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Bango

In a remarkable coup for Bango, Korean technology leader NHN Corp is taking control of the Audiens Customer Data Platform (CDP) business by investing £6.5m for a 60% stake in the holding company, Bango Deep Ltd, with a view to scaling up Audiens through support and technology into a truly world-class CDP provider. NHN is further securing and deepening its relationship with Bango itself by taking 3.5m Bango ordinary shares (4.7% of the expanded Bango) for £3.2m. This is an excellent deal for Bango, sealed at a time of restricted travel and tightened commercial prospects and possible only because Bango is already partnered, and trusted by the Korean technology giant. The deal takes a non-core, near-breakeven business off the Bango P&L and sharpens management focus, while maintaining a substantive interest in what – now backed by NHN’s cash, expertise and data technology – should become a major global player in the lucrative, high-growth CDP market. On top of this, Bango strengthens its balance sheet with a cash injection and the strategic partnership between NHN and Bango itself is substantively deepened. We adjust our FY 2020 forecast for the change in Audiens accounting status and the cash injection, and highlight the value.

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Avacta Group

Avacta announced that it is raising £2m by way of a subscription for 11.1m ordinary shares at 18p (follows £9m raise in October 2019 at 15p per share), subject to a general meeting. Given the current economic uncertainty and disruption caused by the coronavirus outbreak, we think this is prudent as it extends the cash runway further into 2021. Not only does this create a cash buffer for any unseen disruption, but it also provides additional time to advance its immunotherapy pipeline with partners (fully funded by the partners), as well as delivering further commercial progress for both therapeutics and diagnostics. Avacta confirmed that it will file a CTA application as soon as possible, seeking the UK regulator’s permission to commence a Phase I safety study for its lead drug candidate (AVA6000 – pro-doxorubicin). This is on track to start in late 2020, having made good progress in manufacturing drug product. We retain a target price of 76p.

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Omega Diagnostics Group

Omega Diagnostics provided a trading update for FY 2020 that is broadly in line with expectations, confirming also that it had received Chinese approval for the laboratory version of the Food Detective Test that we had expected in January. Under the current circumstances of an almost global lockdown due to coronavirus, we consider this to be a positive outcome. First shipments of VISITECT CD4 (both 350 and Advanced Disease tests) were also confirmed (albeit lower than forecast due to delays in Nigeria and as a result of the coronavirus outbreak), but are expected to be deferred into FY 2021. We have made minor forecasts changes to FY 2020 but leave FY 2021 and our target price unchanged.

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Tracsis

A strong interim period to January 2020 delivered the expected £26m revenue as reported in the February trading update, with a 31 January net cash balance also of £26m – EBITDA of £5.6m (post IFRS16), and adjusted PBT of £4.6m highlighting a strong performance. The Group has unchanged strategic ambitions – organic growth and M&A, both in evidence in Rail Technology & Services (RT&S) with 13% organic growth and the post period end acquisition of iBlocks. We withdrew forecasts last week due to the impact of COVID-19 on the 2H-weighted Traffic & Data Services business, given the exposure to cancelled large scale summer events, and uncertainty over traffic surveys; however, the potential for the Group is unchallenged when the world normalises. New contract wins, new product launches, new acquisitions and a hearty balance sheet continued to offer significant upside in 1H and post period end. Target price 900p remains based on our FY21 forecasts, which in theory should be consistent with previous forecasts and we look forward to reinstating numbers when the virus dust settles.

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