LIBERUM: UK Small & Mid Cap Dispatches
Podcast: Healthcare, Strategy Flash, Semiconductors, Shaftesbury, Motorpoint, Vertu Motors, Pendragon, Bellway, SMS, Mitie, Mears, Volution,
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25 Mar 20
Small Cap Feast
Inspecs, a UK designer, manufacturer and distributor of eyewear frames to global retail chains announces its intention to IPO onto AIM raising £94m with a market cap of £138m. Admission expected 27th February. FY Dec 2018 numbers show revenue of $57m and underlying EBITDA of $11m
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20 Feb 20
LIBERUM: Support Services & Special Situations - The Outliers – Charts that speak a 1,000 words
For our coverage we have compiled a chart book to help investors identify companies for which the share price performance diverges from the main factors that influence the stock. To help us identify these opportunities, we have created a composite index, or basket, for each company.
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04 Feb 20
84% EPS cut to FY 19 but no change to FY 20 EPS
Unscheduled trading statement and we reduce our FY 2019 FDF EPS by 84% due to provisions and write-downs. Having cut FY 2020 EBIT by 30% to £20m in December, we now leave future estimates unchanged. Current trading is in line with management’s expectations. We increase FY 2019 net debt from £55m to £59m, or 6.0x EBITDA. Management indicates a constructive relationship with its lenders, which is hard to evidence. But there are plenty of strategic options available to improve the balance sheet position, including the sale of the Irish business. If Staffline were to sell the Irish business at the start of FY20, our revised FY20 FD EPS estimate would reduce 29% and reduce revised net debt/EBITDA from 2.6x to 2.2x. Target price reduced from 125p to 100p to reflect the downgrade and worse financial position.
31 Jan 20
LIBERUM: Staffline* - FY19 FD EPS cut by 50% due to poor trading in Q4
Trading has been weaker than expected in the key Q4 trading period. We therefore reduce FY19 EBIT by 39% from £18m to £11m and FD EPS by 50% from 24.8p to 12.5p. For FY20, we also cut EBIT by 30% to £20m and EPS by 34% to 19.6p.
18 Dec 19
LIBERUM: The 4S’s: Support Services & Special Situations - Loosening the purse strings
The UK election on 12th December could result in a Conservative majority, a Corbyn government or something in between. Voters cannot claim a lack of choice, with the Conservative manifesto offering One Nation Conservatism and Labour offering to ‘rewrite the rules of the economy’.
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29 Nov 19
Sector Note -
Topic of the quarter. While the forthcoming election has created a significant level of uncertainty, the direction of travel on infrastructure spend seems certain. Both main parties have promised a significant increase. The Conservatives (currently favourite to win) have promised a £20bn p.a. increase to £67bn. Labour has promised to more than double net capital spending to £102bn, which would make the UK’s capital spending amongst the highest in the world. In addition, CP6 (which promises a 25% increase in renewal and maintenance spend in rail) and HS2 (where a leaked document has supported the project continuing) should move from early stages into more meaningful spend. Latest estimates detail HS2 will cost £88bn, with the pressure upwards. We make no predictions as to the election winner or the exact level of infrastructure spend that will eventually occur, but there is mounting evidence that we are about to see significantly improved market conditions for those companies involved in UK infrastructure. Of the companies we follow, we highlight Renew (perfectly positioned to see the benefit of increased renewal and maintenance spend in rail) and Van Elle (which we expect to see both the benefit of higher rail spend and the competition being lured off onto HS2). There is likely another round of downbeat trading statements to clear before spending filters through to improved company trading (excluding Renew whose recent results impressed), but the outlook is brightening and valuations are not stretched.
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28 Nov 19
Small Cap Feast
Airtel Africa Limited — provider of telecommunications and mobile money services, with a presence in 14 countries in Africa, primarily in East Africa and Central and West Africa, looking to join the premium segment of the main market. Offer TBC, expected TBC ReAssure Group plc - The Group is a leading closed book life insurance consolidator in the United Kingdom with 4.3m policies, £68.7 billion of assets under administration on a Post-L&G Illustrative Basis. It is considering a premium listing segment of the main market Voyager AIR The Com pany w ill focus on the acquisition, leasing and m anagement of prim arily widebody aircraft, w ith asset management services to be provided by Amedeo Limited he IPO will comprise a Placing and Offer for Subscription of Shares to raise up to approximately US$200m· IMC Exploration Group (NEX: IMCP), focused on acquiring and exploring prospecting licence areas w hich have high potential for natural resource, is looking to admit its shares to the standard list and will withdraw for the NEX Exchange. TBC
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27 Jun 19
LIBERUM: Morning Comment
Support Services - The 4 S's Video, Origin Enterprises, Asiamet Resources, Futura Medical, Nokia, Whitbread, Berkeley, CapCo, Market Highlights
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19 Jun 19
LIBERUM: UK Small & Mid Cap Dispatches
Support Services - The 4 S's Video, Asiamet Resources, Futura Medical, Berkeley, CapCo, SMID Market Highlights
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19 Jun 19
LIBERUM: VIDEO: The 4 S’s: Support Services & Special Situations - Diamonds in the rough
In these three short videos, Support Services & Special Situations Analyst, Joe Brent, discusses the in depth research piece - The 4 S’s: Support Services & Special Situations Diamonds in the rough. With a particular focus on the big themes, which stocks have been performing and stock recommendations.
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18 Jun 19
LIBERUM: UK Small & Mid Cap Dispatches
Support Services - The 4 S's, DMGT, Galliford Try, CapCo, Spirent, Lookers, Equiniti, SMID Market Highlights
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31 May 19
LIBERUM: Morning Comment
Support Services - The 4 S's, Outdoor Agencies Video, DMGT, Galliford Try, Mining Update, CapCo, Spirent, Lookers, Equiniti, Market Highlights
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31 May 19
LIBERUM: The 4 S’s: Support Services & Special Situations - Diamonds in the rough
These have been challenging times for many companies in Support Services & Special Situations (The 4Ss), with Contractors, Financial Services and Constructors down 17%, 20% and 35% over the last twelve months. Ongoing Brexit uncertainty is making for a difficult environment where the private sector is not making investments and the public sector is not making decisions.
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31 May 19
Sector Note -
Topic of the quarter. The housebuilding sector has been a bright spot in the construction and support services sectors. The outlook for volumes remains good but concerns over quality and build costs suggest margins could come under pressure. Supported by the Government’s Help to Buy scheme and the continued undersupply of housing in the UK, housebuilders and suppliers in the sector continue to report positive outlooks. Most recently, Bellway reported a 8% rise in EPS, pre-tax ROCE of 24.2% and gearing of <1%, and it said that trading in the first six weeks of the new year had been strong. These are familiar themes in the sector. Henry Boot announced that it had invested in its management team to support the anticipated growth in its small housebuilding business and that its larger land promotion business had traded strongly as its housebuilder customers achieved strong sales and replenished their land banks (a sure sign of confidence). Fulcrum (utility connections) said that a relatively buoyant housing market had led to a large volume of housing projects secured and delivered in H2. There is change coming though. The Times has reported that the government is reviewing Persimmon’s participation in the scheme due to claims of poor quality and unfair lease clauses. Persimmon recently launched a ‘Customer Care Improvement Plan’. The Secretary for State for Housing, Communities and Local Government has stated that he will be considering carefully how the developers who work with the Government meet the standards and quality that customers expect and deserve. So while the outlook for volumes remains good given the importance of government support (since 2013 0.5m completions have used one or more Help to Buy schemes), there must be a question mark over industry margins. For some housebuilders, there will be an additional cost for improved quality and, separately, Taylor Wimpey has highlighted higher than expected cost inflation. This may in turn put pressure on the wider supply chain. We are about to find out which suppliers can hold their prices based on strong market positions, differentiation and (most of all) quality of service or product.
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30 Apr 19
Small Cap Feast
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. 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. Distribution Finance Capital Holdings plc — specialist lender which builds relationships with manufacturers and then provides working capital solutions up and down their supply chains to drive their growth is looking to join AIM. No raise, secondary offering of £19.8m at 90p, expected market cap of £95.98m. Expected 09 May 2019. Alumasc Group plc, the premium building products, systems and solutions group, has announced its intention to move from the Premium Segment of the main market to AIM. Expected 25 June 2019
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30 Apr 19
Small Cap Feast
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. Diaceutics, a data analytics and implementation services company which services the global pharmaceutical industry, is looking to join AIM late March, offer TBC.
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13 Mar 19
LIBERUM: Morning Comment
Real Estate Update, Consumer Staples Weekly, Equiniti, Halfords Group, CEO Video: Origin Enterprises, UK Capital Goods Update, Financial Services Update, Staffline Group, PureCircle, Market Highlights
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12 Mar 19
LIBERUM: The 4S’s - The negative working capital model in Construction is changing
Four measures are being considered to protect the supply chains in the wake of the Carillion collapse, a year or so ago; 1) Project Bank Accounts, 2) The Prompt Payment Code; 3) Retentions Reform; and 4) Assigning non-executives for the supply chain. (Read here). This means that in most cases, Costain is an exception, working capital will become less negative, which has a negative impact on cash flows, while Construction companies grow.
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21 Jan 19
Sector Note - Support Group
Topic of the quarter: Since our first quarterly at the end of 2015, 14 of the 59 companies we included in our valuation tables have been bid for (one delisted and one rather high-profile company has gone bust) and there have been other bids outside of our watch list. Given that those tables were simply designed to show the range of companies present within the sector – not a hit-list of undervalued opportunities – the fact that 24% of them have been taken over is worth revisiting. The demise of Carillion, severe financial pressure at Interserve and warnings from the likes of MITIE, Capita and Serco have dominated news flow but it should be remembered that the sector is broad and highly varied both in terms of business model and performance. If the troubles of a minority of the sector drag down wider valuations, then there is evidence that there is an army of potential bidders (possibly reinforced by further weakness of sterling) ready to take advantage
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20 Dec 18
Small Cap Feast
PetroTal (TAL.TO) - The exploration and production company focused on oil assets in Peru is seeking a secondary AIM quoting before the end of 2018. Path Investments— First acquisition of a 50 per cent. participating interest in the producing Alfeld-Elze II gas field located 22 kilometres south of Hannover in Germany. Seeking £10m raise. Due early Oct Green Man Gaming—pure play e-commerce and technology company in the digital video games industry. revenue CAGR growth of 26.7% in the last three years to £47.5m. Due Mid October 2018. EBITDA Profitable. Offer TBA Crossword Cybersecurity PLC* (NEX:CCS)—the technology commercialisation company focusing exclusively on the cyber security sector is exploring its options in relation to a potential move to the AIM market of the London Stock Exchange which, if it were to proceed, would likely take place over the next few months.
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01 Oct 18
HCM UPDATE - 30.07.18 (EMR.L, IPEL.L, RWA.L, STAF.L, STHR.L)
Empresaria Group plc (EMR.L, 82.5p/£40.4m) Half year trading update (25.07.18) | Impellam Group plc (IPEL.L, 467p/£235m) Half year results (26.07.18) | Robert Walters plc (RWA.L, 780p/£589m) Half year results (26.07.18) | Staffline Group plc (STAF.L, 1,092p/£305m) Half year results (25.07.18) | SThree plc (STHR.L, 344p/£454m) Half year results (23.07.18)
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30 Jul 18
LIBERUM: Staffline* - H1 a little weak, but estimates increased due to acquisitions
H1 18 results a little lower than expected due to higher H2 weighting but no trading exceptionals. FY 2018 FD EPS increased by 1% due to tax and despite the JSOP but expect £5m trading exceptional charge.
25 Jul 18
Structural growth – interesting entry point
Staffline (LON:STAF) is a leading outsourcing organisation, operating mainly in the UK and Eire, through two divisions – Staffline Recruitment and PeoplePlus. The shares have been one of the top growth plays in the staffing services sector in the last 15 years, but are currently trading at a discounted valuation.
11 Jun 18
Small Cap Brunch
Codemasters Group— video game developer and publisher, specialising in high quality racing games. Offer TBA. Seeking £15m in primary. Due 1 June. Strongbow Exploration (TSX:SBW) intends to dual list on AIM. Holds rights to the South Crofty underground tin mine ("South Crofty"), a former producing tin mine located in the towns of Pool and Camborne, Cornwall . The project is estimated to require the Company to raise £25 million over the next 18 months to progress to a production decision. Offer TBS. Due June. Maestrano Group, a software company with operations in Australia (main country of operation), the UK, US and the UAE, is looking to join AIM. Offer TBC, expected late May. Yew Grove REIT—newly formed Company will pursue its investment objective by investing in a diversified portfolio of Irish commercial property. Offer TBA. Due Late May Team17 Group -video games label and creative partner for independent developers. Since 2014, delivered a revenue CAGR of 69% (31 December 2015 to 31 December 2017), with revenues of £29.6m and Adjusted EBITDA of £12.9m. Offer TBA Serinus Energy -international upstream oil and gas exploration and production company. Its principal assets are located in Romania (development phase) and Tunisia (production phase). Raising c.£10m at 15p. Due 18 May. Mkt cap £32.6m
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17 May 18
Small Cap Breakfast
Kore Potash— advanced stage mineral exploration and development company whose primary asset is its interest in the Sintoukola Project, a potash project located in the Republic of Congo. ) Measured, Indicated and Inferred Mineral Resource of 5,953Mt at an average grade of 22.0% KCl. Offer TBA. Due end March. Perfomatrix PLC, a global end to end Performance Marketing technology and services company headquartered in the UK, is looking to join AIM in early April 2018, offer TBC Crusader Resources, an ASX-listed public company incorporated in Australia, which is primarily focused on the exploration and development of gold assets in Brazil. Offer TBC, expected late March. SimplyBiz, a Financial Services Firm, looking to join AIM raising £30m via placing and £34.6m via a sale of existing ordinary shares at 170p giving a market cap of £130m. Expected 4 April Bacanora Lithium—Readmission. No new money. Mkt cap £140m. Due 21 March. the new holding company for Bacanora Minerals Ltd Core Industrial REIT—established to invest in Irish-based industrial properties, predominantly located in the Greater Dublin Area. Vendor placing and new funds to a total of €225m, Target gross proceeds €207m. Expected Mid March Polarean - Medical drug-device combination company operating in the high resolution medical imaging market. Offer TBC. Due26 March
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19 Mar 18
HCM UPDATE - 29.01.18 (CPS.L; EMR.L; FDM.L; STAF.L)
CPL Resources plc (CPS.L, 530p/£144m) Half year results to 31.12.17 (25.01.18) | Empresaria Group plc (EMR.L, 112.5p/£55.1m) Full year trading update to 31.12.17 (24.01.18) | FDM Group plc (FDM.L, 967p/£1,040m) Full year trading update to 31.12.17 (23.01.18) | Staffline Group plc (STAF.L, 1,003p/£280m) Preliminary results to 31.12.17 (23.01.18)
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29 Jan 18
Topic of the quarter: It’s alive! Infrastructure and assets in general have traditionally been built to provide a fixed service and are maintained and renovated to a fixed schedule – dead and dumb. Technology will completely change this. Sensors and wireless networks have the potential to allow assets to ‘talk’ to us. These living, smart assets will be able to tell us when they need maintenance, how efficient they are being and provide the data that will directly influence their construction, availability and use. The implications for construction costs through to operating costs and the ability to service changing user needs are very significant. The Support Services, Construction and Technology sectors need to work together to maximise this potential, recognise and harness the power of data, and invest in and embrace change. These are daunting challenges in highly competitive markets where politics play a role, different skill sets (that are currently in short supply) are needed and shareholders are looking over management's shoulders. However, the prize for those companies who get it right is significant, and the risk from not changing much greater. There are positive early signs with Crossrail providing tangible examples of Smart Infrastructure using innovative sensors.
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04 Dec 17
Since our first quarterly at the end of 2015, 12 of the 59 companies we included in our valuation tables have been bid for. Given those tables were simply designed to show the range of companies present within the sector, not a hit-list of undervalued opportunities, the fact that 20% of them have been taken over is worth looking at in more detail. At a time when warnings and share price collapses from the likes of Interserve, Carillion, MITIE, DX and Capita and Serco have dominated newsflow, it should be remembered that the sector is broad and highly varied both in terms of business model and performance. If the troubles of a minority of the sector drag down wider valuations then the evidence is that there is an army of potential bidders (reinforced by the weakness of sterling) ready to take advantage.
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26 Sep 17
LIBERUM: Staffline Group* - Continuing the OnSite expansion
Interim revenues lower than expected, but 3% EPS growth YoY, which is in line. Cash generation in line in H1 and we continue to expect net debt of £1m at the FY. We leave FY estimates unchanged, with higher revenues expected in Staffing in H2 as OnSites contribute for the full period.
28 Jul 17
LIBERUM: Staffline* - H1 in line and estimates unchanged
Interim revenues lower than expected, but 3% EPS growth YoY, which is in line. Cash generation in line in H1 and we continue to expect net debt of £1m at the FY. FY estimates unchanged, with higher revenues expected in Staffing in H2 as OnSites contribute for the full period. Staffing ahead of expectations with 9% OnSite growth and stable gross margins.
26 Jul 17
Joules Group (JOUL): Small beat to upgraded forecasts (BUY) | Quartix* (QTX): Interims show the benefits of Fleet focus (CORP) | Scientific Digital Imaging* (SDI): FY 2017 – acquisitions performing well (CORP) | OptiBiotix* (OPTI): First launch of LPLDLcapsules in Germany (CORP) | Staffline (STAF): New market opportunities and a strong balance sheet (BUY) | Minds + Machines* (MMX: .vip renewing at 75% (CORP)
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26 Jul 17
HCM WEEKLY UPDATE - 24.07.17
Empresaria Group plc (EMR.L, 151p/£74m) H1 Trading Update to 30 June 2017 | FDM Group plc (FDM.L, 915p/£984m) H1 Results to 30 June 2017 | Gattaca plc (GATC.L, 303p/£94m) Full year Trading Update to 31 July | Impellam Group plc (IPEL.L, 648p/£326m) H1 Results to 30 June 2017 | Nakama Group plc (NAK.L, 1.5p/£1.8m) Full Year Results to 31 March 2017 | Parity Group plc (PTY.L, 10.25p/£10.4m) H1 Trading Update to 30 June 2017 | Robert Walters plc (RWA.L, 473p/£352m) H1 Results to 30 June 2017 | Staffline Group plc (STAF.L, 1,211p/£337m) H1 results to 30 June 2017 | SThree plc (STHR.L, 328p/£421m) H1 results to 31 May 2017
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24 Jul 17
LIBERUM: Staffline* - At the pre-close we increase revenues but leave EPS unchanged
Pre-close guides to in line trading, but we increase revenues at Staffing to reflect Brightwork and OnSite growth. We leave our EBIT assumptions at Staffing and Employability unchanged, with no change to EPS. We continue to estimate FY net debt of £1m.
04 Jul 17
Europa Oil & Gas* (EOG): Wressle planning meeting outcome (CORP) | HML Holdings* (HMLH): Final results in line (CORP) | 600 Group* (SIXH): FY results, downgraded forecasts (CORP) | Staffline (STAF): On track for a billion (BUY) | Savannah Resources* (SAV): Portuguese lithium exploration update (CORP)
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04 Jul 17
Small Cap Breakfast
Harvey Nash Group— Provider of professional recruitment and offshore solutions moving to AIM from Main. No capital to be raised. Mkt Cap c. £57.8m. | AnimalCare—RTO of Ecuphar NV, a European animal health company. £30m raise. Ecuphar FY16 rev £68.4m, underlying EBITDA £8.9m. Due 13 July. | Angling Direct -Schedule 1 from the specialist fishing tackle retailer in the UK . Raising £9m of which £7.4m new money. Mkt cap c. £27.4m. Due 13 July | NEXUS Infrastructure—Offer TBA. Provider of essential infrastructure services to the UK housebuilding and commercial sectors. Expected 11 July. FYSep16 rev £135.7m. | Tatton Asset Management –Sch 1. Provider if services to FCA authorized financial advisers. Raising £10m at 156p. Secondary offer £41.6m. Due 6 July. | GYG—Intention to float by the superyacht painting, supply and maintenance company. Due 5 July. Raising £6.9m new plus vendor sale of £21.5m at 100p. Mkt Cap c. £47m. Revenue of €54.6m in FY16 and adjusted EBITDA of €6.7m. | Greencoat Renewables - Schedule 1. Targeting a portfolio of operating renewable electricity generation assets, initially investing in wind generation assets in Ireland. Offer TBC. Due Mid July. | QUIZ— Omni-channel fast fashion womenswear Company intention to float. Due July 2017. Offer TBA | I3 Energy –Schedule 1 Update. Independent oil and gas company with assets and operations in the UK. Offer TBC, Mid July admission. | Verditek— Sch 1 update. The Company's subsidiaries will be involved in advanced solar photovoltaic, filtration and absorption technologies specialising in providing environmental services. Issue price 10p. Admission late June. | Rockpool Acquisitions—Northern Ireland based Company seeking strong NI acquisition with an international outlook. Raising £1.5m at 10p. Due 5 July. | Hipgnosis Songs Fund investment company offering pure-play exposure to Songs and associated musical intellectual property rights. Prospectus yet to be published. | Impact Investment Trust—Exposure to a diversified portfolio of funds providing SMEs across developing economies with the growth capital they need to have a positive impact on the lives of the world's poorer populations. Raising up to $150m at $1.00 | Residential Secure Income - social housing REIT raising up to £300m Admission due c.12 July. | Curzon Energy—Report on Proactive Investors of intended LSE float this year with acquisition of coal bed methane assets in Oregon. Looking to raise £3m plus. | NLB Group—financial and banking institution based in Slovenia, with a network of 356 branches. Seeking Ljubliana Stock Exchange listing with GDRs on the LSE. Expected mid June. | Kuwait Energy— has not been able to complete its initial public offering as announced in its Intention To Float of 3 May 2017. However, in light of positive feedback from potential investors, the Company remains committed to obtaining a London listing and continues to explore its options. | Supermarket Income REIT– Up to £200m raise to acquire a diversified portfolio of supermarket real estate assets in the UK, providing long-term RPI-linked income. Due 21 July.
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04 Jul 17
In light of the UK election, we highlight our favoured overseas earners, operators in defensive markets and those capable of taking market share, but our main topic is the structure of the UK employment market. The UK has the lowest unemployment rate since 1975 at 4.6%, and there are, consequently, fewer and fewer candidates to fill vacancies. This suggests recruitment companies may struggle to grow, but there are structural changes in the UK labour force that offer growth opportunities. Temporary labour continues to expand relative to the point in the economic cycle, its importance accelerating since 2008, and part-time labour has grown at twice the rate of full-time labour throughout both the last cycle and over the long term. There are, of course, specialist temporary recruiters, but the part-time market appears relatively untapped (at least by the quoted companies) despite being c.5x the size of the temporary segment in terms of numbers.
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19 Jun 17
Keywords Studios (KWS): First engineering acquisition (BUY) | Shanta Gold (SHG): Completion of €2.1 million underground equipment financing (BUY) | Staffline (STAF): Excellent progress continues (BUY) | Blancco Technology Group (BLTG): Plugging the hole (SELL)
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18 May 17
Small Cap Breakfast
I3 Energy –Schedule 1. Independent oil and gas company with assets and operations in the UK. Offer TBC, 26 May admission. | Opera Investments –Reverse Takeover of Kibo Mining’s subsidiary Kibo Gold. Raising £1.5m. Expected mkt Cap £6.5m. 23 May. | Verditek— Schedule 1 update. On Admission, the Company's subsidiaries will be involved in advanced solar photovoltaic, filtration and absorption technologies specialising in providing environmental services. Issue price 10p. Admission in late May. | AEW UK Long Lease REIT—Intention to Float. Up to £150m raise. Admission early June. UK specialist and alternative property | Alfa Financial Software –Intention to float. Mission-critical software platform purpose-built for asset finance enterprises. Vendor sale of 25% plus. FYDec16 rev £73.3m (CAGR of 24% from 2012). Adjusted EBIT £32.8m. | Kuwait Energy— $150m raise plus vendor offer. Admission due June. 2p reserves 810.0 mmboe | ADES International— Provider of offshore and onshore oil and gas drilling and production services in the Middle East and Africa, seeking raise up to $170m plus vendor sale under a Standard Listing of the Main Market. Admission due May 2017. | Tufton Oceanic Assets– Extended to 9 May on specialist funds segment of Main Market to enable further due diligence. |PRS REIT—Private rental sector REIT raising up to £250m. Admission due 31 May
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18 May 17
Small Cap Breakfast
I3 Energy –Schedule 1. Independent oil and gas company with assets and operations in the UK. Offer TBC, 26 May admission. | Opera Investments –Reverse Takeover of Kibo Mining’s subsidiary Kibo Gold. Raising £1.5m. Expected mkt Cap £6.5m. 23 May. | Eve Sleep— Schedule 1 from the e-commerce focused, direct to consumer European sleep brand. Raising £35m at £1.01. Expected mkt cap £140m. Expected 18 May 2017 | Velocity Composites—Schedule 1. Manufactures advanced carbon fibre and ancillary material kits (predominantly carbon fibre) for use in the production of aircraft. 18 May 2017 admission expected. Raising £14.4m at 85p. Expected mkt cap £30.4m | Verditek— Schedule 1 update. On Admission, the Company's subsidiaries will be involved in advanced solar photovoltaic, filtration and absorption technologies specialising in providing environmental services. Issue price 10p. Admission in late May.| AEW UK Long Lease REIT—Intention to Float. Up to £150m raise. Admission early June. UK specialist and alternative property | Alfa Financial Software –Intention to float. Mission-critical software platform purpose-built for asset finance enterprises. Vendor sale of 25% plus. FYDec16 rev £73.3m (CAGR of 24% from 2012). Adjusted EBIT £32.8m. | Kuwait Energy— $150m raise plus vendor offer. Admission due June. 2p reserves 810.0 mmboe | Spinnaker Opportunities—Seeking RTO. Targeting a single, material acquisition in the energy or industrial sector. Due 17 May. | ADES International— Provider of offshore and onshore oil and gas drilling and production services in the Middle East and Africa, seeking raise up to $170m plus vendor sale under a Standard Listing of the Main Market. Admission due May 2017. | Tufton Oceanic Assets– Extended to 9 May on specialist funds segment of Main Market to enable further due diligence. | PRS REIT—Private rental sector REIT raising up to £250m. Admission due 31 May
STAF REDX MORT OCI C21 KRS
15 May 17
We have run our new quantitative Slide Rule over the Support Services sector. Of the c.500 stocks we have ranked on a Quality, Value, Growth and Momentum basis in the small to mid-cap space, 21 Support Services stocks appear in the top 100. Fulcrum leads the pack, ranked no. 6 out of 500 (and not coincidentally our top pick for the year), closely followed by Brainjuicer (no.7), Sanne (no.8), Learning Technologies (no. 12) and Next Fifteen (no.16). These stocks have high ROCE on both an EBIT and cash basis, strong growth prospects, earnings and share price momentum and valuations that, in this context, remain attractive. At the other end of the spectrum, HSS, Management Consulting, Serco, Mitie and Lakehouse appear towards the bottom of the rankings. Strong returns could, of course, be made if any of these turn their fortunes around, and management has been changed at Lakehouse, Serco and Mitie.
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10 Mar 17
Small Cap Breakfast
RedstoneConnect (REDS.L) | Paysafe Group (PAYS.L) | 1Spatial (SPA.L) | MayAIR Group (MAYA.L) | Staffline (STAF.L) | Autins Group (AUTG.L) | Tandem group (TND.L) | Kromek (KMK.L) | CentralNic (CNIC.L) | Coinsilium (NEX:COIN)
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07 Mar 17
Framework position secured, contracts next
The share price is factoring in significant risk on Staffline's ability to replace its Government contracts and weather any storm that Brexit produces. However, Staffline is the only company to have won a place in all seven regions of the new Work and Health Programme framework, flexible labour (such as that provided by Staffline) is an essential part of the UK economy and the group has a proven ability to continue to grow against changing market conditions. We expect contract wins to be announced throughout 2017 and reiterate our Buy recommendation.
03 Feb 17
LIBERUM: Staffline Group* - Staffing increases in the mix
FY 16 results 3% ahead with 23% FD EPS growth and weakness in Employability as expected, though higher exceptionals. No change to headline EPS at this stage, yet cost savings coming through and upside building. Net debt decreased as expected to 0.8x EBITDA due to better collections and we continue to assume net cash in FY 17.
27 Jan 17
LIBERUM: Staffline* - FY 3% ahead but no change to estimates
FY results 3% ahead with 23% FD EPS growth, with weakness in Employability as expected but higher exceptionals. No change to headline EPS for FY 17 and FY 18 so early but cost savings coming through and upside building. Net debt decreased as expected to 0.8x EBITDA due to better collections, and we continue to assume net cash in FY 17.
25 Jan 17
Renew (RNWH): Essential services efficiently delivered (BUY) | Minds + Machines* (MMX): Y/E update: Strong growth sustained in H2 (CORP) | Staffline (STAF): Contract wins likely and will drive the shares (BUY) | Cambridge Cognition* (COG): CANTAB Mobile receives 510(k) clearance (CORP) | The People’s Operator* (TPOP): Trading update (CORP)
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25 Jan 17
LIBERUM: Staffline* - EBIT in line but net debt a little higher
We maintain our EBIT estimates, but reduce 2016 and 2017 FD EPS by 2% and 1% for interest. We increase our FY net debt estimate from £34m to £44m, but expect net cash in FY 2017. OnSite wins at Staffing result in higher revenues and stable margins.
12 Dec 16
Following on from our last quarterly we have delved further into the potential and challenges that the Internet of Things present the sector. Having spoken to a wide variety of companies from the sector (large and small, UK and overseas) it is apparent that there is going to be a very significant increase in the amount of data either generated by or available to Support Service companies. The key to generating value from this change will be breaking down the silos in which data is currently held, attracting and investing in the right skills and talent, seeing beyond the short-term investment that is likely to be needed and engaging with clients on a higher, more strategic level. If the sector doesn’t react, then the door is wide open for the Technology sector.
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17 Nov 16
LIBERUM: Staffline – Concerns over Brexit leave attractions under priced
We believe that some of the Brexit risks are overstated. The impact of changing migration rules are mixed. Despite political uncertainty, we expect some clarity on the Work Program in the Autumn Statement.
26 Sep 16
LIBERUM: Staffline Group – Solid H1, prudent forecasts maintained
Strong interim results as expected. At Staffing, revenue increased 44.4% with 36 OnSites added during H1. We now forecast 375 OnSites for the FY but lower gross margins. At Employability growth has been subdued but operational performance is strong.
02 Aug 16
LIBERUM: Staffline - More sales at lower margins but prudent estimates maintained
Strong interim results as expected, with 49% EPS growth. Strong and better cash generation in H1 and now expect net cash in FY 2017. Prudent post Brexit EPS estimates maintained but Staffing sales higher and margins lower.
27 Jul 16
Excellent progress in H1
In an encouraging H1 trading update, Staffline has confirmed trading remains strong and in line with expectations. There has been continued strong demand from new and existing customers in recruitment, and the group continues to source record numbers of workers to meet this demand. There has been no change in demand following the EU referendum, and the improvement in the Work Programmes is now clearly showing through. We continue to believe the fundamental demand for Staffline's recruitment services will remain strong, supported by the cost savings that a flexible labour model offers clients and its differentiated model. However, we believe the risk to underlying GDP has increased with Brexit and this tempers the level of progress that we assume the group can make in the short term. We have reduced our FY 2016 EPS and price target by 5%. We now forecast 22% EPS growth in FY 2016 followed by 5% in FY 2017 and FY 2018. The significant decline in the share price has more than accounted for the increased macro risk, in our view, and we reiterate our Buy recommendation.
05 Jul 16
A significant proportion of the Support Services industry is characterised by regular, scheduled visits driven by fear that something might be about to go wrong. Maintenance schedules by Facilities Managers or visits by Home Carers for example. An entire cost base dedicated to continuously rotating skills around a client base (preventative) sits alongside another cost base focused on fixing a problem when the safety net fails (reactive). But what if you could tell that a part is about to fail or a particular service is about to be needed (predictive)? The Internet of Things holds enormous potential for the Support Services sector. Those fleets of white vans that currently monotonously tour clients will only be seen when they are on-route to a specific need, laden with precisely the right part.
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02 Jun 16
LIBERUM: Staffline* - Strength in Staffing off-setting weakness at Employability
Strength at the lower margin Staffing business. Employability referrals are falling but much improved performance at A4E. Now expect the new Work Program to be bigger than the old, and scope for share gains.
03 May 16
Small caps win dividend race
Dividend income typically comprises a substantial proportion of the total long-term return from equities. This will especially be the case at a time of low interest rates and low inflation/growth. A segmental analysis for 2013- 2016 shows that the further you go down the market-cap scale the more robust dividend growth, especially in the coming year. While there is the potential for short-term performance from “renting” some of the high yielders in the FTSE 100, overall there is better value to be had from a portfolio of good-quality smaller growth companies, some of which are also capable of delivering special dividends.
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28 Apr 16
This quarter’s topic: Is the model good enough? Growth in the current low-growth environment is hard fought but the Support Services sector contains a range of innovative business models that are enabling strong progress against a continued difficult backdrop. Having looked at the level of value-add (and ability to raise margins) in the last quarterly, we now look at EPS forecast trends. Innovative models that separate a company from the competition, support market share gains and drive growth are evidenced by forecast upgrades that are likely to repeat as the model continues to deliver.
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24 Feb 16
Staffline produced another strong FY, with 55% EPS growth. There were £4m of unanticipated exceptionals and net debt increased. Higher rated Staffing has increased in the mix. We increase FY 2016 EPS by 9% and expect an unlevered B/S in FY 2018. There is potential for a macro slow-down. But estimates seem conservative and 65% of Staffing sales are food related. P/E of 8.8x Burst a Bn target. TP increased from £14 to mix and possible accretion.
29 Jan 16
Strong FY 15 results prompts 9% increase to EPS forecasts
FY results increase 55% and 5% ahead, but unexpected exceptionals. FD EPS estimates increased by 9% for FY 16 and 10% for FY 17. Working capital increases net debt as expected and should reverse. 13.7% EBIT growth at Staffing following a year of record Onsite wins. Positive outlook at Staffing, with strength in Food and Driving and scope to grow share. Weak volumes but operational performance at PeoplePlus. Delay to Health Work Programme tender process should be positive. Growth outside of the Work Programme. Hold to BUY, TP 1400p (from 1500p)
27 Jan 16
Trading update guides to in line earnings with net debt higher
Pre-close guides to in-line earnings, which represents 51% FD EPS growth yoy. Net debt increased due to growth and acquisitions. There is potential for a FY 2016 EPS upgrade. Record OnSite wins at Staffing results in higher revenues and stable margins. At PeoplePlus, lower revenues but A4E restructuring ‘remains on track’. Milestone and Diamond will be accretive in FY 2016. The Work Program is generally effective, which reduces the risk to 2017 onwards. Mixed macro data with positive hiring outlook but reduced staff availability. Upside pressure built into the share price. HOLD.
06 Jan 16
dotDigital*: Strong final results; target price raised (CORP) | Weatherly International*: Quarterly operations update (CORP) | LiDCO*: US purchasing agreement for 38 hospitals (CORP) | LiDCO*: Interims in line (CORP) | Staffline: Prospects strengthened (BUY) | Proactis*: Growth and potential (CORP)
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13 Oct 15
The People’s Operator*: Interims (CORP) | Netcall*: Prelims focus on use of cash (CORP) | Iofina*: Encouraging interim results (CORP) | Universe Group*: Interims in line (CORP) | Aggregated Micro Power*: Interim results (CORP) | Staffline: Growth opportunity strengthened (BUY)
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29 Sep 15
ServicePowers into the black, Sareum powers towards Phase 1 and MX Oil power drills for oil
BOOM Half Yearly Report, COG New Research, CRU Preliminary Results, FEVR Interim Results, HCM Innovation Patent, IVO Investments, JRIC Half Yearly Report, MJW Launch of Naked Wines, MARL* Resource Estimation, MXO* Drilling Commences and Director Dealing, NAK Final Results, PEG* Trading Update, SAR* CHK1 Update, SDI Final Results, SVR Trading Statement, STAF Interim Results, SNX Interim Results
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31 Jul 15
Mounting upside pressure
Interim results in line. At Staffing EBIT increased 15% with 32 OnSites added during H1, indicating our forecast of 40 additions for FY 15 may be conservative. At Employability there has been diversification from Work Programme which now represents 67% of revenue. Potential for further synergies and upgrades. Net debt better than expected and management forecast net cash in 2017. ‘Burst the Billion’ 2017 PBT target of £50m implies a P/E of 9.2x. TP increased from 1400p to 1500p. BUY.
23 Jul 15
In line interims, with potential for further upgrades
Interim results in line. Upbeat outlook and potential for upgrades. Staffing is gaining momentum, with encouraging additions of OnSites. At Employability, management is diversifying away from the Work Programme and there is scope for more synergies. Net debt is better than estimates due to lower debtor days. Expect no material impact from the National Living Wage. £50m PBT target suggests P/E of 9.2x. BUY, £14.00 target price.
22 Jul 15
Synairgen*: AstraZeneca commences AZD9412 Phase II trial in severe asthma (CORP) | The Mission Marketing Group*: Trading update (CORP) | Ideagen*: Prelims (CORP) | Amino Technologies*: Interims, placing and acquisition (CORP) | Staffline: EPS up 45% – strong momentum continues (BUY) | Gemfields*: Initial ruby resource – Montepuez mine (CORP) | Weatherly International*: Q4 operating results (CORP) | Fenner: Trading update (HOLD) | Sound Oil: Initiation of coverage – analyst interview (BUY)
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22 Jul 15
Eastern European ATTRAQTion, MX Oil* to roll out the barrels, GOAL exports real football stateside
ATQT New Contract Win, BOOM Agreement, AVN Contract Win, CNIC Agreement, COS Final Results and Partnership, GOAL Trading Statement, IVO Funding Found, MIRA Final Results, MXO Investment and Placing, NRR Acquisition, OPTI Contract Signed, PNA Market update, RSTR Partnership, STAF Trading Update
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17 Jul 15
Estimates increased with potential for more to come
FD EPS increased 3% for 2016 and 7% for 2017, but left unchanged for 2015 due to the investment in growth. H1 PBT and FD EPS increased 5% to £10.1m and 33.5p. Estimates exclude A4E synergies, which could provide a further 20% upside in 2016. Staffing estimates are increased due to a strong start to OnSites, with scope for further upgrades. Employability estimates left unchanged, which should be conservative given the potential for £7m of A4E synergies. A4E is performing in line, but it is early days. Political risks reduced following the Conservative win. A CY 16 P/E of 12.3x is attractive. BUY, TP from 1274p to 1400p
02 Jul 15
Lok’nStore*: EPS and target price upgraded (CORP) | Staffline: No.1 position secured and earnings enhanced (BUY) | Seeing Machines*: Fleet is launched (CORP) | Horizonte Minerals*: Bulk sample collected (CORP) | red24*: Positive trading update and upgrade (CORP) | Sinclair IS Pharma: FDA approval of Silhouette Instalift (HOLD)
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27 Apr 15
Venture life helps the Chinese Aged, SQS gets on the Italian Job, what next for Next 15
DDDD placing, ABC acquisition, ABDP new contract win, BMK preliminary results, CYAN £1m order, EKF collaboration, EMIS contract award, FPM new exploration licences, FITB joins Jawbone, partners with Cancer Research UK and court case judgement, GFM production update, HAYT £3m secured loan note programme and contract win, LWRF preliminary results, NFC proposed placing and trading update, SQS acquisition, STAF full year results, VLG distribution deal .
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03 Feb 15