Allenby Capital Equity Research & Stock Reports

Empresaria Group

As flagged in the Group’s July trading update, NFI has grown by 6% year on year (yoy) in constant currency against a mixed trading backdrop. Adjusted PBT was lower by 21% as a result of lower temp books in Germany and Japan and the ongoing uncertainty surrounding Brexit. The Group also incurred higher costs in H1 following investments made in H2 2018. Once again, Empresaria demonstratesthe benefits that diversification brings to the mitigation of cyclical and specific operational risks within its businesses and because of this and its management equity philosophy the Group differentiates itself from other human capital resource companies. With Rhona Driggs now in place as the new CEO, we look forward to the Group delivering a sequentially stronger H2 in line with our forecasts.

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MTI Wireless Edge

Interim results from MTI Wireless Edge, the technology group focused on communications and radio frequency solutions, were in line with expectation and demonstrate the value of the company’s diversified strategy and the benefit of 2018’s merger with MTI Computers Software and Services (1982). Group revenue increased 12% to $19.1m and operating profit by 41% to $1.5m. Within this, there was particularly strong growth in the Distribution & Professional Consulting Services division. Cash flow from operations increased 22% to $2.6m and H1 cash was $5.7m, supporting the progressive dividend policy. Management reports a positive outlook across all three divisions and we make no change to forecasts. Given sterling’s weakness, the shares are now yielding an attractive 7.5% in FY19 and 9.3% in FY20 and trading on an EV/EBITDA of 4.2x in FY19 and 3.6x FY20. Our fair value of 38p/share represents a prospective PER of 13.3x in FY19 and 11.6x in FY20 and a 72% upside to the current price.

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Brave Bison Group Mobile Tornado Group

Brave Bison Group plc* (BBSN.L, 1.45p/£8.8m) Interims: Swift response to Facebook content policy changes (31.07.19) | Mobile Tornado Group plc* (MBT.L, 5.2p/£18.1m) Subscription: Additional working capital to fund bundled PTT growth (31.07.19)

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Brave Bison Group

Interims from Brave Bison Group, the social media company, saw further growth in Fee Based Services, primarily branded content in APAC. Group revenue increased 8.5% to £10.1m, gross margin +190bps to 33.4% reflecting the change in revenue mix, adj. EBITDA +£168k to £247k and net cash remains a healthy £3.7m. Performance in Advertising was weaker, however, down 10.4% to £6.6m, following changes to Facebook’s publishing guidelines. This resulted in BBSN’s four largest pages being demonetised. The new management team under Kate Burns, who joined in April, has responded quickly: rebranding and investing in these pages; publishing more content on alternative platforms and introducing new processes around licensing, creating and commissioning content. Two Facebook channels are live again and there is growth on alternative platforms. That said, it will take time to recover and we reduce FY19 and FY20 forecasts and move to a FV of 3.0p (4.6p) on a lower EV/EBITDA multiple.

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