Technology

Technology equity research

Explore the most viewed and latest equity research and media content for companies within the Technology sector. Stocks in this sector focus on IT Services, Web Development, Software Development, and IT hardware.

Technology equity research

Stocks in this sector focus on IT Services, Web Development, Software Development, and IT hardware.

06 Nov 18

THE MONTHLY November 2018

In addition to Hardman’s monthly analysis of client stocks, the thorny issue of market disruption – a popular theme currently - is also addressed. In a wide-ranging article, Hardman’s utilities analyst, Nigel Hawkins, assesses the impact that market disruption has already made. In some sectors, notably telecoms and aviation, market disruption has been apparent for many years, as the rise of Vodafone, Ryanair and easyJet demonstrates. However, in some sectors, such as oil and housebuilding, structural changes have been modest – the dominance of the big players endures. For investors, there is real interest in those sectors where changes are underway. The UK groceries market, which may shortly become a duopoly, is a case in point. And, intriguingly, who knows if there is a company currently languishing in AIM, which will attain a £50bn market valuation within the next decade?

Companies: OPM AVO AGY APH ARBB AVCT DISH BNO BUR CMH CLIG CSH DNL DPP GTLY GDR HAYD KOOV MCL MUR NSF OXB PHP RE/ REDX SCE SIXH TON VAL VTA W7L

23 Oct 18

Quarterly Research Outlook

The June IPO of Knights Group Holdings, a Top-100 regional law firm, marked the fifth entrant to the burgeoning UK-listed legal sector. Following recent expansion of our coverage across all five listed legal firms, complemented by coverage of three broader support services peers with exposure to the sector, we revisit and build upon our views on this rapidly evolving sector.

Companies: ARS GTLY GENL KEYS KGH MNO RBGP TWD 7DIG ABBY AMS AMER ANX ARS ATYM AVON BLVN PIER CGS CAML CALL CSRT TIDE DTG DEMG ELM EMR FPM FPO FST GTLY GENL GRI GEEC HDY HMI HAYD HEAD HILS HTG HUR IBPO IOG INDI JHD JOG KEYS KGH LAM MACF MNO MKLW NAH OXIG PCA PKG CAKE PDG RBW RMM REDD RSW RNO RKH RBGP ROR SUS SCPA SHG SOLG TWD TRAK TRI VNET VTC ZTF

06 Nov 18

1H19 results

Strong 1H19 y/y revenue growth of 17% (to $14.9m) should not be overshadowed by restrained gross margins in the period (33%) caused by mix effects and increased investment costs. The Group notes that 2H19E trading has begun ‘extremely positively’. We anticipate that margins will expand, estimating a FY2019E gross margin of 35%, as subtitling volumes recover, ZOOdubs moves to a more mature state and ZOO’s investment in capacity and technological enhancements allow it to capitalise on buoyant market dynamics which should exhibit its scalability. Aside from tweaks to depreciation and cash, our FY2019E estimates are little changed.

Companies: Zoo Digital Group

08 Nov 18

Building up steam

Prelims are in line with the positive August trading update, at which time we had upgraded FY19E and FY20E (revenue +10% per year, EBITDA +5% and +6% respectively). Group revenue growth of 16% included 14% organic growth: +19% Rail Technology & Services (RT&S) (16% organic) and +13% Traffic & Data Services (T&DS) (all organic). Investment in innovative partnerships such as Vivacity; acquisitions like TCS and DRS; and organic success in RT&S and T&DS, drive revenue growth and margin expansion – while increasing addressable markets and placing the business at the forefront of initiatives involving regulatory requirements, the advent of Smart Cities, and data collection and analysis. The potential scale of contract wins with TRACS Enterprise and other technology engagements offer excitement to forecasts, in addition to inevitable self-funded complementary acquisitions. Target 725p reiterated, with investment in future growth and development in place to offer unmodelled upside.

Companies: Tracsis

06 Nov 18

Globally local

Interims report performance in line with the AGM statement and unchanged forecasts. 1H19 revenue growth of 17% (vs FY19E 18%) demonstrates resilience in a period where partial revenue hiatus from a major subtitling customer was offset by extraordinarily strong growth from dubbing revenue. The 2H restoration of higher than former (pre March) levels of business at the major subtitling customer – as well as continuing dubbing strength – de-risks expectations, with board confidence demonstrated in ongoing investment in capacity for revenue growth. As the content industry consolidates (Disney/Fox) and invests in content (Netflix: $8bn), the customer base is focused on delivering both efficiency in process and costs, and maximisation of revenue per title through language localisation: ZOO’s cloud-based product set delivers a collaborative approach to localisation that historically eluded studio restrained processes. As the freelancer network expands, technological capabilities continue to advance, and geographical reach of the group extends, we look forward to strong growth in the business into 2H19 and beyond. Target 180p reiterated.

Companies: Zoo Digital Group

06 Nov 18

€3.45m acqn of VR/AR visualisation expert

Enter Active Online GmbH based in Wesel, NW Germany and employing 29 staff. Its “cutting-edge” software allows consumers & homeowners to do exactly this. Swapping out the furniture, curtains & flooring, alongside changing the décor, wall colours, light fittings, fabrics & windows. All at the touch of a button in rich HD/3D graphics. Providing a fully immersive 360-degree view, Virtual & Augmented Reality (see next page), cloud data management and advanced apps to enable an almost limitless range of homeware products to be imported via standard QR codes. The technology is deployed by c.700 organisations (see later) in order to enhance their sales processes and end-user engagement.

Companies: Elecosoft

01 Nov 18

Share & share alike

Global equity markets in October reverted to a pattern that seen in the past – sharp falls and increased volatility. The usual reasons of Brexit uncertainty, the impact of global trade tariffs and heightened geo-political worries and a raft of disappointing Q3 results in the US & UK punctured some of the market optimism. Both countries’ markets have now surrendered their progress year to date. The UK Budget helped things to stabilise here but continuing volatility seems likely. In Share News & View we comment upon Bloomsbury, Braemar*, Location Sciences*, Nektan*, PCF*, Tricorn* and Warpaint*.

Companies: AOR APC BONH BMS CTG CRPR DMTR ESC EUSP FDM FA/ LSAI NKTN PCF SNX TCN W7L

06 Nov 18

Building a virtual world

The group has undertaken a placing to raise £2.25m in order to part-fund the proposed acquisition of Active Online GmbH for a maximum consideration of €3.45m. This purchase follows the recent acquisition of Shire Systems earlier in H2 2018, and continues a strategy of steady expansion of the software portfolio to cover a broad range of the needs of Architectural, Engineering and Construction (AEC) professionals notably meeting the requirements for the Building Information Modelling (BIM) process. This acquisition will further enhance the cross-selling opportunities, increase the scale of the business and provide synergies to be exploited. Traditionally, the company has used cheap debt and its own cash resources to fund expansion, but is using some equity investment to widen the shareholder base. We expect the acquisition of Active Online to accelerate growth in the longer term and be earnings neutral this year and c.5% earnings enhancing in FY 2019.

Companies: Elecosoft

21 Mar 18

Mixed performances but strong overall result

accesso has released full year results in line with the indications given in the 25 January trading update, which highlighted a small revenue beat and an adjusted EBITDA performance substantially ahead of expectations. Full year revenue increased 30% to $133.4m, delivering adjusted EBITDA up 29% to $24.6m – 8% ahead of our estimate. While the group result was ahead of expectations, we suspect that the positive impact of strong Ticketing volumes was offset by lower than expected Queuing revenues. Both acquisitions made positive contributions, with an impressive early performance from TE2 highlighting the attractions of its personalisation capabilities to multiple verticals. We need to review our forecasts and target price in detail, but anticipate putting through a 5-10% upgrade to our revenue and earnings estimates.

Companies: Accesso Technology Group

08 Oct 18

Revenue visibility improves further

The strong momentum seen in Sopheon’s first half has continued through Q3, with the Group announcing that revenue visibility now exceeds $30 million for 2018 – up from U$27.2 million at the time of the interim results. This reflects a record Q3 performance with a number of transactions, including the addition of two new contracts of material size - one with a new customer and one an extension with an existing customer – which were booked towards the end of the third quarter. The update notes that the sales pipeline for the balance of the year remains ‘robust’. Unsurprisingly, the Board says that it sees the strong performance as indicative of the growing maturity both of the Enterprise Innovation Management solutions market and of Sopheon’s reputation and business model. New customer wins in the first half of 2018 were some 50% ahead of those achieved in the comparator period and momentum has clearly continued. We increase estimates for revenue and Adjusted EBITDA by 5% and 8% respectively for FY 2018E and also nudge up FY 2019E to reflect the updated revenue visibility in the trading update. After an impressive performance so far in 2018 and with Q4 typically a key contributor of revenue performance, we look forward to further positive updates.

Companies: Sopheon

05 Nov 18

WANdisco - $1m application lifecycle management deal

WANdisco’s $1m application lifecycle management (ALM) deal with a leading Chinese tech company will add support to our FY18 forecasts, although big data/cloud deals remain key to driving the inflection. The recent retrenchment in the share price appears to be discounting a miss, but we continue to believe that achieving the required inflection in H2 could be a watershed for the perception of this business’s growth fundamentals.

Companies: Wandisco

04 Sep 18

IQE - Multiple VCSEL programmes entering production

During H118 IQE experienced double-digit sales growth on a constant currency basis in each of its three primary markets, although this was partly offset by a currency headwind. The investment in multiple VCSEL qualifications and the Newport foundry depressed margins, but underpins management’s expectations of a sustained photonics ramp-up in H218 and FY19. Acknowledging the currency headwind and one-off H118 photonics costs, we revise our estimates downwards.

Companies: IQE

26 Sep 18

Morphing into a multi-product proposition

This is an exciting period for Pelatro; the IPO in December has been followed by a landmark contract win in Central Asia and then an earnings-enhancing acquisition that brings recurring revenue, a foothold in Europe and additional products, all of which are transforming the offering from a single-product firm into a multi-channel marketing hub. Organic growth has been impressive with sales rising from $0.4m to $3.1m in two years and maintaining momentum in H1; EBITDA and adj. PBT both saw double-digit growth, to $1.5m and $1.2m, respectively. A key driver of this strong performance has been the $1.7m Tele2 contract win with licence and managed services, which effectively secured our pre-acquisition IPO forecast for the year. Slow cash generation is an unavoidable facet of the industry but a net cash position and a pipeline of opportunities underpin organic growth prospects, enhanced by the H2 acquisition of Danateq. We lift our TP from 100p to 115p.

Companies: Pelatro

12 Sep 18

Share & share alike

Here we go again – the company reporting season is gathering pace. The MPC is likely to leave rates unchanged although expectations still remain for an increase next year. The UK economy expanded at a faster pace in July helped by the weather and better retail sales. General sentiment continues to be impacted by tariff concerns, combined with Brexit uncertainty. As Table 1 shows, all major indices have fallen over the last month. In Share News & Views, we comment on AorTech*, Bonhill*, DeepMatter*, EU Supply* James Fisher, Haynes, Hunting , Location Sciences*, Marshall Motor and Synectics*.

Companies: AOR APC BMS CRPR DMTR ESC EUSP FDM FA/ GETB LSAI PCF SNX TCN W7L

20 Sep 18

AIM MARKET UPDATE June, July, August 2018

AIM showed no signs of a summer slowdown with three strong months with regards to total funds raised (new and further issues). June, July and August averaged over £700m per month, boosted by a particularly strong June which delivered 14 IPOs (historically AIM has 5-6 new joiners per month). Through the end of August 2018, the total amount raised (new and further issues) of £4.80bn is +15% on the same period in 2017 which itself was the best year since 2007.

Companies: CDM LOOP YEW BLOE AQX SAE ANX TGP INX CBOX MIND KGH RAI TGL YCA IMMO DGOC NUC OVB TWD CNIC

30 Oct 18

Proactis (PHD) Full year results Y/E 31st July 2018

06 Nov 18

Castleton Technology (CTP) H1 results November 2018

14 Sep 18

Trakm8 (TRAK) Strategy presentation, September 2018

28 Sep 18

Dillistone Group - Interim Results

01 Oct 18

Executive interview - WANdisco

18 Sep 18

Bango Interim Results

19 Oct 18

Executive interview – Nanoco Group

04 Sep 18

Dillistone - Trading Update

16 Jun 18

Proactis (PHD) Investor presentation June 2018

31 Aug 18

Executive interview – EMIS Group

06 Sep 18

Beeks Financial Cloud (BKS) Full year results presentation September 2018

31 Aug 18

eServGlobal (ESG) Interview with Executive Chairman John Conoley

15 May 13

Executive Interview - WANdisco

27 Jul 18

Newgate Redleaf AI Conference – IMI Mobile: “AI and improving the customer experience”

06 Nov 18

Zoo Digital Interim Results

Latest Content

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Morning Note – 14 November 2018

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14 Nov 18
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Maestrano

Transformative US Bank contract now live

Maestrano confirmed this morning that its key US bank client (Client A) has moved from pilot phase into live roll-out. In our view, this clears a key hurdle and adds confidence to our forecasts for a 99% revenue CAGR over FY18-21E. We see material upside potential to our 30p price target and anticipate clearing milestones as part of the multi-phase roll-out across Client A’s customers will drive the shares. We reiterate our Buy rating on Maestrano.

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14 Nov 18
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ASO IDEA ORCH TRI PPC

Morning Note – 13 November 2018

Avesoro Resources (ASO): Corp Q3 operating and financial results | Ideagen (IDEA): Corp Strength in consistency, boost in activity | Orchard Funding Group (ORCH): Corp Low risk 15% growth with a strategy poised to deliver | President Energy (PPC): Corp Development drilling progress ahead of expectations | Trifast (TRI): Corp Interim results – good value at these levels

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13 Nov 18
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TXT e-solutions

TXT e-solutions - Putting cash to work

Strong organic revenue growth in Q318 combined with the recent Cheleo acquisition resulted in revenue growth of 18.6% y-o-y, a normalised EBITDA margin of 10.0% (+80bp y-o-y) and a normalised EBIT margin of 5.8% (down 240bp due to higher depreciation from the capitalisation of leases). The company has started deploying the proceeds of the TXT Retail disposal, with the first two deals adding software solutions to the services-led Banking and Finance business. We expect the company to make further accretive acquisitions across both businesses.

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13 Nov 18
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United Internet

Still solid organic growth

United Internet has released a correct Q3, although with growth numbers slightly lower than in H1. Q3 revenues have increased by 8.8% yoy in pro forma (vs 10.9% in H1) while EBITDA has grown by 6.6% yoy (vs 10.8% in H1). Remember that in reported terms both revenue and EBITDA growth during the first 9m were slightly above 25% due to the consolidation of Strato and Drillisch.

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13 Nov 18
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Keyware Technologies

EPS cut (2018: -23.9%, 2019: -17.0%) (Keyware)

EPS CHANGE CHANGE IN EPS2018 : € 0.14 vs 0.18 -23.9% 2019 : € 0.16 vs 0.20 -17.0% The company has reported its Q3 18 results, which showed revenue growth but lower operating profitability due to the transition from a hardware provider to a software developer. We have updated our model to integrate these most recent figures, which were slightly lower than we had expected at the beginning of the year. The costs of transition have been higher than our former forecasts, which explains the lower EPS in FY18 and FY19. However, we remain confident about the company’s capability to reap higher profits in the following years and continue to grow, particularly in the software division.

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12 Nov 18
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SAP

Trying to grow at any price...

Qualtrics: transaction overview Price: purchase price of $8bn, or €7bn (including invested employee incentive compensation) Financing: SAP has obtained a €7bn credit facility (loan) to cover the purchase price and acquisition costs. SAP expects to refinance parts of the credit facility via the issuance of debt securities. Management & governance: Ryan Smith will continue to lead Qualtrics, reporting to Robert Enslin, President, SAP Cloud Business Group. Expecting closing: in H1 19; still subject to regulatory approval.

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12 Nov 18
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Infineon Technologies

Beating consensus is no longer enough

Q4 FY18 revenues were up 5.5% qoq to €2,047m, above our expectations and above consensus (range €2bn to €2.04bn). This brings FY18 revenues to €7,599m, up 7.6% yoy, beating again consensus and our expectations (around +7%). The Q4 Segment Result was up 25% qoq to €400m, above both the consensus and our expectations. The FY18 Segment Result was up 38% to €1,353m, however, this is slightly below consensus (€1.393bn) and our expectations (€1,427m). The company recorded a €159m provision related to the Qimonda case, bringing the whole provision for this matter to €180m in the balance sheet. As a result, the Q4 net result ended-up at €141m, down from €271m in the previous quarter. The FY18 net result was €1,075m up from €790m last year. Q4 adjusted EPS was €0.28, slightly above the estimate of €0.27 (range €0.22-0.30), which brought the FY18 adjusted EPS to €0.98. On the back of this good set of results, the company proposed increasing its dividend to €0.27/share (we expected €0.28). Going forward, Infineon sees its Q1 19 revenues declining 4% qoq due to seasonal effects, implying €1,956m of revenues, which comes slightly above our expectations (€1,931m). The Q1 Segment Result’s margin should reach 17.5% at mid-point of the PY, based on a EUR/USD FX rate of 1.15. For FY19, the company sees revenue to grow 11% (+/- 2pts) and the Segment Result’s margin to reach 18% at the mid-point of the FY (vs 17.6% for consensus).

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