Investors have been choosing to take a more risk-averse position here until prospects for the UK consumer and AO’s German operation become clearer
Companies: AO World Plc
After a year of difficult macro and weaker than initially expected performance AO responded by reorganising management behind founder John Roberts. Today the company is effectively reporting on what was delivered under its now-replaced strategy. News on current work is more general. But we would expect more meaningful analysis from the company and some news on how it expects to be set up over the next few years at the Interims in November.
We have met returned CEO (founder) John Roberts. Our overall view is that he is motivated to re-energise the business over so long as it takes and to protect the value of his investment. He is clearly a top sales person so some context will be needed at the Prelims and probably more meaningfully the 2019/20 Interims in November. But overall we came away positive.
AO’s CMD highlighted the enthusiasm of the company anew and focused on the batch of new business areas under development. These included significantly a potential new Consumer Credit offer and more visibility on the already announced B2B division. On the more cautious side the current UK Major Domestic Appliances (MDA) market remains difficult in demand terms (down around 5% in 2Q as per GFK), albeit mitigated by a more benign pricing environment. The company’s upbeat view that recent flat-lining of online participation in the UK MDA market can return to growth is as yet un-supported by evidence. The new UK advertising campaign appears initially successful and Net promoter Scores (NPS) have moved up out of their (already good) post IPO range. We regard the group as well positioned and more investor focused than historically with a multitude of meaningful strategies and and products set around its core UK MDA proposition.
AO World (AO) is the leading online retailer of domestic appliances in the UK and additionally has a significant non-UK operation in Germany and the Netherlands. Our initiation today examines its scaling-upstrategies and its potential to re-rate. We conclude that scaling potential is already being demonstrated outside the UK where we believe the ultimate value lies while the UK needs to show how it can grow its core MDA sales to counter recent signs of maturity. We initiate with a buy recommendation and a 172p target price.
This update will probably be viewed with short term caution as UK sales growth has slowed in June and the benefit from the World Cup comes into question. Europe looks good to us and that is where the upside from future scalability will emanate to drive re-rating if that happens. Sales in 1Q were +8% in the UK and +46% ex currency in Europe. There may be a negative read-across into Dixons Carphone (DC LN, 182p, Hold, TP 185p).
CentralNic-Schedule 1 from the business operating in proprietary retail platforms selling domain names and associated web presence services including hosting and email on a subscription basis, has acquired KeyDrive S.A which constitutes a RTO. Raising £24m at 52p, combined market cap of £88.7m
Trackwise—established business that manufactures specialist products using printed circuit technology. Offer TBA. Due Late July
Ovoca Gold (to be renamed Ovoca Bio PLC) - RTO of IVIX, a Russian company developing a drug candidate for the treatment of female sexual dysfunctions. No monies to be raised, market cap of £8.5m, due 30 July
Nucleus Financial—independent wrap platform provider . FYDec17 revs £40.36m and PBT of £5.1m. Offer TBA. Due late July. Kropz PLC-Intention to float by the emerging plant nutrient producer with an advanced stage phosphate mining project in
South Africa and exploration assets in West Africa
Companies: HUM ZOE AO/ CAR BION TAX SPE BHRD AMYT
AO World (AO.LN, 151p, NR) has reported in line with its post close update issued on 6th April (underlying EBITDA losses £3.4m against £4.2m loss at that time).There is no formal guidance for 2018/19 but the company notes a good start to trade with UK sales up double digits year to date (v +6.2% 1Q last year). Lots of moving parts in this one notably the progress of the European loss making business but the statement does not suggest any big change to expectation which currently indicates a move into overall positive EBITDA around £5m. The comments on current trade should reassure after Dixons update – albeit white goods were doing best in their product mix.
The online appliance retailer had a bumper Christmas period bolstered by a 60% spike in European sales.
Research Tree provides access to ongoing research coverage, media content and regulatory news on AO World Plc.
We currently have 28 research reports from 7
Sumo is trading strongly, with several drivers that could lead the company to outperform 2021 earnings expectations, in our view. Even based on conservative earnings expectations, we believe shares offer attractive value to growth.
Companies: Sumo Group Plc
IQE has announced it expects FY20 revenues to be c £178m. This is ahead of our estimates, which we revised upwards in November, reflecting outperformance in both the wireless and photonics segments. We have updated our FY20 forecasts. Given IQE’s leveraged business model, this results in a 64% uplift in EPS. Noting the uncertainty about the effect of a pandemic-related recession on the rate of smartphone sales growth, we leave our FY21 estimates unchanged for the time being.
Companies: IQE plc
As a nation, we love knocking ourselves. However in truth, we’re actually a pretty pioneering bunch. For instance, the experts at Oxford University & AstraZeneca have developed one of the world’s 3 most important vaccines in double quick time. Plus, many other British firms are creating similar breakthrough Covid inventions, such as Kromek.
Companies: Kromek Group Plc
GB Group (GBG) has sold its marketing services business to HH Global Group for an undisclosed amount. This was not an area of focus for GBG and has been in managed decline for several years. Just before Christmas, GBG boosted its Fraud business with the acquisition of fraud investigation automation software from HooYu for £4m in equity. We have revised our forecasts to reflect the disposal and acquisition, leading to small upgrades to our EPS forecasts. Both deals emphasise the company’s strategy to focus on Identity, Location and Fraud.
Companies: GB Group PLC
Synairgen (SNG.L): Completion of recruitment for at home trial | Sensyne Health (SENS.L): Research agreement with The Royal Wolverhampton NHS Trust
Companies: Synairgen plc (SNG:LON)Sensyne Health Plc (SENS:LON)
The Panoply has reported a very positive trading update for the Q3 to December and indicates that full year results for the year to March will be significantly ahead of expectations. The group won £15m of new contracts in Q3, including the significant assignment from the Planning Inspectorate announced at the November interims. This further demonstrates the successful development of the group, notably its expansion into healthcare and establishment of FutureGov and Foundry4 as full-service brands. In November we raised our FY21 Revenue and PBT forecasts by +5%/+10% to £44.5m/£4.9m and we further raise by +8% to £48.0m/£5.3m this morning. We choose to leave our FY22 estimates unchanged at this stage, but clearly the group has very strong momentum and we see clear scope to raise our forecasts as we progress through the year. We continue to view The Panoply as ideally placed to benefit from the structural tailwinds in digital transformation and, underpinned by our increased forecasts, raise our target price to 235p (was 220p).
Companies: Panoply Holdings Plc
MySale has delivered a striking turnaround in profitability with H1 FY21 EBITDA of A$2.5m up an impressive A$6.1m YOY. We believe this marked turnaround validates its AZN First strategy and signals the Group now has a robust and cash generative operating platform on which it can scale.
Companies: MySale Group plc
FY20E order intake growth of 61% means Corero's revenue for last year of $16.8m will exceed our prior forecast. The trading update confirms c73% annual growth in revenues and further expansion of the annualised recurring revenue base. This performance highlights the increasing prioritisation of protecting networks against cyber and DDoS attacks. Buy.
Companies: Corero Network Security plc
EMIS saw trading gradually improve through H220 to finish the year slightly ahead of expectations. The company continued to support customers in dealing with the pandemic, with the recently acquired Pinnacle Systems’ software now being used in the nationwide vaccination programme. Progress was also made in product development with the launch of the first EMIS-X analytics product. We maintain our forecasts.
Companies: EMIS Group plc
H1A delivered a very resilient performance given the backdrop of halted deliveries and reduced manufacturing capacity. Orders and shipments are resuming and a ramp up in activity levels is expected in H2. A cash outflow in H1A has been supported by new committed facilities and gross cash levels look set to support the business successfully through the second half and beyond.
Strong Q4 performance from Audioboom plc, the leading global podcast company, as it continues to outpace the global podcasting market. Audioboom bounced back from the Q2 CV-19 lull in Q3 and growth accelerated in the final quarter. Q4 revenue of c. $8.5m was a record, up 25% on the same period last year and the previous record, and FY20 revenue of c. $26.8m (+20%) was comfortably ahead of forecast (ACLe: $25.5m). There were also record KPI performances (brand count, eCPM and available ad inventory). Coupled with continued cost control, adj. EBITDA loss fell to c. $0.2m in Q4 and c. $1.8m for FY20 (FY19: $2.9m, ACLe: $1.9m). The company has good access to capital ($6.6m at year end) and management expects to achieve a maiden positive adj. EBITDA for FY21. We introduce FY21 forecasts and set a fair value of 420p/share, equivalent to an FY20 EV/Revenue of 3.3x and 2.5x FY21. Although a premium to the current price, this still represents a significant discount to recent industry transaction multiples.
Companies: Audioboom Group PLC
Tern plc* (TERN.L, 7.1p/£23.5m) Portfolio update: Strong business momentum (12.01.21) | Audioboom plc* (BOOM.L, 276p/£43.3m) Expanded content network (15.01.21)
Companies: Tern Plc (TERN:LON)Audioboom Group PLC (BOOM:LON)
The Panoply’s update on trading for the three months ending 31 December 2020 confirms the group has enjoyed a successful third quarter and continues the trend of positive news flow from the group. Against the backdrop of COVID-19 driven macro-economic challenges, The Panoply has reported an acceleration of new business wins. In our view this further validates both the Panoply’s innovative business model and with operations now focussed on two full-stack brands, demonstrates the strategic value of the acquisitions made to date. Management has increased guidance on FY 21E performance, and we take the company’s cue and revise our revenue and adjusted EBITDA forecasts upwards by 8% and 10% respectively.
Sage Group released a good set of Q1 20/21 figures with organic recurring revenue growth of 4.7% in line with the full-year guidance (+3-5%). This performance was spread out across various cloud native software and essentially driven by the gain of new customers. Lastly, no deterioration in the churn rate is reassuring considering the continuing tough market conditions. All in all, Sage Group confirmed FY2020/21 guidance.
Companies: Sage Group plc
VR Education Holdings (VRE) expects FY20 revenue growth of around 38% to €1.42m. This was
driven by substantial growth in ENGAGE revenue and its user base, with ENGAGE now
accounting for over 40% of group revenue. While ENGAGE benefited from changes resulting
from COVID, they also caused museum closures, which reduced Showcase Experience revenues.
VRE has also outlined its medium-term outlook objectives for 2023 – 2025. Key targets include
ENGAGE revenue of €10m, 500 active enterprise customers and 100K monthly users.
Companies: VR Education Holdings PLC