Zeus Capital

Escape Hunt Plc

Escape Hunt (ESC) provided an in line trading update with EBITDA in 2020 better than in 2019, despite the impact of the pandemic. The company has ample resources to continue investing in its UK sites with cash outflows tightly controlled. The company remains optimistic that it should have sufficient scale and site maturity to reach positive cash flow after trading conditions normalise. As part of its expansion, Escape Hunt announced that it had exchanged contracts on the acquisition of its French master franchise partner, BGP Escape, and expects to complete the transaction on or before 15 March 2021.

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CentralNic Group Plc

CentralNic released unaudited preliminary 2020 results showing pro forma 9% revenue growth, ahead of expectations (ZC: 4%). The company continues to take market share in a growing market. EBITDA was in line with consensus expectations but below our top of consensus forecasts. CNIC is increasing investment in new products and integration, which we expect to continue in 2021 and provide net returns in 2022. The company’s results demonstrate its ability to integrate, scale and extract synergies from acquisitions. We see potential earnings upside from the Codewise acquisition and expect CNIC to deliver further significant earnings accretive acquisitions in 2021.

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Vertu Motors PLC

Vertu has released a pre-close update, confirming FY21E performance is in line with current market consensus and Zeus Capital estimates with underlying PBT expected to be c.£23.0m. Vertu’s long-term investment case remains compelling and we reiterate our valuation of 65p per share.

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AFC Energy plc

Final results from AFC are very close to our projections, with net cash slightly ahead of our expectations. There is no new news in this announcement, and we marginally edge up the losses in 2021E and 2022E due to increased activity levels as the Group looks to capitalise on the vast opportunities available. We remain excited about the long-term investment thesis we set out recently and maintain our target valuation of 191.5p per share. As we have previously highlighted, our valuation excludes what we consider to be significant growth opportunities highlighted in the note.

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Talking points - UK Budget on 3 March should focus on releasing pent-up growth as UK exits lockdown: expect focus on jobs and building back better, funded by economic growth. - Funding is available at exceptionally low interest rates: longer-term risk free rates nudged up while short-term rates are held down (see Chart of the moment). - Banks return to dividend list, with full year results including material provisions, and encouraging underlying trading. - The economy is returning to normal, but some change will be permanent: all should ask: “how has Covid changed our philosophy, procedures and practices?”.

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