Arden Partners Equity Research & Stock Reports
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17 Feb 17
JOG is pursuing a two pronged strategy in the UK North Sea. In addition to the company’s acquisition drive (aimed at assembling a portfolio producing 10mboe/d), JOG is also participating in the drilling of the 113mmboe Verbier well in summer 2017, funded by a US$25m Statoil farm in completed in 2016. The Verbier well provides a tangible catalyst for the stock within the next six to nine months, and would be very significant for the company if it is successful. The acquisition strategy has the potential to underpin JOG with cash generative production volumes, which would help provide funding for Verbier on success and a hedge otherwise. A recent £1.6m placing provides funding for overheads into Q1 2018, the Verbier well result should be known in the autumn, and we could see acquisitions come through before that. For these reasons we have a Buy recommendation.
FY17 forecast earnings growth +22%
16 Feb 17
The Q317 trading update highlights Trifast performing well into emerging macroeconomic trends as the group benefits from a broad spread of geographies with 73% of FY17 Arden Partners forecast EBIT generated outside the UK, including exposure to the manufacturing sector in the eurozone. The pound depreciation is also beneficial to exports from the UK including the automotive OEMs, the largest sector exposure domestically. Given this mix of organic growth and ongoing FX tailwinds, we have revised our FY17 earnings up another 5% providing for an FY17 earnings growth forecast of 22%. Following on from upgrades at the time interims in November 16, this update highlights Trifast in sustained growth mode and fully justifying a growth rating.
AGM trading update
02 Feb 17
Avon reports that trading in Q1 has been in line with expectations and that, with a “positive start to the financial year” and a “sustainable pipeline of prospects”, the Board is “confident of achieving the current year expectations”. Cash generation has been strong, with net cash increasing from £2.0m at year end to £11.1m at 31 December 2016.
01 Feb 17
Yü Group is an independent supplier of gas and electricity entirely focused on supplying SME businesses. It has a highly scalable business model, good revenue visibility and strong cash conversion. Revenue growth has accelerated dramatically following the exit from the Controlled Market Entry (CME) rules. We anticipate rapid growth in earnings as the Group leverages the benefits of economies of scale and takes market share in a huge market where regulators are encouraging disruptive competition from smaller operators.
Enquest Magnus acquisition read across
25 Jan 17
Enquest announced yesterday the acquisition of 25% of the Magnus field (including stakes in related infrastructure) from BP. This pertains to JOG in that JOG is also looking to acquire late life producing assets from the super majors (amongst others), under structures that provide a return and control decommissioning liabilities.
FY16 trading update; 4% earnings upgrade
24 Jan 17
The trading update confirms another year of double digit earnings growth for Empresaria. We anticipate acceleration in growth rates in FY17 reflecting organic growth, acquisition contribution and FX tailwinds; Arden forecast FY17 earnings growth of 24%. We believe this is not reflected in a FY17 valuation of 8.4x, with the relationship to growth expressed in a Price Earnings Growth ratio of 0.35x. The valuation is inconsistent with current trading, geographical alignment and delivery of the strategy to acquire niche growth businesses such as Rishworth and ConSol, which are fundamentally improving the quality of earnings at Empresaria. The shares represent a conviction Buy.
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