finnCap Equity Research & Stock Reports

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Ideagen

Ideagen has reported prelims to April 2019 delivering, as ever, forecasts in line with the May trading update and unchanged expectations. Recurring revenue improved to 67% (FY17: 57%; FY18: 62%), en route to the target 74% by FY20, with a steady stream of well executed acquisitions to boost organic growth (currently 8%) in contributing to the grander ambitions in hand – to achieve the three-year objective of £100m (including c£30m acquired) revenue run rate by FY22. The Integrated Risk Management market is growing at 13% per annum (Gartner, measured by total contract value and not organic recurring revenue growth per IFRS15!), and the confident June Capital Markets Day demonstrated that the group has the depth in management and rigorous processes to accommodate momentum in growth. FY20 forecasts are unchanged, indicating headline 25% revenue growth (organic and acquired) and 32% EBITDA growth, and we issue maiden FY21 forecasts, knowing full well they will inevitably be boosted with the high probability of further acquisitions. Target 180p reiterated.

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Ironveld

Ironveld offers exposure to one of the world’s highest-grade undeveloped vanadium resources. Ironveld was initially conceived to focus on developing an iron project using electric arc smelting technology, based on a substantial resource of vanadium and titanium bearing magnetite (VTM) within South Africa’s Bushveld Complex. However, the market for iron has entered a soft period and with the present electrical power issues in South Africa, other business models have become more attractive. The project includes a shallow mineralised resource of 56.4 million tonnes of ore grading 1.12% V2O5; this is approximately twice the grade of other vanadium resources that are currently being mined and processed within the Bushveld Complex.

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ACP FEN LID SCE PPC GTLY

Armadale Capital (ACP): Corp Mahenge Liandu project update | Frenkel Topping (FEN): Corp Improved rate degrades present value, but insignificant | Gateley (GLTY): Corp Strong momentum and investment for growth | LiDCO (LID): Corp China approval | President Energy (PPC): Corp Frac on | Surface Transforms (SCE): Corp SCE lands breakthrough contract with OEM 5

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Gateley

Gateley continued its strong growth track record in FY 2019 with adj. EPS up +18% driven by organic sales growth of +10% and acquisitions (total sales +20%). The balance sheet remains strong with net debt of only £3.2m, and the dividend was raised by 14% to 8.0p. The outlook is positive, with the group continuing to attract high quality staff and acquisitions at least meeting expectations, growing the range of services offered. We make no major changes to our forecasts but upgrade our target price from 193p to 210p as we roll forward a year and update the market FCF yield that supports our model from 5.5% to 5.1%.

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Amino Technologies

Amino has acquired 24i Media, industry-leading provider of TV and OTT apps, user experience solutions and services, headquartered in Amsterdam. The €21.4m acquisition (€16m cash, €3.3m in Amino stock and €2.1m deferred consideration conditional on management remaining with the business) will be funded from existing cash resources, retaining a continuing net cash position. 24i contributes to the rapid development of Amino’s strategy for driving high-margin software and recurring revenues, in addition to adding further key elements of provision of an end-to-end TV solution to clients – positioning the group earlier in the engagement during selection of the TV ecosystem. Growing at a strong 25% per annum, 24i lifts Amino forecast revenue by 6% with part-year contribution to November FY19, +22% in FY20 and +28% in FY21 – with EBITDA +1%, +24% and +39%. Combining EBITDA growth with a strong supporting dividend and retaining a healthy balance sheet after an intelligent and timely acquisition, we lift our target price to 215p.

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