UK250

UK 250 equity research

Explore the most viewed and latest equity research and media content for the next 250 largest listed companies in the UK.

UK 250 Equity Research

Broker research, valuations, & analysis on the UK 250

18 Sep 19

LIBERUM: Sirius Minerals* - Running numbers on potential financing solutions

Yesterday Sirius has announced the cancellation of its Stage 2 financing plans and the implementation of a strategic review after it failed to issue the $500m high yield bond required to unlock the full financing package. What matters for shareholder returns from here is the structure of any future financing solution and its likelihood of success.

Companies: Sirius Minerals

27 Aug 19

Foreign buyers gorging on UK stocks

Like whales feasting on Krill, overseas firms are today stuffing themselves silly with choice fillets of corporate Britain. Why? Well look no further than geopolitical tensions and Brexit, which have disproportionately impacted UK equities and the £. Indeed the FTSE100 has lagged the S&P500 by a hefty 19% over the past 2 years, with Sterling dropping to 34 year lows vs US$ (see below). That said to us, based purely on fundamentals, this period of underperformance appears over-cooked, leaving many quality British companies vulnerable to predatory interest.

Companies: VOD AV/ AGK CHG CNA ITV BRBY SMIN CTEC SXS OXIG MGAM IMI WEIR WMH KMK EYE GATC ULS INS ALFA RDT TSTL ELCO MBH BLTG IHC 9537 CSRT NBI

23 Jul 19

Quarterly Research Outlook - Summer 2019

In January, we provided a list of 11 stocks for 2019 that we believed would perform strongly with attractive catalysts that could lead to material outperformance. In this Quarterly Research Outlook, we revisit these views, analysing what has happened and how the remaining six months of the year could play out.

Companies: AMS ANX ARS ATYM AVON BLVN PIER BUR CGS CAML CALL CSRT TIDE CYAN DTG DEMG ELM EMR FPO FST GTLY GENL GRI GEEC GKP HMI HAYD HEAD HILS HTG HUR HYR IBPO IOG INDI JHD JOG KAPE KEYS KCT KGH LAM LIT LOK MACF MANO PCA PANR PXC PHC PMO RBW RMM REDD RSW RNO RKH RBGP ROR SUS SCPA SHG SOLG SOM TWD TRAK TSG TRI VNET VTC ZOO ZTF

16 Sep 19

FLASH: Guyana discovery opens new play

The Joe-1 exploration well (TLW 60% WI, op, ECO/EOG 15%, AOI c. 2.8%) has found 14 m of net oil pay in high-quality oil bearing sandstone reservoirs of Upper Tertiary age. This derisks the petroleum system of the western area of the Orinduik block, where a number of Tertiary and Cretaceous age prospects have been identified. Additional thinner sands above and below the main pay at Joe-1 are being evaluated for possible incremental pay.

Companies: Tullow Oil

05 Jul 19

UK Housebuilding Sector in 2Q 2019

Dwight Barkley PhD is a Professor of Mathematics at the University of Warwick. He studies waves in excitable media such as the Belousov-Zhabotinsky reaction, heart tissue and neurons. In 1997, Dr Barkley and Dr Laurette Tuckerman, a Paris-based mathematical physicist, developed ‘bifurcation analysis for time steppers’, which is a technique for modifying computer codes to perform bifurcation analysis. More lyrical, perhaps, Dwight is also known for formulating an equation to estimate how long it will be until a child in a car asks the question “are we there yet?” And, it is shown on the image on page 3 of this report. Herein, there are three factors which decide the timing of this wearisome question i.e. one plus the number of activities, divided by the number of children in the car squared. That figure is then added to the time it took the family to get into the car and set off on its journey. Crucial in putting off the first query as to the proximity of the destination are onboard activities for children i.e. no activities equals a question before leaving the driveway. Dr Barkley says: “Mathematics can help answer many of life’s questions”. If only the Brexit journey were that simple. It is not. We are all children now stuck in the back seat; and, maybe, we are still on the driveway with a dearth of on-board activities. Yes, three years on Brexit-resolution-fatigue is making itself felt across the board, including the UK Housebuilding Sector, where the fall in value in 2Q’19 was 7%. Berkeley said something similarin its final results, on 20 June, when it lamented an uncertain operating environment and “a lack of visibility in the political outlook”; and its PBT is expected to fall by a further third this fiscal year. The daily Sector value chart is also lurching from top-left to bottom-right (as is the British Pound versus the Euro). Yes, there were two palpable positives in 2Q from the NHBC and UK Finance about building activity and mortgages; plus, on the third day of 3Q, CBRE’s bid for Telford Homes. Nonetheless, prospective earnings growth for the Sector is now flat in both 2019 and 2020. This is about the journey.

Companies: MCS TW/ PSN BDEV ABBY CSP WJG BVS TEF INL GLV GLE CRST BWY BKG

18 Jul 19

UK Renewable Energy Infrastructure Funds – For all the fans

Over the past two decades, onshore wind power has prospered and now exceeds 12 GW in the UK. The termination of subsidies for new plants from 2017 onwards has cut investment. Instead, offshore wind power is the new ‘goto’ investment sector, as there has been a sea-change in costs. The key event was the 2017 auction for the development of the Hornsea Project Two and the Moray East fields, when 15-year contract for differences (CfDs) were awarded, at just £57.50p per MWh; this compares with the 2018 £100 per MWh target that had been set previously by the Government. In recent years, solar power has come of age. Total UK solar capacity now exceeds 12 GW. Inevitably, most solar farms are based in the Midlands or in the South, where irradiation levels exceed the UK average. A typical solar farm portfolio might include 50 sites with 8 MW of capacity per site. Despite the removal of subsidies for new solar plants, the prospects remain bright for new build, since costs have fallen appreciably in recent years. The levelised cost (LCOE) of solar power should fall below £70 per MWh. The UK’s first subsidy-free solar farm has been commissioned at Clay Hill in Milton Keynes. For many investors, REIFs offer an attractive means of securing exposure to the benefits of rising UK investment in these sectors, much of which is backed by long-term contracts delivering generally solid and secure returns. Our sector research focuses on 11 quoted REIFs, which mirror those selected by members of the Association of Investment Companies (AIC). The recently floated Aquila European Renewables fund is included, despite its declared policy not to invest in UK generation. Since May 2014, REIF returns have been solid, with total returns approaching 10% per year. As a group, their combined market capitalisation is ca.£7bn; the most valuable quoted funds are Greencoat UK Wind (£2.1bn) and The Renewables Infrastructure Group (£1.8bn). The sector premia over net asset valuations (NAVs) for most REIFs now lie in the 9%-19% range. The premium for Greencoat UK Wind, following its £375m gross fundraise, is ca.14%; The Renewables Infrastructure Group premium is similar. Targeted real dividend increases underpin the attractions, in particular, of wind and solar investments; major earnings shortfalls are low-risk, with little likelihood of a dividend cut. Prospective dividend yields for most REIFs currently lie in the range of 5.0%-6.0%. In terms of risk, future movements of interest rates could have a material impact on NAVs and, consequently, upon share price ratings. The precise effect will depend on the degree to which the discount rates moves relative to the riskfree rate. Regulatory amendments, subsidy changes and possible tax adjustments are also key risk factors with one company commenting that movements in long term power price forecasts are the most significant risk.

Companies: TRIG UKW NESF FSFL AERI GSF GRP SEIT USFP

01 Aug 19

THE MONTHLY August 2019

The introduction of IFRS 2 in 2004 generated considerable debate about the best approach for handling ‘share-based payments’ (SBP). While it is clearly a cost to shareholders, which should be included in the statutory reporting lines through the P&L account, the question arose as to whetherit should be part of our underlying EBIT calculation.

Companies: AVO AJB AGY ARBB CLIG DNL DPP FLTA GTLY GDR KOOV MCL MUR NSF OXB PCA PHP RE/ REDX RMDL STX SCE TRX TON SHED VAL VTA W7L

30 Aug 19

WDAY wows, good for KNOS? Didi launches AVs; Voice activated Nike trainers

We highlight the strong Workday numbers overnight which provides cause for enthusiasm for growth equities, the SaaS software sector and most specifically within AIM, could augur well for Kainos, given their close partnership on consulting and implementation. Beyond the beat, most noteworthy comment was that management saw no impact from Brexit as yet nor the trade tensions in the US and China. With enviable growth rates of 32% in the quarter, we highlight few names in AIM such as CloudCall* offer such compelling opportunity.

Companies: 7DIG CALL TRAK ESYS FST KNOS PHD QTX SAG SEE TRCS

03 Sep 19

THE MONTHLY September 2019

The challenges associated with value creation drive all investors. Any investment professional is eager to make their mark by picking organisations that are able to deliver superior returns. Increasingly investors look into how organisations are governed and how effective the top decision-making bodies of organisations really are. In this white paper, we shed light on research findings and reveal the seven hallmarks of effective boards. The seven hallmarks are proven to create more effective boards and are set to be the next lever in the value creation process. Better Boards has created advanced board evaluation tools designed to motivate and inspire and above all, contribute to superior value creation.

Companies: AVO AJB AGY CLIG DNL DPP FLTA GTLY GDR KOOV MUR NSF OXB PCA PHP RE/ RMDL STX SCE TRX TON SHED VTA W7L

01 Aug 19

The sole growing satellite company

Inmarsat remains the sole company of our coverage enjoying top-line growth in the satellite business. The strategic focus of Inmarsat on the mobility business, i.e. its aviation segment, is mainly responsible for this success.

Companies: Inmarsat

02 Aug 19

LIBERUM: Sirius Minerals* - Bond pricing guidance published at 13.5%

Bloomberg has reported provisional guidance for the $500m bond, due to price next week, at a yield of 13.5%. The rate is above the 12% we modelled and adds $56m of interest costs over the life of the bond, but the far more important impact as far as the shares are concerned is improved certainty around completion of stage 2 finance given the c.$7bn gap between the current share price and our NPV.

Companies: Sirius Minerals

02 Aug 19

Games Workshop Group - Third consecutive year of record results

Games Workshop (GAW), the global leader for tabletop miniature gaming, has bucked wider consumer trends and delivered a third consecutive year of record sales and earnings growth in FY19. The company is proactively exploring new ways, such as the development of digital content, in which to leverage its rich intellectual property and introduce the Warhammer hobby to new audiences globally. Our modest forecast assumptions, which have not materially changed, drive a DCF valuation of 4,703p.

Companies: Games Workshop Group

06 Aug 19

Greggs - More than just the vegan-friendly sausage roll

Greggs’ interim results highlighted that the consumer is responding well to the company’s transition to a leading food-on-the-go retailer. This has led to record revenue growth and a step change in gross margin, as well as enabling further investment to fund future growth initiatives, while funding a special dividend as expected. Our forecasts are broadly unchanged following four upgrades in six months.

Companies: Greggs

06 Aug 19

LIBERUM: Sirius Minerals* - Bond offering delayed, to return in early September

Sirius announced this morning it has suspended its bond issue until market conditions have stabilised. The bond was due to price this week, but has coincided with an escalation in the China/US trade war, a devaulation of the RMB through 7 and a smaller than anticipated cut in the Fed funds rate which combined to drive a sharp equity/commodity sell off and risk-off in high-yield markets.

Companies: Sirius Minerals

07 Aug 19

LIBERUM: The Renewables Infrastructure Group* - Strong H1, 8.6% NAV return

TRIG's 8.6% NAV total return in H1 2019 benefited from asset life extensions, discount rate compression and a number of asset enhancements. Dividend cover remained robust at 1.3x for the half-year (adjusted for scrip dividends).

Companies: Renewables Infrastructure Group

14 Jun 17

Interview with Zillah Byng-Thorne, CEO of Future with N+1 Singer analyst Johnathan Barrett

01 Aug 19

Bitesize briefing - HgCapital Trust

30 Aug 19

Grafton Group - Half Year Results 2019

01 Aug 19

Vivo Energy plc - 2019 Interim results interview

22 Aug 19

Premier Oil - Half Year Results 2019

25 Jul 19

Primary Health Properties - Interim Results

11 Sep 19

Cairn Energy - Half Year Results 2019 Interview

27 Jun 19

Greene King - Preliminary results video 2018/19

12 Aug 19

Acacia Mining - Publication of Scheme Document

27 Jun 19

Polar Capital Technology Trust (PCT) presentation at Mello Trusts & Funds May 2019

07 Mar 19

Premier Oil - Full Year Results 2018

11 Jun 19

Primary Health Properties to 'continue generating strong returns'

11 Feb 19

Acacia Mining - Preliminary results 2018

21 May 19

Shaftesbury - Half Year Results 2019 video interview

07 Aug 19

Ultra Electronics (ULE) interim results August 2019 Analyst presentation

Latest Content

Sirius Minerals

LIBERUM: Sirius Minerals* - Running numbers on potential financing solutions

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18 Sep 19
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Tullow Oil

FLASH: Guyana discovery opens new play

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16 Sep 19
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AMER IGAS HUR PVR ENOG TETY

GMP FirstEnergy ― UK Energy morning research package

Amerisur (AMER LN) (not covered): 1H19 results | Igas Energy (IGAS LN) (not covered): 1H19 results | Hurricane Energy (HUR LN) (not covered): Well result in the UK | Providence Resources (PVR LN) (not covered): Placing | Energean Oil & Gas (ENOG LN) (not covered): 1H19 results | Tethys Oil (TETY SS)1,6; BUY, SEK85: August production in Oman

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12 Sep 19
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CDM FDEV KAPE KWS SUMO TM17 AVST BIDS CNS DFX ECSC FLX GFIN IGP NCC OSI SOPH

Cloudflare prices above range; Virtual wall maker new unicorn; High speed 5G gaming

Cloudflare, a California-based digital content delivery and Internet security company, raised its IPO price range this morning from a prior $10 to $12 interval to $12 to $14 per share. At its new prices, Cloudflare would be valued between $3.5 billion and $4.1 billion. Cloudflare's maximum IPO fund raise is now $563.5 million. Investors’ appetite for cloud offerings appears to remain robust. Ex- Oculus founder, Palmer Luckey’s new business, Anduril Industries, is building a virtual wall on the southern border of the US. His new venture is being valued at more than $1 billion in a new fundraising round, according to sources. Anduril describes itself as a company that "Invents and builds technology to secure America and its interests.". Virtual border controls feel like a natural evolution of physical barriers for a digital era. The Tokyo Game Show, Japan’s video gaming mega-conference, opened on Thursday with enthusiasts testing how ultra-high-speed 5G mobile data networks will impact the gaming experience ahead of the technology's commercial rollout in Japan in 2020. Game makers, related network developers, and esports promoters cite expect to benefit from nextgeneration wireless networks that are expected to allow players of increasingly popular online games to utilize faster downloads and smoother connections. 5G’s influence is only beginning to rise as coverage is rolled out.

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12 Sep 19
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Cairn Energy

Cairn Energy - Half Year Results 2019 Interview

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11 Sep 19

Genus

LIBERUM: Genus* - Litigation set back

Genus has received a disappointing judgement in its latest litigation in the US against Sexing Technologies (ST). The courts have ruled that ST's patent '987 is valid and hence Genus will have to continue paying a $1.25/straw royalty.

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10 Sep 19
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TRIN CNE EXI GKP

GMP FirstEnergy ― UK Energy morning research package

Trinity Exploration and production (TRIN LN) (not covered): 1H19 results | Cairn Energy (CNE LN); BUY, £2.80: 1H19 results | Equinor (EQNR NO) (not covered): Dry hole in Norway | Exillon Energy (EXI LN) (not covered): August production in Russia | Gulf Keystone Petroleum (GKP LN) (not covered): 1H19 results

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10 Sep 19
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CNE GKP TRIN LOGP

SP Angel – Oil & Gas View

Cairn Energy (CNE): Half-year Report | Gulf Keystone Petroleum (GKP): Half Year Results | Trinity Exploration & Production (TRIN): Half Year Results | Lansdowne Oil & Gas* (LOGP): Barryroe Farm-Out Transaction Update

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10 Sep 19
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Cairn Energy

FLASH: 1H19 results in line, FY19 guidance up

1H19 production of 23.7 mboe/d is consistent with production reported at Catcher and Kraken by Premier and EnQuest. 1H19 net cash from operation less lease repayment was US$142.9 mm, with the difference with our expectations of US$164 mm mostly due to a US$35 mm negative movement in working capital. At the end of June, the company has net debt of US$2 mm (GMP FEe: net cash of US$60 mm with the differences down to capex timing and working capital).

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10 Sep 19
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Euromoney Institutional Investor

Euromoney Institutional Investor - Strategic review of Asset Management

Euromoney has announced a strategic review of its Asset Management business. This division accounted for 39% of FY18 revenues and 44% of FY18 operating profit before central costs. It has been under structural and cyclical pressure as its clients (primarily sell-side providers) have struggled with the dual impacts of MiFID II and the growth of passive asset management. A sale is not necessarily the only outcome of the review and, if that is the route chosen, management has a record of strong discipline in M&A pricing. A disposal would naturally result in the growing Price Reporting segment being a greater proportion of the continuing business. The valuation implications depend on how the proceeds were reinvested.