Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on Sigmaroc. We currently have 30 research reports from 4 professional analysts.
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.
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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.
ADES International Holding— Intends to join the Standard List in May raising up to $170m plus a vendor sale. Provider of offshoreand onshore oil and gas drilling and production services in the Middle East and Africa | Integumen— Intention to Float from the personal health company developing and commercialising technology and products for the human integumentary system. Raising £2.25m at 5p. Expected market cap £8.25m. Admission expected 5 April | Franchise Brands—Schedule 1 detailing £28m reverse takeover of Metro Rod. Admission expected 11 April. Alpha FX Group— Schedule 1 from the foreign exchange provider focused on managing exchange rate risk for UK corporates that trade internationally. Fundraise TBC. Admission expected 7 April | K3 Capital Group—Schedule 1 from the Group of business and company sales specialists across business transfer, business brokerage and corporate finance. Admission date and fundraise details TBC | Tufton Oceanic Assets– Offer extended to 9 May to enable investors to complete further due diligence.
Companies: IDP FEN AERO CITY BBSN AVCT AGL SRC BIDS
Confirming our view that Ronez is a high-quality maiden acquisition, SigmaRoc today announces that trading and operational performance at the verticallyintegrated aggregates business on the Channel Islands has been strong in the first few weeks of trading since the deal completed in early 2017. January sales volumes are reportedly above budget, a healthy order book is in place for the remainder of the quarter, and requisite back-office systems are being developed faster and at lower cost than initially anticipated. Furthermore, SigmaRoc has agreed terms with Santander Bank for a £2m revolving credit facility and is close to agreeing an £18m term facility – once finalized these debt facilities should see SigmaRoc sufficiently capitalized to progress initial projects in management’s pipeline of growth opportunities. We thus continue to believe that Ronez has potential to generate EBITDA to the group of at least £6m pa as efficiencies continue to be unlocked under the new independent ownership structure, providing SigmaRoc with a firm platform from which to leverage more acquisitions and/or organic investments and thus deliver further earnings growth as it progresses its niche buy-and-build strategy.
Research Tree provides access to ongoing research coverage, media content and regulatory news on Sigmaroc. We currently have 30 research reports from 4 professional analysts.
|27Jun19 09:15||RNS||Director/PDMR Shareholding|
|11Jun19 15:45||RNS||Result of AGM|
|21May19 11:00||RNS||Change of Adviser|
|17May19 07:00||RNS||PDMR Dealings|
|16May19 12:30||RNS||Notice of AGM|
|16May19 07:00||RNS||Final Results|
|18Apr19 10:30||RNS||Board Appointment|
Amino has acquired 24i Media, industry-leading provider of TV and OTT apps, user experience solutions and services, headquartered in Amsterdam. The €21.4m acquisition (€16m cash, €3.3m in Amino stock and €2.1m deferred consideration conditional on management remaining with the business) will be funded from existing cash resources, retaining a continuing net cash position. 24i contributes to the rapid development of Amino’s strategy for driving high-margin software and recurring revenues, in addition to adding further key elements of provision of an end-to-end TV solution to clients – positioning the group earlier in the engagement during selection of the TV ecosystem. Growing at a strong 25% per annum, 24i lifts Amino forecast revenue by 6% with part-year contribution to November FY19, +22% in FY20 and +28% in FY21 – with EBITDA +1%, +24% and +39%. Combining EBITDA growth with a strong supporting dividend and retaining a healthy balance sheet after an intelligent and timely acquisition, we lift our target price to 215p.
Companies: Amino Technologies
Amino has announced the acquisition of 24i Media, a provider of TV and OTT Apps, user experience and user interface (“UX/UI”) solutions and services. The group is paying total consideration of €21.4m in cash and shares for 87% of the issued share capital, although the subsequent injection of €5m and the AminoTV business into this subsidiary raises Amino’s stake to 92%. This price equates to an EV/Sales of c.4x on an historical basis. The 24i deal will provide Amino with a significantly enhanced geographic footprint and a material extension to AminoTV’s activities. The transaction will also allow Amino to accelerate its strategy of moving towards higher margin, software-led, recurring revenues in a rapidly-changing market.
Companies: Amino Technologies
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: AOR MIRA CYAN ITX HOTC BRK RBD WINK MXCT AAOG
CyanConnode has released a H1’19 trading statement this morning, reaffirming its comfort with market expectations. While H1 revenues were expectedly down YoY, reflecting the isolated impact of the Indian elections on business activity in the group’s key market, the election of the incumbent candidate and burgeoning commercial pipeline are expected to support growth. We believe the shares’ underperformance YTD and current valuation of 1.2x FY19E EV/sales presents a compelling opportunity to gain exposure. We reiterate our Buy rating on the stock.
Australia's top three banks said on Thursday they have agreed to partner with IBM and shopping mall owner Scentre Group to test blockchain technology to digitize bank guarantees. The companies are exploring how to move away from paper-based bank guarantees to cut processing time and the risk of fraud, Australia and New Zealand Banking Group, Westpac Banking Corp and Commonwealth Bank of Australia said in a statement. The US government said on Wednesday it was reviewing licence requests from US companies seeking to export products to China's Huawei "Under the highest national security scrutiny" since the company is still blacklisted. In an email to Reuters, the Commerce Department said that as it reviewed applications, it was applying the "Presumption of denial" standard associated with Entity Listed companies, meaning applications are unlikely to be approved. Symantec shares surged more than 20% in extended trading on Tuesday after Bloomberg reported that Broadcom is in advanced talks to acquire the security software vendor. The deal is reported to be worth more than $16bn, implying an EV/Sales multiple of 3.40x (Bloomberg). Agreement on a deal was close but could be delayed until after the July 4 holiday, according to people briefed on the move.
Companies: KAPE AVST CNS DFX ECSC FLX IGP NCC OSI SWG SOPH TECH AMO IQE
Gamma’s H1 trading update reports another strong performance. In light of that, while management expects full year revenue to be within consensus range, it anticipates that EBITDA and EPS for FY 2019E will be slightly above the range of market expectations. As a result, we are assuming greater overhead efficiency than we had previously allowed for and we are increasing our FY 2019E EBITDA estimate by £1 million to £56.5 million - with the expectation of reassessing this further (positively) at the time of the interims in September. The update confirms that there has been continued growth in the UK across both direct and indirect channels. Cloud PBX sales have performed well again but there is a nod to the effects of an increasingly competitive market in the statement. Additionally, during the period, Gamma implemented the first phase of its digital transformation program in the Direct business. In all, this represents another strong period of growth for Gamma which, as CEO Andrew Taylor notes, balances near-term delivery with the execution of the Group’s longer term strategy.
Companies: Gamma Communications
We’re just over three months in to 2019 and we’ve seen a 10% UK market rally, retracing much of the Q4 decline, such is the nature of fickle market sentiment. That said, many of the issues we wrote about three months ago that were impacting markets remain: notably Brexit, trade wars, geopolitics and global monetary policy. The 2019 rally thus far feels somewhat fragile, with competing forces of optimism on a potential trade deal which could underpin the rally, against the deterioration in underlying economic data that could ultimately undermine the recent market gains. In this context, we look at what the lead indicators and the market are telling us about the industrial cycle and the stocks most exposed to various industrial trends. The Q4 derating in short cycle industrials and autos had been vicious and while these sectors have seen a more solid footing in 2019, with earnings downgrades being priced in, it will likely take a trough in lead indicators before short cycle stocks can start to perform again and re-rate relative to the market.
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Huawei was granted a temporary reprieve as part of a broader accord between the Trump administration and the Chinese central government at a much-anticipated meeting between the countries’ leaders. The autonomous vehicle industry has two big challenges it needs to overcome before self-driving cars become widespread - technology and business models that can make money, according to Michelle Avary, head of autonomous mobility at the World Economic Forum. US chip gear maker Applied Materials on Monday agreed to buy Japanese peer Kokusai Electric for $2.2 billion from KKR & Co Inc, as it bets on rising demand for memory chips used in data centres, 5G phones and AI-powered devices.
Companies: AMO IQE TRAK SEE CPX TCM TRCS QTX
For AdEPT the scale and quality of this acquisition is transformational. Atomwide is highly profitable and has the opportunity to extend its successful model outside the London area, particularly for schools and local authorities adopting the Multi Academy Trust (MAT) model. Incorporating the uplift to earnings and maintaining the same level of comparative differential with AdEPT’s AIM telecom peers leads us to raise our Target Price from 360p to 400p. Our rating remains Buy.
Companies: Adept Technology
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
Gamma’s FY 2018 results show the anticipated continuation of the healthy performance which the Group has provided in recent years. In particular, they feature adjusted numbers which are 3-5% ahead of our estimates which were upgraded after January’s trading update. Importantly, the commentary and the numbers are consistent with recent trading updates and the evolution of Gamma’s strategy which was announced in some detail at the recent Capital Markets Days (CMD). The channel showed further growth during FY 2018 with more contract wins while the direct business also enjoyed a good 2018 – helped by a useful tailwind from contracts won in 2017. The outlook comments are positive and note the visibility afforded by the Group’s recurring revenue base. We make some small positive changes to adjusted estimates for FY 2019E and FY 2020E and introduce estimates for FY 2021E. In viewing the continued momentum in the business, we see our numbers as conservative and we expect to see Gamma further exploit the growth opportunities which it has identified.
Companies: Gamma Communications
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
Finals from Mobile Tornado (MBT.L), a leading global provider of Push To Talk over Cellular (PoC) solutions, were in line with forecasts and February’s trading update with revenue growth (+17.5%) and good cost control resulting in a 49% reduction in adj. EBITDA loss to £0.9m. There was growth both year on year but also H2 over H1 with the success of the new Capex model that bundles hardware and perpetual licences. Recurring revenue was essentially flat. MBT has developed an enterprise-grade platform with a broad and deep set of instant communication applications with competitive advantages in availability, performance, capacity, functionality and price. Technical improvements have expanded the addressable market and management reports numerous engagements with high value Public Safety and Government Agency organisations for the first time as well as new industry verticals that are investigating PoC for worker efficiency applications. The timing associated with these larger deployments are difficult to predict and hence these sit outside our current forecasts. These point to a move into sustained profitability in FY19.
Companies: Mobile Tornado Group
Vodafone has released its annual results. Although there was not much new on the operational side, the dividend was cut to €0.09, as was unfortunately expected (but it was probably the right thing to do). This corresponds to 6% of yesterday’s stock price (vs 10% previously). The major telcos, offering a 4.5-5.5% yield, lend it some upside if the market has confidence, like us, in the sustainability of the dividend. We maitain our Buy on the stock.
Companies: Vodafone Group
Block Energy (BLOE): Result of £12 million Placing | Cairn Energy (CNE): AGM Statement | Falcon Oil & Gas (FOG): Proposed $10 million Placing | Lekoil (LEK): Resignation of CFO | Ophir Energy (OPHR): Sale of Mexico licence | SDX Energy (SDX): Q1 Results | UK Oil & Gas (UKOG): Production Test Update
Companies: BLOE CNE FOG LEK OPHR UKOG SDX