Edison Insight
Strategic perspective | Company profiles
May 2016
Published by Edison Investment Research
Contents
Global perspectives
2
Company profiles
8
Edison dividend list
96
Results diary
98
Stock coverage
100
Prices at 20 May 2016
Published 26 May 2016
US$/£ exchange rate: 0.6895
TRY/£ exchange rate: 0.2364
€/£ exchange rate: 0.7825
HK$/£ exchange rate: 0.0888
C$/£ exchange rate: 0.5364
NOK/£ exchange rate: 0.0841
A$/£ exchange rate: 0.5099
JPY/£ exchange rate: 0.0064
NZ$/£ exchange rate: 0.4714
SG$/£ exchange rate: 0.5054
Welcome to the May edition of the Edison Insight. We now have over 400 companies under coverage,
of which 175 are profiled in this edition. Healthcare companies are now covered separately in Edison
Healthcare Insight. Click here to view the latest edition.
The book opens with a strategy piece from Alastair George, who believes that the combination of slow
growth and high valuations is pointing to a period of low returns for US, UK and European equities
th
over the medium term. The latter years of the 20 century appear to have been an exceptional period
for equities where buy and hold or “time in the market” strategies may have fitted the then prevailing
investment parameters but seem less applicable now. Separately, the most recent Fed minutes
highlight that a June rate increase is clearly a possibility, absent a repeat of the market volatility seen
in Q116. Earnings forecasts may have stabilised but show little sign of upward momentum, which in
our view is a necessary condition for any further sustained increases in market indices.
This month we have added 1Spatial, Elk Petroleum, Gear4music Holdings, Palm Hills Developments,
Piteco, Shore Capital Group and UMT to the company profiles.
Readers wishing more detail should visit our website, where reports are freely available for download
(www.edisongroup.com). All profit and earnings figures shown are normalised, excluding amortisation
of acquired intangibles, exceptional items and share-based payments.
Edison, the investment intelligence firm, is the future of investor interaction with corporates. Our team
of over 100 analysts and investment professionals work with leading companies, fund managers and
investment banks worldwide to support their capital markets activity. We provide services to close to
500 retained corporate and investor clients from our offices in London, New York, Frankfurt, Sydney
and Wellington. Edison is authorised and regulated by the Financial Conduct Authority
(www.fsa.gov.uk/register/firmBasicDetails.do?sid=181584). Edison is a registered investment adviser
regulated by the state of New York.
We welcome any comments/suggestions our readers may have.
Neil Shah
Director of research
Edison Insight | 26 May 2016
1
Global perspectives: Beware of buy and hold
Analyst

The combination of slow growth and high valuations points to a period of
low returns for US, UK and European equities over the medium term. The
th
latter years of the 20 century appear to have been an exceptional period for
equities where buy and hold or “time in the market” strategies fitted the then
prevailing investment parameters. At present, the low expected return on equities
offers no guarantee of outperformance over cash even over 10-year investment
Alastair George
+44 (0)20 3077 5700
[email protected]
periods.

The release of the Fed’s April meeting minutes has sharply increased the
market-implied odds of a June US rate increase and reignited the dollar rally.
This rally has the potential to cause problems for risk assets, but in our view is
likely to be self-limiting as Fed policymakers have demonstrated as recently as
Q116 that they are attuned to the effects on the global economy of tighter US
monetary policy.

Earnings momentum – absence of a negative is not a positive. Earnings
forecasts have stabilised but show little sign of upward momentum which we
believe is a necessary condition for further sustained increases in market indices
after the recent rally.

On balance, global equity markets have more reasons to disappoint than
surprise to the upside. High valuations and slow growth detract from the
medium-term investment case, while in the short-run progress appears capped by
the imminent prospect of one or more US rate increases. Within a cautious
portfolio positioning, we note that niches of the property and corporate debt
markets trade at levels which may offer returns similar to equities, but at a
significantly lower level of risk.
Edison Insight | 26 May 2016
2
Beware of buy and hold
th
The last few decades of the 20 century represented a golden era for equity investment with an
average compound annual return, including dividends, of 14% pa in the period 1973-2000 for the
US, UK and Europe. In this century to date, the annualised rate of return has fallen to 5%, Exhibit 1.
Exhibit 1: Total returns for major markets - buy and hold worked better up to year 2000
100000
Index level
10000
1000
100
CAGR: 5%
CAGR: 14%
10
1973
1977
1981
1985
1989
1993
Europe ex UK
1997
2001
2005
2009
UK
2013
US
Source: Thomson Reuters Datastream
th
To a hesitant investor in the latter part of the 20 century, when dividend yields were 3-5% and
corporate revenues were growing at 8-9% pa, the idea of “time in the market not timing the market”
was backed by the statistics. A 14% expected return when combined with market volatility of 17%
pa meant that the likelihood of losing money over any 10-year period became vanishingly small in
theory. We show in Exhibit 2 below that under certain assumptions this would have been an event
more than 2 standard deviations away from the mean expected return of 270% over a 10-year
holding period. In practice, for the UK, there was only one period between 1965 and 2000 when this
happened, which was during the bear market of the mid-1970s. Buy and hold, looking through the
month-to-month variations in share prices, was otherwise sound advice for a generation of
investors.
th
Return
Exhibit 2: “Time in the market” sound advice for the 20 century – but maybe not the 21
700%
600%
500%
400%
300%
200%
100%
0%
-100%
1
2
3
4
5
6
Expected return = 14% pa: 1973-2001
Expected return = 5% pa: 2016-2030?
7
8
9
Holding period (years)
10
11
st
12
13
14
15
-2 std deviation outcome
-2 std deviation outcome
Source: Edison calculations. Note: Solid lines reflect 14% expected return, dashed lines 5% expected return.
Unfortunately, investing today is not nearly as simple. While investors may recoil from the sub-2%
returns available on long-term government bonds and on the rebound may instinctively look to
increase equity allocations, it is not, in our view, necessarily the right thing to do at this point in time.
We continue to observe very high price/sales valuations in each of the US, UK and Europe and the
evidence is building that we have entered a structurally lower growth environment for corporate
revenues and profits, Exhibit 3.
Edison Insight | 26 May 2016
3
Growth %
Exhibit 3: Slowdown in forecast US sales growth in this cycle, compared to 2006/07
16%
14%
12%
10%
8%
6%
4%
2%
0%
-2%
-4%
-36 -35 -34 -33 -32 -31 -30 -29 -28 -27 -26 -25 -24 -23 -22 -21 -20 -19 -18 -17 -16 -15 -14 -13 -12 -11 -10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0
2006
2015
2007
2016
Source: Thomson Reuters Datastream. Data shows forecast sales growth n months prior to year end
The combination of high valuations and slow growth in corporate profits is pointing towards a much
lower rate of return for equities over the medium term. In the past, the yield available on an equity
portfolio of 3.5%, but more importantly the average dividend growth rate of 8%, mechanically led to
th
the high expected and realised returns of the latter part of the 20 century. For comparison, if
corporate revenues continue to grow at only 2-3% and are combined with dividend yields of 3%,
expected returns could now be as low as 5-6% pa. In terms of yields, we would also highlight that in
the UK at least, the market average yield is skewed to the large cap sectors which have recently
been cutting dividends.
A return several times that of low-yielding bonds may still look superficially attractive, but only
before proper account is taken of equity volatility. Equity markets over the long run have delivered
annualised volatility in the region of 15% pa. When returns were in the double digits, this was of
relatively little consequence to the long-term investor who was almost guaranteed a significantly
positive return in almost all scenarios due to the effect of compounding.
However, in today’s market with our expected return on equities close to 5-6% pa, the same maths
shows that even over holding periods of 10 years there is a material probability of an absolute loss,
(Exhibit 2) and a significant probability of underperforming the returns on risk-free government
bonds. This is because this rate of return struggles to keep up with the increase in expected
volatility over the holding period, even as volatility only increases with the square root of time.
There is unfortunately no easy answer to the pension trustee’s or institutional manager’s problem of
delivering returns which satisfy benchmarks set in prior periods. The rate of return on risk-free
bonds is very low and the risk/reward on equities appears unattractive. We would instead highlight
niches of the market, which perhaps by definition are less liquid but offer returns only slightly lower
than equities and at a significantly lower level of risk. At present for example, a combination of
property investments, high yield bonds, senior loan and infrastructure debt will currently deliver a
return similar to that on equities (ie 5-6%) with significantly lower volatility.
As a strategy, any rotation away from equities and into credit instruments would be a relative rather
than absolute call; if there is a major recession ahead then both asset classes would obviously be
expected to decline in value. However, credit would be expected to meaningfully outperform equity
in that scenario. We believe the most likely scenario of sub-par but tolerable growth would be
consistent with credit returns significantly above cash, while equities could easily underperform. It is
only in the scenario where there is an unanticipated surge in corporate profits that equities are likely
to outperform credit by a wide margin, which in our view remains a low-probability outcome given
that non-financial profit margins are still well above average.
What is remarkable is that despite the slowdown in revenue growth and with valuations so
extended, global markets seem completely focused on the US Federal Reserve’s policy actions.
Edison Insight | 26 May 2016
4
We can see numerous potential risks to the market and a dollar rally inspired by a newly hawkish
Fed is just one.
For example, we see medium-term uncertainty in China’s growth trajectory, of which the recent
rapid credit expansion is a symptom. The risk of Brexit may be diminishing, but the democratic and
legitimate rise of populist political movements is a natural response to the EU’s failure to generate
adequate GDP growth and may yet cause significant volatility. Recent survey and durable goods
data indicate that a slowdown is underway in the US and we continue to watch bank surveys which
indicate that US credit conditions continue to tighten, Exhibit 4. Perhaps in these circumstances it is
not a surprise that M&A activity has slowed down significantly during 2016 and the statistics would
have been much worse had Chinese corporates not been so active.
Balance reporting tighter credit %
Exhibit 4: US credit tightening – US banks’ senior loan officer survey (commercial loans)
100
80
60
40
20
0
-20
-40
1990
1993
1996
1999
2002
Large & Medium firms - tightening credit
2005
2008
2011
2014
Small firms - tightening credit
Source: Thomson Reuters Datastream
In short, we see many risks and only a few positive triggers, by far the most important of which is
that in any slowdown scenario there is a much higher probability compared to history that central
banks will step into the equity market directly. We believe this continued perception of a central
bank ‘put’ is responsible for holding markets up at levels which offer such low returns and to a
degree explains the sensitivity of markets to the direction of monetary policy.
The expectation that investment strategy is about making all the right calls all of the time is at odds
with the reality of the marketplace. There are times, such as now, when it is hard to discern which
way the dice will roll. We cannot be sure for example that the next faltering of economic activity will
lead to a further intervention by central banks into (equity) markets, or whether the Fed is about to
finally call time on a strategy of ever easier policy. In our view, this is the time to follow a strategy of
owning diversified and robust, rather than optimised, portfolios which can achieve an acceptable
return in many scenarios and sufficient preservation of capital in all.
US Fed minutes ‘surprise’
Although it spooked the markets for several days last week, it was no surprise to us that Fed
policymakers were keen to push up abnormally low market expectations for a June rate increase.
We believe the market had underestimated the Fed’s focus on financial conditions (ie risk premia in
global markets) as the reason to defer a rate increase earlier in the year. Consequently, market
participants had failed to acknowledge that an easing of financial conditions would put a June rate
increase immediately back on the agenda with both US unemployment and core inflation close to
target.
However, in our view the Fed remains constrained by the likely impact of rate increases on the
value of the US dollar and global financial conditions. Therefore, any tightening of policy will be
conditional on stability in global markets. We have many reasons to run a cautious portfolio
positioning, but the possibility of a Fed raising rates without regard to the global consequences is
Edison Insight | 26 May 2016
5
not actually so high on the list; the deferral of rate increases as recently as Q116 shows how
attuned current policymakers are to this particular second-order effect.
Earnings momentum – absence of a negative is not a positive
Profits forecasts for the US, UK and eurozone have been stable for the past 2 months. In the
context of last year’s relatively dramatic declines in profits expectations (the worst year in a
decade), we view this as a welcome development for equity investors, Exhibit 5.
Exhibit 5: 2016 forecast EPS index for the US, UK and Europe ex UK
105.0
Index level
100.0
95.0
90.0
85.0
80.0
May-15
Jun-15
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
Dec-15
Jan-16
Feb-16
UK
US
Mar-16
Apr-16
Europe ex UK
Source: Thomson Reuters Datastream, Edison calculations
However, following the 12% rally in these markets since February we believe the absence of a
negative is no longer a positive; at this point we need to see positive earnings momentum for
markets to make a sustained move higher. The lack of positive earnings momentum remains a key
behind-the-scenes factor in the stuttering of global markets during April and May, in our view.
Exhibit 6: 2016 forecast EPS for mining sector
115.0
105.0
Index level
95.0
85.0
75.0
65.0
55.0
45.0
35.0
May-15
Jun-15
Jul-15
Aug-15
Sep-15
US
Oct-15
Nov-15
UK
Dec-15
Jan-16
Feb-16
Mar-16
Apr-16
Europe ex UK
Source: Thomson Reuters Datastream, Edison calculations
From a sector perspective, Exhibit 6 shows that the mining sector continues to benefit from
upgrades as a result of the surprise turn in commodity prices since February 2016. These increases
are now largely in the rear view mirror, especially as China clamps down on commodity price
speculation. Although the global mining sector continues to trade at very modest price/book
multiples relative to its long-run average, the sharp relief rally looks to have run its course, as
forecasts have now caught up with the change in commodity prices.
For oil-related industries, the oil price rally since February has brought the oil price much closer to
the marginal cost of US shale. Therefore, as another upward move would seem inconsistent with
Saudi Arabia’s policy of maintaining market share, oil prices and earnings expectations seem
unlikely to rise significantly above current levels and we would be cautious about chasing
performance in this sector.
Edison Insight | 26 May 2016
6
More generally, the majority of sectors in each of the US, UK and eurozone have seen relatively
few earnings revisions over the past month. On balance, we believe the next revisions are more
likely to be modest downgrades as manufacturing PMI indices in the US and the UK indicate that
economic activity has been decelerating recently, even if the eurozone has been performing
relatively better since the ECB’s expansion of its QE programme, Exhibit 7.
Exhibit 7: Manufacturing PMI Indices
Index level (50 = no change)
61
59
57
55
53
51
49
47
45
May-13
Nov-13
May-14
Eurozone
Nov-14
May-15
US
Nov-15
UK
Source: Thomson Reuters Datastream
The lack of an investment theme based on earnings momentum leaves investors sitting on an
uncomfortable combination of relatively high valuations and very modest sales and profits growth
forecasts. Adding to the fear factor is the prospect of a US interest rate increase in June. While
investors have on a number of occasions appeared rescued by a US Fed hyper-sensitive to
financial market volatility, there is in our view nowhere near enough stress in global financial
markets at present to justify another deferral for that reason alone.
Conclusion
The combination of high valuations and slow revenue and profits growth implies low expected
returns on equities over the medium term. In our view, investors should consider taking the
opportunity presented by the recovery in equity markets to diversify by reducing equity exposure
and allocating capital to segments of the property and credit markets which currently offer similar
levels of return but at significantly less risk.
The US Fed has triggered a re-appraisal of the potential for a US rate increase in June or July.
However, this had been our base case and therefore does not change our view that markets are
likely to struggle to make progress until there is a broad-based upward trend in earnings revisions,
which has been absent to date.
.
Edison Insight | 26 May 2016
7
1Spatial
Sector: Support services
Price:
Market cap:
Forecast net cash (£m)
Forecast gearing ratio (%)
Market
4.9p
£35m
2.5
N/A
AIM
Share price graph (p)
(SPA)
INVESTMENT SUMMARY
1Spatial has significant expertise and IP in the field of geospatial data, supplying some of
the largest and sophisticated users of geospatial data globally. Investment in executing this
transformation significantly compresses earnings over our forecast period, but should create
a platform to deliver scalable, operationally geared growth. We believe the current share
price does not reflect this potential. Our DCF analysis suggests that penetrating a mere
0.22% of the global GIS user base would justify a 10p share price. We believe that positive
newsflow regarding GIS partner customer uptake or new enterprise database partners are
key catalysts for upside.
INDUSTRY OUTLOOK
Company description
1Spatial’s core technology validates,
rectifies and enhances customers’
geospatial data. The combination of its
software and advisory services
reduces the need for costly manual
checking and correcting data.
1Spatial operates in an attractive space. GIS is a multi-billion dollar market growing at a
robust rate. Demand for GIS management solutions is being driven by the increased
criticality of GIS information, the need to integrate data from multiple sources and the
integration of spatial data with financial and operational databases.
Y/E Jan
Price performance
%
1m
3m
Actual
(7.1)
(7.1)
Relative* (3.9) (10.5)
12m
(27.8)
(18.9)
* % Relative to local index
Analyst
Dan Ridsdale
Sector: Media & entertainment
Price:
1356.0p
Market cap:
£381m
Forecast net cash (US$m)
16.4
Forecast gearing ratio (%)
N/A
Market
LSE
Share price graph (p)
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS (fd)
(p)
P/E
(x)
P/CF
(x)
2015
19.6
3.1
1.8
0.27
18.1
90.3
2016
20.7
3.7
2.5
0.29
16.9
N/A
2017e
27.4
3.9
1.9
0.23
21.3
19.3
2018e
28.1
4.7
2.3
0.29
16.9
7.4
4imprint Group
(FOUR)
INVESTMENT SUMMARY
4imprint’s AGM statement confirmed its growth continues to outstrip that of the promotional
products market by a substantial margin, with underlying order intake and revenues ahead
by 15% year to date. The US market is very large and growing, yet remains dominated by
small suppliers and distributors, giving ample scope for an efficient player such as 4imprint
to build at a good pace for some years. With the legacy pension issues now largely resolved
and a strong, cash-positive balance sheet, the premium rating is readily justified. Numbers
are stated pre-pension, share option and exceptional charges.
INDUSTRY OUTLOOK
Company description
4imprint is a supplier of promotional
products with market-leading
businesses in North America and the
UK. 92% of revenues are derived from
North America, where a strategy of
investment in marketing has led to
strong revenue and profit growth.
Trade association ASI-listed 4imprint as the second-largest US distributor in 2014, up from
number five in 2013, and current momentum means it may have taken over the number one
slot ahead of Staples Promotional Products, which had estimated FY14 revenues of $447m.
The total market size was estimated at $22bn for FY15, indicating how fragmented the
industry remains. The ASI estimates the proportion of online sales was 16% of the total
distributor market, up 3.4% in CY15, with a continuing shift in share towards the larger
distributors.
Y/E Dec
Price performance
%
1m
3m
Actual
4.3
17.6
Relative*
7.9
13.3
* % Relative to local index
Analyst
Fiona Orford-Williams
Edison Insight | 26 May 2016
12m
19.2
33.9
Revenue
(US$m)
EBITDA
(US$m)
PBT
(US$m)
EPS (fd)
(c)
P/E
(x)
P/CF
(x)
2014
415.8
29.5
27.9
71.5
27.5
19.8
2015
497.2
35.5
33.5
87.5
22.5
17.9
2016e
560.0
39.7
37.7
94.6
20.8
14.3
2017e
616.0
44.2
41.6
104.6
18.8
12.6
8
Acacia Mining
Sector: Mining
Price:
333.2p
Market cap:
£1366m
Forecast net cash (US$m) 154.3
Forecast gearing ratio (%)
N/A
Market
LSE
Share price graph (p)
(ACA)
INVESTMENT SUMMARY
Excluding a second, successive, anomalously high quarterly tax charge owing to new tax
provisions, underlying Q116 EPS were 13.2% above our expectations, at 4.4c per share.
Q116 output was 190koz at a cash cost of US$693/oz. Official management guidance is for
765koz of output at c US$685/oz for the full year. However, output will be weighted towards
H2 in a c 45:55 ratio, leading us to believe that it is quite possible that ACA will exceed both
expectations and guidance.
INDUSTRY OUTLOOK
Company description
Acacia Mining (previously African
Barrick Gold) was historically the
Tanzanian gold mining business of
Barrick and is one of Africa's five
largest gold producers with output from
three mines: Bulyanhulu, Buzwagi and
North Mara.
Our revised FY16 EPS estimate of 35c (vs 29c previously and a consensus of 26c, within
the range 6-36c) assumes a gold price of US$1,224/oz. Note that ACA has put a zero-cost
collar hedge in place over 136koz of production from Buzwagi in FY16 at
US$1,150-1,290/oz. In the meantime, we estimate an NPV of potential dividends to
investors in ACA of US$5.24 (£3.64) per share (at a 10% discount rate and Edison's
long-term gold price forecasts) or US$3.58 (£2.48) per share at US$1,224/oz (flat, real),
excluding Nyanzaga.
Y/E Dec
Price performance
%
1m
3m
Actual
4.3
44.6
Relative*
7.9
39.4
12m
11.1
24.9
* % Relative to local index
Analyst
Charles Gibson
Revenue
(US$m)
EBITDA
(US$m)
PBT
(US$m)
2014
930.2
249.2
2015
868.1
166.6
2016e
1009.5
2017e
962.4
Acal
Sector: Technology
Price:
253.0p
Market cap:
£162m
Forecast net debt (£m)
40.4
Forecast gearing ratio (%)
43.0
Market
LSE
Share price graph (p)
EPS (fd)
(c)
P/E
(x)
P/CF
(x)
116.4
21.9
22.1
6.8
22.0
(12.4)
N/A
12.1
368.5
206.6
35.2
13.7
6.9
356.9
177.6
30.7
15.7
5.4
(ACL)
INVESTMENT SUMMARY
Acal achieved FY16 revenue growth of 6% y-o-y, or 14% on a constant exchange rate
(CER) basis. While this is slightly below our 8.8% forecast, the company expects to report
underlying earnings slightly ahead of expectations. Trading in Q416 was better than
management expected and recent acquisitions are performing well and as expected.
Contract wins in both divisions, combined with currency tailwinds, support growth
expectations for FY17. We leave our forecasts unchanged pending full year results on 1
June.
INDUSTRY OUTLOOK
Company description
Acal is a leading international supplier
of customised electronics to industry. It
designs, manufactures and distributes
customer-specific electronic products
and solutions to 20,000 industrial
manufacturers.
Acal is a supplier of customised electronics to industry with operations throughout Europe
and increasingly outside Europe. Its solutions are used in both the design and production
phases of a customer’s product. Design activity tends to be technology driven, whereas
production activity is more geared to general economic conditions. The company is focused
on growing the percentage of higher-margin specialist product through organic growth and
acquisition.
Y/E Mar
Price performance
%
1m
3m
Actual
(3.4)
(0.8)
Relative* (0.1)
(4.4)
* % Relative to local index
Analyst
Katherine Thompson
Edison Insight | 26 May 2016
12m
(12.5)
(1.7)
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS (fd)
(p)
P/E
(x)
P/CF
(x)
2014
211.6
9.1
6.9
13.1
19.3
17.9
2015
271.1
16.6
12.4
16.4
15.4
22.1
2016e
294.9
19.6
14.5
16.5
15.3
12.3
2017e
317.9
22.8
16.7
18.4
13.8
9.0
9
AFH Financial Group
Sector: Financials
Price:
166.0p
Market cap:
£40m
Forecast net debt (£m)
N/A
Forecast gearing ratio (%)
N/A
Market
AIM
Share price graph (p)
(AFHP)
INVESTMENT SUMMARY
Although AFH's approach to Lighthouse earlier in the year (valuing it at c £17.4m) was
rejected, the company has a healthy pipeline of potential IFA acquisitions. AFH also has the
funds to make them, having raised £6.37m in December from investors including new
institutional holders. Acquisitions are structured to limit exposure to disappointing results
and have helped to grow AUM in absolute terms and per advisor to £1.8bn and £11m,
respectively (as at year end on 31 October). Recurring revenue makes up 65% of the total
and covers almost 90% of the total cost base, providing a strong platform for further growth.
INDUSTRY OUTLOOK
Company description
AFH Financial Group is a national
independent financial advisory (IFA)
and discretionary wealth management
firm. It has actively consolidated in the
fragmented IFA market, making ten
material acquisitions in 2015.
AFH’s financial advice market should see double-digit, long-term structural growth. In the
near term, regulatory changes have distorted the market, putting pressure on banks and
small IFAs, allowing acquisitions. Changes to the pensions regime are likely with the lack of
action in the latest budget probably merely deferring this.
Y/E Oct
Price performance
%
1m
3m
Actual
4.7
(2.4)
Relative*
8.4
(5.9)
12m
14.5
28.6
* % Relative to local index
Analyst
Andrew Mitchell
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS
(p)
P/E
(x)
P/CF
(x)
2014
15.0
1.5
2015
21.0
3.0
1.4
5.83
28.5
19.1
2.7
11.30
14.7
N/A
2016e
27.5
2017e
31.0
4.1
3.7
12.68
13.1
11.6
5.4
5.0
16.20
10.2
9.9
Alkane Resources
Sector: Mining
Price:
A$0.20
Market cap:
A$99m
Forecast net cash (A$m)
21.8
Forecast gearing ratio (%)
N/A
Market
ASX
Share price graph (A$)
(ALK)
INVESTMENT SUMMARY
Alkane remains one of the most active junior mining companies in the exploration space.
Gold production at the TGO and the positive FCF from that operation is now being used to
explore with a view to extending the LOM to over 10 years. With TGO cash flow being
directed towards exploration rather than being invested back into the DZP, Alkane
announced an A$16m equity raise (25% backed by management) to finalise DZP land
packages, finalise off-takes (incl. testing of the FEED) and ultimately to secure project
financing.
INDUSTRY OUTLOOK
Company description
Alkane Resources is a
multi-commodity explorer and
developer, with projects in the central
west region of New South Wales in
Australia. Alkane owns the Tomingley
Gold Operation and DZP rare metal
and rare earths projects (both 100%).
ALK’s portfolio of land packages are in NSW, Australia and are proven ground in terms of a)
yielding two mines for ALK (Peak Hill which closed in 2004 and the operating TGO); b) one
project which was sold to Regis Resources for a total A$150m; and c) contains the flagship
DZP. Alkane’s recent (6 May 2016) drilling results indicate further potential for another
McPhillamys-style deposit within the Bodangora project at the Kaiser exploration target. Of
the small 1,761m RC drill programme two holes returned assays of 111m at 0.61g/t Au and
0.08% Cu and another 311m at 0.28g/t Au and 0.08%, both close to surface.
Y/E Jun
Price performance
%
1m
3m
Actual
(7.0) (20.0)
Relative* (9.3) (26.0)
* % Relative to local index
Analyst
Tom Hayes
Edison Insight | 26 May 2016
12m
(32.2)
(29.7)
Revenue
(A$m)
EBITDA
(A$m)
PBT
(A$m)
EPS
(c)
P/E
(x)
P/CF
(x)
2014
35.5
3.9
3.4
(0.4)
N/A
N/A
2015
101.8
26.5
0.1
1.0
20.0
2.9
2016e
100.7
20.1
(6.6)
(1.6)
N/A
5.5
2017e
113.4
50.1
(5.5)
(0.5)
N/A
4.5
10
Almonty Industries
Sector: Mining
Price:
C$0.35
Market cap:
C$35m
Forecast net debt (C$m)
57.0
Forecast gearing ratio (%) 163.0
Market
CV
Share price graph (C$)
(AII)
INVESTMENT SUMMARY
Almonty continues to navigate a path through the current downturn in the tungsten market.
Most recently, the company announced the sale of its Wolfram Camp Mine in north
Queensland Australia to ATC Alloys, paid for purely in paper. Almonty, as a result, has
divested its most expensive operation (costs were coming down, but were still around the
US$450/mtu mark), and in return it has acquired 53% (or A$6m) of ATC Alloys – a specialist
tungsten processor in Vietnam, thereby potentially providing downstream processing
exposure.
INDUSTRY OUTLOOK
Company description
Almonty Industries is an independent
tungsten producer, with two operating
mines – Los Santos in Spain and
Wolfram Camp in Australia – and the
development stage Valtreixal
tungsten-tin project in Spain.
We note that European APT prices in May continue to show improvement, averaging c
US$220/mtu (a 22% month-on-month improvement). This is still a way off our FY16 average
APT price assumption of US$250/mtu, which we now look to revise. All-in cash costs at Los
Santos for Q116 were US$124/mtu and at WCM averaged US$465/mtu.
Y/E Sep
Price performance
%
1m
3m
Actual
(2.8)
29.6
Relative* (2.8)
19.3
12m
(39.7)
(34.7)
* % Relative to local index
Analyst
Tom Hayes
EBITDA
(C$m)
4.6p
£24m
9.1
N/A
AIM
Share price graph (p)
PBT
(C$m)
EPS (fd)
(c)
P/E
(x)
P/CF
(x)
2014
29.6
16.1
9.9
25.4
1.4
1.6
2015
36.1
(7.9)
(20.9)
(40.4)
N/A
12.9
2016e
37.1
9.2
(3.7)
(4.3)
N/A
N/A
2017e
N/A
N/A
N/A
N/A
N/A
N/A
Amur Minerals
Sector: Mining
Price:
Market cap:
Forecast net cash (US$m)
Forecast gearing ratio (%)
Market
Revenue
(C$m)
(AMC)
INVESTMENT SUMMARY
The three resource updates announced by Amur in Q216 have increased the mineralised
tonnage at Kun-Manie by 36.3% and contained nickel by 13.8% to 740.1kt, or 982.7kt Ni
equivalent. This effectively completes the resource estimation phase of the definitive
feasibility study and allows Amur to progress to reserves' definition.
INDUSTRY OUTLOOK
Company description
Amur Minerals is an exploration and
development company focused on
base metal projects located in Russia's
far east. Amur's flagship Kun-Manie
Ni-Cu project has a current global
resource of 650,600t contained nickel
and 178,400t contained copper.
Based on the existing (open cast) operational blueprint, in our 24 May note, we calculated
values for concentrate, low-grade matte, high-grade matte and refined metal project options
of 26c, 33c, 26c and 30c, respectively, fully diluted at a 4.58p share price using a 10%
discount rate and US$22,355/t Ni (assuming 80:20 debt:equity funding). Stated
alternatively, Amur’s shares offer investors an IRR of 28.6-34.2% in US dollars over 18
years. However, this could increase if the mine plan is reconfigured to advance high-grade
underground production. In the meantime, we estimate Amur’s enterprise value to be
US$34.67/t Ni currently (cf US$58.67/t as at end-FY15).
Y/E Dec
Price performance
%
1m
3m
Actual
(10.2) (46.2)
Relative* (7.1) (48.1)
* % Relative to local index
Analyst
Charles Gibson
Edison Insight | 26 May 2016
12m
(54.2)
(48.5)
Revenue
(US$m)
EBITDA
(US$m)
PBT
(US$m)
EPS
(c)
P/E
(x)
P/CF
(x)
2013
0.0
(2.5)
(3.7)
(1.0)
N/A
N/A
2014
0.0
(2.4)
(2.5)
(0.6)
N/A
N/A
2015e
0.0
(2.1)
1.0
0.1
66.7
N/A
2016e
0.0
(2.1)
(1.7)
(0.3)
N/A
N/A
11
Arbuthnot Banking Group
Sector: Financials
Price:
1485.5p
Market cap:
£221m
Forecast net debt (£m)
N/A
Forecast gearing ratio (%)
N/A
Market
AIM
Share price graph (p)
(ARBB)
INVESTMENT SUMMARY
In its AGM statement (5 May), ARRB reported a good start to FY16 with overall customer
loan balances up more than 30% in the first quarter, a rate which is comparable to our full
year estimated growth of 34%. This reflects continued growth in lending at both Secure
Trust and at Arbuthnot Latham as its commercial banking service is rolled out. Arbuthnot
Latham has also been adding private clients at a healthy rate of 50 per month. The group
achieved record pre-tax profits of £34.2m in 2015 (£37.7m on an underlying basis),
including the results of Everyday Loans, the sale of which completed in April with an
expected profit of £115m. A special dividend of 25p is proposed following the
disposal.(Figures shown below are on a continuing, normalised basis)
INDUSTRY OUTLOOK
Company description
Arbuthnot Banking Group (ABG) is
engaged in retail and private banking.
It owns 51.9% of the rapidly growing
Secure Trust Bank. Private banking is
conducted through Arbuthnot Latham.
The conditions for strong lending growth remain in place with major banks focused on core
areas and strengthening capital ratios. Specialist/challenger banks such as ARBB still only
account for relatively small market shares in the areas they are addressing. Macro concerns
remain a consideration but in the event of a sharp correction the group is well placed to
exploit an acquisition opportunity that might arise.
Y/E Dec
Price performance
%
1m
3m
Actual
1.2
8.9
Relative*
4.7
4.9
12m
(3.4)
8.5
* % Relative to local index
Analyst
Andrew Mitchell
Sector: Consumer support services
Price:
€3.02
Market cap:
€17m
Forecast net cash (€m)
0.9
Forecast gearing ratio (%)
N/A
Market
FRA, Xetra
Share price graph (€)
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS (fd)
(p)
P/E
(x)
P/CF
(x)
2014
92.0
N/A
17.8
46.3
32.1
N/A
2015
126.7
N/A
26.0
65.5
22.7
N/A
2016e
159.9
N/A
35.0
91.3
16.3
N/A
2017e
186.8
N/A
50.3
132.3
11.2
N/A
artnet
(ART)
INVESTMENT SUMMARY
Q116 saw a 6% rise in revenues (in US$), primarily driven by growing advertising revenues.
With the shift in mix helping to drive gross profit ahead by 11%, the effect at the operating
level was even greater, as lower sales and marketing costs and reduced spend on product
development contributed to the group returning a profit in the quarter of $287k (Q115: loss
of $206k). Although Q1 is the group's quietest trading period, we expect these underlying
trends to continue, leading to further progress in FY16 and FY17.
INDUSTRY OUTLOOK
Company description
artnet is an online business offering an
integrated range of information and
transaction services in the fine art,
design and decorative art markets. It
has four divisions: Price Database,
Galleries, Auctions and News.
The art market had a mixed 2015, with good US growth but a sharp downturn in China. The
growth in the use of online resources attracted a number of new auction market entrants
and increased competition in the galleries segment. Overall, the online market continues to
build its share strongly, particularly in the sub $10k space. The latest Hiscox Online Art
Trade Report shows 24% growth in the online market in 2015. Its revised (higher) projection
is for sales of $9.58bn by 2020. It ranks the artnet platform market leader for traffic and 3rd
overall behind Christie's and Artsy.
Y/E Dec
Price performance
%
1m
3m
Actual
6.2
59.2
Relative* 11.6
50.7
* % Relative to local index
Analyst
Fiona Orford-Williams
Edison Insight | 26 May 2016
12m
75.3
109.5
Revenue
(€m)
EBITDA
(€m)
PBT
(€m)
EPS (fd)
(c)
P/E
(x)
P/CF
(x)
2014
13.9
0.3
(0.1)
(6.3)
N/A
N/A
2015
17.3
1.2
0.9
15.7
19.2
79.8
2016e
18.4
1.7
1.4
18.5
16.3
21.0
2017e
19.8
2.2
1.9
23.7
12.7
12.3
12
Atalaya Mining
Sector: Mining
Price:
97.5p
Market cap:
£114m
Forecast net debt (€m)
48.2
Forecast gearing ratio (%)
22.0
Market
AIM, Toronto
Share price graph (p)
(ATYM)
INVESTMENT SUMMARY
Located on the world's largest VMS system (the Iberian pyrite belt), Atalaya declared
commercial production from 1 February and is currently processing at 4.7-4.9Mtpa
(annualised) with metallurgical recovery in excess of 82% and the concentrate meeting
acceptable specifications. As a result, it is now in the process of commissioning and
integrating its expansion project to take throughput to 9.5Mtpa (to produce 40ktpa Cu) in
Q316 (earlier than expected) and offsetting a recent 12-day tailings deposition suspension
order (by the Junta de Andalucía).
INDUSTRY OUTLOOK
Company description
Atalaya Mining owns 100% of the
Riotinto copper project in Southern
Spain. Production start-up at an initial
rate of 5.0Mtpa was ahead of schedule
and under budget. Commissioning of
the Expansion Project, to double
production to 9.5Mtpa is underway.
Atalaya made a Eur3.3m loss in Q1, but achieved a positive cash-flow from operations.
Costs of production were US$2.20/lb, but are expected to decline. Capex for Phase 1 and
the expansion has been contained to below US$164m. ATYM has dismissed a legal claim
against it by Astor Management regarding consideration for the balance of 49% of the Rio
Tinto project and a court date has now been set for Q117. Forecasts are under review in the
wake of Q1.
Y/E Dec
Price performance
%
1m
3m
Actual
(4.9)
12.7
Relative* (1.6)
8.6
12m
(31.4)
(22.9)
* % Relative to local index
Analyst
Charles Gibson
EBITDA
(€m)
2014
0.0
(11.4)
(11.2)
(25.52)
N/A
N/A
2015
0.0
(5.8)
(15.0)
(17.94)
N/A
14.9
2016e
141.7
49.1
44.3
37.93
3.3
20.1
2017e
N/A
N/A
N/A
N/A
N/A
N/A
Augean
Sector: Support services
Price:
Market cap:
Forecast net debt (£m)
Forecast gearing ratio (%)
Market
Revenue
(€m)
50.0p
£51m
3.0
5.0
AIM
Share price graph (p)
PBT
(€m)
EPS
(c)
P/E
(x)
P/CF
(x)
(AUG)
INVESTMENT SUMMARY
On 19 May Augean announced the £9.2m acquisition of Hull-based Colt Holdings, a
specialist industrial services provider. The transaction was in keeping with Augean's
strategy of growing through client-focused solutions. The deal is expected to be immediately
earnings accretive, but the most attractive element of it is the potential for revenue
synergies given Colt's established customer franchise and complementary operations. This
follows on from March's FY15 announcement which showed the business performed well
across its key segments despite headwinds from the oil price.
INDUSTRY OUTLOOK
Company description
Augean manages hazardous waste
through five divisions: Radioactive
Waste Services (4% of group
revenues), Energy & Construction
(37%), Industry & Infrastructure (21%),
Augean Integrated Services – AIS
(9%) and ANSS (28%).
There is a growing trend towards treatment, recovery and recycling in the waste hierarchy,
highlighted in the government's Strategy for Hazardous Waste Management. This
increasingly more stringent environmental regulation supports Augean's specialist industry
knowledge model and provides a platform for growth, in our view.
Y/E Dec
Price performance
%
1m
3m
Actual
6.4
22.0
Relative* 10.1
17.5
* % Relative to local index
Analyst
Jamie Aitkenhead
Edison Insight | 26 May 2016
12m
0.0
12.4
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS
(p)
P/E
(x)
P/CF
(x)
2014
55.2
10.0
5.4
4.13
12.1
5.3
2015
61.0
12.1
6.0
4.65
10.8
4.1
2016e
57.6
12.9
6.6
5.08
9.8
4.4
2017e
59.4
14.2
7.4
5.73
8.7
3.7
13
Sector: Aerospace & defence
Price:
88.0p
Market cap:
£130m
Forecast net debt (US$m) 539.8
Forecast gearing ratio (%) 227.0
Market
AIM
Share price graph (p)
Avanti Communications Group
(AVN)
INVESTMENT SUMMARY
Avanti has reported Q3 trading that not only allows it to maintain its guidance for FY16
revenue growth, delivering a positive EBITDA in Q3, but clearly indicates a path towards
free cash generation. Contract momentum is building with high quality customers, recurring
revenues are growing, satellite capex is almost complete and the financing facilities nearing
completion appear more than sufficient to execute the plan. As this progress becomes more
widely appreciated, we expect the share price to be released from its shackles and start to
trend towards cash-based fair values. Our capped DCF currently returns a value of 427p
per share.
INDUSTRY OUTLOOK
Company description
Avanti Communications is a
London-based fixed satellite services
(FSS) provider. It sells satellite data
communications services to service
providers to key markets in Enterprise,
Broadband, Carrier Services and
Government. It has Ka-band capacity
on four satellites, with two launches
due in 2017.
Price performance
%
1m
3m
Actual
(8.8) (10.2)
Relative* (5.7) (13.5)
12m
(60.7)
(55.9)
* % Relative to local index
Analyst
Andy Chambers
Sector: Media & entertainment
Price:
217.5p
Market cap:
£41m
Forecast net debt (£m)
3.5
Forecast gearing ratio (%)
8.0
Market
AIM
Share price graph (p)
Avanti is building a Ka-band satellite network to service broadband connectivity for
underserviced markets and remote locations in EMEA. In these markets it has been a first
mover, and it currently owns and operates three satellites in geostationary orbit. The
company's increasing focus on Africa is a reflection of the expected rapid growth of demand
for data transmission in the region. The potential in the market appears to be validated by
recent competitor announcements of future deployment of Ka-band capacity servicing
Africa, to be launched after Avanti's own additions, notably HYLAS 4.
Y/E Jun
Revenue
(US$m)
EBITDA
(US$m)
PBT
(US$m)
EPS (fd)
(c)
P/E
(x)
P/CF
(x)
2014
65.6
(5.8)
(93.0)
(85.2)
N/A
26.9
2015
85.2
13.9
(73.3)
(61.4)
N/A
N/A
2016e
86.7
17.8
(77.8)
(52.8)
N/A
9.8
2017e
126.3
56.1
(39.6)
(26.7)
N/A
3.4
Avesco
(AVS)
INVESTMENT SUMMARY
FY15 results were ahead of forecasts, with a particularly strong performance from Creative
Technology (CT) in the US and with CT Europe getting a boost from the European Games
in Baku. FY16 should benefit from the UEFA European Championships and Rio Olympics.
Growth of corporate revenues and the migration of Presteigne to dry hire only are helping to
even out swings between odd and even years, with the ‘odd’ FY15 outperforming previous
‘even’ highs. The Fountain Studio sale will have further bolstered the balance sheet,
supporting investment to grow CT (appointments have been announced in sales in the US
and Germany) and a progressive dividend. Half year results are scheduled for 9 June.
INDUSTRY OUTLOOK
Company description
Avesco is a leading international
provider of broadcast and audiovisual
rental equipment and services to the
corporate presentation, entertainment
and broadcast industries worldwide.
New technologies such as large LED screens, HD projection, IPTV and streaming allow
ever more dramatic event staging and information displays, underpinning demand for
specialist suppliers such as Avesco. The audiovisual industry is estimated to have been
worth $91bn in 2014 and to grow to $114bn by 2016, a CAGR of over 10%. PWC believes
that investment to expand capacity will push global trade show revenues to $40bn by 2019,
up from $31.8bn in 2014, with exhibitors' appetite for striking displays ever-greater.
Y/E Sep
Price performance
%
1m
3m
Actual
0.5
(0.2)
Relative*
3.9
(3.9)
* % Relative to local index
Analyst
Fiona Orford-Williams
Edison Insight | 26 May 2016
12m
54.3
73.3
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS (fd)
(p)
P/E
(x)
P/CF
(x)
2014
126.4
25.0
5.0
12.4
17.5
2.8
2015
133.7
27.0
5.7
25.3
8.6
1.6
2016e
137.5
27.0
6.6
20.8
10.5
1.9
2017e
136.5
27.1
7.1
22.3
9.8
1.9
14
Sector: Aerospace & defence
Price:
903.0p
Market cap:
£280m
Forecast net debt (£m)
4.0
Forecast gearing ratio (%)
8.0
Market
LSE
Share price graph (p)
Avon Rubber
INVESTMENT SUMMARY
Avon Rubber’s interim results show the group is able to deliver a robust performance even
in a more challenging market environment. Despite the absence of an impact order in
Protection & Defence and Dairy markets being cyclically weak, the group has managed to
progress on all fronts, gaining market share, and is well positioned to accelerate growth
once again as markets normalise. Revenues were up 5% to £66.3m, adjusted operating
profit up 6% to £9.0m and adjusted PBT up 5% to £8.8m. With an effective tax rate of just
1% (2015: 20%), basic EPS was up 29% to 28.7p (2015: 22.3p). Operating cash conversion
was high at 163% of operating profit enabling net debt to decrease to £8.4m (£13.2m at end
FY15), after £3.5m spent acquiring Argus in October 2015. The interim dividend (3.2p)
continues its trend of increasing by 30% as anticipated.
INDUSTRY OUTLOOK
Company description
Avon Rubber designs, develops and
manufactures products in the
respiratory protection, defence (74% of
2015 sales) and dairy (26%) sectors.
Its major contracts are with national
security and safety organisations such
as the DoD.
Despite pressured budgets, the protective and consumable nature of Avon's products
provides resilience. The emerging portfolio effect should enable continued growth, while
dairy expansion in the BRICs and the sales synergies from the InterPuls acquisition provide
further long-term opportunities.
Y/E Sep
Price performance
%
1m
3m
Actual
15.0
16.0
Relative* 19.0
11.8
(AVON)
12m
10.9
24.6
* % Relative to local index
Analyst
Roger Johnston
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS (fd)
(p)
P/E
(x)
P/CF
(x)
2014
124.8
N/A
16.6
43.7
20.7
10.8
2015
134.3
N/A
19.8
56.1
16.1
13.3
2016e
150.6
N/A
20.5
67.2
13.4
10.1
2017e
157.4
N/A
21.7
56.5
16.0
9.7
Banca IFIS
Sector: Financials
Price:
€21.90
Market cap:
€1178m
Forecast net cash (€m)
N/A
Forecast gearing ratio (%)
N/A
Market
Borsa Italiana STAR
Share price graph (€)
(IF)
INVESTMENT SUMMARY
IFIS Q116 results released towards the end of April showed 9.3% growth in net banking
income (NBI) versus Q115 and within this Trade Receivables were up 5%, Tax Receivables
+6% and Distressed Retail Loans (DRL) +224%, while the central G&S area recorded lower
income following the restructuring of the goverment securities portfolio last year. DRL now
accounts for over 36% of NBI and expansion has continued with acquisitions in April and
May of three portfolios of NPLs totalling a nominal value of €1.5bn, comprising
approximately 200,000 positions.
INDUSTRY OUTLOOK
Company description
Banca IFIS’s core business is
financing Italian SME trade receivables
and non-performing loans. There are
modest operations in Romania,
Hungary and Poland. The Italian
government bond portfolio is now
under 10% of group profits.
The trade receivables business should show continued growth and maintain margins as
major banks remain focused on managing capital while the established network and
systems at IFIS act as a differentiating feature. The DRL business offers significant growth
potential through further purchases and effective collection processes. Italian government
securities, previously a significant source of earnings, are expected to be a small contributor
in our estimates.
Y/E Dec
Price performance
%
1m
3m
Actual
(18.2) (14.6)
Relative* (14.8) (19.0)
* % Relative to local index
Analyst
Andrew Mitchell
Edison Insight | 26 May 2016
12m
9.5
42.4
Revenue
(€m)
EBITDA
(€m)
PBT
(€m)
EPS
(c)
P/E
(x)
P/CF
(x)
2014
284.1
N/A
144.9
179.8
12.2
N/A
2015
408.0
N/A
245.6
299.8
7.3
N/A
2016e
286.6
N/A
139.3
168.8
13.0
N/A
2017e
322.8
N/A
164.9
197.3
11.1
N/A
15
Bezant Resources
Sector: Mining
Price:
Market cap:
Forecast net debt (£m)
Forecast gearing ratio (%)
Market
2.1p
£3m
N/A
N/A
AIM
Share price graph (p)
INVESTMENT SUMMARY
The interim results highlighted that Bezant (BZT) continues to conserve cash as it appraises
options to develop its gold and platinum interests in Columbia (the Leeward Resources
transaction) and pursue the sale of its Mankayan asset in the Philippines which has been
affected by adverse mining law proposals. Group expenditures for H116 were £265k, a 19%
fall from a year earlier (H115: £328k). The option entered into with Leeward Resources,
relates to options held over certain interests in certain licences covering what is understood
by management to be highly prospective platinum and gold bearing areas in the Choco
region in Columbia. The ‘Leeward’ transaction included a US$50k upfront payment and a
US$350k working capital loan facility to Leeward used under BZT’s full supervision. BZT
had cash of £1.5m at 31 December 2015.
INDUSTRY OUTLOOK
Company description
BZT has interests in three global
assets: the Mankayan Project (a
copper/gold porphyry project in the
Philippines), the Eureka Project (a
copper/gold deposit in northern
Argentina) and the gold enterprise
Mkurumu Project, located in Tanzania.
The current platinum price is c US$1,005/oz, a m-o-m decrease of c 3%, and gold currently
trades at c US$1,240/oz, relatively flat over the same period.
Y/E Jun
Price performance
%
1m
3m
Actual
21.4
6.3
Relative* 25.6
2.4
(BZT)
12m
(29.2)
(20.4)
* % Relative to local index
Analyst
Tom Hayes
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS
(p)
P/E
(x)
P/CF
(x)
2014
0.0
(1.2)
(1.2)
(1.4)
N/A
N/A
2015
0.0
(0.6)
(0.6)
(0.7)
N/A
N/A
2016e
N/A
N/A
N/A
N/A
N/A
N/A
2017e
N/A
N/A
N/A
N/A
N/A
N/A
Blancco Technology Group
Sector: Technology
Price:
224.5p
Market cap:
£131m
Forecast net cash (£m)
7.9
Forecast gearing ratio (%)
N/A
Market
AIM
Share price graph (p)
(BLTG)
INVESTMENT SUMMARY
Blancco is now focused solely upon data erasure software and mobile diagnostics. The
interim results showed the strong progress that Blancco is making with its erasure
technology, particularly in hosted/virtual markets. The recent announcement of a major
contract win for Xcaliber shows the traction and potential this mobile phone diagnostics
business has, and we welcome Blancco's move to acquire the remainder of the company.
After the £50m share buyback, the shares trade at earnings discounts to key comparators
despite the good newsflow and considerable potential market for its products.
INDUSTRY OUTLOOK
Company description
Blancco Technology Group provides a
suite of lifecycle support services and
technologies designed to help
companies and their customers
successfully deploy, protect, sustain,
retire and re-use digital technology.
The growing need for effective data erasure for enterprises and governments is driven both
by legislation, the spectre of litigation and operational imperatives. Blancco's software
offering is one of only a few that brings together the facilitation, management and recording
of data erasure. However, while the potential market is considerable, the actual market
remains nascent in form.
Y/E Jun
Price performance
%
1m
3m
Actual
(6.3)
16.6
Relative* (3.0)
12.4
* % Relative to local index
Analyst
Ian Robertson
Edison Insight | 26 May 2016
12m
5.0
18.0
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS
(p)
P/E
(x)
P/CF
(x)
2014
N/A
N/A
N/A
N/A
N/A
20.2
2015
15.0
8.2
2.7
2.8
80.2
52.9
2016e
22.7
6.4
5.1
5.8
38.7
13.5
2017e
31.2
8.2
7.2
11.4
19.7
N/A
16
Borussia Dortmund
Sector: Travel & leisure
Price:
€4.02
Market cap:
€370m
Forecast net cash (€m)
41.0
Forecast gearing ratio (%)
N/A
Market
FRA
Share price graph (€)
(BVB)
INVESTMENT SUMMARY
Runaway second place in this season's Bundesliga and early qualification for the group
stage of next season's Champions League justify confidence in a possible step change in
returns in FY17. We look for a doubling in pre-transfer EBITDA (our key metric) and strong
cash generation for player investment. In the current year, while a 20% increase in revenue
in Q3 was impressive without the Champions League, pre-transfer EBITDA was flat as a
result of much higher than expected costs, driven by the team’s outstanding performance.
Finances remain typically disciplined (net cash €13m at March 2016).
INDUSTRY OUTLOOK
Company description
The group operates Borussia
Dortmund, a leading German football
club, this season runners-up in the
Bundesliga and quarter-finalists in the
UEFA Europa League (Round of 16
participants in 2014/15 UEFA
Champions League).
Unsustainable spend on wages and transfers is increasingly being penalised by new UEFA
Financial Fair Play requirements. Notwithstanding a phased implementation, a 'break-even
requirement' applied initially to 2012 financial statements, obliges clubs to spend no more
than they generate over a rolling three-year period. Sanctions vary from a warning to a ban
from UEFA competition, fines and a cap on wages and squad size.
Y/E Jun
Price performance
%
1m
3m
Actual
1.1
3.1
Relative*
6.2
(2.4)
12m
14.9
37.3
* % Relative to local index
Analyst
Richard Finch
EBITDA
(€m)
PBT
(€m)
EPS
(c)
P/E
(x)
2014
256.3
44.7
37.1
50.8
7.9
7.3
2015
263.6
48.0
44.2
42.7
9.4
14.4
2016e
270.0
24.0
26.9
24.6
16.3
19.5
2017e
300.0
48.0
39.0
35.8
11.2
8.6
Bowleven
Sector: Oil & gas
Price:
Market cap:
Forecast net cash (US$m)
Forecast gearing ratio (%)
Market
Revenue
(€m)
20.4p
£67m
102.6
N/A
AIM
Share price graph (p)
P/CF
(x)
(BLVN)
INVESTMENT SUMMARY
Bowleven’s (BLVN) interim announcement gave little new news, although the confirmation
that the appraisal wells may not be drilled until 2017 has affected the shares. Although
disappointing, this delay has a very minor effect on valuation and will still enable the new
operator (NewAge) to take advantage of low rig rates. At Bomono, the company is working
with the government to progress the BEAA to enable a small gas-to-power scheme,
producing useful cash flows. We adjusted our modelling slightly after Bowleven’s interim
results (30 March), but the valuation is unchanged. The share price is broadly supported by
the current cash position of $100m (21p/share), leaving value at Etinde and Bomono upside
available to long-term investors.
INDUSTRY OUTLOOK
Company description
Bowleven is an AIM-listed,
Africa-focused E&P with assets in
Cameroon and Kenya. Its main asset
is its 20% net interest in the Etinde
development, which will provide gas to
a fertiliser plant for 20 years.
Y/E Jun
Price performance
%
1m
3m
Actual
(7.4)
1.9
Relative* (4.2)
(1.8)
* % Relative to local index
Analyst
Will Forbes
Edison Insight | 26 May 2016
12m
(34.3)
(26.2)
Revenue
(US$m)
EBITDA
(US$m)
PBT
(US$m)
EPS
(c)
P/E
(x)
P/CF
(x)
2014
0.0
(11.6)
(13.6)
(4.2)
N/A
N/A
2015
0.0
(11.5)
(14.1)
(4.3)
N/A
N/A
2016e
0.0
(10.2)
(2.4)
(0.7)
N/A
N/A
2017e
6.3
(7.4)
(7.5)
(2.3)
N/A
N/A
17
Brady
Sector: Technology
Price:
Market cap:
Forecast net cash (£m)
Forecast gearing ratio (%)
Market
65.5p
£54m
7.0
N/A
AIM
Share price graph (p)
INVESTMENT SUMMARY
In an in-line AGM trading update, Brady said that each of the group’s three divisions have
signed deals in the year to date. The four new contracts signed includes the first new
business from energycredit, a provider of credit risk management solutions for the energy
and commodity markets, which the group acquired in January. The brief trading update
indicates that the group is stabilising after the difficult FY15, which saw business being
deferred in the wake of the turmoil in the commodities space. Nevertheless, the outcome for
the year will depend on the busier Q2 and Q4. Paul Fullagar is retiring as chairman after
nine years and the process to appoint a new chairman is well advanced. We maintain our
forecasts and continue to believe the shares look attractive, trading on c 15x our
cash-adjusted FY17e earnings.
INDUSTRY OUTLOOK
Company description
Brady provides a range of transaction
and risk management software
applications, which help producers,
consumers, financial institutions and
trading companies manage their
commodity transactions in a single,
integrated solution.
Brady provides trading, risk and connectivity software solutions to the global commodity,
recycling and energy markets – mining and oil companies, fabricators, traders, banks, etc.
Key operational drivers are that the target market is underinvested in IT, auditors and
regulators are seeking increased reporting and accountability, and fundamental changes
such as electronic trading and the EEGI.
Y/E Dec
Price performance
%
1m
3m
Actual
19.1
15.9
Relative* 23.2
11.7
(BRY)
12m
(32.1)
(23.7)
* % Relative to local index
Analyst
Richard Jeans
Sector: Industrial support services
Price:
450.0p
Market cap:
£136m
Forecast net cash (£m)
11.8
Forecast gearing ratio (%)
N/A
Market
LSE
Share price graph (p)
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS
(p)
P/E
(x)
P/CF
(x)
2014
31.0
5.6
5.1
5.3
12.4
8.6
2015
27.4
1.5
1.0
1.0
65.5
22.9
2016e
30.5
4.0
3.5
3.5
18.7
14.7
2017e
32.2
4.6
4.1
3.9
16.8
8.9
Braemar Shipping Services
(BMS)
INVESTMENT SUMMARY
Acquisitions have transformed the medium-term potential for Braemar Shipping. Several
deals since 2007 have established non-broking divisions where demand is related to the
volume of seaborne trade and the oil & gas market, while the merger with ACM in 2014
rejuvenated the group's broking business. The shares offer a safe high yield, supported by a
strong balance sheet and sound medium-term growth potential related to merger benefits
and eventual recovery in the shipping cycle. Last year's results were in line with our
estimates; modest progress is expected in the immediate future.
INDUSTRY OUTLOOK
Company description
Braemar Shipping Services is a
leading global shipping services group,
with interests ranging from shipbroking
to the supply of specialist technical and
logistics support to the various parties
involved in the transporting of goods
by sea and the energy sector.
The shipping industry expanded to absorb the shift in global manufacturing capacity towards
lower-cost territories, responding to the increased movement of raw materials, components
and finished goods. Global recession in 2008/09 upset the supply/demand balance leading
to sharply reduced charter rates; volumes of seaborne trade have recovered, but shipping
overcapacity remains. Oil price weakness has lifted tanker demand, but reduced exploration
activity; dry cargo rates remain depressed.
Y/E Feb
Price performance
%
1m
3m
Actual
(1.1)
4.7
Relative*
2.3
0.8
* % Relative to local index
Analyst
Nigel Harrison
Edison Insight | 26 May 2016
12m
(10.0)
1.1
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS (fd)
(p)
P/E
(x)
P/CF
(x)
2015
145.6
13.6
11.2
29.5
15.3
15.9
2016
159.1
15.9
13.4
31.5
14.3
9.8
2017e
165.0
15.9
13.5
31.1
14.5
9.1
2018e
170.0
16.4
14.0
32.3
13.9
8.8
18
British Polythene Industries
Sector: Basic industries
Price:
729.0p
Market cap:
£200m
Forecast net debt (£m)
16.1
Forecast gearing ratio (%)
17.0
Market
LSE
Share price graph (p)
(BPI)
INVESTMENT SUMMARY
British Polythene Industries’ (BPI’s) AGM update confirmed that the strong start to the year
in Q1 continued in April, slightly tempered by some upward pressure in polymer prices
latterly. The company has also announced a proposed transfer of activity from its
Sevenoaks site to another group facility. The associated £1m exceptional charge in the
current year will be matched by the annual profit uplift in subsequent years once completed.
This triggers a further upgrade to our estimates and should support a higher share price, in
our view.
INDUSTRY OUTLOOK
Company description
British Polythene Industries (BPI) is
one of the largest manufacturers of
polythene film products in Europe. It is
also Europe's largest recycler of waste
polythene film.
Polymer price softness at the beginning of 2015 gave way to a strong rebound during Q2,
as reported with the H115 results. Prices generally eased again during Q3 and into October
before increases were sought by polymer producers towards the end of 2015. We believe
that euro pricing eased modestly at the beginning of 2016, though there is some upward
pressure latterly.
Y/E Dec
Price performance
%
1m
3m
Actual
5.7
11.0
Relative*
9.3
6.9
12m
4.3
17.2
* % Relative to local index
Analyst
Toby Thorrington
EBITDA
(£m)
PBT
(£m)
EPS (fd)
(p)
P/E
(x)
P/CF
(x)
2014
499.0
41.0
25.1
66.2
11.0
5.3
2015
468.3
43.4
27.4
76.6
9.5
9.0
2016e
493.2
47.4
30.7
82.8
8.8
5.0
2017e
501.8
49.8
32.5
87.8
8.3
4.6
Bushveld Minerals
Sector: Mining
Price:
Market cap:
Forecast net cash (£m)
Forecast gearing ratio (%)
Market
Revenue
(£m)
2.5p
£12m
2.1
N/A
AIM
Share price graph (p)
(BMN)
INVESTMENT SUMMARY
The planned acquisition of the Vametco vanadium mine from Evraz could, on completion,
be a major transformational event for Bushveld (BMN). It would move BMN closer to being a
fully vertically integrated vanadium explorer-producer-seller. The sale of vanadium in the
currently oversupplied market will be greatly supported by BMN’s move into the vanadium
redox flow-battery space. Advanced discussions are underway relating to a placing of
shares and/or co investment to fund the deal.
INDUSTRY OUTLOOK
Company description
Bushveld Minerals (BMN) is an
AIM-listed junior iron and tin explorer in
the mineral-rich Bushveld Complex in
South Africa. Its flagship is an
iron-titanium-vanadium deposit in the
northern limb of the Bushveld
Complex.
The Vametco operation can currently produce 2,750t of Nitrovan (vanadium nitride), Evraz’s
proprietary steel hardening ingredient, and also vanadium oxide. Evraz produced 2,419t
during 2015. Bushveld states capacity could increase to 3,340t through de-bottlenecking
certain plant aspects. The deal also brings 24 years’ worth of compliant reserves (27Mt at
2.55% V2O5 in magnetite), which sit within 135Mt of resource. Bushveld’s move into the
energy storage market has gathered pace recently, as it signed an MoU with US company
UniEnergy Technologies (UET), announced April 2016, for the development and promotion
of redox flow-battery technology.
Y/E Feb
Price performance
%
1m
3m
Actual
0.0
(4.9)
Relative*
3.5
(8.3)
* % Relative to local index
Analyst
Tom Hayes
Edison Insight | 26 May 2016
12m
(43.0)
(36.0)
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS
(p)
P/E
(x)
P/CF
(x)
2014
0.0
(1.3)
(1.4)
(0.4)
N/A
N/A
2015
0.0
(3.2)
(3.2)
(0.6)
N/A
N/A
2016e
0.0
(1.9)
(2.1)
(0.3)
N/A
N/A
2017e
N/A
N/A
N/A
N/A
N/A
N/A
19
Byotrol
Sector: Basic industries
Price:
Market cap:
Forecast net debt (£m)
Forecast gearing ratio (%)
Market
3.6p
£10m
0.5
126.0
AIM
Share price graph (p)
(BYOT)
INVESTMENT SUMMARY
The continued challenging global consumer climate and demanding regulatory regimes in
the US and the EU continue to delay the introduction of new products employing Byotrol
technology. However, management has indicated that the momentum of opportunities
continues to increase, while work to adapt to further regulatory changes continues, with
encouraging progress reported. In its pre-close trading update, the chairman reported that
the board has never been more positive about group opportunities and that the workload
has never been higher. Moreover, the group's working capital position is indicated to be
adequate for future needs.
INDUSTRY OUTLOOK
Company description
Byotrol has developed and controls
patents for a unique technology to
facilitate the safe eradication of
harmful microbes. These include
several high-profile infections, such as
MRSA and swine flu.
The global market for specialist antimicrobial technology is vast, as awareness of infection
and diseases increases. While many products use chemicals (sometimes solving one
problem to create another), a product that can damage the reproductive capacity of various
bacteria offers considerable attractions to users. The challenge is convincing the major
industry players of the efficacy of technology and seeing new products to market.
Y/E Mar
Price performance
%
1m
3m
Actual
(6.5)
7.4
Relative* (3.2)
3.5
12m
7.4
20.7
* % Relative to local index
Analyst
Nigel Harrison
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS (fd)
(p)
P/E
(x)
P/CF
(x)
2014
3.1
(0.6)
(0.7)
(0.3)
N/A
N/A
2015
3.3
(0.4)
(0.6)
(0.3)
N/A
N/A
2016e
3.5
(0.4)
(0.5)
(0.2)
N/A
N/A
2017e
4.5
0.1
0.0
0.0
N/A
215.7
Caledonia Mining
Sector: Mining
Price:
66.0p
Market cap:
£34m
Forecast net cash (US$m)
10.6
Forecast gearing ratio (%)
N/A
Market
AIM, TSE
Share price graph (p)
(CMCL)
INVESTMENT SUMMARY
Caledonia’s Q116 results show a steady and profitable start to FY16. CMCL’s FY16
production guidance is for 50koz (cf 42.8koz in FY15). This increase in production will stem
from the use of the completed tramming loop as well as new ore production from below the
750m level via the No. 6 Winze and an additional development. Capex is expected to
moderate over the remainder of 2016 as the Central Shaft enters the main sinking phase. A
gold price at current (ie c US$1,250/oz) levels will provide for cash growth in H216, which
coincides with a resumption of dividend payments as well as facilitation loan repayments
(on hold for 201%) from CMCL’s indigenous Zimbabwean partners.
INDUSTRY OUTLOOK
Company description
Caledonia Mining mines gold at its
main operating asset, the 49%-owned
Blanket gold mine in southern
Zimbabwe. It is also progressing its
understanding of a number of
promising satellite projects close to
Blanket.
In Q116 Blanket produced 10,822oz (Q115: 9,960oz) Au at an all-in sustaining cost of
production of US$950/oz (Q115: US$985/oz), gross profit for Q116 was US$3.9m and
NPAT US$0.5m. CMCL recorded a 31% increase in cash from operating activities US$1.7m
(Q115: US$1.3m).
Y/E Dec
Price performance
%
1m
3m
Actual
2.3
43.5
Relative*
5.9
38.3
* % Relative to local index
Analyst
Tom Hayes
Edison Insight | 26 May 2016
12m
45.1
63.0
Revenue
(US$m)
EBITDA
(US$m)
PBT
(US$m)
EPS (fd)
(c)
P/E
(x)
P/CF
(x)
2014
53.5
14.7
11.0
10.4
9.2
3.2
2015
49.0
9.0
5.1
8.1
11.8
6.0
2016e
60.4
19.5
16.0
23.5
4.1
2.9
2017e
87.2
40.3
36.7
46.7
2.0
1.3
20
Canadian Overseas Petroleum
Sector: Oil & gas
Price:
C$0.06
Market cap:
C$35m
Forecast net debt (C$m)
N/A
Forecast gearing ratio (%)
N/A
Market
LSE, Toronto
Share price graph (C$)
(XOP)
INVESTMENT SUMMARY
Canadian Overseas Petroleum's (COPL) Liberia Block LB-13, Mesurado-1 well is expected
to be drilled in late 2016 or early 2017 and targets a Santonian to Turonian stacked
channel/fan complex. Block-wide net prospective resource is estimated by D&M at P50
449mmbbls and COPL is funded through a $120m gross carry provided by ExxonMobil.
Based on tentative Liberia drill activity, our RENAV value is C$0.36/share. However, taking
into consideration the play-opening potential of its Liberia block, we anticipate a risked M&A
valuation of C$1.60/share in the event of exploration success.
INDUSTRY OUTLOOK
Oil companies are attracted to Liberia given its location on the West African Transform
Margin, where exploration success has been achieved in offshore Ghana and Sierra
Leone/Senegal. Chevron, ENI, Exxon, Repsol and Anadarko are all active.
Company description
Canadian Overseas Petroleum is an
African-focused E&P with assets in
Liberia and plans to expand into
Nigeria. ExxonMobil is its operator and
farm-in partner in Liberia Block LB-13.
Y/E Dec
Price performance
%
1m
3m
Actual
(13.3)
44.4
Relative* (13.4)
33.0
12m
(35.0)
(29.6)
* % Relative to local index
Analyst
Sanjeev Bahl
Sector: Alternative energy
Price:
€10.75
Market cap:
€40m
Forecast net cash (€m)
4.1
Forecast gearing ratio (%)
N/A
Market
Euronext Paris
Share price graph (€)
Revenue
(C$m)
EBITDA
(C$m)
PBT
(C$m)
EPS (fd)
(c)
P/E
(x)
P/CF
(x)
2013
0.0
(9.8)
(9.9)
(3.0)
N/A
N/A
2014
0.0
(8.5)
(8.5)
(1.9)
N/A
N/A
2015e
N/A
N/A
N/A
N/A
N/A
N/A
2016e
N/A
N/A
N/A
N/A
N/A
N/A
Carbios
INVESTMENT SUMMARY
Carbios leverages proprietary and unique enzyme-based technology for self-destruction and
recovery of plastics. It addresses the issue of plastics disposal in the face of growth in
demand for plastics driven by major global trends, as well as environmental and sustainable
solutions via break-through technologies for a circular plastics economy. Our fair value
range is €23-37 per share, based on probability-weighted cash flows. The company has
recently announced the start of pilot production which is a significant step. FY15 results
were characterised by faster than expected expansion towards industrialisation. It reported
an operating loss of €4.1m (vs €3.4m 2014). The company needs to reach the
industrialisation and commercialisation stage in 2017, which is when its Thanaplast project
ends.
INDUSTRY OUTLOOK
Company description
Carbios develops enzyme-based
processes for biodegradation and
bioproduction of plastics, with a
long-term aim of displacing current
recycling and production practices.
Growing volumes, environmental concerns and an increasing focus on sustainability are
becoming ever more important challenges to conventional plastic market participants.
Biological plastic production and recycling is the single most important aim of the industry as
a response. The target is a circular economy whereby plastic is constantly reused and
recycled.
Y/E Dec
Price performance
%
1m
3m
Actual
(2.7)
(1.6)
Relative*
2.0
(4.9)
12m
(13.2)
1.6
* % Relative to local index
Analyst
Catharina Hillenbrand-Saponar
Edison Insight | 26 May 2016
(ALCRB)
Revenue
(€m)
EBITDA
(€m)
PBT
(€m)
EPS (fd)
(c)
P/E
(x)
P/CF
(x)
2014
0.7
(3.3)
(3.3)
(59.3)
N/A
N/A
2015
0.8
(3.9)
(4.0)
(81.3)
N/A
N/A
2016e
0.6
(5.3)
(5.5)
(111.7)
N/A
N/A
2017e
0.7
(4.1)
(4.4)
(93.1)
N/A
N/A
21
Carclo
Sector: Technology
Price:
152.0p
Market cap:
£101m
Forecast net debt (£m)
24.9
Forecast gearing ratio (%)
56.0
Market
LSE
Share price graph (p)
(CAR)
INVESTMENT SUMMARY
The year end trading update confirmed that the underlying business continues to make
good progress, reaffirming our view that the VW Phaeton contract loss was taken too hard
by the markets. The announcement of the intention to cease the CDS (diagnostics) venture
shows the management's commitment to delivering real value to investors. We think the
extent of the discount to UK comparators is unjustified and expect the long-term story to
remain firmly intact.
INDUSTRY OUTLOOK
Company description
Carclo is a specialist in high-precision
plastic moulding principally for
healthcare, optical and automotive
applications. Its two main end-markets
are high-volume medical consumables
and low-volume, very high-value
automotive lens components.
The healthcare device markets that Carclo serves continue to grow and the underlying
long-term story for this industry is, in our view, attractive. Not only is demand driven by
global economic development, but device manufacturers continue to innovate. The supercar
market continues to grow, with volumes for Carclo driven not just by strong demand for
end-products, as the rich get richer, but also by developments in lighting technologies and
the moves by manufacturers to build an increasing variety of cars.
Y/E Mar
Price performance
%
1m
3m
Actual
0.2
16.0
Relative*
3.6
11.8
12m
(1.9)
10.2
* % Relative to local index
Analyst
Ian Robertson
Sector: General industrials
Price:
144.0p
Market cap:
£130m
Forecast net debt (£m)
21.7
Forecast gearing ratio (%)
20.0
Market
LSE
Share price graph (p)
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS (fd)
(p)
P/E
(x)
P/CF
(x)
2014
97.3
10.2
5.3
6.1
24.9
17.8
2015
107.5
11.4
7.1
7.9
19.2
28.4
2016e
111.3
14.0
8.6
9.5
16.0
6.6
2017e
120.7
15.8
10.4
11.5
13.2
6.0
Carr's Group
(CARR)
INVESTMENT SUMMARY
Carr's interims show that its strategy of innovation, investment and internationalisation is
able to counter the impact of the headwinds prevailing in many of its markets. The
announcement notes that Carr’s is trading in line with expectations but comments on a
challenging agricultural market globally. We have left our FY16 estimates unchanged,
reduced our FY17 and FY18 profit estimates slightly, and revised our indicative valuation to
197p/share (previously 205p).
INDUSTRY OUTLOOK
Company description
Carr’s Agriculture serves farmers in the
UK, the US, Germany and New
Zealand. The Food division mills flour
in the UK and Engineering offers
remote handling equipment and
fabrications to the global nuclear and
oil & gas industries.
Group revenues reduced by 9% y-o-y to £189.1m, reflecting lower commodity prices.
Reported profit before tax was almost flat at £10.5m (£10.6m). Growth in the Agriculture
division, where the US feed block operations performed well, and the Food division offset a
comparatively weak performance from Engineering. New manufacturing contracts from the
UK nuclear industry are expected to drive a recovery in Engineering profits during H216.
Y/E Aug
Price performance
%
1m
3m
Actual
(4.6) (11.4)
Relative* (1.3) (14.6)
* % Relative to local index
Analyst
Anne Margaret Crow
Edison Insight | 26 May 2016
12m
(15.4)
(5.0)
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS (fd)
(p)
P/E
(x)
P/CF
(x)
2014
429.0
20.9
17.0
12.8
11.3
7.5
2015
411.6
22.2
18.1
13.6
10.6
8.5
2016e
403.2
22.5
18.1
13.5
10.7
6.4
2017e
409.2
22.0
17.7
12.9
11.2
4.8
22
Cenkos Securities
Sector: Financials
Price:
145.0p
Market cap:
£82m
Forecast net cash (£m)
27.3
Forecast gearing ratio (%)
N/A
Market
AIM
Share price graph (p)
(CNKS)
INVESTMENT SUMMARY
Cenkos' revenues and profits for 2015 were lower than the record levels reached in 2014
but were still the second highest level reported in the last eight years. Funds raised for
clients were over £3bn (£2.8bn 2014), although a change in mix and a lower result for the
market making activity resulted in a 14% reduction in revenue. Performance-related pay did
fall, but this was offset in part by investment to facilitate the execution of larger and more
complex deals. The FY15 dividend was 14p (17p) and, including share buybacks relating to
FY15/16, means Cenkos will have paid out virtually 100% of earnings over the two years.
INDUSTRY OUTLOOK
Company description
Cenkos is a specialist, UK institutional
stockbroker, focused on growth
companies and investment funds. Its
principal activities are primary and
secondary fund raising, corporate
advisory, research, trade execution
and market making activities.
While the market background remains uncertain, Cenkos has demonstrated resilience over
time and, given its mix of revenues, should be less exposed to the effect of continuing
pressure on institutional commissions. In its AGM statement in May, the company indicated
that, despite challenging markets, it has been engaged in a number of significant fund
raisings and that its pipeline and outlook for the full year is satisfactory.
Y/E Dec
Price performance
%
1m
3m
Actual
1.8
(5.2)
Relative*
5.3
(8.7)
12m
(20.6)
(10.7)
* % Relative to local index
Analyst
Andrew Mitchell
Sector: Alternative energy
Price:
Market cap:
Forecast net cash (£m)
Forecast gearing ratio (%)
Market
9.1p
£71m
6.6
N/A
AIM
Share price graph (p)
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS (fd)
(p)
P/E
(x)
P/CF
(x)
2014
88.5
27.2
27.0
35.2
4.1
7.3
2015
76.5
20.0
19.9
27.2
5.3
3.1
2016e
58.0
9.5
9.3
13.8
10.5
N/A
2017e
N/A
N/A
N/A
N/A
N/A
N/A
Ceres Power Holdings
(CWR)
INVESTMENT SUMMARY
Adoption of fuel cells generally remains limited because although the basic technology is
proven, it is not yet cost competitive. Ceres’s patented Steel Cell technology is an
innovative solution to this cost problem, predicated on using non-exotic materials that can
be processed in volumes using conventional manufacturing equipment and techniques.
Ceres’s new high-speed print line has achieved a tenfold reduction in processing times, a
key step in achieving the low-cost, high-volume production capability required for
commercialisation. The technique also gives a better-quality deposition layer.
INDUSTRY OUTLOOK
Company description
Ceres Power is a developer of
low-cost, next generation fuel cell
technology for use in decentralised
energy products that reduce
operating costs, lower CO2 emissions,
increase efficiency and improve energy
security.
Technology advances in the latest release (V3) of the Steel Cell platform have enabled
Ceres to address new market applications and attract new potential partners. Net electrical
efficiency has reached 55%, significantly exceeding the 50% level at which the technology
becomes viable for commercial and light industrial scale applications and improving the
economic case for the residential market.
Y/E Jun
Price performance
%
1m
3m
Actual
13.0
67.4
Relative* 16.9
61.3
* % Relative to local index
Analyst
Anne Margaret Crow
Edison Insight | 26 May 2016
12m
(5.2)
6.5
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS (fd)
(p)
P/E
(x)
P/CF
(x)
2014
1.2
(6.7)
(7.7)
(1.22)
N/A
N/A
2015
0.3
(9.7)
(10.5)
(1.19)
N/A
N/A
2016e
1.0
(11.2)
(12.4)
(1.40)
N/A
N/A
2017e
2.0
(10.8)
(12.0)
(1.35)
N/A
N/A
23
Challenger Energy
Sector: Oil & gas
Price:
A$0.03
Market cap:
A$11m
Forecast net debt (A$m)
N/A
Forecast gearing ratio (%)
N/A
Market
ASX
Share price graph (A$)
(CEL)
INVESTMENT SUMMARY
Challenger Energy (CEL) completed a capital raising of almost A$1m (before costs) in late
March 2016. A total of 32.7m shares were issued at A$0.03. The funds will be used for the
progression of the licence application in South Africa, working capital and the cost of the
offer. CEL, through its subsidiary Bundu, is the only junior company with interests in the
Karoo Basin, South Africa. Shell and Chevron are active alongside CEL. The US-based EIA
has estimated 390 Tcf of risked, technically recoverable gas resource in the Lower Permian
ECCA Group shales in the basin.
INDUSTRY OUTLOOK
Company description
Challenger Energy is an ASX-listed
E&P with a 95% interest in an
application for an exploration permit in
the Karoo basin, South Africa, which is
prospective for shale gas. It is awaiting
award of a permit to start drilling.
The power crisis in South Africa is getting worse. The power tariff charged by Eskom (the
state power utility) is to rise by 9.4% for 2016/17. Newbuild power economics continue to
favour gas over coal or diesel in the long term. Challenger's application area is proximate to
major existing power transmission infrastructure and the company is well positioned to
proceed on award.
Y/E Jun
Price performance
%
1m
3m
Actual
(12.5)
0.0
Relative* (14.7)
(7.5)
12m
(60.0)
(58.5)
* % Relative to local index
Analyst
Peter Chilton
Sector: Industrial support services
Price:
HK$3.92
Market cap:
HK$5958m
Forecast net debt (HK$m) 3616.0
Forecast gearing ratio (%)
49.0
MarketHong Kong Stock Exchange
Share price graph (HK$)
Revenue
(A$m)
EBITDA
(A$m)
PBT
(A$m)
EPS (fd)
(c)
P/E
(x)
P/CF
(x)
2014
0.1
(1.2)
(1.2)
(0.4)
N/A
N/A
2015
0.1
(1.2)
(1.3)
(0.2)
N/A
N/A
2016e
N/A
N/A
N/A
N/A
N/A
N/A
2017e
N/A
N/A
N/A
N/A
N/A
N/A
China Water Affairs Group Limited
(855)
INVESTMENT SUMMARY
Edison recently initiated coverage of China Water Affairs (CWA), which we expect to grow
operating profit by a CAGR of 17.8% over the next five years. CWA owns and operates
water supply assets in 46 cities across China. It has an excellent track record of privatising
small water supply networks and extracting shareholder value while enhancing customer
service and working hand-in-hand with local government. April saw CWA make a further
small acquisition in Yichun in the Jiangxi Province.
INDUSTRY OUTLOOK
Company description
China Water Affairs Group owns and
operates regulated water supply
assets across 46 cities in mainland
China, serving eight million customers
in the residential, commercial and
industrial sectors.
Edison forecasts significant growth in Chinese water supply. Water supply lags behind
wastewater treatment in terms of private operator penetration. CWA estimates that private
enterprises account for only 20% of the water supply industry, whereas the same figure for
wastewater treatment is more like 60%. The fact that privatised water supply has so far to
catch up with water treatment offers another growth engine for CWA’s addressable market.
Y/E Mar
Price performance
%
1m
3m
Actual
17.7
15.3
Relative* 25.9
12.0
* % Relative to local index
Analyst
Jamie Aitkenhead
Edison Insight | 26 May 2016
12m
(12.1)
22.1
Revenue
(HK$m)
EBITDA
(HK$m)
PBT
(HK$m)
EPS (fd)
(c)
P/E
(x)
P/CF
(x)
2014
2747.0
1076.0
730.0
15.7
25.0
10.1
2015
2859.0
1300.0
886.0
16.6
23.6
9.8
2016e
3351.0
1613.0
1130.0
30.4
12.9
4.7
2017e
4080.0
1908.0
1407.0
36.1
10.9
3.9
24
Circle Holdings
Sector: Financials
Price:
Market cap:
Forecast net debt (£m)
Forecast gearing ratio (%)
Market
21.0p
£52m
N/A
N/A
AIM
Share price graph (p)
(CIRC)
INVESTMENT SUMMARY
Results for the 12 months to 31 December 2015 saw group revenues rise 15%, group
EBITDA losses more than halve to £4.9m (excl. Project Reset), with all business segments
now EBITDA positive. Planning permission has been obtained for CircleBirmingham and
construction work is planned to commence in 2016. Circle is examining a partnership with
another healthcare provider to provide rehabilitation services which could add another value
revenue stream to its activities. Other initiatives it is pursuing include further MSK contracts,
a proton beam therapy treatment centre in London and the export of its expertise to China.
Our forecasts are currently under review.
INDUSTRY OUTLOOK
Company description
Circle Holdings plc is incorporated in
Jersey and listed on the AIM market of
the London Stock Exchange. It is an
operator of both NHS and independent
hospital facilities in the UK, and is
extending its activities to the provision
of other healthcare services.
Demand for the healthcare services that Circle provides in the UK is driven by patient
demand from an ageing population, tighter public finances, changes in technology and shift
to integrated healthcare. With its pioneering MSK contract at CircleBedfordshire, Circle
believes that it is particularly well placed to provide integrated healthcare for the benefit of
patients and the NHS.
Y/E Dec
Price performance
%
1m
3m
Actual
2.4
(4.6)
Relative*
6.0
(8.0)
12m
(57.7)
(52.5)
* % Relative to local index
Analyst
Peter Thorne
Sector: General industrials
Price:
29.2p
Market cap:
£412m
Forecast net cash (US$m) 222.5
Forecast gearing ratio (%)
N/A
Market
LSE
Share price graph (p)
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS (fd)
(p)
P/E
(x)
P/CF
(x)
2014
111.0
(10.4)
(20.2)
(4.3)
N/A
N/A
2015
127.8
(7.4)
(11.7)
(4.7)
N/A
N/A
2016e
N/A
N/A
N/A
N/A
N/A
N/A
2017e
N/A
N/A
N/A
N/A
N/A
N/A
Coats Group
(COA)
INVESTMENT SUMMARY
Trading in the first four months of FY16 largely mirrors management’s balanced outlook
comments with the FY15 results – with resilience and progress in Industrial (81% of FY15
revenue) partly offset by another step down in the ongoing Crafts business. EBIT guidance
is unchanged. We reduced PBT estimates slightly to reflect the latest pension scheme
recovery plan update on the Staveley scheme. Progress in resolving legacy issues is
welcome and the large Coats scheme is next to be addressed.
INDUSTRY OUTLOOK
Company description
Coats Group is a leading producer of
industrial thread and consumer craft
textiles with over 70 manufacturing
sites internationally. Its divisions are
Industrial – Apparel & Footwear (c
64%) and Speciality (c 16%) – and
Crafts (20%) based on FY14 revenue.
Population growth is the ultimate trend driver for clothing and footwear demand. Increasing
urbanisation, mobility and wealth are all features of this overall growth. Consumer
consumption will generally track GDP growth over time. Economic and demographic
differences at a country level mean that the local characteristics of demand vary. Coats is
the world’s leading industrial thread and consumer textile crafts business.
Y/E Dec
Price performance
%
1m
3m
Actual
(1.7)
31.5
Relative*
1.7
26.7
* % Relative to local index
Analyst
Toby Thorrington
Edison Insight | 26 May 2016
12m
6.4
19.5
Revenue
(US$m)
EBITDA
(US$m)
PBT
(US$m)
EPS
(c)
P/E
(x)
P/CF
(x)
2014
1561.4
170.0
128.2
5.2
8.1
3.7
2015
1489.5
183.0
126.8
5.0
8.5
6.8
2016e
1528.6
187.8
129.5
5.3
8.0
6.5
2017e
1578.4
200.1
138.5
5.9
7.2
3.8
25
Sector: Aerospace & defence
Price:
367.5p
Market cap:
£151m
Forecast net cash (£m)
8.5
Forecast gearing ratio (%)
N/A
Market
AIM
Share price graph (p)
Cohort
(CHRT)
INVESTMENT SUMMARY
Cohort will report preliminary results for FY16 on 28 June. Completion of the initial purchase
of 57% of EID in Portugal has slipped into the new financial year, and it will thus make no
FY16 contribution. This still remains a matter of timing and not value. We believe the
strength of trading during the period to have been strong enough to meet market
expectations despite the EID delay. With strong order intake and improving defence
fundamentals, the organic development should continue to drive strong cash flow facilitating
further value-creating bolt-ons. The share price has been trading robustly in recent weeks
and upside to fair value remains.
INDUSTRY OUTLOOK
Company description
Cohort is an AIM-listed defence and
security company operating across
four divisions: MASS (31% of FY15e
sales); SEA (43%); SCS (16%); and
MCL (9%).
Cohort is heavily influenced by activities in defence and security (89% of FY15 sales).
These markets provide highly differentiated technologies and services with high barriers to
entry based on customer relationships, regulation and high-level security clearances. The
recent commitment by the UK government to spend at least 2% of GDP on defence
provides greater confidence over the coming years.
Y/E Apr
Price performance
%
1m
3m
Actual
(3.3)
9.4
Relative*
0.1
5.4
12m
32.4
48.8
* % Relative to local index
Analyst
Andy Chambers
Sector: Pcare and household prd
Price:
NZ$12.32
Market cap:
NZ$492m
Forecast net debt (NZ$m)
12.0
Forecast gearing ratio (%)
8.0
Market
NZSX
Share price graph (NZ$)
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS
(p)
P/E
(x)
P/CF
(x)
2014
71.6
8.8
8.3
19.1
19.2
40.8
2015
99.9
11.0
10.2
20.5
17.9
7.2
2016e
115.3
12.5
11.7
21.8
16.9
167.0
2017e
132.4
15.0
14.2
26.7
13.8
12.5
Comvita
(CVT)
INVESTMENT SUMMARY
Comvita (CVT) plans to leverage its premium brand positioning, exploit its established
distribution channels and use its control of raw material sourcing as a key competitive
advantage. Comvita (CVT) has put the building blocks in place to grow sales to more than
NZ$400m within five years (we are estimating FY20 sales of NZ$440m) and at the same
time improve margins and ROCE. In the last three years CVT’s sales have almost doubled
and the operational leverage has seen operating profit treble in the same time frame. In
FY16 EPS increased by 45%, dividends were up 23% and ROCE improved from 12% to
15.3%.
INDUSTRY OUTLOOK
Company description
Comvita manufactures and markets
manuka honey-based products and
fresh olive leaf extract products. It sells
honey and olive leaf extract products
for health, skin care and medical uses.
Price performance
%
1m
3m
Actual
4.8
31.8
Relative*
4.7
19.0
* % Relative to local index
Analyst
Moira Daw
Edison Insight | 26 May 2016
Manuka honey has gained an international reputation for its medicinal qualities, both for
wound care and general health. Comvita is the largest manuka manufacturer and exporter
and has leading market positions in a number of countries including the US, UK, Australia
and China. Investment in manuka honey continues apace in New Zealand to meet
increasing demand for raw manuka honey and manuka honey-derived products.
Y/E Mar / Jun Revenue
(NZ$m)
12m
200.5
162.1
EBITDA
(NZ$m)
PBT
(NZ$m)
EPS
(c)
P/E
(x)
P/CF
(x)
2015
152.7
22.8
16.3
29.9
41.2
22.0
2016
202.2
36.4
28.4
47.7
25.8
N/A
2017e
242.1
44.4
37.4
64.7
19.0
N/A
2018e
294.7
55.1
48.2
83.0
14.8
14.2
26
Cooks Global Foods
Sector: Food & drink
Price:
NZ$0.11
Market cap:
NZ$45m
Forecast net debt (NZ$m)
N/A
Forecast gearing ratio (%)
N/A
Market
NZSX
Share price graph (NZ$)
(CGF)
INVESTMENT SUMMARY
Cooks Global Foods (CGF) has finalised its recapitalisation plans, having received
NZ$7.9m from China's Jiajiayue Group and an equivalent amount received or underwritten
from Cooks Investment Holdings. Of the new funds received, NZ$9m will go into supporting
Esquires Coffee's growth in China, the Middle East, the UK, Ireland and North America,
while NZ$6.8m has been allocated to acquire the majority of shares held by Cooks' largest
shareholder, DSL Management. Given the delays in finalising the recapitalisation, the
company’s rollout plans have been pushed out in the near to medium term. As at March
end, the company had 87 Esquires Coffee stores globally, below its previous target for 120
stores. Our FY16e and FY17e forecasts are under review.
INDUSTRY OUTLOOK
Company description
Cooks Global Foods owns the global
rights to the Esquires Coffee House
brand, with 87 stores currently
operating in the UK, Ireland, Canada,
China and the Middle East via master
franchise arrangements.
The global market for branded coffee chains is experiencing widespread growth, with a
number of leading companies such as Starbucks, Costa Coffee and Tim Hortons all looking
to developing markets for growth, while at the same time seeing continued strong growth in
their respective home markets. The branded coffee chain sector is growing at around 10%
pa in many countries, providing numerous opportunities for the company to expand.
Y/E Mar
Price performance
%
1m
3m
Actual
0.0
0.0
Relative* (0.1)
(9.7)
12m
(15.4)
(26.2)
* % Relative to local index
Analyst
Finola Burke
Sector: Media & entertainment
Price:
Market cap:
Forecast net debt (£m)
Forecast gearing ratio (%)
Market
94.5p
£55m
0.4
0.0
LSE
Share price graph (p)
Revenue
(NZ$m)
EBITDA
(NZ$m)
PBT
(NZ$m)
EPS
(c)
P/E
(x)
P/CF
(x)
2014
4.5
(3.8)
(4.0)
(1.65)
N/A
N/A
2015
9.2
(3.3)
(4.0)
(1.40)
N/A
N/A
2016e
N/A
N/A
N/A
N/A
N/A
N/A
2017e
N/A
N/A
N/A
N/A
N/A
N/A
Creston
(CRE)
INVESTMENT SUMMARY
CRE’s year-end trading update indicated FY16 revenue and earnings in line with indications
given in January and our expectations. However, the cash performance was significantly
better than we had anticipated at over £1m. Publication of the numbers is scheduled for 8
June. FY17 should benefit from more focused recent attention to overhead management
after the less consistent trading in H216, with no trading improvement currently factored in.
The valuation remains at a significant discount to other smaller marketing agencies and the
shares carry a premium yield on a well-covered dividend. DBAY Advisors, represented on
the board since February by Iain Ferguson (ex-Havas), took advantage of the lower price,
increasing its shareholding to 28.0%.
INDUSTRY OUTLOOK
Company description
Creston plc, incorporating the Creston
Unlimited group offer, is a marketing
communications group delivering a
range of digital technology-based
marketing solutions to blue-chip global
clients.
Client mood is reportedly showing signs of stabilising, although remains focused on cost
rather than top line growth. It is no longer enough to put promotional material in front of an
audience. The technical demands of delivering integrated, multi-channel campaigns and
measuring the impact in real time are considerable. The latest UK adspend forecast
(WARC/AA) for 2016 are for growth of 5.5%, with higher projections from Carat (6.2%),
Zenith Optimedia (9.2%) and GroupM (7.0%).
Y/E Mar
Price performance
%
1m
3m
Actual
(12.1) (10.4)
Relative* (9.1) (13.7)
* % Relative to local index
Analyst
Fiona Orford-Williams
Edison Insight | 26 May 2016
12m
(21.9)
(12.3)
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS (fd)
(p)
P/E
(x)
P/CF
(x)
2014
74.9
11.4
9.6
11.8
8.0
N/A
2015
76.9
11.7
10.0
13.1
7.2
N/A
2016e
83.0
11.3
9.5
11.3
8.4
N/A
2017e
85.0
12.2
10.5
12.4
7.6
N/A
27
DeA Capital
Sector: Financials
Price:
€1.14
Market cap:
€349m
Forecast net cash (€m)
N/A
Forecast gearing ratio (%)
N/A
Market
Borsa Italiana
Share price graph (€)
(DEA)
INVESTMENT SUMMARY
DeA Capital is pursuing its strategy of exiting some of its direct private equity investments. It
currently holds c 14% of own shares and obtained approval at its recent AGM to buy back
up to 20%. In alternative asset management, DeA is launching new initiatives which should
lead to an increase in AuM in 2016-18. AUM at end 2015 was €9.5bn and NAV per share
was €2.07. DPS of €0.12 was announced for 2015. Q116 results saw NAV increase to
€2.08 per share and AuM at end Q1 was unchanged from the year end at €9.5bn with the
net financial position at end Q116 of €137.1m vs €133.8m at the year end.
INDUSTRY OUTLOOK
Loose monetary policy and the search for yield is generating interest in real estate, notably
in Italy, where the number of transactions has started to increase.
Company description
DeA Capital, a De Agostini group
company, is one of Italy’s leading
players in alternative investments. It is
active in private equity investments
and asset management. At 31
December 2015, it had an investment
portfolio of €455m and €9.5bn AUM.
Y/E Dec
Price performance
%
1m
3m
Actual
(11.7)
(6.1)
Relative* (8.0) (11.0)
12m
(28.1)
(6.5)
* % Relative to local index
Analyst
Peter Thorne
Sector: Alternative energy
Price:
€3.33
Market cap:
€28m
Forecast net debt (€m)
2.1
Forecast gearing ratio (%) 211.0
Market
Alternext Paris
Share price graph (€)
Company description
Deinove designs, develops and
markets technologies in biofuels and
biochemistry by harnessing the
properties of the Deinococcus
bacterium.
Revenue
(€m)
EBITDA
(€m)
PBT
(€m)
EPS (fd)
(c)
P/E
(x)
P/CF
(x)
2014
28.3
N/A
(56.8)
(21.0)
N/A
N/A
2015
156.0
N/A
32.5
15.4
7.4
N/A
2016e
87.4
N/A
24.5
7.3
15.6
N/A
2017e
88.0
N/A
25.1
7.5
15.2
N/A
Deinove
(DEINO)
INVESTMENT SUMMARY
Deinove made significant scientific and technical advances in 2015, signed important
commercial agreements (Tyton and Arbiom) and improved the financial positioning of the
company. The FY15 results showed a net loss for the year of €6.4m (-2% vs FY14) in line
with our forecasts. The net cash position of €12.4m at end December 2015, bolstered by
grants, milestone payments, tax credits, the recent equity issue (€10.0m net) and the
drawdown of the Kepler Cheuvreux facility (€4.6m), was ahead of our forecasts (€12.1m).
The €12.4m is said to be sufficient to last until the end of 2017 without further equity
drawdowns. During 2016 we expect Deinove to continue to advance towards commercial
deployment across all its major research platforms but with a major focus on carotenoids.
Following the FY16 results we updated our forecasts and expect the first commercial
revenues in 2018.
INDUSTRY OUTLOOK
Environmental concerns/mandates will continue to underpin growth in green chemistry and
biofuels.
Y/E Dec
Price performance
%
1m
3m
Actual
(5.1)
(3.2)
Relative* (0.5)
(6.5)
* % Relative to local index
Analyst
Graeme Moyse
Edison Insight | 26 May 2016
12m
(59.1)
(52.2)
Revenue
(€m)
EBITDA
(€m)
PBT
(€m)
EPS
(c)
P/E
(x)
P/CF
(x)
2014
0.2
(6.5)
(6.6)
(98.6)
N/A
N/A
2015
0.5
(7.3)
(7.3)
(81.5)
N/A
N/A
2016e
0.4
(7.5)
(8.3)
(82.4)
N/A
N/A
2017e
0.5
(7.5)
(8.5)
(84.7)
N/A
N/A
28
Sector: Media & entertainment
Price:
124.0p
Market cap:
£91m
Forecast net debt (£m)
26.0
Forecast gearing ratio (%)
52.0
Market
AIM
Share price graph (p)
Company description
Ebiquity is an independent marketing
performance specialist and a leading
provider of a range of business critical
data, analysis and consultancy
services to advertisers and media
owners on an international basis.
Ebiquity
INVESTMENT SUMMARY
Alongside audited results for the eight months to its new December year-end, management
provided relevant unaudited pro-forma data for CY15 and CY14. CY15 saw solid revenue
growth of 10.8% (7.9% on a like-for–like basis), while underlying operating profit, PBT and
diluted EPS all grew substantially, with EPS rising 63.4% to 10.8p (CY14: 6.6p). This
increase was magnified by a strong Media Value Measurement segment in Q115 vs an
uncharacteristic slower start in Q114, which dampened the CY14 results. We maintain our
CY16 estimate and have introduced a CY17 estimate, which suggests 11.7p diluted EPS up
6.4% on our maintained CY16 11.0p estimate. EPS growth in the short term is affected by a
rise in tax charge we have factored for each of these years as the benefit of available tax
losses is almost exhausted. (In the table below, 2014 and 2015 show pro-forma data as
supplied by the company.)
INDUSTRY OUTLOOK
Advertisers continue to focus on achieving better returns on their marketing investment. The
growing influence of social media is changing the way that marketing departments view the
overall media arena, especially regarding non-paid social media.
Y/E Dec
Price performance
%
1m
3m
Actual
(2.8)
(9.2)
Relative*
0.6 (12.5)
12m
0.4
12.8
* % Relative to local index
Analyst
Martin Lister
Revenue
(£m)
EBITDA
(£m)
9.5p
£21m
2.8
N/A
AIM
Share price graph (p)
PBT
(£m)
EPS (fd)
(p)
P/E
(x)
P/CF
(x)
2014
69.1
9.6
6.8
6.6
18.8
N/A
2015
76.6
14.2
11.2
10.8
11.5
N/A
2016e
82.0
15.7
12.5
11.0
11.3
N/A
2017e
88.5
17.0
13.9
11.7
10.6
N/A
Egdon Resources
Sector: Oil & gas
Price:
Market cap:
Forecast net cash (£m)
Forecast gearing ratio (%)
Market
(EBQ)
(EDR)
INVESTMENT SUMMARY
2016 is an important year for Egdon’s UK shale gas business, with planning catalysts from
Third Energy and Cuadrilla likely to set the stage for Egdon's planning application at Springs
Road. If achieved, this could make our valuation of the company's shale gas portfolio
increasingly feasible. We see the shares as pricing in little of the opportunity in UK shale,
with our last published standalone 22p/share (RENAV) valuation of Egdon’s conventional
business sitting considerably higher than the current share price.
INDUSTRY OUTLOOK
The supportive stance taken by the UK government towards shale provides a stable fiscal
and regulatory environment for its development. It is widely expected that we will see the
first approval for a shale well to be drilled and fracked in 2016.
Company description
Egdon Resources is an AIM-listed
onshore oil and gas exploration and
production company. The group has
conventional and unconventional
assets in the UK and France, with its
focus being the UK.
Y/E Jul
Price performance
%
1m
3m
Actual
22.6
22.6
Relative* 26.8
18.1
* % Relative to local index
Analyst
Sanjeev Bahl
Edison Insight | 26 May 2016
12m
(24.8)
(15.5)
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS (fd)
(p)
P/E
(x)
P/CF
(x)
2014
3.0
0.3
(1.5)
(0.2)
N/A
36.7
2015
2.1
(2.9)
(4.5)
(2.0)
N/A
N/A
2016e
1.8
(1.2)
(3.1)
(1.4)
N/A
4199.0
2017e
N/A
N/A
N/A
N/A
N/A
N/A
29
Elk Petroleum
Sector: Oil & gas
Price:
A$0.10
Market cap:
A$38m
Forecast net cash (A$m)
0.9
Forecast gearing ratio (%)
N/A
Market
ASX
Share price graph (A$)
(ELK)
INVESTMENT SUMMARY
Elk Petroleum (ELK) is developing the Grieve CO2 enhanced oil recovery (EOR) project in
Wyoming, in a JV with Denbury Resources Inc (DNR:NYSE). ELK sees its current US
activities as providing a platform for leveraging its EOR expertise to create scalable growth,
both in the US and overseas. The minimum miscible pressure (MMP) at Grieve, a critical
milestone in EOR project development, has now been achieved. Based on the current CO2
injection plan, full pressurisation of the field could be achieved ahead of the original target of
August 2017. Grieve is expected to achieve production status in late 2017.
INDUSTRY OUTLOOK
Company description
Elk Petroleum is an enhanced oil
recovery (EOR) company. This
technology achieves low-cost tertiary
recovery of residual oil. Elk’s first
project at Grieve in the US is targeted
for first production in CY17. There is a
significant opportunity to apply EOR in
Australasia, Indonesia and Malaysia.
At current low oil prices, many fields suitable for EOR are uneconomic for conventional oil.
EOR is a tertiary recovery method to target the substantial residual oil remaining in mature
or life expired fields. The low oil price environment may assist ELK cost-effectively securing
additional oil acreage.
Y/E Jun
Price performance
%
1m
3m
Actual
16.3
33.3
Relative* 13.4
23.3
12m
316.7
332.0
* % Relative to local index
Analyst
Peter Chilton
Sector: Media & entertainment
Price:
173.4p
Market cap:
£741m
Forecast net debt (£m)
171.0
Forecast gearing ratio (%)
24.0
Market
LSE
Share price graph (p)
Company description
Entertainment One (eOne) is a leading
international entertainment company
that sources, selects and sells films
and television content. Its library
contains over 40,000 film and TV titles,
4,500 half-hours of TV programming
and 45,000 music tracks.
Revenue
(A$m)
EBITDA
(A$m)
PBT
(A$m)
EPS (fd)
(c)
P/E
(x)
P/CF
(x)
2014
0.3
(4.1)
(5.3)
(2.9)
N/A
N/A
2015
0.0
(3.1)
(3.6)
(1.9)
N/A
N/A
2016e
0.0
(3.9)
(4.9)
(1.3)
N/A
N/A
2017e
0.0
(3.8)
(3.9)
(0.5)
N/A
N/A
Entertainment One
INVESTMENT SUMMARY
FY16 revenues increased by 2% with strong growth from Television and Family offset by a
weaker Film. EBITDA increased 20%, reflecting the shift in the mix of the business towards
the higher margin divisions. The weaker film slate was reflected in lower content investment,
which, coupled with a higher EBITDA resulted in a strong cash conversion at 62%. £181m
of net debt was reported - down from £225m last year, and £118m of production finance
was in use. The dividend increased by 9% to 1.2p. Higher growth divisions now account for
over two thirds of EBITDA, have excellent pipelines and, with a stronger film slate, eOne
should see strong growth across all divisions in FY17. Furthermore, with a lower risk profile
in Television and Film, the overall discount on eOne should come down and we see plenty
of scope for the significant ratings gap vs peers to close.
INDUSTRY OUTLOOK
OTT (over-the-top) platforms are having a disruptive effect, helping to drive strong demand
for content. Premium content companies like eOne, with a diversified portfolio of content
across Television, Film and Family brands, are well placed to satisfy the strong global
demand for entertainment content.
Y/E Mar
Price performance
%
1m
3m
Actual
(6.6)
29.9
Relative* (3.4)
25.2
* % Relative to local index
Analyst
Bridie Barrett
Edison Insight | 26 May 2016
12m
(39.9)
(32.5)
(ETO)
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS
(p)
P/E
(x)
P/CF
(x)
2015
785.8
107.3
88.8
20.8
8.3
2.1
2016
802.7
129.1
104.1
19.4
8.9
2.1
2017e
973.5
152.4
122.1
19.2
9.0
1.6
2018e
1071.7
175.1
146.4
23.2
7.5
1.3
30
Sector: General industrials
Price:
121.8p
Market cap:
£172m
Forecast net debt (£m)
9.3
Forecast gearing ratio (%)
10.0
Market
AIM
Share price graph (p)
Epwin Group
(EPWN)
INVESTMENT SUMMARY
Epwin is investing in both divisions and this organic development strategy was
complemented by two acquisitions in FY15. In this way, management is building business
momentum despite flat markets and this should become increasingly apparent in FY16. As
it does so, we see scope for a re-rating based on the delivery of strong earnings progress.
Epwin’s AGM is to take place on 24 May.
INDUSTRY OUTLOOK
Epwin is exposed to both RMI (c 70% revenue) and newbuild (c 30%) in the UK housing
market. Newbuild activity is clearly ahead y-o-y, while RMI demand has been more patchy.
Referencing a rising interest rate path, industry commentators have expressed some
caution in the short term.
Company description
Epwin supplies functional
low-maintenance exterior PVC building
products into a number of UK market
segments and is a modest exporter. It
has a vertically integrated model in
windows and doors and a leading
market position in roofline products.
Y/E Dec
Price performance
%
1m
3m
Actual
(8.1)
(3.9)
Relative* (4.9)
(7.4)
12m
(9.1)
2.1
* % Relative to local index
Analyst
Toby Thorrington
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS
(p)
P/E
(x)
P/CF
(x)
2014
259.5
24.5
18.0
11.2
10.9
7.9
2015
256.0
25.6
19.2
11.8
10.3
6.9
2016e
291.7
33.3
24.2
13.9
8.8
6.0
2017e
302.5
34.5
25.4
14.5
8.4
5.2
EQS Group
Sector: Technology
Price:
€31.50
Market cap:
€37m
Forecast net debt (€m)
5.8
Forecast gearing ratio (%)
30.0
Market
Xetra
Share price graph (€)
(EQS)
INVESTMENT SUMMARY
EQS Group’s FY15 figures reflected the impact of accelerated expansion to establish the
group as a leading global provider of digital IR solutions. December’s Swiss acquisition
provides market leadership in that territory, while the January 2016 purchase of Obsidian
gives a strong base from which to leverage UK growth. Asia remains the region with the
greatest potential to transform the group. The valuation remains at a marked discount to
global software and B2B media peers, partly reflecting the earlier stage of corporate
development, but not signalling a growing SaaS revenue stream. The Q1 report is
scheduled for 31 May.
INDUSTRY OUTLOOK
Company description
EQS is a leading global provider of
digital solutions for investor relations
and corporate communications. Its
solutions and services help 7,000
clients worldwide to fulfil complex
domestic and international corporate
information requirements.
The scale of the Asian opportunity dwarves the potential for EQS in its existing geographies.
It has already gained a foothold in HK, Singapore and Taiwan (and now in the UK). The
number of listed companies in HK, Shenzhen and Shanghai is up over 5.0% in the year to
end March. Taipei and Taiwan show smaller increases, with mature European and North
American markets retrenching. Increasing regulation in APAC to meet international
investors’ transparency requirements means that listed companies will need to buy in the
expertise or develop it internally.
Y/E Dec
Price performance
%
1m
3m
Actual
(1.6)
7.7
Relative*
3.4
1.9
* % Relative to local index
Analyst
Fiona Orford-Williams
Edison Insight | 26 May 2016
12m
5.5
26.0
Revenue
(€m)
EBITDA
(€m)
PBT
(€m)
EPS
(c)
P/E
(x)
P/CF
(x)
2014
16.4
3.7
3.4
182.94
17.2
9.1
2015
18.4
3.5
3.1
115.20
27.3
7.5
2016e
20.8
3.7
3.2
181.47
17.4
8.7
2017e
22.8
4.0
3.5
201.27
15.7
8.3
31
eServGlobal
Sector: Technology
Price:
Market cap:
Forecast net debt (A$m)
Forecast gearing ratio (%)
Market
5.0p
£13m
15.9
66.0
AIM
Share price graph (p)
(ESG)
INVESTMENT SUMMARY
Management has reiterated its target of breaking even at the EBITDA level for FY16. Two
material contract wins confirmed that the anticipated recovery began towards the end of
Q216, following a weak Q116. While this means that the company expects to report an
EBITDA loss in H116, the combination of cost-cutting and revenue recovery provides
confidence that break-even can be achieved for the full year. We have revised our forecasts
to reflect H116 performance; we continue to forecast a return to positive EBITDA in FY16.
INDUSTRY OUTLOOK
Company description
eServGlobal develops mobile software
solutions to support mobile financial
services, with a focus on emerging
markets. The company also has a
share in the HomeSend international
remittances hub, alongside
MasterCard and BICS.
eServGlobal's core business is focused on developing markets, where there is a higher
prevalence of pre-paid contracts and unbanked citizens. Growth drivers include the shift to
using the mobile phone for financial services and the increasing popularity of mobile
peer-to-peer payments. The international remittances market was worth $583bn in 2014
and is forecast to grow to $636bn by 2017 (source: World Bank). The HomeSend JV has
the potential to reduce the cost of sending smaller sums of money cross border.
Y/E Oct
Price performance
%
1m
3m
Actual
(11.1) 110.5
Relative* (8.0) 102.9
12m
(72.6)
(69.2)
* % Relative to local index
Analyst
Katherine Thompson
Price:
€31.14
Market cap:
€165m
Forecast net cash (€m)
15.7
Forecast gearing ratio (%)
N/A
Market
Alternext Paris
Share price graph (€)
EBITDA
(A$m)
PBT
(A$m)
EPS (fd)
(c)
P/E
(x)
P/CF
(x)
2014
31.3
2.6
(0.5)
(0.20)
N/A
N/A
2015
25.9
(10.4)
(17.7)
(5.41)
N/A
N/A
2016e
29.9
0.1
(10.6)
(3.23)
N/A
N/A
2017e
32.0
2.0
(5.7)
(1.75)
N/A
18.0
Esker
Sector: Technology
Revenue
(A$m)
(ALESK)
INVESTMENT SUMMARY
After a strong performance in FY15, Esker is on track to generate double-digit revenue and
margin growth in FY16/FY17. Revenues in Q116 have continued in this vein (+16% y-o-y
underlying growth) and management expects to generate organic revenue growth of
13-18% in FY16. We upgrade our FY16 forecasts to reflect stronger revenue growth
combined with increased investment in the business, and introduce FY17 forecasts for 10%
revenue and 16% earnings growth. Investment in product development (internally or via
M&A), should support sustained growth.
INDUSTRY OUTLOOK
Company description
Esker provides end-to-end document
automation solutions, offering
on-premise and on-demand delivery
models. The business generates 50%
of revenues from Europe, 40% from
the US and the remainder from Asia
and Australia.
Esker's DPA software operates across four areas: document delivery, accounts payable,
accounts receivable and sales order processing. Competitors are different for each
business process and consist of business process outsourcers and specialist DPA software
companies. Customers move to using DPA software to reduce paper-related costs and
errors in processing, to speed up the cash conversion cycle, to improve process visibility
within the enterprise and to improve customer service.
Y/E Dec
Price performance
%
1m
3m
Actual
12.4
11.2
Relative* 17.9
7.4
* % Relative to local index
Analyst
Katherine Thompson
Edison Insight | 26 May 2016
12m
26.6
48.2
Revenue
(€m)
EBITDA
(€m)
PBT
(€m)
EPS (fd)
(c)
P/E
(x)
P/CF
(x)
2014
46.1
9.0
5.9
90.0
34.6
16.2
2015
58.5
13.4
9.3
131.0
23.8
10.9
2016e
67.4
16.3
11.7
163.0
19.1
9.5
2017e
74.4
18.9
14.1
189.0
16.5
8.9
32
Euromax Resources
Sector: Mining
Price:
C$0.50
Market cap:
C$58m
Forecast net debt (C$m)
9.6
Forecast gearing ratio (%)
86.0
Market
Toronto
Share price graph (C$)
(EOX)
INVESTMENT SUMMARY
A recently completed DFS on Ilovica envisages a conventional 10Mtpa drill & blast, truck &
shovel operation, followed by a consecutive flotation and cyanide leach process flow route.
The study follows Euromax's mandating of four financial institutions to provide up to
US$240m in finance for Ilovica, confirmation of German government guarantees for the
financiers and an off-take agreement with Aurubis. Subsequently, it has submitted its EIA
for approval as well as raising US$5m from the EBRD via a convertible bond and the first
tranche of up to US$30m via a strategic alliance with EPC contractor, Consolidated
Contractors Company.
INDUSTRY OUTLOOK
Company description
Euromax Resources is a Canadian
resource company that focuses on the
acquisition and development of
mineral-bearing assets in Southeast
Europe. Its flagship asset, Ilovica in
Macedonia, is at the pre-feasibility
stage.
Ilovica’s resource comprises 2.9Moz Au plus 1.2bn lbs Cu (5.0Moz of gold equivalent),
which we estimate has a value of US$52.0-78.8m when considered purely as a resource.
On the basis of the DFS, Edison's valuation of EOX increases to C$1.03 (fully diluted). Note
that the majority of Ilovica's costs are denominated in euros, making it a beneficiary of euro
weakness.
Y/E Dec
Price performance
%
1m
3m
Actual
(7.4)
42.9
Relative* (7.5)
31.5
12m
25.0
35.4
* % Relative to local index
Analyst
Charles Gibson
Sector: Media & entertainment
Price:
965.0p
Market cap:
£1238m
Forecast net cash (£m)
71.8
Forecast gearing ratio (%)
N/A
Market
LSE
Share price graph (p)
Revenue
(C$m)
EBITDA
(C$m)
PBT
(C$m)
EPS (fd)
(c)
P/E
(x)
P/CF
(x)
2013
0.0
(5.3)
(5.4)
(5.8)
N/A
N/A
2014
2.7
(6.4)
(6.6)
(5.7)
N/A
N/A
2015e
3.7
(7.9)
(8.6)
(5.6)
N/A
N/A
2016e
0.0
(8.6)
(8.8)
(3.1)
N/A
N/A
Euromoney Institutional Investor
(ERM)
INVESTMENT SUMMARY
H116 results reflected ERM's legacy structural issues and difficult trading environment,
partially offset by currency benefit. The statement also contains pointers as to how and
when internal actions will shift the momentum. The group continues to generate plentiful
cash, smoothing the process of realigning the portfolio and optimising the positioning of its
strongly branded B2B digital information offer. Clear sight on driving the top line should
enable ERM to regain its traditional sector premium.
INDUSTRY OUTLOOK
Company description
Euromoney Institutional Investor is a
leading international B2B media group
focused primarily on the international
finance, metals and commodities
sectors.
Our forecasts are based on the assumption that there is no sign of immediate recovery in
underlying customers’ markets. The trading backdrop for investment banking markets
remains very difficult, with the Q1 reporting season reaffirming the mood and with
cost-cutting still the order of the day, but this has been built into ERM’s expectations. Asset
management at one point earlier last year looked to be the brighter spot, but belts have also
been tightened, with the full impact not yet necessarily completely worked through.
Commodity and energy markets are very obviously still in the doldrums with, perhaps, some
signs of patchy life re-emerging.
Y/E Sep
Price performance
%
1m
3m
Actual
7.2
8.4
Relative* 10.9
4.5
* % Relative to local index
Analyst
Fiona Orford-Williams
Edison Insight | 26 May 2016
12m
(19.5)
(9.6)
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS (fd)
(p)
P/E
(x)
P/CF
(x)
2014
406.6
122.7
116.2
70.6
13.7
11.1
2015
403.4
109.4
107.8
70.1
13.8
11.1
2016e
390.0
102.8
101.0
64.5
15.0
13.6
2017e
397.5
108.3
106.5
68.0
14.2
11.7
33
Evolva
Sector: Food & drink
Price:
CHF0.60
Market cap:
CHF239m
Forecast net cash (CHFm)
51.5
Forecast gearing ratio (%)
N/A
Market
Swiss Stock Exchange
Share price graph (CHF)
(EVE)
INVESTMENT SUMMARY
Evolva has an innovative fermentation platform focused on developing new production
methods for nutritional and consumer health products. Evolva's key programme for the
stevia sweeteners, partnered with Cargill, has been delayed as production costs have not
yet reached a competitive level. We estimate the delay will be c 18 months and hence we
now expect launch during 2018. Evolva also has a vanillin project (partnered with IFF, on
market) and projects for resveratrol, nootkatone, valencene (all on market) and saffron. It
has various alliances, including with L'Oreal, Ajinomoto and Valent BioSciences. Evolva had
a cash position of CHF83m at December 2015.
INDUSTRY OUTLOOK
Company description
Evolva is Swiss high tech fermentation
company. It has a proprietary yeast
technology platform, which it uses to
create and manufacture high-value
speciality molecules for nutritional and
consumer products.
The manufacturers of nutritional and consumer health products are always interested in
cheaper production methods, especially if the product is natural and has health benefits.
Evolva is primarily targeting this market.
Y/E Dec
Price performance
%
1m
3m
Actual
(11.8) (28.6)
Relative* (9.7) (29.8)
12m
(63.2)
(57.1)
* % Relative to local index
Analyst
Sara Welford
Revenue
(CHFm)
EBITDA
(CHFm)
PBT
(CHFm)
EPS
(CHFc)
P/E
(x)
P/CF
(x)
2014
10.7
(19.4)
(21.2)
(6.4)
N/A
N/A
2015
13.4
(30.3)
(32.1)
(8.0)
N/A
N/A
2016e
12.8
(33.8)
(34.7)
(8.7)
N/A
N/A
2017e
20.8
(30.9)
(34.9)
(8.8)
N/A
N/A
Expert System
Sector: Technology
Price:
€2.14
Market cap:
€54m
Forecast net debt (€m)
7.7
Forecast gearing ratio (%)
35.0
Market
Borsa Italiana
Share price graph (€)
(EXSY)
INVESTMENT SUMMARY
Expert System received further 3rd party validation of the strength of its core Cogito
technology in May. It was honored with the 2016 LT-Innovate Award (Linguistic
Technologies Award) for Best Language Technology during the annual LT-Innovate Summit
and was a winner of Best Metadata Management Solution in the highly prestiguous 2016
CODiE awards. It was also named as a 'strong performer' in the top 10 out of c 200 text
analytics providers by global technology research provider Forrester in its report, 'Forrester
Wave™ Big Data Text Analytics Platforms, Q2 2016.
INDUSTRY OUTLOOK
Company description
Expert System's patented technology
combines the best of both artificial
intelligence algorithms for simulating
the human ability to read and
understand language (semantics) and
deep learning techniques (machine
learning) to help companies integrate,
discover and leverage their data and
unstructured information.
Price performance
%
1m
3m
Actual
0.8
13.3
Relative*
5.0
7.5
* % Relative to local index
Analyst
Eric Opara
Edison Insight | 26 May 2016
12m
(5.6)
22.8
Natural language understanding (NLU) is a key part of understanding unstructured data. It
can be applied to many verticals in a range of different applications. Enterprise search is
just one application and Gartner estimates it had a market size of $1.7bn in 2013 and will
grow at 11.2% CAGR to $2.6bn in 2017. NB: FY14 was the first year that results were
prepared on a consolidated basis, making direct comparisons with FY13 difficult.
Y/E Dec
Revenue
(€m)
EBITDA
(€m)
PBT
(€m)
EPS (fd)
(c)
P/E
(x)
P/CF
(x)
2013
11.1
2.0
0.5
0.8
267.5
16.3
2014
13.0
2.3
0.6
0.1
2140.0
63.9
2015e
19.0
1.3
(1.0)
(3.1)
N/A
22.2
2016e
28.8
4.3
1.8
4.6
46.5
12.5
34
Fair Value REIT
Sector: Property
Price:
Market cap:
Forecast net debt (€m)
Forecast gearing ratio (%)
Market
€6.84
€97m
114.3
63.0
FRA
Share price graph (€)
INVESTMENT SUMMARY
Q116 results were consistent with our full year forecasts which are towards the top end of
management guidance, and we have made no material changes to our estimates. Q1
earnings and EPS represented c 25% of our full year forecast. Underlying profit on an
EPRA basis (or FFO), which excludes the one-off items and valuation movements, was up
53% at €1.6m or €0.11 per share (similar to Q115 as a result of the increased number of
shares resulting from last year’s capital increase). Q1 saw none of the investment activity
that we expect (but do not include in our base forecasts), while two non-core property
assets held for sale were disposed of. The capital base (REIT Equity ratio of 62.5% versus
a minimum 45%) is sufficient to support further similar significant accretive growth that is not
yet reflected in our base case forecasts.
INDUSTRY OUTLOOK
Company description
Fair Value REIT (FVI) is a real estate
investment trust focused on retail and
office commercial properties in
German regional centres. As at 31
March 2016 it managed c 263,000sqm
spread across 38 properties, with a
market value of €288m.
The German commercial real estate market benefits from continued low interest rates, a
dearth of attractive yield-generating investment alternatives and the comparative stability of
the economy.
Y/E Dec
Price performance
%
1m
3m
Actual
0.1
0.3
Relative*
5.2
(5.1)
(FVI)
12m
(14.9)
1.7
* % Relative to local index
Analyst
Martyn King
Revenue
(€m)
EBITDA
(€m)
PBT
(€m)
EPS
(c)
P/E
(x)
2014
30.1
14.7
4.4
47.2
14.5
5.9
2015
29.8
12.5
6.4
51.7
13.2
10.6
2016e
27.8
14.0
6.4
45.3
15.1
10.1
2017e
29.3
15.4
7.4
52.6
13.0
9.3
Findel
Sector: General retailers
Price:
176.5p
Market cap:
£153m
Forecast net debt (£m)
210.2
Forecast gearing ratio (%) 213.0
Market
LSE
Share price graph (p)
P/CF
(x)
(FDL)
INVESTMENT SUMMARY
Findel's pre-close statement confirmed that the group will meet full-year earnings and net
debt expectations. Management has successfully addressed issues relating to stock
shortages, credit management and marketing. Currency headwinds and a competitive
market remain challenges for Express but Q4 product sales performance was encouraging.
The project to restructure Education's logistics has started well and it has stabilised its
market share in its UK Schools brands. We value Findel at c £3 per share.
INDUSTRY OUTLOOK
Company description
Findel comprises two businesses
focused on the UK: the home-shopping
business, Express Gifts and education
supplies business Findel Education.
High street footfall remains under pressure and retail sales value in March was lower than a
year ago, according to ONS. Nevertheless, online sales increased 8.9% year-on-year,
sustaining a long-term trend for 'online' to outperform and demonstrating that the
background for Express remains supportive. The environment for Education is likely to
prove less supportive which is why management is focusing on self-help measures to
restore performance.
Y/E Mar
Price performance
%
1m
3m
Actual
4.4
(6.5)
Relative*
8.0
(9.9)
* % Relative to local index
Analyst
David Stoddart
Edison Insight | 26 May 2016
12m
(19.8)
(9.9)
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS
(p)
P/E
(x)
P/CF
(x)
2014
402.2
43.3
24.8
23.7
7.4
5.7
2015
406.9
45.1
27.7
25.8
6.8
7.8
2016e
406.1
44.3
25.0
24.2
7.3
69.2
2017e
423.8
46.2
27.9
26.5
6.7
4.7
35
Fusionex International
Sector: Technology
Price:
180.0p
Market cap:
£85m
Forecast net debt (RMm)
N/A
Forecast gearing ratio (%)
N/A
Market
AIM
Share price graph (p)
(FXI)
INVESTMENT SUMMARY
Big data software is forecast to show dramatic growth over the coming years and
Fusionex’s GIANT product has been built to address a large proportion of the market. The
ongoing flow of contract wins show that GIANT is a widely applicable and credible product
and the announcement at the start of March of the strategic alliance with Cloudera
reinforces this further. The FY15 results showed that this is being reflected in the revenues,
although the shift in sales mix from direct towards indirect has led to a significant increase in
working capital. The recent trading update confirmed trading was in line with market
expectations and this should go some way towards restoring the market's faith in the
company.
INDUSTRY OUTLOOK
Company description
Fusionex International is a software
business providing data management,
business intelligence and analytics
products, including GIANT, a big data
analytics software.
Business intelligence newsflow, particularly in relation to big data, continues to be bullish
with more deals being done in the VC-funded space and larger software players continuing
to acquire.
Y/E Sep
Price performance
%
1m
3m
Actual
2.7
38.5
Relative*
6.3
33.4
12m
(54.7)
(49.1)
* % Relative to local index
Analyst
Ian Robertson
Revenue
(RMm)
EBITDA
(RMm)
PBT
(RMm)
EPS (fd)
(sen)
P/E
(x)
P/CF
(x)
2014
57.1
25.8
21.4
42.08
24.9
17.4
2015
77.0
33.2
26.3
53.28
19.7
34.4
2016e
N/A
N/A
N/A
N/A
N/A
N/A
2017e
N/A
N/A
N/A
N/A
N/A
N/A
Galaxy Resources
Sector: Mining
Price:
A$0.38
Market cap:
A$480m
Forecast net debt (A$m)
10.5
Forecast gearing ratio (%)
9.0
Market
ASX
Share price graph (A$)
INVESTMENT SUMMARY
Mt Cattlin (GXY 50%) is now believed to be the second largest producing hard rock lithium
mine globally. It has also commenced production of tantalum as a co-product. Following
commissioning of further additions in the processing circuit, concentrate production will be
stockpiled prior to the first shipment in the September 2016 quarter. The final offtake
agreement has been signed between General Mining (GMM), GXY's JV partner with 50% of
Mt Cattlin, Mitsubishi Corporation and customer. The agreement is consistent with the
binding Term Sheet of 8 March 2016. A US$9m pre-payment has been received by GMM
on behalf of the JV with GXY. The Mt Cattlin operation is now fully funded through to
production.
INDUSTRY OUTLOOK
Company description
Galaxy Resources (GXY) has
substantial in-house IP in lithium and a
40+ battery-materials customer base.
Its main focus is the development of its
integrated Sal de Vida lithium and
potash brine project in Argentina.
Battery use is driving lithium demand. There are also other areas of lithium growth such as
glass and ceramics. Some commentators have forecast a doubling in lithium demand over
the next five to ten years.
Y/E Dec
Price performance
%
1m
3m
Actual
(21.6) 100.0
Relative* (23.6)
85.0
* % Relative to local index
Analyst
Peter Chilton
Edison Insight | 26 May 2016
(GXY)
12m
763.6
795.3
Revenue
(A$m)
EBITDA
(A$m)
PBT
(A$m)
EPS
(c)
P/E
(x)
P/CF
(x)
2013
32.2
(27.4)
(60.3)
(8.2)
N/A
N/A
2014
0.2
(5.2)
(13.9)
(1.3)
N/A
N/A
2015e
0.7
(2.3)
(3.6)
(0.3)
N/A
N/A
2016e
4.1
1.1
0.7
0.1
380.0
382.4
36
Gaming Realms
Sector: Travel & leisure
Price:
Market cap:
Forecast net cash (£m)
Forecast gearing ratio (%)
Market
20.0p
£51m
2.7
N/A
AIM
Share price graph (p)
(GMR)
INVESTMENT SUMMARY
Gaming Realms’ 2015 final results show that it continues to build momentum, with revenues
more than doubling to £21.2m (2014 pro forma: £9.8m). Growth is being driven by its real
money and social gaming verticals, which were up 362% and 294%, respectively. It also
recently announced that it has extended its licensing deal with Scientific Games to
land-based gaming machines as part of its strategy of taking the Slingo brand into adjacent
markets. FY15 adjusted EBITDA losses fell by 30% to £4.1m and the Q1 trading update
(revenues up 100% y-o-y) supports our view that the company can break even at the
EBITDA level this year.
INDUSTRY OUTLOOK
Company description
Gaming Realms creates, develops and
markets interactive next-generation
online gambling games delivered via
mobile, tablet and desktop computers.
It listed on AIM via a reverse takeover
(of Pursuit Dynamics) in August 2013.
Price performance
%
1m
3m
Actual
0.0
9.6
Relative*
3.5
5.6
Over 70% of GMR's players are using mobile and tablet devices, well ahead of the industry
average. Digital Spy estimates that total mobile data usage is growing at 70% pa, driven by
4G proliferation, and that 25% of mobile time is spent playing games or listening to music,
according to InMobi. GMR is also hoping to expand the current UK online slot market of
1.73m players into the relatively untapped 12m adult social games market.
Y/E Sep / Dec Revenue
(£m)
12m
(38.5)
(30.9)
* % Relative to local index
Analyst
Eric Opara
Price:
295.0p
Market cap:
£365m
Forecast net cash (£m)
3.8
Forecast gearing ratio (%)
N/A
Market
AIM
Share price graph (p)
PBT
(£m)
EPS (fd)
(p)
P/E
(x)
P/CF
(x)
2014
11.2
(7.8)
(8.4)
(5.0)
N/A
N/A
2015
21.2
(4.1)
(5.1)
(2.2)
N/A
N/A
2016e
40.0
0.8
(0.1)
0.0
N/A
N/A
2017e
65.0
11.6
10.7
3.8
5.3
5.4
GB Group
Sector: Technology
EBITDA
(£m)
(GBG)
INVESTMENT SUMMARY
GB Group’s (GBG) CEO Richard Law has announced his intention to retire. He will remain
at GBG for as long as required to ensure a smooth transition to a new CEO once appointed.
He will be leaving the group in good shape; 27% of revenues are now from the strategically
important international markets and the year-end trading update points to strong
momentum, with FY16 EBITA 11% ahead of our forecasts.
INDUSTRY OUTLOOK
Growth in internet trading, regulatory pressure and the need for money-laundering, age and
anti-fraud checks are behind growing interest in increasingly complex and comprehensive
verification of personal data. The scope and financial impact of global fraud and cyber crime
is growing. The requirement of organisations and governments to invest in technologies and
compliance solutions to combat these issues should also increase to outpace this threat.
Company description
GB Group has complementary identity
(ID) intelligence offerings of
verification, capture, maintenance and
analysis, enabling companies to
identify and understand their
customers.
Y/E Mar
Price performance
%
1m
3m
Actual
1.7
15.7
Relative*
5.2
11.5
* % Relative to local index
Analyst
Bridie Barrett
Edison Insight | 26 May 2016
12m
47.9
66.1
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS (fd)
(p)
P/E
(x)
P/CF
(x)
2014
41.8
7.8
7.1
4.8
61.5
34.6
2015
57.3
11.8
10.5
6.7
44.0
30.1
2016e
76.0
13.4
11.8
7.3
40.4
29.0
2017e
89.0
16.3
14.6
9.0
32.8
23.4
37
Gear4music Holdings
Sector: General retailers
Price:
132.5p
Market cap:
£27m
Forecast net cash (£m)
2.5
Forecast gearing ratio (%)
N/A
Market
LSE
Share price graph (p)
(G4M)
INVESTMENT SUMMARY
Gear4music (G4M) is a disruptive online retailer selling musical instruments and equipment.
Traditional competition is fragmented and only partially online, so the market is wide open.
Maiden prelims show the first year growth that was expected at the June 2015 IPO being
realised. With sales growth of 46% in FY16, G4M now has 3.5% of the UK market, and is
focusing on the European market, which is six times larger, and where revenue growth was
73%. We think the company has scope for significant further revenue growth and, assuming
undemanding economies of scale at operating margin level, we value the shares at 186p
based on peer comparison and DCF modelling.
INDUSTRY OUTLOOK
Company description
Gear4music is the largest dedicated,
UK-based online retailer of musical
instruments and music equipment. It
sells branded instruments and
equipment, alongside its own brand
products, to customers ranging from
beginners to professionals, in the UK
and into Europe.
The UK musical instrument and equipment market is worth approximately £750m in the UK
at retail value, according to management estimates based on research by consultants in
2012. Of this, G4M management estimates that around £180m is online. The European
market is estimated on the same basis to be worth £4.3bn. The UK market is highly
fragmented and G4M is the biggest player. There is more organised competition in Europe,
with three larger players. The musical instrument (only) market is forecast to grow by a
compound 1.7% over the next five years, according to ibisworld.co.uk.
Y/E Feb
Price performance
%
1m
3m
Actual
1.9
(2.2)
Relative*
5.4
(5.8)
12m
N/A
N/A
* % Relative to local index
Analyst
Paul Hickman
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS
(p)
2015
24.2
0.8
(0.6)
2016
35.5
1.7
0.6
2017e
48.7
2.5
2018e
60.3
3.8
GFT Group
Sector: Technology
Price:
€20.70
Market cap:
€545m
Forecast net debt (€m)
12.6
Forecast gearing ratio (%)
9.0
Market
FRA
Share price graph (€)
Company description
GFT Group is a global technology
services and recruitment business
primarily focused on banks and
insurance companies.
* % Relative to local index
Analyst
Richard Jeans
Edison Insight | 26 May 2016
12m
8.0
29.1
P/CF
(x)
(4.1)
N/A
10.9
3.1
42.7
N/A
1.6
6.5
20.4
17.6
2.7
10.8
12.3
11.4
(GFT)
INVESTMENT SUMMARY
Q1 revenue grew by 10% to €97.4m, which reflected 6% organic growth (7% at constant
currencies), and €3.3m from Adesis which was acquired in July 2015. EBITDA rose by 6%
to €10.2m. Q1 growth was impacted by poor results in the banking sector, which led to
budget deferrals, and the uncertainties over the British referendum on the EU which held
back the UK and North America (UK and US revenues were also impacted by the switching
of one c €3.5m account from the UK to the US in the period). Despite this, management
remains optimistic it will meet this year’s targets, with increased orderflow anticipated in late
Q2 and Q3. We are maintaining our forecasts, prior to the inclusion of WG Systems (trades
as Habber Tec Brazil) which was acquired after the period end, and is expected to generate
c €7m of revenue in FY16. In our view, if management can continue to maintain the
momentum, the stock looks attractive, trading on c 17x our FY17e EPS.
INDUSTRY OUTLOOK
GFT provides consulting and IT services, primarily to commercial and investment banks. It
benefits from high levels of IT spending and complex business requirements in the financial
services industry. It also benefits from favourable outsourcing trends in banking and has
integrated near/farshore hubs in Spain, Poland and Brazil.
Y/E Dec
Price performance
%
1m
3m
Actual
(7.3) (12.9)
Relative* (2.6) (17.5)
P/E
(x)
Revenue
(€m)
EBITDA
(€m)
PBT
(€m)
EPS (fd)
(c)
P/E
(x)
P/CF
(x)
2014
279.2
35.2
30.8
96.2
21.5
23.3
2015
373.5
45.5
38.7
119.5
17.3
10.1
2016e
410.0
48.6
40.7
120.6
17.2
11.2
2017e
451.0
53.3
45.4
125.8
16.5
10.2
38
Sector: Investment companies
Price:
Market cap:
Forecast net debt (£m)
Forecast gearing ratio (%)
Market
29.5p
£68m
39.5
43.0
LSE
Share price graph (p)
GLI Finance
(GLIF)
INVESTMENT SUMMARY
GLI Finance (GLI) is undertaking a strategic review to determine the best utilisation of its
human and capital resources. It is only part way through its review and has already
identified four electronic platforms which it believes have the ability to grow significantly. It
has reiterated its intention to pay an annual dividend of 2.5p per share and for Q116 it
declared a divided of 0.625p per share. On 16 May it announced plans to increase its
ownership in Sancus Gibraltar and BMS to 100%. This will involve the issue of 54.5m new
shares and a five-year £10m 7% bond. It also plans an additional £4m bond. An EGM to
approve the transaction will be held on 6 June 2016.
INDUSTRY OUTLOOK
Company description
GLI Finance (GLIF) is a Guernsey
domiciled company, which has equity
in a number of specialist providers of
SME financing, including marketplace
and balance sheet lenders, and
aggregators.
GLI's main exposure is to UK SMEs where economic trends are generally positive and bank
lending appetite remains subdued. There is considerable interest from institutional and retail
investors to invest in alternative finance loans, which could help GLI expand its asset
management business (Amberton Asset Management) and grow its platforms.
Y/E Dec
Price performance
%
1m
3m
Actual
(7.8)
(7.1)
Relative* (4.6) (10.5)
12m
(43.8)
(36.9)
* % Relative to local index
Analyst
Peter Thorne
Sector: Alternative energy
Price:
€20.95
Market cap:
€66m
Forecast net debt (€m)
4.5
Forecast gearing ratio (%)
87.0
Market
Alternext Paris
Share price graph (€)
Company description
Global Bioenergies is in the scale-up
stage to convert renewable resources
into isobutene, the first of a number of
olefins that will be out-licensed to
partners once the process is proved in
an industrial pilot.
Price performance
%
1m
3m
Actual
(12.5)
11.0
Relative* (8.2)
7.1
EBITDA
(£m)
2014
13.4
N/A
6.7
2015
0.2
N/A
(9.5)
2016e
9.1
N/A
1.6
2017e
N/A
N/A
N/A
Global Bioenergies
12m
(53.0)
(45.0)
Analyst
Catharina Hillenbrand-Saponar
PBT
(£m)
EPS
(p)
P/E
(x)
P/CF
(x)
4.71
6.3
N/A
(4.62)
N/A
N/A
0.68
43.4
N/A
N/A
N/A
N/A
(ALGBE)
INVESTMENT SUMMARY
Global Bioenergies (GBE) continues to progress towards commercialisation of its isobutene
programme. Having delivered first batches of commercial isobutene and liquid fuels to its
partners ahead of schedule, GBE has announced its first commercial licensing deal. Its first
joint venture with Cristal Union targets an industrial plant by 2018, which should underpin
confidence in the business model. FY15 results were in line with our expectations and
showed continued progress in scaling up. GBE reported an operating loss of €12m. Cash
burn was €5.5m as capex is peaking now with the build of the second demo plant in Leuna,
Germany. We estimate the company is funded into 2017. GBE has announced that it has
achieved 99.77% purity on its isobutene, which enables it to access a wider range of
applications. It has also recently achieved yields of 74% of its commercial target at
Pommacle which is positive proof it is scaling up.
INDUSTRY OUTLOOK
Global Bioenergies is developing bioprocesses to convert renewable resources into some of
the most widely used petrochemical building blocks. Its first successes have been in
isobutene, butadiene and propylene, which it intends to replicate with other olefins, the key
molecules for the petrochemical industry, currently derived exclusively from fossil fuels.
Y/E Jun / Dec Revenue
(€m)
* % Relative to local index
Edison Insight | 26 May 2016
Revenue
(£m)
EBITDA
(€m)
PBT
(€m)
EPS (fd)
(c)
P/E
(x)
P/CF
(x)
2014
3.2
(9.0)
(9.2)
(293.11)
N/A
N/A
2015
2.2
(11.0)
(12.2)
(395.61)
N/A
N/A
2016e
4.7
(9.4)
(10.9)
(292.97)
N/A
N/A
2017e
11.6
(3.3)
(4.9)
(125.02)
N/A
N/A
39
Globalworth Real Estate Investments
Sector: Property
Price:
€5.07
Market cap:
€320m
Forecast net debt (€m)
394.6
Forecast gearing ratio (%)
80.0
Market
AIM
Share price graph (€)
(GWI)
INVESTMENT SUMMARY
The Q415 trading update showed EPRA NAV per share increased 12% to €9.08 during
2015. We estimate that EPRA net assets grew c 17% before the impact of share issuance.
The appraised value of the portfolio including developments increased 55% to €931m,
spread over 15 investments in Romania vs 11 at the end of 2014. Average occupancy also
rose to 85.1% in 2015 vs 77.2% in 2014. All developments are progressing to plan and the
flagship asset, Globalworth Tower in central Bucharest, is now complete and c 60% let. LTV
was 44.3% as at 31 December 2015. We expect the full results to be released in June.
Despite the progress reported, the shares have continued to drift lower on light volume, and
are trading at a c 45% discount to NAV.
INDUSTRY OUTLOOK
Company description
Globalworth Real Estate Investments
is incorporated in Guernsey. It is a real
estate investment company focused on
opportunities in South-East Europe
and the CEE, but primarily Romania,
which accounts for the entire current
portfolio.
The Romanian economy is performing well with the IMF expecting 4.2% growth in 2016.
Demand for quality, modern commercial property (GWI's focus) continues to outstrip supply,
creating potential for NAV to benefit from a convergence of property yields towards those
seen in more established CEE capitals.
Y/E Dec
Price performance
%
1m
3m
Actual
0.0
(9.0)
Relative*
3.5 (12.3)
12m
(13.6)
(2.9)
* % Relative to local index
Analyst
Martyn King
Revenue
(€m)
Price:
€1.60
Market cap:
€10m
Forecast net debt (€m)
6.1
Forecast gearing ratio (%) 121.0
Market
Borsa Italiana
Share price graph (€)
PBT
(€m)
EPS
(c)
P/E
(x)
P/CF
(x)
2013
5.3
3.2
3.0
30.6
16.6
138.6
2014
12.9
(1.7)
(9.4)
(21.0)
N/A
N/A
2015e
28.1
15.4
(3.0)
(5.3)
N/A
15.4
2016e
40.7
28.4
9.2
14.5
35.0
10.2
GO internet
Sector: Technology
EBITDA
(€m)
(GO)
INVESTMENT SUMMARY
GO internet continues to steadily expand its network rollout with 33.8k subscribers reported
at the end of May, up 30% year-on-year. It has confirmed plans for a €4m capital increase
and a €4m convertible bond, needed to participate in planed spectrum auctions and to
accelerate the pace of expansion of its network - although the timing is not clear. In the
meantime, GO’s majority shareholder, FC Gold, has issued a ‘Comfort Letter’ saying it will
provide funding installments up to €2m by 31 December 2016.
INDUSTRY OUTLOOK
The Italian broadband market is relatively underpenetrated and with no cable alternative to
incumbent TI, opportunities exist for niche providers. GO internet, with its low-cost wireless
service, is targeting the one million 'mobile-only' homes in the Emilia-Romagna and Marche
regions of Italy that are increasingly opting to relinquish their expensive fixed-line services.
Company description
GO internet provides internet and
telephone services using 4G wireless
technology. The service is currently
offered in the Emilia-Romagna and
Marche regions of Italy, where GO has
an exclusive right of use for 42MHz in
the 3.5GHz frequency band (4G).
Y/E Dec
Price performance
%
1m
3m
Actual
4.4
(3.8)
Relative*
8.8
(8.8)
* % Relative to local index
Analyst
Bridie Barrett
Edison Insight | 26 May 2016
12m
(57.2)
(44.3)
Revenue
(€m)
EBITDA
(€m)
PBT
(€m)
EPS (fd)
(c)
P/E
(x)
P/CF
(x)
2014
3.9
1.4
0.1
0.67
238.8
4.3
2015
5.1
2.0
0.3
5.07
31.6
4.7
2016e
6.8
3.0
0.5
6.07
26.4
3.2
2017e
8.4
3.9
0.8
9.30
17.2
2.5
40
Green Dragon Gas
Sector: Oil & gas
Price:
252.5p
Market cap:
£394m
Forecast net debt (US$m)
N/A
Forecast gearing ratio (%)
N/A
Market
LSE
Share price graph (p)
INVESTMENT SUMMARY
GDG's 2015 results continue to demonstrate strong revenue and cash performance, and a
maiden profit for the group. The company's focus remains on capital discipline, operational
efficiency and maximising the returns from the existing well stock. Discretionary capex could
accelerate development and 1P reserves growth, although this will require funding. RBL
debt remains the most likely long-term funding route for GDG although this is linked to ODP
submission, likely in H216 for GSS and GCZ. GDG is also considering equity and farm-outs
to accelerate development and increase stock liquidity. Dividends are also not far off, with
GDG announcing it will partially return cash flow to investors from fields that are net cash
flow positive, rather than waterfall these automatically into further development/exploration.
Our forecasts are under review.
INDUSTRY OUTLOOK
Company description
Green Dragon Gas is one of the
largest independent companies
involved in the production and sale of
CBM gas in China.
Despite medium-term pricing pressure in the downstream sector in China, domestic CBM is
still likely to generate particularly attractive returns.
Y/E Dec
Price performance
%
1m
3m
Actual
(2.9)
(4.7)
Relative*
0.5
(8.2)
(GDG)
12m
(27.9)
(18.9)
* % Relative to local index
Analyst
Sanjeev Bahl
Revenue
(US$m)
EBITDA
(US$m)
PBT
(US$m)
EPS
(c)
P/E
(x)
P/CF
(x)
2014
33.8
11.4
(6.2)
0.0
N/A
816.6
2015
32.7
20.1
(0.1)
0.0
N/A
46.1
2016e
N/A
N/A
N/A
N/A
N/A
N/A
2017e
N/A
N/A
N/A
N/A
N/A
N/A
Greggs plc
Sector: Food & drink
Price:
1115.0p
Market cap:
£1128m
Forecast net cash (£m)
43.2
Forecast gearing ratio (%)
N/A
Market
LSE
Share price graph (p)
(GRG)
INVESTMENT SUMMARY
Greggs’ appeal lies in the combination of its relatively low-risk business model, its history of
strong cash generation and its return to strong earnings growth in the past two years. It is in
the middle of a strategic plan that has delivered impressive financial results so far and has
the financial strength to complete that programme. The Q1 update was encouraging. We
value Greggs at 1,169p per share.
INDUSTRY OUTLOOK
Greggs is pursuing these self-improvement measures against the background of an
expanding market. The Project Café2016 UK report from Allegra World Coffee Portal valued
the total UK coffee shop market in 2015 at £7.9bn. That was 10% higher than in 2014. The
branded segment that includes Greggs accounted for £3.3bn of this. Encouragingly, Allegra,
which has studied this market for many years, estimates that it could reach £15bn by 2025.
Company description
Greggs is a UK-based bakery food
on-the-go retailer. It owns
approximately 1,700 shops, nine
regional bakeries and two distribution
centers. It has 45 franchised shops
operating in travel and other
convenience locations.
Y/E Jan
Price performance
%
1m
3m
Actual
3.8
9.5
Relative*
7.4
5.5
* % Relative to local index
Analyst
David Stoddart
Edison Insight | 26 May 2016
12m
(4.5)
7.3
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS
(p)
P/E
(x)
P/CF
(x)
2014
806.1
95.6
58.3
44.0
25.3
10.3
2015
835.7
113.3
73.0
57.0
19.6
9.4
2016e
881.8
122.0
77.1
60.1
18.6
9.8
2017e
941.5
132.3
84.8
66.2
16.8
8.1
41
GVC Holdings
Sector: Travel & leisure
Price:
553.5p
Market cap:
£1615m
Forecast net debt (€m)
185.0
Forecast gearing ratio (%)
15.0
Market
AIM
Share price graph (p)
(GVC)
INVESTMENT SUMMARY
Final results showed excellent progress in 2015 (adjusted EBITDA up 10% despite cost
headwinds). More importantly, GVC has wasted no time in beginning the challenge of
reinvigorating the bwin.party business and the recent B2B licensing deal with Betfred
illustrates the value of its IP. The AGM trading update reported 15% pro forma Q216
constant currency revenue growth. Cost synergies are on track and our forecasts (Update
report 3 May) are for a very strong upswing in profits and cash generation. The move to a
Premium Listing later in 2016 will widen the potential shareholder base.
INDUSTRY OUTLOOK
Company description
GVC Holdings is a leading e-gaming
operator in both B2C and B2B
markets. Post the €1.5bn acquisition of
bwin.party on 1 February 2016, GVC
has four verticals with a number of
brands (sports labels, gaming labels,
B2B and non-core).
The global online gambling market is forecast to grow at a CAGR of 8.7% (2014-2020) to
$53bn (H2 Gambling Capital). Sports betting is the largest segment and is forecast to grow
at a CAGR of 6%, to $23.3bn. Industry consolidation is underway partly due to economies
of scale and new taxes/costs in regulating markets, including Paddy Power Betfair,
GVC/bwin and the proposed merger of Ladbrokes/Coral.
Y/E Dec
Price performance
%
1m
3m
Actual
7.5
20.1
Relative* 11.2
15.8
12m
19.7
34.5
* % Relative to local index
Analyst
Eric Opara
Revenue
(€m)
EBITDA
(€m)
PBT
(€m)
Price:
A$0.06
Market cap:
A$11m
Forecast net debt (A$m)
N/A
Forecast gearing ratio (%)
N/A
Market
ASX
Share price graph (A$)
P/E
(x)
P/CF
(x)
2015
247.7
54.1
50.0
76.4
9.3
6.9
2016e
850.0
196.5
81.2
25.2
28.1
102.3
2017e
878.5
250.0
167.8
50.0
14.1
9.2
2018e
930.0
285.0
223.8
66.0
10.7
8.1
High Peak Royalties
Sector: Oil & gas
EPS (fd)
(c)
(HPR)
INVESTMENT SUMMARY
HPR has recently received a number of royalty investment proposals, both locally and
overseas, and expects the trend to continue increasing. HPR believes the royalty sector on
the ASX is evolving with evidence of renewed investor interest during the current period of
commodity price volatility. Shell is now operator of the QCLNG project following its
acquisition of BG Group. HPR's highest value assets are Surat Basin royalty interests within
QCLNG. Further data processing and 3D seismic continued on HPR Carnarvon Basin
Royalty permits, which includes WA-482-P. The permit contains a multi-billion barrel
prospective oil resource in six prospects covering a third of the permit area.
INDUSTRY OUTLOOK
Oil prices have been volatile but have improved. The outlook for the East Coast gas market
is for continued tightness.
Company description
High Peak Royalties has been
established to generate income from
royalties. Currently all its royalties,
current and projected, relate to oil and
gas permits. In the future, it may
acquire royalty streams from other
areas such as the mining sector.
Y/E Jun
Price performance
%
1m
3m
Actual
(4.5)
(1.5)
Relative* (6.8)
(8.9)
* % Relative to local index
Analyst
Peter Chilton
Edison Insight | 26 May 2016
12m
(32.6)
(30.2)
Revenue
(A$m)
EBITDA
(A$m)
PBT
(A$m)
EPS (fd)
(c)
P/E
(x)
P/CF
(x)
2013
0.3
(0.7)
(0.8)
(0.6)
N/A
N/A
2014
0.3
(1.0)
(1.2)
(2.6)
N/A
N/A
2015e
N/A
N/A
N/A
N/A
N/A
N/A
2016e
N/A
N/A
N/A
N/A
N/A
N/A
42
Hogg Robinson Group
Sector: Support services
Price:
71.5p
Market cap:
£233m
Forecast net debt (£m)
24.0
Forecast gearing ratio (%)
67.0
Market
LSE
Share price graph (p)
(HRG)
INVESTMENT SUMMARY
Hogg Robinson’s (HRG’s) development of software-as-a-service (Fraedom) is paying off
impressively with “excellent” performance in the year to March. A near-doubling in
technology trading profit more than made up for relative softness in travel management and
looks set to continue to drive HRG’s growth in addition to likely increasing benefits from
corporate restructuring. Bumper cash generation (FY16 net debt/EBITDA of just 0.6x) offers
ample scope for profitable investment and returns to shareholders.
INDUSTRY OUTLOOK
Company description
Hogg Robinson is an international
corporate services company,
specialising in travel, expenses and
data management.
While not correlating strictly with HRG’s business, international trade is a useful market
indicator in view of its influence on corporate travel and its reflection of business confidence.
IATA expects limited growth owing to political and economic risks. A structural move by
clients to online channels and automated servicing tools to make their travel arrangements
is viewed as positive over the long term by the major travel management companies as it
gives clients what they want and should be cost-effective.
Y/E Mar
Price performance
%
1m
3m
Actual
10.0
10.0
Relative* 13.8
6.0
12m
27.7
43.5
* % Relative to local index
Analyst
Richard Finch
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS
(p)
P/E
(x)
P/CF
(x)
2015
330.1
53.4
30.5
6.57
10.9
5.8
2016
318.3
55.5
32.2
7.16
10.0
4.8
2017e
321.0
57.5
34.0
7.34
9.7
5.2
2018e
N/A
N/A
N/A
N/A
N/A
N/A
Hurricane Energy
Sector: Oil & gas
Price:
17.5p
Market cap:
£172m
Forecast net cash (£m)
11.8
Forecast gearing ratio (%)
N/A
Market
AIM
Share price graph (p)
(HUR)
INVESTMENT SUMMARY
Hurricane's main asset is the 200mmbo Lancaster basement oil field West of Shetlands. A
key outcome of the company's funded 2016 well programme will be delineating the
Lancaster resource base to be targeted for EPS development. Firming up of volumes,
development concept and project economics should provide the basis for farm-out, taking
the much anticipated Lancaster development through to EPS first-oil in 2019. A £52m fund
raise, announced on 18 April, was carried out at a 46% premium to the market and will
provide capital for the ‘Lancaster 7 wells’ drilling programme – a vertical Pilot Well and
horizontal production test.
INDUSTRY OUTLOOK
Company description
Hurricane is an E&P focused on UKCS
fractured basement exploration. It
owns 100% in three licences, including
the 207mmboe Lancaster discovery. It
is currently engaged in a farm-out
process to fund an Early Production
System (EPS).
Fractured basement is seen as an unusual play in the UK, although basement reservoirs
have been producing for decades, eg in Vietnam and Yemen. Hurricane recently
announced the appointments of former Petroceltic, Global Petroleum and Oyster Petroleum
chairman, Robert Arnott, as its new chairman, and former founder and CFO of Volga Gas,
Alistair Stobie, as its new CFO.
Y/E Dec
Price performance
%
1m
3m
Actual
32.1
70.7
Relative* 36.6
64.5
* % Relative to local index
Analyst
Sanjeev Bahl
Edison Insight | 26 May 2016
12m
3.7
16.5
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS (fd)
(p)
P/E
(x)
P/CF
(x)
2014
0.0
(8.5)
(9.0)
(1.4)
N/A
N/A
2015
0.0
(5.4)
(5.5)
(0.9)
N/A
N/A
2016e
0.0
(4.6)
(4.5)
(0.5)
N/A
N/A
2017e
0.0
(4.6)
(4.6)
(0.5)
N/A
N/A
43
ifa systems
Sector: Technology
Price:
€10.78
Market cap:
€30m
Forecast net debt (€m)
N/A
Forecast gearing ratio (%)
N/A
Market
FRA
Share price graph (€)
(IS8)
INVESTMENT SUMMARY
As the leader in the German market, ifa systems has an established position in the
expanding international market for ophthalmology software and clinical decision support
systems. It is well placed to gain from the expected growth in this area in the US, Latin
America, China and the Middle East. The successful offer for 50.1% of the shares by the
Japanese optometry and ophthalmology leader, Topcon opens up interesting and exciting
global opportunities for ifa and its remaining shareholders.
INDUSTRY OUTLOOK
The outlook for healthcare IT is strong and even though there may be some slippage in
regulatory deadlines, the industry is set for continued solid growth - although specialist
players with key market exposures could see growth significantly ahead of that of the
industry as a whole.
Company description
As the leader in the German market,
ifa systems has an established position
in the expanding international market
for ophthalmology software and clinical
decision support systems.
Y/E Dec
Price performance
%
1m
3m
Actual
1.7
(2.6)
Relative*
6.9
(7.8)
12m
5.9
26.5
* % Relative to local index
Analyst
Ian Robertson
Revenue
(€m)
EBITDA
(€m)
PBT
(€m)
EPS (fd)
(c)
P/E
(x)
P/CF
(x)
2013
7.8
2.6
1.5
41.7
25.9
7.0
2014
8.1
3.3
2.4
60.6
17.8
8.0
2015e
N/A
N/A
N/A
N/A
N/A
N/A
2016e
N/A
N/A
N/A
N/A
N/A
N/A
IFG Group
Sector: Financials
Price:
€2.44
Market cap:
€257m
Forecast net cash (£m)
34.8
Forecast gearing ratio (%)
N/A
Market Irish Stock Exchange, LSE
Share price graph (€)
INVESTMENT SUMMARY
The Q1 trading update showed both James Hay and Saunderson House continuing to
attract new clients and assets, and maintain strong levels of retention. Our estimates and
fair value were increased following strong 2015 results and we make no changes at this
stage. The trading statement confirmed our outlook for continued organic growth at JHP
including benefits from the 2015 partnership agreements with Towry and Capita. 2016 will
also see a full year benefit from the 2015 re-pricing of certain JHP products and a maturing
of business written in 2015. We see less room for operational gearing at SH but anticipate
continued steady growth in client numbers. With a strong balance sheet IFG has the
resources to seize additional consolidation opportunities amongst SIPP providers, about
which management is hopeful.
INDUSTRY OUTLOOK
Company description
IFG provides financial services,
comprising a platform for retirement
wealth planning and personal advisory
business primarily operating in the UK.
Through James Hay Partnership it is
one of the largest UK platform
providers.
The UK SIPP market is expected to deliver long-term, double-digit growth, driven by an
ageing population, greater self-provision and higher tax rates. In the short term we see
evolving customer and regulatory requirements requiring investment and higher compliance
costs.
Y/E Dec
Price performance
%
1m
3m
Actual
16.1
27.0
Relative* 15.8
24.9
* % Relative to local index
Analyst
Andrew Mitchell
Edison Insight | 26 May 2016
(IFG)
12m
25.7
27.0
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS
(p)
P/E
(x)
P/CF
(x)
2014
65.1
10.3
7.8
5.61
34.0
24.7
2015
71.3
14.0
11.5
8.26
23.1
14.6
2016e
79.5
16.8
13.3
9.77
19.5
12.0
2017e
85.2
18.8
14.8
11.11
17.2
10.6
44
Sector: General industrials
Price:
Market cap:
Forecast net debt (£m)
Forecast gearing ratio (%)
Market
11.0p
£21m
N/A
N/A
LSE
Share price graph (p)
Intelligent Energy Holdings
(IEH)
INVESTMENT SUMMARY
Intelligent Energy (IEH) has agreed the terms of a fundraising of £30.0m (gross) through the
issue of convertible loan notes. The financing has been irrevocably secured from the
company’s largest shareholder, Meditor, with additional qualifying investors eligible to
subscribe for up to half of the loan notes. The loan notes may be converted at the option of
the holders at a conversion price of 8p. IEH is seeking shareholder approval for a Rule 9
Waiver so that Meditor is not obliged to make an offer for the company should it decide to
convert all of its loan notes to shares. Our estimates and indicative valuation remain under
review.
INDUSTRY OUTLOOK
Company description
Intelligent Energy develops efficient
hydrogen fuel cell power systems for
the distributed power and generation
markets (DP&G division), global
automotive (Motive division) and
consumer electronics (CE division).
Management is restructuring the business to reduce costs and cash burn, focusing activity
on the most immediate and material market opportunities. These are primarily based on its
air cooled fuel cell technologies for deployment in distributed power and generation systems
and in auxiliary power units and range extenders for drones and motive applications.
Y/E Sep
Price performance
%
1m
3m
Actual
(10.2) (78.7)
Relative* (7.1) (79.5)
12m
(85.1)
(83.3)
* % Relative to local index
Analyst
Anne Margaret Crow
Sector: Consumer support services
Price:
173.0p
Market cap:
£103m
Forecast net debt (£m)
26.0
Forecast gearing ratio (%)
37.0
Market
AIM
Share price graph (p)
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS (fd)
(p)
P/E
(x)
P/CF
(x)
2014
13.6
(52.4)
(58.0)
(30.4)
N/A
N/A
2015
78.2
(48.8)
(52.1)
(21.5)
N/A
N/A
2016e
N/A
N/A
N/A
N/A
N/A
N/A
2017e
N/A
N/A
N/A
N/A
N/A
N/A
International Greetings
(IGR)
INVESTMENT SUMMARY
The year-end trading update indicates that IGR ended FY16 strongly in all its geographic
regions, with good momentum into the new financial year. FY16 EPS will be at least 13.0p
(Edison forecast: 12.1p). Cash performance was also well ahead, with deleveraging
comfortably outperforming our modelled outcome, which showed an end-March net debt
figure of £26m. The full year dividend is to be recommended at 2.5p (our forecast: 2.0p).
FY16 numbers and FY17 estimates will be revised up on publication of the full year
numbers on 30 June, underlining the strong value in the shares at current levels.
INDUSTRY OUTLOOK
Company description
International Greetings (IGR) is one of
the world's leading designers,
innovators and manufacturers of gift
packaging and greetings, social
expression giftware, stationery and
creative play products.
IGR operates in the global gift packaging market, which it estimates at £10bn at retail value,
equivalent to a trade value of around £3.2bn, giving it a c 7% share and making it the third
largest participant after American Greetings and Hallmark. In some of its sectors, overall
volumes are showing limited growth and the low unit cost, high-volume nature of the
products makes maximising manufacturing efficiency key to building both margins and
market share. IGR's investments in China, the Netherlands and South Wales, and the
planned investment in the US, give clear water over competitors on unit cost.
Y/E Mar
Price performance
%
1m
3m
Actual
(2.0)
8.5
Relative*
1.4
4.5
* % Relative to local index
Analyst
Fiona Orford-Williams
Edison Insight | 26 May 2016
12m
51.8
70.5
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS (fd)
(p)
P/E
(x)
P/CF
(x)
2014
224.5
16.4
8.1
9.1
19.0
7.2
2015
229.0
16.9
9.6
11.8
14.7
5.6
2016e
233.5
17.2
10.1
12.1
14.3
6.4
2017e
237.0
18.2
11.1
12.8
13.5
6.1
45
IQE
Sector: Technology
Price:
20.2p
Market cap:
£136m
Forecast net debt (£m)
25.5
Forecast gearing ratio (%)
17.0
Market
AIM
Share price graph (p)
(IQE)
INVESTMENT SUMMARY
IQE continues to make progress with regards to diversification. It has recently announced a
strategic partnership with imec, a world-leading nanoelectronics research centre, to
continue the development of GaN-on-Si (Gallium Nitride-on-Silicon) power devices. It has
also successfully transferred Translucent's cREO capability to its North Carolina facility. The
cREO technology offers opportunities to reduce the cost of compound semiconductor
materials for RF (radio-frequency) applications. It complements IQE's well-established
wireless, photonics, power and CMOS products and will enable novel solutions for IQE's
customers.
INDUSTRY OUTLOOK
Company description
IQE is the leading supplier of epitaxial
compound semiconductor wafers
globally. The principal applications
include radio frequency
semiconductors, CPV solar cells and
vertical cavity lasers.
If the business progresses to plan, we should see revenues continue to diversify, cash
conversion improve and the balance sheet strengthen. With the company's rating at a
substantial discount to its peers, we believe this should justify an upward re-rating in the
shares.
Y/E Dec
Price performance
%
1m
3m
Actual
(8.0)
9.5
Relative* (4.8)
5.5
12m
(10.0)
1.1
* % Relative to local index
Analyst
Anne Margaret Crow
Sector: Investment companies
Price:
TRY0.97
Market cap:
TRY344m
Forecast net debt (TRYm)
N/A
Forecast gearing ratio (%)
N/A
Market
BIST
Share price graph (TRY)
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS (fd)
(p)
P/E
(x)
P/CF
(x)
2014
112.0
27.0
16.2
2.42
8.3
8.8
2015
114.0
29.0
17.6
2.60
7.8
6.4
2016e
122.0
31.2
19.0
2.75
7.3
7.2
2017e
127.8
34.5
21.9
3.16
6.4
4.2
Is Yatirim
(ISMEN)
INVESTMENT SUMMARY
ISY has a strong balance sheet and is committed to rewarding shareholders with high
dividend payments. It has announced a dividend of Kr10.00 per share for 2015, which is
lower than the Kr13.2 of the previous year but still represents a high yield of c.10%. In
Q116, ISY investment banking operations increased net income by 11% y-o-y to
TRY29.5m, but setbacks at certain of its other subsidiaries resulted in flat y-o-y consolidated
net attributable profit of TRY12.6m.
INDUSTRY OUTLOOK
The long-term potential for above-average growth in Turkish capital markets and ISY's
place in those markets remains; however, in the short term the markets will be affected by
many uncertainties.
Company description
Is Yatirim Menkul Degerler (also
known as Is Investment) offers
brokerage, corporate finance,
investment advisory services and
portfolio management services. It also
advises on IPOs.
Y/E Dec
Price performance
%
1m
3m
Actual
(3.0)
(7.6)
Relative*
8.7 (11.7)
* % Relative to local index
Analyst
Peter Thorne
Edison Insight | 26 May 2016
12m
(12.8)
0.2
Revenue
(TRYm)
EBITDA
(TRYm)
PBT
(TRYm)
EPS (fd)
(Kr)
P/E
(x)
P/CF
(x)
2014
372.4
N/A
100.5
17.7
5.5
N/A
2015
377.5
N/A
33.7
11.4
8.5
N/A
2016e
401.7
N/A
44.5
12.9
7.5
N/A
2017e
428.6
N/A
60.0
15.2
6.4
N/A
46
Sector: General industrials
Price:
457.5p
Market cap:
£14018m
Forecast net debt (£m)
37.4
Forecast gearing ratio (%)
24.0
Market
LSE
Share price graph (p)
Jersey Electricity
INVESTMENT SUMMARY
Recent H116 results confirmed that returns at JEL remain at a satisfactory level and
profitability is broadly stable (H116 EPS 20.7p vs 20.8p EPS H115). In our view the H1
results demonstrate that JEL remains on track to meet our FY16 forecasts. A small dip in
the profitability of the core energy business (against a backdrop of stable tariffs, reduced
demand and increased use of on-island generation), was offset by an improved
performance of the non-Energy businesses. Capex of £11.5m in H1 should rise in H2 as
JEL continues to invest in the N1 interconnector with France, which is expected to be
commissioned in early 2017. With net debt of £21.m and modest gearing JEL retains ample
financial resources with which to implement its investment programme. We expect a period
of stable returns on an asset base that should continue to grow as JEL invests.
INDUSTRY OUTLOOK
Company description
Jersey Electricity is the monopoly
supplier of electricity to the island of
Jersey. It also operates businesses in
retail, property and business services
on the island.
We expect the current regulatory regime to continue, enabling Jersey to earn a return of
6-7% on the electricity business asset base.
Y/E Sep
Price performance
%
1m
3m
Actual
(1.6)
(3.2)
Relative*
1.8
(6.7)
(JEL)
12m
10.9
24.6
* % Relative to local index
Analyst
Graeme Moyse
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS
(p)
P/E
(x)
P/CF
(x)
2014
98.4
18.3
10.0
27.7
16.5
6.9
2015
100.5
23.8
12.4
32.5
14.1
5.6
2016e
101.7
23.9
12.1
31.5
14.5
5.9
2017e
103.4
26.3
13.3
34.9
13.1
5.2
K3 Business Technology Group
Sector: Technology
Price:
346.0p
Market cap:
£125m
Forecast net debt (£m)
5.8
Forecast gearing ratio (%)
8.0
Market
AIM
Share price graph (p)
(KBT)
INVESTMENT SUMMARY
K3 is acquiring DdD, a Danish point-of-sale (PoS) solution provider, for up to €10m/£7.9m
(€8.9m/£7.0m cash up-front and the remaining €1.1m/£0.9m contingent on performance
post-acquisition). The company is raising £12.8m (net) from the issue of 4.1m shares at
330p per share to fund the deal and future product development. The acquisition adds
proprietary retail software and should be complementary to K3’s existing retail software
solutions. The deal, expected to be earnings enhancing in FY17, also expands K3’s
presence in Northern Europe and offers cross-selling potential.
INDUSTRY OUTLOOK
Company description
K3 Business Technology provides
Microsoft- and Sage-based ERP
solutions and managed services to
SMEs in the retail, distribution and
manufacturing sectors.
K3 is Microsoft's biggest Dynamics partner in the UK, supplying the retail, distribution and
manufacturing sectors. The company is seeing strong demand for its Retail AX solution
(ax¦is fashion), where it continues to invest in specialist product functionality. The
Manufacturing & Distribution division is also seeing good demand for its SYSPRO and
hosting/managed services offerings.
Y/E Jun
Price performance
%
1m
3m
Actual
1.6
(1.7)
Relative*
5.1
(5.3)
* % Relative to local index
Analyst
Katherine Thompson
Edison Insight | 26 May 2016
12m
37.0
54.0
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS (fd)
(p)
P/E
(x)
P/CF
(x)
2014
72.0
9.9
6.6
18.5
18.7
20.3
2015
83.4
11.0
7.2
19.1
18.1
11.4
2016e
87.5
13.5
9.4
23.3
14.8
12.4
2017e
95.6
15.7
11.9
26.2
13.2
9.9
47
KEFI Minerals
Sector: Mining
Price:
Market cap:
Forecast net debt (£m)
Forecast gearing ratio (%)
Market
0.5p
£16m
3.3
31.0
LSE
Share price graph (p)
(KEFI)
INVESTMENT SUMMARY
Our valuation of KEFI has risen to 2.55p/sh (post-March equity funding) following the
announcement of the results of a PEA into the feasibility of an underground mine at Tulu
Kapi to complement the initial open pit. It then rises further to 3.69p/sh in FY20 (equating to
an EV of US$101/oz vs average discovery costs of less than US$10/oz overall) and could
rise to 5.61p in the event that management can then leverage cash flows into other
value-enhancing exploration opportunities.
INDUSTRY OUTLOOK
Company description
KEFI Minerals has acquired and
developed seven gold and base metal
projects from its 31 licences in Turkey.
Artvin is its flagship gold project and
initial drilling was completed in January
2009. It also operates a gold
exploration JV in Saudi Arabia.
KEFI intends to present a syndicate-approved financing plan at the company's AGM in
June. To date, its preferred lenders have indicated non-binding terms for project finance
including senior secured project loans of US$60m over six years. This follows Ethiopian
government confirmation of its plan to invest US$20m (the top end of our expectations) in
return for a 20% minority interest in the project (at the bottom end). As such, the only
funding tranche that remains outstanding therefore is a streaming deal.
Y/E Dec
Price performance
%
1m
3m
Actual
25.0
54.4
Relative* 29.3
48.8
12m
(41.7)
(34.5)
* % Relative to local index
Analyst
Charles Gibson
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS
(p)
P/E
(x)
P/CF
(x)
2013
0.0
(0.9)
(0.9)
(0.4)
N/A
N/A
2014
0.0
(2.1)
(2.6)
(0.4)
N/A
N/A
2015e
0.0
(1.7)
(1.8)
(0.1)
N/A
N/A
2016e
0.0
(2.0)
(6.3)
(0.2)
N/A
N/A
Keywords Studios
Sector: Technology
Price:
287.0p
Market cap:
£155m
Forecast net cash (€m)
9.9
Forecast gearing ratio (%)
N/A
Market
AIM
Share price graph (p)
(KWS)
INVESTMENT SUMMARY
Keywords Studios achieved a significant expansion in its free float in May when both the
founder Giorgio Guastalla and the CEO Andrew Day sold down part of their holdings. The
sale was met with strong demand from institutional shareholders and was completed in
under a day. As a result, Keyword's free float has increased from 68% to 78%.
INDUSTRY OUTLOOK
The global video game market is estimated to be growing at a CAGR of 6.2% to 2018, and
the market for outsourced services is growing ahead of the industry. We believe that
Keywords' recent deals position it well to take advantage of the growth opportunities in the
sector. Success is increasingly being driven by developers’ ability to localise their content.
As a result, they are looking to external service providers to offer cost-efficient solutions that
broaden games' appeal.
Company description
Keywords Studios provides
localisation, testing, artwork and
community support services
exclusively to the video games
industry. It provides services to 20 of
the top 25 games developers.
Y/E Dec
Price performance
%
1m
3m
Actual
4.7
29.3
Relative*
8.4
24.6
* % Relative to local index
Analyst
Eric Opara
Edison Insight | 26 May 2016
12m
81.7
104.1
Revenue
(€m)
EBITDA
(€m)
PBT
(€m)
EPS (fd)
(c)
P/E
(x)
P/CF
(x)
2014
37.3
6.0
5.1
8.5
43.1
68.6
2015
58.0
9.5
8.0
12.5
29.3
37.7
2016e
84.8
13.3
11.6
17.0
21.6
14.0
2017e
98.9
15.8
13.9
20.2
18.2
13.3
48
Sector: General industrials
Price:
NOK6.11
Market cap:
NOK2485m
Forecast net debt (€m)
N/A
Forecast gearing ratio (%)
N/A
Market
Oslo
Share price graph (NOK)
Kongsberg Automotive
(KOA)
INVESTMENT SUMMARY
Kongsberg Automotive’s (KA) Q116 results showed sales in line with guidance while
operational improvements partly offset the increased R&D expenses as previously
communicated. This continues to highlight the positioning of the group's transformation, with
a focus on profitable growth businesses and investment in new product development. Q1
wins were €35m and a healthy pipeline exists for Q2. Significant new project activity is
building up over the next two years particularly in new areas such as AMT, ABC couplings
and seat comfort products. The disposal of the light duty cables business is also on
schedule for completion during 2016, further refocusing the group.
INDUSTRY OUTLOOK
Company description
Kongsberg Automotive is a global
manufacturer of interior components
(30% 2014 sales), driveline systems
(26%), driver controls (19%) and fluid
transfer products (25%), supplying the
automotive and commercial vehicle
markets.
Kongsberg's exposure to the automotive and commercial vehicle markets is split 60% and
40%, respectively. With some divergence by market and geography, KA is focused on
building a more global exposure, particularly towards BRIC countries.
Y/E Dec
Price performance
%
1m
3m
Actual
(4.2)
(7.7)
Relative* (3.6) (14.0)
12m
7.6
22.1
* % Relative to local index
Analyst
Roger Johnston
Sector: General industrials
Price:
Market cap:
Forecast net debt (€m)
Forecast gearing ratio (%)
Market
€9.68
€69m
143.6
399.0
FRA
Share price graph (€)
Revenue
(€m)
EBITDA
(€m)
PBT
(€m)
EPS (fd)
(c)
P/E
(x)
P/CF
(x)
2014
979.1
96.9
43.1
7.37
8.9
3.1
2015
1020.1
102.6
47.9
8.90
7.4
3.6
2016e
N/A
N/A
N/A
N/A
N/A
N/A
2017e
N/A
N/A
N/A
N/A
N/A
N/A
KTG Energie
(KB7)
INVESTMENT SUMMARY
KTG is a profitable biogas developer and operator with a sustainable competitive
advantage. A strong track record of organic growth and execution is now being
complemented with acquisitions. This should drive revenue growth and margin expansion,
with financing requirements remaining high. The BBB- (neg. watch) rating with high
leverage shows that investors need to consider the balance sheet. The company reported
solid FY14/15 results with an underlying EBITDA margin of 33%, 14% y-o-y EBITDA growth
and an outlook in line with our expectations. The upcoming amendments to the German
EEG could lead to opportunity for the company if the sector continues to consolidate as a
result of peers struggling with incentives. Our fair value is €18 per share.
INDUSTRY OUTLOOK
Company description
KTG Energie develops and operates
biogas facilities. The output is sold
under the German renewable energy
law at subsidised rates.
Biogas in Germany is regulated under the renewable energy law (EEG) of 2012 and 2014.
The broader context is the target of renewable accounting for 80% of gross electricity
consumption by 2050 and 40-45% by 2025. The legislation governs priority offtake for all
renewable and feed-in tariffs, including biogas. It receives fixed feed-in tariffs for 20 years
from commissioning. Output can also be fed directly into the gas grid or go into heating.
Both are governed by the gas feed-in and combined heat and power laws.
Y/E Oct
Price performance
%
1m
3m
Actual
1.0
2.3
Relative*
6.1
(3.2)
12m
(24.9)
(10.3)
* % Relative to local index
Analyst
Catharina Hillenbrand-Saponar
Edison Insight | 26 May 2016
Revenue
(€m)
EBITDA
(€m)
PBT
(€m)
EPS (fd)
(c)
P/E
(x)
P/CF
(x)
2014
73.3
22.0
4.0
40.3
24.0
4.4
2015
92.8
25.0
4.6
40.5
23.9
2.4
2016e
100.4
29.1
8.2
67.1
14.4
3.5
2017e
107.9
31.3
10.0
81.9
11.8
3.1
49
Sector: Consumer support services
Price:
€11.32
Market cap:
€351m
Forecast net debt (€m)
111.0
Forecast gearing ratio (%)
46.0
Market
Borsa Italiana
Share price graph (€)
La Doria
(LD)
INVESTMENT SUMMARY
La Doria is delivering on its overarching objective to reduce the volatility of the business and
improve visibility. The updated three-year plan provides strategic continuity. The hot
summer in Italy in 2015 resulted in unfounded fears of tomato overproduction at the start of
the campaign, hence we forecast sales to fall in 2016, although lower costs should mitigate
the EBITDA impact. Q1 results were in line with expectations.
INDUSTRY OUTLOOK
Company description
La Doria is the leading manufacturer of
private-label preserved vegetables and
fruit for the Italian (20% revenues) and
international (80% revenues) market. It
enjoys leading market share positions
across its product ranges in the UK
and Italy.
La Doria's strategic objectives, published as part of the updated three-year plan, remain
broadly unchanged: the main priority is to expand the higher margin and less volatile parts
of the business to reduce the dependence on the more unpredictable ‘red line’. There is a
new target to develop the US market, which is a natural evolution of the strategy given the
company’s presence in the US, albeit small. The financial targets represent a small upgrade
at the net profit level in relation to the previous three-year rolling plan.
Y/E Dec
Price performance
%
1m
3m
Actual
(10.5)
(1.1)
Relative* (6.7)
(6.3)
12m
(16.1)
9.0
* % Relative to local index
Analyst
Sara Welford
Sector: General industrials
Price:
A$0.12
Market cap:
A$16m
Forecast net cash (A$m)
1.2
Forecast gearing ratio (%)
N/A
Market
ASX
Share price graph (A$)
Revenue
(€m)
EBITDA
(€m)
PBT
(€m)
EPS (fd)
(c)
P/E
(x)
P/CF
(x)
2014
631.4
60.0
2015
748.3
77.5
44.0
80.5
14.1
6.5
61.0
140.6
8.1
5.2
2016e
684.7
2017e
718.9
68.2
51.8
116.9
9.7
8.5
73.0
57.6
130.1
8.7
7.7
Leaf Resources
(LER)
INVESTMENT SUMMARY
LER continues to take steps, globally, to commercialise its Glycell technology, which
represents a ground-breaking advance in the conversion of plant based biomass to
renewable chemicals. In the US, LER has continued negotiations with several potential
partners with regard to possible projects, in addition to the JV with Zeachem. In Europe, first
stage results from the Monaghan JV have been favourable with progression to the second
stage. In Asia, there are plans to utilise the excellent results from the recent testing of
Empty Fruit Bunch (EFB) from palm oil plantations. In Australia, LER has received excellent
results from the first stage of a project with a large industrial agricultural company.
INDUSTRY OUTLOOK
Company description
The Glycell process, developed and
owned by Leaf Resources, is an
intermediate-stage process in the
conversion of biomass to bio-based
chemicals, plastics and fuel.
There is global support for the establishment of biobased projects. LER has recently been
nominated as one of three finalists in the World Bio Markets' 'Breakthrough Bio-Based
Technology Platform' section of its Bio Business awards.
Y/E Jun
Price performance
%
1m
3m
Actual
(11.1) (11.1)
Relative* (13.3) (17.8)
* % Relative to local index
Analyst
Peter Chilton
Edison Insight | 26 May 2016
12m
(14.3)
(11.1)
Revenue
(A$m)
EBITDA
(A$m)
PBT
(A$m)
EPS
(c)
P/E
(x)
P/CF
(x)
2014
0.0
(1.6)
(1.6)
(2.4)
N/A
N/A
2015
0.0
(2.2)
(2.2)
(1.6)
N/A
N/A
2016e
0.0
(2.0)
(2.0)
(1.5)
N/A
N/A
2017e
0.0
(2.0)
(2.0)
(1.4)
N/A
N/A
50
Liquefied Natural Gas Limited
Sector: Oil & gas
Price:
A$0.53
Market cap:
A$267m
Forecast net cash (A$m)
86.3
Forecast gearing ratio (%)
N/A
Market
ASX, OTC Pink
Share price graph (A$)
(LNGL)
INVESTMENT SUMMARY
Liquefied Natural Gas Ltd (LNGL) has continued to progress the Magnolia project, with EPC
contracts signed in recent months that put the project on a much firmer footing and
effectively fix costs for the development (now out to 31 December 2016). Although the
contracts call for a higher capital cost than previously guided, Magnolia should still be at the
lower end of LNG development costs and have lower operating costs, encouraging
investment by tolling partners. We expect tolling agreements to be signed in 2016 to enable
financial close (the FERC order has just been received). Given the low costs and continued
need for global LNG supply, we continue to believe that Magnolia should proceed, albeit in
a tougher environment. We have substantially remodelled the projects given the new
information, resulting in a new NAV of A$1.0/share (US$2.8/ADR).
INDUSTRY OUTLOOK
Company description
LNG Ltd is an ASX-listed company
devoted to the development of an LNG
export terminal in the US (the Magnolia
project), which is progressing towards
financial close in late 2016/early 2017.
Y/E Jun
Price performance
%
1m
3m
Actual
(5.4) (10.2)
Relative* (7.7) (16.9)
12m
(88.0)
(87.6)
* % Relative to local index
Analyst
Will Forbes
Revenue
(A$m)
EBITDA
(A$m)
PBT
(A$m)
EPS (fd)
(c)
P/E
(x)
P/CF
(x)
2014
0.0
(23.8)
(24.7)
(0.1)
N/A
N/A
2015
0.0
(86.8)
(86.3)
(0.2)
N/A
N/A
2016e
0.0
(111.3)
(110.9)
(0.2)
N/A
N/A
2017e
135.1
93.0
92.1
0.2
265.0
N/A
London Stock Exchange Group
Sector: Financials
Price:
2598.0p
Market cap:
£9055m
Forecast net debt (£m)
N/A
Forecast gearing ratio (%)
N/A
Market
LSE
Share price graph (p)
(LSE)
INVESTMENT SUMMARY
LSE has announced an agreed all share merger with Deutsche Börse which will result in
LSE shareholders owning 45.6% of the combined company and Deutsche Börse the
remainder. The merger will create a leading Europe-based global infrastructure group and
management plans to generate €450m of cost synergies from the merger, 20% of combined
cost base, mostly in technology. The HQ will be in London and there will be listings in
London and Frankfurt. The merger is subject to regulatory approval in many jurisdictions.
The merger is expected to close by the end of 2016 or during Q1 2017. We are currently
reviewing our forecasts.
INDUSTRY OUTLOOK
Financial markets are continuing their recovery from the crisis and regulatory pressures are
driving business towards LSE's combination of infrastructure businesses.
Company description
LSE is Europe’s leading exchange
group in cash equities. MTS is
Europe’s largest electronic government
bond market, LCH.Clearnet and CC&G
offer post-trade services and FTSE
Russell provides benchmark indices
and related data services.
Y/E Dec
Price performance
%
1m
3m
Actual
(6.3)
12.3
Relative* (3.0)
8.2
* % Relative to local index
Analyst
Peter Thorne
Edison Insight | 26 May 2016
12m
5.2
18.2
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS
(p)
P/E
(x)
P/CF
(x)
2014
1381.0
618.0
558.0
103.3
25.2
N/A
2015
1419.0
769.0
710.0
129.4
20.1
N/A
2016e
N/A
N/A
N/A
N/A
N/A
N/A
2017e
N/A
N/A
N/A
N/A
N/A
N/A
51
Lookers
Sector: General retailers
Price:
143.0p
Market cap:
£567m
Forecast net debt (£m)
129.9
Forecast gearing ratio (%)
37.0
Market
LSE
Share price graph (p)
(LOOK)
INVESTMENT SUMMARY
Lookers has a clear strategy, involving organic growth supplemented by a flow of
acquisitions. It has grown consistently, delivering record profits in each of the past seven
years. Results for the year to December 2015 showed continued strong organic growth, with
earnings up 13%. As indicated in its trading update on 17 May, the current year has started
well, with continued benign trading conditions, while there will be a full contribution from last
year's major Benfield acquisition. Meanwhile, the dynamics for the group's specialist parts
business should turn favourable from 2017.
INDUSTRY OUTLOOK
Company description
Lookers is a leading UK motor vehicle
and specialist parts distributor. It
operates more than 120 franchises,
representing 31 marques spread
across the UK.
Market dynamics suggest that larger motor dealership groups will continue to gain share in
each of the key market segments (new cars, used cars, aftermarket), largely at the expense
of the independents, which still command some 60% of the franchise market. Global
manufacturing overcapacity and current exchange rates indicate continued support from
OEMs. Confidence was tempered by the VW scandal, but a 30% discount rating relative to
the FTSE All-share General Retailers index makes the sector attractive.
Y/E Dec
Price performance
%
1m
3m
Actual
(0.6)
(7.5)
Relative*
2.8 (10.9)
12m
(12.3)
(1.4)
* % Relative to local index
Analyst
Nigel Harrison
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS (fd)
(p)
P/E
(x)
P/CF
(x)
2014
3043.0
87.0
65.0
13.21
10.8
10.1
2015
3649.0
99.6
72.1
14.88
9.6
9.7
2016e
4150.0
109.5
80.0
16.14
8.9
5.8
2017e
4300.0
112.5
83.0
16.71
8.6
5.6
Low & Bonar
Sector: Basic industries
Price:
57.0p
Market cap:
£188m
Forecast net debt (£m)
108.8
Forecast gearing ratio (%)
61.0
Market
LSE
Share price graph (p)
(LWB)
INVESTMENT SUMMARY
Mixed market conditions and FX movements provided a challenging backdrop to FY15
trading, but Low & Bonar delivered the expected progress. Estimates were trimmed
modestly, including a lower JV contribution. Improving profitability from core operations in
FY16 is likely to come mainly from well-flagged internal initiatives, in our view and Low &
Bonar should begin to demonstrate the benefits of strategic change to the group operating
structure. AGM comments (31 March) noted a solid start to FY16 and unchanged guidance.
INDUSTRY OUTLOOK
Key strategic medium-term financial targets are currently for 10% operating margins and
12%+ return on capital employed. Organic group revenue growth may be supplemented by
M&A. The onus is clearly on territories outside Europe to provide the growth engine.
Company description
Low & Bonar produces specialist
performance materials for a variety of
end-markets by combining polymers
with specialty additives and pigments.
It now reports as five global business
units.
Y/E Nov
Price performance
%
1m
3m
Actual
(9.5)
(3.8)
Relative* (6.4)
(7.3)
* % Relative to local index
Analyst
Toby Thorrington
Edison Insight | 26 May 2016
12m
(19.7)
(9.8)
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS
(p)
P/E
(x)
P/CF
(x)
2014
410.6
45.0
25.2
5.4
10.6
5.5
2015
395.8
45.8
26.5
5.5
10.4
5.3
2016e
411.3
49.6
28.0
5.9
9.7
4.3
2017e
426.9
51.7
29.9
6.4
8.9
3.7
52
LSL Property Services
Sector: Property
Price:
298.8p
Market cap:
£306m
Forecast net debt (£m)
60.7
Forecast gearing ratio (%)
46.0
Market
LSE
Share price graph (p)
INVESTMENT SUMMARY
LSL continued to trade well in Q1 with group revenues up 16.9% year-on-year. In the Estate
Agency division, revenue growth was 19.9% with exchange income up 30.4%, lettings up
13.0% and financial services up 6.3%. The Surveying division saw revenue growth of 6.3%
with a continued focus on investment and efficiency. Q1 market activity was distorted by
accelerated buy-to-let activity ahead of the 1 April stamp duty changes and as this falls
away, uncertainties about general economic growth and the EU referendum vote are likely
to have at least a temporary effect. Management says that on balance, the outlook for the
year as a whole continues to be in line with its, and we believe our, expectations. The
group's strong balance sheet and cash generative business model leave it well placed to
benefit from continuing selective acquisitions.
INDUSTRY OUTLOOK
Company description
LSL Property Services is one of the
UK's leading residential property
services companies. It owns and
operates the second-largest UK estate
agency network, and a range of
services for corporate (mortgage
lender) and retail clients.
Headline mortgage payments to earnings are better than long-run averages, and
employment and net immigration are both supportive. The medium-term impact of buy-to-let
stamp duty and tax changes remains uncertain.
Y/E Dec
Price performance
%
1m
3m
Actual
3.0
11.6
Relative*
6.6
7.5
12m
(23.5)
(14.0)
* % Relative to local index
Analyst
Martyn King
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS
(p)
P/E
(x)
P/CF
(x)
2014
287.5
39.4
39.8
30.5
9.8
12.6
2015
300.6
48.5
40.5
31.5
9.5
8.4
2016e
316.6
50.1
43.4
33.0
9.1
8.5
2017e
330.3
53.3
46.7
35.6
8.4
7.6
MedicX Fund Limited
Sector: Property
Price:
88.0p
Market cap:
£330m
Forecast net debt (£m)
342.4
Forecast gearing ratio (%) 132.0
Market
LSE
Share price graph (p)
MedicX Fund is a specialist investor in
primary care infrastructure. It holds a
portfolio of 151 properties (including
those under construction), let mainly to
UK government-funded (NHS) tenants
(90%) and pharmacies on GP surgery
sites (8%).
INVESTMENT SUMMARY
Further property acquisitions and continued yield compression saw the rent roll and
NAV/share increase further in Q116, building on the FY15 results which showed strong
underlying profit growth with operational gearing on target. A revised management fee will
limit cost increases going forward. MXF is a long-term investor in a portfolio of modern
primary care properties in the UK and the Republic of Ireland on long, quasi
government-backed leases. Similar duration fixed-rate debt at modest (c 50%) gearing
underpins secure cash flows to support the dividend. A quarterly dividend of 1.4875p in
respect of the 1 January to 31 March period will be paid on 30 June and barring unforeseen
circumstances, total dividends of 5.95p per share are indicated for the current year, a c 7%
prospective yield.
NHS planning suggests good growth prospects for the primary care property sector. A
recovery in NHS development approvals should support increasing rental growth, reflecting
underlying demand for new premises and land and build cost inflation. Similar opportunities
in the smaller Irish market offer a significantly higher rental yield.
Y/E Sep
* % Relative to local index
Analyst
Martyn King
Edison Insight | 26 May 2016
(MXF)
INDUSTRY OUTLOOK
Company description
Price performance
%
1m
3m
Actual
(0.6)
1.7
Relative*
2.9
(2.0)
(LSL)
12m
5.4
18.4
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS
(p)
P/E
(x)
P/CF
(x)
2014
29.5
23.7
10.7
3.1
28.4
12.7
2015
33.7
27.3
13.5
3.7
23.8
13.6
2016e
36.2
29.7
14.2
3.8
23.2
11.4
2017e
40.0
33.2
15.4
4.1
21.5
9.6
53
Migme
Sector: Technology
Price:
A$0.59
Market cap:
A$138m
Forecast net debt (A$m)
2.2
Forecast gearing ratio (%) 1583.0
Market
ASX
Share price graph (A$)
(MIG)
INVESTMENT SUMMARY
migme (MIG) is a global social media company employing a freemium model to drive user
engagement. It is focused on the emerging markets of Indonesia, the Philippines and India.
At 31 March 2016 monthly active users (MAUs) totalled over 39 million (March 2015: over
14 million), an increase of 7m for the quarter. In the March 2016 quarter, cash receipts grew
32% to A$7.1m. This rate of increase in monetisation gives us confidence in our FY16
revenue forecast of A$46m. To achieve this forecast, quarterly increases in revenue
(equivalent to cash receipts) would need to increase at about the same quarterly rate (32%).
INDUSTRY OUTLOOK
Company description
migme (MIG) is a social entertainment
platform targeting the world’s next
wave of internet users – the 3.6 billion
people in emerging markets. The
service offers free chat, content and
blogging services to acquire new
users.
MIG’s investment case is based on the premise that there is room for more than one social
media platform in the emerging markets of Indonesia and India. There is a precedent in
China, where in large regions two or three exist in parallel. The large and fast-growing
mobile markets in Indonesia and India have a high propensity to use social media, and
there may be room for a new entrant. Given the size of the addressable market, if MIG
succeeds in executing on strategy the rewards could be significant.
Y/E Dec
Price performance
%
1m
3m
Actual
(10.6)
21.6
Relative* (12.8)
12.5
12m
(16.3)
(13.2)
* % Relative to local index
Analyst
Moira Daw
Revenue
(A$m)
EBITDA
(A$m)
PBT
(A$m)
Price:
A$0.13
Market cap:
A$53m
Forecast net debt (US$m)
N/A
Forecast gearing ratio (%)
N/A
Market
ASX
Share price graph (A$)
P/E
(x)
P/CF
(x)
2014
2.0
(28.6)
(16.0)
(5.95)
N/A
N/A
2015
12.3
(21.0)
(21.0)
(7.33)
N/A
N/A
2016e
46.0
(16.3)
(16.5)
(3.77)
N/A
N/A
2017e
103.9
9.9
9.7
2.20
26.8
15.3
Mineral Commodities
Sector: Mining
EPS (fd)
(c)
(MRC)
INVESTMENT SUMMARY
Completion of the Garnet Separation Plant (GSP) at the Tormin mineral sands operation is
still expected around 30 June 2016, with commissioning and tie-in to the existing plant
completed in early July 2016. The GSP will increase the non-magnetic zircon/rutile feed
grade to the Secondary Concentrator Plant (SCP) by removing the garnet fraction from the
Heavy Mineral Concentrate (HMC) prior to the SCP. This, in turn, will allow a higher grade
non-magnetic concentrate to be fed to the existing magnetic circuit. In conjunction with other
initiatives, this will increase final zircon/rutile concentrate production by approximately 25%.
INDUSTRY OUTLOOK
Company description
Mineral Commodities is a growing
producer of zircon/rutile non-magnetic
concentrate and ilmenite and garnet
by-products from its Tormin resource
on the Atlantic coast of South Africa. It
also owns a large ilmenite deposit,
Xolobeni.
Mineral sands producer Iluka Resources (ILU:ASX) recently commented that it had
observed a recovery in zircon demand. It also noted that it was seeing the most positive
combination of factors for the pigment sector and ultimately for high grade feedstock
demand (which includes rutile), that it has seen since 2012.
Y/E Dec
Price performance
%
1m
3m
Actual
(7.1)
30.0
Relative* (9.4)
20.2
* % Relative to local index
Analyst
Peter Chilton
Edison Insight | 26 May 2016
12m
8.3
12.3
Revenue
(US$m)
EBITDA
(US$m)
PBT
(US$m)
EPS (fd)
(c)
P/E
(x)
P/CF
(x)
2014
35.0
7.7
3.9
2.0
4.8
4.6
2015
46.5
17.7
13.1
2.6
3.7
4.3
2016e
N/A
N/A
N/A
N/A
N/A
N/A
2017e
N/A
N/A
N/A
N/A
N/A
N/A
54
Mitula Group
Sector: Technology
Price:
A$0.95
Market cap:
A$198m
Forecast net cash (A$m)
29.4
Forecast gearing ratio (%)
N/A
Market
ASX
Share price graph (A$)
(MUA)
INVESTMENT SUMMARY
Mitula (MUA) is a leading aggregator of online classified listings, operating in the global
online advertising market. Its specific growth techniques, together with existing scale and a
focus on higher-growth markets, should drive medium-term growth ahead of the sector, we
believe. The company listed on ASX in July 2015, raising A$26.52m gross at an offer price
of A$0.75/share. MUA is already profitable, has met its prospectus guidance for CY15. On
17 May, the company announced it was on track to meet its FY16 prospectus forecasts,
having delivered a strong third quarter result with 26% year-on-year growth in quarterly
revenues to A$6.7m and an EBITDA margin of 50%.
INDUSTRY OUTLOOK
Company description
Mitula Group is a leading online
classifieds aggregator, with 74 vertical
search websites in 44 countries across
real estate, employment, motoring, and
in some countries, vacation rentals.
These sites are in 18 different
languages and operate under either
the Mitula or Nestoria brands.
According to eMarketer, the global online advertising market is forecast to grow at a
compound rate of 13% over the next four years and accounts for 39% of total advertising
expenditure by 2019, up from 27% in 2014. Global search advertising is forecast to grow to
US$130bn by 2019, from an estimated US$82bn in 2015. However, eMarketer forecasts
growth rates in emerging markets to be higher and it is important to note that MUA’s focus
in Latin America and emerging markets such as Indonesia and India will expose it to higher
growth rates than the global average.
Y/E Dec
Price performance
%
1m
3m
Actual
3.8
(4.0)
Relative*
1.3 (11.3)
12m
N/A
N/A
* % Relative to local index
Analyst
Finola Burke
Revenue
(A$m)
EBITDA
(A$m)
PBT
(A$m)
2014
N/A
N/A
N/A
2015
20.6
9.5
7.5
2016e
32.2
15.4
15.9
5.69
16.7
9.7
2017e
42.8
20.8
21.6
7.65
12.4
N/A
MMG
Sector: Mining
Price:
HK$1.58
Market cap:
HK$8358m
Forecast net debt (US$m) 9833.0
Forecast gearing ratio (%) 414.0
Market
HKSE
Share price graph (HK$)
EPS (fd)
(c)
P/E
(x)
P/CF
(x)
N/A
N/A
20.4
3.02
31.5
11.7
(1208)
INVESTMENT SUMMARY
Project construction at Las Bambas is now complete, with the molybdenum plant in
commissioning. MMG continues to expect to produce 250-300,000 tonnes copper in
concentrate in 2016, with commercial production achieved in H2 CY16. Once the plant
achieves a steady state of production, C1 costs are expected to be within a US$0.80-90/lb
copper range. Early works are continuing at Dugald River to the updated development plan.
First zinc concentrate production is expected in H1 CY18. The Dugald River project remains
subject to financing.
INDUSTRY OUTLOOK
The copper price has recently declined from around US$2.25/lb to US$2.10/lb, possibly due
to a stronger US dollar. Zinc prices have been more stable and tending to consolidate within
a US$0.84-0.86/lb range.
Company description
MMG is a mid-tier global resources
company that explores, develops and
mines base metal deposits around the
world. Its headquarters are in
Melbourne, Australia, and it is listed on
the Hong Kong Stock Exchange.
Y/E Dec
Price performance
%
1m
3m
Actual
(11.2)
(1.9)
Relative* (5.0)
(4.7)
* % Relative to local index
Analyst
Peter Chilton
Edison Insight | 26 May 2016
12m
(50.9)
(31.8)
Revenue
(US$m)
EBITDA
(US$m)
PBT
(US$m)
EPS
(c)
P/E
(x)
P/CF
(x)
2014
2480.0
781.0
164.0
2.0
10.2
1.4
2015
1951.0
421.0
(314.0)
(4.6)
N/A
2.9
2016e
2404.0
1194.5
(65.0)
(1.7)
N/A
0.9
2017e
4000.0
2422.3
815.0
6.5
3.1
0.5
55
Mosman Oil and Gas
Sector: Oil & gas
Price:
Market cap:
Forecast net cash (A$m)
Forecast gearing ratio (%)
Market
0.7p
£2m
1.5
N/A
LSE
Share price graph (p)
(MSMN)
INVESTMENT SUMMARY
Mosman is engaged in activities in Australia and New Zealand. As a result of the prevailing
oil environment, the company cancelled its proposed acquisition of the STEP project in New
Zealand. It is also reviewing its projects, exiting the Officer and Otway basins recently and
has taken steps to conserve the cash reserves it holds (in excess of A$5m as of 18
February and it sold excess working capital in March) and will "evaluate other suitable
opportunities to enhance shareholder value as appropriate."
INDUSTRY OUTLOOK
The market remains suppressed, with a multitude of challenges that are exacerbated in
small E&Ps, funding being the major challenge.
Company description
Mosman Oil & Gas is engaged in
exploration activities in New Zealand
and has built a portfolio of exploration
assets in Australia and New Zealand.
Y/E Jun
Price performance
%
1m
3m
Actual
0.0
(9.4)
Relative*
3.5 (12.7)
12m
(83.9)
(81.9)
* % Relative to local index
Analyst
Will Forbes
Sector: General industrials
Price:
986.6p
Market cap:
£36966m
Forecast net debt (£m)
25407.0
Forecast gearing ratio (%) 214.0
Market
LSE
Share price graph (p)
Revenue
(A$m)
EBITDA
(A$m)
PBT
(A$m)
EPS
(c)
P/E
(x)
P/CF
(x)
2013
0.0
(0.7)
(0.7)
(9.8)
N/A
N/A
2014
0.0
(1.8)
(1.8)
(4.1)
N/A
N/A
2015e
0.0
(2.8)
(2.8)
(4.6)
N/A
N/A
2016e
N/A
N/A
N/A
N/A
N/A
N/A
National Grid
(NG)
INVESTMENT SUMMARY
National Grid's last results demonstrated continued execution on incentive outperformance
in the UK. US rate case filings are on track. The company has announced its intention to
dispose of a majority stake in its UK gas distribution business, which should contribute to
lifting asset growth to its targeted 5% pa. It has recently been mentioned as a potential
bidder for US transmission operator ITC group, alongside other potential bidders. UK
energy policy having refocused on security of supply is a positive for long-term RAB growth.
With a solid operational outlook in the UK and improving US ROE through rate filings, we
believe that National Grid shares continue to offer investors an attractive combination of
growth and yield.
INDUSTRY OUTLOOK
Company description
National Grid owns and operates
regulated electricity and gas network
assets in both the UK and US. Its
unregulated assets consist of the Grain
LNG import terminal, interconnectors,
a metering business and a property
business.
With visibility on the allowed rate of returns by Ofgem in the UK until 2021 and potential
capex upside from the UK government's Electricity Market Reform, National Grid is well
positioned to play a key part to ensure security of supply and support the development of
new renewable generation.
Y/E Mar
Price performance
%
1m
3m
Actual
(1.4)
2.3
Relative*
2.0
(1.4)
* % Relative to local index
Analyst
Roger Johnston
Edison Insight | 26 May 2016
12m
9.2
22.7
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS
(p)
P/E
(x)
P/CF
(x)
2014
15002.0
5080.0
2584.0
54.0
18.3
8.3
2015
15201.0
5345.0
2876.0
58.1
17.0
6.9
2016e
15668.0
5519.0
2970.0
59.8
16.5
7.9
2017e
16318.0
5888.0
3148.0
62.7
15.7
6.9
56
Nektan
Sector: Travel & leisure
Price:
Market cap:
Forecast net debt (£m)
Forecast gearing ratio (%)
Market
67.5p
£16m
11.0
375.0
AIM
Share price graph (p)
(NKTN)
INVESTMENT SUMMARY
Nektan announced the appointment of Leigh Nissim as CEO during May. He takes over
from interim CEO Gary Shaw who will move to the position of Director of Strategy, an
executive board position. Leigh Nissim comes with over 11 years of gaming sector
experience, most recently at industry heavyweight IGT, where he was Commercial Director
for the Interactive Business, responsible for the growth of the real money wagering business
across multiple regulated markets in Europe and North America. His formal start date will be
in late July.
INDUSTRY OUTLOOK
Company description
Nektan is a leading international B2B
mobile gaming content developer and
platform provider. It operates both
regulated real money and freemium
games. Its Respin JV provides US
casinos with mobile-based in venue
technology and products.
Mobile gambling is forecast to grow at 27.5% pa between 2014 and 2018, to $19bn (H2
Gambling Capital), by which time it will account for c 40% of global online gambling
revenues. A broad range of media and leisure businesses are looking at ways to engage
their customers with mobile gaming. In the US, c 40% of the 651,000 installed base of slot
machines could be suitable for Respin's mobile-based, bolt-on products, which increase
machine takings.
Y/E Jun
Price performance
%
1m
3m
Actual
(2.2) (21.1)
Relative*
1.2 (23.9)
12m
(60.1)
(55.1)
* % Relative to local index
Analyst
Eric Opara
EBITDA
(£m)
PBT
(£m)
EPS
(p)
P/E
(x)
P/CF
(x)
2014
1.9
(3.5)
(3.7)
(22.3)
N/A
N/A
2015
0.5
(5.1)
(6.9)
(33.4)
N/A
N/A
2016e
6.2
(5.6)
(9.7)
(41.6)
N/A
N/A
2017e
N/A
N/A
N/A
N/A
N/A
N/A
NetDimensions
Sector: Technology
Price:
Market cap:
Forecast net cash (US$m)
Forecast gearing ratio (%)
Market
Revenue
(£m)
59.5p
£30m
11.0
N/A
AIM
Share price graph (p)
INVESTMENT SUMMARY
NetDimensions grew revenues by 12% in FY15 to $25.4m and the adjusted loss was better
than we expected at $0.7m (we forecast a $2.5m loss). Secure SaaS revenues grew at a
robust 26%, albeit down from 36% in FY14. The focus on high-consequence industries has
led to a shift to larger customers with the average deal size nearly doubling to $210k. The
positive trend continued into FY16, with Q1 revenues in-line with management expectations
along with a substantially improved EBITDA loss. We are maintaining our sales forecasts,
but have edged up gross margins. Hence, our FY16 forecast loss falls by $0.4m. The
industry outlook remains favourable and the group’s US peers have rebounded recently, in
the wake of a two-year bear market. These peers continue to trade at significant EV/sales
premiums and hence we believe NETD shares could warrant a significant re-rating.
INDUSTRY OUTLOOK
Company description
NetDimensions provides talent and
learning management systems to
global enterprises. Its solutions allow
organisations to deliver personalised
learning, share knowledge, enhance
performance, foster collaboration and
manage compliance.
NETD's software helps deliver corporate training and develop talent. Its learning
management system (LMS) is popular in regulated industries with stringent compliance
requirements for employee training and NETD also offers Performance and Analytics
modules. MarketsandMarkets, the market research firm, forecasts the global talent
management systems market to grow 16.6% pa from $5.3bn in 2014 to $11.4bn in 2019.
Y/E Dec
Price performance
%
1m
3m
Actual
0.9
14.4
Relative*
4.3
10.3
* % Relative to local index
Analyst
Richard Jeans
Edison Insight | 26 May 2016
(NETD)
12m
(28.3)
(19.5)
Revenue
(US$m)
EBITDA
(US$m)
PBT
(US$m)
EPS
(c)
P/E
(x)
P/CF
(x)
2014
22.7
(3.3)
(3.5)
(9.4)
N/A
N/A
2015
25.4
(0.5)
(0.7)
(2.2)
N/A
N/A
2016e
28.2
(0.4)
(0.6)
(0.9)
N/A
N/A
2017e
32.0
1.7
1.4
2.0
43.1
22.5
57
Sector: Construction & blding mat.
Price:
173.0p
Market cap:
£106m
Forecast net debt (£m)
31.9
Forecast gearing ratio (%)
59.0
Market
LSE
Share price graph (p)
Norcros
(NXR)
INVESTMENT SUMMARY
FY16 was a year of strategic and financial progress for Norcros, with improved profit
contributions from both reporting regions and two acquisitions completed. Having acquired
Croydex in June, Norcros announced its second FY16 deal, Abode Home Products at the
year end, with a good strategic fit with Vado. A year-end trading update stated that
underlying group EBIT is likely to be “marginally ahead” of market expectations. We have
raised our FY17 and FY18 PBT and EPS expectations by c 3% to reflect the Abode
acquisition, with no other changes to existing estimates. FY16 results are scheduled for 14
June.
INDUSTRY OUTLOOK
Company description
Norcros is a leading supplier of
showers, tiles, taps and related fittings
and accessories for bathrooms,
washrooms and other commercial
environments. It has operations in the
UK and South Africa, with some export
activity from both countries.
In the UK, the residential new-build sector has rebounded well and there is impetus for this
to continue or even step up. RMI spending has not recovered at the same rate, but we
believe that sustained progress in real average incomes and confidence in asset prices will
support ongoing progress. The South African economy is struggling in the short term, but
wider distribution of wealth and an emerging middle class should benefit consumer
spending over time.
Y/E Mar
Price performance
%
1m
3m
Actual
(3.9)
(3.4)
Relative* (0.6)
(6.9)
12m
3.3
16.1
* % Relative to local index
Analyst
Toby Thorrington
EBITDA
(£m)
PBT
(£m)
EPS (fd)
(p)
P/E
(x)
P/CF
(x)
2014
218.7
22.9
12.9
22.8
7.6
7.4
2015
222.1
24.3
14.0
18.0
9.6
6.3
2016e
240.6
28.3
17.5
21.1
8.2
4.6
2017e
263.6
30.9
19.5
23.2
7.5
4.6
Northern Petroleum
Sector: Oil & gas
Price:
Market cap:
Forecast net debt (US$m)
Forecast gearing ratio (%)
Market
Revenue
(£m)
3.4p
£5m
N/A
N/A
AIM
Share price graph (p)
(NOP)
INVESTMENT SUMMARY
Northern Petroleum (NOP) bolstered its position in Canada in November 2015 by acquiring
a package of c 28,000 acres in the Rainbow area of Northwest Alberta. In the last three
months, production has more than doubled with the 9-25 production battery yet to be added.
Indicative operating costs are in the range of US$20-25 per barrel (based on output of
400bopd) and variable operating costs of incremental production are forecast between
US$4-10 per barrel. Near-term cash generation is highly levered to oil output. Importantly,
remedial work will also support the return of a c $1.4m abandonment deposit over the
coming months. Beyond Canada, the group continues to progress its exploration and
appraisal portfolio in Italy. Our forecasts are under review.
INDUSTRY OUTLOOK
Company description
Northern Petroleum is an oil and gas
company that acquires low-cost
exploration, production and
development assets. It has exploration,
appraisal and development assets in
Canada, Italy, French Guiana, the UK
and Australia.
With established infrastructure and supportive legislation, investors can expect sustained
newsflow from Northern's new focus in Canada, while retaining upside in Italy and further
afield.
Y/E Dec
Price performance
%
1m
3m
Actual
17.4
28.6
Relative* 21.4
23.9
* % Relative to local index
Analyst
Sanjeev Bahl
Edison Insight | 26 May 2016
12m
(38.6)
(31.1)
Revenue
(US$m)
EBITDA
(US$m)
PBT
(US$m)
EPS (fd)
(c)
P/E
(x)
P/CF
(x)
2014
2.7
(7.1)
(8.8)
(9.1)
N/A
N/A
2015
0.3
(3.7)
(4.4)
(2.6)
N/A
N/A
2016e
N/A
N/A
N/A
N/A
N/A
N/A
2017e
N/A
N/A
N/A
N/A
N/A
N/A
58
Numis Corporation
Sector: Financials
Price:
215.0p
Market cap:
£246m
Forecast net debt (£m)
N/A
Forecast gearing ratio (%)
N/A
Market
LSE
Share price graph (p)
(NUM)
INVESTMENT SUMMARY
Numis has continued to enlarge its franchise with its corporate client list now standing at
185 compared with 157 at the end of FY13. To help maintain momentum in the business,
the group has been addressing management succession with founder Oliver Hemsley to be
succeeded by joint CEOs Alex Ham and Ross Mitchinson later this year. After strong
first-half profit growth, we have left our estimates little changed reflecting an uncertain
market background for the second half. This may prove conservative as may the share price
which, on our ROE/COE model, implies growth of only 2-3%.
INDUSTRY OUTLOOK
Company description
Numis has grown to become one of
the UK's leading institutional
stockbrokers and corporate advisors. It
employs c 200 staff, and has 185
corporate clients. In 2015 it completed
38 equity issuance transactions and a
further 31 separate advisory
mandates.
Stock market levels have recovered from the sharp fall in the first quarter of the calendar
year but the economic and political background remains uncertain. Looking beyond
near-term volatility, Numis’s broadening client base and its rising average market cap bode
well for prospective earnings.
Y/E Sep
Price performance
%
1m
3m
Actual
6.6
(5.5)
Relative* 10.3
(8.9)
12m
(19.6)
(9.7)
* % Relative to local index
Analyst
Andrew Mitchell
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS (fd)
(p)
P/E
(x)
P/CF
(x)
2014
92.9
24.3
30.5
21.98
9.8
N/A
2015
98.0
28.9
32.7
23.49
9.2
N/A
2016e
102.8
30.1
34.2
23.83
9.0
N/A
2017e
105.9
32.2
36.4
24.89
8.6
N/A
Orosur Mining
Sector: Mining
Price:
11.2p
Market cap:
£11m
Forecast net cash (US$m)
3.2
Forecast gearing ratio (%)
N/A
Market
AIM, Toronto
Share price graph (p)
(OMI)
INVESTMENT SUMMARY
Orosur’s Q316 results demonstrate a return to profitability at San Gregorio in line with
realistic guidance provided by the company at the start of FY16. Gold production is ahead of
budget (27.9koz ytd), making the upper bound of its 30-35koz FY16 guidance look
eminently achievable. All-in sustaining costs are, as guided, now below US$1,000/oz
(Q316: US$978/oz) and projected to be around this level through to year-end. Cost savings
extend to development capex, with San Gregorio Deeps (SGD) due to be mined using
Arenal Deeps mining equipment when production ceases at this operation in Q416.
INDUSTRY OUTLOOK
Company description
Orosur Mining owns (100%) and
operates its San Gregorio gold mine in
Uruguay. It also explores for gold close
to San Gregorio and in Chile at the
advanced Pantanillo Norte heap-leach
and the Anillo properties.
We adjust our model for ytd production data and an estimate of 7,083oz gold to achieve the
upper end of its 30-35koz production guidance. We also adjust for revised FY17 guidance,
from 41.1koz to 35koz of gold produced at an average AISC cost of production of
US$960/oz. We adjust our annual capex estimate from US$5.4m to US$3.5m. We retain
our previous forecast of US$3.2m pa for exploration expenditure. On the basis of these
adjustments, we reduced our DDF valuation by 7% (due mainly to lower gold production in
FY17e) from 28p to 26p per share (10% discount rate). At a flat gold price of US$1,200/oz,
this becomes 17p.
Y/E May
Price performance
%
1m
3m
Actual
11.1
52.5
Relative* 15.0
47.0
* % Relative to local index
Analyst
Tom Hayes
Edison Insight | 26 May 2016
12m
21.6
36.7
Revenue
(US$m)
EBITDA
(US$m)
PBT
(US$m)
EPS (fd)
(c)
P/E
(x)
P/CF
(x)
2014
80.4
23.9
4.5
6.6
2.5
0.6
2015
65.9
10.7
(6.2)
(56.3)
N/A
1.3
2016e
42.4
9.8
2.8
0.9
18.0
2.3
2017e
44.1
18.8
7.6
5.7
2.8
1.0
59
OTC Markets Group
Sector: Financials
Price:
US$16.70
Market cap:
US$188m
Forecast net cash (US$m)
21.7
Forecast gearing ratio (%)
N/A
Market
OTC QX
Share price graph (US$)
(OTCM)
INVESTMENT SUMMARY
OTC Markets Group (OTCM) provides regulated marketplaces offering a cost-effective
solution for targeting US investors. Q116 gross revenue rose 11% y-o-y and net income
25%. Seasonal factors resulted in a q-o-q decline of 2% in revenue and 21% in net income.
The quarterly dividend was maintained at $0.14 per share, the same as in Q415 and its
prospective yield of c 7% remains attractive for a profitable company with cash of $22.6m,
no debt and exposure to the growth of online capital raising. The shares are trading below
our DCF valuation of $19.2 per share and at a discount to other market data providers on
both FY16e and FY17e P/Es.
INDUSTRY OUTLOOK
Company description
OTC Markets Group (OTCM) operates
open, transparent and connected
financial marketplaces for 10,000 US
and global securities. OTC Link ATS is
operated by OTC Link LLC, a
FINRA/SIPC member and
SEC-regulated ATS.
Regulatory trends have been positive for OTCM, easing regulations on international issuers
in 2008 and prospectively on domestic issuers with the "JOBS" Act. The success of its
OTCQB initiative to attract entrepreneurial and development-stage companies and create a
US version of the AIM market in London is most encouraging.
Y/E Dec
Price performance
%
1m
3m
Actual
(2.0)
13.8
Relative*
0.4
6.3
12m
6.0
9.8
* % Relative to local index
Analyst
Peter Thorne
Price:
2.52EGP
Market cap:
EGP5541m
Forecast net debt (EGPm) 2327.0
Forecast gearing ratio (%)
Market
Share price graph (EGP)
Palm Hills is a developer of residential
property in Greater Cairo and Egypt’s
Mediterranean and African Red Sea
coasts aimed at high- and
middle-income buyers. It has a 60%
share in a JV with Accor, which owns
three hotels in Egypt, a country club in
West Cairo and an undeveloped land
bank including acreage in Saudi
Arabia.
Analyst
Julian Roberts
Edison Insight | 26 May 2016
PBT
(US$m)
EPS (fd)
(c)
P/E
(x)
P/CF
(x)
2014
42.2
14.4
12.9
68.58
24.4
N/A
2015
49.9
18.6
16.9
88.32
18.9
N/A
2016e
52.3
18.7
17.1
89.17
18.7
N/A
2017e
54.4
19.5
17.8
91.24
18.3
N/A
(PHDC)
INVESTMENT SUMMARY
Palm Hills (PHDC) has capitalised on a period of strong housing demand (which the recent
devaluation continues to support) during the economic recovery since the 2011 revolution to
accelerate development and grow sales. Building on a successful 2015 performance, Q1
preliminary earnings showed continued strong momentum in reservations (with full year
guidance increased) and revenues. Q1 reservations were up 62% to a record EGP2.2bn. A
strong balance sheet is allowing the group to actively pursue growth of its land bank and
invest in recurring revenue streams. A strong performance by the Palm Club helped lift the
share of recurring profits to 11% in the quarter, while the commercial developments
continue to progress. Negotiations on the potentially very significant 10k feddan residential
development project continue.
INDUSTRY OUTLOOK
Company description
* % Relative to local index
EBITDA
(US$m)
Palm Hills Developments
Sector: Property
Price performance
%
1m
3m
Actual
(8.7)
8.2
Relative*
7.1
2.5
Revenue
(US$m)
12m
(9.4)
18.5
Demographic trends and economic growth are supporting demand for quality
accommodation in the newer residential areas of greater Cairo, and second homes on the
Mediterranean coast. In addition, property is often seen as a relatively stable store of
wealth.
Y/E Dec
Revenue
(EGPm)
EBITDA
(EGPm)
PBT
(EGPm)
EPS
(pia)
P/E
(x)
P/CF
(x)
2014
2126.1
423.5
382.1
25.69
9.8
N/A
2015
3602.5
634.8
1102.2
60.50
4.2
N/A
2016e
4280.0
1032.1
869.8
27.73
9.1
N/A
2017e
4318.3
980.0
648.7
20.68
12.2
N/A
60
Pan African Resources
Sector: Mining
Price:
14.0p
Market cap:
£256m
Forecast net cash (£m)
0.4
Forecast gearing ratio (%)
N/A
Market
AIM
Share price graph (p)
(PAF)
INVESTMENT SUMMARY
PAF's H116 results were ahead of Edison's expectations, with strong performances at the
BTRP and the ETRP complementing a solid recovery in the underground head grade at
Evander (effectively portending its exit from the low grade mining cycle). Gold sold
increased 17.4% vs H115, to 101,797oz, while cash costs fell 25.7% to US$740/oz,
indicating good cost control as well as rand depreciation.
INDUSTRY OUTLOOK
Company description
Pan African Resources has five major
assets in South Africa: Barberton
Mines, the Barberton Tailings
Retreatment Project, Evander Gold
Mines, the Evander Tailings
Retreatment Project and Phoenix
Platinum.
Management guidance is for output of c 209koz of precious metals in FY16 (vs Edison's
214koz) cf a longer-term target of 250koz pa, with expansion potential at Evander South
and Elikhulu (among others). Earnings forecasts currently exclude Uitkomst, control of
which passed to PAF on 1st April, but which is expected to be immediately earnings
enhancing, and the Shanduka Gold transaction consideration. Our valuation of PAF is 25.3p
at Edison's long-term gold prices or 19.6p at US$1,234/oz (real). In the meantime, of the
gold miners, PAF has the sector's third highest forecast dividend yield, globally.
Y/E Jun
Price performance
%
1m
3m
Actual
(3.5)
7.7
Relative* (0.1)
3.8
12m
16.7
31.1
* % Relative to local index
Analyst
Charles Gibson
Sector: General industrials
Price:
€29.20
Market cap:
€120m
Forecast net debt (€m)
43.1
Forecast gearing ratio (%) 242.0
Market
Xetra
Share price graph (€)
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS
(p)
2014
154.2
44.2
34.0
2015
140.4
28.4
16.0
2016e
166.7
55.0
2017e
198.9
92.1
paragon
P/E
(x)
P/CF
(x)
1.46
9.6
5.6
0.64
21.9
9.9
42.8
1.74
8.0
5.2
83.0
3.08
4.5
2.9
(PGN)
INVESTMENT SUMMARY
paragon’s Q1 update highlighted the ongoing growth of the group with revenues up 9.4% to
€23.2m, largely driven by the Electromobility and Acoustics businesses. EBITDA increased
by 8.3% to €3.0m and following an increase in personnel expenses following the expansion
of the business and higher depreciation and amortisation, EBIT was flat at €1.4m. With Q1
results achieved, management maintained its expectations for 2016. We see this as a year
of more moderate growth ahead of a planned ramp-up in electromobility that will accelerate
from 2017. With further potential catalysts anticipated as new product launches come to
market, we believe that paragon is clearly aligned to automotive megatrends.
INDUSTRY OUTLOOK
Company description
paragon designs and manufactures
advanced automotive electronics
solutions as a direct supplier to the
automotive industry. Products include:
sensors; acoustics; cockpit;
electromobility, and body kinematics.
paragon’s core business has been built on a strategy of identifying emerging trends and
developing systems ahead of, as opposed to in response to, requests from OEMs. This has
led to significant success in automotive, accounting for 95% of 2014 revenues, 80% of
which were derived from strong German OEMs. With the same R&D and systems approach
being used to rapidly expand in electromobility, we forecast that 27% of revenue will come
from non-automotive markets by 2017.
Y/E Dec
Price performance
%
1m
3m
Actual
6.6
0.6
Relative* 12.0
(4.7)
* % Relative to local index
Analyst
Roger Johnston
Edison Insight | 26 May 2016
12m
68.9
101.8
Revenue
(€m)
EBITDA
(€m)
PBT
(€m)
EPS (fd)
(c)
P/E
(x)
P/CF
(x)
2014
79.0
10.5
4.3
67.0
43.6
11.6
2015
95.0
14.1
5.0
83.0
35.2
7.3
2016e
105.6
15.8
7.4
120.0
24.3
7.6
2017e
134.7
19.9
11.4
186.0
15.7
8.0
61
Park Group
Sector: Financials
Price:
69.5p
Market cap:
£128m
Forecast net cash (£m)
27.3
Forecast gearing ratio (%)
N/A
Market
AIM
Share price graph (p)
Company description
Park Group is a financial services
business. It is one of the UK’s leading
multi-retailer gift voucher and prepaid
gift card businesses, focused on the
corporate gift and consumer markets.
Sales are generated via e-commerce,
a direct sales force and agents.
INVESTMENT SUMMARY
The trading update for the financial year (which ended on 31 March) indicated that the
positive momentum of H1 had continued. Sales for the consumer business were up 7% on
the previous year and early orders for Christmas 2016 are also ahead of last year so far.
Consumer credit sales continue to reduce, as has been the trend for several years, and are
expected to be under £4m for the year from £20m last year. This has contributed to a fall of
£2m across the Corporate division, which saw revenue growth of £14m from incentive and
reward products. With consumer credit now contributing under 1% of group billings, revenue
growth in other businesses is likely to outweigh further reduction there. The free float has
increased significantly with the placing by the founder and retiring non-executive chairman
of his remaining stake (50m shares). Laura Carstensen has been chosen as the new
non-executive Chairman and will succeed on 3 June. She joined the board in 2013. Full
year results will be published on 7 June.
INDUSTRY OUTLOOK
Supported by e-commerce initiatives, Park continues to expand its Corporate and
Consumer offering into a recovering market.
Y/E Mar
Price performance
%
1m
3m
Actual
(4.8) (11.6)
Relative* (1.5) (14.8)
12m
26.4
42.0
* % Relative to local index
Analyst
Martyn King
(PKG)
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS (fd)
(p)
P/E
(x)
P/CF
(x)
2014
269.6
9.7
10.0
4.3
16.2
N/A
2015
293.3
11.5
11.5
4.8
14.5
N/A
2016e
297.1
12.4
12.7
5.5
12.6
N/A
2017e
316.0
13.3
13.7
5.9
11.8
N/A
Paysafe Group
Sector: Technology
Price:
380.9p
Market cap:
£1833m
Forecast net debt (US$m) 260.5
Forecast gearing ratio (%)
21.0
Market
LSE
Share price graph (p)
(PAYS)
INVESTMENT SUMMARY
Management has confirmed that trading has remained strong year-to-date, with Payment
Processing and Digital Wallets generating particularly strong growth. The company now
expects to generate revenues of $950-970m in FY16 (vs consensus at $911m) driving
EBITDA of $270-276m (vs consensus at $260m). The integration of Skrill is on track and the
company still expects this to be substantially complete by Q316, with targeted cost
synergies as per previous guidance. We are reviewing our forecasts.
INDUSTRY OUTLOOK
Company description
Paysafe Group is a global payment
solutions specialist operating in three
areas: payment processing, eWallets
and prepaid services.
The payment processing business should continue to benefit from the growth in customer
transactions. Online retail sales are forecast to continue to show strong growth, for example
Forrester predicts US e-commerce revenue CAGR of 10% from 2014-19, as more retail
sales shift from on premise, mail order or telephone to online. The Digital Wallet business
continues to benefit from growth in online gambling and could further benefit from
opportunities in the newly regulated US market.
Y/E Dec
Price performance
%
1m
3m
Actual
(1.8)
(5.7)
Relative*
1.6
(9.1)
* % Relative to local index
Analyst
Katherine Thompson
Edison Insight | 26 May 2016
12m
43.6
61.3
Revenue
(US$m)
EBITDA
(US$m)
PBT
(US$m)
EPS
(c)
P/E
(x)
P/CF
(x)
2014
365.0
82.9
69.2
22.0
25.1
35.9
2015
613.4
152.6
118.8
25.6
21.6
24.1
2016e
911.9
259.9
207.6
34.8
15.9
10.9
2017e
997.4
284.1
229.7
38.1
14.5
9.3
62
Piteco
Sector: Financials
Price:
Market cap:
Forecast net cash (€m)
Forecast gearing ratio (%)
Market
€3.81
€69m
2.9
N/A
BIST
Share price graph (€)
(PITE)
INVESTMENT SUMMARY
Piteco is the leading player in the Italian treasury management systems (TMS) market. It
has a strong track record of profitability, generates very healthy c 42% operating margins
and has excellent cash generation. In July 2015, it raised c €11.5m (gross) in new money
and listed on AIM Italia. It plans to use the funds to accelerate growth, both organically
(boosting R&D, for example, it has introduced a hosted cloud offering) and through
acquisitions (it made a small acquisition in Italy in late 2015 and is investigating other
growth opportunities there and the US). The stock looks attractive, trading on c 15x our
earnings in FY16e, which falls to c 14x in FY17e and to c 12x in FY18e.
INDUSTRY OUTLOOK
Company description
Piteco is Italy’s leading company in
designing, developing and
implementation of software for
treasury, finance and financial planning
management.
Treasury management systems (TMS) are software solutions used by corporate treasuries
and finance departments to manage transactions and support their decision making. A TMS
typically covers front, middle and back-office processes. The application software market in
Italy is valued at €3.8bn (Assinform/NetConsulting 2014). A small slice of this (Piteco
suggests 5-10%) represents the market for treasury and financial planning software.
According to IDC, the industry analysts, the worldwide revenue for the risk and treasury
applications market was $2.1bn in 2013, representing growth of 4.3% over 2012.
Y/E Dec
Price performance
%
1m
3m
Actual
(0.4)
4.6
Relative*
3.8
(0.9)
12m
N/A
N/A
* % Relative to local index
Analyst
Richard Jeans
Sector: General industrials
Price:
75.8p
Market cap:
£220m
Forecast net debt (€m)
16.4
Forecast gearing ratio (%)
14.0
Market
AIM
Share price graph (p)
Revenue
(€m)
EBITDA
(€m)
PBT
(€m)
EPS
(c)
P/E
(x)
P/CF
(x)
2014
11.6
5.2
4.1
0.0
N/A
N/A
2015
12.8
5.7
5.0
21.5
17.7
13.6
2016e
14.3
6.6
6.1
26.1
14.6
10.1
2017e
15.4
7.2
6.7
28.3
13.5
9.4
Powerflute
(POWR)
INVESTMENT SUMMARY
FY15 results came in well ahead of our last published estimates and slightly above the
€53-55m EBITDA range flagged in a December IMS. A strong y-o-y uplift from Packaging
Papers was complemented by a full year contribution from Cores & Coreboard (acquired in
December 2014). This fed through into a strong cash performance and net debt ended
FY15 at €37.1m, c $24m down on the year. Market conditions were favourable in FY15 and,
despite some noted headwinds, another successful year is anticipated in FY16. Powerflute’s
AGM will take place on 26 May.
INDUSTRY OUTLOOK
Company description
Powerflute is a holding company
established to acquire and improve
underperforming businesses and
assets in the broadly defined
international paper and packaging
sector.
Powerflute aims to build a portfolio of niche paper and packaging businesses. It has
demonstrated financial and operational judgement in transactions and now needs to take
the group to the next level. Typical target companies will have turnover of €150-200m
and/or produce in excess of 300,000 tonnes of product. At any one time, the portfolio is
unlikely to exceed five businesses to maintain the operational focus overseen by the
executive board.
Y/E Dec
Price performance
%
1m
3m
Actual
(7.6)
(7.6)
Relative* (4.4) (11.0)
* % Relative to local index
Analyst
Toby Thorrington
Edison Insight | 26 May 2016
12m
13.5
27.5
Revenue
(€m)
EBITDA
(€m)
PBT
(€m)
EPS
(c)
P/E
(x)
P/CF
(x)
2014
150.1
22.3
13.3
3.8
25.5
14.6
2015
357.2
56.1
39.7
9.8
9.9
5.6
2016e
362.1
52.5
36.0
8.6
11.3
5.3
2017e
369.3
52.7
36.6
8.8
11.0
5.3
63
PPHE Hotel Group
Sector: Travel & leisure
Price:
795.0p
Market cap:
£335m
Forecast net debt (£m)
454.0
Forecast gearing ratio (%) 159.0
Market
LSE
Share price graph (p)
(PPH)
INVESTMENT SUMMARY
IMS confirmation of momentum is reassuring in the face of headwinds, notably the timing of
Easter, significant renovations and the threat of terrorism. Encouragingly, a focus on room
rate (+5% in Q1) rather than occupancy (-500 bps in Q1) should allow PPHE to mitigate
cost pressures. Transformative investment (over 1,000 new rooms this year), facilitated by
further long-term re-financing, remains on track, as does the consolidation of its Croatian
resort businesses (forecasts to be updated once financials are fully disclosed). PPHE’s
valuation is low in terms of EV/EBITDA and is at a marked discount to real asset value.
INDUSTRY OUTLOOK
Company description
PPHE Hotel Group (formerly Park
Plaza Hotels) is an integrated owner
and operator of four-star, boutique and
deluxe hotels in gateway cities and
regional centres, predominantly in
Europe.
Security and geopolitical developments are necessarily a concern, with the Brussels attacks
compounding uncertainty. Post-Paris, according to STR, RevPAR in the London market was
down 4% in Q116 but stabilised in April, while GL, London’s largest hotel owner-operator
has newly confirmed "a cautious outlook." Although supply additions and an economic
downturn are an inherent risk, there is reassurance in the capital’s long-term resilience, as
recognised in its award as top destination for 2016, according to TripAdvisor users.
Y/E Dec
Price performance
%
1m
3m
Actual
(2.2)
24.7
Relative*
1.2
20.2
12m
37.3
54.3
* % Relative to local index
Analyst
Richard Finch
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS (fd)
(p)
P/E
(x)
P/CF
(x)
2014
217.0
76.1
28.6
68.9
11.5
4.4
2015
218.7
80.1
31.8
76.1
10.4
4.0
2016e
239.0
85.0
29.5
70.2
11.3
4.0
2017e
278.0
98.0
41.5
98.8
8.0
3.5
Primary Health Properties
Sector: Property
Price:
106.8p
Market cap:
£637m
Forecast net debt (£m)
N/A
Forecast gearing ratio (%)
N/A
Market
LSE
Share price graph (p)
INVESTMENT SUMMARY
A trading update for the period up to 19 May 2016 gives more details of the use of the
proceeds of the recently completed share placing which raised £150 at a 14% premium to
EPRA NAV at the FY15 year-end of 87.7p. 19 completed properties have been acquired for
an aggregate consideration of £53.8m, taking the portfolio total to 292 properties valued at
£1.18bn. The new properties add c £3m to the rent roll, which has now reached £66.6m.
The consolidated LTV is 53% (31 December 2015), providing room for additional growth
from the remaining strong pipeline. Swap restructuring will also see a decline in on-going
interest expenses. Both measures suggest that our pre-equity issue PBT estimates, now
under review, should increase, mitigating the near term dilutive impact of the equity raise on
EPS.
INDUSTRY OUTLOOK
Company description
Primary Health Properties is a
long-term investor in primary
healthcare property in the UK,
principally let long term to GPs and
NHS organisations backed by the UK
government.
There is political and financial support for NHS planning that should soon see an
acceleration of new development spending on the sort of modern primary care facilities that
PHP and peers provide the finance for.
Y/E Dec
Price performance
%
1m
3m
Actual
2.6
1.6
Relative*
6.2
2.1
* % Relative to local index
Analyst
Martyn King
Edison Insight | 26 May 2016
(PHP)
12m
8.8
22.2
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS (fd)
(p)
P/E
(x)
P/CF
(x)
2014
60.0
52.5
18.2
4.1
26.0
9.7
2015
63.1
55.5
21.7
4.9
21.8
8.3
2016e
N/A
N/A
N/A
N/A
N/A
N/A
2017e
N/A
N/A
N/A
N/A
N/A
N/A
64
Prodware
Sector: Technology
Price:
€6.30
Market cap:
€52m
Forecast net debt (€m)
40.5
Forecast gearing ratio (%)
33.0
Market
Alternext Paris
Share price graph (€)
(ALPRO)
INVESTMENT SUMMARY
The Q1 revenues release showed that with 2.6% like-for-like revenue growth Prodware is
continuing to make progress. The news that the Benelux and German businesses are
showing signs of growth, after much restructuring, is particularly encouraging. The
restructuring of the debt since the year end leaves Prodware well placed to finance its
ambitious development programme, with its target of €300m revenues for 2020 and
Prodware Academy. The shares trade at marked and, in our view, unjustified multiples
discounts to Europe-listed comparators.
INDUSTRY OUTLOOK
Company description
Founded in 1989, Prodware
specialises in the creation, integration
and hosting of management software
for businesses. It is a Gold Partner of
Microsoft in the EMEA zone with
almost 1,700 employees supporting
20,000 clients in 14 countries.
Although the wider economic outlook across Europe remains uncertain, Prodware's
exposure to the SME software markets and to the provision of hosted solutions should
mean that it shows underlying growth in excess of the wider economy and software
industry.
Y/E Dec
Price performance
%
1m
3m
Actual
(5.7) (15.5)
Relative* (1.1) (18.5)
12m
(3.7)
12.8
* % Relative to local index
Analyst
Ian Robertson
Revenue
(€m)
EBITDA
(€m)
2014
174.8
2015
181.8
2016e
2017e
PSI
Sector: Technology
Price:
€13.03
Market cap:
€204m
Forecast net cash (€m)
40.2
Forecast gearing ratio (%)
N/A
Market
FRA
Share price graph (€)
PBT
(€m)
EPS (fd)
(c)
P/E
(x)
P/CF
(x)
27.7
9.9
112.1
5.6
3.8
27.4
11.8
130.8
4.8
1.5
191.2
35.2
14.2
147.4
4.3
2.0
206.1
40.7
18.1
188.4
3.3
1.6
(PSAN)
INVESTMENT SUMMARY
Performance remained robust in Q1, with new orders up 13% to €70m and EBIT up 25.1%
to £2.2m. Management has maintained its cautious outlook for the full year, reflecting the
current turbulent economic and currency environment and the risk of cyclical softening in
demand from the domestic gas market. We should get greater visibility on the likely impact
of these risks as the year progresses. Nevertheless, we still believe that PSI’s long-term
margin expansion strategy remains intact, while the valuation only appears to be pricing in
partial success on this front.
INDUSTRY OUTLOOK
Company description
PSI develops and integrates software
control systems: electricity, gas, oil,
water solutions; production planning,
control, logistics software; monitoring
and operating solutions for critical
transport, public safety, environmental
and disaster prevention.
Structurally, we believe that PSI remains well placed across a range of industries. Cautious
guidance reflects the volatile geopolitical and economic picture, as well as currency
volatility. Business is currently being supported by domestic demand, particularly in Energy
Management boosted by the energy tariff setting cycle. Other industries/geographies will
need to take up some slack as domestic energy demand moderates.
Y/E Dec
Price performance
%
1m
3m
Actual
0.4
(2.6)
Relative*
5.6
(7.8)
* % Relative to local index
Analyst
Dan Ridsdale
Edison Insight | 26 May 2016
12m
15.4
37.9
Revenue
(€m)
EBITDA
(€m)
PBT
(€m)
EPS (fd)
(c)
P/E
(x)
P/CF
(x)
2014
175.4
11.1
5.9
27.5
47.4
7.5
2015
183.7
15.3
9.6
49.1
26.5
11.7
2016e
192.8
16.4
11.2
58.6
22.2
14.9
2017e
201.4
19.4
14.2
74.3
17.5
12.2
65
Pura Vida Energy
Sector: Oil & gas
Price:
A$0.03
Market cap:
A$7m
Forecast net debt (A$m)
0.5
Forecast gearing ratio (%)
13.0
Market
ASX
Share price graph (A$)
(PVD)
INVESTMENT SUMMARY
Along with its international E&P peers, Pura Vida (PVD) is looking to preserve its cash
reserves while progressing its exploration assets for possible future drilling. The technical
focus is on maturing prospects for the second well in the permit, although no timing has
been firmed up as yet (a deadline of September 2016 was set at the time of the farm-out).
The second well should benefit from falling rig rates. PVD is carried on the two wells to a
cap of $215m. With Freeport having spent an estimated $137m, this leaves $78m of the
carry left – which given rig costs, should be enough to fully carry the second well we think,
especially if it is shallow. It held A$6.35m in cash as of 27 April 2016.
INDUSTRY OUTLOOK
Company description
Pura Vida has a varied African
exploration portfolio and is currently
drilling the MZ-1 well in Morocco and
undertaking 3D seismic in
Madagascar. It has executed farm-outs
to increase shareholder exposure to
world-class exploration.
In Q116, farm-in deals were announced over nearby acreage offshore Morocco. Qatar
Petroleum farmed into three of Chevron’s block which are adjacent to the Mazagan permit.
In addition, Eni farmed into Rabat Deep (Chariot, Woodside) which lies to the north of
Mazagan.
Y/E Jun
Price performance
%
1m
3m
Actual
(6.5)
7.4
Relative* (8.8)
(0.7)
12m
(93.0)
(92.8)
* % Relative to local index
Analyst
Will Forbes
Sector: Aerospace & defence
Price:
233.7p
Market cap:
£1371m
Forecast net cash (£m)
203.8
Forecast gearing ratio (%)
N/A
Market
LSE
Share price graph (p)
Revenue
(A$m)
EBITDA
(A$m)
PBT
(A$m)
EPS
(c)
P/E
(x)
P/CF
(x)
2014
14.8
1.0
(0.2)
(0.2)
N/A
N/A
2015
0.1
(18.6)
(16.2)
(10.6)
N/A
N/A
2016e
0.0
(5.0)
(4.9)
(3.2)
N/A
N/A
2017e
N/A
N/A
N/A
N/A
N/A
N/A
QinetiQ Group
(QQ)
INVESTMENT SUMMARY
QinetiQ’s pre-close statement highlighted that the company is on course to achieve full year
expectations. In addition to contract wins, the statement also highlighted the key outcomes
from the Single Source Regulations Office (SSRO) baseline profit rate review. While this
provides a level of certainty in the short term, further development of the rate for outer years
is yet to be finalised, consistent with management’s guidance for a moderation of margins in
EMEA Services, as modelled in our forecasts. With results due on 26 May, we expect the
group to further articulate its strategic evolution to enhance customer focus and
competitiveness.
INDUSTRY OUTLOOK
Company description
QinetiQ provides technical support
services to customers in the global
aerospace, defence and security
markets. Following the disposal of its
US Services business, the group will
operate through two divisions: EMEA
Services and Global Products.
The UK business is underpinned by some good long-term contracts such as the LTPA. New
non-DoD products in the Global Products division are not yet increasing at a high enough
rate to fully offset conflict-related declines, although there are initial signs of stabilisation.
Y/E Mar
Price performance
%
1m
3m
Actual
4.6
(0.5)
Relative*
8.2
(4.1)
* % Relative to local index
Analyst
Roger Johnston
Edison Insight | 26 May 2016
12m
8.6
22.0
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS
(p)
P/E
(x)
P/CF
(x)
2014
782.6
144.9
101.2
13.8
16.9
10.8
2015
763.8
135.6
107.8
15.2
15.4
10.6
2016e
776.6
130.5
105.5
15.4
15.2
13.1
2017e
784.0
129.1
103.9
15.5
15.1
12.8
66
Quadrise Fuels Int.
Sector: Basic industries
Price:
14.5p
Market cap:
£117m
Forecast net cash (£m)
2.7
Forecast gearing ratio (%)
N/A
Market
AIM
Share price graph (p)
(QFI)
INVESTMENT SUMMARY
Quadrise has commenced the shipment of equipment to the refinery designated to produce
MSAR for Maersk's LONO (Letter of No Objection) trials and started the associated
construction work. Installation and commissioning of the MSAR manufacturing unit is on
track for completion during calendar H116. Fuel availability is targeted for mid-calendar
2016, ahead of LONO trials lasting up to 10 months, followed by potential commercial
roll-out during calendar 2017.
INDUSTRY OUTLOOK
Company description
Quadrise Fuels International is the
licensor of an oil-in-water emulsion fuel
technology enabling refiners to
manufacture and market MSAR for use
as a low-cost substitute for heavy fuel
oil in the marine bunker and power
generation sectors.
Quadrise is discussing terms, to be executed with the Saudi client, for a semi-commercial
scale ‘production-to-combustion’ demonstration involving the production of MSAR which will
be used to fuel a thermal power unit. The programme with a global oil major is ongoing, with
the next step a project in a large oil refining complex, likely to be triggered by confirmation of
results from the LONO programme.
Y/E Jun
Price performance
%
1m
3m
Actual
8.4
28.9
Relative* 12.2
24.2
12m
20.8
35.8
* % Relative to local index
Analyst
Anne Margaret Crow
Sector: Media & entertainment
Price:
230.0p
Market cap:
£45m
Forecast net debt (US$m)
53.5
Forecast gearing ratio (%)
84.0
Market
LSE
Share price graph (p)
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS (fd)
(p)
P/E
(x)
P/CF
(x)
2014
0.0
(2.3)
(2.4)
(0.3)
N/A
N/A
2015
0.1
(2.6)
(2.7)
(0.3)
N/A
N/A
2016e
1.2
(5.1)
(5.1)
(0.6)
N/A
N/A
2017e
10.1
(0.9)
(1.0)
(0.1)
N/A
N/A
Quarto
(QRT)
INVESTMENT SUMMARY
Quarto has had a good start to 2016 with the momentum from FY15 carrying into the first
quarter, normally the quietest period of the year. The natural seasonality gives a revenue
bias to H2, which management has said will be greater this year, and our full year forecasts
are unchanged. Further meaningful progress has been made on debt reduction, consistent
with our year-end forecast of $53.5m, achieved without compromise on investment in IP, the
lifeblood of the business. The rating continues to trade at a substantial discount to other
smaller publishing stocks.
INDUSTRY OUTLOOK
Company description
Quarto is the leading global illustrated
book publishing and distribution group,
with five complementary businesses:
Quarto International Co-editions,
Quarto Publishing USA, Quarto
Publishing UK, Quarto Hong Kong and
Books & Gifts Direct.
US figures show that for 2015, overall publishers' book sales were up 0.8%, although
revenues dipped 2.6% and eBook sales declined over 2014. Demand from the broader
trade market, though, does not necessarily describe Quarto's trading environment, given its
focus on high-quality illustrated titles. The book distribution and retail sectors remain in a
state of upheaval, with non-traditional retail outlets becoming an increasing element of the
mix. The mood at the London Book Fair was upbeat, with plenty of deals signed.
Y/E Dec
Price performance
%
1m
3m
Actual
(6.1)
(1.1)
Relative* (2.9)
(4.7)
* % Relative to local index
Analyst
Fiona Orford-Williams
Edison Insight | 26 May 2016
12m
18.0
32.5
Revenue
(US$m)
EBITDA
(US$m)
PBT
(US$m)
EPS (fd)
(c)
P/E
(x)
P/CF
(x)
2014
171.3
17.0
11.9
44.1
7.6
1.4
2015
182.2
18.4
14.1
49.5
6.7
1.2
2016e
187.0
19.2
15.0
53.1
6.3
1.2
2017e
192.5
19.7
15.8
55.4
6.0
1.2
67
Rank Group
Sector: Travel & leisure
Price:
247.5p
Market cap:
£967m
Forecast net debt (£m)
42.0
Forecast gearing ratio (%)
12.0
Market
LSE
Share price graph (p)
(RNK)
INVESTMENT SUMMARY
Rank’s 19-week IMS (12 May) showed good growth in its venues (2% l-f-l) and at
Grosvenor digital (up 35%) - an important growth driver for the group. News of softer trading
(-5%) in Mecca digital since the recent platform migration was slightly disappointing, but it is
early days. Rank has excellent organic growth prospects as it moves towards a true
multi-channel offering, potentially augmented by acquisitions if the right opportunities arise.
Finals are on 18 August.
INDUSTRY OUTLOOK
Company description
Rank is the UK’s largest multi-channel
casino operator with Grosvenor
Casinos and the second largest
multi-channel bingo operator with
Mecca. It is also the fourth largest
bingo operator in Spain and has two
casinos in Belgium.
The UK land-based gambling industry is worth c £5.4bn (Gambling Commission) with
casino revenue up 4.5% in FY15 but bingo down 1.5%. The 2014 bingo duty cut was
helpful, being partly ploughed back into increased investment to improve products and
venues. The UK online gambling industry is worth c £3bn pa and M&A has been a feature in
2015/16. The Living Wage (from April 2016) adds some cost pressures, and the Budget
2016 proposed extension of gaming duty to free bets is a modest extra burden, but only
from FY18.
Y/E Jun
Price performance
%
1m
3m
Actual
0.1
(2.9)
Relative*
3.5
(6.5)
12m
23.0
38.2
* % Relative to local index
Analyst
Jane Anscombe
EBITDA
(£m)
PBT
(£m)
EPS
(p)
P/E
(x)
P/CF
(x)
2014
707.7
116.0
62.5
12.4
20.0
17.6
2015
738.3
126.3
74.1
14.6
17.0
6.6
2016e
756.0
130.0
79.0
15.7
15.8
7.9
2017e
785.0
136.0
84.0
16.7
14.8
7.4
Rare Earth Minerals
Sector: Mining
Price:
Market cap:
Forecast net debt (£m)
Forecast gearing ratio (%)
Market
Revenue
(£m)
0.5p
£39m
N/A
N/A
LSE
Share price graph (p)
(REM)
INVESTMENT SUMMARY
A revised resource has been announced by European Metal Holdings (in which REM holds
a 19.81% shareholding). EMH announced a maiden indicated resource of 0.5Mt LCE
contained in 49.1Mt at 0.43% LiO2 and also a maiden indicated tin resource of 15.7Mt at
0.26% Sn and 0.5% LiO2 for 40kt Sn and 0.19Mt LCE. The total lithium resource (all
categories) stands at 5.7Mt LCE contained in 532Mt at 0.43% LiO2. REM has also entered
into a subscription agreement with ASX listed Pilbara lithium explorer (this area is rich in
lithium-tantalum-tin pegmatites), MacArthur Minerals, whereby it will buy a 15.26% holding
for C$300k.
INDUSTRY OUTLOOK
Company description
Rare Earth Minerals (REM) is a
minerals investment company with
direct and indirect interests in lithium
and rare earth projects. REM’s primary
value proposition is a 40.06% effective
interest in the Sonora Lithium Project
concessions in Northern Mexico.
REM has exposure to other lithium companies through equity holdings in Lithium America’s
(LAC) projects (1.35% equity interest) situated in the US and Argentina (where LAC has
entered into a 50/50 JV with Chilean diversified major - SQM). REM also has a 30%
free-carry in Yangibana to completion of a BFS.
Y/E Dec
Price performance
%
1m
3m
Actual
(11.0) (17.3)
Relative* (7.9) (20.3)
* % Relative to local index
Analyst
Tom Hayes
Edison Insight | 26 May 2016
12m
(49.5)
(43.3)
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS
(p)
P/E
(x)
P/CF
(x)
2013
0.0
1.5
1.5
0.05
10.0
N/A
2014
0.0
(3.1)
(3.5)
(0.07)
N/A
N/A
2015e
N/A
N/A
N/A
N/A
N/A
N/A
2016e
N/A
N/A
N/A
N/A
N/A
N/A
68
Sector: Investment companies
Price:
33.5p
Market cap:
£229m
Forecast net debt (US$m) 697.4
Forecast gearing ratio (%)
Market
LSE
Share price graph (p)
Raven Russia
(RUS)
INVESTMENT SUMMARY
Raven worked hard in 2015 to mitigate the impact of a harsh trading environment.
Management focused on maintaining income at the best level achievable, in whatever
currency the market will allow, while protecting cash balances. It ended the year with $202m
in cash, a significant share of the current market cap. A proposed issue of convertible bonds
(a minimum £105.5m, backed by existing investors), subject to shareholder approval,
potentially enhances financial flexibility at a lower cost than existing bank debt. This would
likely reduce immediate debt amortisation, be supportive of continued distributions, and
provide additional resources for Raven to participate in market upside when conditions
improve.
INDUSTRY OUTLOOK
Company description
Guernsey based Raven Russia is
listed on the main Market of the LSE
and invests, for the long term, in
modern, high quality warehouse
properties in Russia, with the aim of
delivering progressive distributions to
shareholders.
Oil prices have continued to recover recently since the IMF forecast the Russian economy
to continue to contract in 2016 (-1.9%) before returning to growth in 2017. Demand/supply
conditions in the Moscow warehouse market appear to be improving with new build falling
away.
Y/E Dec
Price performance
%
1m
3m
Actual
4.7
0.0
Relative*
8.3
(3.6)
12m
(40.4)
(33.1)
* % Relative to local index
Analyst
Martyn King
Revenue
(US$m)
EBITDA
(US$m)
PBT
(US$m)
EPS (fd)
(c)
P/E
(x)
P/CF
(x)
2014
257.6
N/A
75.1
8.94
5.4
2.1
2015
219.7
N/A
64.9
7.94
6.1
2.4
2016e
192.4
N/A
37.1
5.01
9.7
2.6
2017e
181.2
N/A
30.2
4.09
11.9
2.8
Real Estate Investar Group
Sector: Technology
Price:
A$0.05
Market cap:
A$3m
Forecast net cash (A$m)
3.9
Forecast gearing ratio (%)
N/A
Market
ASX
Share price graph (A$)
(REV)
INVESTMENT SUMMARY
Real Estate Investar (REV) floated on the ASX on 10 December 2015, raising A$5m (25m
shares at A$0.20/share) to fund market growth and product development. REV offers
integrated online software tools for real estate investors in Australia and New Zealand on a
SaaS basis. It announced in late April that its membership base at the end of the March
quarter was 170,413, a 46.4% y-o-y increase while subscriber numbers rose 16.2% y-o-y to
2,768. REV noted that it expected to reach 200,000 members by 30 June and to pass the
250,000 ahead of the IPO prospectus milestone of 31 December 2016. Further market
share gains, an increase in conversion of members into subscribers and adding new
high-margin products could provide material upside to the current share price.
INDUSTRY OUTLOOK
Company description
Real Estate Investar (REV) provides
integrated online services to Australian
and New Zealand property investors to
assist them to identify and manage
suitable properties.
REV is exposed to the key drivers of the property market, including population, interest
rates and taxation policies. The government's forecast CAGR for Australia’s population to
2023 is 1.2% vs NZ's ~1%. A sudden spike in interest rates could have a negative impact
on demand for residential property. A favourable income tax policy is also an important
driver of demand. Other factors such as FX, slower than-expected user growth and China’s
investment restriction may also dampen demand.
Y/E Jun
Price performance
%
1m
3m
Actual
(16.7) (54.5)
Relative* (18.7) (58.0)
* % Relative to local index
Analyst
Finola Burke
Edison Insight | 26 May 2016
12m
N/A
N/A
Revenue
(A$m)
EBITDA
(A$m)
PBT
(A$m)
EPS
(c)
P/E
(x)
P/CF
(x)
2014
N/A
N/A
N/A
N/A
N/A
N/A
2015
4.0
(0.8)
(1.1)
(2.5)
N/A
N/A
2016e
5.2
(0.8)
(0.9)
(0.7)
N/A
2.8
2017e
9.6
0.5
0.5
0.2
25.0
N/A
69
Record
Sector: Financials
Price:
Market cap:
Forecast net debt (£m)
Forecast gearing ratio (%)
Market
24.8p
£55m
N/A
N/A
LSE
Share price graph (p)
(REC)
INVESTMENT SUMMARY
Record's results for the six months to 30 September 2015 reported a 9% y-o-y increase in
underlying PBT and operating margin of 33%. Assets under management equivalent
(AUME) amounted to $53.3bn, down from $56.6bn at June. The interim dividend was raised
to 0.825p, from 0.75p last year. The capital and cash positions remain strong. Record
continues to see interest in its hedging strategies and a high level of client engagement. We
made small changes to our FY16 and FY17 forecasts following the publication of these
results. A Q416 trading update on 22 April 2016 stated that AUME had risen to $53.7bn at
31 March 2016, with client outflows of $1.5bn and exchange rate and market movements
adding $1.7bn. Annual results due 17 June 2016.
INDUSTRY OUTLOOK
Company description
Record is a specialist currency
manager, providing currency hedging
and return seeking mandates to
institutional clients. Services include
passive and dynamic hedging and
return seeking currency strategies via
funds or segregated accounts.
The emergence of a strengthening US dollar could provide a material opportunity for Record
in the large US market. US investors holding assets denominated in foreign currencies have
benefited from the weakness of the US dollar on a trade-weighted basis since 2001;
hedging could protect these gains. The much expected rise in US interest rates occurred in
December 2015, but since then market sentiment over concerns on the strength of the
global economy has lowered expectations about the pace of further US rate rises.
Y/E Mar
Price performance
%
1m
3m
Actual
(8.3)
(5.7)
Relative* (5.2)
(9.2)
12m
(30.8)
(22.2)
* % Relative to local index
Analyst
Peter Thorne
EBITDA
(£m)
PBT
(£m)
EPS
(p)
P/E
(x)
P/CF
(x)
2014
20.3
7.1
6.9
2.48
10.0
N/A
2015
20.9
7.7
7.5
2.66
9.3
N/A
2016e
20.4
6.7
6.5
2.40
10.3
N/A
2017e
19.5
6.2
6.0
2.18
11.4
N/A
Rex Bionics
Sector: Technology
Price:
Market cap:
Forecast net cash (£m)
Forecast gearing ratio (%)
Market
Revenue
(£m)
36.5p
£7m
2.4
N/A
LSE
Share price graph (p)
(RXB)
INVESTMENT SUMMARY
In its March trading update, Rex Bionics (RXB) confirmed it is on track to sell more units in
H216 than the three units it sold in H116. In the US, initial demos have confirmed customer
interest and the capability of its marketing partner, EnableMe. RXB recently agreed the
terms of a Materiel Transfer Agreement with the US Army Medical Research and Materiel
Command to develop a programme of design modifications to the REX robotic mobility aid
that will allow it to be used for early ambulation of patients with lower limb loss. The
RAPPER II trial is progressing well, with 31 volunteers and two new centres recruited.
INDUSTRY OUTLOOK
Company description
Rex Bionics develops and produces
exoskeletons to help assist in the
rehabilitation and improve the mobility
of patients with spinal cord injury (SCI)
and other lower limb mobility problems.
Price performance
%
1m
3m
Actual
0.0 (16.1)
Relative*
3.5 (19.2)
* % Relative to local index
Analyst
Katherine Thompson
Edison Insight | 26 May 2016
There are two target markets for Rex: rehab centres and personal use. Physiotherapy
centres can use Rex to enable patients with mobility problems (such as those with SCI,
stroke, MS) to stand upright and move. However, the largest opportunity is devices for
personal use, but for this to be successful it is likely that clinical trials will need to
demonstrate a clear medical and economic benefit.
Y/E Nov / Mar Revenue
(£m)
12m
(40.2)
(32.8)
EBITDA
(£m)
PBT
(£m)
EPS
(p)
P/E
(x)
P/CF
(x)
2013
0.0
(0.5)
(0.5)
(1.4)
N/A
N/A
2015
0.2
(4.7)
(4.8)
(46.9)
N/A
N/A
2016e
0.9
(5.3)
(5.3)
(33.2)
N/A
N/A
2017e
5.0
(5.0)
(5.5)
(30.7)
N/A
N/A
70
RM2 International
Sector: Support services
Price:
25.5p
Market cap:
£101m
Forecast net debt (US$m)
N/A
Forecast gearing ratio (%)
N/A
Market
AIM
Share price graph (p)
(RM2)
INVESTMENT SUMMARY
As reported with H115 results, manufacturing activity and the number of contracted
customers continued to grow. So far in FY16, RM2 has announced a pallet supply
agreement with Loblaw (Canada’s largest retailer), a significant strategic pallet
manufacturing agreement with Zhenshi Holding Group (a large fibreglass producer) and,
latterly, the appointment of a new COO Kevin Mazula who brings a range of managerial
experience to the group. Our estimates are under review.
INDUSTRY OUTLOOK
The investment proposition is for a significant outlay of capital in the next two or three years
to build a large pallet pool generating recurring income flows from three to five-year
contracts, primarily in North America. This is expected to form the platform for further
international growth.
Company description
RM2 is entering international pallet
markets with an innovative glass fibre
composite pallet designed and
manufactured in house. The company
is targeting the generation of pallet
service revenues under three- to
five-year contracts.
Y/E Dec
Price performance
%
1m
3m
Actual
(21.5) (22.7)
Relative* (18.8) (25.5)
12m
(62.8)
(58.2)
* % Relative to local index
Analyst
Toby Thorrington
Revenue
(US$m)
EBITDA
(US$m)
PBT
(US$m)
EPS
(c)
P/E
(x)
P/CF
(x)
2013
0.1
(18.3)
(42.2)
(33.7)
N/A
N/A
2014
2.0
(33.7)
(42.7)
(13.3)
N/A
N/A
2015e
N/A
N/A
N/A
N/A
N/A
N/A
2016e
N/A
N/A
N/A
N/A
N/A
N/A
Rockhopper Exploration
Sector: Oil & gas
Price:
35.8p
Market cap:
£163m
Forecast net cash (US$m)
68.2
Forecast gearing ratio (%)
N/A
Market
AIM
Share price graph (p)
(RKH)
INVESTMENT SUMMARY
The release of the independent audit of Rockhopper’s (RKH’s) assets confirms that
contingent 2C resources at Sea Lion exceed 500mmboe. This should give further comfort to
investors on the value of the project, which should continue to benefit from the deflating cost
environment. Elsewhere, due to issues during the redrilling of Isobel, the data available to
the company and auditors were only enough to substantiate 2C volumes of 20mmboe at
this time. However, the company remains very confident (with appraisal) that the complex
could hold 400-500mmbls (which is closer to the current auditors’ 3C estimate). Investors
will have to wait until further appraisal is undertaken, probably in Sea Lion development
drilling, for further confirmation. We have made some adjustments to the modelling following
the CPR, increasing our core NAV to 93p/share.
INDUSTRY OUTLOOK
Company description
Rockhopper is a London-listed E&P
with fully funded development of Sea
Lion, a 500+mmbbl field in the
Falklands as well as the potential of a
similar size discovery to the south. It
also holds assets in the
Mediterranean.
Y/E Dec
Price performance
%
1m
3m
Actual
16.3
33.6
Relative* 20.3
28.8
* % Relative to local index
Analyst
Will Forbes
Edison Insight | 26 May 2016
12m
(43.3)
(36.2)
Revenue
(US$m)
EBITDA
(US$m)
PBT
(US$m)
EPS
(c)
P/E
(x)
P/CF
(x)
2014
1.9
(7.8)
(7.6)
(2.6)
N/A
N/A
2015
4.0
(40.6)
(44.7)
3.6
14.4
N/A
2016e
11.7
(12.7)
(12.9)
(2.5)
N/A
N/A
2017e
14.8
(16.1)
(16.5)
(3.2)
N/A
N/A
71
Sector: Aerospace & defence
Price:
643.0p
Market cap:
£11823m
Forecast net debt (£m)
607.0
Forecast gearing ratio (%)
12.0
Market
LSE
Share price graph (p)
Rolls-Royce
(RR)
INVESTMENT SUMMARY
Rolls-Royce’s FY15 results soothed market nerves as it continues to work through its
current investment phase. The current shortfall in cash flow is being addressed, and
longer-term cost savings potential of up to £1bn are being reported. We believe the strength
of the core civil engine model should ultimately reassert itself, lifting equity value towards
significantly higher cash valuations. Management is providing a more cohesive approach to
the market, with increased disclosure levels, simplified messages and measurable
milestones. RR needs to build a conviction that it can convert the burgeoning order backlog
into real cash.
INDUSTRY OUTLOOK
Company description
Rolls-Royce designs, develops,
manufactures and services power
systems for air, land and sea use. It is
one of the world’s leading aero
engines suppliers for large civil aircraft
and business jets, and second in
military engines and services.
Widebody aircraft deliveries are rising sharply through the end of the decade, with
Rolls-Royce’s increasing market share the driver of longer-term cash generation growth.
Older aircraft utilisation rates are dropping as new, more efficient aircraft are delivered, and
a reduced share in regional and corporate jet markets also currently act as a drag on
performance. Offshore marine markets are depressed by lower oil & gas investment levels,
but naval, power, nuclear and defence markets remain more stable at present. RR is clearly
focused on managing underlying operational performance to ensure cash realisation.
Y/E Dec
Price performance
%
1m
3m
Actual
(5.0)
1.2
Relative* (1.7)
(2.5)
12m
(34.4)
(26.3)
* % Relative to local index
Analyst
Andy Chambers
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS (fd)
(p)
2014
13864.0
2312.0
1617.0
65.3
9.8
7.6
2015
13354.0
2108.0
1432.0
58.7
11.0
10.1
2016e
13175.0
1341.0
607.0
24.4
26.4
10.3
2017e
13464.0
1592.0
833.0
33.5
19.2
8.0
S&U
Sector: Financials
Price:
2300.0p
Market cap:
£275m
Forecast net debt (£m)
45.9
Forecast gearing ratio (%)
33.0
Market
LSE
Share price graph (p)
P/E
(x)
P/CF
(x)
(SUS)
INVESTMENT SUMMARY
Following last year’s profitable sale of its stable but relatively low-growth home credit
activity, S&U is now focused on its well-established and fast-growing motor finance
business, Advantage. It is also looking for opportunities to invest in a new business, but will
not do so unless the right opportunity appears. In the meantime, Advantage continues to
make strong progress and S&U appears cautiously valued. At the time of its AGM (17 May)
S&U gave a positive trading update, reporting that Advantage has seen an acceleration in
its transactions growth rate. In the first three and a half months of FY17, net receivables
were up by more than 10% to over £160m. S&U also noted that collections, profit margins
and average loan sizes were all on budget.
INDUSTRY OUTLOOK
Company description
Following the disposal of its home
collect business S&U is a niche motor
finance provider to the non-standard
UK market. It has over 30,000
customers up 28% on FY15.
The non-standard auto market is likely to remain strong for some years, albeit with
increased competition. S&U and competitors all report good demand and excellent asset
quality.
Y/E Jan
Price performance
%
1m
3m
Actual
3.8
(0.7)
Relative*
7.4
(4.4)
* % Relative to local index
Analyst
Andrew Mitchell
Edison Insight | 26 May 2016
12m
9.9
23.5
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS
(p)
P/E
(x)
P/CF
(x)
2015
36.1
16.6
14.8
99.0
23.2
N/A
2016
45.2
21.5
19.5
132.4
17.4
N/A
2017e
58.3
27.7
25.7
171.4
13.4
N/A
2018e
71.7
33.9
30.4
202.8
11.3
N/A
72
SCISYS
Sector: Technology
Price:
Market cap:
Forecast net cash (£m)
Forecast gearing ratio (%)
Market
70.5p
£20m
0.3
N/A
AIM
Share price graph (p)
(SSY)
INVESTMENT SUMMARY
In April, SCISYS announced a contract win with the South African Broadcasting Corp
(SABC). The contract covers all activities to deliver SCISYS's dira! radio production and
playout system to SABC's pan-South African broadcast operation. dira! will be rolled out to
SABC's six Johannesburg radio networks as well as to ten larger and five smaller regional
sites replacing other providers' systems. The contract win highlights the strength of dira!
solution as SCISYS seeks to internationalise the product. Valued at c €2m over a 2½ years,
it is the largest Media & Broadcast contract for SCISYS outside the UK and DACH
countries. SCISYS has a medium-term goal to return the business to 8%+ operating
margins, which leaves the shares looking attractive trading on c 10x our FY17e earnings.
INDUSTRY OUTLOOK
Company description
SCISYS provides a range of
professional services in support of the
planning, development and use of
computer systems in the space,
media/broadcast and defence sectors,
as well as to other public and private
sector enterprises.
SCISYS is a specialist provider of high-value IT solutions, focusing on specialist markets of
space, media and broadcast, and defence sectors, along with other public and private
sector enterprises. In recent years, weakness across the group's significant public sector
customer base, notably in the environment sector, has been offset by strong performances
from the space and defence areas while management is keen to add critical mass to the
Media & Broadcast division and expand the offering beyond radio play out systems.
Y/E Dec
Price performance
%
1m
3m
Actual
(0.7)
4.4
Relative*
2.7
0.6
12m
(14.6)
(4.0)
* % Relative to local index
Analyst
Richard Jeans
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS
(p)
2014
40.4
4.2
3.2
8.2
8.6
4.3
2015
36.1
1.5
0.6
1.3
54.2
13.0
2016e
38.0
3.3
2.3
6.2
11.4
6.7
2017e
39.9
3.7
2.7
7.0
10.1
6.0
SeaDragon
Sector: Food & drink
Price:
NZ$0.01
Market cap:
NZ$41m
Forecast net cash (NZ$m)
0.9
Forecast gearing ratio (%)
N/A
Market
NZSX
Share price graph (NZ$)
P/E
(x)
P/CF
(x)
(SEAZ)
INVESTMENT SUMMARY
SeaDragon (SEA) is a final-stage fish oil processor based in Nelson, New Zealand. Its
existing 300 tonne (t) capacity plant produces omega-2 oils for the global dietary
supplements market. Management reported in January 2016 that it had completed the first
commercial production run through its new Omega-3 factory with satisfactory results. The
H116 results saw revenue double and improved margins compared with the pcp. The recent
capital raise of NZ$10.009m (NZ$0.008 per share) provides funding to enable SEA to begin
producing value-add products. The relationship with Comvita which includes an equity
investment of 13.14% (18.77% assuming the exercise of 1,251,142,517 options) and a
product supply agreement is seen as strategically important.
INDUSTRY OUTLOOK
Company description
SeaDragon Marine Oils produces
specialist fish oils including squalene
and omega-3, which are supplied to
manufacturers and marketers of
dietary supplements in Australasia and
worldwide.
Price performance
%
1m
3m
Actual
(7.1)
0.0
Relative* (7.2)
(9.7)
* % Relative to local index
Analyst
Moira Daw
Edison Insight | 26 May 2016
New Zealand-sourced fish oils are expected to occupy a high-value niche with demand for
squalene and omega-3 oils remaining strong. Worldwide omega-3 production is c 110,000
tonnes, with market growth averaging 5-10% globally. New market opportunities for
SeaDragon include the functional and fortified foods, beverages, cosmetics and
pharmaceutical markets. SeaDragon is well placed with its focus on sustainable fisheries
and New Zealand-sourced products.
Y/E Jun / Mar Revenue
(NZ$m)
12m
(26.0)
(35.5)
EBITDA
(NZ$m)
PBT
(NZ$m)
EPS
(c)
P/E
(x)
P/CF
(x)
2014
3.1
1.0
0.4
0.0
N/A
N/A
2015
6.3
(2.2)
(2.8)
(0.2)
N/A
N/A
2016e
12.3
0.2
(0.7)
0.0
N/A
N/A
2017e
27.5
5.8
4.6
0.1
10.0
7.6
73
Sealegs Corporation
Sector: Basic industries
Price:
NZ$0.11
Market cap:
NZ$14m
Forecast net cash (NZ$m)
1.5
Forecast gearing ratio (%)
N/A
Market
NZSX
Share price graph (NZ$)
(SLG)
INVESTMENT SUMMARY
Sealegs (SLG) has changed its focus to developing a licensing strategy for its higher-margin
amphibious enablement systems (AES) and B2B sales to hull manufacturers. This change
of focus has been driven by the CEO David McKee Wright, who was appointed in
November 2014. We see this as a significant game-changer for Sealegs. The company
recently announced that it had formed a development partnership with Amphibious Systems
LLC, an established US manufacturer. Sealegs and Amphibious Systems will jointly develop
new amphibious technologies for Sealegs to distribute and sell worldwide. This follows the
successful delivery of five highly specialised Sealegs amphibious craft to Malaysia’s Eastern
Sabah Security Command (ESSCOM) in March.
INDUSTRY OUTLOOK
Company description
Sealegs Corporation is a manufacturer
of amphibious craft and amphibious
marine systems. The company is
based in Auckland, New Zealand, and
sells its products worldwide.
Both recreational and professional boat markets are significant, although estimates of the
addressable market for Sealegs’ boats and technology kits are complicated by the lack of
reliable market data for both the recreational and professional market. It is a truism of the
marine sector that the smaller the vessel, the more opaque market data and information
become.
Y/E Mar
Price performance
%
1m
3m
Actual
0.0
31.3
Relative* (0.1)
18.5
12m
5.0
(8.4)
* % Relative to local index
Analyst
Finola Burke
Revenue
(NZ$m)
EBITDA
(NZ$m)
PBT
(NZ$m)
EPS (fd)
(c)
P/E
(x)
2014
16.8
(0.3)
(0.7)
(0.6)
N/A
N/A
2015
17.3
(1.3)
(1.7)
(1.4)
N/A
13.0
2016e
18.4
0.4
0.2
0.1
110.0
31.8
2017e
20.3
1.2
0.9
0.6
18.3
12.5
Secure Trust Bank
Sector: Financials
Price:
2799.5p
Market cap:
£509m
Forecast net debt (£m)
N/A
Forecast gearing ratio (%)
N/A
Market
AIM
Share price graph (p)
P/CF
(x)
(STB)
INVESTMENT SUMMARY
In its AGM statement (4 May) Secure Trust Bank reported that the business is developing
as planned. As noted previously, the bank has taken a more cautious approach to lending to
the residential development sector ahead of the EU referendum. The Everyday Loans
Group sale provides substantial regulatory capital for organic and potentially inorganic
growth and the group is working on a diverse pipeline of business development
opportunities. STB's move into mortgages will further diversification of lending. Despite a
record of rapid loan book expansion, an ROE/COE valuation model suggests the market is
reluctant to make full allowance for profitable employment of the surplus.
INDUSTRY OUTLOOK
Company description
Secure Trust Bank is a high-growth,
well-funded, strongly capitalised retail
bank. Its lending is focused on niches
in the UK personal market with
selective expansion into SME finance.
With the large incumbent banks facing pressure on capital and focusing on core activities,
specialist/challenger banks such as STB have significant room for growth while still only
accounting for a relatively small slice of the market. This allows for both a selective
approach and rapid growth.
Y/E Dec
Price performance
%
1m
3m
Actual
0.3
(4.7)
Relative*
3.8
(8.2)
* % Relative to local index
Analyst
Andrew Mitchell
Edison Insight | 26 May 2016
12m
(1.7)
10.5
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS
(p)
P/E
(x)
P/CF
(x)
2014
63.7
N/A
17.5
156.0
17.9
N/A
2015
92.1
N/A
24.8
170.0
16.5
N/A
2016e
123.8
N/A
33.9
156.0
17.9
N/A
2017e
147.1
N/A
49.8
217.0
12.9
N/A
74
Seeing Machines
Sector: Technology
Price:
3.9p
Market cap:
£42m
Forecast net cash (A$m)
6.7
Forecast gearing ratio (%)
N/A
Market
AIM, ISDX
Share price graph (p)
INVESTMENT SUMMARY
In mid-May, Seeing Machines (SM) announced that it has signed a term sheet with a
US-based investment firm with extensive experience in automotive technologies, for
investment into a separately funded company solely focused on commercialising SM's
technology in the automotive market. SM would retain a significant equity stake in the new
company. The term sheet is non-binding, except for customary legal obligations and due
diligence. SM and its advisors are working with the lead investor and other investors to
finalise the investment round. The company also said that it is continuing to develop and
deliver driver monitoring systems (DMS) for a global car maker, for their first and
second-generation DMS platforms, launching first in early 2018 models. We will review our
numbers when the automotive spin-out is concluded.
INDUSTRY OUTLOOK
Company description
Seeing Machines is a technology
company focused on designing
vision-based human machine
interfaces.
SM specialises in operator performance and safety through real-time monitoring and
intervention. The group’s IP is based around three sets of algorithms – head tracking, eye
aperture and eye gaze. SM is focusing on five safety-related areas: mining, commercial
road transport, consumer automotive, rail and simulators (including aviation). It is also
seeking business in consumer electronics through licensing/royalty relationships.
Y/E Jun
Price performance
%
1m
3m
Actual
(13.9)
(8.8)
Relative* (10.9) (12.1)
(SEE)
12m
(18.4)
(8.3)
* % Relative to local index
Analyst
Richard Jeans
Revenue
(A$m)
EBITDA
(A$m)
PBT
(A$m)
EPS
(c)
P/E
(x)
P/CF
(x)
2014
16.8
(2.4)
(2.5)
(0.4)
N/A
N/A
2015
19.0
(9.1)
(9.4)
(1.2)
N/A
N/A
2016e
44.1
0.8
0.7
0.0
N/A
N/A
2017e
42.0
(8.4)
(8.7)
(1.0)
N/A
N/A
Severfield
Sector: Engineering
Price:
49.0p
Market cap:
£146m
Forecast net cash (£m)
9.2
Forecast gearing ratio (%)
N/A
Market
LSE
Share price graph (p)
(SFR)
INVESTMENT SUMMARY
Severfield’s rising UK order book and improving margins set a good tone ahead of FY16
results on 15 June. A capital markets event (21 April) served to reinforce the margin
development path that the company is on, with further progress targeted. Little of this
appears to be factored into the share price currently and we believe the scope for
outperformance is now significant.
INDUSTRY OUTLOOK
The primary strategic aim is to maintain Severfield’s position as the leading UK structural
steelwork supplier. An Indian JV (established in 2010) is operational and targeting similar
sectors to those served in the UK. Management has valued the Indian construction market
at c £100bn pa, with a very low penetration of steel structures currently.
Company description
Severfield is a leading UK structural
steelwork fabricator operating across a
broad range of market sectors. An
Indian facility currently undertakes
structural steelwork projects for the
local market and is fully operational.
Price performance
%
1m
3m
Actual
(6.2) (16.4)
Relative* (3.0) (19.5)
* % Relative to local index
Analyst
Toby Thorrington
Edison Insight | 26 May 2016
Y/E Dec / Mar Revenue
(£m)
12m
(28.2)
(19.3)
EBITDA
(£m)
PBT
(£m)
EPS
(p)
P/E
(x)
P/CF
(x)
2014
231.3
12.0
4.0
0.88
55.7
69.0
2015
201.5
13.6
8.3
2.31
21.2
12.8
2016e
232.1
17.9
11.8
3.25
15.1
9.1
2017e
244.1
21.7
15.7
4.35
11.3
7.6
75
Share plc
Sector: Financials
Price:
Market cap:
Forecast net cash (£m)
Forecast gearing ratio (%)
Market
28.0p
£40m
8.9
N/A
AIM
Share price graph (p)
INVESTMENT SUMMARY
In its Q1 trading update at the end of April, Share announced that heads of agreement had
been signed for a major new partnership set to add materially to revenue and profit in 2017.
It also reported that trading remained in line with management expectations. Q1 saw
subdued investor activity and revenues were down 3%, or flat excluding interest income.
Within this, dealing commission was up 1% and fee income down 1% (each c 46% of
revenue). Interest income was down 33% but only accounts for 8% of revenue. The
company's market share by revenue was 7.50% in Q1 vs 7.17% in Q415. Share is investing
significantly in IT to meet future customer requirements. This will hold back 2016 profits but
should provide a platform for longer-term growth. Supporting the investment, at year-end
Share had no debt and capital of 3.6x the FCA requirement.
INDUSTRY OUTLOOK
Company description
Share plc owns the Share Centre and
Sharefunds. The Share Centre is a
self-select retail stockbroker that also
offers share services for corporates
and employees. A high proportion of
income is from stable fee and interest
income.
We expect long-term market growth reflecting demographic, economic and social changes.
Near-term profits are likely to be affected by the investment programme and the fluctuating
level of retail investor trading activity.
Y/E Dec
Price performance
%
1m
3m
Actual
1.8
0.0
Relative*
5.3
(3.6)
(SHRE)
12m
(26.3)
(17.2)
* % Relative to local index
Analyst
Andrew Mitchell
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS
(p)
P/E
(x)
P/CF
(x)
2014
15.0
0.5
1.6
0.99
28.3
N/A
2015
14.1
(0.8)
0.6
0.40
70.0
N/A
2016e
14.6
(1.6)
(0.8)
(0.43)
N/A
N/A
2017e
16.1
(0.5)
0.3
0.18
155.6
N/A
Shore Capital Group
Sector: Financials
Price:
317.5p
Market cap:
£69m
Forecast net cash (£m)
10.6
Forecast gearing ratio (%)
N/A
Market
AIM Italia
Share price graph (p)
(SGR)
INVESTMENT SUMMARY
Shore Capital’s diversified mix of activities has proved itself through a number of market
cycles. An entrepreneurial approach and the long tenure of key staff has helped deepen and
broaden its client network and hence revenue potential. Like a successful merchant bank,
opportunistic investments have periodically provided supernormal profits, while asset
management provides a growing stream of recurring earnings. Balance sheet strength
dampens near-term returns on equity, but increases resilience and provides the means to
seize further opportunities. Our central valuation of c 360p may prove conservative in the
event of further investment realisations or a more buoyant market.
INDUSTRY OUTLOOK
Company description
Shore Capital Group is an independent
investment group with three main
areas of business: Capital Markets,
Asset Management and Principal
Finance (on-balance sheet
investments). It has offices in
Guernsey, London, Liverpool,
Edinburgh and Berlin and has c 130
staff serving over 60 corporate broking
clients.
Price performance
%
1m
3m
Actual
(4.5) (22.6)
Relative* (1.2) (25.4)
* % Relative to local index
Analyst
Andrew Mitchell
Edison Insight | 26 May 2016
12m
(23.5)
(14.0)
The uncertain macroeconomic and political background may restrain short-term activity
levels for the Capital Markets business but, on a longer view capability and client
relationships of the team should stand it in good stead. In Asset Management, given the
focus on property and SME lending and the generally sticky nature of assets managed, the
prospects are more stable with potential for good growth from products providing
inheritance tax shelter. Principal Finance could provide significant additional value at some
point through further realisations.
Y/E Dec
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS (fd)
(p)
P/E
(x)
P/CF
(x)
2014
40.6
9.5
8.3
20.8
15.3
N/A
2015
42.0
12.9
11.7
26.1
12.2
97.6
2016e
35.6
6.1
4.9
11.2
28.3
N/A
2017e
N/A
N/A
N/A
N/A
N/A
N/A
76
Silver Wheaton
Sector: Mining
Price:
C$25.12
Market cap:
C$11049m
Forecast net debt (US$m) 395.8
Forecast gearing ratio (%)
8.0
Market
NYSE, TSX
Share price graph (C$)
(SLW)
INVESTMENT SUMMARY
After four record quarters, output attributable to Silver Wheaton moderated in Q116 – with
good quarterly performances from Antamina and Salobo offset by headwinds at San Dimas
and SLW’s ‘other’ assets. Other features of the results were a continuation of the (non-cash)
depletion charge at elevated levels and a decision to expense (rather than capitalise)
interest.
INDUSTRY OUTLOOK
Company description
Silver Wheaton (SLW) is the world’s
pre-eminent pure precious metals
streaming company with 24 precious
metals streaming agreements relating
to assets in Mexico, Peru, Canada,
Brazil, Chile, Argentina, Sweden,
Greece, Portugal, the US and Guyana.
Assuming no material purchases of additional streams (which is unlikely), we forecast a
value per share for SLW of US$37.62, or C$48.27, in FY19 (at prices of US$26.57/oz Ag
and US$1,483/oz Au), representing a total internal rate of return to investors at the current
share price of 31.3% in US dollar terms. In the meantime, SLW is trading on near-term
financial ratios that are cheaper than those of its royalty/streaming ‘peers’ on at least 83% of
valuation measures considered and the miners themselves on at least 61% of measures
considered, despite being associated with materially less operational and cost risk.
Y/E Dec
Price performance
%
1m
3m
Actual
4.2
17.2
Relative*
4.1
7.9
12m
5.1
13.8
* % Relative to local index
Analyst
Charles Gibson
Revenue
(US$m)
EBITDA
(US$m)
PBT
(US$m)
EPS (fd)
(c)
P/E
(x)
P/CF
(x)
2014
620.2
431.2
268.8
74.0
26.4
16.2
2015
648.7
426.2
223.6
53.0
36.9
17.7
2016e
835.3
540.7
293.4
68.0
28.7
15.1
2017e
1091.5
794.4
584.2
133.0
14.7
10.8
SinnerSchrader
Sector: Technology
Price:
€4.48
Market cap:
€52m
Forecast net cash (€m)
6.6
Forecast gearing ratio (%)
N/A
Market
FRA, NYSE Euronext
Share price graph (€)
(SZZ)
INVESTMENT SUMMARY
Strong new business wins led to a 21% increase in like-for-like revenues in Q2 for
SinnerSchrader (SZZ) and, despite the pressure this can put on staffing, margins were fairly
firm. With ‘significant tenders’ underway, management is confident of reaching full year
guidance, a doubling of net profit. We expect the current c 30% FY16e P/E discount to
peers to narrow.
INDUSTRY OUTLOOK
As the largest e-commerce agency in Germany, SinnerSchrader has a strong franchise and
is well positioned to capture its share of the expanding market for digital agency services.
Company description
SinnerSchrader is a leading European
independent digital agency that helps
companies use the internet to sell and
market goods and services.
Y/E Aug
Price performance
%
1m
3m
Actual
2.3
11.3
Relative*
7.5
5.4
* % Relative to local index
Analyst
Bridie Barrett
Edison Insight | 26 May 2016
12m
28.6
53.7
Revenue
(€m)
EBITDA
(€m)
PBT
(€m)
EPS (fd)
(c)
P/E
(x)
P/CF
(x)
2014
48.6
5.4
4.6
27.8
16.1
18.7
2015
47.7
5.3
4.2
25.1
17.8
22.6
2016e
50.5
6.0
5.2
30.5
14.7
11.0
2017e
53.9
6.6
5.6
32.7
13.7
8.5
77
SLI Systems
Sector: Technology
Price:
NZ$0.99
Market cap:
NZ$62m
Forecast net cash (NZ$m)
4.4
Forecast gearing ratio (%)
N/A
Market
NZSX
Share price graph (NZ$)
(SLIZ)
INVESTMENT SUMMARY
SLI Systems has announced it is on track for record revenue of NZ$35m for the 12 months
to 30 June, which equates to a 25% year-on-year increase. Annual recurring revenue,
however, is expected to be flat due to the loss of three large customers, two due to
insolvency and one as a result of change of control. CEO Chris Brennan remains confident
that recent changes made to North American operations will restore growth and
complement the greater than market growth SLI’s operations are enjoying in Europe, the
Middle East and Asia Pacific. SLI had NZ$5.6m cash on hand at 31 December and expects
to break even without requiring additional capital. We are forecasting FY16 EPS of (1.0)c.
INDUSTRY OUTLOOK
Company description
SLI Systems' core products are
e-commerce site search and
navigation tools that learn from
customer behaviours to improve the
relevance of search results and
therefore increase sales conversion.
Mobile search and business analytics are becoming key industry drivers for SLI Systems.
e-Retailers are increasingly aware that effective search and merchandising can have a
significant impact on revenue and profitability and therefore deserve specialised focus.
Mobile search is particularly difficult and it is the appreciation of this fact by retailers that
should lead to growth in the independent site search industry.
Y/E Jun
Price performance
%
1m
3m
Actual
(9.2)
32.0
Relative* (9.2)
19.2
12m
2.1
(11.0)
* % Relative to local index
Analyst
Finola Burke
Sector: Consumer support services
Price:
Market cap:
Forecast net debt (£m)
Forecast gearing ratio (%)
Market
0.6p
£2m
N/A
N/A
AIM
Share price graph (p)
Revenue
(NZ$m)
EBITDA
(NZ$m)
PBT
(NZ$m)
2014
22.4
(5.4)
2015
28.6
(6.5)
2016e
36.6
2017e
46.2
Snoozebox
EPS
(c)
P/E
(x)
P/CF
(x)
(5.4)
(8.5)
N/A
N/A
(6.7)
(10.7)
N/A
N/A
(0.3)
(0.6)
(1.0)
N/A
N/A
4.1
3.7
6.0
16.5
35.7
(ZZZ)
INVESTMENT SUMMARY
Snoozebox has announced a comprehensive review aimed at securing a more sustainable
financial footing. Its initial conclusion is a focus on deployment of rooms on semi-permanent
contracts rather than at events, given likely better returns. However, a relatively weak
pipeline and longer than expected lead times suggest a decline in revenue this year.
Management guidance is for an adjusted EBITDA loss of £5.5m for 2015 and net debt of
£1.9m at March 2016. It believes that the company has sufficient working capital in the short
term. Overheads are being reduced, including the resignation of the CEO, and an
amendment to debt servicing obligations is being sought. We are reviewing forecasts.
INDUSTRY OUTLOOK
Company description
As the UK leader in portable hotel
accommodation, Snoozebox serves
high-spec en-suite bedrooms to the
events market. A less sophisticated
version is available for longer periods,
typically for staff lodging in the public
and private sectors.
The UK outdoor leisure market, the company’s focus to date, is large and visible with over
1,000 annual events of three days or more. There are also significant one-off events, such
as the recent Rugby World Cup. There is invariably no hotel accommodation at or near the
event premises, yet strong demand from sponsors, visitors, VIPs, event organisers and
participants.
Y/E Dec
Price performance
%
1m
3m
Actual
(69.3) (80.0)
Relative* (68.3) (80.7)
* % Relative to local index
Analyst
Richard Finch
Edison Insight | 26 May 2016
12m
(94.3)
(93.5)
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS
(p)
P/E
(x)
P/CF
(x)
2013
6.7
(4.8)
(6.1)
(6.8)
N/A
N/A
2014
2.8
(3.6)
(5.2)
(2.9)
N/A
N/A
2015e
N/A
N/A
N/A
N/A
N/A
N/A
2016e
N/A
N/A
N/A
N/A
N/A
N/A
78
SNP AG
Sector: Technology
Price:
€30.09
Market cap:
€112m
Forecast net debt (€m)
3.5
Forecast gearing ratio (%)
18.0
Market
FRA
Share price graph (€)
(SHF)
INVESTMENT SUMMARY
Activity remained robust in Q1, as revenue jumped 52% to €18.5m, including 30% organic
growth and an initial €2.6m from the acquired Astrums and Hartung. Q1 bookings were very
healthy at €26.2m, representing 1.42x Q1 revenues, while the backlog lifted by 52% to
€28.7m. In mid-May SNP announced a new multi-year order from a global Germany-based
industrial group, which is a constituent of the DAX index. The contract is valued in the low
seven-figure range. SNP also announced a capital increase, to raise between €25m and
€35m. This led to the shares dipping back below €30. Given the buoyant backdrop, we
believe the shares look attractive trading on c 16x our FY17 earnings.
INDUSTRY OUTLOOK
Company description
SNP Schneider-Neureither & Partner
(SNP) is a software and consulting
business focused on supporting
customers in implementing change,
and rapidly and economically tailoring
IT landscapes to new situations.
SNP helps businesses tailor and improve their ERP landscapes. Its proprietary software
includes the only off-the-shelf transformation product in SNP Transformation Backbone with
SAP Landscape Transformation Software (T-B), which automates the process of combining,
upgrading or carving out data from ERP systems. Activity remains brisk at SNP, with
utilisation rates very high, as the company continues to benefit from favourable structural
growth drivers, a partnership with SAP, along with its elevated profile in wake of the
landmark Hewlett-Packard deal of 2015.
Y/E Dec
Price performance
%
1m
3m
Actual
(2.5)
11.3
Relative*
2.4
5.3
12m
120.5
163.4
* % Relative to local index
Analyst
Richard Jeans
Sector: General industrials
Price:
342.5p
Market cap:
£29m
Forecast net debt (£m)
2.4
Forecast gearing ratio (%)
17.0
Market
AIM
Share price graph (p)
Revenue
(€m)
EBITDA
(€m)
PBT
(€m)
EPS (fd)
(c)
2014
30.5
0.9
(0.1)
2015
56.2
5.5
3.4
2016e
75.2
9.1
2017e
88.4
11.8
Solid State
P/E
(x)
P/CF
(x)
(13.9)
N/A
N/A
58.8
51.2
N/A
6.9
124.1
24.2
N/A
9.6
173.2
17.4
N/A
(SOLI)
INVESTMENT SUMMARY
Solid State has announced that trading results for FY16 at the group’s core businesses
should be in line with market expectations. This confirms that its diversified platform will
deliver another year of results at FY15’s record profit levels, despite general market
weakness and the unexpected termination of the Ministry of Justice contract. This strong
result excludes compensation for the terminated contract, which we will treat as an
exceptional item. The healthy order book at the start of FY17 supports our forecasts
showing modest profit growth, so we leave our estimates and indicative valuation of
505p/share unchanged.
INDUSTRY OUTLOOK
Company description
Solid State is a high value-add
manufacturer and specialist design-in
distributor specialising in
industrial/ruggedised computers,
electronic components, antennas,
microwave systems, secure comms
systems and battery power solutions.
Management’s creation of a diversified platform with focus on value-added capability to
driving margins is key to maintaining profits at prior-year levels. The acquisition of Ginsbury
Electronics in April 2015, the development of new products such as next-generation
ticketing equipment and new franchise contracts all contributed to this.
Y/E Mar
Price performance
%
1m
3m
Actual
(1.0) (36.0)
Relative*
2.4 (38.3)
* % Relative to local index
Analyst
Anne Margaret Crow
Edison Insight | 26 May 2016
12m
(58.9)
(53.8)
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS (fd)
(p)
P/E
(x)
P/CF
(x)
2014
32.1
2.8
2.4
28.4
12.1
11.4
2015
36.6
3.8
3.2
36.3
9.4
10.6
2016e
44.0
3.8
3.2
34.7
9.9
8.5
2017e
39.6
4.0
3.4
36.1
9.5
5.9
79
StatPro Group
Sector: Technology
Price:
Market cap:
Forecast net debt (£m)
Forecast gearing ratio (%)
Market
75.5p
£49m
7.2
19.0
AIM
Share price graph (p)
INVESTMENT SUMMARY
StatPro says that Q1 trading was in line with expectations. New sales of StatPro Revolution,
the cloud service, have progressed well and Revolution now represents c 36% of
annualised contracted revenue, up from c 20% a year earlier. Management says the
pipeline for the remainder of FY16 is “strong”, which is notably increasingly upbeat
language. The group had a very busy Q1 with two acquisitions made (including Investor
Analytics, a US-based provider of cloud-based risk analytics solutions) and StatPro also
bought back 4.25% of its shares. With StatPro continuing to advance to late-stage cloud
transition, we highlight the increasing potential for positive earnings surprises. Hence, with
StatPro’s US-based financial software peers and SaaS companies trading on lofty multiples,
we continue to believe there is significant upside in the shares.
INDUSTRY OUTLOOK
Company description
StatPro Group provides cloud-based
portfolio analytics solutions to the
global investment community.
StatPro's products are targeted at the global wealth management industry. There has been
an improving outlook for fund managers with assets under management up 8% at a record
$74trn in 2014 according to Boston Consulting Group. In addition, competitive, cost and
regulatory pressures all require asset managers to maintain and upgrade their reporting and
risk management systems.
Y/E Dec
Price performance
%
1m
3m
Actual
2.0
4.1
Relative*
5.6
0.4
(SOG)
12m
(12.2)
(1.4)
* % Relative to local index
Analyst
Richard Jeans
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS
(p)
P/E
(x)
P/CF
(x)
2014
32.0
4.4
2.6
2.7
28.0
6.6
2015
30.2
4.0
2.6
2.6
29.0
7.8
2016e
34.4
4.3
2.5
2.7
28.0
6.7
2017e
36.4
5.2
3.4
3.6
21.0
5.4
Stobart Group
Sector: Support services
Price:
116.2p
Market cap:
£400m
Forecast net debt (£m)
N/A
Forecast gearing ratio (%)
N/A
Market
LSE
Share price graph (p)
(STOB)
INVESTMENT SUMMARY
All Stobart's business segments reported a strong set of FY16 results in May and group
EBITDA was ahead of market expectations. Of special note were the strong performances
of both the Aviation and Energy units which now seem well on their way to delivering on
their ambitious growth targets of 2.5m passengers and 2m tonnes, respectively. Stobart is
now demonstrating its transition from haulage company to support services firm with the
added benefit of a disposal programme of its property portfolio. With growth in its support
services unit together with shareholder upside from its continued disposal programme, we
are optimistic about Stobart's outlook and we are currently reviewing our forecasts.
INDUSTRY OUTLOOK
After disposing of the majority of Eddie Stobart Logistics, the group will be an infrastructure
and support service firm operating in the energy (biomass), aviation and rail sectors.
Company description
Stobart consists of two divisions:
Infrastructure and Support Services
operating across Aviation, Energy, Rail
and Investments.
Y/E Feb
Price performance
%
1m
3m
Actual
12.3
20.8
Relative* 16.2
16.4
* % Relative to local index
Analyst
Jamie Aitkenhead
Edison Insight | 26 May 2016
12m
8.1
21.5
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS (fd)
(p)
P/E
(x)
P/CF
(x)
2015
116.6
18.0
(9.4)
2.2
52.8
N/A
2016
126.7
30.0
20.6
5.9
19.7
112.1
2017e
N/A
N/A
N/A
N/A
N/A
N/A
2018e
N/A
N/A
N/A
N/A
N/A
N/A
80
Stride Gaming
Sector: Travel & leisure
Price:
255.0p
Market cap:
£131m
Forecast net cash (£m)
0.9
Forecast gearing ratio (%)
N/A
Market
AIM
Share price graph (p)
(STR)
INVESTMENT SUMMARY
Interim results (23 May) showed that Stride continues to execute well with l-f-l revenue up
21%, led by its online bingo and slots offering (up 31%, well ahead of the wider market).
Social gaming increased profit and margins on flattish revenues as management dialled
down marketing while it invested in product improvements. Cash generation was strong. We
increased our FY16 EBITDA estimate by £0.5m to £11.8m. An inaugural interim dividend of
1.1p per share was announced, a year earlier than we expected.
INDUSTRY OUTLOOK
Company description
Stride Gaming is an online gaming
operator in the bingo-led and social
gaming markets, using proprietary and
purchased software to provide online
bingo and related gaming and social
activities to players. Stride Gaming
only operates in regulated markets.
The UK online gambling market is set to pass £3bn by 2016, within which bingo-led gaming
is £500m, growing at 8% (Gambling Compliance). Stride has rapidly achieved a 6% market
share. The global social casino market was worth $5.4bn in 2012 and is growing at 16.1%
CAGR (Transparancy Research). M&A has been a feature of UK online sport-betting in
2015/16 but bingo and gaming have yet to see the same levels of activity, suggesting
acquisition opportunities for companies such as Stride.
Y/E Aug
Price performance
%
1m
3m
Actual
9.2
4.1
Relative* 13.0
0.3
12m
38.6
55.7
* % Relative to local index
Analyst
Eric Opara
Sector: Media & entertainment
Price:
351.0p
Market cap:
£139m
Forecast net debt (£m)
24.3
Forecast gearing ratio (%) 172.0
Market
LSE
Share price graph (p)
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS (fd)
(p)
P/E
(x)
P/CF
(x)
2014
8.5
1.2
1.2
4.0
63.8
N/A
2015
27.8
7.3
7.2
14.0
18.2
24.3
2016e
44.7
11.8
10.7
17.7
14.4
14.3
2017e
49.8
13.4
11.9
19.8
12.9
11.9
STV Group
(STVG)
INVESTMENT SUMMARY
ITV's recent comments that Brexit uncertainties are weighing on short-term trading has
affected sentiment; however, at STV's update on 26 April it indicated that it was on track for
a good first half with growth across the board, particularly in digital and production. Trading
on a FY16e P/E of 8.3x, with dividend support, the shares offer good relative value.
Furthermore, the valuation of the defined pension deficits will conclude in this quarter, which
should clarify STV’s cash commitments for the next three years and may pave the way for
special dividends further out.
INDUSTRY OUTLOOK
Company description
STV is Scotland's digital media
company. It holds the Channel 3 (ITV)
commercial television licences for
Scotland and creates and distributes
programmes across all platforms,
including broadcast and catch-up TV,
online, mobile and connected devices.
With audiences and profits from ITV, the UK's largest commercial channel fairly stable, UK
TV companies are increasingly focused on leveraging their brands elsewhere through
spin-off channels, digital players, and by exploiting their production capabilities in a buoyant
market for TV content. Companies with the strongest brands, experience and resources to
invest in these initiatives should outperform.
Y/E Dec
Price performance
%
1m
3m
Actual
(10.4) (17.9)
Relative* (7.3) (20.9)
* % Relative to local index
Analyst
Bridie Barrett
Edison Insight | 26 May 2016
12m
(7.6)
3.8
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS (fd)
(p)
P/E
(x)
P/CF
(x)
2014
120.4
21.5
17.3
37.6
9.3
6.6
2015
116.5
22.9
19.1
38.8
9.0
6.9
2016e
127.0
24.5
20.8
42.1
8.3
7.0
2017e
134.7
26.2
22.8
45.9
7.6
5.5
81
Sector: Industrial support services
Price:
NZ$2.52
Market cap:
NZ$163m
Forecast net debt (US$m)
N/A
Forecast gearing ratio (%)
N/A
Market
NZAX
Share price graph (NZ$)
Tenon
(TEN)
INVESTMENT SUMMARY
Tenon is undertaking a strategic business review to identify a path to increase shareholder
value. Peer group comparisons suggest a valuation range in excess of NZ$4.51 based on
calendarised 2015 multiples, and higher still on estimates beyond this. Our analysis
suggests a very positive outlook for its core US markets; the company is set to deliver faster
earnings growth and H116 results (15 February) delivered EBITDA (excluding strategic
review costs) almost double that in H115. Our estimates are under review.
INDUSTRY OUTLOOK
Company description
Tenon is a leading mouldings and
millwork manufacturer and distributor
primarily for the North American
housing market. It sources products
and materials globally, including from
its traditional New Zealand base, which
serves Asia-Pacific and Europe.
The decline in the US housing market is well documented, with peak-to-trough falls of
around 70% in new housing starts (National Association of House Builders), 24% in
remodelling activity (Harvard’s Joint Center of Housing Studies) and c 40% in existing home
transactions (National Association of Realtors). Activity levels have improved gradually over
the last 18 months or so, but are still below historical averages or what might now be
considered to be a steady or mid-cycle rate.
Y/E Jun
Price performance
%
1m
3m
Actual
(4.2)
(4.9)
Relative* (4.2) (14.1)
12m
26.0
9.9
* % Relative to local index
Analyst
Peter Chilton
Revenue
(US$m)
EBITDA
(US$m)
PBT
(US$m)
EPS
(c)
P/E
(x)
P/CF
(x)
2014
396.0
11.0
4.0
4.2
41.0
16.1
2015
406.0
13.0
6.0
9.9
17.4
28.1
2016e
N/A
N/A
N/A
N/A
N/A
N/A
2017e
N/A
N/A
N/A
N/A
N/A
N/A
Thin Film Electronics
Sector: Technology
Price:
NOK4.97
Market cap:
NOK3361m
Forecast net cash (US$m)
9.2
Forecast gearing ratio (%)
N/A
Market
Oslo
Share price graph (NOK)
(THIN)
INVESTMENT SUMMARY
Thinfilm (THIN) has announced plans to construct a new c 1bn unit capacity roll-to-roll
(R2R) plant at a new production site in the US by end-2017. We see this news as
supportive of our NOK7.52 per share DCF valuation because of the expected efficiency
gains from the new plant. In Q116 THIN reported 16% y-o-y revenue growth. Normalised
EBITDA losses grew 29% y-o-y to $8.2m due to high R&D and plant testing costs.
INDUSTRY OUTLOOK
Company description
Thin Film Electronics (Thinfilm)
commercialises printed electronics and
owns key patents for printing
rewritable, non-volatile memory and
printable NFC circuits. It also licenses
technology from others to develop
complete printed systems.
Thinfilm is the global leader in printed electronics, which is a low cost and highly scalable
method of creating smart labels for the Internet of Things. The company is currently focused
on three areas: NFC labels, most notably NFC OpenSense, which is on pilot trial with a
number of major brands, memory labels, which are in production and sensor and display
labels, where it has developed prototypes. The ability of printed electronics to add
intelligence to low-cost, high-volume products opens a wide range of potential applications
that could present an even greater market opportunity.
Y/E Dec
Price performance
%
1m
3m
Actual
22.7
38.1
Relative* 23.6
28.6
* % Relative to local index
Analyst
Anna Bossong
Edison Insight | 26 May 2016
12m
(23.1)
(12.7)
Revenue
(US$m)
EBITDA
(US$m)
PBT
(US$m)
EPS
(c)
P/E
(x)
P/CF
(x)
2014
4.5
(23.6)
(24.2)
(4.9)
N/A
N/A
2015
4.4
(29.2)
(28.3)
(5.3)
N/A
N/A
2016e
12.0
(30.6)
(32.5)
(5.3)
N/A
N/A
2017e
48.3
(24.2)
(28.7)
(4.3)
N/A
N/A
82
Thunderbird Resorts
Sector: Travel & leisure
Price:
US$0.23
Market cap:
US$6m
Forecast net debt (US$m)
N/A
Forecast gearing ratio (%)
N/A
Market
Euronext Amsterdam
Share price graph (US$)
(TBIRD)
INVESTMENT SUMMARY
Q116 results showed adjusted EBITDA down 4.2% (at $0.9m) on revenue down 7.5%
($9.7m); on a currency neutral basis EBITDA rose 19.7% on revenue up 2.0%.
Management has cut costs and net debt has been brought down from $41m at end 2014 to
$28.4m at 31 March 2016, but it remains a burden. Management is continuing to investigate
strategic options. In the 2015 Annual Report it announced the proposed sale and lease back
of the Fiesta Lima hotel/casino property (which could materially reduce debt) and it has just
sold its Escazau Costa Rica land for net proceeds of c $1.5m. Our forecasts remain under
review.
INDUSTRY OUTLOOK
Company description
Thunderbird is a Latin-American
gaming operator with casino, slot
parlour and hotel operations in Peru
and Nicaragua, with approximately
2,000 gaming positions. It sold its
Costa Rica operations in February
2015.
Peru's economic recovery remains weak with GDP up 2.8% in 2015 and 3.5% forecast for
2016 (source: LatinFocus). The smaller Nicaragua economy grew at 3.9% in 2015 with
4.1% forecast for 2016. The Peruvian Sol fell by over 12% vs the US$ in 2015 and
continued to fall in Q116, although there has been some strengthening since 1 March. The
Nicaragua cordoba slipped 3.5% against the US$ in 2015.
Y/E Dec
Price performance
%
1m
3m
Actual
0.0
(8.0)
Relative*
5.0 (12.7)
12m
(61.7)
(55.7)
* % Relative to local index
Analyst
Jane Anscombe
Sector: General industrials
Price:
NZ$2.87
Market cap:
NZ$329m
Forecast net debt (NZ$m)
86.1
Forecast gearing ratio (%)
49.0
Market
NZSX
Share price graph (NZ$)
Revenue
(US$m)
EBITDA
(US$m)
PBT
(US$m)
EPS
(c)
P/E
(x)
P/CF
(x)
2014
56.2
5.3
(4.8)
(0.27)
N/A
0.7
2015
41.3
3.1
(1.2)
(0.10)
N/A
2.9
2016e
N/A
N/A
N/A
N/A
N/A
N/A
2017e
N/A
N/A
N/A
N/A
N/A
N/A
Tourism Holdings
(THL)
INVESTMENT SUMMARY
THL’s H116 NPAT of NZ$8.2m was 45% more than the previous corresponding period. It
lifted its guidance for FY16 from NPAT of NZ$22m to NPAT of c NZ$24m and confirmed
that it expected to meet its FY19 NPAT guidance of NZ$30m. Tourism Holdings (THL)
provides exposure to the buoyant tourist markets of New Zealand (NZ) and Australia. In
2015, in-bound visitor numbers were up 9.7% in NZ and 8.2% in Australia. In both markets
visitors from China showed the strongest growth. This trend continues in 2016. THL’s focus
will remain on innovative ways to reduce the capital costs in the business and achieve a
long-term average company-wide ROCE target of 14%. Our forecasts show FY16 ROCE
reaching 16.2% and improving thereafter.
INDUSTRY OUTLOOK
Company description
Tourism Holdings listed on the NZX in
1986. It is the largest motorhome
rental operator in the world with a fleet
of c 3,700 motorhomes designed to
meet the needs of the free
independent traveller (FIT) market.
THL rents its fleet of c 3,700 motorhomes to free independent travellers (FITs) in New
Zealand, Australia, the UK and the US. Growth in the FIT component of the travel market is
expected to remain strong and to grow quickly because technology is allowing a greater
proportion of travellers to 'roam free'. The outlook for international arrivals into New Zealand
remains strong with visitor arrivals up c 5% year to date.
Y/E Jun
Price performance
%
1m
3m
Actual
10.4
13.0
Relative* 10.3
2.0
* % Relative to local index
Analyst
Moira Daw
Edison Insight | 26 May 2016
12m
64.0
43.1
Revenue
(NZ$m)
EBITDA
(NZ$m)
PBT
(NZ$m)
EPS (fd)
(c)
P/E
(x)
P/CF
(x)
2014
226.7
61.3
19.8
9.5
30.2
6.0
2015
237.3
65.6
31.4
17.0
16.9
9.7
2016e
271.5
76.9
39.6
20.6
13.9
5.2
2017e
275.0
79.9
41.7
22.6
12.7
3.8
83
Sector: Industrial support services
Price:
Market cap:
Forecast net cash (£m)
Forecast gearing ratio (%)
Market
3.9p
£16m
7.2
N/A
AIM
Share price graph (p)
TP Group
(TPG)
INVESTMENT SUMMARY
Management has successfully addressed the inherited losses ahead of plan and is now
embarking on driving a more growth-oriented business focused on high integrity support,
services and solutions. Management action and a robust aerospace and defence
performance delivered the break-even adjusted EBITDA. The removal of speculative
development and losses, combined with improved returns from a growing top line should
ensure a more accurate reflection of underlying economic value. The AGM in mid June
should confirm the share price strength since the results is warranted, with our
sum-of-the-parts calculation standing at 8.8p per share.
INDUSTRY OUTLOOK
Company description
TP Group (previously Corac Group) is
a specialist engineering, technical and
managed services group, structured
around two market facing divisions:
Aerospace & Defence (54% of FY14
sales) and Energy & Process (46%).
TP Group has transitioned its structure to four capability-based divisions: TPG Maritime
(54% of FY15 sales), Engineering (35%), Design & Technology (4%) and Managed
Solutions (7%), primarily for the aerospace, defence, energy and maritime markets. These
provide the opportunity to grow revenues with existing blue-chip customers and through
access to adjacencies in both the UK and export markets, including selective acquisitions.
Y/E Dec
Price performance
%
1m
3m
Actual
24.0
24.0
Relative* 28.3
19.5
12m
(22.5)
(12.9)
* % Relative to local index
Analyst
Roger Johnston
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS (fd)
(p)
P/E
(x)
P/CF
(x)
2014
21.7
(2.1)
(3.4)
(0.8)
N/A
N/A
2015
20.4
0.0
(1.2)
(0.2)
N/A
N/A
2016e
22.7
0.9
(0.2)
0.0
N/A
54.7
2017e
24.6
1.9
0.8
0.1
39.0
16.4
Track Group
Sector: Technology
Price:
US$4.00
Market cap:
US$41m
Forecast net debt (US$m)
26.7
Forecast gearing ratio (%) 236.0
Market
OTC Bulletin Board
Share price graph (US$)
(TRCK)
INVESTMENT SUMMARY
Track Group reported Q216 revenues of $6.6m (+37% y-o-y, +4% q-o-q) with an adjusted
EBITDA margin of 8.8% (vs -9.1% in Q215). The company announced that in May it signed
a new contract with Marion County, Indiana. The eighteen-month contract to supply Shadow
tags and monitoring services to more than 2,300 offenders is worth $4m. Management
maintains its FY16/17 financial outlook. We are reviewing our forecasts.
INDUSTRY OUTLOOK
Company description
Track Group develops and provides
end-to-end tracking solutions that
combine real-time tracking devices and
monitoring services with advanced
data analytics for the global criminal
justice market.
There are over 300,000 offenders currently being electronically monitored in the US
compared to just 4,914 in 2007 (CAGR 70%). The main adoption driver is recent prison
reform legislation in the US and other countries intended to reduce prison overcrowding.
Tighter budgets provide an incentive for governments to accept EM as an evidence-based
alternative to incarceration, reducing recidivism and promoting the secure reintegration of
offenders into society, rather than keeping them incarcerated at over 6x the annual cost.
Y/E Sep
Price performance
%
1m
3m
Actual
(33.3) (49.4)
Relative* (31.7) (52.7)
* % Relative to local index
Analyst
Katherine Thompson
Edison Insight | 26 May 2016
12m
(66.4)
(65.2)
Revenue
(US$m)
EBITDA
(US$m)
PBT
(US$m)
EPS (fd)
(c)
P/E
(x)
P/CF
(x)
2014
12.3
(2.0)
(5.4)
(54.4)
N/A
N/A
2015
20.8
0.8
(6.1)
(59.8)
N/A
N/A
2016e
28.1
4.2
(3.6)
(35.2)
N/A
20.6
2017e
42.0
10.8
2.8
27.2
14.7
6.7
84
Treatt
Sector: Food & drink
Price:
180.5p
Market cap:
£93m
Forecast net debt (£m)
5.6
Forecast gearing ratio (%)
14.0
Market
LSE
Share price graph (p)
(TET)
INVESTMENT SUMMARY
Treatt had yet another strong half in H116. The strategy to improve the quality of earnings is
coming through and the move from commoditised sales to more value-added products is
playing out. As management stated at the start of the year, it is confident of building “a
successful, strong business for the long term.” We believe this will continue to be reflected
throughout FY16. A decision has been made regarding the UK business and there will be a
full site relocation over the next three years or so. We continue to view Treatt as a
good-value opportunity in the highly rated and high-growth ingredients space.
INDUSTRY OUTLOOK
Company description
Treatt provides innovative ingredient
solutions from its manufacturing bases
in Europe, N America and Africa,
principally for the flavours and
fragrance industries and multinational
consumer goods companies,
particularly in the beverage sector.
Annual growth rates for the global flavours, fragrance and ingredients sector are expected
to be low single digits in 2013-18 (source: IAL Consultants). Craft beer in particular has
proved to be a fast-growing new market for Treatt. This trend should continue for some time
as the multinational beverage companies are now getting involved in the space.
Y/E Sep
Price performance
%
1m
3m
Actual
4.0
(1.1)
Relative*
7.6
(4.7)
12m
17.2
31.7
* % Relative to local index
Analyst
Sara Welford
Price:
136.0p
Market cap:
£159m
Forecast net debt (£m)
17.7
Forecast gearing ratio (%)
24.0
Market
LSE
Share price graph (p)
EBITDA
(£m)
PBT
(£m)
EPS
(p)
P/E
(x)
P/CF
(x)
2014
79.2
9.0
7.1
10.3
17.5
26.2
2015
85.9
10.1
8.1
12.3
14.7
10.7
2016e
85.9
10.6
8.5
12.4
14.6
8.9
2017e
89.4
11.5
9.1
13.3
13.6
9.7
Trifast
Sector: Engineering
Revenue
(£m)
(TRI)
INVESTMENT SUMMARY
Trifast has an impressive record since management restructuring seven years ago,
restoring confidence both internally and across the group's supplier and customer base.
Organic progress is being delivered without conceding margin, while acquisitions extend the
product, geographical and customer spread, providing numerous cross-selling opportunities.
Continental aspirations are greatly enhanced by recent acquisitions based in Italy and
Germany. April's pre-close trading update confirmed another sound year's trading, with
profits indicated at the upper end of market expectations.
INDUSTRY OUTLOOK
Company description
Trifast is a leading global designer,
manufacturer and distributor of
industrial fasteners. Principal
operations are in the UK, South-East
Asia and Continental Europe, while
there is a modest, but growing,
presence in North America.
The global specialist industrial fasteners market is valued at around £25bn. Successful
manufacturers and distributors responded to the shift in manufacturing to lower-cost regions
by developing their own local facilities and/or supply routes. They have also created
effective logistical services and shifted the emphasis towards more complex products to
increase value. A recent increase in M&A activity in the sectors looks set to continue in the
immediate future.
Y/E Mar
Price performance
%
1m
3m
Actual
(1.5)
16.1
Relative*
2.0
11.9
* % Relative to local index
Analyst
Nigel Harrison
Edison Insight | 26 May 2016
12m
28.9
44.8
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS (fd)
(p)
P/E
(x)
P/CF
(x)
2014
129.8
10.8
9.2
5.96
22.8
12.5
2015
154.7
16.5
14.3
8.68
15.7
22.8
2016e
158.0
17.6
15.4
9.21
14.8
10.9
2017e
170.0
18.9
16.5
9.86
13.8
11.8
85
True North Gems
Sector: Mining
Price:
C$0.11
Market cap:
C$34m
Forecast net cash (C$m)
0.7
Forecast gearing ratio (%)
N/A
Market
CV
Share price graph (C$)
(TGX)
INVESTMENT SUMMARY
TGX’s update on mine construction highlights that on-site infrastructure is very near
completion with processing plant equipment basically installed, other than for some
non-critical wiring and heating arrangements for the main plant building. Further, the pit has
been prepared and stockpiles formed from which wet commissioning of the processing
facilities can take place. The Nuuk located beneficiation facility is still to be completed and a
building available for retrofitting with upgrading equipment is being sourced. Design
approvals for the Nuuk facility have been received.
INDUSTRY OUTLOOK
Company description
True North Gems is developing its
85.4%-owned (65% upon completion
of the mine by its JV partner LNSG)
and exploitation (mining) permitted
Aappaluttoq ruby and pink sapphire
mine in Greenland.
A key risk to our valuation is that TGX is still to source sufficient off-take for its products.
While the agreement with Chinastone goes some way to removing this risk, further off-takes
are needed. The overall gemstone equity market has seen a rally consistent with its mining
peers; as long as gemstone prices mirror this market rise, we expect TGX to be able to
acquire new off-take partners to take all of Aappaluttoq’s material. TGX has engaged
Endeavour Financial to help advise it through the commissioning phase and into production
and will ‘assess and execute additional financing’ to help boost TGX’s working capital.
Y/E Dec
Price performance
%
1m
3m
Actual
(31.3) (31.3)
Relative* (31.3) (36.7)
12m
(31.3)
(25.6)
* % Relative to local index
Analyst
Tom Hayes
EBITDA
(C$m)
PBT
(C$m)
EPS
(c)
P/E
(x)
P/CF
(x)
2013
0.0
(1.6)
(1.7)
(0.7)
N/A
N/A
2014
0.0
(1.2)
(1.4)
(0.5)
N/A
N/A
2015e
0.0
(5.2)
(5.2)
(1.1)
N/A
N/A
2016e
48.8
37.5
35.0
7.3
1.5
1.0
Tungsten Corporation
Sector: Financials
Price:
Market cap:
Forecast net debt (£m)
Forecast gearing ratio (%)
Market
Revenue
(C$m)
59.0p
£74m
N/A
N/A
LSE
Share price graph (p)
Company description
Tungsten Corporation operates a
global e-invoicing network, as well as
providing value-added services such
as spend analytics to help buyers on
its network save money, and invoice
financing to suppliers to enable them
to receive early payment on their
invoices.
INVESTMENT SUMMARY
Tungsten aims to transform its business in the next two years to achieve EBITDA
break-even on a run-rate basis by the end of FY17. It intends turning around its loss-making
e-invoicing network business, selling its loss-making bank and reducing one-off costs. In the
key e-invoicing division it intends to reprice its services to the buyers on the network,
increase the number of suppliers and re-engineer its processes to achieve the operational
gearing potentially inherent in this activity. It believes that it now has sufficient funding to
see the group through to break-even after raising £16.7m (net) in May 2015 and the
proposed sale of its bank for c £30m. At a capital markets day in February 2016 it
elaborated on some of the measures it will undertake to achieve its financial targets. On 18
April 2016 Tungsten announced that an experienced banking specialist from HSBC had
joined Tungsten Network to drive the finance business forward. Pre-close trading statement
due 24 May and FY16 results 25 July.
INDUSTRY OUTLOOK
The potential to sell invoice financing to suppliers on its network remains. Tungsten faces
competition for invoice financing - not just from the traditional suppliers but also from other
e-invoicing organisations.
Y/E Apr
Price performance
%
1m
3m
Actual
(1.7) (20.3)
Relative*
1.7 (23.2)
* % Relative to local index
Analyst
Peter Thorne
Edison Insight | 26 May 2016
12m
(40.1)
(32.7)
(TUNG)
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS (fd)
(p)
P/E
(x)
P/CF
(x)
2014
10.8
(10.2)
(11.1)
(18.6)
N/A
N/A
2015
23.1
(24.8)
(27.3)
(26.3)
N/A
N/A
2016e
27.7
(18.0)
(26.3)
(21.2)
N/A
N/A
2017e
34.6
(9.8)
(7.7)
(6.1)
N/A
N/A
86
TXT e-solutions
Sector: Technology
Price:
€7.44
Market cap:
€97m
Forecast net cash (€m)
2.4
Forecast gearing ratio (%)
N/A
Market
Borsa Italiana STAR
Share price graph (€)
(TXT)
INVESTMENT SUMMARY
TXT reported a small year-on-year revenue decline for Q116. While TXT Next showed
continued growth (+7.4% y-o-y), TXT Perform saw delays in the signing of new licences,
resulting in a decline in revenues (-8.3% y-o-y). This was offset by reduced operating
expenses. Management sees a more positive outlook in Q2 and maintains expectations for
FY16. The PACE acquisition (within TXT Next) completed as planned on 1 April (already
factored into our estimates). Other than factoring in the put/call option in place to acquire the
remaining 21% of PACE in 2020/21, our forecasts are substantially unchanged.
INDUSTRY OUTLOOK
Company description
TXT e-solutions has two divisions: TXT
Perform provides software solutions for
supply chain management in the
international retail & consumer-driven
industrial sectors; and TXT Next
provides IT, consulting and R&D
services to Italian customers.
The supply chain management software market is growing at c 10% pa and splits into two
broad areas: supply chain planning (SCP) and supply chain execution software. TXT
Perform specialises in SCP software, a market that was worth c $3.7bn in 2014 (source:
Gartner). TXT Next is a beneficiary of the trend to outsource IT, which gives the customer
greater flexibility on cost and better access to specialist skills.
Y/E Dec
Price performance
%
1m
3m
Actual
(2.6)
(4.0)
Relative*
1.5
(9.0)
12m
(9.7)
17.4
* % Relative to local index
Analyst
Katherine Thompson
Sector: Construction & blding mat.
Price:
268.8p
Market cap:
£456m
Forecast net debt (£m)
156.4
Forecast gearing ratio (%)
52.0
Market
LSE
Share price graph (p)
Revenue
(€m)
EBITDA
(€m)
PBT
(€m)
EPS (fd)
(c)
P/E
(x)
P/CF
(x)
2014
54.4
5.3
4.0
28.0
26.6
15.8
2015
61.5
6.7
5.7
40.0
18.6
36.1
2016e
70.3
7.9
7.1
46.0
16.2
13.8
2017e
74.5
8.5
7.7
50.0
14.9
11.2
Tyman
(TYMN)
INVESTMENT SUMMARY
An AGM update (13 May) indicated that year to date trading has been in line with
management expectations across existing operations and recent acquisitions. Regional
trends and outlooks also appear to be consistent with those outlined at the time of the FY15
results in March and estimates are unchanged. The rating is consistent with a mid-cycle
position, but we believe that Tyman offers an extended earnings growth profile derived from
internal initiatives that are underway.
INDUSTRY OUTLOOK
US new-build growth has continued and rising housing transactions appear to be starting to
feed into RMI spend now. A similar scenario is playing out in the UK, Tyman's
second-largest market.
Company description
Tyman’s product portfolio now solely
addresses the residential RMI &
building markets. It manufactures and
sources window and door hardware
and seals, largely for the N. American
(63%) and UK (26%) markets.
(Percentages for FY14 revenue.)
Y/E Dec
Price performance
%
1m
3m
Actual
(7.7)
2.9
Relative* (4.5)
(0.9)
* % Relative to local index
Analyst
Toby Thorrington
Edison Insight | 26 May 2016
12m
(15.0)
(4.4)
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS (fd)
(p)
P/E
(x)
P/CF
(x)
2014
350.9
54.6
41.6
18.4
14.6
11.2
2015
353.4
60.4
44.9
19.2
14.0
9.2
2016e
415.5
70.0
51.1
21.1
12.7
8.8
2017e
441.5
76.4
56.2
23.3
11.5
6.6
87
Sector: Aerospace & defence
Price:
1734.0p
Market cap:
£1219m
Forecast net debt (£m)
270.3
Forecast gearing ratio (%)
78.0
Market
LSE
Share price graph (p)
Ultra Electronics
(ULE)
INVESTMENT SUMMARY
Ultra Electronics is benefiting from the improved outlook for defence spending, enabling the
shares to trade robustly in recent weeks, unlike some peers. Order flow has been strong in
recent weeks, indicating some of the FY15 backlog shortfall is being reversed. Management
is guiding for a flat FY16 but defence constraints should start to gradually release, allowing
organic growth to accelerate modestly from FY17e. Our valuation basis still indicates values
closer to 1,900p, which could be approached if H1 results support the current market
expectations for next year.
INDUSTRY OUTLOOK
Company description
Ultra Electronics is a global aerospace
and defence electronics company, with
operations across three divisions:
Aerospace & Infrastructure (27% of
2015 sales); Communications &
Security (33%); and Maritime & Land
(40%).
With defence drivers moving towards greater demand for electronic equipment and
information management, Ultra is well positioned to benefit from more frequent upgrade
cycles. In addition, it appears that defence spending may have turned a corner in the
Western world. Also, with civil airport infrastructure booming in emerging economies and an
increasing civil aircraft build rate, Ultra stands to benefit from its diversified end-markets.
Y/E Dec
Price performance
%
1m
3m
Actual
(3.0)
(8.3)
Relative*
0.4 (11.6)
12m
(4.7)
7.1
* % Relative to local index
Analyst
Andy Chambers
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS
(p)
P/E
(x)
P/CF
(x)
2014
713.7
128.9
112.0
123.1
14.1
12.4
2015
726.3
130.9
112.4
123.9
14.0
14.2
2016e
781.8
141.1
116.6
127.7
13.6
10.9
2017e
807.2
145.4
122.4
138.3
12.5
8.3
UMT United Mobile Technology
Sector: Technology
Price:
€1.30
Market cap:
€21m
Forecast net debt (€m)
N/A
Forecast gearing ratio (%)
N/A
Market
FRA, Xetra
Share price graph (€)
(UMD)
INVESTMENT SUMMARY
UMT’s five-year contract with Payback Germany should establish it as the leading German
white-label mPay operator. If the company is able, as it expects, to resell user data crossing
its platform, we expect data analytics to form a significant new revenue stream. We expect
positive momentum in UMT’s valuation if its current pipeline of potential clients translates
into new orders over the next 12 months.
INDUSTRY OUTLOOK
Company description
UMT is the operator of a proprietary
mobile payments and loyalty platform.
It has created an mPay platform in
Germany for the loyalty scheme
Payback and has preferred partner
status for roll-out to other countries.
UMT is also expanding into big data.
UMT is a white-label operator of mobile payments and loyalty platform services with plans to
grow a big data business. The mobile payments market is set to grow strongly in coming
years as more consumers shop with smartphones and tablets and retailers expand their
payments options. Business Insider forecasts a 116% CAGR in the US mPay market to
2019 and we expect similar trends in European markets. This growth should lead to rising
demand for UMT’s white-label solutions, from retailers, loyalty schemes and companies in
the B2B sphere.
Y/E Dec
Price performance
%
1m
3m
Actual
(2.5)
(4.7)
Relative*
2.5
(9.8)
* % Relative to local index
Analyst
Anna Bossong
Edison Insight | 26 May 2016
12m
(1.7)
17.4
Revenue
(€m)
EBITDA
(€m)
PBT
(€m)
EPS (fd)
(c)
P/E
(x)
P/CF
(x)
2014
1.3
0.1
0.1
0.89
146.1
N/A
2015
3.0
0.6
1.0
6.29
20.7
N/A
2016e
N/A
N/A
N/A
N/A
N/A
N/A
2017e
N/A
N/A
N/A
N/A
N/A
N/A
88
Sector: Industrial support services
Price:
163.2p
Market cap:
£127m
Forecast net debt (£m)
3.8
Forecast gearing ratio (%)
6.0
Market
AIM
Share price graph (p)
Company description
Utilitywise is an independent cost
management consultancy offering
energy procurement and management
products to the business market in the
UK.
Utilitywise
INVESTMENT SUMMARY
UTW’s H116 results extended its record of growth, with revenue +36% and reported adj.
EBITDA +15%. The DPS was increased by 29% to 2.2p. A number of the key business
metrics also demonstrated positive y-o-y momentum with customer numbers of 29,288 (vs
22,048 at 31 January 2015). These underlying figures exclude a net positive exceptional
credit of £4.1m, largely due to the release of deferred consideration that UTW had expected
to pay to the vendors of t-mac of £5.7m, less a goodwill impairment charge of £1.3m, also
relating to t-mac. Overall, management believes that UTW remains on track to deliver
revenue and EBITDA margins in line with market expectations. We have refined our
forecasts but our EBITDA estimate for FY16 remains broadly unchanged (lower gross
margins but lower admin. costs).However, we have increased our FY16 DPS forecast to 6p
(vs 5.8p). We continue to see upside in the shares.
INDUSTRY OUTLOOK
We believe a fragmented UK TPI market provides an opportunity for Utilitywise to continue
to grow.
Y/E Jul
Price performance
%
1m
3m
Actual
(10.3)
(2.1)
Relative* (7.2)
(5.7)
12m
(35.7)
(27.7)
* % Relative to local index
Analyst
Graeme Moyse
(UTW)
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS (fd)
(p)
P/E
(x)
P/CF
(x)
2014
48.9
14.5
13.4
14.6
11.2
10.2
2015
69.1
17.8
16.7
17.9
9.1
N/A
2016e
93.3
20.7
19.2
18.9
8.6
10.3
2017e
104.9
23.9
22.4
23.3
7.0
7.7
Vertu Motors
Sector: General retailers
Price:
57.8p
Market cap:
£229m
Forecast net cash (£m)
29.0
Forecast gearing ratio (%)
N/A
Market
AIM
Share price graph (p)
(VTU)
INVESTMENT SUMMARY
Having initially specialised in volume cars, Vertu is now building a strong position in the
premium segment. The strategy involving the development of a series of acquisitions,
typically strengthening used car and aftermarket operations, has established the group as
the fifth-largest UK motor dealer. Results for the year to February beat market estimates
and reinforced current year targets. Short-term dilution from the recent £35m fund raising
will be reversed following the imminent deployment of the funds. Growth in economies of
scale, especially used car marketing on the internet, are expected to lead to increasing
numbers of quality acquisition opportunities.
INDUSTRY OUTLOOK
Company description
Vertu is the fifth largest UK motor
vehicle retailer. Established in 2006, it
is expanding through the completion
and subsequent development of a
series of acquisitions, initially in
volume cars, but now including the
premium segment of the market.
Market dynamics suggest that larger motor dealership groups will continue to gain share in
each of the key market segments (new cars, used cars, aftermarket), largely at the expense
of the independents, which still command some 60% of the franchise market. Global
manufacturing overcapacity and current exchange rates indicate continued support from
OEMs. Confidence was tempered by the VW scandal, but a 30% discount rating relative to
the FTSE All-share General Retailers index makes the sector attractive.
Y/E Feb
Price performance
%
1m
3m
Actual
(2.9) (13.5)
Relative*
0.4 (16.6)
* % Relative to local index
Analyst
Nigel Harrison
Edison Insight | 26 May 2016
12m
(3.8)
8.1
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS (fd)
(p)
P/E
(x)
P/CF
(x)
2015
2074.9
28.7
22.0
5.06
11.4
7.5
2016
2423.3
35.5
27.4
6.31
9.2
3.0
2017e
2650.0
37.4
29.5
5.87
9.8
5.5
2018e
2750.0
40.4
32.5
6.37
9.1
5.6
89
Victoria Gold
Sector: Mining
Price:
C$0.47
Market cap:
C$208m
Forecast net cash (C$m)
12.9
Forecast gearing ratio (%)
N/A
Market
CV
Share price graph (C$)
(VIT)
INVESTMENT SUMMARY
Drill results testing the Shamrock-Olive target area show highly promising assays, including
one of 144.5m at 1.2g/t Au from 11m below surface and another of 73.8m at 1.6g/t from
35.9m. Numerous other intercepts and gold grades around these values were also
announced. These drill results and that the Eagle-Shamrock-Olive trend has now been
tested over 1.5km of strike and a width of 300m suggests operating two leach pads at Eagle
would provide for greater profits via enhanced grade control from treating ore from multiple
open pits. The C$3.6m fully funded drill programme is ahead of schedule and below budget.
The drilling information provided will underpin a revised Eagle FS by end 2016.
INDUSTRY OUTLOOK
Company description
Victoria Gold’s flagship project, Eagle
Gold, is located in the 100%-owned
Dublin Gulch property in the Yukon
Territory, Canada. Victoria Gold is
looking to monetise its Santa Fe
project in Nevada, US.
VIT announced on 10 May that it has closed a C$24m financing with Electrum Strategic
opportunities and Sun Valley Gold. The offering sees the issue of 80m units (1 share, ½
share purchase warrant) valued at C$0.30 each for gross proceeds of C$24m. Electrum has
subscribed for 75% of the offering with Sun Valley taking up the remainder. Electrum now
holds 13.6% and Sun Valley 18% of the outstanding share capital of VIT.
Y/E Feb
Price performance
%
1m
3m
Actual
30.6 129.3
Relative* 30.5 111.1
12m
235.7
263.5
* % Relative to local index
Analyst
Tom Hayes
EBITDA
(C$m)
PBT
(C$m)
EPS
(c)
P/E
(x)
P/CF
(x)
2014
0.0
(2.5)
(1.6)
(0.9)
N/A
N/A
2015
0.0
(2.0)
(1.7)
(0.3)
N/A
N/A
2016e
0.0
(2.1)
(2.1)
(0.6)
N/A
N/A
2017e
0.0
(2.1)
(1.9)
(0.5)
N/A
N/A
Vislink
Sector: Technology
Price:
Market cap:
Forecast net debt (£m)
Forecast gearing ratio (%)
Market
Revenue
(C$m)
38.2p
£47m
3.3
6.0
AIM
Share price graph (p)
(VLK)
INVESTMENT SUMMARY
Management has taken action to rebalance the group towards software-related activities in
response to structural changes in the global broadcast industry. The company has invested
heavily in headcount in the software division. It has completed a major restructuring of the
hardware division to reduce fixed costs while giving flexibility to cope with swings in
demand. Our FY16 estimates assume that growth will mainly be driven by software and that
the hardware division's restructuring programme will generate a partial recovery in profit.
We continue to see fair value at 54p.
INDUSTRY OUTLOOK
Company description
Vislink is a global technology business
specialising in solutions for the
collection and delivery of high-quality
video and associated data from the
field to point of usage. These are used
in the broadcast surveillance and
public safety markets.
The VislinkNews Net system, a virtualised studio launched in April 2016, epitomises
Vislink's new generation of solutions for broadcasters. Signal flows from content
contributors and in the studio are IP-based and hosted in a private cloud. The system
provides a flexible working environment as editing can be done in the field and, most
importantly, helps broadcasters reduce cost.
Y/E Dec
Price performance
%
1m
3m
Actual
4.1
45.7
Relative*
7.7
40.4
* % Relative to local index
Analyst
Anne Margaret Crow
Edison Insight | 26 May 2016
12m
(28.5)
(19.7)
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS (fd)
(p)
P/E
(x)
P/CF
(x)
2014
61.9
10.7
7.6
5.1
7.5
5.6
2015
57.8
8.7
4.4
2.8
13.6
77.6
2016e
59.1
10.8
6.9
4.1
9.3
5.0
2017e
60.8
11.1
7.3
4.3
8.9
4.8
90
Sector: Pcare and household prd
Price:
189.5p
Market cap:
£114m
Forecast net cash (£m)
4.6
Forecast gearing ratio (%)
N/A
Market
AIM
Share price graph (p)
Walker Greenbank
(WGB)
INVESTMENT SUMMARY
Management continues to invest across the group's brand network and broaden
manufacturing skills, notably in digital printing. The Scion and Sanderson Home brands
extended the group's UK customer base in 2012, while the more recently introduced
Anthology brand is becoming quickly established, especially in key overseas markets.
Recent results confirmed the group's effective response to market conditions. Meanwhile,
costs and loss of profits associated with major flooding at its fabric printing facility have
been covered by the group's insurers. Conditions remain challenging, but the underlying
performance continues to be positive.
INDUSTRY OUTLOOK
Company description
Walker Greenbank is a luxury interior
furnishings group, combining specialist
design skills with high-quality upstream
manufacturing facilities. Leading
brands include Harlequin, Sanderson,
Morris & Co, Scion, Anthology and
Zoffany.
The UK interior furnishings industry has experienced uncertainty for many years under the
influence of economic shifts and fashion changes. Many brands have failed to grow, while
significant manufacturing capacity has been closed down, with manufacture for the volume
segment largely moved overseas. Success continues to be delivered by businesses able to
differentiate themselves from competition by consistently offering innovative and
high-quality design and products.
Y/E Jan
Price performance
%
1m
3m
Actual
(6.4)
(4.1)
Relative* (3.2)
(7.5)
12m
(2.6)
9.5
* % Relative to local index
Analyst
Nigel Harrison
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS
(p)
P/E
(x)
P/CF
(x)
2015
83.4
10.7
8.1
11.64
16.3
32.4
2016
87.8
11.8
8.9
12.47
15.2
16.0
2017e
90.0
10.4
7.5
10.38
18.3
12.5
2018e
98.0
12.8
9.8
13.29
14.3
11.4
WANdisco
Sector: Technology
Price:
185.0p
Market cap:
£55m
Forecast net debt (US$m)
10.0
Forecast gearing ratio (%)
64.0
Market
AIM
Share price graph (p)
(WAND)
INVESTMENT SUMMARY
WANdisco's OEM agreement with IBM, whereby IBM is embedding fusion directly into its
suite of solutions was an important step forward, enhancing WANdisco's potential to scale
without incurring direct sales costs. IBM is a top two supplier of big data and analytics
solutions and a top five supplier of cloud platform services globally, so clearly a very strong
partner to have. Ultimately, deal flow and cash flow will be the key metrics on which to
measure progress, but this is a further indication that a recovery is due.
INDUSTRY OUTLOOK
Company description
WANdisco is a distributed computing
company. It has applied its proprietary
replication technology to open-source
tools to claim a strong position in the
software version control market and is
now establishing a promising position
in the big data infrastructure market.
Enterprise adoption of Hadoop has been slower than anticipated. While wary of hyperbole,
we believe that Fusion’s ability to facilitate the replication and migration of enterprise
databases to and from the cloud could position the company very attractively within a very
significant structural growth trend. Key to WANdisco's success will be successfully
leveraging its strong base of partners - Amazon, IBM, Microsoft, Oracle and Google.
Y/E Dec
Price performance
%
1m
3m
Actual
2.8
72.1
Relative*
6.3
65.8
* % Relative to local index
Analyst
Dan Ridsdale
Edison Insight | 26 May 2016
12m
(35.1)
(27.1)
Revenue
(US$m)
EBITDA
(US$m)
PBT
(US$m)
EPS
(c)
P/E
(x)
P/CF
(x)
2014
11.2
(17.9)
(25.9)
(103.3)
N/A
N/A
2015
11.0
(16.0)
(26.4)
(87.7)
N/A
N/A
2016e
11.4
(10.3)
(21.3)
(69.0)
N/A
N/A
2017e
13.3
(8.2)
(19.5)
(62.2)
N/A
27.0
91
Sector: General industrials
Price:
166.0p
Market cap:
£202m
Forecast net debt (£m)
44.7
Forecast gearing ratio (%)
26.0
Market
LSE
Share price graph (p)
Wincanton
(WIN)
INVESTMENT SUMMARY
Wincanton’s pre-close statement reaffirmed that trading results will be in line with
expectations. With the proceeds received from the disposal of Records Management used
to pay down debt and £34m of US Private Placement notes repaid on maturity via the RCF,
Wincanton is set to see an ongoing reduction in financing costs as forecast. This follows the
thesis set out in our March 2016 initiation that the group is now a more focused logistics
play with increasing financial flexibility. Preliminary results are due on 9 June 2016.
INDUSTRY OUTLOOK
Company description
A leading provider of supply chain
solutions in the UK and Ireland. A
comprehensive warehousing and
transport network allows them to
provide a flexible logistics solution
across a range of industries. The
Specialist division includes Containers
and Pullman Fleet Services.
The UK logistics market is estimated at £36bn and while it is directly linked to economic
health and business activity, it has resilience and has consistently grown faster than GDP,
helped by the complexity of supply chains and the evolution of multi-channel retailing. A
specialist logistics company can deliver supply chain management and warehousing
services to provide a flexible, cost-effective and efficient solution.
Y/E Mar
Price performance
%
1m
3m
Actual
(1.5)
(2.4)
Relative*
1.9
(5.9)
12m
4.7
17.6
* % Relative to local index
Analyst
Roger Johnston
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS
(p)
P/E
(x)
P/CF
(x)
2014
1098.0
61.2
25.6
16.6
10.0
2.7
2015
1107.4
62.0
31.4
21.1
7.9
4.1
2016e
1146.7
61.0
33.1
22.3
7.4
115.6
2017e
1138.1
59.8
33.3
22.4
7.4
3.9
Windar Photonics
Sector: Alternative energy
Price:
115.0p
Market cap:
£45m
Forecast net cash (€m)
0.6
Forecast gearing ratio (%)
N/A
Market
AIM
Share price graph (p)
(WPHO)
INVESTMENT SUMMARY
Product roll-out during FY15 was delayed due to problems with the distributor in China,
which is a key market. The order of 15 WindEYE LiDAR units from the Chinese market for
delivery during April 2016 indicates that these issues have been resolved and underpins our
assumption that the ensuing ramp up in sales during Q216 will continue. The order is also a
significant step towards a collaboration with Chinese wind turbine OEMs on integrating
Windar's LiDAR units into the direct control systems of wind turbines during the design
stage of turbine development.
INDUSTRY OUTLOOK
Company description
Windar Photonics is a UK-registered,
Copenhagen-based developer and
manufacturer of an innovative low-cost
light detection and ranging (LIDAR)
system.
Windar has raised c £1.0m (€1.2m) through a subscription for 885,502 new shares at
110p/share and agreed a factoring facility, initially for up to €400,000 and increasing up to
€1.5m, as the company makes further progress with orders for its WindEYE LiDAR units.
These fundraising activities should enable Windar to fully exploit the sales opportunities
currently presented for its products.
Y/E Dec
Price performance
%
1m
3m
Actual
0.0
48.4
Relative*
3.5
43.0
* % Relative to local index
Analyst
Anne Margaret Crow
Edison Insight | 26 May 2016
12m
(5.0)
6.8
Revenue
(€m)
EBITDA
(€m)
PBT
(€m)
EPS (fd)
(c)
P/E
(x)
P/CF
(x)
2013
0.1
(1.0)
(1.5)
(3.49)
N/A
N/A
2014
1.0
(1.5)
(2.0)
(5.10)
N/A
N/A
2015e
1.0
(2.8)
(3.0)
(7.51)
N/A
N/A
2016e
6.4
0.1
(0.4)
(1.18)
N/A
N/A
92
Sector: Industrial support services
Price:
126.5p
Market cap:
£85m
Forecast net cash (£m)
4.4
Forecast gearing ratio (%)
N/A
Market
AIM
Share price graph (p)
WYG
(WYG)
INVESTMENT SUMMARY
The FY16 update contained a bullish tone based on order book development and we
increased estimates for both FY17 and FY18. This impression was reinforced at the
company’s recent capital markets event, which explained the rising international
opportunities for WYG. We expect momentum here to be a key highlight in the FY16 results
announcement, which is scheduled for 7 June.
INDUSTRY OUTLOOK
Company description
WYG is a multidiscipline, project
management and management service
consultancy. Over half of revenues are
generated in the UK, with the
remainder in a spread of international
markets.
Management is clearly focused on margin improvement predicated on the efficient delivery
of high-quality consultancy services and rigorous operational and financial control.
Extending the multi-discipline service offering, along seven identified sector lines,
particularly in international markets, is a key component of this process. Market diversity
offers both challenges and opportunities, requiring proactive and reactive approaches to
business development.
Y/E Mar
Price performance
%
1m
3m
Actual
(3.8)
(1.2)
Relative* (0.5)
(4.8)
12m
24.9
40.4
* % Relative to local index
Analyst
Toby Thorrington
EBITDA
(£m)
PBT
(£m)
EPS (fd)
(p)
P/E
(x)
2014
126.9
6.4
4.3
6.4
19.8
N/A
2015
130.5
7.2
5.7
8.6
14.7
34.7
2016e
134.7
9.0
6.9
8.8
14.4
20.1
2017e
155.5
11.2
8.9
11.3
11.2
12.0
Xcite Energy
Sector: Oil & gas
Price:
Market cap:
Forecast net debt (US$m)
Forecast gearing ratio (%)
Market
Revenue
(£m)
13.4p
£41m
132.5
40.0
AIM
Share price graph (p)
P/CF
(x)
(XEL)
INVESTMENT SUMMARY
The next few weeks are critical to the future of Xcite. $135m of bonds mature at the end of
June 2016 and there is no visibility yet that they can be refinanced, or at what cost. At the
same time, Xcite has done an excellent job of driving down costs for its Bentley
development, both through cost deflation and optimisation of the project. Our risked NAV of
74p/share, reflecting a farminee earning a 25% IRR, dramatically deteriorates towards zero
if funding partners require better returns or if substantial equity is required to refinance the
current bonds.
INDUSTRY OUTLOOK
Company description
Xcite Energy is an oil appraisal and
development company focused on
heavy oil resources in the UK sector of
the North Sea. It has one project, the
Bentley field, in which it has 100%
working interest.
With improving fiscal terms, the Bentley project is potentially more robust than ever before
and is resilient across a wide range of commodity prices. However, with depressed equity
and debt markets and cautious industry sentiment, securing development funding in
addition to the refinancing of the bonds remains a daunting challenge.
Y/E Dec
Price performance
%
1m
3m
Actual
(10.8)
8.1
Relative* (7.8)
4.2
* % Relative to local index
Analyst
Ian McLelland
Edison Insight | 26 May 2016
12m
(62.6)
(58.0)
Revenue
(US$m)
EBITDA
(US$m)
PBT
(US$m)
EPS (fd)
(c)
P/E
(x)
P/CF
(x)
2014
0.0
2.7
(8.0)
(1.6)
N/A
N/A
2015
0.0
(1.7)
(1.7)
0.3
64.8
N/A
2016e
0.0
(1.8)
(18.3)
(5.2)
N/A
N/A
2017e
0.0
(1.9)
(18.3)
(5.2)
N/A
N/A
93
Sector: Electronics & elec. eqpt.
Price:
1658.0p
Market cap:
£315m
Forecast net cash (£m)
1.8
Forecast gearing ratio (%)
N/A
Market
LSE
Share price graph (p)
XP Power
(XPP)
INVESTMENT SUMMARY
XP saw encouraging trading in Q116: revenues grew 10% y-o-y to £28.2m (+6% constant
currency) and 1% q-o-q. Order intake of £30.3m was marginally higher than the Q415 intake
and +9% y-o-y (+4% constant currency). The integration of the recent EMCO acquisition
continues on track. Trading continues to support management’s expectations for revenue
growth in 2016 and, accordingly, we leave our estimates unchanged. We note that there is
upside potential to revenues (with a more limited effect on net income) from the continued
weakness of sterling versus the dollar.
INDUSTRY OUTLOOK
Company description
XP Power is a developer and designer
of power control solutions with
production facilities in China and
Vietnam, and design, service and
sales teams across Europe, the US
and Asia.
XP supplies three end-markets: Healthcare, Industrial and Technology, across Europe,
North America and Asia. The Industrial segment is relatively fragmented, but the company
sees demand across various applications. The Healthcare business continues to gain
market share, with corporate approvals from the major suppliers in place. The Technology
segment is the most cyclical, although semi fab suppliers have returned to growth.
Y/E Dec
Price performance
%
1m
3m
Actual
2.0
12.5
Relative*
5.6
8.4
12m
4.9
17.8
* % Relative to local index
Analyst
Katherine Thompson
Sector: Media & entertainment
Price:
175.2p
Market cap:
£183m
Forecast net cash (£m)
12.3
Forecast gearing ratio (%)
N/A
Market
AIM
Share price graph (p)
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS (fd)
(p)
P/E
(x)
P/CF
(x)
2014
101.1
27.6
24.3
101.07
16.4
14.5
2015
109.7
29.7
25.7
104.32
15.9
15.0
2016e
122.2
31.2
27.0
105.34
15.7
13.3
2017e
129.6
34.2
29.8
116.56
14.2
12.5
YouGov
(YOU)
INVESTMENT SUMMARY
Half year results to January 2016 showed further strong progress in data products and
services, driving group revenue growth well above market levels. Key brands BrandIndex
and Omnibus between them should account for over one-third of FY16 revenues. The US
and UK markets provide the model for operations in other regions, for penetration of these
key products and for growing profitable custom business. The group has the cash resource
to continue to invest in its offer and in delivering it efficiently, underpinning projections for
continuing premium growth, readily justifying the valuation.
INDUSTRY OUTLOOK
Company description
YouGov is an international, full service
online market research agency offering
custom research, omnibus, field and
tab services, qualitative research,
syndicated products and market
intelligence reports.
The latest Bellwether Survey (April) shows MR budgets remaining in negative territory for
budget planning, although overall expectations for UK adspend remain positive. The latest
forecast from Zenith Optimedia shows strengthening growth into FY16 to 9.2%, although
GroupM's expectations are lower at +7%, with Carat at 6.2%. The increasing ability to
manipulate 'big data' into a value-adding and granular form, and in real time, presents a
substantial industry opportunity.
Y/E Jul
Price performance
%
1m
3m
Actual
24.3
30.8
Relative* 28.6
26.0
* % Relative to local index
Analyst
Fiona Orford-Williams
Edison Insight | 26 May 2016
12m
49.2
67.6
Revenue
(£m)
EBITDA
(£m)
PBT
(£m)
EPS (fd)
(p)
P/E
(x)
P/CF
(x)
2014
67.4
8.0
7.6
5.8
30.2
20.0
2015
76.1
9.3
9.1
6.7
26.1
17.5
2016e
83.5
10.6
10.7
7.6
23.1
17.0
2017e
91.8
11.8
12.1
8.4
20.9
15.2
94
Sector: Industrial support services
Price:
A$0.29
Market cap:
A$31m
Forecast net cash (A$m)
1.5
Forecast gearing ratio (%)
N/A
Market
ASX
Share price graph (A$)
YPB Group
(YPB)
INVESTMENT SUMMARY
On 19 May, the company announced it expected to breakeven by the end of Q1 FY17 and
to deliver profit before tax of A$5m in FY17. YPB noted that it had several revenue
pathways to achieve this result. This is ahead of our FY17 forecast for profit before tax of
A$4.3m. On 24 May, the company announced it had completed a A$4.5m share placement
at A$0.24/share, which was at 19% discount to the last traded price before the transaction
was announced. Our forecasts are under review.
INDUSTRY OUTLOOK
The counterfeit solutions market is a crowded one, with several multinationals offering a
range of anti-counterfeiting products alongside smaller listed and private technology
companies. Competitive advantage can be gained by being first to market either with
product or certification.
Company description
YPB Group has developed a
three-pronged strategy designed to
detect and protect brands from
counterfeiters. The company owns two
Chinese patents over invisible tracers
and has secured three contracts for its
technology.
Y/E Dec
Price performance
%
1m
3m
Actual
13.5
13.5
Relative* 10.7
4.9
* % Relative to local index
Analyst
Finola Burke
Edison Insight | 26 May 2016
12m
9.3
13.3
Revenue
(A$m)
EBITDA
(A$m)
PBT
(A$m)
EPS
(c)
P/E
(x)
P/CF
(x)
2014
0.1
(1.9)
(2.3)
(2.2)
N/A
N/A
2015
1.7
(4.4)
(5.5)
(4.5)
N/A
N/A
2016e
8.5
(2.5)
(2.7)
(1.6)
N/A
N/A
2017e
22.2
4.5
4.3
2.0
14.5
N/A
95
Edison dividend list
Company name
Acacia Mining PLC
Acal PLC
Arbuthnot Banking Group PLC
Avesco PLC
Banca IFIS S.p.A.
Borussia Dortmund PLC
Brady PLC
Braemar Shipping Services PLC
British Polythene Industries PLC
Caledonia Mining Corp
Carr's Group PLC
Cenkos Securities PLC
Cohort PLC
Comvita LTD
Creston PLC
DeA Capital S.p.A.
Ebiquity PLC
Entertainment One PLC
Epwin Group PLC
EQS Group AG
Euromoney Institutional Investor PLC
Fair Value REIT AG
GB Group PLC
GFT Group AG
GLI Finance LTD
Globalworth Real Estate Investments LTD
Greggs plc PLC
GVC Holdings PLC
Hogg Robinson Group PLC
ifa systems PLC
IFG Group PLC
International Greetings PLC
Is Private Equity PLC
IS Solutions PLC
Is Yatirim Menkul Degerler PLC
Jersey Electricity PLC
K3 Business Technology Group PLC
Keywords Studios PLC
KTG Energie AG
La Doria PLC
London Stock Exchange Group PLC
Lookers PLC
Low & Bonar PLC
LSL Property Services PLC
MedicX Fund Limited LTD
National Grid LTD
NetDimensions LTD
Newmark Security PLC
Norbert Dentressangle PLC
Edison Insight | 26 May 2016
FY0 period end
Currency
DPSFY0
DPSFY1
DPSFY2
2015/12
2015/03
2015/12
2015/09
2015/12
2015/06
2015/12
2016/02
2015/12
2015/12
2015/08
2015/12
2015/04
2016/06
2015/03
2015/12
2015/12
2015/03
2015/12
2015/12
2015/09
2015/12
2015/03
2015/12
2015/12
2014/12
2015/01
2015/12
2015/03
2014/12
2015/12
2015/03
2013/12
2015/03
2015/12
2015/09
2015/06
2015/12
2015/10
2015/12
2015/12
2015/12
2015/11
2015/12
2015/09
2015/03
2015/12
2015/04
2014/12
USD
GBP
GBP
GBP
EUR
EUR
GBP
GBP
GBP
USD
GBP
GBP
GBP
NZD
GBP
EUR
GBP
GBP
GBP
EUR
GBP
EUR
GBP
EUR
GBP
EUR
GBP
EUR
GBP
EUR
GBP
GBP
TRY
GBP
TRY
GBP
GBP
EUR
EUR
EUR
GBP
GBP
GBP
GBP
GBP
GBP
USD
GBP
EUR
4.2
7.6
29.0
7.0
76.0
5.0
0.0
26.0
18.0
4.8
3.7
14.0
5.0
16.0
4.2
12.0
0.4
1.1
6.4
0.8
23.4
25.0
1.9
25.0
4.4
0.0
28.6
56.0
2.3
12.0
4.4
1.0
50.2
0.6
13.2
12.8
1.5
1.5
50.0
25.0
36.0
3.1
2.8
12.6
5.9
42.9
0.9
0.1
180.0
4.2
8.0
31.0
8.0
80.0
5.0
1.7
26.0
19.3
4.5
3.8
4.2
8.3
34.0
9.0
85.0
5.0
1.9
26.0
20.6
4.5
3.9
6.0
25.0
4.2
12.0
0.5
1.2
6.6
0.8
23.4
25.0
2.0
27.0
2.5
1.5
29.9
0.0
2.5
7.0
31.0
4.4
12.0
0.6
1.3
6.7
0.9
23.4
25.0
2.2
31.0
4.9
2.0
5.4
3.0
1.6
13.2
13.4
1.7
1.7
55.0
26.0
1.8
13.2
14.4
1.8
1.8
65.0
27.0
3.3
3.0
13.8
6.0
43.7
1.0
0.1
195.0
3.4
3.2
15.0
6.0
44.8
1.1
0.1
210.0
10.0
33.0
25.0
2.7
96
Norcros PLC
Numis Corporation PLC
Ocean Wilsons Holdings PLC
OTC Markets Group INC
Pan African Resources PLC
Piteco S.p.A.
Powerflute LTD
PPHE Hotel Group LTD
Primary Health Properties PLC
PSI AG
QinetiQ Group PLC
Quarto Group Inc. (The) INC
Rank Group PLC
Raven Russia LTD
Rolls-Royce PLC
S&U PLC
SCISYS PLC
Secure Trust Bank PLC
Severfield PLC
Share plc PLC
Shore Capital Group LTD
Silver Wheaton PLC
SinnerSchrader AG
Slater & Gordon LTD
Smiths City Group LTD
SNP Schneider-Neureither & Partner AG
Solid State PLC
StatPro Group PLC
Stride Gaming PLC
STV Group PLC
Tenon LTD
Treatt PLC
Trifast PLC
TXT e-solutions S.p.A.
Tyman PLC
Ultra Electronics Holdings PLC
Utilitywise PLC
Vertu Motors PLC
Vislink PLC
Walker Greenbank PLC
Wincanton PLC
WYG PLC
Edison Insight | 26 May 2016
2015/03
2015/09
2014/12
2015/12
2015/06
2015/12
2015/12
2015/12
2015/12
2015/12
2015/03
2015/12
2015/06
2015/12
2015/12
2016/01
2015/12
2015/12
2015/03
2015/12
2015/12
2015/12
2015/08
2015/06
2014/04
2015/12
2015/03
2015/12
2015/08
2015/12
2015/06
2015/09
2015/03
2015/12
2015/12
2015/12
2015/07
2016/02
2015/12
2016/01
2015/03
2015/03
GBP
GBP
USD
USD
GBP
EUR
EUR
GBP
GBP
EUR
GBP
USD
GBP
USD
GBP
GBP
GBP
GBP
GBP
GBP
GBP
USD
EUR
AUD
NZD
EUR
GBP
GBP
GBP
GBP
USD
GBP
GBP
EUR
GBP
GBP
GBP
GBP
GBP
GBP
GBP
GBP
5.6
11.5
63.0
108.0
0.5
10.0
3.0
20.0
1.3
21.0
5.4
14.5
5.6
2.0
16.4
201.0
1.8
165.0
0.5
0.7
0.0
20.0
12.0
9.0
3.5
34.0
12.0
2.9
0.0
10.0
4.0
4.6
2.1
25.0
8.8
46.1
5.0
1.3
1.5
2.9
0.0
1.0
6.4
12.0
65.0
116.0
0.5
11.0
3.2
21.0
6.8
12.5
67.0
120.0
0.8
12.0
3.3
21.0
25.0
5.7
15.3
6.4
1.0
11.7
89.6
1.9
0.0
1.0
0.2
10.0
25.0
13.0
30.0
6.0
15.8
7.4
1.0
15.0
109.5
2.1
0.0
1.3
0.2
40.0
12.0
2.9
2.4
12.0
50.0
12.0
2.9
2.6
14.0
4.7
2.4
26.0
9.3
47.4
6.0
1.4
1.5
3.0
0.0
1.5
5.0
2.7
27.0
10.3
49.5
7.0
1.5
1.5
3.2
7.0
1.7
36.0
13.7
97
Results diary
Listed below are the expected dates of forthcoming results from Monday, 30 May 2016.
Monday 30 May
Renold
Finals
Tuesday 1 June
Atlantis Resources
Kainos Group
HaiKe Chemical Group
Finals
Wednesday 2 June
Fusionex International
Interims
LondonMetric Property
Telford Homes
Acal
Finals
Thursday 2 June
Iomart Group
Johnson Matthey
Finals
Monday 6 June
Palace Capital
Finals
Tuesday 7 June
IDOX
Gooch & Housego
Interims
WYG
Carclo
B.P. Marsh & Partners
VP
Vianet Group
Fulcrum Utility Services
Finals
Redhall Group
Alternative Networks
Sanderson Group
Interims
Grafenia
Workspace Group
Tricorn Group
Creston
Best of the Best
Finals
Watkin Jones
Private & Commercial Finance Group
Interims
First Property Group
Auto Trader Group
Volex
Flybe Group
Finals
Friday 10 June
Fuller Smith & Turner
Finals
Monday 13 June
Schroder Real Estate Investment Trust
Finals
Tuesday 14 June
Crest Nicholson Holdings
Servoca
Interims
Norcros
Halma
Trifast
Shield Therapeutics
Market Tech Holdings
Park Group
Ashtead Group
Falkland Islands Holdings
Finals
Wednesday 8 June
Thursday 9 June
Edison Insight | 26 May 2016
98
Wednesday 15 June
Berkeley Group Holdings
Oxford Instruments
Finals
Thursday 16 June
Safestore Holdings
Interims
Darty
Redcentric
Consort Medical
Purplebricks Group
Atkins (WS)
Charles Stanley Group
Finals
Thursday 23 June
Latham (James
Smith (DS)
Finals
Friday 24 June
Polar Capital Holdings
Eckoh
Finals
Monday 27 June
Porvair
Interims
Omega
Diagnostics Group
Finals
Ocado Group
Interims
Carpetright
Cohort
ULS Technology
Finals
Wednesday 29 June
Stagecoach Group
Dixons Carphone
Finals
Thursday 30 June
Outsourcery
Finals
Tuesday 28 June
Edison Insight | 26 May 2016
99
Company
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19/03/14
BlackRock Latin American Inv. Trust
Investment companies
Investment company review
03/11/15
Software & comp services
Update
25/04/16
Technology
Update
10/04/15
Travel and leisure
Update
11/03/16
Oil & gas
Update
06/04/16
Industrial support services
Outlook
20/05/16
Media
Outlook
31/03/16
Technology
Update
13/05/16
Basic industrial
Update
13/05/16
Investment companies
Investment company review
18/12/15
Bushveld Minerals
Metals & mining
Update
18/05/16
Caledonia Mining
Metals & mining
Update
04/04/16
Investment companies
Investment company review
03/12/15
Canadian Overseas Petroleum Limited
Oil & gas
Flash
02/10/15
Cap Energy
Oil & gas
Update
15/02/16
Alternative energy
Update
11/04/16
Oil & gas
Update
01/10/14
Technology
Update
23/11/15
Food & drink
Update
11/04/16
Altamir
Amur Minerals
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Atlantis Japan Growth Fund
Augean
Avalon Rare Metals
Avanti Communications Group
Avesco Group
Avnel Gold Mining
Avon Rubber
Azonto Petroleum
Blancco Technology Group
blur Group
Borussia Dortmund
Bowleven
Braemar Shipping Services
BrainJuicer
Brady
British Polythene Industries
Brunner Investment Trust
Canadian General Investments
Carbios
Carbon Energy
Carclo
Carr’s Group
Edison Insight | 26 May 2016
100
Company
Cenkos Securities
Sector
Most recent note
Date published
Financials
Update
26/05/16
Metals & mining
Update
06/10/14
Alternative energy
Update
25/02/16
Oil & gas
Update
28/04/15
Metals & mining
Initiation
18/08/14
Utilities
Initiation
26/04/16
Financials
Update
19/10/15
Investment companies
Electronics & electrical
i
t
General industrials
Investment company review
22/01/15
Update
24/04/14
Update
19/05/16
Aerospace & Defence
Flash
31/03/16
Comptel
Technology
Update
07/08/15
Comvita
Consumer
Update
16/05/16
Food & drink
Update
18/12/15
Central Asia Metals
Ceres Power Holdings
Challenger Energy
Champion Iron
China Water Affairs group
Circle Holdings
City Natural Resources
CloudTag
Coats Group
Cohort
Cooks Global Foods
Corac Group
Industrials
Update
26/05/15
Creston
Media
Update
18/04/16
Cupid
Media
Update
26/05/15
Metals & mining
Update
21/01/16
Investment companies
Outlook
13/05/16
Alternative energy
Update
30/03/16
Deutsche Beteiligungs
Investment companies
Investment company review
16/02/16
Diverse Income Trust (The)
Investment companies
Investment company review
11/02/16
Metals & mining
Update
11/11/14
Investment companies
Investment company review
05/10/15
Industrials
Initiation
28/02/14
Media
Technology
Update
Flash
30/03/16
21/01/16
Investment companies
Initiation
13/10/14
Oil & gas
Flash
24/05/16
Technology
Update
15/06/15
Elk Petroleum
Oil & gas
Initiation
04/05/16
EMED Mining
Metals & mining
Update
16/09/15
Media
Update
24/05/16
Entu
Industrials
Update
31/07/15
Epwin Group
Industrials
Update
04/05/16
Danakali
DeA Capital
Deinove
Duluth Metals
Dunedin Enterprise Investment Trust
DX Group
Ebiquity
Eckoh
Edinburgh Worldwide Investment Trust
Egdon Resources
Ekso Bionics Holdings
Entertainment One
EQS Group
Media
Update
21/04/16
eServGlobal
Technology
Update
25/05/16
Esker
Technology
Outlook
04/05/16
Metals & mining
Update
18/04/16
Media
Update
24/05/16
European Assets Trust
Investment companies
Investment company review
11/05/15
European Investment Trust (The)
Investment companies
Investment company review
26/06/15
Food & beverages
Update
06/04/16
Technology
Update
17/12/15
Property
Update
16/05/16
Fidelity China Special Situations
Investment companies
Investment company review
20/04/16
Fidelity European Values
Investment companies
Investment company review
11/12/15
Retail
Flash
24/03/16
Investment companies
Investment company review
29/03/16
General retailers
Update
02/09/15
Investment companies
Investment company review
15/03/16
Property
Update
06/11/14
Technology
Update
19/05/15
Industrial support services
Update
06/08/15
Financials
Update
25/09/14
Gaming
Update
06/05/16
Technology
Update
20/04/16
Euromax Resources
Euromoney Institutional Investor
Evolva
Expert System
Fair Value REIT
Findel
Finsbury Growth & Income Trust
Firstextile
Foreign & Colonial Investment Trust
Forterra Trust
Fusionex International
G3 Group
Gable Holdings
Gaming Realms
GB Group
Edison Insight | 26 May 2016
101
Company
Sector
Most recent note
Date published
Consumer support services
Initiation
10/05/16
Oil & gas
Initiation
17/11/14
Technology
Update
21/03/16
Financials
Outlook
28/04/16
Alternative energy
Update
08/04/16
Investment companies
Initiation
06/05/14
Property
Update
23/09/15
Investment companies
Investment company review
07/11/14
Oil & gas
Update
21/11/14
Technology
Update
24/03/16
Oil & gas
Outlook
06/01/16
Food & drink
Update
11/05/16
Greka Drilling
Oil & gas
Update
24/11/14
Gulf Keystone Petroleum
Oil & gas
Flash
15/10/15
Gear4music Holdings
Genie Energy
GFT Group
GLI Finance
Global Bioenergies
Global Resources Investment Trust
Globalworth Real Estate Investments
Golden Prospect Precious Metals
Green Dragon Gas
GO internet
Green Dragon Gas
Greggs
GVC Holdings
Travel & leisure
Update
03/05/16
Hansa Trust
Investment companies
Investment company review
24/11/15
HarbourVest Global Private Equity
Investment companies
Update
06/10/15
Oil & gas
Outlook
06/07/12
HBM Healthcare Investments
Investment companies
Initiation
26/02/16
Henderson Far East Income
Investment companies
Investment company review
04/05/16
Henderson Global Trust
Investment companies
Investment company review
31/03/16
Henderson International Income Trust
Investment trusts
Investment company review
16/12/15
Henderson Value Trust
Investment trusts
Initiation
04/06/15
Oil & gas
Update
20/05/15
Consumer support services
Update
26/05/16
Financials
Update
13/08/15
Hurricane Energy
Oil & gas
Update
28/04/16
Hydrodec Group
Oil & gas
Update
27/10/15
Industrial engineering
Pre-IPO
17/09/15
ifa systems
Software & comp services
Update
03/12/14
IFG Group
Financials
Update
12/05/16
Imperial Innovations
Financials
Update
11/03/16
Technology
Flash
07/07/15
Industrial support services
Update
19/11/15
Alternative energy
Flash
04/03/16
Hawkley Oil & gas
High Peak Royalties
Hogg Robinson Group
HSBC
HydroWorks
Innovation Group
Inspired Energy
Intelligent Energy Holdings
International Biotechnology Trust
Investment companies
Investment company review
10/05/16
Consumer support services
Update
18/04/16
Invesco Asia Trust
Investment companies
Investment company review
26/11/15
InVision
Technology
Electronics & electrical
i
t
Investment companies
Outlook
04/11/15
Update
22/03/16
Outlook
15/03/15
International Greetings
IQE
Is Private Equity
IS Solutions
Technology
Outlook
09/03/16
General financial
Update
24/05/16
Industrials
Outlook
22/02/16
Investment trusts
Investment company review
10/09/15
JPMorgan Global Convertibles Inc Fund
Investment companies
Investment company review
10/02/16
JPMorgan Private Equity
Investment Companies
Investment company review
28/04/15
Jupiter Primadona Growth Trust
Investment companies
Initiation
03/06/15
K3 Business Technology Group
Technology
Update
26/04/16
Mining
Update
10/03/16
Industrials
Update
26/04/16
Software & comp services
Update
15/04/16
Industrials
Update
22/04/15
Food & drink
Update
02/03/16
Alternative energy
Initiation
09/09/15
Is Yatirim Menkul Degerler
Jersey Electricity
JPMorgan European Smaller Comps
KEFI Minerals
KTG Energie
Keywords Studios
Kongsberg Automotive
La Doria
Leaf Resources
Liquefied Natural Gas Ltd
Lookers
London Stock Exchange Group
Edison Insight | 26 May 2016
Oil & gas
Update
26/04/16
General retailers
Update
15/03/16
Financials
Update
19/10/15
102
Company
Sector
Most recent note
Date published
Basic industries
Update
19/02/16
Property
Update
24/03/16
Martin Currie Asia Unconstrained Trust
Investment companies
Investment company review
17/02/16
Martin Currie Global Portfolio Trust
Investment companies
Investment company review
10/02/16
Financials
Flash
07/05/13
Property
Update
18/02/16
Investment companies
Investment company review
17/12/15
Software & comp services
Flash
27/04/16
Mining
Update
05/02/16
Miton Income Opportunities Trust
Investment companies
Investment company review
10/07/13
Miton Global Opportunities
Investment companies
Review
09/03/16
Media
Initiation
29/03/16
Metals & mining
Update
26/04/16
Technology
Update
29/09/15
Low & Bonar
LSL Property Services
MCB Finance Group
MedicX Fund
Merchants Trust (The)
migme
Mineral Commodities
Mitula Group
MMG
Monitise
Mosman Oil & Gas
Oil & gas
Update
29/09/15
Mwana Africa
Metals & mining
Update
27/05/15
M Winkworth
Financial services
Update
03/12/15
NAHL Group
Financial services
Update
24/03/15
National Grid
Industrials
Update
18/11/15
Ncondezi Energy
Metals & mining
Update
29/04/13
Nektan
Travel & Leisure
Update
23/10/15
Technology
Outlook
18/04/16
Support services
Outlook
25/09/15
Oil & gas
Update
31/10/14
Media
Update
28/04/15
Healthcare equipment &
Oil & igas
Initiation
11/09/15
Update
28/01/14
Industrial support services
Construction & building
i l
Oil t& gas
Flash
30/04/15
Update
22/04/16
Re-initiation
17/07/14
Oil & gas
Update
02/09/14
Financial services
Update
19/05/16
Investment companies
Outlook
26/06/15
Metals & mining
Update
15/04/16
Financial services
Update
13/05/16
NetDimensions
Newmark Security
New Standard Energy
Next Fifteen Communications
Nexstim
Nido Petroleum
Norbert Dentressangle
Norcros
Northern Petroleum
Norwest Energy
Numis Corporation
Ocean Wilsons Holdings
Orosur Mining
OTC Markets Group
Otto Energy
Oil & gas
Update
18/12/15
Investment companies
Investment company review
30/07/15
Real estate
Flash
10/05/16
Metals & mining
General industrials
Update
16/03/16
Update
14/04/16
Oil & gas
Update
07/05/15
Financial services
Update
08/04/16
Technology
Update
21/04/16
Petrel Energy
Oil & gas
Update
26/08/15
Petroceltic
Oil & gas
Flash
19/01/16
Oil & gas
Software & comp services
Update
13/11/14
Initiation
03/05/16
Oil & gas
Update
25/04/14
Basic industries
Alternative energy
Update
08/04/16
Initiation
11/09/14
Travel & leisure
Flash
05/05/16
Property
Update
23/02/16
Prodware
Technology
Update
26/05/16
PSI
Technology
Update
15/04/16
Oil & gas
Investment companies
Update
16/12/15
Investment company review
12/05/16
Aerospace & defence
Update
18/04/16
Pacific Assets Trust
Palm Hills Developments
Pan African Resources
paragon
Parex Resources
Park Group
Paysafe Group
Petromanas Energy
Piteco
Po Valley Energy
Powerflute
PowerHouse Energy Group
PPHE Hotel Group
Primary Health Properties
Pura Vida Energy
Qatar Investment Fund
QinetiQ Group
Edison Insight | 26 May 2016
103
Company
Sector
Most recent note
Date published
Oil & gas
Outlook
16/11/15
Media
Update
25/05/16
Oil & gas
Update
03/03/16
Rank Group
Travel & leisure
Update
12/05/16
Rare Earth Minerals
Metals & mining
Update
15/01/16
Property
Update
01/04/16
Technology
Initiation
31/03/16
Financials
Update
01/12/15
Industrial support services
Update
09/09/15
Technology
Update
06/01/16
Industrial support services
Flash
05/10/15
Media
Update
07/03/16
Metals & mining
Initiation
23/04/14
Oil & gas
Update
25/05/16
Aerospace & defence
Construction & building
t i l
Alternative energy
Update
11/04/16
Update
09/04/15
Update
17/09/14
Metals & mining
Flash
12/05/15
Financials
Update
20/05/16
Investment companies
Investment company review
18/03/16
Investment trusts
Initiation
22/06/15
Technology
Outlook
14/04/16
Investment companies
Investment company review
14/04/16
SeaDragon
Food & drink
Update
01/12/15
SeaEnergy
Alternative energy
Update
16/04/15
Engineering
Update
25/11/15
Financials
Outlook
26/04/16
Securities Trust of Scotland
Investment companies
Investment company review
09/03/16
Seeing Machines
Technology
Investment companies
Update
13/11/15
Investment company review
08/03/16
Industrial engineering
Update
03/05/16
Industrial support services
Update
05/02/16
Share plc
Financials
Update
29/03/16
Shore Capital Group
Financials
Initiation
09/05/16
Sigma capital Group
Real estate
Outlook
17/12/14
Silver Wheaton
Metals & mining
Update
25/05/16
SinnerSchrader
Technology
Update
18/04/16
SITO
Technology
Update
17/12/14
Financial services
Update
23/09/15
Technology
Update
21/03/16
General retailers
Initiation
26/08/14
Quadrise Fuels International
Quarto Group (The)
Ramba Energy
Raven Russia
Real Estate Investar
Record
Regeneus
Rex Bionics
RM2 International
RNTS Media
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Snakk Media
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Outlook
30/09/14
Travel & leisure
Flash
27/11/14
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Technology
Update
04/05/16
Solera
Technology
Update
23/07/15
Industrial support services
Flash
25/05/16
Oil & gas
Update
12/05/15
Update
29/03/16
Standard Life Equity Income Trust
Media
Investment companies
Initiation
01/10/15
Standard Life European Private Equity Trust
Investment companies
Initiation
24/02/16
Standard Life Inv. Property Income Trust
Investment companies
Initiation
19/10/15
Standard Life UK Smaller Cos Trust
Investment companies
Initiation
02/09/15
StatPro Group
Technology
Update
19/05/16
Stobart Group
Support services
Update
05/11/15
Technology
Update
17/11/15
Investment companies
Investment company review
20/03/15
Travel & leisure
Update
23/05/16
Snoozebox
Solid State
Sound Oil
SpaceandPeople
Store Electronic Systems
Strategic Equity Capital
Stride Gaming
Edison Insight | 26 May 2016
104
Company
Sector
STV Group
Most recent note
Date published
Media
Update
26/04/16
Taiwan Fund (The)
Investment companies
Investment company review
11/02/15
Tangiers Petroleum
Oil & gas
Update
16/01/15
Investment companies
Investment company review
03/06/15
Building materials
Outlook
03/12/15
Oil & gas
Flash
02/07/15
The Bankers Investment Trust
Investment trusts
Investment company review
14/03/16
The North American Income Trust
Investment trusts
Initiation
26/04/16
Investment companies
Investment company review
25/09/15
Thin Film Electronics
Technology
Update
19/05/16
Thunderbird Resorts
Travel & leisure
Update
04/09/15
Tiso Blackstar Group
Investment companies
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20/04/16
Oil & gas
Update
23/01/15
Travel & leisure
Industrial engineering
Update
04/05/16
Update
21/04/16
Investment trusts
Initiation
29/10/15
Technology
Update
16/02/16
Oil & gas
Flash
07/10/15
Treatt
Basic industries
Update
17/05/16
Trifast
Engineering
Update
17/02/16
Metals and mining
e-invoicer & invoice financier
Update
Update
01/02/16
24/02/16
Templeton Emerging Markets Investment Trust
Tenon
Tethys Petroleum
The World Trust Fund
Touchstone Exploration
Tourism Holdings
TP Group
TR European Growth Trust
Track Group
TransGlobe Energy
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TXT e-solutions
Technology
Update
18/05/16
Construction & materials
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13/05/16
Tech hardware & equipment
Update
19/05/15
Aerospace & defence
Flash
19/05/16
Software & comp services
Initiation
10/05/16
Investment companies
Investment company review
16/02/16
Industrial support services
Update
29/04/16
Technology
Update
26/02/15
Oil equipment & services
Update
30/06/14
Vertu Motors
Automotive retailers
Update
17/05/16
Victoria Gold
Metals & mining
Update
07/04/16
Investment companies
Investment company review
01/10/14
Tech hardware & equipment
Update
04/04/16
Investment companies
Investment company review
17/08/15
Technology
Initiation
03/12/14
General industrials
Update
13/04/16
Technology
Flash
28/04/16
Oil & gas
Initiation
05/06/14
Industrial support services
Flash
31/03/16
Alternative Energy
Outlook
23/03/16
Witan Investment Trust
Investment companies
Investment company review
07/12/15
Witan Pacific Investment Trust
Investment companies
Investment company review
16/05/16
Worldwide Healthcare Trust
Investment companies
Investment company review
17/05/16
Metals & mining
Update
03/11/14
Industrial support services
Update
23/05/16
Oil & gas
Update
17/05/16
Electronic & electrical equipment
Update
11/04/16
Industrial support services
Update
24/05/16
YouGov
Media
Update
22/03/16
YuuZoo
Software & comp services
Initiation
20/05/15
Metals & mining
Flash
02/10/14
Tyman
TZ Limited
Ultra Electronics
UMT United Mobile Technology
Utilico Emerging Markets
Utilitywise
VASCO Data Security
Velocys
VinaCapital Vietnam Opportunity Fund
Vislink
VinaLand
VMob Group
Walker Greenbank
WANdisco
WestSide Corporation
Wincanton
Windar Photonics
W Resources
WYG
Xcite Energy
XP Power
YPB Group
Zanaga Iron Ore Company
Edison Insight | 26 May 2016
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