Earthport’s FY’18 results were well flagged, and there were no surprises in the release. Of more interest is the strategic review carried out by the new management team. The core payments business has been separated from standalone FX business, and a strategy has been put in place to maximise the potential of the underlying payments platform, while building towards profitability. The shares have continued to drift on uncertainty in recent months, and we believe the current price significantly undervalues the core payments business. Prudently assigning no value to the FX business (profitable but lower quality) results in an EV/Sales on the core transactional payments business of just 0.8x. Rebuilding investor confidence will take time, but we see significant upside potential if the group can execute on the new strategic plan.
Curtis Banks Group (CBP LN) Discerning approach to non-standard, strong controls in place | Earthport (EPO LN) Restatement of fair value adjustments | Elektron Technology (EKT LN) Forecasts upgraded following very strong Q3 | Midatech Pharma (MTPH LN) Forecast update post sale of US operations | Wilmington (WIL LN) Tracking the right way, but more to do
Companies: CBP EPO CKT WIL
Cello Health (CLL LN) Building in caution | Earthport (EPO LN) Board changes | Hargreaves Services (HSP LN) Completion of Brockwell Energy Disposal
Companies: CLL EPO HSP
Augean (AUG LN) Strong H1 PBT growth; material reduction in net debt | Brewin Dolphin Holdings (BRW LN) Impressive 8% annualised discretionary flows in Q3 | Burford Capital (BUR LN) H1 results – c.15% up on a strong comp – increasing estimates and TP | Earthport (EPO LN) Continued progress with operational changes | EKF Diagnostics (EKF LN) Exclusive agreement with Asahi Kasei expands US products portfolio | IDOX (IDOX LN) Framework in place for improved future performance | Marston’s (MARS LN) Positive Q3 update goes a long way to allay forecast and DPS concerns | Rathbone Brothers (RAT LN) Solid H1 earnings, but still modest organic net inflows | Victrex (VCT LN) Another strong volume performance, FY guidance maintained
Companies: AUG BRW BUR EPO EKF IDOX MARS RAT VCT
Earthport (EPO LN) New CEO appointment | Horizon Discovery Group (HZD LN) Attractive growth story: reiterating Buy and 230p target price | Microsaic Systems (MSYS LN) Distribution agreement with Stable Arm | Midatech Pharma (MTPH LN) Exciting newsflow highlights longer-term potential | Oxford Metrics (OMG LN) Disposal of Yotta Surveying | Realm Therapeutics (RLM LN) Atopic Dermatitis Phase II fully enrolled & on track: data due Q3 2018e | Small-cap quantitative research Strong performance from quality – 11 focus stocks | StatPro Group (SOG LN) Positive AGM statement
Companies: EPO MSYS OMG RLM SOG
Earthport has reported its H1’18 results, which were largely flagged in the trading update last month. The results reflect a challenging period, where underlying progress with both existing and new customers was offset by the previously announced loss of a large piece of domestic UK business. Total revenue grew 8% to £15.4m on the back of flat transaction numbers and an increase in average price per transaction. The EBITDA loss increased in-line with our full year projection and we make no changes to our primary forecast assumptions. With the on-going operational changes increasing the group’s ability to fulfil its potential, we continue to believe Earthport is well placed to gain a significant piece of the attractive cross-border payments market.
Be Heard (BHRD LN) CFO appointment | Churchill China (CHH LN) Executing against LT targets and modest FY18 upgrades | Earthport (EPO LN) Positive outlook despite challenging period | Halfords Group (HFD LN) CFO departure disappointing but Halfords can attract new talent | Mobile Streams (MOS LN) Subscriber growth has picked up again | T. Clarke (CTO LN) High quality focus paying dividends | Trend spotting - Synchronicity II Better H2 for hard hit consumer and retail stocks?
Companies: BHRD CHH EPO HFD MOS CTO
Earthport has announced that it has expanded its relationship with existing client, Japan Post Bank. The group will now deliver outbound cross-border payment services across a number of additional regions, including North America and Europe. Expanding transaction numbers in Asia, and increasing the volume of outbound payments are key goals for Earthport. Asia is expected to contribute significantly to global cross-border payment volume growth in the coming years, while bi-directional flows bring the potential for a significant margin improvement. With existing customers delivering in excess of 10% growth y-o-y, we are encouraged to see the group continue to expand its existing relationships as well as convert its new customer pipeline.
Earthport’s H1’18 update confirms trading is in line with revised expectations. Despite the previously announced setbacks in the period, revenue grew 8% to £15.4m, with the EBITDA loss comfortably on track to meet our full year forecast. The pipeline for H2’18 and FY’19 remains strong which, combined with continued growth from existing customers, leaves the group well placed to deliver cash flow break even during FY’19. Execution remains key, but we continue to believe that Earthport is well placed to capture a significant slice of the vast cross-border payments market, and that the ongoing strategic changes will maximise the group’s ability to fulfil its potential.
Avon Rubber (AVON LN) UK MoD agreement confirmed | Earthport (EPO LN) Underlying progress in H1 | LiDCO Group (LID LN) FY trading update & new HUP wins | N Brown Group (BWNG LN) Valuation anomaly at 2008 levels (9x P/E, 7% yield) | Realm Therapeutics (RLM LN) Positive clinical and business update | Sanderson Group (SND LN) Good start to year, on track | Trifast (TRI LN) Q3 trading update in line | Zinc Media Group (ZIN LN) Board changes
Companies: AVON EPO BWNG RLM SND TRI
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.
TruFin—holding company of an operating group comprising three growth-focused FinTech and banking businesses operating in three niche lending markets: supply chain finance, invoice finance and dynamic discounting. Offer raising £70m at 190p with
market cap of £185m, expected 21 Feb
Polarean - The medical drug-device combination companies operating in the high resolution medical imaging market. Offer TBC. Due 22 Feb
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
Companies: ORPH MHC ORR SCLP SDM TPOP EPO IDP TENG
Actual Experience (ACT LN) 2018 year of execution | Adept4 (AD4 LN) Asset light strategy starting to deliver | Bodycote (BOY LN) Forecasts increased following positive year end update | City of London Investment Group (CLIG LN) Q2 FuM +6%, H1 profits expected in line | Clinigen Group (CLIN LN) H1 trading update in line with expectations | Earthport (EPO LN) Board changes
Companies: ACT CLCO BOY CLIG EPO CLIN
Earthport has announced that Simon Adamiyatt is stepping down from his position as CFO and Executive Director. The board is currently seeking a replacement for Simon, and in the interim period Asif Ali, current Finance Director and Company Secretary, will act as Interim CFO. Earthport released a disappointing trading update in December however the medium term outlook remains positive. The new business pipeline is extremely healthy and we were encouraged by news of an existing client expansion worth over 1 million incremental transactions annually last month. We continue to believe that Earthport is well placed to corner a significant slice of the vast cross border payments market and that the changes announced since the December update will maximise the group’s ability to fulfil its potential.
Earthport’s trading update indicates a weak end to cal’17, with delays to new client implementations and the loss of a major piece of business resulting in 17% revenue downgrades to FY’18. Despite these setbacks, the medium term outlook remains positive. The new business pipeline is extremely healthy and an existing client expansion worth over 1 million incremental transactions annually is ramping up after starting earlier this month. The group has also announced that Hank Uberoi will move to Executive Chairman to focus on strategic opportunities. While the setback in FY’18 is highly disappointing, we continue to believe that Earthport is well placed to corner a significant slice of the vast cross border payments market and that the changes announced today will maximise the group’s ability to fulfil its potential.
Earthport has announced that it has expanded its network to enable inbound payments into Bangladesh. The partnership with BRAC Saajan Exchange Ltd, the payments arm of Bangladesh’s fastest growing bank, marks Earthport’s entry into Bangladesh, and continues the group’s strategy to increase the number of Asian markets it services. A large proportion of the growth in cross-border payments volumes is coming from emerging markets in Asia, Middle East & Africa and Latin America, and Earthport is increasingly well placed to benefit from this growth.
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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
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.
WEY Educaon (WEY) – Corporate – Trading significantly ahead; strong momentum prompts new ’21/’22E forecast
Touchstar (TST) – Corporate – Update points to a robust trading performance and strong cash generaon in the year
Companies: Wey Education PLC (WEY:LON)Touchstar plc (TST:LON)
Instem has delivered a positive trading update for the year to 31 December 2020 – revenue growth was “in excess of 11%”, suggesting a performance in line with our estimates, and net cash appears to have ended the year extremely strongly, with a figure of £26.7m vs our expectation of £22.4m.
Companies: Instem plc
iEnergizer announced the proposed payment of a special dividend worth 49.4p ($0.668) per share. The group has stated the stock will go ex-div on 14th January 2021, with a pay date of 5th February 2021. At a total value of £94m ($127m), this dividend represents a significant payout for shareholders, c.13% of Group's market cap of £730m. We acknowledge this to be a clear signal of confidence in the growth trajectory and current operations.
Companies: iEnergizer Limited
Instem has delivered another year of double digit revenue growth, in line with expectations. Progress has been made across all three business streams, buoyed by strong demand from new and existing customers. A key highlight is cash generation, with Y/E net cash £3.2m better than expectations at £26.7m (pre-IFRS16). The outlook remains positive, with further organic growth opportunities in areas such as SEND exploitation and Informatics. The company remains in active discussions with a number of acquisition targets following the £15.0m fundraise in July. The valuation remains extremely undemanding and we continue to see significant upside potential for a business with multiple organic and acquisitive growth opportunities.
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
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
Touchstar is a supplier of mobile data computing solutions and managed services to a variety of industrial sectors. The group has this morning released a year-end update, pointing to the fact that the Board expects to report a profitable outcome for the year (H1 2020A PBT £130k, PAT £150k). Importantly, the positive cash generation seen in H1 2020A has continued into H2, with Touchstar ending the year with a net cash position of £1.6m (gross cash £1.9m), a further increase of £300k from that reported at 30th June.
Companies: Touchstar plc
Cornish Metals (TSX-V: CUSN) intends to list on AIM. The Company is proposing to raise £5 million by way of private placement of new Common Shares (the "Fundraising") to advance the United Downs copper-tin project. The Company expects that Admission will become effective in February 2021. The Company's Common Shares will continue to be listed and trade on the TSX-V in Canada. Further media reports that Dr Martens, the British Boot brand is planning an IPO on the LSE. It is currently owned by PE group, Permira who is expected to sell down its stake at the IPO. March 2020 YE the group had revenues of £672m and EBITDA of £184m. Deal size TBC. VH Global Sustainable Energy Opportunities plc, a closed-ended investment Company focused on making sustainable energy infrastructure investments, today announces intends to launch an initial public offering of shares on the Official List (Premium) of the Main Market of the London Stock Exchange. Due by Early Feb. Moonpig, the digital greeting card company, is planning an IPO with a potential valuation of £1bln, according to multiple media reports. Further details expected to be announced over the next two weeks.
Companies: ZPHR PANR PRSM SENS CYAN G4M ITX CRCL FEN ZIN
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)
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)
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
ZOO’s H1 FY21 included a tumultuous few months as COVID-19 effectively shut off work on new media content production which impacted subtitling projects, but studios rapidly adopted Cloud-based dubbing and the group’s digital packaging business enjoyed a dramatic rebound in fortunes. We note the positive commentary in today’s RNS and upgrade our FY21E and FY22E estimates to reflect the recent performance and, in particular, the exceptionally strong H2 trading that the group is enjoying.
Companies: ZOO Digital Group plc
Crimson Tide has reported a strong set of H1 results evidencing very strong sales momentum backed by long-term contracts and cash flow. H1 sales grew by 40% and EPS by 154%. Net cash has improved to £0.8m at June 2020 from nil at December 2019. The strategic focus on transportation and supermarkets is working well, partnerships are improving routes to market, and there is growing traction from investments in innovation. We have left our forecasts unchanged for now, but recognise positive pressure and have upgraded our target price from 3.1p to 4.3p. We reiterate our view that Crimson Tide’s valuation will be dictated by its ability to convert the significant opportunity rather than short-term metrics. H1 results show the group is nicely on track to do exactly that.
Companies: Crimson Tide Plc