoc of £5.1m and 20% respectively). At 6.25x EBITDA, the acquisition multiple compares favourably against the c8x SigmaRoc paid for its flagship Ronez asset and is also significantly lower than the 10.1x multiple the group was trading at preannouncement. Assuming Topcrete continues to generate EBITDA of £2m going forward (management believes there may be scope for growth), SigmaRoc’s annualised EBITDA generation could be enhanced by 35-40% to >£7m, putting it on a forward-looking multiple of just 9x based on yesterday’s closing price. With the peer group trading at 11.5x, we believe there is ample room to re-rate.
SigmaRoc has delivered strong H1 2017 results, its maiden set of financials to incorporate its Ronez vertically-integrated aggregates business on the Channel Islands which was acquired at the turn of the year. Operational level EBITDA from Ronez was up by 53% vs H1 2016, reflecting improved trading conditions on Jersey but also efficiencies implemented by SigmaRoc since taking control of the business. Assuming no material downturn in trading conditions in H2, Ronez looks on course to meet our forecast operational EBITDA of c£6m (vs £5m in 2016). This would translate to £5m EBITDA at the corporate level, putting SigmaRoc on a 2017 EV/EBITDA multiple of just under 10x. The latter trails the construction materials peer group and, in our view, undervalues SigmaRoc’s above-average growth potential. Having successfully integrated Ronez, management is focused on the next stage of its niche asset ‘buy-and-build’ strategy – twelve opportunities have been reviewed to date, some now in exclusivity. Executing on these opportunities should be a significant catalyst for share price appreciation going forward.
Reporting its 2016 results this morning, SigmaRoc flagged a solid start to 2017 from its Ronez vertically-integrated aggregates business on the Channel Islands, the acquisition of which post-dates the reporting period. Q1 2017 EBITDA is reportedly 12% higher compared with that achieved by Ronez in Q1 2016, suggesting tangible progress is being made by SigmaRoc on unlocking operational and trading efficiencies since taking control of the business at the start of the year. We remain confident the group can generate EBITDA at the Ronez-level of >£6m pa going forward (up from £4.9m in 2016). Having successfully integrated Ronez, management is now sharpening its focus on executing the next stage of its niche asset ‘buy-and-build’ strategy. Leveraging management’s vast experience in the construction materials industry and Ronez’ robust cash-flow base, we expect SigmaRoc to roll out more acquisition and/or organic investment opportunities as the year progresses, which should be a catalyst for further share price appreciation.
SigmaRoc has established a new bulk-shipping subsidiary to support the material importation requirements of its Ronez vertically-integrated aggregates business on the Channel Islands. The initiative includes the £0.55m acquisition of a dedicated bulk cement carrier, an investment that we believe not only simplifies and de-risks Ronez’ logistics chain (cement being the one key input material for which Ronez is not self-sufficient in on the islands) but which could also generate at least £0.2m pa of additional operational EBITDA to SigmaRoc as the vessel has capacity to also provide supplementary shipping services to third-party cement majors around the British Isles and northern Europe. Such returns would see the initial investment repaid in under three years, offering value accretion to SigmaRoc which is currently trading at 9.3x our revised 2017 EBITDA forecast. The latter multiple represents a discount to the peer-group average 2016 EV/EBITDA of 12.2x, a valuation gap we believe should narrow as SigmaRoc rolls out further earnings-accretive growth initiatives in its project pipeline.
Research Tree provides access to ongoing research coverage, media content and regulatory news on Sigmaroc. We currently have 37 research reports from 4 professional analysts.
|11Sep19 07:00||RNS||Acquisition, proposed board appointment & GM|
|05Sep19 07:01||RNS||Holding(s) in Company|
|05Sep19 07:00||RNS||Holding(s) in Company|
|03Sep19 16:17||RNS||Holding(s) in Company|
|27Jun19 09:15||RNS||Director/PDMR Shareholding|
|11Jun19 15:45||RNS||Result of AGM|
|21May19 11:00||RNS||Change of Adviser|
ECSC Group plc* (ECSC.L, 72.5p/£6.6m) Interims: Managed Serivces boosts margins; positive start to H2 (11.09.19) | The Character Group plc* (CCT.L, 360p/£77m) Pre-close update: Scandinavia disappoints (13.09.19) | MTI Wireless Edge Ltd* (MWE.L, 29.5p/£25.8m) Contract win: Scope for growth (16.09.19)
Companies: ECSC CCT MWE
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: EVRH ESYS BGO BOKU EQLS IMMO SMRT TECH VRE
In January, we provided a list of 11 stocks for 2019 that we believed would perform strongly with attractive catalysts that could lead to material outperformance. In this Quarterly Research Outlook, we revisit these views, analysing what has happened and how the remaining six months of the year could play out.
Companies: AMS ANX ARS ATYM AVON BLVN PIER BUR CGS CAML CALL CSRT TIDE CYAN DTG DEMG ELM EMR FPO FST GTLY GENL GRI GEEC GKP HMI HAYD HEAD HILS HTG HUR HYR IBPO IOG INDI JHD JOG KAPE KEYS KCT KGH LAM LIT LOK MACF MANO PCA PANR PXC PHC PMO RBW RMM REDD RSW RNO RKH RBGP ROR SUS SCPA SHG SOLG SOM TWD TRAK TSG TRI VNET VTC ZOO ZTF
Like whales feasting on Krill, overseas firms are today stuffing themselves silly with choice fillets of corporate Britain. Why? Well look no further than geopolitical tensions and Brexit, which have disproportionately impacted UK equities and the £. Indeed the FTSE100 has lagged the S&P500 by a hefty 19% over the past 2 years, with Sterling dropping to 34 year lows vs US$ (see below). That said to us, based purely on fundamentals, this period of underperformance appears over-cooked, leaving many quality British companies vulnerable to predatory interest.
Companies: VOD AV/ AGK CHG CNA ITV BRBY SMIN CTEC SXS OXIG MGAM IMI WEIR WMH KMK EYE GATC ULS INS ALFA RDT TSTL ELCO MBH BLTG IHC 9537 CSRT NBI
MTI Wireless Edge Ltd* (MWE.L, 22.2p/£19.4m) | Blackbird plc* (BIRD.L, 10.8p/£31.2m) | Mi-Pay Group plc* (MPAY.L, 8p/£3.7m) | Starcom plc* (STAR.L, 1.25p/£4.3m) | Character Group (The) plc* (CCT.L, 425p/£90.8m) |
Companies: MWE BIRD MPAY STAR CCT
Pebble Beach has reported full year results ahead of management’s expectations, with revenues down 11% to £9.2m but adjusted EBITDA increasing materially to £2.5m (FY17: £0.5m). This outturn reflects a focus on high margin revenue and demonstrates management’s commitment to delivering improved profitability, despite challenging underlying market conditions. The margin gains delivered, improving cash flow and a strong order book give management confidence in delivering further financial improvement in FY 2019.
Companies: Pebble Beach Systems Group
As presaged in Gamma’s July trading update, the first half of 2019 has been another strong period of trading for the Group. We are upgrading our revenue estimates by between 3% and 6% and adjusted EBITDA by between 11% and 19% across our three-year forecast horizon. The results show further good growth in the UK across both the direct and indirect businesses while the acquisitions in the Netherlands settled into Gamma ownership with a solid first half. With strong growth across the major product groups in what is proving to be an increasingly competitive market, we believe that the interims provide further evidence that Gamma is continuing to balance near-term delivery with the execution of the its longer-term strategy. Given another strong half year, the outlook comments in the announcement are, unsurprisingly, positive about the Group’s future performance.
Companies: Gamma Communications
Spirent’s results last week showed good traction from the group’s strategic growth areas (Lifecycle Service Assurance and Application Security), which combined with effective cost control, resulted in strong earnings growth and excellent cash generation. The group remains heavily H2 weighted, but we believe it is well placed to deliver a long awaited return to top-line growth going forwards. With gross margins remaining strong and management maintaining a tight grip on costs, we expect the growth to result in continued margin expansion across our forecast period. We make significant upgrades to all forecast years and increase our target price to 139p. Buy.
Companies: Spirent Communications
BT released this morning its Q3 update which was slightly worse than expected in terms of EBITDA. EBITDA was indeed down by 3.5% yoy, while revenue declined as expected by 1%. So quite a poor release reflecting a new decline in EBITDA which offsets the previous solid H1 (EBITDA was up by 2% yoy). Note, however, this poor performance was quite expected as it is due to the regulated price reductions at Openreach on FTTC and Ethernet products. By the way, the outlook for 2018/19 has not been modified and management still expects EBITDA to be in the upper half of its £7.3-7.4bn range.
Companies: BT Group
AdEPT Technology is a communications and IT managed services provider to mid-sized enterprises in the UK healthcare, education and public sectors.
Companies: Adept Technology
The correct but not more than a Q1 trading update has been largely overshadowed by the announcement in parallel of the creation of Europe’s largest tower company with preparations underway for a variety of monetisation alternatives, to be executed during the next 18 months, including an IPO. The EV of this company could be at least of around €13.5bn. It is obviously excellent news and could be the catalyst that everyone expected to boost the stock, finally. We maintain our strong Buy.
Companies: Vodafone Group
Data analytics software maker Splunk Inc on Wednesday said it would acquire privately held SignalFx, which makes software for the cloud, in a cash and stock deal for about $1.05 billion. Splunk hopes the deal will boost its capabilities by allowing its customers to use SignalFx products to monitor their data centres and applications in real-time.
Companies: Amino Technologies IQE
CyanConnode’s H1’19 numbers this morning are in-line with its earlier pre-close trading update. While management flagged recent civil unrest in India which has created a short delay to contract awards and roll-out, it remains confident of new leads in other regions to help offset the potential shortfall in revenues. We retain our estimates for FY19E pending further updates. We retain our Buy rating and target price on a still-compelling risk-reward balance given the shares material weakness YTD (-58%).
Under the new, strengthened management team, Telit has delivered a good six months in H1 2019 – not just the $103m cash and a $57m profit from the sale of the automotive operation but also enjoying strong growth in its continuing industrial IoT business. H1 has seen the automotive sale, the reorganisation of management and a focus on innovative industrial IoT products and services, all of which has helped improve the financial performance. This is now a well-capitalised global business with a strong position at the leading edge of the rapidly growing and exciting industrial IoT market. The company is comfortably on track to meet our FY expectations and we reiterate our forecasts and TP.
Companies: Telit Communications
mVISE interims highlight a business continuing to make progress on its three-year 2018+ strategy. Headline revenues rose nearly 7% y-o-y and 12% organically. With new white-label partners now marketing elastic.io, a big acceleration in product and associated (high-margin) consulting sales is expected in H2 and the company has maintained its FY19 guidance. We see the shift to cloud-based, big data-driven platforms providing an excellent long-term growth tailwind. In our view, these prospects are not reflected in a consensus FY20 P/E of 12.1x.