IIP has announced a further decline in its NAV per share from 28p as at 31 March 2018 to 21p as at 30 September, reflecting continuing delays to completion of the container terminals at its key asset, DLI. These delays are being caused by a lack of available funding, which the financing agreements announced on 31 July should address. The company now expects these agreements to be completed by the end of the year. The company flags that these financing agreements will be dilutive to NAV per share. The Nagpur terminal has continued to ramp up activities, the IHDC hydro portfolio production increased YoY and the IEL wind energy portfolio production was marginally down YoY. At period end the company had unaudited cash balances of £1.7million and on balance sheet loans of £56.1million. Completion of the financing agreements will see the company sell 24% of DLI for $50million with a further $75million injected over time directly into DLI through the issue of convertible securities, which will result in an ultimate holding in DLI of between 20% and 49%.
Companies: Infrastructure India
Elementis (ELM LN) Interims confirm FY guidance, Mondo acquisition under review | Infrastructure India (IIP LN) Proposed financing to generate $125m
Companies: Elementis Infrastructure India
IIP’s half year results to 30 September 2017 reflect weakness in the Indian Rupee exchange rate around the period end and ongoing difficulties in progressing the development of the main transport and logistics asset, DLI. The reported NAV per share has declined from 41p at 31 March 2017 to 35p at the half year point. While the policy background remains favourable to the logistics sector in India, current operating conditions are tough and IIP requires additional finance to compete the build-out of its container terminals. The well-publicised discussions to raise this finance are reported to be advanced, but given the inherent uncertainty our forecasts remain withdrawn.
Advanced Medical Solutions (AMS LN) In line FY trading update | Infrastructure India (IIP LN) NAV declines further - financing discussions continue | IQE (IQE LN) Apple investment in VCSELs highlights upgrade potential | ReNeuron Group (RENE LN) Interim results and IND approved to commence Phase IIb in stroke | Severfield (SFR LN) Significant Google contract confirmed | Synairgen (SNG LN) Revised terms with Pharmaxis | Tribal Group (TRB LN) Financial performance materially ahead | Vernalis (VER LN) Trading update highlights Tuzistra® XR run-rate below expectations
Companies: AMS IQE VER SNG IIP TRB SFR RENE
Frontier Smart Technologies Group (FST LN) (VIDEO SUMMARY) Value in innovation, growth and cash generation | Infrastructure India (IIP LN) Difficult conditions cause DLI delays | Microsaic Systems (MSYS LN) Difficult H1, but new focus showing +ve signs | Midatech Pharma (MTPH LN) H1’s & £6m Placing; key trials to start in Q4 | Mobile Streams (MOS LN) Argentina still tough, growing pains in India | Vp (VP/ LN) Positive half year update
Companies: VP/ MOS IIP MTPH MSYS FST
Huge difference between Management fair value estimates and market cap remains
Infrastructure India’s portfolio performance in the half year to 30 September was characterised by difficult operating conditions for the key asset, DLI, offset by a significant benefit from a strengthening Indian Rupee and an improvement in the Indian risk free rate used for asset valuations. Balance sheet liquidity improved with the disposal in the period of the toll-road interest for £22.4m. However further measures or renegotiation will be needed to deal with the £13.4m working capital loan due in April 2017. While the DLI asset is under pressure from a disrupted transport sector and delays to completion of its terminals, it will be difficult to make substantial inroads to the still huge 81% discount to NAV. This looks an opportunity for the future.
COLEFAX GROUP PLC (CFX LN) | COLLAGEN SOLUTIONS PLC (COS LN) | CRAWSHAW GROUP PLC (CRAW LN) | CRONIN GROUP PLC (CRON LN) | FRANCHISE BRANDS PLC (FRAN LN) | INFRASTRUCTURE INDIA PLC (IIP LN) | MEDAPHOR GROUP PLC (MED LN) | POWERFLUTE OYJ (POWR LN) | PURPLEBRICKS GROUP PLC (PURP LN) | TRIBAL GROUP PLC (TRB LN)
Companies: COS MED POWR CRAW TRB FRAN DMTR PURP CFX IIP
Greene King (GNK LN) Stronger than anticipated finals | Harwood Wealth (HW LN) Interims in-line, healthy acquisition pipeline | Infrastructure India (IIP LN) Sale of interest in WMP toll road completes | OMG (OMG LN) Appointment of Non-Executive Chairman
Companies: OMG GNK IIP HW/
EKF Diagnostics (EKF LN) Appointment of Christopher Mills as Chairman | Infrastructure India (IIP LN) Asset disposal and DLI update | Liontrust Asset Management (LIO LN) Positive flows in volatile Q4, Euro income acquisition | Minds + Machines Group (MMX LN) Transformative outsourcing contracts | Senior (SNR LN) High quality Aerospace manufacturer
Companies: EKF IIP LIO MMX SNR
IIP has achieved a decent sale of the toll road minority interest (WMP), albeit at a small discount to balance sheet valuation, and provided an encouraging operational update on the key logistics business, DLI. Under the circumstances, the WMP disposal offers some validation of the NAV approach, while of course also increasing balance sheet liquidity. In the context of movements in the Rupee exchange rate and the risk-free rate, we expect any change to NAV arising from this update to be immaterial and accordingly do not alter our March ’16 NAV per share estimate of 49.8p. In light of this the discount, which has widened again to 70%, looks to us too high.
As foreshadowed by the company’s notice of results on November 25th, the Rupee exchange rate and softer background business conditions have caused the NAV per share to fall to 48p from 55p at the March 2015 year end. Most of this impact was seen in the valuation of the key logistics investment DLI, where nonetheless steady progress towards completion of the 4 container terminals has been made. Operationally, the other assets have performed broadly in line with expectations during the first half of the year. The shares stand at a sharp 62% discount to the current NAV reflecting macro headwinds in the near term.
NAV of 55p per share at 31 March 2015 was better than expected. This was driven mainly by movements in the Indian risk-free rate and INR exchange rate and means that despite some recent movement in the share price, it remains at a 71% discount to NAV. This looks too high as the key DLI subsidiary increasingly transitions from regulatory/bureaucratic/financial risk to operational risk. Operationally, all assets have performed broadly in line with expectations during the second half of the year.
Infrastructure India has provided an encouraging update today on expected year-end NAV, the ramp-up of business in the all-important DLI container transport and logistics business and the steady state of the other assets. Management’s expectation that the NAV has resumed upward progress to about 55p as at 31 March (our estimate was 47p), after the difficulties of recent times, suggest strongly that the implied 74% discount to NAV should start to narrow.
Infrastructure India (IIP LN) NAV resumes progress, discount looks too high | Latchways (LTC LN) Results in line; Outlook improving | Premier Technical Services Group (PTSG LN) First acquisition enhances offering with turnaround potential | Redcentric (RCN LN) Delivering organic growth
Companies: IIP PTSG RCN
Research Tree provides access to ongoing research coverage, media content and regulatory news on Infrastructure India.
We currently have 16 research reports from 2
Ramsdens has reported a strong set of trading results in the last twelve months to March 2020. COVID lockdown has led to store closures, which will lead to weaker trading over the following months. However, Ramsdens has a very solid balance sheet, is diversified and is well positioned to re-open stores and continue its growth. We use an 8x multiple on last 12 months to March 2020 earnings as a reflection of a normalised earnings base which reduces our target price to 162p from 180p. At this target price Ramsdens would trade on a CY20 P/B of 1.5x. This target price offers 15% upside and we re-iterate BUY.
Premier Miton have reported their H1’20 results, which have shown delivery of key operational milestones during the period and strong performance despite the COVID-19 fears. Since the end of March, markets have recovered and net flows have been positive in April, meaning AUM has reached £9.9bn. We believe this shows the resilience of the business and that the benefits of the merger are coming through. As delivery continues we believe Premier Miton will see a significant re-rating as the shares currently trade on just 9.7x CY20 P/E, a significant discount to peers and historic levels of 12.5x. We reiterate our BUY rating and DCF based target price of 152p, implying 52% upside.
Companies: Premier Miton Group
The Renewables Infrastructure Group - £120m capital raise
Marwyn Value Investors - Proposed share acquisition by manager and crystallisation of carried interest
DP Aircraft I - 5% ownership stake in Norwegian
Companies: Renewables Infrastructure Group Marwyn Value Investors
The Merchants Trust (MRCH) is managed by Simon Gergel at Allianz Global Investors (AllianzGI). Aiming to continue to provide a high and growing level of income, he is adjusting the trust's portfolio in the wake of dividend cuts sparked by the negative economic effects of COVID-19. If there is an income shortfall in this financial year, MRCH is well positioned to maintain its dividend, with revenue reserves of more than 1x the last annual payment. It has not been an easy period for value managers over the last decade as growth stocks have led the charge; however, Gergel has outperformed the UK market over this period in both NAV and share price terms. The board reduced MRCH's gearing in late January 2020, which was opportune timing ahead of the recent significant stock market weakness.
Companies: Merchants Trust
Companies: AVO AGY ARBB ARIX BUR CMH CLIG DNL GDR HAYD PCA PIN PHP RE/ RECI RMDL STX SHED VTA
The covid-19 pandemic has had a devastating effect on the share price of property companies, with 31% wiped off the value of their total market capitalisation during the first quarter of 2020.
Companies: AEWU CREI CSH BOOT INL HLCL THRL SUPR RESI RGL DIGS GR1T SOHO PHP BOXE ASLI UTG AGR UAI BLND UANC CAL SHED CWD WHR EPIC WKP GRI YEW HMSO PCA INTU NRR
The COVID-19-related crisis further increases the top-line pressure. However, the quarter showed ongoing efficiency gains and, above all, management’s cost of risk guidance stood significantly below our stress test based projections.
Companies: Lloyds Banking Group
In this note, we analyze the indebtedness of 35 international E&Ps publicly listed in the UK, Canada, Norway, Sweden and the USA. For each company, we look at (1) cash position, (2) level and nature of debt (including covenants), (3) debt service and principal repayment framework and (4) Brent price required from April to YE20 to meet all the obligations and keep cash positions intact. We also estimate YE20 cash if Brent were to average US$20/bbl from April to YE20. While the oil demand and oil price collapse are of unprecedented historical proportions and the opportunities to cut costs much more limited than in 2014, most companies (with a few exceptions) entered the crisis in much better position than six years ago, with stronger balance sheets and often already extended debt maturities. In addition, this time around, many E&Ps have already been deleveraging for 1-2 years and are not caught in the middle of large developments that cannot be halted. The previous crisis also showed that debt providers could relax debt covenants for a certain period as long as interest and principal repayment obligations were met. This implies that as long as operations are not interrupted and counterparties keep paying their bills (Kurdistan), the storm can be weathered by most for a few quarters.
With (1) Brent price of about US$50/bbl in 1Q20, (2) reduced capex programmes, (3) material hedging programmes covering a large proportion of FY20 production at higher prices and (4) limited principal repayments in 2020, we find that most companies can meet all their costs and obligations in 2020 at Brent prices below US$40/bbl and often below US$35/bbl) from April until YE20 and keep their cash intact, allowing them to remain solvent at much lower prices for some time. In particular, Maha Energy and SDX Energy are cash neutral at about US$20/bbl. When factoring the divestment of Uganda, Tullow needs only US$9/bbl to maintain its YE20 cash equal to YE19. Canacol Energy, Diversified Gas and Oil, Independent Oil & Gas, Orca Exploration, Serica Energy and Wentworth Resources are gas stories not really exposed to oil prices and Africa Oil has hedged 95% of its FY20 production at over US$65/bbl.
Companies: AKERBP AOI CNE CNE DGOC EGY ENOG ENQ GENL GKP GPRK GTE HUR IOG JSE KOS LUPE MAHAA OKEA ORC.B PEN PHAR PMO PTAL PXT RRE SDX SEPL TETY TGL TLW TXP WRL
A number of REITs have the ability to thrive in current market conditions and thereafter. Not only do they hold assets that will remain in strong demand, but they have focus and transparency. The leases and underlying rents are structured in a manner to provide long visibility, growth and security. Hardman & Co defined an investment universe of REITs that we considered provided security and “safer harbours”. We introduced this universe with our report published in March 2019: “Secure income” REITs – Safe Harbour Available. Here, we take forward the investment case and story. We point to six REITs, in particular, where we believe the risk/reward is the most attractive.
Companies: AGR CSH ESP DIGS IHR LXI PHP RESI SIR SUPR THRL SOHO BBOX SHED WHR
AFH Financial released an AGM statement suggesting that trading for FY20 remains in line with expectations. In the first four months of FY20 AFH has continued to see inflows at Q4’19 levels. The company also expects to see continued consolidation and a growing need for financial planning. Although the current market uncertainty has hit the industry, we believe that AFH is less affected than others by market movements due to its protection broking revenues and initial advice fees totalling 40% of revenues. We leave our forecasts and TP unchanged. These show AFH trading on 10.8x FY20 P/E falling to 9.7x in FY21, and yielding 2.8% rising to 3.1%. BUY.
Companies: AFH Financial Group
In the past month the group has made significant progress in pivoting its business away from its traditional face-to-face model. Although lending levels remain appropriately subdued, it has achieved an impressive collections performance, with its largest business running at about 90% of pre-lockdown levels. This, combined with the group’s high risk-adjusted margins has enabled it to generate £3m of FCF in the first three weeks of April, taking its net cash position to £38.7m as of 21 April. This strong financial position, combined with the group’s innovative approach to product development puts it in an extremely strong position to serve its clients and win share when the current government restrictions are eventually lifted. Reflecting this positive outlook we reiterate our BUY rating.
Companies: Non-Standard Finance
There has been much comment on the fact that equity markets in the US and Europe have been shrinking for some years now, certainly in terms of the number of quoted companies, if not in total market capitalisation (MCap). This paper has been written with the assistance of the Quoted Companies Alliance (QCA) and focuses on the evidence for such in the London market and, in particular, that for smaller and midcap companies. It assesses that evidence and considers explanations. Finally, we ask why it matters, and assuming that it does, what practical steps can be taken to reverse the trend. Successful public markets have been a key part of the United Kingdom’s economic success for generations, even centuries, and we should not allow them to wither on the vine.
Companies: AVO AGY ARBB ARIX ASAI DNL GDR HAYD NSF PCA PIN PXC PHP RE/ RECI RMDL STX SCE TRX TON SHED VTA
TruFin is an operating company with holdings in four FinTech businesses that operate in underserved niches. The businesses have established market positions, proven routes to market and are growing fast. With this growth requiring no additional equity, and the realistic prospect of all four being profitable within our forecast horizon, we believe that executional delivery, and a resolution of the current shareholder uncertainty will result in the current discount to fair value unwinding. We initiate with a BUY rating and a 29.3p target price, implying 83% upside.
Smaller companies are usually a problematic area to invest in during significant downturns or recessions; and the sharp fall in 2020 hasn’t been an exception. In this article we assess the performance of smaller companies trusts throughout the pandemic, while identifying the factors that have differentiated the winners from the losers. This includes the impact that cash, market cap exposure, sector allocation, revenue exposure and growth or value biases have had, with some surprising results. We also ask whether now is an attractive time to invest in smaller companies, highlighting the trusts which stand out to us…
Companies: THRG GHE MINI RMMC ASIT ASL MTE TRG BRSC DSM
Despite the disruption caused by COVID, Harworth has continued to make good progress across each business area. Liquidity has also been enhanced with an increase in the RCF announced at the end of April.
Companies: Harworth Group