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Keystone Law

Upgrades to forecasts, release of FY22E numbers

Following FY19A results last week, we upgrade FY20E and FY21E forecasts to reflect an increase in business momentum. We increase FY20E revenues by 3.0% to £48.6m, and adjusted PBT 6.7% to £5.6m. For FY21E we nudge up revenues by 1.3% albeit keep earnings broadly flat. Our newly released FY22E forecasts expect £62.3m of revenues and £7.2m Adj. PBT. We increase our PT to 520p from 460p (set by DCF) on updated forecasts, yet remain Neutral.

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  • 17 May 19
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Grainger

H1 19 Interims; 6% PBT fall due to sales timing

Grainger’s interims reported net rental income of £29.1m (up 33% YoY, +3.6% excluding the GRIP consolidation) and underlying PBT of £38.3m (- 6% YoY due to the timing of residential sales, as previously indicated). EPRA NNNAV was reported at 271p (up marginally from a restated 270p at Sept 18, which our calculations assumed would be 277p). The company has also declared an interim dividend of 1.73p (up 10% YoY) but below our original forecast of 1.96p due to the impact of right issue restatement. Net debt currently stands at £1,080m (LTV of 37.2%). The group has delivered substantial progress on its PRS pipeline (now £1.3bn plus a further £760m secured, significantly ahead of its 2020 target of £850m). At current levels (10% NAV discount, 2.2% yield), we see scope for the shares to re-rate into NAV premium territory fuelled by Grainger’s growing investment pipeline and strong PRS fundamentals and maintain our Buy and 290p PT.

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  • 16 May 19
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Trans-Siberian Gold

Confirmation of debt financing

Trans-Siberian Gold is proposing to buy back 22,894,565 existing shares from two of the major shareholders within UFG Asset Management (UFG) at an attractive discount to the market price (33p vs 57p current price). As part of the transaction further shares will be sold by the same shareholders to other members of the UFG Group, Directors and to new investors. The share sales, together with the buy back, will reduce the dominance by UFG of the share register and benefit shareholders as a whole. (reducing the UFG holding from 86.4% to 77.0%)

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  • 16 May 19
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Great Eastern Energy Corporation

FY 2019 results

GEEC has released its FY 2019 results. These are broadly in line with our forecasts at the sales gas and revenue levels, but ahead on EBITDA and PAT due to a better performance on costs than we had allowed for. Operationally, the company is now progressing its programme to replace the pumps in a number of wells, supporting growth going forward. Equipment delivery delays for the pumps programme and adjustment of our Raniganj South gas calorific value assumptions lead us to reduce FY 2020 sales forecasts, though this is compensated for by cost reductions, all detailed below. While we expect a degree of steady growth to continue, more profound progress could be achieved on tiein to the new GAIL regional pipeline. The GAIL pipeline could begin operation in H2 2020, with potential subsequent GEEC tie-in a significant opportunity for the company. We await further news here, alongside further cash flow progress, with interest.

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  • 14 May 19
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Cyanconnode

Solid growth in FY18; forecasts unchanged

2018 was a year of progress for CyanConnode whereby costs were dramatically reduced (-22%), evidence of real commercial traction emerged in key region India (£15m order book) and £5m of equity capital was raised to scale the business. FY18 revenues were slightly light due to accounting factors with a directly proportional impact on net income, with the group’s cash position inline with forecasts. Our forward estimates remain intact as we take encouragement from Q1’19 performance reported to be on budget and several contracts already won YTD. CyanConnode’s shares have fallen 29% YTD and trade on a modest 1.4x FY19E EV/sales relative to its projected growth profile. We reiterate our Buy rating and see substantial upside 12m PT of 12p.

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  • 13 May 19
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Kin and Carta

Board & senior management changes; top pick 2019

Kin & Carta has announced a number of changes to its’ management team; a change in the CFO and appointment of a ‘Chief Connective Officer.’ Given the turnaround story and strategic repositioning of the company, we would envisage these changes would provide a fresh perspective for the group as it looks to capitalise on the rapid expansion of the digital transformation market. At 10.9x FY19 P/E, we remain buyers and reiterate KCT as one of our top picks for 2019, seeing 36% upside to the shares.

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  • 10 May 19
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BowLeven

Rig contract for Etinde appraisal wells

Etinde announced yesterday afternoon that the operator of its Etinde licence New Age has entered into a rig contract for the jackup Topaz Driller for the drilling of the two planned appraisal wells on the licence in 2018. The contract is for 150 days and spudding of the first well (IM-6) is expected during Q2.

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  • 02 Feb 18
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