Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on Earthport. We currently have 70 research reports from 3 professional analysts.
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 MTPH 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 HZD MSYS MTPH 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 LID BWNG RLM SND TRI ZIN
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 CPT ORR SCLP SDM LID 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.
Research Tree provides access to ongoing research coverage, media content and regulatory news on Earthport. We currently have 70 research reports from 3 professional analysts.
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Sopheon’s trading update confirms that some of its customers are delaying decisions on contracts because of uncertainty prevailing in their own markets and businesses. At the time of the interim results, Sopheon’s management expected a return to a stronger second half weighting for the full year numbers. That is still the case and the Group continues to highlight the strength of the new business pipeline and a higher proportion of SaaS (Software as a Service) opportunities. Nevertheless, the anticipated signings of a number of opportunities have now slipped into 2020. With revenue visibility currently at $28 million, we conservatively move our current year revenue estimate down 13% to $29 million with a knock-on effect on EBITDA (down 29%). We also assume that buying cycles remain extended during FY 2020E and therefore take a prudent view on our numbers for that year as well with revenue and Adj. EBITDA estimates reducing by 10% and 40% respectively.
The Character Group plc* (CCT.L, 360p/£80.2m) | Blackbird plc* (BIRD.L, 15p/£42.8m) |Gfinity plc* (GFIN.L, 3.90p/£18.5m)
Companies: CCT BIRD GFIN
Bigblu’s trading statement confirmed an H2 performance in line with expectations. Actions to cleanse the customer base should yield operational benefits over time and the above consensus year-end net debt figure (£14m vs £9m) primarily reflected a Brexit-driven inventory build that should reverse in the next few months. Bigblu remains confident in FY20 consensus (see below), which implies an acceleration in revenue growth.
Companies: Bigblu Broadband
Following continued delays of a Brexit agreement, few sectors within the UK market have remained attractive to investors despite low valuations. One sector which has continued to outperform despite the political drama has been the UK video gaming sector (henceforth UK gaming), which we are fans of. We believe a combination of sector-leading growth, strong cash conversion and timely cyclical positioning support our positive view on the UK video gaming sector.
Companies: ABBY AMS ANX ARS ATYM AVON BLVN PIER BUR CGS CAML CDM CSRT TIDE CYAN DTG DEMG ELM EMR FPO FDEV GTLY GENL GHH GRI GEEC GKP HMI HAYD HEAD HILS HTG HUR IBPO IOG INDI JHD JOG KAPE KEYS KWS KCT KGH LAM LIT LOK MACF MANO MOD OXIG PCA PANR APP ESRE PHC PMO RBW RMM RBGP REDD RSW RNO ROR SUS SCPA SEN SHG SOLG SOM SUMO TM17 INCE TWD TRAK TRI VNET VTC ZOO ZTF
PTY is a brand leader in specialist consulting and strategic recruitment linked to data services. As a leading player in its field, the company is now seizing the opportunity to grow profits by lifting its high-value data service activities as a share of the mix. Recent H1 results reflected the significant transition that PTY is going through, while also heralding better numbers further down the line as the mix moves towards higher value services (also helped by success in removing a net £1.2m costs). Complementary activities directly linked to the core data focus are being developed. So far in this process, the company has seen a bigger reorganisation programme than originally anticipated – but has also highlighted the extra potential that this is generating. The company’s target market of data services is estimated at $10bn-plus and growing rapidly, while early signs from PTY’s change programme indicate the potential for meaningful client acquisition, with new clients such as Compass reflecting the opportunity for the business to scale up substantially. The recent announcement of Heads of Terms reached with a partner, Integumen plc, in delivering intelligent data management systems, is potentially a major step forward (to be finalised by 18/12).
Companies: Parity Group
Disney+ hits 22m mobile users, SoftBank backed firm downsizes IPO, German mobile carrier selects Huawei
Companies: ENET 7DIG EVRH ZOO ZOO AMO BOOM MIRA MWE
CentralNic has announced the acquisition of Team Internet for a total consideration of $48m. The acquisition will be financed in part by a further €40m bond issue under identical terms to the €50m issue announced on 23 May 2019. Team Internet operates a ‘domain monetisation’ platform, allowing domain name owners to monetise dormant domains to generate recurring income to offset renewal fees and earn a profit. This provides a complimentary service to existing CNIC services: clients currently pay CentralNic subscription fees to register and renew domain names. Team Internet had revenues of $66.7m in the 12 months to June 2019, with EBITDA of $10.6m. We expect this transaction to have an immaterial impact to 2019E due to timing and be 43.8% accretive to 2020E earnings. Post completion, we estimate net debt:EBITDA will be 2.1x in 2020E falling to 1.6x in 2021E.
Companies: Centralnic Group
Prelims reveal continued progress, particularly within Vicon, where sales grew an impressive 16% y/y, in turn driven by success within both new and existing verticals and so consistent with strategic objectives. Relative to forecasts, sales of £35.4m (+12% y/y) are in line and so too is adj. PBT of £5.5m, following continued investment and also IFRS 15 adoption. We leave forecasts essentially unchanged, believing the drivers for both divisions remain firmly intact and indeed reaffirmed, following an excellent FY’19, particularly in Engineering and ‘Adjacent Verticals’ within Vicon. On valuation, we continue to apply a SOTP methodology, reflecting both Vicon’s industry leading position and cash generative qualities and further, Yotta’s growing ARR in our fair value calculation. This arrives at 108p, implying some 20% upside.
Companies: Oxford Metrics
Corporate life is full of tricky decisions, often having to weigh up various scenarios, each perhaps involving numerous competing forces and associated risks. Therefore it is nice when occasionally a ‘no-brainer’ comes along. Earlier today, Blancco announced that it had lifted its stake in its Japanese JV (FY19 PAT +£1.2m) from 51% to 80% by issuing 813,253 new shares at 132.8p (or £1.08m) to its local ‘mobile reseller / ITAD’ partner Aucnet (Ticker: 3964, Tokyo Stock Exchange, £271m market cap). Here Aucnet is 44.3% owned by Flex Corporation (Singapore based contract electronics manufacturer), and will continue to act as an important route to market in Japan, Asia and other parts of the world, retaining its 20% stake in the JV.
Companies: Blancco Technology Group
Parliamentary and Brexit developments continue to hold centre stage, although the precise path forward remains as unclear as ever. The uncertainty over Brexit, worries over a possible slowdown in the US and the outlook for global economic growth generally have all contributed to the recent falls in markets. While the rally seen since the start of the year has petered out, most indices have still made progress. In Share News & Views we comment on Bloomsbury Publishing, Bonhill Group*, Braemar Shipping Services*, Burford, Clarkson, LightwaveRF*, Marshall Motor Holdings and Synectics*.
Companies: AOR APC BONH BMS CTG CRPR DMTR ESC EUSP FDM FA/ LWRF LSAI NKTN PCF SNX TCN VRE W7L
We continue to take a selective stance on stocks within the small cap Technology space. The sector’s equity performance was lacklustre over 2019, rising 4% and keeping pace with the All-Share index (relative to multi-year periods of outperformance) as investors took a cautious stance on geopolitical and macro risk. We believe cautious sentiment is likely to dominate trade during the first half of 2020 and maintain our preference for consumeroriented players, consistent with our Arden Thematic Technology framework. Our top picks for 2020 are CDM, EVRH*, SUMO and VNET.
Companies: CALL CDM FDEV KWS SUMO TM17
As noted in the trading update, H1 was in line with expectations. It highlighted that this year will be particularly H2-weighted, with £8.8m sales in H1 delivering a small Adj. PBT. The expectation of a record H2 is underpinned by substantial annual contract renewals from licences signed in H2 LY; strong visibility on new contracts due to initiate in H2; and a significant pipeline of new business in negotiation with existing clients who continue to derive substantial benefits from D4t4’s data management solutions. We reiterate our FY forecasts and TP.
Companies: D4T4 Solutions