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20 Apr 17
JOG has released its 2016 results, reporting a cash holding of £1.9m at the end of 2016. This funds overheads into Q1 2018, and we today update our valuation, with risked NAV moving 173p/share to 192p/share and unrisked NAV from 887p/share to 1,044p/share (details below). Over the rest of 2017 the company will continue to pursue its dual strategy – drilling the Verbier exploration well and pursuing production acquisitions in the North Sea. JV partner Statoil recently secured a rig for Verbier, and North Sea asset deals continue to be announced by peers. This makes for a busy time going forward for JOG, with catalyst potential from Verbier and acquisitions. Given this potential, coupled with the valuation upside on success at Verbier, we have a Buy recommendation.
31 Mar 17
NAHL has a track record of being highly innovative around changes in regulation and we believe the changing personal injury landscape presents an opportunity to build market share. The recent strategy statement provides forecast benchmarks on which to base long-term investment decisions. The shares have more than halved from 2015 highs and valuations appear very modest in the context of the emerging investment case. Trading on a “trough” FY18 PE ratio of just 7.9x and a dividend yield of 8.6%, we believe the shares are meaningfully undervalued.
30 Mar 17
Macfarlane Group is the UK market leader in the distribution of protective packaging materials. We anticipate sustained doubledigit earnings growth in FY17 as new business wins drive organic momentum and price inflation supports margins to enhance operational leverage. As the leading consolidator within this market, we also anticipate further acquisitions in due course. This growth strategy is being part funded by equity raisings and, as liquidity improves, we believe the shares will increasingly appear on the radar of growth funds. A FY17 PE of 10.7x remains modest, given the 13% earnings growth projection, and provides scope for meaningful upside from current levels. We reiterate our conviction Buy stance.
FY17 results ; 28% earnings growth
28 Mar 17
28% earnings growth in FY17 reflects strong demand for nonprime used vehicle loans supported by significant available funds which has enabled the Group to accelerate investment into the market opportunity. This inherent “momentum in the system” is driving top line growth into FY18 (Arden forecast revenue growth +20%). With a highly cost-efficient model, we are confident the group can fine tune its product into changing market dynamics to maintain bottom line leverage; our FY18 and FY19 PBT forecasts are unchanged. We believe the scale of market opportunity and visibility over future earnings growth rates should attract a premium and we stand by the view that the shares warrant a mid teens rating which would equate to a share price nearer 3000p on a one year view providing scope for meaningful upside from current levels.
Verbier and Cortina CPR resource update
27 Mar 17
JOG has announced a CPR resource update from ERC Equipoise on its P2170 licence (JOG 18%), which contains the Verbier and Cortina prospects. Gross P50 prospective resources for Verbier move from 102mmbbl and 66bcf to 108mmbbl and 58bcf, and the P10 case increases substantially from 158mmbbl and 66bcf to 301mmbbl and 168bcf. The CPR has also added 1.8mmbbl and 1.0bcf of 2C resources based on the 2006 20/5a-10Y well. This potentially flowed oil from the eastern edge of Verbier, and inclusion of the 2C is an important endorsement of this. Chance of success is also increased to 29%, from 26% previously. This analysis not only increases resources in Verbier, it also provides important third party endorsement. An exploration well is planned on Verbier for this summer, and we expect announcement of a rig shortly. The well is the main catalyst for the stock, but the company is also looking to add production assets via acquisition. We maintain our Buy recommendation.
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