Cenkos Securities

JSE HUR RDSA

 View

Seeing Machines Ltd.

Seeing Machines has released a trading update demonstrating the business is performing better than expected on key metrics: Revenues of A$39.7m were 13% ahead of our expectations of $35.1m and cash of A$38.7m was 21% ahead of our expectations of A$32.0m. We believe this strong end to the financial year reflects the continued demand for the company's Fleet product by sophisticated fleet owners and that the key home markets of Australia and New Zealand have been less affected by COVID than feared. We believe this strong cash performance should reduce the perceived funding risk weighting and help the valuation recover towards previous levels. We iterate our Buy recommendation and 7.2p price target.

 View

United Oil & Gas

United has announced that it has successfully negotiated an 18 month extension to its Walton Morant licence, offshore Jamaica, in what could be a pivotal moment for the Company. United will assume a 100% working interest, and will complete a work programme to further de-risk the high-graded Colibri prospect ahead of a drill-or-drop decision in 2022. We view the award of the Walton Morant licence as a huge endorsement of the United team and its capabilities to operate a frontier, deepwater licence. We increase our risked valuation of the Colibri prospect to US$68.3m or 7.1p per share and our Company valuation to US$162.2m or 17p per share. Unrisked, our valuation of the Colibri prospect increases to US$752.7m or 78.7p, underlining its potential. We set our price target in line with our risked NAV at 17p, a 507% premium to the current share price, and reiterate our BUY recommendation.

 View

Skinbiotherapeutics

SkinBioTherapeutics has provided a development update for its two lead commercial programmes, demonstrating strong progress towards accessing two significant market opportunities, cosmetic ingredients and psoriasis. Sederma, the division of Croda which is developing SkinBiotix, has completed initial manufacturing development and has progressed to scale up validation. Following completion of the AxisBiotix formulation development ahead of schedule, SBTX has established a protocol for a self-managed food supplement trial, designed to mitigate the restriction associated with the COVID-19 pandemic. The trial is anticipated to commence in early 2021. We maintain our Buy recommendation.

 View

88 Energy

88 Energy has completed the takeover of XCD Energy, creating a single, enhanced Alaskan focussed oil exploration and appraisal company. Amongst its three highly prospective project areas, 88 Energy is pursuing a two well drilling campaign in H1/21 at Project Peregrine, targeting >1 billion barrels of prospective resources. Located on trend with the existing Willow and Harpoon fields, and at cUS$7.5m per well, the Harrier and Merlin prospects present 88 Energy with access to a de-risked, low cost, high reward opportunity.

 View

Smart Metering Systems

In a trading update, SMS confirmed that revenue and underlying profitability to 30 June 2020 are in line with earlier expectations demonstrating the resilience of meter related ILARR and business model. FY20 underlying profitability remains in line with prior expectations. H1/20 net cash was £45m. Meter installations recommenced on 1 June 2020 and are expected to return to normal run rates by the beginning of 2021. We believe SMS presents a compelling investment proposition with a strong balance sheet, underlying profitability in line with expectations prior to Covid-19 uncertainty and a rebased, index linked dividend yield of 4.2%. In our 21 July 2020 report (download) we highlighted our base DDM valuation of 1164p (potential upside of 87%), supported by the 16.4x net ILARR asset sale completed in April 2020 and favourable positioning versus other listed infrastructure development companies where SMS provides comparable and visible growth but with a yield premium.

 View