EDISON INSIGHT Strategic perspective | Company profiles
August 2021
Published by Edison Investment Research
Contents
Global perspectives 2 Company profiles 7 Edison dividend list 65 Stock coverage 66
Prices at 20 August 2021 Published 26 August 2021 US$/£ exchange rate: 0.7231 NOK/£ exchange rate: 0.0814 €/£ exchange rate: 0.8519 CHF/£ exchange rate: 0.7913 C$/£ exchange rate: 0.5748 ZAR/£ exchange rate: 0.0489 A$/£ exchange rate: 0.5293 HUF/£ exchange rate: 0.0024 NZ$/£ exchange rate: 0.5039 KZT/£ exchange rate: 0017 SEK/£ exchange rate: 0.0834 JPY/£ exchange rate: 0.0066
Welcome to the August edition of Edison Insight. We now have c 400 companies under coverage, of which 115 are profiled in this edition. Healthcare companies are covered separately in Edison Healthcare Insight. Click here to view the latest edition.
This month we open with a strategy piece by Alastair George, who believes that the impact of the positive benefits from the policy responses to COVID-19 may have peaked and the time for tighter global monetary conditions is nearing. Market volatility is likely to rise during the autumn as policymakers negotiate their first steps away from COVID-19 support towards more neutral settings, consistent with the closing of output gaps in developed market economies. Investors may be focused on Fed ‘tapering’ but the bigger risk is to economic growth. The persistence of the ‘delta’ variant infections despite comprehensive vaccination programmes suggests that further relaxation of social restrictions is becoming less likely in developed markets. In China, purchasing managers’ indices (PMIs) have peaked and bond yields are falling as growth slows, suggesting pricing of industrial commodities and energy may soften. At high valuations, global equities continue to walk a tightrope. Global equities are still trading at a 15- year high forward price/book. While this is not necessarily irrational in the context of very low yields available in other asset classes, it is suggestive of only modest returns for long-term investors. There are two ‘known’ risks which may yet prove problematic. The most obvious is that the goalposts have shifted on the ‘delta’ variant of COVID-19 from suppression to tolerance of endemic levels of disease and as a result further social restrictions cannot be excluded during the autumn. Secondly, and arguably more importantly for markets, medium-term inflation expectations have risen sharply in the United States which may yet constrain the US Federal Reserve. However, consensus earnings forecasts continue to offer support for global markets in the very near term. 2021 earnings forecasts have continued their upward trajectory during August. While unquestionably helpful for sentiment in the short term, we do question for how long this can persist as PMIs retrace from peak levels. We maintain a neutral position on global equities, balancing valuation concerns against still strong earnings momentum. However, we suggest heightened vigilance is in order for the autumn as the prospect of tighter monetary conditions draws closer. As developed market economies return to trend levels of activity, economic growth is likely to slow just as central bank policies take their first steps on the path to policy normalisation.
This month we have added Mirriad Advertising and Global Energy Ventures to the company profiles. Readers wishing for 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 is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisors and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. 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 August 2021 1
Global perspectives: The cycle advances Analyst The impact of the positive benefits from the policy responses to COVID-19 Alastair George may have peaked. The time for tighter global monetary conditions is nearing. We +44 (0)20 3077 5700 believe that market volatility is likely to rise during the autumn as policymakers [email protected]
negotiate their first steps away from COVID-19 support towards more neutral settings, consistent with the closing of output gaps in developed market economies.
Investors may be focused on Fed ‘tapering’ but we believe the bigger risk is to economic growth. In the very short term, the persistence of the ‘delta’ variant infections despite comprehensive vaccination programmes suggests that further relaxation of social restrictions is becoming less likely in developed markets. In China, purchasing managers’ indices (PMIs) have peaked and bond yields are falling as growth slows, suggesting pricing of industrial commodities and energy may soften.
At high valuations, global equities continue to walk a tightrope. Global equities are still trading at a 15-year high forward price/book. While this is not necessarily irrational in the context of very low yields available in other asset classes, it is suggestive of only modest returns for long-term investors.
We can identify two ‘known’ risks which may yet prove problematic. The most obvious is that the goalposts have shifted on the ‘delta’ variant of COVID-19 from suppression to tolerance of endemic levels of disease. While in largely vaccinated nations infection rates have to a significant degree decoupled from economic trajectories, further social restrictions cannot be excluded during the autumn. Secondly, and arguably more importantly for markets, medium-term inflation expectations have risen sharply in the United States which may yet constrain the US Federal Reserve.
However, consensus earnings forecasts continue to offer support for global markets in the very near term. 2021 earnings forecasts have continued their upward trajectory during August. While unquestionably helpful for sentiment in the short term, we do question for how long this can persist as PMI indices retrace from peak levels.
We maintain a neutral position on global equities, balancing valuation concerns against still strong earnings momentum. However, we suggest heightened vigilance is in order for the autumn as the prospect of tighter monetary conditions draws closer. As developed market economies return to trend levels of activity, economic growth is likely to slow just as central bank policies take their first steps on the path to policy normalisation.
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The cycle advances
The benefits from the policy responses to COVID-19 are close to peaking, in our view. The time for tighter global monetary conditions is nearing and the ‘fiscal impulse’ or rate of change of budget deficits will become contractionary by 2022 in much of the developed world. The narrative of a complete vaccine-led recovery is becoming increasingly challenged by stubbornly high levels of infection of the ‘delta’ COVID-19 variant, even if hospital admissions per infection are a fraction of previous levels.
Exhibit 1: Is the ‘delta’ variant defeating the first generation of vaccines?
900 800 700 600 500 400 300 200 100 0 Italy UAE Chile Israel Latvia Japan Russia Turkey Ireland France Poland Mexico Croatia Iceland Finland Greece Estonia Norway Canada Czechia Belgium Sweden Portugal Hungary Australia Malaysia Lithuania Germany Colombia Argentina Singapore Switzerland Netherlands South Africa South Korea Saudi Arabia Saudi New Zealand United States
United Kingdom United Source: Our world in data, Edison Investment Research calculations. Note: Chart shows daily new cases per million of population. The shifting of the goalposts in terms of the benefits of vaccines away from the gold standard of herd immunity to moderating hospital admissions has been accompanied by a similar shift in thinking among investors in terms of the impact of COVID-19 on the economy and financial markets. The stubbornly high level of infections in the UK and the fourth wave of infections in Israel, both populations with high vaccination rates, has not been associated with any meaningful increase in equity market volatility in recent weeks. Investors believe the trajectory of the economy has to a large degree decoupled from the evolution of the pandemic, for as long as the most intrusive social restrictions can be avoided.
Exhibit 2: Narrowing output gaps close the window for extraordinary policies
4.00 2.00 0.00 -2.00 -4.00
% GDP -6.00 -8.00 -10.00 -12.00 -14.00 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
United States OECD - Total Germany Japan United Kingdom
Source: OECD, National statistics However, we believe that market volatility is likely to rise during the autumn as the Fed and other monetary policymakers negotiate their first steps away from COVID-19 support towards more neutral policy settings, consistent with the closing of output gaps in developed market economies. While investors should in our view keep an open mind on the transience or otherwise of the factors behind the recent increase in inflation, it is a fact that US inflation has exceeded policymakers’ initial forecasts during 2021 and increasingly risks boxing in US monetary policy at a time when the risks from COVID-19 have not gone away. Consumer surveys of medium-term US inflation expectations
Edison Insight | 26 August 2021 3
are elevated, Exhibit 3, and the fact that long-term bond yields are yet to respond is a testament to investors’ conviction in the Fed’s control of the long end of the yield curve, which may yet be tested.
Exhibit 3: Rising US inflation and survey-based inflation expectations not yet reflected in US bond yields
3.5 4.00 3 2.5 3.50 2 %
% 1.5 3.00 1 0.5 2.50 0 -0.5 2.00 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 Jun-19 Dec-19 Jun-20 Dec-20 Jun-21
US CPI Inflation expectations
Source: Refinitiv, Federal Reserve Bank of New York For equity investors, forward price/book multiples remain at a 15-year high, according to our calculations. Based on historical evidence, currently high valuations suggest a relatively modest rate of return for global equities over the longer term. We believe experienced investors are under no illusions but are currently faced with few compelling liquid alternatives to equities. In addition to low term premiums for government bonds, corporate credit spreads remain close to record lows.
Furthermore, the trend in consensus earnings forecasts remains positive, leading to the sense of needing to do something as portfolios generate significant gains in 2021, but perhaps not right now. We believe the optimal strategy is to maintain discipline and take profits where sector valuations are fully up with the recovery while recognising that for as long as earnings forecasts continue rising a major market correction remains relatively unlikely.
Nevertheless, the breadth of the argument for maintaining equity weightings has shrunk considerably compared to as recently as Q320. At that time, the bull case could draw on supportive valuations, the prospect of a strong COVID-19 recovery and accommodative policy settings, in addition to positive earnings momentum. Bullish arguments based on the single factor of recent positive earnings momentum should carry less weight in our view.
The US manufacturing PMI peaked in July while the Euro-area PMI index has also fallen from the record levels of earlier in the summer, with respondents highlighting supply chain issues and input price inflation as negative factors. While developed market PMIs are still at levels indicating a relatively fast expansion, we also note that in China the Caixin manufacturing PMI is close to 50, having declined steadily since the start of the year.
Exhibit 4: Global equities close to 15-year record price/book
3
2.5
2
1.5 P/Book 1
0.5
0 2004 2006 2008 2010 2012 2014 2016 2018 2020
FY1 P/Book Average
Source: Refinitiv, Edison Investment Research calculations as of 30 July 2021
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Earnings momentum still positive for now Global consensus earnings estimates have continued their upward trajectory, representing another bullish impulse in the tug of war between high valuations on the one hand and strong profits momentum on the other.
Exhibit 5: Global consensus earnings estimates re-accelerate to the upside
110 105 100 95 90 85 Index level Index 80 75 Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21 Mar-21 May-21 Jul-21
Unweighted Weighted average
Source: Refinitiv, Edison Investment Research calculations as of 24 August 2021 Despite our worries of a loss of economic momentum, the strong corporate performance being demonstrated in the recent earnings season has once again pushed consensus forecasts for 2021 to a new high. On a weighted basis we estimate that global profits forecasts are now 5% higher than the pre COVID-19 levels of January 2020.
On an equal-weighted basis global profits forecasts are close to par with pre COVID-19 levels. The stronger growth for the weighted index reflects the unanticipated surge in profits for the large-cap technology sector during 2020 which has ‘stuck’ as working practices have changed, followed by the 2021 recovery in expectations for the mining and energy sectors.
Exhibit 6: 2021 global sector one-month consensus earnings revisions
Chemicals Automobiles & Auto Parts Cyclical Consumer Products Mineral Resources Technology Equipment Energy - Fossil Fuels Software & IT Services Industrial & Commercial Services Pharmaceuticals & Medical Research Retailers Insurance Transportation Industrial Goods Real Estate Cyclical Consumer Services Banking & Investment Services Applied Resources Consumer Goods Conglomerates Food & Drug Retailing Telecommunications Services Healthcare Services & Equipment Utilities Food & Beverages Personal & Household Products & Services -4% -2% 0% 2% 4% 6% 8% 1-month 2021 earnings revision
Source: Refinitiv, Edison Investment Research calculations as of 24 August 2021 Even given some high-profile earnings misses in the personal and household goods sector, in aggregate there appears to have been relatively little impact to date on corporate profits from
Edison Insight | 26 August 2021 5
exceptionally strong input cost inflation over the past year. All but one of the 25 largest global sectors benefited from upgrades during the past month.
We believe the corporate sector is in something of a sweet spot with stimulus packages put in place to counter COVID-19 restrictions still supporting activity, while all but the most trivial of public health restrictions to counter the spread of COVID-19 have been removed. We also note that travel restrictions and costly requirements for pre- and post-travel testing and quarantine are being progressively dismantled across Europe.
However, unlike earlier in the year this benign picture from consensus earnings revisions is increasingly at odds with the declining momentum in PMI survey data and a modest softening of energy and industrial metals prices in recent months. Investors may have become accustomed to corporate earnings upgrades over the past 12 months, but they are the exception rather than the rule as it is more typical for earnings forecasts to modestly decline over the course of a year.
Looking further forward, we believe there is a risk that earnings momentum will ebb over the remainder of the year as the positive effects from the re-opening of the economy fade and the negative effects in terms of supply chain issues and input cost inflation gain in prominence.
Conclusion
We believe that we no longer need to look towards ‘unknowns’ to argue for a considered approach to portfolio risk at present. Globally, equity valuations remain extended on a price/book basis with many sectors well above long-term averages on this measure. An autumn resurgence in ‘delta’ COVID-19 infections would hardly be a big surprise given the waning efficacy of the current generation of vaccines over time. Furthermore, survey data point to slowing global growth rates while Fed policymakers have much to ponder on rising US inflation expectations and the risks of any delays to the tapering of the US QE programme.
It remains the case in our view that given current valuations, the risk/reward appears unusually asymmetric to the downside for many sectors and markets. While we remain neutral on global equities, the tailwind from COVID-19 stimulus measures is diminishing and the hard questions of higher inflation, tighter monetary policy and slower growth lie ahead. Earnings momentum may remain positive for now but as the key swing factor for corporate profits expectations is energy and commodity demand, we are now calling time on this period of ever-rising earnings forecasts, which are already above pre COVID-19 levels.
We maintain a neutral position on global equities for now, balancing valuation concerns against still strong earnings momentum but suggest heightened vigilance is in order for the autumn as the prospect of tighter monetary conditions draws closer. As developed market economies return to trend levels of activity, economic growth is likely to slow just as central bank policies take their first steps on the path to policy normalisation.
We remain underweight on global bonds as current yields do not appear to reflect rising inflation or inflation uncertainty, nor the Fed’s new-found determination to ensure an average rate of inflation close to target in the medium term. These factors suggest that at current yields global bonds could offer limited or even no protection for portfolios, should the growth rate of the global economy slow during the autumn.
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Sector: Technology 1Spatial (SPA) Price: 37.5p Market cap: £41m INVESTMENT SUMMARY Market AIM 1Spatial’s recent AGM statement (23 June) highlighted that orders for new sales are up year-on-year so far and refers to a ‘strong and growing pipeline in all regions’, suggesting Share price graph (p) momentum was sustained in May and most of June. As management is expecting growth and our forecasts include a rise in sales in FY22, we make no changes ahead of the interims on 29 September. However, we continue to see scope for an increase in forecasts if momentum continues.
INDUSTRY OUTLOOK
The GIS industry is large and growing. P&S Market Research estimates the global GIS software, services and hardware market generates sales of US$9.0bn annually and will grow at a 10% CAGR to reach annual sales of US$17.5bn by 2023. 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 of data.
Y/E Jan Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual (1.3) (13.8) 47.1 2020 23.4 3.2 0.8 0.58 64.7 72.2 Relative* (4.9) (15.5) 20.8 2021 24.6 3.6 0.3 0.18 208.3 10.8 * % Relative to local index Analyst 2022e 25.6 3.7 0.4 0.26 144.2 8.5 Dan Gardiner 2023e 27.2 4.2 0.8 0.53 70.8 8.2
Sector: Technology 4iG (4IG) Price: HUF641.00 Market cap: HUF63592m INVESTMENT SUMMARY Market Budapest stock exchange Having announced a series of transformational acquisitions in H121, including DIGI Group (a leading Hungarian telecoms services provider) and Spacecom (a listed Israeli satellite Share price graph (HUF) operator), 4iG's newsflow since the Q121 update has been limited. On a pro forma basis, these businesses look set to incraese 4iG's run-rate EBITDA to HUF88bn (c US$300m). Clearly both DIGI Group and Spacecom are transformational deals for 4iG but are not yet reflected in our forecasts. We will update our estimates once the deals complete in H221. 4iG's H121 results are expected on 31 August 2021.
INDUSTRY OUTLOOK
Management anticipates continuing consolidation-driven growth, with organic growth supplemented by market share gains and accelerating market consolidation. 4iG’s strategy Company description is focused on three pillars: IT services; telecoms & infrastructure; and space & defence. The 4iG is one of the leading IT services group is targeting market leadership in Hungary, but we also expect 4iG to develop a more and systems integrators in Hungary, working with public sector clients, large diversified regional footprint in FY21 and FY22. corporates and SMEs. Management is focused on becoming the market leader in Hungary by FY22 as well as targeting expansion in Central and Eastern Europe (CEE). Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (HUFbn) (HUFbn) (HUFbn) (HUF) (x) (x) % 1m 3m 12m Actual (2.0) 6.7 (0.8) 2019 41.1 4.1 3.3 31.54 20.3 N/A Relative* (9.7) (4.6) (30.8) 2020 57.3 5.0 4.2 37.17 17.2 N/A * % Relative to local index Analyst 2021e 82.7 8.9 7.3 59.16 10.8 N/A Richard Williamson 2022e 93.0 9.9 8.9 72.41 8.9 N/A
Edison Insight | 26 August 2021 7 Sector: Media 4imprint Group (FOUR) Price: 2940.0p Market cap: £826m INVESTMENT SUMMARY Market LSE 4imprint’s interim results show a strong pick-up in demand from both existing and new customers. Management’s decisions taken early in the onset of the pandemic to retain the Share price graph (p) staff base and maintain a market presence through advertising have put the group in a strong position to capitalise on the rebound in the US economy. A return to paying dividends is a clear indication of confidence and we have increased our revenue forecasts for FY21 and FY22 by 11% in both years. The step-up in projections at an earnings level are lower, given the higher US tax charges. 4imprint’s balance sheet remains strong, with end-June net cash of $53m.
INDUSTRY OUTLOOK
The Advertising Specialty Institute (ASI), an industry body, estimated the value of the US Company description promotional products distribution market in 2020 at US$20.7bn, down 20% on prior year, 4imprint is the leading direct marketer after an extended period of growth at a 10-year CAGR of 5.0%. However, the FY20 figure of promotional products in the United States, Canada, the UK and Ireland. In includes US$6bn of PPE sales, without which sales would have fallen by 43% year-on-year. FY20, 98% of revenues were 4imprint has dipped from the top of table but had negligible PPE sales. generated in the United States and Canada.
Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual 17.1 4.3 38.0 2019 860.8 59.1 55.6 157.2 25.9 20.2 Relative* 12.8 2.2 13.4 2020 560.0 8.4 5.0 13.8 294.6 155.5 * % Relative to local index Analyst 2021e 775.0 26.6 22.6 62.6 64.9 45.5 Fiona Orford-Williams 2022e 850.0 36.1 32.0 88.6 45.9 37.2
Sector: General industrials AAC Clyde Space (AAC) Price: SEK3.00 Market cap: SEK559m INVESTMENT SUMMARY Market Nasdaq FN Premier AAC Clyde Space is at the forefront of the rapidly growing and innovative market for small satellites. As nanosatellite build rates and deployments rise sharply over the next decade, Share price graph (SEK) increasing systems and platform sales should be surpassed by growing services revenue. Management is navigating the growth phase and targeting opportunities in New Space to extend AAC's reach, capabilities and technologies. Recent deals enhance profit and cash generation and support the SEK500m 2024 revenue goal. The largest SDaaS contract to date worth SEK100m was signed in July and the company has announced the start up of an operation to serve Africa. H121 results are due on 26 August 2021.
INDUSTRY OUTLOOK
AAC Clyde Space has a strong space heritage in small and nanosatellites. Over the next Company description five years around 3,000 nanosatellites should be launched as technology development AAC Clyde Space specialises in small extends the applications for low earth orbit (LEO) constellations, especially for satellite technologies and services that enable businesses, governments and communications. Its growing capabilities bring together three divisions: Space Data as a educational organisations to access Service, Space Missions and Space Products & Components. AAC Clyde Space aims to high-quality, timely data from space. The group’s main operations are in become a world leader in commercial small satellites and services from space. Sweden, the UK, the Netherlands and the United States, with partner networks in Japan and South Korea. Y/E Dec Net Sales EBITDA PBT EPS (fd) P/E P/CF Price performance (SEKm) (SEKm) (SEKm) (öre) (x) (x) % 1m 3m 12m Actual (2.0) 27.4 (7.7) 2019 66.4 (27.3) (38.2) (44.55) N/A N/A Relative* (6.4) 15.7 (35.5) 2020 98.4 (17.5) (26.7) (25.79) N/A N/A * % Relative to local index Analyst 2021e 217.8 7.2 (3.8) (2.00) N/A 154.7 Andy Chambers 2022e 293.0 25.6 16.5 8.00 37.5 22.0
Edison Insight | 26 August 2021 8 Sector: General industrials Accsys Technologies (AXS) Price: 161.0p Market cap: £310m INVESTMENT SUMMARY Market LSE FY21 results included group revenue of c €100m (+10%) with Accoya wood volumes up 4.5% (to c 60,500 m3) feeding into a 44% EBITDA uplift to €10.1m and positive EBIT and Share price graph (p) PBT contributions for the year as a whole after some COVID-19 disruption in Q1. The Arnhem facility operated at capacity and generated a manufacturing margin of 33.5%, c 200bp above the prior year. The addition of a fourth reactor is on track for completion by the end of FY22 and a US JV with Eastman Chemicals is moving through the front end process to evaluate a new greenfield Accoya facility with a decision expected this summer. The new Hull/Tricoya facility is now expected to be commissioned and operational by July 2022. Our estimates are under review.
INDUSTRY OUTLOOK
Company description Accsys has a technically proven process and wide international market acceptance for its Accsys Technologies is a chemical modified wood output. As well as successful capex execution, the sales and marketing technology company focused on the development and commercialisation of challenge is to pull through demand to absorb newly available capacity and develop licence a range of transformational partners. Management has previously stated long-term market potential of 1m m3 pa of technologies based on the acetylation of solid wood and wood elements for Accoya wood and 1.6m+ m3 of Tricoya panel products. use as high performance, environmentally sustainable construction materials. Y/E Mar Revenue EBITDA PBT EPS P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual (3.6) 3.2 77.1 2019 75.2 0.9 (6.2) (0.38) N/A N/A Relative* (7.1) 1.2 45.5 2020 90.9 7.0 (2.2) (0.08) N/A 113.3 * % Relative to local index Analyst 2021e N/A N/A N/A N/A N/A N/A Toby Thorrington 2022e N/A N/A N/A N/A N/A N/A
Sector: Mining Alkane Resources (ALK) Price: A$0.95 Market cap: A$566m INVESTMENT SUMMARY Market ASX Alkane exceeded its (already twice increased) production guidance of 50–55koz for FY21 by 1,958oz, at an AISC of A$1,320/oz (cf guidance of A$1,400–1,550/oz). At the same time, Share price graph (A$) exploration at Tomingley's San Antonio and Roswell extensions has led to an extension of the mine's life from CY23 until at least CY31 at higher levels of production (eg up to 115koz pa) and lower levels of cost (eg AISC of A$1,350–1,450/oz) than currently.
INDUSTRY OUTLOOK
Our most recent valuation of Alkane attributes 32c/share in value to Tomingley plus net cash (cf 18c previously). To this may then be added 1) 5c for the eventual development of the Roswell underground extension, 2) 13c given the current level of the gold price, 3) 4c for residual resources, 4) 3c for ongoing exploration success, 5) 8c for ALK's investments in Company description Calidus and Genesis and 6) up to 60c for exploration at Boda (where drilling has recently Alkane Resources is an Australian identified shallow, high grade cemented breccia plus a potential feeder structure to the production and development company. It previously produced 70,000oz of porphyry system). gold per year from the open-pit operations at its Tomingley gold mine, but is transitioning to underground operations and expects to produce c 52,500oz in FY21. Y/E Jun Revenue EBITDA PBT EPS P/E P/CF Price performance (A$m) (A$m) (A$m) (c) (x) (x) % 1m 3m 12m Actual (17.7) 10.5 (14.4) 2019 94.0 33.0 25.4 4.57 20.8 13.2 Relative* (19.9) 3.7 (30.5) 2020 72.5 29.4 20.6 2.56 37.1 18.5 * % Relative to local index Analyst 2021e 131.7 65.5 44.6 5.17 18.4 10.9 Charles Gibson 2022e 133.2 51.8 28.0 3.30 28.8 11.1
Edison Insight | 26 August 2021 9 Sector: Technology Allied Minds (ALM) Price: 26.0p Market cap: £62m INVESTMENT SUMMARY Market LSE Allied Minds' shares trade at a signficant discount to our FY20 adjusted NAV per share of 42.5p. Despite this, Allied Minds’ board is increasingly confident of delivering VC-like Share price graph (p) returns. In particular, management continues to believe in the potential for significant further value uplift from Federated Wireless as it continues to make good progress. Management continues its share buyback programme and expects to announce its H121 results in mid-September 2021. In a narrowing portfolio, funding rounds are still anticipated for Federated Wireless and BridgeComm. Given limited cash resources (H121: US$17.8m parent net cash), management will need to be cautious about its level of support for future rounds.
INDUSTRY OUTLOOK
Company description COVID-19 fears have largely abated, with sustained tech valuations and amidst a robust Allied Minds is a technology funding environment. Investors have preferred stocks that demonstrate portfolio progress investment company with a concentrated portfolio focused on and offer the opportunity for meaningful exits in a realistic timeframe and upside potential. early-stage spin-outs from US federal government laboratories and universities.
Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual 27.5 8.3 (40.9) 2019 2.7 (47.2) 49.5 20.97 1.7 N/A Relative* 22.8 6.2 (51.5) 2020 0.5 (12.9) (54.5) (21.49) N/A N/A * % Relative to local index Analyst 2021e N/A N/A N/A N/A N/A N/A Richard Williamson 2022e N/A N/A N/A N/A N/A N/A
Sector: Mining Alphamin Resources (AFM) Price: C$0.70 Market cap: C$834m INVESTMENT SUMMARY Market JSE , TSX-V Alphamin offers rare exposure to a metal that both Rio Tinto and MIT regard as being the most likely to benefit from the electrification of the world economy. Moreover, its Bisie mine Share price graph (C$) in the DRC is hitting its stride at just the moment that the tin price is experiencing its biggest squeeze in decades, providing it with a golden opportunity to repay debt and potentially make distributions to shareholders from as early as next year. Production from Q221-Q222 will be temporarily affected by lower mined grades. EBITDA for Q221 was nevertheless almost three times last year's level on account of the strong tin price.
INDUSTRY OUTLOOK
At a tin price of US$29,815/t, we estimate a value for Alphamin of US$0.615 (or C$0.743) per share. At a long-term tin price of US$23,425/t, we estimate a value for Alphamin of Company description US$0.424 (C$0.512) per share. However, this rises to as high as C$1.162/share in the Alphamin Resources owns (84.14%) event that exploration successfully expands and/or extends the life of operations (see recent and operates the Mpama North tin mine in the North Kivu province of the exploration updates). DRC with a grade of c 4.5% Sn (the world’s highest). Accounting for c 4% of the world’s mined supply, it is the second largest tin mine in the world outside China and Indonesia. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual (5.4) (6.7) 241.5 2019 27.2 8.5 (5.8) 0.8 69.6 N/A Relative* (7.3) (10.3) 178.8 2020 187.4 58.3 15.7 (1.1) N/A 32.6 * % Relative to local index Analyst 2021e 318.0 180.7 148.6 8.9 6.3 6.1 Charles Gibson 2022e 271.0 140.9 114.9 7.4 7.5 5.6
Edison Insight | 26 August 2021 10 Sector: Technology Applied Graphene Materials (AGM) Price: 29.5p Market cap: £19m INVESTMENT SUMMARY Market AIM Applied Graphene (AGM) has launched a range of eco-friendly graphene nanoplatelet dispersions that enable paints, coatings and composite materials customers to improve the Share price graph (p) sustainability of their product formulations in response to growing market pressures. The new range of eco-friendly graphene nanoplatelet dispersions are integrated with a selection of certified, fully biobased solvents and resins that are already available in the market. The dispersions are based on the company's well-established Genable graphene dispersion technology which has been proven to deliver significant performance uplifts such as chemical resistance, barrier and anticorrosion properties.
INDUSTRY OUTLOOK
AGM commenced trading on the US OTCQX Best Market with the ticker APGMF at the end Company description of July. The listing, which was not a capital raise, provides AGM with exposure to a wider Applied Graphene Materials (AGM) audience of potential investors by easing cross-border trading for those based in the United develops graphene dispersions that customers use to enhance the States. properties of coatings, composites and functional materials. It also manufactures high-purity graphene nanoplatelets using a proprietary process based on sustainable, readily available raw materials instead of Y/E Jul Revenue EBITDA PBT EPS (fd) P/E P/CF graphite. Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 11.3 (9.5) (4.2) 2019 0.1 (4.6) (4.8) (7.9) N/A N/A Relative* 7.2 (11.3) (21.3) 2020 0.1 (3.1) (3.5) (6.1) N/A N/A * % Relative to local index Analyst 2021e N/A N/A N/A N/A N/A N/A Anne Margaret Crow 2022e N/A N/A N/A N/A N/A N/A
Sector: General industrials ArborGen Holdings (ARB) Price: NZ$0.31 Market cap: NZ$157m INVESTMENT SUMMARY Market NZSX ArborGen’s FY21 results were US$1m ahead of our expectations at the US GAAP EBITDA level (at US$8.1m after central costs, which was above FY20’s US$7.7m comparable) but Share price graph (NZ$) slightly lower at the PBT level including lower R&D and other adjustments. The US in particular – and South America to a lesser extent – showed some revenue impact from the COVID-19 pandemic but underlying operations are strengthening through investment, self-help actions and growing availability of higher value seeds which are expected to facilitate a ramp up in seedling sales and revenue growth in future periods. The August ASM included FY22 US GAAP EBITDA (pre central costs) of US$13–14m and the previously announced strategic review is ongoing.
INDUSTRY OUTLOOK
Company description Prior to the COVID-19 outbreak, the economic growth outlook in each of its core countries, ArborGen Holdings (formerly Rubicon) the United States, Brazil, New Zealand and Australia, was either good or improving, is an NZX-listed investment company. Its subsidiary ArborGen is the world’s according to OECD data. At this point, the primary end-markets served by its plantation largest integrated developer, forestry customer base (ie construction and the pulp and paper industries) were in a positive commercial manufacturer and supplier of advanced forestry seedlings with cyclical phase. operations in the United States, Brazil and Australasia. Y/E Mar Revenue EBITDA PBT EPS P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual 46.5 85.3 93.3 2020 56.9 7.7 6.0 1.4 15.4 22.4 Relative* 45.0 84.9 81.5 2021 52.7 8.1 8.9 1.9 11.4 10.9 * % Relative to local index Analyst 2022e 62.1 12.0 12.1 2.4 9.0 8.3 Toby Thorrington 2023e 69.3 13.4 12.9 2.6 8.3 8.2
Edison Insight | 26 August 2021 11 Sector: Travel & leisure Aspire Global (ASPIRE) Price: SEK67.90 Market cap: SEK3157m INVESTMENT SUMMARY Market Nasdaq FN Premier Aspire Global's (AG's) Q221 strong organic revenue growth of 21.6% y-o-y and the contribution of Sports (consolidated from the start of Q420) produced another all-time high Share price graph (SEK) in quarterly revenue and EBITDA, with an enhanced margin of 17.7% versus 16.1% in Q220. There was quarter-on-quarter revenue growth across all divisions. We upgraded our EBITDA forecasts for FY21 and FY22 by 7%.
INDUSTRY OUTLOOK
AG is exposed to favourable growth trends. First, the online gaming market is enjoying structural growth due to increasing global wealth, internet/mobile penetration and regulation. The geographic markets to which AG currently has some exposure are forecast to grow gross gaming revenue (GGR; ie customer wagers less their winnings) from US$37.6bn in Company description 2019 to US$69.1bn by 2025 (source: H2 Gambling Capital). Secondly, online gaming Aspire Global is a leading B2B markets are highly competitive with differing levels of regulation. These combine to make provider of iGaming solutions, offering partners all relevant products to the operation of an online gaming brand challenging, particularly when working across many operate a successful iGaming brand. It geographies. also owns/offers B2C online gaming brands, including Karamba. Aspire operates in 30 regulated markets across Europe, the US, South America and Africa. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual 8.0 7.4 98.5 2019 131.4 21.7 17.9 32.7 20.3 68.0 Relative* 3.1 (2.4) 38.6 2020 161.9 27.1 18.4 32.6 20.4 10.4 * % Relative to local index Analyst 2021e 214.9 36.5 32.4 59.8 11.1 7.9 Russell Pointon 2022e 241.4 42.7 35.7 68.5 9.7 7.4
Sector: Financials Attica Bank (TATT) Price: €0.15 Market cap: €70m INVESTMENT SUMMARY Market Athens Stock Exchange Attica Bank is now at an important point in its transformation phase. It is planning three securitisations over the next months that will take its NPE from 44% to just 1% of loans and Share price graph (€) remove about €1bn in risk-weighted assets. Its capital plan then calls for raising about €300m in equity over the next two to three years and targets a CET1 of 10% by the end of 2023 (currently 3.7% statutory, estimated -1.0% fully loaded).
INDUSTRY OUTLOOK
Attica has a market cap of c €72m and although the shares do reflect the ongoing restructuring risk, we believe there is a risk of much shareholder dilution. However, if the securitisations and capital raisings are successful, Attica will likely have a healthy balance sheet that would allow it to pursue its strategy of doubling the loan book in three years by Company description focusing on the energy, green and infrastructure business loan segments. We are Attica Bank is the fifth-largest bank in suspending our forecasts and valuation until there is greater clarity on the outcomes of Greece, with assets of €3.6bn and 55 branches centred around Athens. It these capital actions. has a 2% market share of business banking and around 2% market share of most retail banking products.
Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual 4.9 10.1 (16.7) 2019 71.6 N/A (23.6) 1.08 13.9 N/A Relative* (0.4) 10.7 (39.9) 2020 69.2 N/A (284.7) (66.18) N/A N/A * % Relative to local index Analyst 2021e N/A N/A N/A N/A N/A N/A Pedro Fonseca 2022e N/A N/A N/A N/A N/A N/A
Edison Insight | 26 August 2021 12 Sector: Mining Auriant Mining (AUR) Price: SEK4.22 Market cap: SEK417m INVESTMENT SUMMARY Market NASDAQ OMX First North Relative to its earlier heap leach operation, Auriant's new Tardan CIL plant has increased metallurgical recoveries by c 40pp and reduced cash costs by c 25% (to c US$700/oz) to Share price graph (SEK) result in a c 4x increase in EBITDA and a c 3x increase in operational cash flows in FY20 cf FY19. Currently, it is in the process of completing a definitive feasibility study on Kara-Beldyr and, combined, the two mines are expected to achieve management’s goal of 3t (96.5koz) of gold output pa in c FY25. Confirmatory drilling is also underway with a view to accelerating the development of Solcocon.
INDUSTRY OUTLOOK
Q121 pre-tax profit was 3.5% above our prior forecast and Auriant has now repaid all of its high cost debt. Assuming that it raises US$20m in equity (NB Subject to the gold price, cash Company description flows etc and could be less) at SEK4.70/share, we value the company at US$1.72/share. In Auriant Mining is a Swedish junior gold the meantime, plant throughput and grade were ahead of our forecasts in Q2 with financial mining company focused on Russia. It has two producing mines (Tardan and results scheduled to be released on 30 August. Solcocon), one advanced exploration property (Kara-Beldyr) and one early stage exploration property (Uzhunzhul).
Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual (7.9) (13.2) (38.5) 2019 29.8 7.2 (2.2) (1.3) N/A 5.2 Relative* (12.0) (21.2) (57.0) 2020 53.4 31.2 16.6 13.7 3.6 1.8 * % Relative to local index Analyst 2021e 52.7 26.8 15.8 13.4 3.6 2.0 Charles Gibson 2022e 55.6 35.0 23.8 13.5 3.6 1.9
Sector: Aerospace & defence Avon Protection (AVON) Price: 1900.0p Market cap: £589m INVESTMENT SUMMARY Market LSE The renamed Avon Protection reflects the increased focus of the group. The strategy focuses on organically growing the core, supported by selective product development and Share price graph (p) value-enhancing M&A. The US acquisitions in 2020 extended the product portfolio and deepened customer engagement. Despite lockdowns, adverse FX and ballistic protection contract delays, H121 revenues grew 41%. H221 has seen DOD infill order deferrals and supply chain disruption and management has cut FY21 and FY22 revenue guidance to $245–260m and $320–340m respectively, reducing adjusted EBITDA margins to 17–18% this year. We have lowered our estimates accordingly.
INDUSTRY OUTLOOK
Avon's long-standing, multi-level relationship with the US DoD is important to the group and Company description the end market backdrop is supportive. The focus on higher-price sophisticated mask Avon Protection designs, develops and systems is proving successful, with M50 mask system replenishment and the addition of manufactures personal protection products for Military and First helmets and body armour provides further opportunities. We believe that Avon has the Responder markets. Its main market position, product portfolio and strategic ambition to continue its growth through customers are national security agencies such as the US DOD and c organic and inorganic means. 90% of sales are from the United States. Y/E Sep Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual (23.0) (40.5) (47.4) 2019 162.0 36.2 28.3 84.9 30.9 91.1 Relative* (25.8) (41.7) (56.8) 2020 213.6 52.3 36.0 96.2 27.3 N/A * % Relative to local index Analyst 2021e 248.0 43.5 25.6 66.7 39.4 236.5 Andy Chambers 2022e 328.9 71.5 46.8 122.2 21.5 9.5
Edison Insight | 26 August 2021 13 Sector: Travel & leisure bet-at-home (ACXX) Price: €26.45 Market cap: €186m INVESTMENT SUMMARY Market Xetra Q221 results (revenue declined by c 12%) reflected the first signs of the revenue weakness in Germany that led to the recent downgrade to management’s guidance for FY21. H221 Share price graph (€) will bring further declines as the lower revenues in Germany are compounded by no revenue from Poland. FY22 should see improving operational momentum in Germany and potential new licences in the Netherlands and Poland may improve the growth outlook. The balance sheet remains strong but the legal position in Austria creates near-term uncertainty for the level of potential shareholder returns. We no longer provide estimates for BAH.
INDUSTRY OUTLOOK
According to H2 Gambling Capital, the European online sports betting and gaming market is expected to grow 7.4% CAGR between 2019 and 2024. BAH operates mainly in 'grey' Company description markets (no formal regulation but not illegal), which are characterised by strong cash flow, Founded in 1999, bet-at-home is an but also carry commensurately higher regulatory risks. Its main market, Germany, is online sports betting and gaming company with c 300 employees. It is becoming fully regulated in FY21. licensed in Malta and headquartered in Dusseldorf, Germany. Since 2009 bet-at-home has been part of Betclic Everest, a privately owned gaming company. Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual (13.3) (33.0) (27.1) 2019 143.3 35.2 33.1 425.53 6.2 6.2 Relative* (16.5) (34.8) (40.9) 2020 126.9 30.9 28.8 331.92 8.0 10.2 * % Relative to local index Analyst 2021e N/A N/A N/A N/A N/A N/A Russell Pointon 2022e N/A N/A N/A N/A N/A N/A
Sector: Technology BluGlass (BLG) Price: A$0.03 Market cap: A$31m INVESTMENT SUMMARY Market ASX BluGlass has pivoted its innovative compound semiconductor manufacturing technology onto the development of high performance laser diodes which it intends to start shipping at Share price graph (A$) scale over the coming year. Entering the laser diode market represents a route for BluGlass to grow revenues much more rapidly. Based on industry sources, management estimates that the global laser diode market will grow from A$369m in CY21 to A$849m in CY26, driven by demand for lasers in industrial, display, biotech, scientific and lighting markets. Management’s goal is to capture 8% of the laser diode market by calendar year 2026, potentially generating almost A$75m revenues annually.
INDUSTRY OUTLOOK
In August BluGlass successfully demonstrated the world’s first working tunnel junction laser Company description diodes manufactured using its proprietary RPCVD technology. The uncoated, unpackaged BluGlass is an Australian technology prototype devices have demonstrated good lasing behaviour. This milestone helps confirm company that is developing and commercialising a breakthrough the potential of the RPCVD laser diode designs for higher power, more efficient, high value, compound semiconductor technology gallium nitride laser diodes for use in commercial applications such as 3D printing and for the production of high efficiency devices such as laser diodes, light industrial welding. emitting diodes (LEDs) and micro-LEDs. Y/E Jun Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (A$m) (A$m) (A$m) (c) (x) (x) % 1m 3m 12m Actual 0.0 (45.6) (59.2) 2019 0.4 (5.1) (5.1) (1.21) N/A N/A Relative* (2.6) (48.9) (66.9) 2020 0.7 (3.6) (4.8) (1.01) N/A N/A * % Relative to local index Analyst 2021e N/A N/A N/A N/A N/A N/A Anne Margaret Crow 2022e N/A N/A N/A N/A N/A N/A
Edison Insight | 26 August 2021 14 Sector: Technology Boku (BOKU) Price: 196.5p Market cap: £581m INVESTMENT SUMMARY Market AIM The high level of demand for digital content and online transactions drove organic revenue growth of 21% y-o-y in H121, and due to the strong operational leverage of the platform, Share price graph (p) drove upgrades to our FY21 revenue and EBITDA forecasts. Boku plans to increase investment in its product suite and sales and marketing to take advantage of the opportunities to help its international merchant base access consumers using a range of mobile-based payment methods. Boku recently launched its M1ST Mobile First Payments Network. This features more than 330 mobile payment methods (including mobile wallets, direct carrier billing and real-time payments schemes) all through a single integration.
INDUSTRY OUTLOOK
Direct carrier billing (DCB) is an alternative payment method that uses a consumer’s mobile Company description bill as the means to pay for digital content or services such as games, music or apps. Boku Boku operates a billing and identity is the dominant DCB player, serving the largest merchants such as Apple, Sony, Facebook, verification platform that connects merchants with mobile network Spotify and Netflix, and is expanding into alternative payment methods such as digital operators in more than 80 countries. It wallets. Boku's identity verification service enables merchants to sign up and transact with has c 300 employees, with its main offices in the United States, the UK, users while meeting regulatory requirements and avoiding fraud. Estonia, Germany and India.
Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual 12.9 23.6 112.4 2019 50.1 10.7 4.1 1.3 209.0 74.5 Relative* 8.8 21.2 74.5 2020 56.4 15.3 11.0 3.2 84.9 23.8 * % Relative to local index Analyst 2021e 68.9 19.6 14.1 3.9 69.7 41.0 Katherine Thompson 2022e 79.0 22.0 16.0 4.3 63.2 31.3
Sector: Travel & leisure Borussia Dortmund (BVB) Price: €6.20 Market cap: €570m INVESTMENT SUMMARY Market FRA Borussia Dortmund’s FY21 preliminary results (revenue declined by c 10% and EBITDA by c 38%) were slightly above management’s expectations at the EBITDA level and testimony Share price graph (€) to how well the cost base has been managed given the on-off expectations through the season about the return of fans to the stadium. The challenging year led to an increase in the company’s net debt position, unusual for a club that is conservatively run from a financial perspective, but recent transfer activity and higher match attendance should lead to an improved financial position through FY22. Our FY22 forecasts are unchanged ahead of the publication of the full financial statements on 28 September 2021.
INDUSTRY OUTLOOK
Unsustainable spend on wages and transfers is increasingly being penalised by UEFA Company description Financial Fair Play requirements. A 'break-even requirement' obliges clubs to spend no The group operates Borussia more than they generate over a rolling three-year period. Sanctions vary from a warning to a Dortmund, a leading football club, placed third in the Bundesliga in ban from UEFA competition, fines and a cap on wages and squad size. 2020/21, DFB Super Cup winners in 2019/20, and DFB-Pokal winners in 2020/21. The club has qualified for the Champions League in nine of the last 10 seasons. Y/E Jun Revenue EBITDA PBT EPS P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual 3.4 (2.1) 8.4 2019 370.3 116.0 101.5 87.95 7.0 18.9 Relative* (0.5) (4.8) (12.0) 2020 370.2 63.0 45.6 46.77 13.3 192.4 * % Relative to local index Analyst 2021e 335.2 32.3 16.1 17.50 35.4 129.5 Russell Pointon 2022e 369.9 80.8 63.9 62.47 9.9 28.7
Edison Insight | 26 August 2021 15 Sector: Oil & gas Brooge Energy (BROG) Price: US$8.55 Market cap: US$937m INVESTMENT SUMMARY Market NASDAQ Brooge Energy (BROG) is an independent oil and refined oil products storage and service provider located in the Port of Fujairah, in the UAE. The company is developing its Share price graph (US$) terminal’s storage capacity in phases and differentiates itself from competitors by providing fast order processing times and high accuracy blending services with low oil losses using the latest technology. Phase I has been operational since 2017 and Phase II will start in H221 (waiting for regulatory approval). Additionally, Brooge is moving towards Phase III (preparing to secure project funding and to begin construction), with a positive feasibility study; this will increase oil storage capacity by 2.5x once operational (2023). In Q221 BROG renewed contracts for 58% of its Phase I storage capacity at a 70% premium to the starting fixed lease storage price of H120 contracts, as it benefitted from high oil storage demand. Our valuation currently stands at $10.3/share. Company description INDUSTRY OUTLOOK Brooge Energy is an oil storage and service provider strategically located in the Port of Fujairah in the United Arab The COVID-19 pandemic highlighted the importance of oil storage infrastructure and the Emirates (UAE). Current storage vital role the business plays in the logistics and trading of crude oil and refined oil products. capacity stands at 399,324m3 and will be increased by 602,064m3 once Phase II is completed.
Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual 0.6 (5.0) (6.6) 2019 44.0 37.0 (75.0) (85.5) N/A 14.2 Relative* (2.1) (11.0) (28.8) 2020 42.0 29.0 17.0 19.5 43.8 20.3 * % Relative to local index Analyst 2021e 68.0 54.0 29.0 26.4 32.4 24.0 Marta Szudzichowska 2022e 130.0 112.0 88.0 80.0 10.7 9.2
Sector: Oil & gas Canacol Energy (CNE) Price: C$3.08 Market cap: C$550m INVESTMENT SUMMARY Market TSX Canacol offers investors a pure play on the Colombian natural gas market where it holds a c 20% market share of national demand. With gas export capacity now in place, it is focusing Share price graph (C$) on converting its 5.7tcf of net unrisked prospective resource into reserves (up 1tcf vs 2019), with its 2021 exploration capex the largest in its history. In 2020, Canacol replaced 61.9bcf of production with 75bcf of reserves (a reserves replacement ratio (RRR) of 122%). It is targeting a RRR of 200% in 2021. Up to 12 wells are planned this year at an estimated cost of c $66m, along with a substantial 655km2 3D seismic programme. The most recent discovery well, Aguas Vivas 1, encountered the thickest net pay yet of 412ft. The historical success rate of over 80% underpinned by AVO analysis of 3D seismic keeps risks low, while the planned capex and cash dividends are covered by Canacol’s existing cash and cash generation. Company description INDUSTRY OUTLOOK Canacol Energy is a natural gas exploration and production company primarily focused on Colombia. The Colombian, Caribbean Coast gas market is expected to move into gas deficit in the absence of LNG imports, incremental piped gas or the development of recent deepwater discoveries. Canacol sells gas under long-term, fixed-price gas contracts, typically of five to 10 years’ duration with inflation clauses to protect cash flows. Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual (3.5) (3.8) (13.7) 2019 219.5 162.8 64.7 19.21 12.7 4.0 Relative* (5.3) (7.5) (29.6) 2020 246.8 184.6 79.8 (1.27) N/A 2.9 * % Relative to local index Analyst 2021e 228.4 187.2 85.7 29.92 8.2 2.8 Ian McLelland 2022e N/A N/A N/A N/A N/A N/A
Edison Insight | 26 August 2021 16 Sector: General industrials Carr's Group (CARR) Price: 162.5p Market cap: £152m INVESTMENT SUMMARY Market LSE Carr’s Group has provided an update for the 20-week period ended 17 July 2021, which notes that FY21 performance is expected to be moderately ahead of management Share price graph (p) expectations. We have raised our FY21 adjusted PBT estimate by 4.5%, leaving FY22 and FY23 estimates unchanged.
INDUSTRY OUTLOOK
Strong performances from both the Speciality Agriculture and Agricultural Supplies divisions have continued into H221, supported by buoyant livestock and milk prices and an improvement in UK farmer confidence generally as the prospect of a no-deal Brexit disappeared. The H221 Engineering divisional recovery that management expected has been realised, supported by contracts from the nuclear and defence markets, a recovery in Company description the oil & gas market, and reduced overhead costs resulting from minor restructuring Carr's Group's Agriculture divisions programmes at the end of FY20 and during H121 following the appointment of new CEO, serve farmers in the North of England, South Wales, the Welsh Borders and Hugh Pelham. Scotland, the US, Germany, Canada and New Zealand. The Engineering division offers remote handling equipment and fabrications to the global nuclear and oil and gas industries. Y/E Aug Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 6.9 8.2 26.5 2019 403.9 23.8 18.0 14.2 11.4 10.9 Relative* 3.0 6.1 3.9 2020 395.6 23.4 14.9 11.8 13.8 7.7 * % Relative to local index Analyst 2021e 440.0 24.2 16.1 11.4 14.3 6.5 Anne Margaret Crow 2022e 447.0 24.7 16.5 12.7 12.8 8.8
Sector: Financials Cenkos Securities (CNKS) Price: 79.0p Market cap: £45m INVESTMENT SUMMARY Market AIM In its 12 May AGM statement Cenkos confirmed that it had continued to trade well and in line with its own expectations. This followed 2020 when its revenue increased 23% to Share price graph (p) £31.9m and it raised £0.9bn (vs £0.7bn) for clients, including four IPOs. Year to date transactions have included two AIM IPOs (Lords Trading and GEN inCode). New CEO Julian Morse and executive board member Jeremy Osler (co-head of corporate finance) took up their positions following the AGM. The group’s strategy is to focus on entrepreneurial growth companies and investment trusts, forming deep, long-term relationships with clients.
INDUSTRY OUTLOOK
On outlook, the company noted that its pipeline provides confidence for the rest of the year, Company description subject to the market background. With approaching 100 corporate clients and a strong Cenkos is a leading UK securities balance sheet (end-2020 cash £32.7m and surplus capital over pillar 1 of £14.5m) it is well business, which acts as nominated advisor, sponsor, broker and financial placed to deliver on its strategy. adviser to companies, focusing on entrepreneurial growth companies and investment trusts. Since inception in 2005 it has raised more than £20bn in equity capital for corporate clients, which stood at 94 at end December Y/E Dec Revenue EBITDA PBT EPS P/E P/CF 2020. Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 0.6 (4.8) 68.1 2019 25.9 0.4 0.1 0.1 790.0 N/A Relative* (3.1) (6.7) 38.1 2020 31.9 2.6 2.3 3.3 23.9 7.1 * % Relative to local index Analyst 2021e N/A N/A N/A N/A N/A N/A Andrew Mitchell 2022e N/A N/A N/A N/A N/A N/A
Edison Insight | 26 August 2021 17 Sector: Media Centaur Media (CAU) Price: 50.5p Market cap: £74m INVESTMENT SUMMARY Market LSE Centaur Media’s H121 results showed revenue and EBITDA margin picking up strongly, with the group on track to meet its FY23 targets, as set out in January in its MAP23 Share price graph (p) strategy. This envisages group revenue of £45m, with a 23% EBITDA margin. The Flagship 4 brands are leading the way, posting 26% revenue growth over H120. Econsultancy’s blended learning is achieving good traction, while events across the group are benefiting from attractive digital propositions. We edged our revenue forecast up on the figures by £1m in both FY21e and FY22e, retaining earlier expectations on adjusted EBITDA. The H121 cash performance was particularly strong, and we expect year-end net cash of £11.0m.
INDUSTRY OUTLOOK
The pandemic-accelerated disruption to the marketing sector should provide a fertile Company description backdrop for demand for B2B market intelligence, with a greater propensity for clients to Centaur Media is an international adopt digital solutions, albeit on a slower sales conversion cycle, provided they deliver provider of business information, training and specialist consultancy for greater efficiencies. Forecasts from the major commentators for FY21 global ad spend the marketing and legal professions. growth have again been revised upwards, further supporting the trading environment. Its Xeim and The Lawyer business units serve the marketing and legal sectors respectively and, across both, offer customers a wide range of products and services targeted at Y/E Dec Revenue EBITDA PBT EPS P/E P/CF helping them add value. Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 24.7 20.2 140.5 2019 39.6 4.0 (1.5) (1.4) N/A 15.4 Relative* 20.1 17.9 97.6 2020 32.4 3.8 (0.3) 0.2 252.5 34.6 * % Relative to local index Analyst 2021e 37.2 5.1 1.2 0.6 84.2 9.8 Fiona Orford-Williams 2022e 42.5 7.6 3.6 2.0 25.3 9.4
Sector: Technology CentralNic Group (CNIC) Price: 96.0p Market cap: £241m INVESTMENT SUMMARY Market AIM In its trading update, management confirmed that CentralNic continued to trade strongly in H121. Benefiting from its FY20 investment programme, the company delivered 25% organic Share price graph (p) growth in Q221, with all business lines contributing. Management expects to deliver FY21 revenue ‘well ahead’ of market expectations, with profits ‘in line’. As investment normalises, management expects future periods (we interpret this to mean FY22 and beyond) to benefit from increasing operational leverage. CentralNic’s shares trade on an undemanding rating, in our view, not reflecting its prospects. We intend to review our estimates with the H121 results due on 31 August 2021.
INDUSTRY OUTLOOK
CentralNic supplies the tools needed for businesses to develop their online presence, Company description providing domain names, hosting, websites, email, security certification, brand protection CentralNic is a leading provider of and marketing. It delivers services to c 40m domains, with cross-selling and upselling global domain name services, operating through three divisions: important drivers of future growth – organic growth is supported by M&A. Indirect, Direct and Monetisation. Services include domain name reselling, hosting, website building, security certification and website monetisation. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual 8.5 14.8 12.3 2019 109.2 17.9 16.1 9.24 14.4 N/A Relative* 4.5 12.6 (7.8) 2020 241.2 30.6 19.8 10.57 12.6 N/A * % Relative to local index Analyst 2021e 323.4 39.5 26.7 9.93 13.4 N/A Richard Williamson 2022e 350.0 43.7 30.1 10.94 12.1 N/A
Edison Insight | 26 August 2021 18 Sector: Technology Checkit (CKT) Price: 59.0p Market cap: £37m INVESTMENT SUMMARY Market AIM In H122, Checkit made further progress in its strategy to become a pure SaaS business, with 16% h-o-h growth in annual recurring revenue (ARR) and 13% group revenue growth Share price graph (p) year-on-year on a normalised basis. Management reiterated that it continues to invest in sales, marketing and product development to take advantage of the opportunity in the deskless worker software market. We maintain our forecasts pending H122 results on 16 September.
INDUSTRY OUTLOOK
With its workflow management software, Checkit is focused on connecting and empowering deskless mobile workers who are not able to use desktop software in their day-to-day working environment. Only a small proportion of the current enterprise software market is Company description designed for this group of workers. Checkit’s sweet spot is supporting workers who perform Checkit optimises the performance of a combination of routine tasks and infrequent but important tasks where the volume and people, processes and physical assets with connected digital solutions. It is variety of tasks is such that it is difficult to build a targeted application. headquartered in Cambridge, UK and has its operations centre in Fleet, UK.
Y/E Jan Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 7.3 (3.3) 40.5 2020 9.8 (4.9) (6.4) (4.0) N/A N/A Relative* 3.3 (5.2) 15.4 2021 13.2 (2.5) (3.1) (5.2) N/A N/A * % Relative to local index Analyst 2022e 15.2 (3.9) (4.5) (7.2) N/A N/A Katherine Thompson 2023e 17.8 (2.0) (2.7) (4.3) N/A N/A
Sector: Financials Civitas Social Housing (CSH) Price: 110.4p Market cap: £687m INVESTMENT SUMMARY Market LSE The resilient operational and financial performance delivered through the pandemic continued in Q122, including rent collection as normal. Q121 NAV per share increased to Share price graph (p) 108.42p (end-FY21: 108.30p) and including DPS paid the quarterly NAV total return was 1.4%. A Q122 DPS of 1.3875p was declared, in line with the increased FY22 target of 5.55p (FY21: 5.40p). The previously announced acquisition of 25 supported living facilities for £19.5m completed in the period, with the acquisition of a further property for £2.5m agreed with contracts exchanged. With the M&G debt facility drawn down, funding resources are in place for further accretive growth including plans to address the need for accommodation and support for the homeless.
INDUSTRY OUTLOOK
Company description Private capital is crucial in meeting the current and future needs for care based social Civitas Social Housing invests across housing which is widely recognised to improve lives in a cost-effective manner compared the UK in care-based community housing and healthcare facilities, with the alternatives of residential care or hospitals. particularly specialised supported housing, for the benefit of working age adults with long-term care needs. Its investment objective is to provide an attractive level of income, with the potential for capital growth. Y/E Mar Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual (4.7) (4.2) (0.2) 2020 45.9 36.0 37.7 4.6 24.0 20.9 Relative* (8.2) (6.0) (18.0) 2021 47.8 38.3 36.1 4.9 22.5 26.3 * % Relative to local index Analyst 2022e 54.0 44.4 42.9 5.5 20.1 15.2 Martyn King 2023e 56.6 46.8 51.5 5.9 18.7 14.7
Edison Insight | 26 August 2021 19 Sector: Technology Claranova (CLA) Price: €7.08 Market cap: €296m INVESTMENT SUMMARY Market Euronext Paris Claranova has raised new funds of €65m via an equity issue to two new institutional shareholders and a convertible bond and plans to use these to partially fund the buy-out of Share price graph (€) the Avanquest minority shareholders. Taking full ownership of Avanquest simplifies the group’s corporate structure and gives management full control over the future of the division. Management reiterated its FY23 targets for revenue of €700m and an EBITDA margin of 10%. We are reviewing our forecasts.
INDUSTRY OUTLOOK
PlanetArt is evolving from a digital photo printing business into a personalised e-commerce business and is focused on expanding its product offering geographically. Avanquest, the consumer software business, is focused on developing and marketing software in three key Company description product areas: PDF, photo editing and security/privacy. The IoT business's myDevices Claranova consists of three platform provides a simple and effective way for SMEs and corporates to deploy IoT businesses focused on mobile and internet technologies: PlanetArt (digital applications. photo printing; personalised gifts), Avanquest (consumer software) and myDevices (internet of things (IoT)).
Y/E Jun Revenue EBITDA PBT EPS P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual 4.7 (1.3) 10.3 2019 262.3 16.0 12.0 25.1 28.2 92.0 Relative* 0.4 (5.4) (17.3) 2020 409.1 20.6 11.3 20.4 34.7 9.2 * % Relative to local index Analyst 2021e 483.4 40.1 29.6 47.4 14.9 9.8 Katherine Thompson 2022e 569.9 45.5 35.9 54.3 13.0 6.5
Sector: Aerospace & defence Cohort (CHRT) Price: 537.0p Market cap: £220m INVESTMENT SUMMARY Market AIM Cohort's defence and security orientation has proven resilient during the pandemic. In FY21 it delivered record sales, adjusted EBIT, adjusted PBT and order backlog. All were Share price graph (p) achieved with the benefit of an initial five-month contribution from ELAC, but there was modest like-for-like growth in orders and sales. The pandemic led to some order deferral to FY22 and FY23. EID is worst affected with FY22 sales to drop by a third with lower margins. The other divisions including ELAC largely offset EID. Strong group order intake continues with over £50m won since April including the recent hearing systems award for MCL adding to the 64% cover the £242m FY21 backlog provided for FY22 consensus sales. Our FY22 adjusted PBT is marginally above FY21.
INDUSTRY OUTLOOK
Company description Cohort is heavily influenced by activities in defence and security (94% of FY21 sales). Cohort is an AIM-listed defence and These markets require highly differentiated technologies and services with high barriers to security company operating across six divisions: MASS (28% of FY21 sales), entry based on customer relationships, regulation and high-level security clearances. SEA (20%), MCL (13%), 80%-owned Defence is generally quite resilient in periods of significant economic disruption. The recent EID (15%), 81%-owned Chess Technologies(20%) and recently UK Strategic Defence and Security Review focuses on some of Cohort's key strengths and acquired ELAC SONAR (6%). was followed by a 10% increase in spending plans until 2025. Y/E Apr Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 6.8 (17.6) (16.1) 2020 131.1 20.9 17.5 37.1 14.5 16.8 Relative* 2.9 (19.2) (31.1) 2021 143.3 22.1 17.9 33.6 16.0 10.4 * % Relative to local index Analyst 2022e 156.1 22.0 18.0 34.3 15.7 22.1 Andy Chambers 2023e 168.0 23.7 19.5 37.4 14.4 10.2
Edison Insight | 26 August 2021 20 Sector: Property Custodian REIT (CREI) Price: 101.8p Market cap: £428m INVESTMENT SUMMARY Market LSE Custodian (CREI) and DRUM Income Plus REIT (DRIP) are in discussions regarding a possible securities exchange offer by CREI for DRIP. Full details are available on the CREI Share price graph (p) website, www.custodianreit.com. Under the Takeover Code CREI has initially until 1 September to announce whether or not it intends to make a firm offer for DRIP. CREI’s Q122 NAV per share increased 4.2% to 101.7p (Q421: 97.6p) and including DPS paid the quarterly NAV total return was 6.0%. The Q122 DPS of 1.25p, fully covered by cash earnings, is in line with the board’s stated target of a minimum FY22 DPS of 5.0p, based on rent collection remaining in line with expectations. The Q221 property valuation increase was £19.0m (3.4% of the portfolio value), driven by industrial assets but including £1.4m from asset management initiatives (EPRA occupancy improved to 92.4% from 91.5%).
INDUSTRY OUTLOOK Company description CREI is a London Main Market-listed The commercial property market is cyclical, historically exhibiting substantial swings in REIT focused on commercial property in the UK outside London. It is capital values through cycles while income returns have been more stable. While the income-focused, with a commitment to pandemic has created significant economic and market uncertainty, the rebound in GDP, pay a high but sustainable and covered dividend. continuing low interest rates, and lockdown easing are supporting a broadening of positive commercial property returns, still led by the industrial sector. Y/E Mar Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 1.8 5.0 17.0 2020 38.1 33.4 28.7 7.0 14.5 13.5 Relative* (1.9) 2.9 (3.9) 2021 33.1 28.5 23.7 5.6 18.2 18.0 * % Relative to local index Analyst 2022e N/A N/A N/A N/A N/A N/A Martyn King 2023e N/A N/A N/A N/A N/A N/A
Sector: Technology Datatec (DTCJ) Price: ZAR26.70 Market cap: ZAR5425m INVESTMENT SUMMARY Market JSE Datatec's valuation is lagging its peers across the global IT services sector despite strong operational performance across all three divisions in FY21, with revenues of US$4.1bn Share price graph (ZAR) down 0.7% in constant currency terms and adjusted EBITDA of US$141m. Company underlying EPS was up 37% to 13.6 USc per share and the group announced a c 7 USc dividend per share, offering a 3.4% yield. Net debt fell from US$139.9m to US$60.9m. Positioning for future growth, Logicalis acquired Siticom, a 5G systems integration consultancy as a European hub for advanced networking integration around 5G and cloud-based network interoperability.
INDUSTRY OUTLOOK
The global IT industry offers attractive defensive growth, leading to significant multiple Company description inflation over the past six to 12 months. As the global recovery gathers pace, we expect Datatec is a South Africa-listed Datatec to continue to deliver progressive margin improvement and improving profitability multinational ICT business, serving clients globally, predominantly in the from the streamlining of its operations and cost base. Investors have yet to recognise the networking and telecoms sectors. The progress made by Datatec. group operates through three main divisions: Westcon International (distribution); Logicalis (IT services); and Analysys Mason (consulting). Y/E Feb Revenue EBITDA PBT EPS P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual 7.2 (9.0) 18.8 2020 4214.4 158.7 79.1 10.59 17.1 2.1 Relative* 6.7 (8.8) 0.1 2021 4109.5 118.6 73.1 6.75 26.7 2.1 * % Relative to local index Analyst 2022e 4316.5 163.1 79.1 16.61 10.9 3.8 Richard Williamson 2023e 4548.5 185.3 101.6 25.19 7.2 3.6
Edison Insight | 26 August 2021 21 Sector: Media Dentsu Group (4324) Price: ¥3920.00 Market cap: ¥1130566m INVESTMENT SUMMARY Market TSE Dentsu Group’s interim results showed a strong recovery in Q221 for both Dentsu Japan (DJN) and Dentsu International (DI), with organic revenue less cost of sales (LCoS) up Share price graph (¥) 15.0% in Q221, giving an increase of 5.4% for H121. The pick-up in operating margins was also well ahead of expectations and the targets for FY22e (20% for DJN and 15% for DI) may even be achieved in FY21 as the transformation plan kicks in. Management issued new guidance for FY21, including a good uplift in the planned dividend.
INDUSTRY OUTLOOK
In July, Dentsu lifted its global ad spend forecast to +10.4% in FY21 and +7.2% for FY22. Digital spend is set to increase by 15.6%. The Japanese ad market still lags the digital transition curve, with TV prominent, but faster growth in digital will improve digital’s share of Company description spend to 38.1% in FY21, still well below the 50% global share. The FY20 postponement of Dentsu Group is a holding company the Tokyo Olympics contributed to a y-o-y ad spend decline of 16.6% in Japan. Forecast with two operational networks: Dentsu Japan Network and Dentsu recovery is 4.4% in FY21, and +4.2% in FY22. International. Operating in over 145 countries, Dentsu Group provides a wide range of client-centric integrated communications, media and digital services. Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (¥m) (¥m) (¥m) (¥) (x) (x) % 1m 3m 12m Actual 4.4 12.2 41.8 2019 1047881.0 160279.0 101340.0 271.0 14.5 13.8 Relative* 4.9 13.1 20.6 2020 939243.0 90061.0 123470.0 249.0 15.7 12.4 * % Relative to local index Analyst 2021e 1039276.0 204649.0 117810.0 334.0 11.7 4.5 Fiona Orford-Williams 2022e 1104632.0 240271.0 151432.0 374.0 10.5 6.0
Sector: Electronics & elec eqpt discoverIE Group (DSCV) Price: 1008.0p Market cap: £902m INVESTMENT SUMMARY Market LSE discoverIE saw trading in Q122 continue in the same vein as H221. Group revenue was 21% higher y-o-y at constant exchange rates and 16% higher on an organic basis, clearly Share price graph (p) helped by the weaker Q121 comparative. Encouragingly, the group also grew compared to the same period two years ago, up 10% on an organic basis. Order intake was well ahead of revenue and the order book grew 22% from the end of FY21. We have upgraded our forecasts to reflect stronger organic growth, resulting in upgrades to our EPS forecasts of 3% in FY22 and 2% in FY23.
INDUSTRY OUTLOOK
discoverIE Group is a designer, manufacturer and supplier of customised electronics to industry with operations throughout Europe and increasingly outside Europe. The company Company description is focused on growing the percentage of higher-margin specialist product through organic discoverIE is a leading international growth and acquisition. Its key markets (more than two-thirds of sales) are medical, designer, manufacturer and supplier of customised electronics to industry, renewables, transportation and industrial connectivity, all of which are good growth markets. supplying customer-specific electronic products and solutions to original equipment manufacturers.
Y/E Mar Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 9.6 32.6 73.2 2020 466.4 50.9 34.6 31.8 31.7 N/A Relative* 5.6 30.1 42.3 2021 454.3 48.4 32.6 27.0 37.3 N/A * % Relative to local index Analyst 2022e 507.5 53.0 36.3 29.4 34.3 N/A Katherine Thompson 2023e 521.0 55.0 38.0 30.4 33.2 N/A
Edison Insight | 26 August 2021 22 Sector: Technology Doctor Care Anywhere Group (DOC) Price: A$0.69 Market cap: A$220m INVESTMENT SUMMARY Market ASX Doctor Care Anywhere’s (DOC) H121 results were robust, with underlying revenue increasing by 101% y-o-y to £9.2m and consultations by 130%. Growth in the second half Share price graph (A$) should be driven by continued growth in consultations, which looks likely given that DOC delivered a record 35,000 in July. Looking to FY22, progress will be determined by new partnerships and new services on its platform. Notably, management has delivered on the addition of mental health services, as well as expanding its existing relationship with Nuffield Health to provide the UK’s first digitally integrated virtual and in-person primary care service.
INDUSTRY OUTLOOK
The global telehealth market is forecast to grow at a CAGR of 23.1% from US$5.3bn in 2019 to US$14.9bn by 2024, primarily driven by COVID-19 related changes to consumer Company description habits. Enhanced consumer confidence, along with the benefits of increased efficiency and Doctor Care Anywhere is a convenience, should continue to provide long-term tailwinds as pandemic-related fast-growing telehealth company focused on delivering high-quality care restrictions ease. DOC's H121 performance gives the strongest indication yet that to its patients, while reducing the cost performance is following a secular trend that is set to remain as we exit the pandemic. IPO of providing healthcare for health insurers and healthcare providers. activity within the industry is showing continuing momentum, as highlighted by Babylon, which announced its planned listing on Nasdaq for an equity valuation of c $4.2bn in H221. Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual (17.9) (14.8) N/A 2019 5.7 (3.7) (4.4) (3.69) N/A N/A Relative* (20.0) (20.0) N/A 2020 11.6 (11.6) (13.5) (7.76) N/A N/A * % Relative to local index Analyst 2021e 23.4 (15.5) (16.4) (5.10) N/A N/A Katherine Thompson 2022e 37.1 (11.4) (9.0) (2.81) N/A N/A
Sector: Technology Draper Esprit (GROW) Price: 1062.0p Market cap: £1625m INVESTMENT SUMMARY Market LSE Following its FY21 results (57% rise in NAV to £1.03bn, a record £206m of realisations and exits), management completed a £111m placing at 800p per share, an 8% premium to its Share price graph (p) 743p FY21 NAV per share. The funding will be used to accelerate investment. In July, Revolut announced an US$800m Series E funding round from Softbank and Tiger Global, valuing it at US$33bn (a six times uplift in 18 months). Based on the round, Draper Esprit’s stake is valued at c £119m (78p per share), an uplift of £99m from the FY21 year end valuation or 65p per share (before carry deductions). Draper Esprit completed its move from AIM to the main market on 23 July 2021.
INDUSTRY OUTLOOK
Technology valuations have had a very strong run as COVID-19 fears have eased, with Company description sustained valuations amidst a robust funding environment. Investors have preferred Draper Esprit is a London-based companies with embedded value in their portfolios that offer the potential for material exits venture capital (VC) firm that invests in the European technology sector. and upside in a realistic timeframe. Draper Esprit has a portfolio of c 70 investee companies and includes a range of funds (seed, EIS and VCT) within the group, as well as its flagship balance sheet VC fund. Y/E Mar Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 15.6 37.9 102.7 2020 52.0 N/A 41.4 33.7 31.5 29.9 Relative* 11.3 35.2 66.5 2021 288.8 N/A 268.9 207.3 5.1 5.0 * % Relative to local index Analyst 2022e N/A N/A N/A N/A N/A N/A Richard Williamson 2023e N/A N/A N/A N/A N/A N/A
Edison Insight | 26 August 2021 23 Sector: Media Ebiquity (EBQ) Price: 57.0p Market cap: £45m INVESTMENT SUMMARY Market AIM Ebiquity’s period-end trading update indicated a good first half performance, with revenues of £32m, up 19% on the prior period. The group has also posted an operating profit – Share price graph (p) undisclosed but ahead of the £1.0m delivered in H220. The progress is a result of a mix of factors, including new business wins (notably in digital), with some benefit from work deferred from FY20. We leave our forecasts unchanged for now, noting that any revisions at the interims in September are more likely to be on the upside. The share price performance year-to-date has been strong, but the valuation remains at a sizeable discount to peers.
INDUSTRY OUTLOOK
Ebiquity’s reconfigured Digital Innovation Centre, built on Digital Decisions, looks to be achieving its goal of providing a more comprehensive and integrated digital media offering. Company description Although Google’s withdrawal of support for third-party cookies has been pushed back to Ebiquity is a world leader in media FY23, the direction of travel remains the same and the need for advertisers to optimise and investment analysis, harnessing data to provide independent, fact-based benchmark their digital media spend in a complex ecosystem is unlikely to diminish. advice, enabling brand owners to perfect media investment decisions and improve business outcomes.
Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 2.7 4.6 111.1 2019 68.1 8.6 4.7 2.9 19.7 12.6 Relative* (1.1) 2.6 73.5 2020 55.9 1.8 (1.3) (1.9) N/A 129.9 * % Relative to local index Analyst 2021e 61.0 5.0 2.6 2.5 22.8 13.2 Fiona Orford-Williams 2022e 68.3 7.4 5.0 4.7 12.1 11.6
Sector: Technology EMIS Group (EMIS) Price: 1398.0p Market cap: £885m INVESTMENT SUMMARY Market AIM EMIS has reported that H121 trading was slightly ahead of board expectations. Management noted it saw a return to business as usual in H121, despite the ongoing Share price graph (p) pandemic, and trading was slightly ahead of board expectations. Revenue and adjusted operating profit for H121 were ahead of both H120 and H119. The mix of business is returning to pre-COVID-19 levels and the company continues to focus on investing in its technology roadmap. While H121 performance was positive, we maintain our forecasts for FY21–23 pending H121 results, which are scheduled for 9 September.
INDUSTRY OUTLOOK
EMIS is the leading software supplier to the UK GP market, with a greater than 50% market share. It has a strong position in community pharmacies, community health, A&E and Company description hospital pharmacies. The EMIS-X platform is being developed to promote greater EMIS is a software supplier with two interoperability between NHS departments, in line with the NHS Long Term Strategy. divisions. EMIS Health supplies integrated care technology to the NHS, including primary, community, acute and social care. EMIS Enterprise is a B2B software provider to the UK healthcare market, including medicines management, partner businesses, patient-facing services and analytics. Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 17.5 17.3 33.9 2019 159.5 55.6 41.0 53.5 26.1 17.6 Relative* 13.2 15.0 10.0 2020 159.5 53.5 43.4 56.4 24.8 13.7 * % Relative to local index Analyst 2021e 164.1 55.7 43.8 56.2 24.9 19.0 Katherine Thompson 2022e 172.7 59.1 46.5 59.7 23.4 14.6
Edison Insight | 26 August 2021 24 Sector: Technology EML Payments (EML) Price: A$3.81 Market cap: A$1379m INVESTMENT SUMMARY Market ASX EML Payments reported a strong underlying performance in FY21 driven by volume growth in the General Purpose Reloadable division and higher breakage revenue in the Gift & Share price graph (A$) Incentive business. EML is working with the Irish regulator to resolve the issues within PFS’s European operations and, subject to French regulator approval, expects to complete the Sentenial acquisition in September. This deal will bring open banking technologies to the group, enabling EML to offer both card-based and direct-from-bank-account technologies to its customer base.
INDUSTRY OUTLOOK
In terms of market size, US$1,848bn was loaded onto prepaid cards in 2019 and this is forecast to grow to US$5,511bn by 2027, a CAGR of 14.6% (source: Applied Market Company description Research). EML is keen to gain share of this fast growing market, and as part of its Project EML Payments is a payment solutions Accelerator strategy to position the company at the forefront of payment-related technology, company specialising in the prepaid stored value market, with mobile, has made its first two investments via its FinLabs incubator. physical and virtual card offerings. It manages thousands of programmes across 28 countries in Europe, North America and Australia.
Y/E Jun Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (A$m) (A$m) (A$m) (c) (x) (x) % 1m 3m 12m Actual 0.5 30.9 25.7 2020 121.0 32.5 21.6 5.489 69.4 50.8 Relative* (2.1) 22.9 2.1 2021 192.2 42.2 30.2 6.579 57.9 27.3 * % Relative to local index Analyst 2022e 235.3 60.8 43.3 9.175 41.5 51.4 Katherine Thompson 2023e 290.1 88.4 65.8 13.922 27.4 17.6
Sector: Mining Endeavour Mining (EDV) Price: C$28.02 Market cap: C$7021m INVESTMENT SUMMARY Market Toronto Endeavour's acquisitions of SEMAFO and Teranga have projected it into the top 10 gold producing companies globally with output of c 1.5Moz pa and a targeted AISC of Share price graph (C$) US$900/oz with c US$100m in annual synergies. It has now listed in London (and hence is likely to be included in the FTSE 250 index from September) and is on the cusp of being net debt free. Production and adjusted EPS were materially ahead of our prior forecasts (and AISC lower) in Q121 and ahead of both our and consensus forecasts in Q221.
INDUSTRY OUTLOOK
Exploration has yielded 84% of a five-year target of 10–15Moz Au after four years, which has already increased medium-term production levels at Ity and Hounde to 0.5Moz pa (combined) until 2028. It is hedge-free, has announced a progressive minimum dividend Company description policy, added US$342m in value (100% basis) to Fekekro and Kalana via updated PFSs Following its acquisitions of SEMAFO and also announced a share buyback programme. With Teranga's assets now fully and Teranga, Endeavour has become one of the top 10 major gold producers integrated, we value Endeavour at US$35.46/share and potentially as high as globally, with seven mines in Côte US$55.59/share. d’Ivoire, Burkina Faso and Senegal plus a portfolio of development projects, all in the West African Birimian greenstone belt. Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual (1.3) (3.0) (23.1) 2019 1362.1 618.4 220.4 56.95 39.1 5.6 Relative* (3.2) (6.8) (37.2) 2020 1847.9 910.3 501.2 181.51 12.3 3.4 * % Relative to local index Analyst 2021e 2718.8 1370.3 707.0 166.56 13.4 5.0 Charles Gibson 2022e 2495.1 1417.0 881.2 234.78 9.5 4.0
Edison Insight | 26 August 2021 25 Sector: Technology Ensurge Micropower (ENSU) Price: NOK0.67 Market cap: NOK1039m INVESTMENT SUMMARY Market Oslo Ensurge formally completed its first product design in January and has manufactured its first prototype cells. It recently announced its first customer agreement with a global leader in Share price graph (NOK) the hearables market under which it will deliver customised solid-state microbatteries based on the Ensurge Microbattery Product Platform. This agreement, which addresses the medical hearables market, follows the announcement in May of a customer agreement with a Fortune Global 500 company addressing the broader wearables market. The company looks on track to deliver initial product revenues in late 2021.
INDUSTRY OUTLOOK
Ensurge is continuing its programme to transfer process technology from a sheet-based Company description production line to the much higher-volume roll-to-roll line ahead of volume ramp-up by end Ensurge Micropower's (previously Thin FY21. Film Electronics') solid-state lithium battery technology combines advanced energy cell design with proprietary materials and manufacturing innovation to produce thin, flexible batteries that can power safer and more capable hearables and wearable devices. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual 4.4 (8.2) 98.2 2019 1.2 (30.6) (35.9) (61.23) N/A N/A Relative* 3.6 (11.8) 56.4 2020 0.5 (11.4) (15.3) (3.90) N/A N/A * % Relative to local index Analyst 2021e N/A N/A N/A N/A N/A N/A Anne Margaret Crow 2022e N/A N/A N/A N/A N/A N/A
Sector: Construction & blding mat Epwin Group (EPWN) Price: 116.0p Market cap: £168m INVESTMENT SUMMARY Market AIM A H121 pre close update pointed to a 13% revenue uplift versus its undisturbed (pre COVID-19) H119 comparator with good progress in both divisions and firm residential RMI Share price graph (p) markets being the key driver. Higher volume and operational gearing effects will have been favourable though we expect that the dilutive and delayed effects of rising costs and prices will have held H121 EBIT margins below their H119 equivalents. Core net debt reduced to £15.9m at the end of H121. With raised guidance, we have increased our FY21 PBT estimate by 20% to £12m with smaller (3–4%) uplifts in the following two years.
INDUSTRY OUTLOOK
Epwin is exposed to both RMI (c 70% revenue) and newbuild (c 30%) in the UK housing market. RMI activity is currently stronger that other sectors which are also recovering Company description gradually. There is some caution associated with potential impacts of rising unemployment Epwin supplies functional on consumer confidence. low-maintenance exterior building products (including windows, doors, roofline and rainwater goods) into a number of UK market segments and is a modest exporter.
Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 16.0 9.4 66.2 2019 282.1 38.2 15.0 8.5 13.6 4.8 Relative* 11.8 7.3 36.6 2020 241.0 28.6 5.0 4.0 29.0 7.0 * % Relative to local index Analyst 2021e 309.3 37.7 12.0 6.8 17.1 5.1 Toby Thorrington 2022e 314.4 39.6 13.8 7.8 14.9 4.3
Edison Insight | 26 August 2021 26 Sector: Technology EQS Group (EQS) Price: €45.80 Market cap: €388m INVESTMENT SUMMARY Market Scale EQS Group’s H121 results were strong, showing robust increases in revenue and its customer base. Following its acquisition of Business Keeper in Q321, EQS is now well Share price graph (€) positioned to capitalise on the time-limited opportunity presented by the European Whistleblowing Directive. Achieving a strong foothold here will be key for driving SaaS customer acquisition, underpinning management’s ambitious short- and medium- term guidance. Higher SaaS-based revenues have helped lift recurring revenues, which accounted for 83% of total H121 revenues (H120: 79%).
INDUSTRY OUTLOOK
While this EU whistleblowing regulation is now active, the deadline for implementation in national laws is two years, which will be in December 2021. We would therefore expect the Company description benefit to be heavily skewed to H221 and into H122, amplified further by the Business EQS is a leading international provider Keeper acquisition, while the additional sales cost will be in place for most of H121.The of regulatory technology in the fields of corporate compliance and investor pandemic has provided fertile territory for selling online communications solutions, and we relations. Its products enable corporate would expect a proportion off this to be retained once physical meetings resume in greater clients to fulfil complex national and international disclosure obligations, numbers. minimise risks and communicate transparently with stakeholders. Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual 17.4 46.8 102.7 2019 35.4 2.6 (0.3) (7.41) N/A 137.7 Relative* 13.0 42.7 64.5 2020 37.6 4.8 0.4 4.12 1111.7 57.0 * % Relative to local index Analyst 2021e 49.4 2.8 (2.7) (21.24) N/A 208.0 Fiona Orford-Williams 2022e 70.0 7.5 1.0 7.67 597.1 89.4
Sector: Technology Esker (ALESK) Price: €256.50 Market cap: €1509m INVESTMENT SUMMARY Market Euronext Growth Esker’s Q2 revenue update confirmed that trading accelerated over the quarter, with revenue 28% higher against a weak comparative, but also 8% higher q-o-q. Cloud solutions Share price graph (€) grew 37% y-o-y in Q221 versus 16% growth in Q121, making up 93% of group revenue. Implementation services increased 13% y-o-y, reflecting bookings received earlier this year. Order intake has been strong so far this year, providing the basis for continued growth, and management has raised revenue guidance for FY21. We have upgraded our FY21 EPS forecast by 3.6%.
INDUSTRY OUTLOOK
Esker's DPA software operates across five areas: document delivery, accounts payable, accounts receivable, procurement and sales order processing. Competitors are different for Company description each business process and consist of business process outsourcers and specialist DPA Esker provides end-to-end software companies. Customers move to using DPA software to reduce paper-related costs SaaS-based document automation solutions supporting order-to-cash and and errors in processing, to speed up the cash conversion cycle, to improve process procure-to-pay processes. In FY20, visibility within the enterprise and to improve customer service. 56% of revenues were from Europe, 38% from the United States and the remainder from Asia and Australia.
Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual 2.2 19.6 78.9 2019 104.2 20.1 13.6 179.0 143.3 N/A Relative* (2.1) 14.6 34.1 2020 112.3 21.9 14.5 195.0 131.5 N/A * % Relative to local index Analyst 2021e 131.6 26.5 18.3 240.0 106.9 N/A Katherine Thompson 2022e 154.5 34.2 25.5 329.0 78.0 N/A
Edison Insight | 26 August 2021 27 Sector: Food & drink Evolva (EVE) Price: CHF0.18 Market cap: CHF167m INVESTMENT SUMMARY Market Swiss Stock Exchange Evolva's overall geographical and product footprint continues to expand and the pipeline remains robust. The company's aim remains to reach cash break-even by FY23. Due to Share price graph (CHF) COVID-19, Evolva has witnessed a softening in demand for some of its flavour and fragrance products, but recent results demonstrate Evolva's progress in transforming itself from an R&D-driven enterprise towards a commercial company with a product-based revenue model. The Q1 trading update confirmed the company is on track and it subsequently announced it has secured up to CHF20m of funding via convertible notes from investment firm Nice & Green. H1 results are due on 26 August.
INDUSTRY OUTLOOK
Food and health ingredients continue to be in the sweet spot as consumers demand Company description healthier products with cleaner labels without compromising on taste or convenience. Evolva is a Swiss biotech company Evolva's fermentation platform aims to deliver these benefits while reducing production focused on the research, development and commercialisation of products costs. based on nature. The company has leading businesses in Flavours and Fragrances, Health Ingredients and Health Protection.
Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (CHFm) (CHFm) (CHFm) (CHFc) (x) (x) % 1m 3m 12m Actual (2.2) (0.2) (33.3) 2019 11.6 (12.3) (15.6) (2.0) N/A N/A Relative* (5.9) (10.4) (45.1) 2020 7.5 (16.7) (23.4) (2.9) N/A N/A * % Relative to local index Analyst 2021e 14.3 (15.1) (17.0) (2.1) N/A N/A Sara Welford 2022e 27.4 (2.5) (4.5) (0.5) N/A N/A
Sector: Technology Expert.ai (EXAI) Price: €2.75 Market cap: €141m INVESTMENT SUMMARY Market Borsa Italiana In March, expert.ai made its new SaaS platform available via an early adopters' programme, in line with the timetable laid out in its Path to Lead five-year plan. In June, the company Share price graph (€) announced the general availability of the platform which supports the design, development, testing, deployment and monitoring of scalable natural language solutions. It uses an exclusive hybrid AI approach combining symbolic AI and machine learning techniques to ensure the best possible accuracy for each individual use case with the transparency of explainable AI.
INDUSTRY OUTLOOK
Ever-increasing amounts of data are being produced, 80% of which are estimated to be unstructured. The need to derive useful insights from this growing body of data is driving the Company description demand for cognitive computing and smarter artificial intelligence solutions, such as those Expert.ai has developed and patented offered by Expert.ai. ResearchAndMarkets estimates that the global text analytics market an AI-based technology platform that extracts useful information from was worth $4bn in 2018 and is forecast to grow at a CAGR of 17.3% to 2023. unstructured text using a unique mix of natural language understanding and machine learning algorithms and applies it to verticals such as enterprise search, customer experience management and big data Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF analytics. Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual (4.2) 0.0 (0.4) 2019 33.7 5.5 (0.5) (1.6) N/A 42.8 Relative* (10.8) (4.9) (24.3) 2020 30.6 (1.9) (10.6) (20.2) N/A N/A * % Relative to local index Analyst 2021e 32.2 (7.2) (15.0) (26.6) N/A N/A Katherine Thompson 2022e 45.5 (1.3) (10.0) (17.8) N/A N/A
Edison Insight | 26 August 2021 28 Sector: Technology Filtronic (FTC) Price: 12.4p Market cap: £27m INVESTMENT SUMMARY Market LSE Group sales declined by 9% year-on-year during FY21. Strong growth in defence sales partly offset a decline in sales of transceivers for 5G XHaul links and a slowdown in sales to Share price graph (p) the US public safety market during H121 as budget was diverted during the pandemic. This market began to recover during Q4. The improvement in adjusted EBITDA was attributable primarily to increased manufacturing efficiencies and a more favourable sales mix. Net cash (excluding IFRS 16 leases) increased from £0.4m at end FY20 to £1.9m at end FY21
INDUSTRY OUTLOOK
Our FY22 estimates assume that the recovery noted in the critical communications markets during Q421 continues during FY22. In addition, FY22 is likely to benefit from the £1.3m contract win from a new major UK defence customer for the supply of battlefield radio Company description communications hardware announced in January 2021. This strong revenue growth will be Filtronic is a designer and accompanied by an increase in overheads as the company resumes physical meetings with manufacturer of advanced RF communications products supplying a potential customers and invests in additional engineering resource to support new number of market sectors including customers and develop product for emerging communications frequencies such as W-band. mobile telecommunications infrastructure, public safety, defence and aerospace.
Y/E May Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 12.5 41.4 39.0 2020 17.2 1.2 0.1 0.05 248.0 N/A Relative* 8.4 38.7 14.2 2021 15.6 1.8 0.1 0.14 88.6 10.6 * % Relative to local index Analyst 2022e 18.0 2.0 0.7 0.34 36.5 22.1 Anne Margaret Crow 2023e N/A N/A N/A N/A N/A N/A
Sector: Financials Foxtons Group (FOXT) Price: 55.0p Market cap: £178m INVESTMENT SUMMARY Market LSE Foxtons Group’s core London market has been improving all year and the interim results highlight both the recovery and the contribution from recent acquisitions. Focus on M&A of Share price graph (p) lettings books, BTR growth and regional expansion are likely to drive growth longer term. Furthermore, the company announced a return to paying dividends in respect of the half year and given the strength of both trading and the balance sheet, revealed a £3m share buyback programme that should augment earnings. We retain our underlying assumptions but raise our valuation by 1p to 130p to reflect the share buyback.
INDUSTRY OUTLOOK
Foxtons is almost entirely focused on the London market where both the lettings and sales markets are recovering as London, and rest of the UK, head towards a ‘new normal’. Company description Foxtons’ Greater London region contains 13% of the UK population, and by value accounts Foxtons Group is London’s leading for 33% of sales and 38% of UK lettings. and most widely recognised estate agency. It operates from a network of 57 inter-connected branches offering a range of residential related services which break down into three separate revenue streams; sales, lettings and mortgage broking. Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 17.7 (6.6) 47.1 2019 106.9 13.5 (1.9) (0.32) N/A N/A Relative* 13.3 (8.4) 20.8 2020 93.6 15.7 1.6 (0.08) N/A N/A * % Relative to local index Analyst 2021e 130.1 22.0 8.1 0.08 687.5 N/A Andy Murphy 2022e 137.7 25.5 12.5 3.31 16.6 N/A
Edison Insight | 26 August 2021 29 Sector: Consumer support services Games Workshop Group (GAW) Price: 11700.0p Market cap: £3835m INVESTMENT SUMMARY Market LSE FY21 results were at record levels from the perspective of revenue, profitability (FY21 operating profit pre-royalty income of £135.4m was greater than those of FY18 (£64.7m) Share price graph (p) and FY19 (£69.8m) combined), cash flow generation and cash returns to shareholders. Results were driven by the launch of the ninth edition of 40K as well as products from prior year releases. The phasing and scale of future new product releases in FY22 and FY23 may produce lower rates of growth than FY21. Management’s focus on product innovation, customer engagement and geographic expansion has tended to provide positive surprises. Our DCF-based valuation increases by c 8% to £129 per share.
INDUSTRY OUTLOOK
Games Workshop is the global leader for tabletop miniature gaming, a market it created. Company description Tabletop miniature gaming is the fastest-growing segment of the global non-digital games Games Workshop is a leading market, which is expected to grow at a CAGR of 9% between 2017 and 2023 and reach a international specialist designer, manufacturer and multi-channel value exceeding $12bn. retailer of miniatures, scenery, artwork and fiction for tabletop miniature games set in its fantasy Warhammer worlds.
Y/E May Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 3.0 3.2 33.6 2020 269.7 115.6 89.4 217.8 53.7 36.7 Relative* (0.8) 1.2 9.7 2021 353.2 178.3 150.9 370.5 31.6 28.8 * % Relative to local index Analyst 2022e 376.9 185.9 158.1 387.1 30.2 25.1 Russell Pointon 2023e 395.3 192.5 163.4 398.8 29.3 24.1
Sector: Travel & leisure Gamesys Group (GYS) Price: 1843.0p Market cap: £2022m INVESTMENT SUMMARY Market LSE On 24 March 2021, Gamesys Group and Bally’s Corporation announced that they have reached an agreement in principle on the key terms of a possible combination, in which Share price graph (p) Bally’s would acquire the entire share capital of Gamesys.
INDUSTRY OUTLOOK
For the purposes of the Takeover Code, Edison is deemed to be connected with Gamesys Group as a provider of paid-for research. Under Rule 20.1 Edison must not include any profit forecast, quantified financial benefits statement, asset valuation or estimate of other figures key to the offer, except to the extent that such forecasts, statements, valuations or estimates have been published prior to the offer period (as defined in the Takeover Code) by an offeror or the offeree company (as appropriate) in accordance with the requirements Company description of the Code. Consequently we have removed our estimates until the offer period ends. Gamesys is a leading international online gaming operator. The group was formed after JPJ Group acquired Gamesys for £490m in September 2019.
Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual (0.1) (1.2) 69.1 2019 565.3 158.9 119.5 100.4 18.4 25.7 Relative* (3.7) (3.1) 38.9 2020 727.7 206.2 163.1 142.4 12.9 8.9 * % Relative to local index Analyst 2021e N/A N/A N/A N/A N/A N/A Russell Pointon 2022e N/A N/A N/A N/A N/A N/A
Edison Insight | 26 August 2021 30 Sector: Technology GB Group (GBG) Price: 876.5p Market cap: £1722m INVESTMENT SUMMARY Market AIM In GB Group's recent AGM trading update, management confirmed that it had seen a good start to FY22. All divisions are benefiting from the consumer shift to transacting online. Share price graph (p) Cryptocurrency trading has boosted Identity volumes in the quarter, while Location continues to see good demand and recent licence extensions point to a recovery in the Fraud business. The strong trading in Q122 provides management with confidence for the year ahead; we maintain our forecasts.
INDUSTRY OUTLOOK
Globalisation and the growth in internet trading have also resulted in the need for higher compliance standards in light of the rising scope and financial impact of cybercrime. This, in turn, is driving the demand for more complex and comprehensive solutions for the Company description verification of personal data. GB Group specialises in identity data intelligence. Its products/services enable customers to understand and verify clients and employees in fraud, risk management, compliance and customer on-boarding services. With headquarters in the UK, it operates across 16 countries. Y/E Mar Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 8.4 (3.5) 20.1 2020 199.1 51.7 45.7 17.9 49.0 N/A Relative* 4.4 (5.4) (1.4) 2021 217.7 61.4 56.7 21.7 40.4 N/A * % Relative to local index Analyst 2022e 209.6 50.8 46.5 17.7 49.5 N/A Katherine Thompson 2023e 233.0 56.6 52.1 19.6 44.7 N/A
Sector: Mining Gemfields Group (GML) Price: ZAR2.29 Market cap: ZAR2676m INVESTMENT SUMMARY Market JSE On 12 August Gemfields announced exceptional results from an online auction of commercial quality emeralds from Kagem which set new all-time records for a commercial Share price graph (ZAR) quality emerald auction both in terms of total revenue of US$23.1m and also average revenue per carat of US$6.61/ct. Production at both Kagem and MRM resumed in March 2021 and has ramped up rapidly.
INDUSTRY OUTLOOK
Gemfields' online mini-auction process (as customers cannot travel internationally to auctions as usual, stones have been shown in Tel Aviv, Dubai and Jaipur followed by online auctions) has been a resounding success. The US$23.1m from the latest commercial quality auction adds to the US$90.3m generated from a high quality ruby and a high quality Company description emerald auction in H121. Not only does this shore up Gemfields’ balance sheet but the Gemfields is a world-leading supplier success of the auctions is also a very clear indication of the strength of market demand for of responsibly sourced coloured gemstones. It owns 75% of Montepuez the company’s emerald and ruby production. Ruby Mining in Mozambique, 75% of the Kagem emerald mine in Zambia, the Fabergé jewellery business and an investment in Sedibelo Platinum.
Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual 17.4 43.1 95.7 2019 216.2 80.9 55.9 1.3 11.9 5.3 Relative* 16.9 43.4 65.0 2020 34.6 (30.0) (84.7) (6.1) N/A N/A * % Relative to local index Analyst 2021e 190.1 33.1 1.2 (1.5) N/A 4.8 Alison Turner 2022e 240.3 80.8 52.2 1.5 10.3 3.1
Edison Insight | 26 August 2021 31 Sector: General industrials Genuit Group (GEN) Price: 729.0p Market cap: £1806m INVESTMENT SUMMARY Market LSE Genuit (formerly Polypipe) reported first half revenue growth (vs H119) +32.4% headline and +13.8% underlying, adjusting for acquisitions (slightly above 13.5% reported for the first Share price graph (p) four months). On the same basis, Residential grew fastest (+17.8%), while Commercial & Infrastructure also made reasonable progress (+8.3%). Group gross and EBIT margins of 41.3% and 16.4% respectively have done well to recover to these levels and approach their H119 equivalents despite cost headwinds. Free cash flow was modestly positive as in previous normal trading years with overall cash flow influenced mainly by acquisition and equity raise activity. At the period end, core net debt was c £170m, equivalent to 1.5x pro forma EBITDA and is set to be lower by the year end. A ‘generally encouraging’ market caused management to raise guidance for the year again. Our estimates are under review.
INDUSTRY OUTLOOK Company description Genuit is a leading supplier of largely The Construction Products Association estimates that sector activity contracted by c 14% plastic building products and systems. Operations in the UK (c 90% of overall in 2020 and expects this to be followed by a similar percentage rise in output in revenue) address a broad range of 2021, followed by almost 5% in 2022. sectors including residential, commercial and civil building demand and a number of subsectors within them. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 18.0 20.9 84.1 2019 447.6 99.1 70.8 29.2 25.0 16.3 Relative* 13.6 18.5 51.3 2020 398.6 63.4 35.7 13.3 54.8 25.9 * % Relative to local index Analyst 2021e 534.6 113.0 81.0 26.9 27.1 17.8 Toby Thorrington 2022e 568.7 120.1 87.8 29.1 25.1 15.3
Sector: Alternative energy Global Energy Ventures (GEV) Price: A$0.07 Market cap: A$34m INVESTMENT SUMMARY Market ASX Global Energy Ventures (GEV) is one of the first transport companies to offer the prospect of genuinely emission-free hydrogen production and inter-regional hydrogen transport Share price graph (A$) solutions. Its innovative C-H2 Ship design has been approved and is in the early stages of development and construction prior to an expected launch in 2026, most likely serving markets in South-East Asia, but with exciting applications in offshore energy production in Europe too. Our scenario models suggest IRRs of between 10% and 19%.
INDUSTRY OUTLOOK
Australia is blessed with plentiful renewable energy sources (wind and solar) and a relatively limited local demand given the population. By contrast, several countries in South-East Asia have pledged to decarbonise their economies but have challenges in Company description achieving targets given the geographies. GEV is looking to address this imbalance by Global Energy Ventures is focused on transporting surplus energy in the form of green hydrogen from northern and western the delivery of integrated compressed gas shipping solutions for transporting Australia to areas of high demand in its novel compressed hydrogen vessels. energy to regional markets. Although the primary focus is on compressed natural gas, large-scale compressed hydrogen solutions are likely to become the dominant focus of the group. Y/E Jun Revenue EBITDA PBT EPS P/E P/CF Price performance (A$m) (A$m) (A$m) (c) (x) (x) % 1m 3m 12m Actual 13.8 (9.8) 48.0 2019 1.1 N/A (8.9) (2.6) N/A N/A Relative* 10.9 (15.3) 20.2 2020 1.5 N/A (2.9) (0.8) N/A N/A * % Relative to local index Analyst 2021e 0.1 N/A (4.1) (1.0) N/A N/A Andy Murphy 2022e 0.0 N/A (6.4) (1.3) N/A N/A
Edison Insight | 26 August 2021 32 Sector: Food & drink Greggs (GRG) Price: 2992.0p Market cap: £3047m INVESTMENT SUMMARY Market LSE H121 results demonstrated how well management has steered the company through COVID-19, notably the re-instatement of the interim dividend. Management is now firmly Share price graph (p) focused on delivering on its refreshed long-term growth strategy. We upgraded our FY21 PBT forecasts by a further 7% to reflect the resilient trading and cost control. Our forecasts for revenue, PBT and dividends in FY21 are higher than reported in FY19, despite the ongoing disruption to some parts of the estate, highlighting the success of new initiatives that are expected to enhance future growth prospects.
INDUSTRY OUTLOOK
Greggs enjoys an expanding market. The Project Café2017UK report (Allegra World Coffee portal) valued the UK coffee shop market in 2016 at £8.9bn, +12% y-o-y, with branded Company description outlets accounting for £3.7bn. Allegra estimates it could reach £16bn by 2025. The With 2,115 shops, and eight squeezed consumer is a potential concern, although Greggs is well placed for the value manufacturing and distribution centres, Greggs is the leading UK switch after widespread refurbishments and extended customer options as it moves to ‘food-on-the-go’ retailer. It uses vertical widen its market. integration to offer differentiated products at competitive prices.
Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 18.6 19.8 114.6 2019 1167.9 231.9 114.2 89.7 33.4 12.3 Relative* 14.2 17.5 76.4 2020 811.3 115.4 (12.9) (12.1) N/A 49.1 * % Relative to local index Analyst 2021e 1228.9 257.2 135.4 107.0 28.0 9.7 Russell Pointon 2022e 1309.9 268.7 145.1 116.1 25.8 10.9
Sector: Oil & gas Hellenic Petroleum (ELPE) Price: €5.59 Market cap: €1709m INVESTMENT SUMMARY Market Athens Stock Exchange Hellenic has presented its updated strategy with a focus on a low-carbon future. It involves accelerating the energy transition towards renewable energy sources (RES) and upgrading Share price graph (€) Hellenic’s core refining operations aimed at a significant reduction in CO2 (50% by 2030, including both a reduction in emissions and offset through RES). The company plans to spend c €1.7bn (out of a total €3.5–4bn capital investment plan by 2030) to boost its RES portfolio up to 2GW by 2030. The core refining business should be supported by energy-efficiency projects, transitioning to cleaner fuels and adopting blue/green hydrogen technologies. We expect Hellenic to benefit from an increase in demand for transport fuels as the restrictions were gradually lifted in Q221 and with Greece opened for tourists. Our valuation stands at €6.73/share, based on the current shape of the company pending more information on the transition. Company description INDUSTRY OUTLOOK Hellenic Petroleum (ELPE) operates three refineries in Greece with a total capacity of 344kbod. It has sizeable European refining will likely face continued challenges in the coming years as demand falls marketing (domestic and international) and refinery systems elsewhere (Asia/United States) hold structural advantages. To offset and petrochemicals divisions. this, changing regulations should put complex, middle distillate-orientated refineries such as Hellenic's in a strong position. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual 0.7 (9.7) 5.9 2019 8857.0 570.0 205.0 60.6 9.2 3.5 Relative* (4.3) (9.2) (23.6) 2020 5782.0 333.0 5.0 1.8 310.6 3.8 * % Relative to local index Analyst 2021e 7087.0 495.0 175.0 44.4 12.6 3.7 Marta Szudzichowska 2022e 7265.0 626.0 304.0 74.5 7.5 3.2
Edison Insight | 26 August 2021 33 Sector: Property Impact Healthcare REIT (IHR) Price: 114.8p Market cap: £403m INVESTMENT SUMMARY Market LSE With the portfolio continuing to perform as expected, unaudited Q121 NAV per share increased to 110.66p (Q121: 110.48p) and including DPS paid the quarterly NAV total Share price graph (p) return was 1.6%. A Q221 DPS of 1.6025p was declared, in line with the FY21 target of 6.41p (+1.9%). Rents and capital values continue to benefit from RPI-linked rent reviews and rents continue to be received in full as they fall due. Investment continued in the quarter with the group committing to two properties, a high-quality operational home and a forward funding arrangement, both let/pre-let to a new (13th) tenant, while work commenced on a significant asset management project. With a low LTV of c 14% including the £35m proceeds of the April equity issue, and a strong and growing pipeline of acquisition opportunities, we expect further accretive growth.
INDUSTRY OUTLOOK Company description Impact Healthcare REIT invests in a Care home demand is driven by demographics and care needs with a shortage of quality diversified portfolio of UK healthcare assets, particularly residential and care homes suggesting strong investment demand in years to come. The pandemic nursing care homes, let on long leases presents a significant near-term challenge to the sector but does not change the underlying to high-quality operators. It aims to provide shareholders with attractive demographic-driven fundamentals while highlighting its critical role in supporting the NHS and sustainable returns, primarily in the form of dividends, underpinned by and the importance of long-term investment. structural growth in demand for care. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual (0.9) 2.1 14.2 2019 24.0 19.4 17.6 6.9 16.6 19.6 Relative* (4.5) 0.2 (6.2) 2020 30.8 25.6 23.1 7.3 15.7 17.4 * % Relative to local index Analyst 2021e 37.1 31.3 28.0 8.7 13.2 14.3 Martyn King 2022e 43.1 37.1 33.3 9.5 12.1 13.0
Sector: Technology IQE (IQE) Price: 48.8p Market cap: £391m INVESTMENT SUMMARY Market AIM IQE notes that H121 trading was in line with management expectations. The company expects H121 revenue will be c £79m on a reported basis. This is consistent with the Share price graph (p) guidance management issued in March that H121 revenue and EBITDA would be similar to H120 levels on a constant currency basis because H121 revenue is equivalent to c £87m (constant currency), which is close to the £89.9m revenues reported in H120. Management also expects adjusted EBITDA to be similar to the prior year at constant currency (c £16m versus £16.4m in H120). We have left our estimates, which depend on an H2 recovery in infrastructure revenues, unchanged.
INDUSTRY OUTLOOK
During H121 continued strong growth in wireless products for 5G handsets and Wi-Fi 6 Company description routers offset a year-on-year reduction in wireless products for 5G infrastructure. While IQE is the leading supplier of epitaxial management did not comment explicitly on the photonics activity, we believe it is likely that compound semiconductor wafers globally. The principal applications demand for epitaxy from IQE’s major VCSEL customer, which we have previously inferred include radio frequency is involved in the Apple supply chain, has been steady. semiconductors, devices for optical networks, vertical cavity surface emitting lasers (VCSEL) and infrared semiconductors. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 7.5 (7.1) (12.3) 2019 140.0 16.2 (7.0) (2.46) N/A 42.9 Relative* 3.6 (9.0) (28.0) 2020 178.0 29.9 3.2 0.29 168.3 11.0 * % Relative to local index Analyst 2021e 175.0 30.3 2.5 0.21 232.4 13.9 Anne Margaret Crow 2022e 185.4 39.0 6.8 0.63 77.5 11.3
Edison Insight | 26 August 2021 34 Sector: Mining KEFI Gold and Copper (KEFI) Price: 1.8p Market cap: £38m INVESTMENT SUMMARY Market LSE KEFI is in the process of finalising the specifics of the remaining funding sources for Tulu Kapi ahead of the project's launch in mid-FY21 and commissioning in late-FY22. The Share price graph (p) Ethiopian central bank has already approved the project's debt financing structure and community resettlement has been authorised in an environment in which the government is keen to encourage investment and generate tax and export earnings.
INDUSTRY OUTLOOK
In the aftermath of the recent general election in Ethiopia, we are valuing KEFI at 4.35p/share on the basis of its enhanced (75%) interest in Tulu Kapi and our forecast that it is able to generate c £66m in free cash flow pa. However, this valuation excludes Hawiah (19.3Mt at 1.57% CuE), on which KEFI has completed a recent preliminary economic Company description assessment showing a post-tax NPV(8%) of US$96m (1.07p/share attributable) and on KEFI Gold and Copper is an which it is now conducting a pre-feasibility study, and the value of its other tier 2 assets, exploration and development company focused on gold and copper deposits which we estimate could add a further 1.40–6.33p/share to its valuation. in the highly prospective Arabian-Nubian Shield – principally the Tulu Kapi project in Ethiopia, as well as Hawiah Copper and Gold and Jibal Qutman Gold in Saudi Arabia. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 2.7 (10.3) (11.8) 2019 0.0 (2.4) (3.5) (0.6) N/A N/A Relative* (1.1) (12.0) (27.5) 2020 0.0 (2.7) (2.8) (0.2) N/A N/A * % Relative to local index Analyst 2021e 0.0 (1.4) (5.8) (0.2) N/A 49.7 Charles Gibson 2022e 0.0 (1.4) (8.0) (0.3) N/A N/A
Sector: General industrials Kendrion (KENDR) Price: €22.35 Market cap: €334m INVESTMENT SUMMARY Market AMS Kendrion is a global player in high-quality electromagnetic systems that optimise safety, performance and comfort in automotive and industrial applications. The company will benefit Share price graph (€) from long-term disruptive trends such as autonomous driving, electrification, emission reduction and industrial automation. We value Kendrion at €28 per share, the average of historical multiples, DCF and a peer comparison.
INDUSTRY OUTLOOK
For both Automotive and Industrial a market recovery is expected in 2021–22. In H121, Kendrion reported organic revenue growth of 22% and EBITDA growth of 46% (margin 13.6%). Kendrion's targets for 2025 are for organic revenue growth of at least 5% on average per year and an EBITDA margin of at least 15%. In Automotive, Kendrion focuses Company description on the car of the future (fully electric and autonomous), with existing but particularly with Kendrion develops, manufactures and new products. For Industrial Brakes, Kendrion expects the market to grow >5% per year, markets high-quality electromagnetic systems for automotive (52% of with above-average growth in robotics, wind power and industrial trucks. revenues) and industrial applications (48%). The geographical spread of revenues is Germany 39%, other Europe 30%, the Americas 15% and Asia 16%. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual 6.9 (2.0) 84.1 2019 412.4 43.8 11.0 93.57 23.9 N/A Relative* 0.1 (10.5) 31.8 2020 396.4 44.6 5.7 79.25 28.2 N/A * % Relative to local index Analyst 2021e 438.1 54.1 19.7 109.51 20.4 N/A Johan van den Hooven 2022e 477.5 62.9 29.1 151.89 14.7 N/A
Edison Insight | 26 August 2021 35 Sector: Mining Kopy Goldfields (KOPY) Price: SEK1.94 Market cap: SEK1719m INVESTMENT SUMMARY Market NASDAQ OMX First North Kopy Gold reported Q2 gold equivalent production of 13.01koz (up 69% q-o-q but down 7% y-o-y). Mining at Yubileyney recovered after the COVID-19 outbreak that significantly Share price graph (SEK) affected operations and staffing in Q1, but some COVID-19 impacts still remained. Alluvial mining also resumed in May after the winter and will increase in Q3. The company is expecting a stronger second half and has retained production guidance of 56–59koz for the full year.
INDUSTRY OUTLOOK
In our last note on the gold price (The gold rush, published on 11 June 2020), we argued that the sharp increases in the total US monetary base might be expected to support a nominal gold price of US$1,892/oz and potentially as high as US$3,000/oz. While there is a Company description historically strong and statistically significant correlation of 0.909 between the gold price and Following the reverse takeover of Kopy the total US monetary base from 1967 to 2018, there is very little visibility as to how, or to Goldfields by Amur Zoloto in September 2020, the new Kopy boasts what extent, the total US monetary base may be expected to evolve. In the four months to production of >50koz pa of gold from November 2020, the US monetary base was expanding at an average rate of approximately two hard rock mines and a number of smaller placer deposits. Kopy also US$98bn per month, which would equate to an expected increase in the gold price (using retains a 49% interest in the Krasny project and 100% of the Maly Patom the historical correlation) of approximately US$391/oz per year. exploration licences. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual 1.5 (10.0) (15.3) 2019 70.1 27.3 14.0 1.47 15.2 N/A Relative* (3.1) (18.3) (40.8) 2020 98.8 45.6 27.6 2.7 8.3 N/A * % Relative to local index Analyst 2021e 112.3 44.3 30.5 2.7 8.3 N/A Alison Turner 2022e 150.3 72.6 53.4 4.7 4.8 N/A
Sector: Food & drink La Doria (LD) Price: €17.92 Market cap: €556m INVESTMENT SUMMARY Market Borsa Italiana FY20 benefitted significantly from increased at-home consumption caused by the pandemic and we expect volumes to normalise in FY21. That said, we believe there will be a structural Share price graph (€) increase in home consumption once restrictions are lifted, as more flexible working arrangements will continue. The commercial landscape is currently favourable, with high demand levels owing to the pandemic, and low industry stocks. We therefore expect FY21 profitability to remain high, with increased pricing - albeit lower volumes - and a more positive industry backdrop. Q1 results confirmed this and the board maintained its outlook. H1 results are due on 10 September.
INDUSTRY OUTLOOK
La Doria's strategic objectives, published as part of its three-year plan, are broadly Company description unchanged: the priority is to expand the higher margin and less volatile parts of the La Doria is the leading manufacturer of business to reduce the dependence on the more unpredictable ‘red line’. private-label preserved vegetables and fruit for the Italian (17% of revenues) and international (83%) market. It enjoys leading market share positions across its product ranges in the UK, Italy, Germany and Australia.
Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual 3.6 7.2 63.2 2019 717.7 56.0 32.7 64.0 28.0 14.4 Relative* (3.6) 1.9 23.9 2020 848.1 83.1 63.3 182.8 9.8 10.1 * % Relative to local index Analyst 2021e 805.7 83.8 61.8 153.5 11.7 8.1 Sara Welford 2022e 813.8 89.5 66.5 164.1 10.9 7.9
Edison Insight | 26 August 2021 36 Sector: Mining Lepidico (LPD) Price: A$0.02 Market cap: A$117m INVESTMENT SUMMARY Market ASX Lepidico's patented technologies produce lithium hydroxide plus a range of by-products in an eco-friendly fashion from less contested minerals such as lepidolite. Technically, its Share price graph (A$) project has been de-risked by a successful pilot plant campaign and, in May 2020, it announced the results of a definitive feasibility study (DFS) to produce c 4,900t of battery grade lithium hydroxide monohydrate pa (7,060tpa LCE including by-product credits) over 14 years.
INDUSTRY OUTLOOK
The DFS calculated a project NPV(8%) of US$221m and a 31% IRR after initial capex of US$139m. Since then, Lepidico has advanced the project to development status by awarding an EPCM contract to Lycopodium and (effectively) completing the permitting and Company description approvals process. After raising A$12.5m in equity recently, we valued the shares at Via its Karibib project in Namibia and 4.96c/share plus a potential 0.61–1.53c/share for a risk-adjusted 20,000tpa LCE Phase 2 unique IP, Lepidico is a vertically integrated lithium development plant. In the meantime, the US DFC is evaluating the project for potential preferential debt business that has produced both financing and binding product offtakes are well advanced. lithium carbonate and lithium hydroxide from non-traditional hard rock lithium-bearing minerals using its registered L-Max and LOH-Max processes. Y/E Jun Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (A$m) (A$m) (A$m) (c) (x) (x) % 1m 3m 12m Actual 72.7 35.7 153.3 2019 0.0 (4.0) (5.1) 0.0 N/A N/A Relative* 68.3 27.4 105.7 2020 0.0 (4.9) (10.8) 0.0 N/A N/A * % Relative to local index Analyst 2021e 4.1 1.1 (0.4) 0.0 N/A 38.1 Charles Gibson 2022e 0.0 (25.6) (26.7) 0.0 N/A N/A
Sector: Financials London Stock Exchange Group (LSEG) Price: 8036.0p Market cap: £44777m INVESTMENT SUMMARY Market LSE LSEG's H121 results in August showed strong progress with total income (ex-recoveries) up 4.6% y-o-y, adjusted EBITDA up 9.4% and an adj EBITDA margin of 49.4%. Adj EPS Share price graph (p) increased 18.6% to 146.1p and the interim dividend was increased by 7% to 25p. Leverage has been reduced to 2.2x EBITDA following the sale of Borsa Italiana. Progress on integration of Refinitiv is reported to be good and cost savings are ahead of guidance with the end-21 run-rate now expected to be £125m vs £88m, though full year total income (+c 4–5%) and adjusted cost guidance (+5%) is maintained as are overall year-five cost synergies of £350m.
INDUSTRY OUTLOOK
Post-Refinitiv transaction financial targets include: year-five revenue and cost synergies of Company description >£225m (3.4%) and >£350m (7.1%), respectively, a three-year post deal revenue CAGR of London Stock Exchange Group 5–7% and an end 2023 EBITDA margin of 50%. The group previously signalled increased (LSEG) is a diversified global financial markets infrastructure and data investment in capex and operating expenses to provide for growth and separation of Borsa business. Its core areas of activity are: Italiana but still looked for >30% EPS accretion in the the first year post completion. data and analytics (including indices), capital markets and post trade.
Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 7.2 7.1 (9.1) 2019 2314.0 1265.0 994.0 200.3 40.1 N/A Relative* 3.2 5.0 (25.3) 2020 2444.0 1329.0 1061.0 209.7 38.3 N/A * % Relative to local index Analyst 2021e N/A N/A N/A N/A N/A N/A Andrew Mitchell 2022e N/A N/A N/A N/A N/A N/A
Edison Insight | 26 August 2021 37 Sector: General retailers Lookers (LOOK) Price: 67.7p Market cap: £265m INVESTMENT SUMMARY Market LSE Lookers is the second largest UK new car retailer. In COVID-affected FY20, a £36.1m H120 underlying PBT loss was followed by strong H220 trading producing a £14m profit for FY20. Share price graph (p) At end of May adjusted net cash (ex leases) was around £18m (FY20 adjusted net debt £40.7m). Disruption and uncertainties for car retailers continue although trading in lockdown 3 was healthier than expected and improved strongly as more normal trading resumed in Q221, as indicated by the trading update on 28 June. Management expectations for FY21 adjusted PBT were increased again and consensus for FY21 adjusted PBT is now over £50m.
INDUSTRY OUTLOOK
Market dynamics favour larger motor dealership groups against smaller independent Company description groups, which still command c 60% of the franchise market. Global manufacturing Lookers is vying to be the largest UK overcapacity still points to OEM support. However, the sector is normally rated for motor vehicle retailer, with its new car operations supported by the strength recessions and economic shocks like these and survived a dramatic crisis for the sector in of used and aftersales activities. It 2008/9. operates 153 franchises, representing 33 marques from 100 sites around the UK.
Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 11.7 4.2 222.4 2019 4806.5 95.3 4.0 0.81 83.6 2.8 Relative* 7.6 2.1 164.9 2020 3699.9 99.0 14.1 2.86 23.7 3.9 * % Relative to local index Analyst 2021e 4290.4 154.7 60.4 12.33 5.5 2.7 Andy Chambers 2022e 4517.9 150.7 51.6 10.53 6.4 4.8
Sector: Financials LXi REIT (LXI) Price: 147.8p Market cap: £1034m INVESTMENT SUMMARY Market LSE Good progress is being made with deployment of the c £100m proceeds of the July equity raise, with acquisitions amounting to £80m at an accretive 5.25% net initial yield (existing Share price graph (p) portfolio yield 4.7%). Each of the assets acquired benefits from a long weighted average lease term to first break (a blended average 23 years) and inflation-linked or fixed rent uplifts and is let to high quality tenants operating in robust sectors. LXi is well advanced with the deployment of the remaining equity proceeds, with a range of pre-let forward funding and sale and leaseback transactions in solicitors’ hands. Following an unsolicited approach, a food store has been sold for £7.8m, reflecting a low exit yield of 3.8% (acquired by LXi at a 5.5% yield), the proceeds of which will be recycled into higher yielding opportunities.
INDUSTRY OUTLOOK
Company description The pandemic and Brexit contribute to a highly uncertain UK economic outlook. Long LXi REIT is an externally managed UK upwards-only, mostly index-linked or fixed uplift leases (95%) provide significant income REIT investing in high-quality, smaller lot size (£5–15m) assets, let on long protection against inflation and should mitigate the cyclical volatility in capital values index-linked leases to strong financial historically exhibited by the commercial property market. covenants across a range of sectors with defensive characteristics.
Y/E Mar Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 3.5 8.4 37.2 2020 38.5 31.9 30.5 6.3 23.5 27.8 Relative* (0.3) 6.3 12.7 2021 42.8 36.9 39.2 7.5 19.7 26.9 * % Relative to local index Analyst 2022e 61.1 52.5 50.9 7.5 19.7 20.4 Martyn King 2023e 68.6 59.5 56.6 8.1 18.2 20.3
Edison Insight | 26 August 2021 38 Sector: General retailers Marshall Motor Holdings (MMH) Price: 248.0p Market cap: £194m INVESTMENT SUMMARY Market AIM Marshall Motor Holdings has grown to rank seventh among UK automotive retailers. Strong brand coverage, excellent relationships with major car brands and a strong balance sheet Share price graph (p) support continued strategic development. Challenges remain for 2021 (eg supply chain issues), but a record H121 performance was achieved. Volume outperformance continued for both new and used segments with an exceptional margin performance in the latter. Management increased its FY21 expectations to more than £40m adjusted PBT, substantially ahead of the previous record result despite repaying £4m of government support received this year. The exceptional 8.86p interim dividend provides attractive immediate income, with the normal policy to be resumed in FY22.
INDUSTRY OUTLOOK
Company description Market dynamics favour larger motor dealership groups against smaller independent Marshall Motor is the seventh largest groups, which still command c 60% of the franchise market. The large rating discount to the UK motor retailer, operating 116 franchises across 22 brands. It is one General Retailers Index is generally a reflection of concerns about economic recession. of six UK dealership groups that Shocks like the current COVID-19 pandemic are more challenging, but may throw up represent each of the top five volume and premium brands and has a strong opportunities in the future. presence in eastern and southern England. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 20.4 38.9 96.8 2019 2276.1 52.0 22.1 22.9 10.8 4.4 Relative* 16.0 36.2 61.7 2020 2154.4 53.4 20.9 21.1 11.8 2.2 * % Relative to local index Analyst 2021e 2336.6 70.3 40.2 40.3 6.2 3.2 Andy Chambers 2022e 2246.9 52.2 22.8 22.9 10.8 8.1
Sector: Industrial support services MedservRegis (MDS) Price: €0.75 Market cap: €40m INVESTMENT SUMMARY Market Maltese Stock Exchange MedservRegis’s strategy to expand its geographic reach and range of services remains but COVID-19 and lower oil prices has deferred progress. The development of the new oil and Share price graph (€) gas assets in the eastern Mediterranean offer the prospect of growth in the medium and longer term. The two major shareholders’ intentions to find a strategic investor led to the reverse takeover by Regis Holdings of Mauritius, which underpins the balance sheet and expands operations into sub-Saharan Africa. The transaction completed on 25 June 2021 and H121 result are due on 30 August 2021.
INDUSTRY OUTLOOK
MedservRegis operates in the upstream oil and gas segment, providing onshore bases in the Mediterranean, the Middle East, sub-Saharan Africa and the Americas for onshore and Company description offshore exploration and production customers. The METS business added onshore OCTG MedservRegis is a Malta-based services to the historical integrated offshore services offered on an increasingly global provider of integrated offshore logistics and services in support of drilling basis. As new territories are brought on stream the potential for future revenue growth operations in the Mediterranean, remains, which the Regis deal should augment further. MENA, and South America. The METS companies provide OCTG services in the Middle East and beyond, and Regis adds base management and logistics operation in sub-Saharan Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Africa. Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual 0.0 (9.6) 15.4 2018 36.2 6.3 (3.4) (6.76) N/A 6.1 Relative* 0.0 (6.3) 11.0 2019 68.7 11.5 1.1 1.2 62.5 5.9 * % Relative to local index Analyst 2020e N/A N/A N/A N/A N/A N/A Andy Chambers 2021e N/A N/A N/A N/A N/A N/A
Edison Insight | 26 August 2021 39 Sector: Investment companies Mercia Asset Management (MERC) Price: 36.5p Market cap: £161m INVESTMENT SUMMARY Market AIM FY21 was the year Mercia’s business model as a specialist asset manager matured. Mercia has built a structurally profitable, cash-generative business, with high levels (90%+) of Share price graph (p) contracted revenue and the potential for super-returns from its mature direct portfolio. In FY21, management largely achieved its FY22 strategic goals a year early (c £1bn AUM, evergreen balance sheet, sustainably profitable), with NAV per share climbing 24% to 40p and AUM rising 18% to £940m at year end. Management’s new three-year plan aims for 20% average annual growth in AUM and average PBT of £20m between FY22–24. Mercia still trades at a discount to NAV, even before considering the embedded value of the third-party fund management business (c 6.9p/share at 4% of AUM).
INDUSTRY OUTLOOK
Company description COVID-19 fears have largely abated and technology and life sciences sector valuations Mercia Asset Management is a remain strong. Sustained growth in AUM and profitability, supported by material realisations regionally focused specialist asset manager. Its stated intent is to become and exits are the key metrics by which to judge success. the leading regional provider of supportive balance sheet, venture, private equity and debt capital in transaction sizes typically below £10m.
Y/E Mar Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 4.3 12.3 71.8 2020 12.7 0.3 (15.5) (4.55) N/A 284.8 Relative* 0.5 10.1 41.1 2021 23.4 7.1 36.9 8.38 4.4 27.9 * % Relative to local index Analyst 2022e N/A N/A N/A N/A N/A N/A Richard Williamson 2023e N/A N/A N/A N/A N/A N/A
Sector: Media Mirriad Advertising (MIRI) Price: 32.0p Market cap: £89m INVESTMENT SUMMARY Market AIM Mirriad Advertising is shifting up a gear, with its AI-driven, in-content advertising gaining credibility with brands, agencies and platforms, helped by December’s £26m fund raise. A Share price graph (p) Tier 1 global content platform signed up in Q420 (subject to an NDA) and in June, Tencent upgraded to a full commercial contract. A significant global food and beverage company has been working with Mirriad to insert assets into content and has extended the co-operation. The offering is being positioned as an integral element of marketing budgets, with the additional prospect of ad insertion into live TV. We initiate forecasts showing scaling revenues and reducing EBITDA loss.
INDUSTRY OUTLOOK
Privacy concerns are driving substantive changes to the advertising ecosystem and brand Company description and product owners are facing ever-growing challenges reaching ad-avoiding audiences. Mirriad generates new advertising The withdrawal of third-party cookies used by advertisers from 2023 presents an additional revenue for content producers and distributors, using patented, AI and hurdle. The market is actively seeking innovative solutions to engage target audiences with computer vision technology to their products, such as the solution offered by Mirriad. Identification and monetisation of ads dynamically insert products and innovative signage formats must be seamless, scalable, and readily compatible with agencies’ working practices, postproduction. This dramatically improves the viewer experience by especially for live content. limiting commercial interruptions. It Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF operates in the US, Europe and China. Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual (26.4) (36.0) 56.4 2019 1.1 (11.5) (12.2) (8.1) N/A N/A Relative* (29.1) (37.3) 28.5 2020 2.2 (8.6) (9.1) (4.2) N/A N/A * % Relative to local index Analyst 2021e 3.3 (10.9) (11.2) (4.0) N/A N/A Fiona Orford-Williams 2022e 9.0 (7.9) (8.1) (2.9) N/A N/A
Edison Insight | 26 August 2021 40 Sector: Mining Monarch Mining Corporation (GBAR) Price: C$0.82 Market cap: C$64m INVESTMENT SUMMARY Market TSX Monarch Gold (MQR) sold its Wasamac and Camflo assets to Yamana for C$200m but retains a suite of potentially high-return projects as Monarch Mining, which it spun out in Share price graph (C$) January 2021. Its portfolio is located in the established and highly prospective Abitibi gold belt. Beaufor mine and the Beacon mill is planned to re-start production by June FY22 with minimal capex. Once in production, its cash flows plus existing cash will be invested in Croinor, due to start up in FY24. Our valuation is C$0.99/share comprising C$0.69 for Beaufor and Croinor and C$0.30/share for second tier assets McKenzie Break and Swanson. A C$6.7m private placement of units and excellent drilling results on Beaufor will increase its measured, indicated and inferred (MI&I) resources when updated in August 2021 and likely improve its valuation.
INDUSTRY OUTLOOK Company description Monarch Mining Corporation is a Canada ranks second in the world and Quebec ranks top quartile overall in the 2020 Fraser Canadian gold explorer with one past producing asset, one major near-term Institute index of mining attractiveness. M&A activity in the region has picked up in recent project and two second tier projects in years, with the QMX Gold acquisition in January implying a valuation C$170/oz and a peer the Abitibi, Quebec, gold belt. group trading at an average of C$61/oz versus Monarch at C$49/oz at the time of our initiation. Y/E Sep / Jun Revenue EBITDA PBT EPS P/E P/CF Price performance (C$m) (C$m) (C$m) (c) (x) (x) % 1m 3m 12m Actual (6.8) (4.7) N/A 2019 N/A N/A N/A N/A N/A N/A Relative* (8.6) (8.4) N/A 2020 N/A N/A N/A N/A N/A N/A * % Relative to local index Analyst 2021e 0.0 (3.8) (4.0) (5.9) N/A N/A Rene Hochreiter 2022e 20.5 (3.4) (3.8) (5.2) N/A N/A
Sector: Consumer support services Mondo TV (MTVI) Price: €1.43 Market cap: €62m INVESTMENT SUMMARY Market Milan Stock Exchange Mondo TV Group had a strong start to the year, with continuing deals on its key properties, including MeteoHeroes, Grisù, Agent 203 and Invention Story. New contracts include a first Share price graph (€) to develop, produce and distribute a video game based on MeteoHeroes for Sony from the group’s upgraded studio subsidiary in the Canary Islands, which has also recently won its first substantial third-party animation contract valued at US$0.4m. The funding round from Atlas, completed in Q121, has put the group on a sound financial footing. With its extensive library and a strong front list, Mondo TV is in a good position to benefit from the continued appetite for content from broadcasters and streamers.
INDUSTRY OUTLOOK
Structural changes to the market mean strong demand in the short to medium term. The Company description rapid take-up of video on demand (VoD) and streaming VoD (SVoD) globally has fuelled a Mondo TV is a global media group well-documented thirst for content from the major players, with new entrants continuing. focused on the production, acquisition and exploitation of animated children’s Consolidation among the larger US and global players highlights the need for quality television series. It owns the rights to content for regional broadcasters and streamers. High-quality animated series can drive >1,600 TV episodes and films, which it distributes across 75 markets. new subscriptions and stimulate viewer loyalty. Children’s content is a key element of the various providers’ offerings. Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual 6.6 (1.8) (21.1) 2019 23.1 16.4 6.2 11.3 12.7 9.8 Relative* (0.8) (6.6) (40.1) 2020 24.7 18.8 6.4 13.2 10.8 4.5 * % Relative to local index Analyst 2021e 29.2 24.6 10.5 15.0 9.5 3.8 Fiona Orford-Williams 2022e 31.3 27.4 12.8 17.3 8.3 3.0
Edison Insight | 26 August 2021 41 Sector: General industrials Mytilineos (MYTI) Price: €15.50 Market cap: €2215m INVESTMENT SUMMARY Market Athens Stock Exchange Mytilineos is a leading industrial company with international presence in all five continents. Mytilineos’s H121 results showed a 17% increase in EPS versus H120. This was driven by Share price graph (€) a significant turn-around in the Sustainable Engineering Solutions and Metallurgy businesses. Renewables & Storage Development showed some promise with EBITDA margin improving to 6.4% from 2.5% (in H220). Strong maturing pipelines of renewables and sustainable engineering projects should drive growth in these businesses. In July, it announced an agreement with Public Power Corp (PPC) for electricity supply to the Metallurgy business unit till end-2023, after which Metallurgy will shift to renewable power sourcing. In addition, it announced a new long-term agreement with Glencore for sale of alumina and aluminium worth >$1.5bn.
INDUSTRY OUTLOOK Company description Mytilineos is a leading industrial Mytilineos possesses a portfolio of assets that enjoy low costs. CCGTs benefit from access company with international presence in all five continents. The company is to cheap natural gas and low production costs for both alumina/aluminium allow the active in Metallurgy, Power & Gas, metallurgy business to be strongly cash flow generative. Sustainable Engineering Solutions and in Renewables & Storage Development, operating via a unique synergistic business model. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual 12.3 4.2 100.8 2019 2256.0 313.0 180.0 103.0 15.0 9.1 Relative* 6.7 4.9 44.8 2020 1899.0 315.0 N/A 91.0 17.0 N/A * % Relative to local index Analyst 2021e N/A N/A N/A N/A N/A N/A James Magness 2022e N/A N/A N/A N/A N/A N/A
Sector: Technology Nanoco Group (NANO1) Price: 18.5p Market cap: £57m INVESTMENT SUMMARY Market LSE Nanoco has announced the details of the non-dilutive loan note facility of £3.15m (gross) being provided by major shareholders. This facility supports the cash runway for organic Share price graph (p) business activities past calendar H222, at which point there should be good visibility of potential production orders. The initial inter partes review (IPR) judgement and verdict from the trial in the patent litigation against Samsung are both expected during calendar 2022, so the loan notes preserve both potential sources of value for shareholders.
INDUSTRY OUTLOOK
Nanoco has successfully petitioned the judge in Texas to delay the court trial until after the US Patent Trial and Appeal Board has completed IPRs of the five patents in the case, which examine the validity of the patents themselves. The change in sequence improves the Company description likelihood of a positive outcome for Nanoco, but potentially extends the timescales for Nanoco is a global leader in the receiving the initial IPR judgement and trial verdict by around six months to late calendar development and manufacture of cadmium-free quantum dots and other 2022. nanomaterials. Its platform includes c 740 patents and specialist manufacturing lines. Focus applications are advanced electronics, displays, lighting and bio-imaging. Y/E Jul Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual (8.4) (21.9) 10.6 2019 7.1 (3.8) (5.0) (1.34) N/A N/A Relative* (11.8) (23.5) (9.1) 2020 3.9 (2.9) (4.9) (1.38) N/A N/A * % Relative to local index Analyst 2021e 1.9 (2.6) (3.9) (0.99) N/A N/A Anne Margaret Crow 2022e 2.0 (2.2) (3.6) (0.97) N/A N/A
Edison Insight | 26 August 2021 42 Sector: Mining Newmont Corporation (NEM) Price: US$56.35 Market cap: US$45031m INVESTMENT SUMMARY Market New York Stock Exchange Newmont is the world’s largest gold mining company with forecast production of 6.5Moz in FY21 plus a further 1.3Moz AuE of co- and by-products (+/-5%) out of attributable Share price graph (US$) (end-FY20) reserves of 94.2Moz and reserves & resources of 195.4Moz in top tier jurisdictions. It seeks to distinguish itself from its peers via its high environmental, social and governance (ESG) standards, its management strength and experience, its operating model, its capital discipline, its track record of returns (eg its market leading dividend), its methodical approach to project development and its conservatism (eg reserves calculated at US$1,200/oz).
INDUSTRY OUTLOOK
Newmont has a number of sources of organic growth plus three major new projects (Tanami Company description Expansion 2, Ahafo North and Yanacocha Sulphides) that we forecast will result in a c 50% Newmont Corporation is the world’s increase in pre-financing cash flows at NEM by FY25, supporting our absolute valuation of leading gold company with a world-class portfolio of assets in North the company of US$73.15/share. Both Q1 and Q221 results were materially ahead of our and South America, Australia and expectations. Africa. It is the only gold producer in the S&P 500 Index and is widely recognised for its ESG practices and as a leader in value creation, safety and mine execution. Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual (6.8) (23.7) (16.2) 2019 9740.0 3734.0 1473.0 131.6 42.8 14.5 Relative* (9.3) (28.6) (36.1) 2020 11497.0 5537.0 2929.0 265.5 21.2 9.3 * % Relative to local index Analyst 2021e 12446.0 6473.0 3807.0 318.4 17.7 9.4 Charles Gibson 2022e 12407.0 6434.0 3799.0 305.0 18.5 8.8
Sector: General industrials Norcros (NXR) Price: 286.0p Market cap: £232m INVESTMENT SUMMARY Market LSE An AGM/Q122 update from Norcros both confirmed the sustained strength of the rebound from a heavily COVID-19 affected Q121 but also indicated that the company is continuing to Share price graph (p) power ahead versus FY20 (ie June quarter 2019) comparators in both main geographic reporting regions. Specifically, UK like-for-like revenue was 23% higher than Q120 (+96% y-o-y) while South Africa was +20% (+143%) on the same bases. Increased international and UK freight costs and challenges have been well documented; actions taken appear to have been sufficient to maintain margins (presumably some higher input costs matched by price and volume effects) and, on a higher revenue base is a promising start to the year. Our estimates are under review.
INDUSTRY OUTLOOK
Company description RMI has been a stronger sub-sector during/exiting the UK COVID-19 lockdown phase while Norcros is a leading supplier of new residential new-build gathered momentum more gradually. The South African economy showers, enclosures and trays, tiles, taps and related fittings and has faced a number of challenges; wider distribution of wealth and an emerging middle accessories for bathrooms, kitchens, class should benefit consumer spending over time. Management's 2025 financial targets washrooms and other commercial environments. It has operations in the targeted £600m revenue with a balanced UK/overseas split with sustained ROCE of 15%+. UK and South Africa, with some export activity from both countries. Y/E Mar Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual (0.7) 2.1 95.9 2019 331.0 42.2 30.9 29.6 9.7 N/A Relative* (4.3) 0.2 61.0 2020 342.0 38.8 27.1 26.1 11.0 N/A * % Relative to local index Analyst 2021e 324.5 38.7 28.0 26.9 10.6 N/A Toby Thorrington 2022e 337.5 41.4 31.1 29.9 9.6 N/A
Edison Insight | 26 August 2021 43 Sector: Financials Numis Corporation (NUM) Price: 362.0p Market cap: £390m INVESTMENT SUMMARY Market LSE In its July trading update Numis reported a strong Q321 with revenue of over £50m, only slightly below the H121 run rate. In addition to favourable market conditions, Numis saw Share price graph (p) benefits across Investment Banking and Equities activities from its investment in staff and focus on enhancing the quality of its client base. IPOs made a strong contribution but the group also noted that its M&A advisory and private markets businesses were making a significant contribution and have good longer-term potential to expand. Equities had seen some easing in activity levels following a very strong Q221 but the business continued to gain market share and the trading book performance was positive.
INDUSTRY OUTLOOK
Numis indicated that the transaction pipeline for the rest of FY21 and into next year was Company description very strong although it expected Q421 to be seasonally quieter. Market fluctuations and Numis is one of the UK's leading seasonality will influence near-term revenue trends but moves to develop its advisory and independent investment banking groups, offering a full range of private markets activities and offer equity capital markets services outside the UK, should research, execution, equity capital diversify revenues and help support longer-term growth. markets, corporate broking and advisory services. It employs c 290 staff in offices in London and New York. Y/E Sep Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 3.4 1.7 24.8 2019 111.6 15.3 12.4 8.1 44.7 N/A Relative* (0.4) (0.3) 2.6 2020 154.9 39.6 37.1 26.7 13.6 6.4 * % Relative to local index Analyst 2021e 208.1 67.3 62.0 41.8 8.7 21.0 Andrew Mitchell 2022e N/A N/A N/A N/A N/A N/A
Sector: Investment companies Ocean Wilsons Holdings (OCN) Price: 1040.0p Market cap: £368m INVESTMENT SUMMARY Market LSE Ocean Wilsons (OCN) reported PBT of $66.2m in H121 versus a loss of $1.8m in H120. Buoyant financial markets have allowed OCN’s global investment portfolio (OWIL) to swing Share price graph (p) from a loss in H120 to a strong performance. At the same time, OCN’s EBITDA grew 13% y-o-y to $79.6m and its operating profit by 23% as Wilson Sons’ (WSON) results improved as expected from recovering business levels and firmer prices. Business is now picking up in WSON’s key container terminals and tugboat business and a recovery seems underway. We forecast OCN’s PBT to rise by 44% in FY21 and by 20% in FY22 as business recovers to normal. OCN is currently trading on a 39% discount to look-through value. Its stake in listed WSON alone is worth 99% of its market cap.
INDUSTRY OUTLOOK
Company description While WSON’s business volumes were affected by the pandemic, prices and margins Ocean Wilsons Holdings is an actually improved due to better competitive dynamics in its key towage and container ports investment company based in Bermuda. It has a controlling businesses. Currently, volumes are picking up in these two divisions, while higher oil prices shareholding in Wilson Sons, a quoted are supportive of a future recovery in WSON’s lagging oil and gas platform service maritime services company in Brazil, and holds a portfolio of international operations. investments.
Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual 3.5 11.2 56.4 2019 406.1 147.9 95.6 169.3 8.5 3.2 Relative* (0.3) 9.1 28.5 2020 352.8 135.7 74.6 109.5 13.1 3.5 * % Relative to local index Analyst 2021e 382.3 157.6 110.0 178.1 8.1 3.5 Pedro Fonseca 2022e 417.1 181.6 117.4 181.2 7.9 2.9
Edison Insight | 26 August 2021 44 Sector: Travel & leisure OPAP (OPAP) Price: €12.16 Market cap: €4270m INVESTMENT SUMMARY Market Athens Stock Exchange OPAP has exclusive licences across a number of its gaming products; the earliest is due to expire in 2026 and the latest in 2036. The strategy is to grow revenue by enhancing its Share price graph (€) products while accelerating the move online. In Q121 revenue declined by 47% y-o-y and EBITDA declined by 26%, due to COVID-related store closures. We downgraded our FY21 EBITDA forecast by 13% due to more COVID-related closures of the land-based locations than previously expected in our December 2020 update. For FY21 and FY22 we look for a strong recovery post COVID, which is helped by underlying growth as well as the contribution from Stoiximan, which is now fully consolidated.
INDUSTRY OUTLOOK
The Hellenic Gaming Commission estimates that the total legal Greek gaming market Company description amounted to €1.6bn gross gaming revenue (GGR) in 2020, -27% y-o-y due to COVID, of OPAP was founded in 1958 as the which OPAP land-based games comprised €0.9bn GGR. Regulation of the online gaming Greek national lottery and is the exclusive licensed operator of all market is in progress; HGC has granted online licences to OPAP and Stoiximan. numerical lotteries, sports betting, instant and passives, VLTs and horse racing. OPAP listed in 2001 and was fully privatised in 2013. Sazka Group has a 46.39% stake and significant board representation. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual 7.8 (1.1) 56.6 2019 1619.9 411.2 286.6 68.0 17.9 12.7 Relative* 2.4 (0.5) 12.9 2020 1129.8 263.6 133.4 32.0 38.0 18.3 * % Relative to local index Analyst 2021e 1581.6 575.0 408.0 86.0 14.1 9.4 Russell Pointon 2022e 2074.6 772.4 609.6 129.0 9.4 6.5
Sector: Technology Osirium Technologies (OSI) Price: 22.5p Market cap: £7m INVESTMENT SUMMARY Market AIM Osirium reported revenue growth of 22.5% for FY20 and, as a result of cost-control measures taken to manage the business during the pandemic, reduced the EBITDA loss Share price graph (p) from £2.15m in FY19 to £1.36m in FY20. Bookings declined 14% y-o-y, although the company achieved record intake in Q120 and Q420 and has seen positive momentum so far this year, particularly in the healthcare sector. We have revised our forecasts to reflect lower operating costs and the recent fund raise, reducing our EBITDA loss forecast from £1.8m to £1.4m for FY21.
INDUSTRY OUTLOOK
The market for privileged access management (PAM) software is currently worth US$2.2bn and is forecast to grow to US$5.4bn by 2025 (source: KuppingerCole), with demand driven Company description by regulation, the shift to the cloud and adoption spreading to smaller organisations. The UK-based Osirium Technologies complexity of established solutions means fewer mid-market businesses use PAM software designs and supplies subscription-based cybersecurity than enterprises, so this is a market ripe for development. software. Its PAM platform includes privileged access, task, session and behaviour management. It recently launched a secure process automation solution and a privileged endpoint management solution. Y/E Oct / Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual (2.2) 2.3 (13.5) 2019 1.2 (2.2) (3.5) (19.45) N/A N/A Relative* (5.8) 0.3 (28.9) 2020 1.4 (1.4) (3.1) (12.85) N/A N/A * % Relative to local index Analyst 2021e 1.7 (1.4) (3.4) (11.19) N/A N/A Katherine Thompson 2022e 2.0 (1.2) (3.4) (9.79) N/A N/A
Edison Insight | 26 August 2021 45 Sector: Financials OTC Markets Group (OTCM) Price: US$44.95 Market cap: US$529m INVESTMENT SUMMARY Market OTC QX In August OTCM reported a strong second quarter with gross revenues of $25.5m, up 49% compared with Q220. Segmentally this was led by OTC Link (+110%), which benefited from Share price graph (US$) elevated US equity trading levels, but Market Data Licensing (+25%) and Corporate Services (+40%) were also strong. Expenses, including redistribution and transaction-based costs, were up 33%. This left pre-tax profit up 90% and, after a higher tax charge, diluted EPS increased by 64%.
INDUSTRY OUTLOOK
Following Q221, there are further signs that US equity trading activity continues to normalise, and we have assumed this in our forecasts while acknowledging that it is not possible to estimate with any degree of confidence. Net acquisition of corporate clients has Company description accelerated, which bodes well despite a likely normalisation of trading activity. We raised OTC Markets Group operates the our EPS forecast by 12% for 2021 and 19% for 2022. Management’s confidence in the OTCQX, OTCQB and Pink financial markets for over 11,000 US and global business has prompted it to increase the quarterly dividend to $0.18 from $0.15 and we securities. OTC Link LLC, a member of expect the group to pay a special dividend of 65c in 2021 and 75c in 2022. FINRA, operates OTC Link ATS and OTC Link ECN, both SEC-registered Alternative Trading Systems. In FY20 c 82% of revenues were of a subscription-based recurring nature Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF and 71% in Q221. Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual (3.7) 4.5 51.0 2019 62.8 19.4 18.0 124.7 36.0 22.8 Relative* (6.3) (2.1) 15.1 2020 71.2 23.2 21.4 153.4 29.3 17.8 * % Relative to local index Analyst 2021e 92.5 34.8 33.1 216.0 20.8 13.4 Karl Morris 2022e 84.1 32.3 30.5 205.6 21.9 14.0
Sector: Property Palace Capital (PCA) Price: 255.0p Market cap: £118m INVESTMENT SUMMARY Market LSE FY21 results were robust, with a clear improvement in H221. Adjusted PBT of £7.5m included a £0.9m receivables provision, with H221 improving to £4.5m versus £3.1m in Share price graph (p) H121. EPRA NTA per share was 350p (end-FY20: 364p) but also improved in H221 (from 347p at end-H121). With a good level of rent collection continuing, Q421 DPS was increased by 20% to a level that management hopes to at least maintain through FY22. Sales have now completed/been agreed on 57 of the 127 residential units at Hudson Quarter (HQ), completed in April, with a value of c £18m. Also, £9.4m of non-core assets have been sold ytd, as part of the £30m disposal programme. The proceeds of residential sales and non-core disposals provide a significant opportunity for accretive reinvestment and debt reduction.
INDUSTRY OUTLOOK Company description Palace Capital is a UK property The commercial property market is cyclical, historically exhibiting substantial swings in investment company. It is not sector-specific and looks for capital values through cycles while income returns have been more stable. While the opportunities where it can enhance pandemic has created significant economic and market uncertainty, the rebound in GDP, long-term income and capital value through asset management and continuing low interest rates, and lockdown easing are supporting a broadening of positive strategic capital development in locations outside London. commercial property returns, still led by the industrial sector. Y/E Mar Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual (4.5) 3.9 35.1 2020 21.1 14.6 8.0 17.5 14.6 7.5 Relative* (8.0) 1.9 11.0 2021 17.3 10.6 7.5 16.4 15.5 10.4 * % Relative to local index Analyst 2022e 16.7 9.8 6.6 14.3 17.8 13.5 Martyn King 2023e 17.4 10.6 7.5 16.4 15.5 11.1
Edison Insight | 26 August 2021 46 Sector: Mining Pan African Resources (PAF) Price: 16.0p Market cap: £309m INVESTMENT SUMMARY Market AIM Pan African (PAF) produced a forecast beating 179.6koz gold in FY20 and 201.6koz in FY21, to result in net debt declining by 74.2% over the course of 18 months alone. The Share price graph (p) company increased its dividend more than five-fold in FY20 such that it is already among the top 20 yielding precious metals companies, globally, and we expect a further increase in FY21. Since the year end, PAF has concluded multi-year wage agreements with both the NUM and UASA. FY21 results are scheduled for 15 September.
INDUSTRY OUTLOOK
We value PAF at 38.76c (28.04p) per share plus the 5.08cps upside potential from the development of Mintails/Mogale and the value of 19.2m underground Witwatersrand ounces (estimated 0.22–5.24c/share). Near-term development opportunities include Egoli Company description (ZAR2.01bn NPV and 50.1% IRR), the Evander 8 Shaft Phase 1 (ZAR126.1m NPV) & 2 Pan African Resources has three projects, Mintails (ZAR1.47bn NPV and 42.8% IRR), the Prince Consort shaft pillar, the major producing precious metals assets in South Africa: Barberton Fairview sub-vertical shaft (7–10koz pa) and the Royal Sheba project (c 30koz pa). (target output 95koz Au pa), the Barberton Tailings Retreatment Project (20koz) and Elikhulu (55koz), now incorporating the Evander Tailings Retreatment Project (10koz). Y/E Jun Revenue EBITDA PBT EPS P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual (2.2) (19.2) (34.3) 2019 218.8 65.5 37.1 1.64 13.5 7.1 Relative* (5.8) (20.8) (46.0) 2020 274.1 115.2 80.8 3.78 5.9 5.8 * % Relative to local index Analyst 2021e 369.0 157.3 122.4 4.24 5.2 3.2 Charles Gibson 2022e 340.9 170.1 144.0 5.18 4.3 2.5
Sector: General industrials paragon (PGN) Price: €9.76 Market cap: €44m INVESTMENT SUMMARY Market Xetra Recovery is strengthening following the COVID-19 disruptions in FY20 while the sale process of its remaining stake in Voltabox continues but has yet to be finalised. paragon Share price graph (€) Automotive H121 revenues were €75.7m, 51% up on H120. The 14.8% H121 EBITDA margin is at the top end of the guided FY21 range of 12–15%. The performance has been driven by strong sales growth in both Electronics (+62%) and Mechanics (+29%) air quality sensors, with strong EBITDA margin improvements in both to 16.2% and 9.8% respectively. Management is mitigating the chip shortage through the use of buffer stocks and maintained guidance for Automotive sales of €145m in FY21 and FCF of c €12m.
INDUSTRY OUTLOOK
We believe paragon's identification of, and investment in, solutions to address megatrends Company description in global automotive markets is understood by investors. It is growing faster than its markets paragon designs and supplies due to innovative products that are driving changes in customer perceptions, creating new automotive electronics and solutions, selling directly to OEMs, including growth engines for the group. These should reassert themselves as the COVID-19 sensors, interior, digital assistance and pandemic wanes. body kinematics. Production facilities are in Germany, the US and China. It retains 51% of Voltabox, which supplies battery power systems. Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual (9.2) (10.5) (10.5) 2018 187.4 30.3 14.8 144.58 6.8 N/A Relative* (12.6) (12.9) (27.3) 2019 192.2 17.2 (8.5) (115.00) N/A N/A * % Relative to local index Analyst 2020e N/A N/A N/A N/A N/A N/A Andy Chambers 2021e N/A N/A N/A N/A N/A N/A
Edison Insight | 26 August 2021 47 Sector: Property Phoenix Spree Deutschland (PSDL) Price: 404.0p Market cap: £381m INVESTMENT SUMMARY Market LSE The external portfolio valuations increased by a like-for-like 2.5% in H121, reflecting an increase in market rents following removal of the Mietendeckel rent cap, further progress in Share price graph (p) condominium splitting and general valuation improvements related to specific assets. Meanwhile, the collection of back-rents, due for the period in which the rent cap was in place, is proceeding well, with more than 89% of the c €2.1m due to PSDL already collected. Despite some drag from COVID-19 restrictions, H121 condominium notarisations increased by 45.1% versus H120, amounting to €4.3m at an average 25.4% premium to book value and 15.9% premium to the average value of the Berlin residential portfolio. Seeking to ensure that the share price better reflects the intrinsic value of the company’s portfolio and future prospects PSD continues to actively repurchase shares at an accretive discount to net assets, acquiring c 2.4m shares at an average c 399p since June compared Company description with the end-FY20 EPRA NTA per share of €5.28, or c 451p (at £/€ = 1.17). Phoenix Spree Deutschland is a long-term investor in mid-market INDUSTRY OUTLOOK residential property in Berlin, targeting reliable income and capital growth. Its Strong demand for housing in Berlin has been by net migration and a relative lack of supply, core strategy is to acquire unmodernised apartment blocks that generating growth in free market rents and capital values. may be improved to the benefit of tenants, generating attractive returns for shareholders. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual 1.0 10.1 32.0 2019 22.6 44.6 28.6 21.8 21.8 N/A Relative* (2.7) 7.9 8.5 2020 23.9 48.3 37.9 30.1 15.8 N/A * % Relative to local index Analyst 2021e 28.2 51.5 44.3 37.1 12.8 N/A Martyn King 2022e 28.1 51.6 44.4 36.8 12.9 N/A
Sector: Financials Picton Property Income (PCTN) Price: 96.0p Market cap: £526m INVESTMENT SUMMARY Market LSE Q122 NAV total return was a strong 4.0% and, supported by a continuing good level of rent collection, the quarterly rate of DPS was increased by 6.3% to 0.85p or an annualised 3.4p, Share price graph (p) just slightly below the pre-pandemic level (3.5p). EPRA dividend cover was 121%. EPRA NTA per share increased 3.2% to 99.9p, including a 2.9% average like-for-like increase in portfolio valuations, led by a 4.8% gain on industrial assets, while office assets showed a slight gain (0.2%) and retail and leisure assets gained 2.3% led by retail warehouses. Lettings and lease renewals added to annual rent with occupancy maintained at 91%. There is significant reversionary potential within the portfolio while low gearing (20.6%) and £50m of undrawn debt provide scope for accretive acquisitions.
INDUSTRY OUTLOOK
Company description The commercial property market is cyclical, historically exhibiting substantial swings in Picton Property Income is an internally capital values through cycles while income returns have been more stable. While the managed UK REIT that invests in a diversified portfolio of commercial pandemic has created significant economic and market uncertainty, the rebound in GDP, property across the UK. It is total continuing low interest rates, and lockdown easing are supporting a broadening of positive return driven with a strong income focus and aims to generate attractive commercial property returns, still led by the industrial sector. returns through proactive management of the portfolio. Y/E Mar Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 9.1 13.6 39.1 2020 33.6 28.1 22.4 3.66 26.2 N/A Relative* 5.1 11.4 14.3 2021 33.5 28.1 33.8 3.68 26.1 N/A * % Relative to local index Analyst 2022e 33.9 28.2 49.9 3.74 25.7 N/A Martyn King 2023e 35.2 29.2 41.1 3.93 24.4 N/A
Edison Insight | 26 August 2021 48 Sector: General industrials PIERER Mobility (PMAG) Price: €75.00 Market cap: €1690m INVESTMENT SUMMARY Market Vienna PIERER Mobility is a leading manufacturer of powered two wheelers (PTWs) focused on premium markets through the KTM, HUSQVARNA and GASGAS motorcycle brands. With Share price graph (€) e-bikes it adds a new organic growth stream as urban e-mobility markets develop rapidly, and has formed a joint venture with its Bulgarian supplier that will add capacity of 350k e-bikes by 2023. Following a strong FY20 despite the pandemic, strong global demand for motorcycles and e-bikes continued in Q121 with revenues of €509m. Guidance for FY21 sales was increased to €1.85bn to €1.95bn, with EBIT margins of 8–9% and EBITDA margin of over 15%. H121 results are due on 31 August.
INDUSTRY OUTLOOK
PIERER Mobility’s historic target PTW market has been for motorcycles greater than 120cc Company description that retail for over €2,500. The segment represents 6m units or around 11% of the global PIERER Mobility (previously KTM PTW market. PIERER had a market share of around 9.5% of this market in 2019 with a Industries) is a leading manufacturer of powered two wheelers, focusing on record 280.9k registrations, up 10% on 2018; 66.2k were through the Indian jv partner, premium motorcycles and two-wheeled Bajaj. The market for e-bikes and scooters has grown strongly in Europe, supported by electric vehicles. With its well-known brands – KTM, HUSQVARNA and structural long-term trends especially cleaner transport solutions. GASGAS – it is the largest sports motorcycle manufacturer in Europe. Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual 3.3 2.3 55.0 2019 1520.0 241.0 118.0 241.8 31.0 6.6 Relative* (1.6) (1.7) 0.9 2020 1530.0 239.0 91.0 155.1 48.4 5.4 * % Relative to local index Analyst 2021e 1829.0 306.0 143.0 262.1 28.6 8.6 Andy Chambers 2022e 2014.0 335.0 168.0 312.9 24.0 6.1
Sector: Property Primary Health Properties (PHP) Price: 167.0p Market cap: £2224m INVESTMENT SUMMARY Market LSE Including the first benefits from internalisation of the group management structure, expected to deliver immediate cost savings of c £4.0m pa, H121 recurring earnings progressed as Share price graph (p) expected. While a highly competitive investment market held back acquisitions, it was also reflected in strong portfolio revaluation gains and NAV growth. Meanwhile, progress continued with rent reviews and asset management projects, forward-funded developments and the recently acquired direct development pipeline. Robust rent collection underpins quarterly DPS payments with an annual target of a fully covered 6.2p (+5.1% vs FY20), a 25th year of DPS growth. With significant funding headroom and a strong pipeline of opportunities we expect investment to pick-up in H2.
INDUSTRY OUTLOOK
Company description The sector enjoys strong income visibility, with long leases and upwards-only rents, 90% Primary Health Properties is a backed directly or indirectly by government bodies, with little exposure to the economic long-term investor in primary healthcare property in the UK and the cycle, or fluctuations in occupancy. Healthcare planning, with broad political support, Republic of Ireland. Assets are mainly already suggests strong underlying demand for modern healthcare properties in both the long-let to GPs and the NHS or the HSE, organisations backed by the UK UK and the Republic of Ireland while the pandemic highlights existing pressures and may and Irish governments, respectively. well lead to increased healthcare spending over the longer term. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 5.7 10.0 8.7 2019 115.7 103.4 (70.2) 5.5 30.4 19.4 Relative* 1.8 7.9 (10.7) 2020 131.2 118.0 112.4 5.8 28.8 17.8 * % Relative to local index Analyst 2021e 136.1 126.5 136.3 6.2 26.9 17.4 Martyn King 2022e 140.5 130.7 134.1 6.5 25.7 17.1
Edison Insight | 26 August 2021 49 Sector: Financials ProCredit (PCZ) Price: €7.52 Market cap: €443m INVESTMENT SUMMARY Market Xetra ProCredit (PCB) has extensive experience in supporting SMEs in emerging economies (and strong ESG profile), with a focus on Southeastern (SEE) and Eastern Europe (EE) and Share price graph (€) banking operations in Ecuador. It streamlined its business in recent years, including a digital direct bank strategy for private clients and a reduced branch network and headcount. As macro conditions normalise further and PCB continues to grow its business, we expect it to realise its scaling potential and gradually reach its mid-term ROE target of 10%.
INDUSTRY OUTLOOK
While the SEE and EE region benefitted from secular GDP growth of 3–5% pa in the five years prior to COVID-19, the pandemic triggered a recession in 2020 with a GDP decline of 2.0% in Emerging and Developing Europe, according to IMF data. The IMF forecasts a Company description return to growth in 2021 with GDP up 4.9%. PCB’s in-depth, impact-oriented relationships ProCredit Holding is a Germany-based with SME borrowers (93% of loan book at end June 2021), prudent credit risk management group operating regional banks across Southeastern and Eastern Europe, as and solid capital base (CET-1 ratio of 13.7% at end June 2021) should help drive further well as in Ecuador. The banks focus loan book growth while reducing the impact of any macro headwinds. Longer term, PCB’s on small and mid-size enterprises (SMEs) and private middle-income and business should be assisted by the low banking sector penetration in the region (loan book high earners. At end-2020, the group’s total assets stood at €7.3bn. to GDP of 40–45% on average vs >70% in Western Europe). Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual (6.7) (13.6) 26.4 2019 252.6 N/A 76.9 89.0 8.4 N/A Relative* (10.2) (16.0) 2.6 2020 223.5 N/A 52.1 70.0 10.7 N/A * % Relative to local index Analyst 2021e 259.7 N/A 84.3 118.8 6.3 N/A Milosz Papst 2022e 278.6 N/A 91.4 128.2 5.9 N/A
Sector: General industrials Quadrise Fuels International (QFI) Price: 3.9p Market cap: £55m INVESTMENT SUMMARY Market AIM Recent tests carried out by a third party on Quadrise's new bioMSAR fuel show CO2 savings of 26–28%. This compares favourably with existing biofuels which typically deliver Share price graph (p) savings of 10–15%. In addition NOx, CO, particulate and soot emissions were low, indicating highly efficient combustion. BioMSAR provides a potential route for MSAR adopters to reduce their CO2 emissions, which should in our opinion both help increase Quadrise’s market opportunity and the speed and scale of market penetration. We note that Quadrise has shared the results of the tests with MSC Shipmanagement, part of the world’s second largest shipping line. Quadrise has a joint development agreement with MSC to carry out a trial of both bioMSAR and MSAR on representative vessels in MSC’s global fleet, with the bioMSAR testing taking precedence.
INDUSTRY OUTLOOK Company description Quadrise Fuels International is the Greenfield Energy experienced significant problems in starting heavy oil extraction at the innovator, supplier and global licensor of disruptive residual oil technology Petroteq Oil Sands plant in Utah, so Quadrise has only recently received samples for testing that produces a synthetic, enhanced even though it had expected to receive them by the end of December 2020. Quadrise heavy fuel oil called MSAR. The technology enables refiners to produce expects to finish testing the samples by the end of August. MSAR for use as a low-cost substitute for heavy fuel oil. Y/E Jun Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 24.6 (20.5) 35.1 2019 0.0 (2.8) (3.0) (0.32) N/A N/A Relative* 20.1 (22.1) 11.0 2020 0.0 (3.1) (3.4) (0.32) N/A N/A * % Relative to local index Analyst 2021e N/A N/A N/A N/A N/A N/A Anne Margaret Crow 2022e N/A N/A N/A N/A N/A N/A
Edison Insight | 26 August 2021 50 Sector: Property Raven Property Group (RAV) Price: 26.9p Market cap: £152m INVESTMENT SUMMARY Market LSE H121 results will be published on 31 August. In FY20 the strong operational progress, with occupancy increasing to 94% (FY19: 90%) and more than 99% of rents were collected, was Share price graph (p) obscured by rouble weakness when presented in sterling. In recent months the rouble has stabilised, ending-H121 little changed from the start of the year, although the H121 average rate was well below H120. A continuing favourable demand-supply situation in the warehouse market is positive for rents and while interest rates have recently risen (to 6.5%) to manage inflationary pressures this remains well below the end-FY20 portfolio yields of c 11%. During H121 the repurchase of ordinary and preference shares from Invesco funds, in part through a new JV between the company and management, was completed and shareholder distributions recommenced.
INDUSTRY OUTLOOK Company description Raven Property Group (formerly The Russian Economics Ministry has increased its 2021 GDP growth forecast to 3.8% as Raven Russia) invests mainly in Class A warehouses in Russia. It also owns the economy recovers from the impacts of the pandemic. Strong demand for warehouse three office buildings in St Petersburg, space, especially driven by e-commerce activity, combined with low vacancy, a lack of new a third-party logistics company in Russia and a residential development supply, and increased construction costs are positive indicators for increased rents and company in the UK. valuations. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual (0.9) (9.0) (14.4) 2019 127.0 N/A 54.0 6.4 4.2 N/A Relative* (4.6) (10.8) (29.6) 2020 113.0 N/A (25.0) (6.9) N/A N/A * % Relative to local index Analyst 2021e 100.0 N/A 31.0 4.1 6.6 N/A Martyn King 2022e 102.0 N/A 22.0 2.5 10.8 N/A
Sector: Financials Record (REC) Price: 89.6p Market cap: £178m INVESTMENT SUMMARY Market LSE Record’s AUME continued to grow in Q122, increasing 5% to $84.5bn. There was a net inflow of $1.8bn (2%) split evenly between passive hedging and currency for return. The Share price graph (p) latter included the Record EM Sustainable Finance Fund which launched with UBS Wealth Mgt at end June with a size of approximately $0.75bn. The fund is a first step in the group’s strategy to create new products in collaboration with clients to grow and diversify revenue. It also provides an entry point to sustainable investment as an area for development and commands a significantly higher fee margin than existing products. Market and other movements added $2.6bn (3%). Average fee rates were broadly stable and no performance fees were earned in the period.
INDUSTRY OUTLOOK
Company description The continuation of growth in AUME creates a strong base for FY22. The diversity of Record is a specialist independent revenue has increased and there is potential for this trend to continue as further new currency manager. It provides a number of products and services, products are launched. Work continues on introducing new software and technology to including passive and dynamic facilitate this and enhance efficiency and scalability. hedging, and a range of currency for return strategies, including funds and customised segregated accounts.
Y/E Mar Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual (7.6) 2.5 159.7 2020 25.6 8.5 7.7 3.26 27.5 27.0 Relative* (11.0) 0.5 113.4 2021 25.4 7.0 6.2 2.73 32.8 25.9 * % Relative to local index Analyst 2022e 33.0 13.1 12.2 5.05 17.7 18.2 Andrew Mitchell 2023e N/A N/A N/A N/A N/A N/A
Edison Insight | 26 August 2021 51 Sector: Property Regional REIT (RGL) Price: 88.9p Market cap: £384m INVESTMENT SUMMARY Market LSE With completion of the £45.0m sale of an industrial portfolio (at 7.5% above the end-FY20 valuation) more than 70% of the start-year industrial assets have now been sold, with the Share price graph (p) proceeds expected to be promptly recycled into a strong pipeline of higher yielding office investments, the focus of investment going forward. The existing office portfolio contains significant reversionary income potential (c £12m or more than 20% of gross contracted rents at end-FY20) and engagement with potential occupiers has increased as pandemic restrictions have relaxed. Supported by continuing strong rent collection, a Q221 DPS of 1.6p has been declared (Q121: 1.6p) and our FY21 forecast remains 6.6p (vs 6.4p in FY20) including a increased Q421 DPS, consistent with the company’s normal pattern. Interim results will be published on 16 September.
INDUSTRY OUTLOOK Company description Regional REIT owns a highly The commercial property market is cyclical, historically exhibiting substantial swings in diversified commercial property portfolio of predominantly offices capital values through cycles while income returns have been more stable. While the located in the regional centres of the pandemic has created significant economic and market uncertainty, the rebound in GDP, UK. It is actively managed and targets a total shareholder return of at least continuing low interest rates, and lockdown easing are supporting a broadening of positive 10% with a strong focus on income. commercial property returns, still led by the industrial sector. Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 0.8 3.1 14.9 2019 55.0 44.1 30.6 7.8 11.4 N/A Relative* (2.9) 1.1 (5.6) 2020 53.3 42.0 27.7 6.5 13.7 N/A * % Relative to local index Analyst 2021e 53.6 42.8 28.9 6.7 13.3 N/A Martyn King 2022e 55.3 44.5 30.4 7.0 12.7 N/A
Sector: General industrials Renewi (RWI) Price: 532.0p Market cap: £426m INVESTMENT SUMMARY Market LSE A confident AGM statement referenced a good start to FY22 with all three reporting divisions performing well and as expected in Q1. Accompanying comments included Share price graph (p) confirmed investment plans to support the innovation pipeline, a further €20m reduction in core net debt (to below 2x EBITDA) and confirmation that the latest green bonds issuance has been successfully completed. The AGM also approved a one for 10 share consolidation, with trading in the new ordinary shares commencing on 19 July.
INDUSTRY OUTLOOK
The Dutch waste market, accounting for the largest single business within Renewi, was growing as the economy recovered from cyclical lows ahead of the coronavirus outbreak.
Company description Renewi is a waste-to-product company with operations primarily in the Netherlands, Belgium and the UK. Its activities span the collection, processing and resale of industrial, hazardous and municipal waste.
Y/E Mar Revenue EBITDA PBT EPS P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual 5.1 7.2 123.5 2020 1775.4 167.1 54.3 5.4 115.6 29.6 Relative* 1.2 5.1 83.7 2021 1693.6 159.8 47.1 4.5 138.8 19.2 * % Relative to local index Analyst 2022e 1800.9 171.1 55.8 5.2 120.1 30.4 Toby Thorrington 2023e 1847.9 189.0 72.2 6.8 91.8 27.0
Edison Insight | 26 August 2021 52 Sector: Technology Riber (ALRIB) Price: €1.39 Market cap: €30m INVESTMENT SUMMARY Market Euronext Paris Riber’s H121 revenues were €9.3m, 20% lower than the previous year. MBE system sales halved year-on-year during H121 to €2.8m. H120 billings included three systems, two of Share price graph (€) which were larger units for volume production, while H121 billings included only two smaller R&D units. Delivery of a third R&D system was delayed into Q321 because of coronavirus-related travel restrictions. Revenues from services and accessories rose by 8% to €6.4m, in line with management’s intention to grow this category. As expected, evaporator sales were minimal (€0.1m H121 and €0.1m H120), reflecting a trough in investment in the OLED screen industry.
INDUSTRY OUTLOOK
The total order book at end June 2021 was €17.4m versus €14.4m at end December 2020 Company description and €17.3m at end March 2021. The June total included five MBE systems, all for delivery Riber designs and produces molecular in FY21, of which one is a production system. It does not include the additional order for a beam epitaxy (MBE) systems and evaporator sources and cells for the research system announced in July. semiconductor industry. This equipment is essential for the manufacturing of compound semiconductor materials that are used in numerous high-growth applications. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual (0.6) (21.3) (12.9) 2019 33.5 1.7 0.9 3.07 45.3 N/A Relative* (4.7) (24.6) (34.7) 2020 30.2 2.1 0.7 2.49 55.8 N/A * % Relative to local index Analyst 2021e 29.1 2.4 0.9 3.03 45.9 N/A Anne Margaret Crow 2022e 32.8 3.4 1.8 6.48 21.5 N/A
Sector: Financials S&U (SUS) Price: 2950.0p Market cap: £358m INVESTMENT SUMMARY Market LSE S&U’s trading update for the period from 20 May to 31 July indicated that it is trading well, with profitability, collections and book debt quality ahead of expectations. Advantage motor Share price graph (p) finance saw strong levels of applications though transactions were slightly below an ambitious target (with cautious underwriting and limitations on supply of vehicles) leaving net receivables similar to the year-end level of £247m. This has been more than offset by strong collections with bad debt and impairment levels below expectation so the divisional H122 profit is expected to show a significant increase, ahead of budget. Aspen benefited from a strong housing market (albeit with some supply constraints) and participation in CBILS and net receivables reached nearly £58m (vs £18.5m a year ago).
INDUSTRY OUTLOOK
Company description Looking ahead, Advantage should benefit from a gradual return to normal levels of S&U’s Advantage motor finance business, subject to the evolution of the pandemic and UK economy. Aspen should benefit business lends on a simple HP basis to lower- and middle-income groups from a long-term supply shortage of housing in the UK and a further maturing of this who may have impaired credit records relatively new business. S&U's H122 results are due 28 September. restricting access to mainstream products. It has c 63,000 customers. The Aspen property bridging business has been developing since its launch in 2017. Y/E Jan Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 10.9 10.1 93.4 2020 89.9 40.4 35.1 239.4 12.3 72.2 Relative* 6.8 7.9 58.9 2021 83.8 22.2 18.1 120.7 24.4 10.8 * % Relative to local index Analyst 2022e 84.4 34.9 30.6 204.2 14.4 N/A Andrew Mitchell 2023e 90.9 38.4 33.2 221.7 13.3 N/A
Edison Insight | 26 August 2021 53 Sector: General retailers SandpiperCI Group (SANDPI) Price: 90.0p Market cap: £90m INVESTMENT SUMMARY Market TISE Sandpiper has been able to leverage its relationships with its franchise partners to open their brands in additional geographies: initially Gibraltar and more recently the Isle of Man. It Share price graph (p) is a dependable operator and upholds the franchisor’s brand values. It owns a high-quality freehold property portfolio, valued at £64m in January 2021, which provides a barrier to entry for the competition. There are some opportunities for in-fill across existing geographies, but we believe that more significant long-term opportunities lie in developing into new territories and an expansion into an adjacent segment such as hospitality. However, this is unlikely to occur in the short term given the ongoing pandemic. The FY21 results demonstrated the group’s resilience: in spite of lockdown-related store closures and significant extra pandemic-related costs such as PPE and social distancing measures, gross revenues were up 6% and trading EBITDA was up by 3%. Company description INDUSTRY OUTLOOK SandpiperCI operates a high-quality portfolio of retail brands covering food, clothing and specialist products. It Our medium-term sales growth of 3.5% for Sandpiper reflects consensus RPI forecasts of c primarily operates franchise stores but 3% and modest space growth, as Sandpiper expands across its existing geographies. also a number of its own food convenience stores. It is the leading Channel Islands retailer and is also present in Gibraltar and the Isle of Man. Y/E Feb Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual N/A N/A N/A 2020 188.5 11.0 4.5 3.56 25.3 31.1 Relative* N/A N/A N/A 2021 200.4 11.3 5.1 4.09 22.0 9.6 * % Relative to local index Analyst 2022e 205.2 11.8 5.3 4.25 21.2 9.9 Sara Welford 2023e 210.4 12.1 5.3 4.27 21.1 8.9
Sector: General industrials Schaltbau Holding (SLT) Price: €55.40 Market cap: €531m INVESTMENT SUMMARY Market Deutsche Börse On 7 August 2021, Carlyle Group announced its intention to launch a voluntary public cash takeover offer for Schaltbau Holding at €53.50 per share. Carlyle has secured irrevocable Share price graph (€) undertakings from 69% of the shareholders. Schaltbau should benefit from trends towards digitalisation and interconnectivity in Rail (68% of FY20 revenues), while restoring profitability levels. The ability to leverage direct current (DC) switching expertise should provide opportunities in growth markets, such as new energy, new industry and e-mobility.
INDUSTRY OUTLOOK
H121 results were strong with revenues +6% and EBIT +42%. In the Rail segment, Schaltbau expects to realise growth of 4–6% in the modestly growing railway market until 2026, driven by modernisation, and to significantly improve EBIT margins towards 6–8% in Company description 2026 (2–3% in FY20). Higher growth will come from the DC Power segment with exposure Schaltbau Holding specialises in to high growth markets such as new energy (wind and solar) and e-mobility. Annual growth products for rail infrastructure and rolling stock and also road vehicles in these segments is estimated at >20%. and other industrial applications. Rail represented 68% of FY20 revenues. The geographical spread of revenues in FY20 was Germany 36%, other Europe 47% and rest of the world 17%. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual 55.0 60.3 106.7 2019 513.7 45.1 10.5 104.85 52.8 N/A Relative* 49.2 55.9 67.8 2020 502.3 43.1 14.5 146.53 37.8 N/A * % Relative to local index Analyst 2021e 533.0 48.2 23.4 201.98 27.4 N/A Johan van den Hooven 2022e 570.4 57.6 31.4 186.86 29.6 N/A
Edison Insight | 26 August 2021 54 Sector: Financials Secure Trust Bank (STB) Price: 1330.0p Market cap: £248m INVESTMENT SUMMARY Market LSE Secure Trust Bank (STB) reported H121 PBT of £30.7m, boosted by a net impairments reversion of £1.1m (vs a net charge of £19.8m in H220). The good news on provisions had Share price graph (p) been previously flagged by management. Loan arrears have remained lower than expected and most borrowers have returned from payment holidays. Loan demand is picking up and loans grew 1.3% (core division loan growth of 2.6%) in the six months to 30 June 2021. STB also announced a new 25% payout dividend policy along with a surprise 20p interim dividend. This policy better matches the bank’s growth strategy of organic and opportunistic acquisitions. We have raised our FY21 earnings forecasts to reflect lower impairments while trimming FY22 EPS by 11% (ROE forecast 9.5%) to reflect higher costs as the bank expands. Our fair value has edged to 2,234p from 2,163p per share.
INDUSTRY OUTLOOK Company description Secure Trust Bank is a There is naturally some uncertainty regarding job furlough schemes and other support well-established specialist bank addressing niche markets within measures, but we expect the government to take a pragmatic approach to tapering them off. consumer and commercial banking. As such, we do not envisage a cliff-edge scenario despite the clear risk to forecasts.
Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 18.2 13.7 97.0 2019 165.5 N/A 41.1 180.2 7.4 N/A Relative* 13.9 11.5 61.9 2020 166.1 N/A 20.1 85.2 15.6 N/A * % Relative to local index Analyst 2021e 164.6 N/A 47.9 211.9 6.3 N/A Pedro Fonseca 2022e 191.3 N/A 36.3 156.6 8.5 N/A
Sector: Engineering Severfield (SFR) Price: 82.0p Market cap: £253m INVESTMENT SUMMARY Market LSE FY21 results were slightly better than we had anticipated in most respects. Revenue and reported EBIT were 2.5% and 4.8% above our estimates respectively – and a 7% operating Share price graph (p) margin achieved – with slightly lower interest costs and loss from JV/associates slightly lower. Dividends were in line (ie 1.8p final making an unchanged 2.9p for the year as a whole). Year-end net cash was as expected at c £4m and strong cash collection was a feature throughout the year. The underlying UK/Europe order book is stable and enhanced by DAM making £301m in total while the Indian JV equivalent has swollen to a record £140m. Management referred to positive momentum across the group and an expectation of progress in FY22. The AGM is scheduled for 1 September. Our estimates are under review.
INDUSTRY OUTLOOK Company description Severfield is a leading UK structural The primary strategic aim is to maintain Severfield’s position as the leading UK structural steelwork fabricator operating across a broad range of market sectors. An steelwork supplier. The Indian JV targets similar sectors to those served in the UK; Indian facility undertakes structural management has valued the Indian construction market at c £100bn pa, with a very low steelwork projects for the local market and is currently being expanded. penetration of steel structures currently.
Y/E Dec / Mar Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 4.9 7.9 51.9 2019 274.9 29.0 24.7 6.66 12.3 13.8 Relative* 1.0 5.8 24.8 2020 327.4 33.2 28.6 7.75 10.6 8.9 * % Relative to local index Analyst 2021e 354.5 29.6 22.9 6.03 13.6 9.0 Toby Thorrington 2022e 365.3 34.6 27.5 7.29 11.2 9.2
Edison Insight | 26 August 2021 55 Sector: General industrials Stern Groep (STRN) Price: €13.95 Market cap: €83m INVESTMENT SUMMARY Market AMS In 2020, Stern restructured its balance sheet and further streamlined operations. This puts it in a good position to cope with the uncertain car market, as was evident in Q1. In 2021, Share price graph (€) opportunities relating to the company’s financial position, as well as its participation in Bovemij and M&A, could start to materialise. We expect profitability to increase in the next few years, driven by the restructured organisation, digitisation efforts, a focus on margin over volume and an improving market environment. The valuation is undemanding, at c 7.0x 2022e P/E.
INDUSTRY OUTLOOK
Automotive retail already had to deal with structural change and COVID-19 has presented another big challenge. After a drop in new car sales in 2020 by 20% to 356,051 in the Company description Netherlands, sector organisations Aumacon and RAI/Bovag expect a moderate rebound of With 61 dealer and Stern Point car 1–12% in 2021. Stern should start to see the effects of optimising its dealer network, repair locations and revenues of almost €900m, Stern Groep is the third focusing on omnichannnel, moving out of unattractive car brands and executing cost largest car retailer group in the controls. Netherlands. The company has more than 1,557 employees.
Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual 1.8 3.3 35.4 2019 876.8 26.4 (1.4) 29.13 47.9 N/A Relative* (4.7) (5.7) (3.0) 2020 751.1 27.8 0.8 (85.41) N/A N/A * % Relative to local index Analyst 2021e 837.9 19.9 10.3 164.00 8.5 N/A Edwin De Jong 2022e 873.3 23.7 13.3 211.51 6.6 N/A
Sector: General retailers Studio Retail Group (STU) Price: 288.0p Market cap: £251m INVESTMENT SUMMARY Market LSE Studio Retail Group’s (SRG) exceptional FY21 results were due to strong customer growth and spend per customer, reflecting product appeal and convenience, helped by positive Share price graph (p) effects from the COVID-19 pandemic. After the sale of Education, SRG represents a pure play on the growth of online value retail. At the capital markets day, management reiterated its ambition to grow revenue to £1bn within four to six years, a minimum CAGR of 9.5%. The key drivers are expected to be growth of the customer base, enhancing spend per customer and providing more flexible payment options. These play to SRG’s strengths, as evidenced in recent years. Our forecasts are under review.
INDUSTRY OUTLOOK
Against a challenging macroeconomic backdrop, Studio is outperforming much of the retail Company description market through its unique digital-first value proposition, combined with the backing of Studio Retail Group is a leading online flexible, and increasingly tailored, responsible consumer credit solutions. value retailer with an integrated financial services offer. The growth strategy is based around three key levers: value, choice and payment options, and management’s medium-term target is to achieve revenue of £1bn. Y/E Mar Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 3.6 (5.9) 14.1 2020 434.9 35.0 27.3 12.1 23.8 58.1 Relative* (0.2) (7.7) (6.3) 2021 578.6 73.0 48.8 44.9 6.4 14.3 * % Relative to local index Analyst 2022e N/A N/A N/A N/A N/A N/A Russell Pointon 2023e N/A N/A N/A N/A N/A N/A
Edison Insight | 26 August 2021 56 Sector: Financials Supermarket Income REIT (SUPR) Price: 122.0p Market cap: £989m INVESTMENT SUMMARY Market LSE SUPR has invested c £240m since the close of the H121 results, including a c £58m increase in its economic interest in the Sainsbury Reversion Portfolio. With a strong pipeline Share price graph (p) of investment opportunities that meet the strict investment criteria, and available capital from the well-received March capital raise, we anticipate further significant investment activity. Although already overtaken by these events, the H121 results provided evidence of both the financial benefits of increased scale and the key role of omnichannel stores in supermarket distribution strategies. Recent changes to the management advisory agreement have introduced a new, lower tier of fees on assets above £2.0bn, increasing the benefit of further growth for shareholders.
INDUSTRY OUTLOOK
Company description Supermarket property has a long record of positive total returns underpinned by stable Supermarket Income REIT, listed on income returns in part due to long-leases, a strong occupier covenant, and the non-cyclical the special funds segment of the LSE, invests in supermarket property, let to nature of grocery retailing. Supermarkets have been net beneficiary of the pandemic which leading UK supermarket operators, on has boosted sales, particularly online and fulfilled by omnichannel stores. long, RPI-linked leases. The investment objective is to provide an attractive level of income, with the potential for capital growth. Y/E Jun Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 3.8 6.6 10.9 2019 16.9 21.2 9.9 5.0 24.4 17.4 Relative* 0.0 4.5 (8.9) 2020 25.5 38.9 16.8 5.0 24.4 15.2 * % Relative to local index Analyst 2021e 45.8 59.2 40.5 6.2 19.7 19.2 Martyn King 2022e 66.3 61.5 58.3 7.2 16.9 17.0
Sector: Property Target Healthcare REIT (THRL) Price: 123.8p Market cap: £633m INVESTMENT SUMMARY Market LSE Q421 EPRA NAV per share increased 1.2% to 110.4p and including DPS paid the total return was 2.8%. Returns are underpinned by inflation-indexed rent growth and robust rent Share price graph (p) collection, with recent progress on the small number of underperforming homes. Reported COVID-19 cases across the portfolio remain very low and strong enquiry levels from potential residents are beginning to translate into increased occupancy for tenant operators, up c 5% across mature homes since the Q121 lows. The entire £60m (gross) proceeds of the March equity raise have been deployed or allocated to board approved acquisitions that are in advanced stages of due diligence, including the recent acquisitions of a luxury operational care home in Scotland and a land site/forward funding commitment in Buckinghamshire with an aggregate completed value of £33m (including costs).
INDUSTRY OUTLOOK Company description Target Healthcare REIT invests in Care home demand is driven by demographics and care needs with a shortage of quality modern, purpose-built residential care homes in the UK let on long leases to care homes suggesting a strong investment demand in years to come. The pandemic has high-quality care providers. It selects presented a significant near-term challenge to the sector but does not change the assets according to local demographics and intends to pay underlying demographic-driven fundamentals while highlighting its critical role in supporting increasing dividends underpinned by structural growth in demand for care. the NHS and the importance of long-term investment. Y/E Jun Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 5.5 9.0 14.0 2019 34.3 N/A 20.1 5.45 22.7 25.4 Relative* 1.6 6.9 (6.3) 2020 44.3 N/A 23.2 5.27 23.5 26.0 * % Relative to local index Analyst 2021e 49.8 N/A 26.1 5.55 22.3 22.4 Martyn King 2022e 56.4 N/A 33.6 6.57 18.8 17.6
Edison Insight | 26 August 2021 57 Sector: Technology Technicolor (TCH) Price: €3.00 Market cap: €707m INVESTMENT SUMMARY Market Euronext Paris Technicolor’s half year figures showed it on track to meet management guidance on EBITDA and EBITA for both FY21 and FY22. Trading conditions are improving for Share price graph (€) Technicolor Creative Services as the film and episodic industry re-emerges from lockdowns, with a strong order book and pipeline for H221 and FY22. Connected Home is also experiencing strong demand but its performance is being constrained by supply issues for componentry. With the group’s planned cost savings on track, the shift is continuing back towards the equity, which now represents 39% of the EV.
INDUSTRY OUTLOOK
COVID-19 has highlighted the importance of reliable domestic broadband and high-quality wi-fi as homes increasingly act as devolved workplaces alongside greater content Company description consumption. This is unlikely to change as the global economy reopens. In Technicolor Technicolor is a worldwide technology Creative Studios, the live content industry continues to re-emerge, while animation demand leader operating in the media and entertainment industry. Its activities are remains strong. Fresh, high-quality content is crucial to reinforce the attractiveness of VoD organised in three business segments, platforms to subscribers and advertisers in a highly competitive market. Production Services, DVD Services and Connected Home.
Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual 3.3 (6.0) 15.8 2019 3800.0 325.0 (73.0) (492.18) N/A 0.6 Relative* (1.0) (9.9) (13.2) 2020 3006.0 167.0 (43.0) (33.64) N/A N/A * % Relative to local index Analyst 2021e 2933.0 270.0 (3.0) (2.97) N/A 6.8 Fiona Orford-Williams 2022e 3255.0 385.0 117.0 42.67 7.0 2.4
Sector: General industrials Thrace Plastics (PLAT) Price: €7.90 Market cap: €346m INVESTMENT SUMMARY Market Athens Stock Exchange FY20 was an outstanding year for Thrace which benefitted from a sharp increase in demand for personal protective equipment (PPE) arising from the COVID-19 pandemic but also Share price graph (€) delivered a very strong organic increase in underlying profitability in group PBT from continuing operations. Margins improved at all levels in both divisions with Technical Fabrics’ EBIT rising almost fivefold while that for Packaging more than doubled. Further earnings progress was achieved in Q121 at the end of which net debt had reduced to c €6m (€9m including IFRS 16 leases) and the sale of the Thrace Linq US industrial property completed on 18 August.
INDUSTRY OUTLOOK
Thrace manufactures a wide range of products that are used in a variety of sectors, ranging Company description from construction/infrastructure to food packaging, medical and horticulture primarily in Thrace Plastics is an established Europe. Management’s high-level financial objective is to pursue profitable growth using two international producer of Technical Fabrics (FY19: 72% of net revenues) primary levers: increased capacity and value capture. and Packaging (28%). Each division uses a number of manufacturing processes and produces a wide range of products from polymer materials, serving a diverse range of end-markets. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual 9.3 34.4 311.5 2019 327.8 30.6 10.2 12.8 61.7 13.0 Relative* 3.8 35.2 196.8 2020 339.7 76.5 56.1 93.1 8.5 4.0 * % Relative to local index Analyst 2021e 387.5 100.1 76.5 132.5 6.0 3.8 Toby Thorrington 2022e 342.4 57.8 32.9 56.2 14.1 5.4
Edison Insight | 26 August 2021 58 Sector: Media Tinexta (TNXT) Price: €38.00 Market cap: €1794m INVESTMENT SUMMARY Market Borsa Italiana STAR H121’s results indicated Digital Trust (DT) revenue growth well ahead of management guidance, and improving underlying revenue growth for Credit Information & Management Share price graph (€) (CIM) and Innovation & Marketing Services (IMS) from Q1 to Q2. Total organic revenue growth of 12.7% was further boosted by acquisitions, primarily the Cyber Security (CS) business unit and Queryo in IMS. The overall EBITDA margin declined to 23.8% from 28.2% in H120 due to the first-time inclusion of CS and mix changes within the business units (eg the recovery of Co.Mark in IMS and REValuta in CIM).
INDUSTRY OUTLOOK
Tinexta is exposed to favourable growth trends including the transition to a digital world and the requirement for enhanced online security. Starting from a purely domestic Italian focus, Company description the company is exploiting these trends internationally. In particular, given recent regulatory Tinexta has four divisions: Digital changes, in DT the group is leveraging its Italian expertise to expand on an EU-wide basis Trust, solutions to increase trust in digital transactions; Credit Information with a unified legal base across the region. At the same time, Tinexta is likely to make & Management, services to manage acquisitions in Italy and Europe that will further expand its addressable markets and seek credit; Innovation & Marketing Services, consulting services to help cross-selling opportunities between the business units. clients develop their businesses; and Cybersecurity. Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual 15.4 52.2 114.7 2019 258.7 71.3 53.5 80.3 47.3 N/A Relative* 7.4 44.8 63.0 2020 269.0 77.9 58.6 85.9 44.2 N/A * % Relative to local index Analyst 2021e 373.7 95.0 72.1 108.2 35.1 N/A Russell Pointon 2022e 438.6 119.6 92.8 139.5 27.2 N/A
Sector: Technology Trackwise Designs (TWD) Price: 240.0p Market cap: £69m INVESTMENT SUMMARY Market AIM Trackwise Designs expects H121 group revenues to increase 71% year-on-year to £4.1m, reflecting the acquisition of Stevenage Circuits in March 2020 and a 130% jump in IHT Share price graph (p) revenues to £0.6m. Management expects adjusted EBITDA to quadruple to £0.45m and adjusted operating loss to narrow from £0.4m to £0.1m. We have left our estimates unchanged.
INDUSTRY OUTLOOK
The trading update shows progress in both the improved harness technology (IHT) and advanced printed circuit board (PCB) activities during H121. IHT revenues were backed by deliveries to the UK electric vehicle OEM and an industrial customer. The opportunity continues to expand as Trackwise supplies early-stage samples to other companies in the Company description electric vehicle sector as well as development products to a range of customers in the Trackwise Designs is a UK medical, industrial and aerospace markets, including the first customer for aerospace manufacturer of specialist products using printed circuit technology. These battery packs. H121 revenues in the Advanced PCB division were 6% higher than H220 include a lightweight replacement for despite supply chain shortages and the adverse impact of Brexit on trading with customers conventional wiring harnesses known as IHT and RF antennae. In FY20, in mainland Europe. The division’s order book is growing, encouraging management to add 39% of revenues related to exports. a second shift later in FY21 to meet production demand Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 34.8 0.8 170.9 2019 2.9 0.5 0.1 0.8 300.0 N/A Relative* 29.9 (1.1) 122.6 2020 6.1 0.8 (0.4) 1.4 171.4 N/A * % Relative to local index Analyst 2021e 9.0 0.7 (0.7) (1.0) N/A N/A Anne Margaret Crow 2022e 22.1 4.2 1.9 6.4 37.5 N/A
Edison Insight | 26 August 2021 59 Sector: Food & drink Treatt (TET) Price: 1095.0p Market cap: £653m INVESTMENT SUMMARY Market LSE Treatt once again delivered a strong performance in the first half of FY21, with good momentum across multiple categories contributing to growth. Operating margins have Share price graph (p) benefited from the improved product mix as Treatt continues to move up the value chain and partners with its customers to develop new products. Its technical expertise is being utilised across a growing range of applications, which has led to revenue growth and margin expansion. The UK facility opened in April 2021 with commissioning of the machinery due later in the year. The outlook for FY21 is optimistic, with the board raising FY expectations with the H1 results and adjusted PBT expected to be 'at least £20m'.
INDUSTRY OUTLOOK
Treatt has migrated its business from that of a pure supplier to the food and beverage Company description industries to being a valued partner in the development of new ingredients. Citrus, tea, fruit Treatt provides innovative ingredient and vegetable flavours and health & wellness (mainly sugar reduction) are core areas of solutions from its manufacturing bases in Europe and North America, focus, with the latter undergoing a structural growth trend. principally for the flavours and fragrance industries and multinational consumer goods companies, particularly in the beverage sector.
Y/E Sep Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 3.3 (8.4) 93.5 2019 112.7 15.8 14.0 19.0 57.6 31.5 Relative* (0.5) (10.2) 59.0 2020 109.0 17.9 15.8 21.3 51.4 41.8 * % Relative to local index Analyst 2021e 127.5 25.6 21.7 29.5 37.1 43.0 Sara Welford 2022e 135.2 30.2 23.6 32.0 34.2 24.8
Sector: Property Triple Point Social Housing REIT (SOHO) Price: 110.4p Market cap: £445m INVESTMENT SUMMARY Market LSE H121 results will be announced on 3 September. The portfolio continued to perform in line with expectations in Q121 with unaudited NAV per share increasing to 106.55p (end-FY20: Share price graph (p) 106.42p). Including DPS paid, the quarterly NAV total return was 1.3%, continuing the consistently positive trend since IPO. A Q121 DPS of 1.3p was declared and SOHO is targeting aggregate FY21 DPS of 5.2p, up 0.4% in line with the annual February increase in the UK CPI. We forecast continuing accretive growth as the £55m (gross) proceeds from October’s equity issue, along with increased debt funding, are deployed, supporting a continuation of the progressive dividend policy, fully covered by adjusted earnings. SOHO recently completed/exchanged on the acquisition of 12 properties, committing c £14m (before costs), taking the FY21 ytd total to c £30m.
INDUSTRY OUTLOOK Company description Triple Point Social Housing REIT Private capital is crucial in meeting the current and future needs for care based social (SOHO) invests in primarily newly built and newly renovated social housing housing which is widely recognised to improve lives in a cost-effective manner compared assets in the UK, with a particular with the alternatives of residential care or hospitals. focus on supported housing. SOHO aims to provide a stable, long-term inflation-linked income with the potential for capital growth. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 6.2 4.6 4.4 2019 21.1 15.1 11.9 3.39 32.6 23.8 Relative* 2.3 2.5 (14.2) 2020 28.9 22.3 16.6 4.61 23.9 16.3 * % Relative to local index Analyst 2021e 33.9 26.9 20.6 5.11 21.6 13.6 Martyn King 2022e 36.1 28.9 22.4 5.57 19.8 15.2
Edison Insight | 26 August 2021 60 Sector: Technology TXT e-solutions (TXT) Price: €8.60 Market cap: €112m INVESTMENT SUMMARY Market Borsa Italiana STAR TXT reported robust results for H121, with year-on-year organic revenue growth of 4.7% and recent fintech acquisitions adding a further 31.4% to growth; EBITDA margins Share price graph (€) expanded 0.4pp to 13.0% y-o-y. Since the end of H1, TXT has acquired a German internet of things (IoT) specialist for €10m, bolstering its exposure to the industrial sector and strengthening its operations in Germany. We estimate the deal is earnings accretive and raise our normalised EPS forecasts by 9% in FY21 and 13% in FY22.
INDUSTRY OUTLOOK
In the aerospace and aviation division, the rapid pace of innovation combined with increasing regulation drives demand for TXT's software and services. In the fintech division, TXT has expanded from providing software testing services to Italian banks to providing a Company description range of software and services (eg risk management, digital payments, supply chain finance TXT e-solutions provides IT, consulting solutions, credit management software) to an international customer base. and R&D services to aerospace, aviation, automotive, banking and finance customers.
Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual 10.0 11.5 8.2 2019 59.1 7.0 7.6 45.6 18.9 N/A Relative* 2.3 6.1 (17.9) 2020 68.8 8.6 7.1 47.0 18.3 N/A * % Relative to local index Analyst 2021e 90.9 11.8 9.5 58.5 14.7 N/A Katherine Thompson 2022e 101.7 13.7 11.2 69.0 12.5 N/A
Sector: Construction & blding mat Tyman (TYMN) Price: 418.0p Market cap: £820m INVESTMENT SUMMARY Market LSE Tyman reported strong H121 results with good progress versus undisturbed (pre COVID-19) markets in all reporting regions. At the headline level, group like-for-like growth versus H119 Share price graph (p) was +10% in revenue terms and +20% at the EBIT level (and a 140bp EBIT margin improvement). On the same basis, gross margin was slightly improved also (+70bp to 34.9%) which is some achievement given well-publicised supply chain pressures on input costs and international freight challenges. To this end, Tyman has been rebuilding inventories where possible (with a c £28m cash outflow, partly reflecting a low starting point and seasonal build) but still managed to reduce core net debt to £95m (below 1x EBITDA). Following a return to paying dividends at the end of FY20, Tyman also reinstated a 4p interim dividend this time. Management outlook comments indicate a small nudge up in guidance implying EBIT in the £91–92m range (we were on £89.4m, pre results) and our Company description estimates are under review. Tyman’s product portfolio substantially addresses the residential RMI and INDUSTRY OUTLOOK building markets with increasing commercial sector exposure following Prior to the COVID-19 outbreak, leading North American and European markets were acquisitions. It manufactures and sources window and door hardware expected to grow modestly and the new-build sector has generally been firmer than RMI and seals, reporting in three divisions. spend which has been more patchy. Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual (1.5) (15.2) 110.1 2019 613.7 100.8 71.0 27.3 15.3 7.3 Relative* (5.1) (16.9) 72.6 2020 572.8 94.9 68.4 27.1 15.4 7.4 * % Relative to local index Analyst 2021e 620.0 104.7 80.1 31.5 13.3 8.6 Toby Thorrington 2022e 635.8 108.9 85.1 33.0 12.7 7.3
Edison Insight | 26 August 2021 61 Sector: General industrials VivoPower International (VVPR) Price: US$5.57 Market cap: US$94m INVESTMENT SUMMARY Market NASDAQ The move into electric vehicles (EVs) through the acquisition of Tembo is a step-change for VivoPower International. It brings significant growth potential in a niche market while the Share price graph (US$) group’s scale and presence has already delivered a number of distribution deals. Of particular note is the letter of intent (LOI) with Toyota Australia for volume deliveries and exclusive technical collaboration on the ubiquitous Land Cruiser, a positive endorsement of Tembo's portfolio and capabilities.
INDUSTRY OUTLOOK
The move to a low carbon environment is accelerating the drive towards electrification of the economy. In transportation this involves a full chain from generation (solar, wind etc), associated infrastructure (grid robustness and charging), electric vehicles as internal Company description combustion engines are phased out and storage requirements (battery management). The VivoPower International’s strategy is to speed of regulation is accelerating as are the commitments from companies including the provide sustainable energy solutions on an international scale. Key activities mining sector. at present are electric vehicles, critical power and solar development. Its primary operations are in Australia, Europe and North America.
Y/E Jun Revenue EBITDA PBT EPS P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual (16.0) (21.8) 55.2 2019 39.0 (4.0) (8.6) (63.80) N/A N/A Relative* (18.2) (26.7) 18.3 2020 48.7 3.9 (1.0) (12.00) N/A N/A * % Relative to local index Analyst 2021e 41.6 4.9 0.1 0.41 1358.5 N/A David Larkam 2022e 52.3 5.3 (0.9) (4.06) N/A 15.9
Sector: Technology WANdisco (WAND) Price: 330.0p Market cap: £174m INVESTMENT SUMMARY Market AIM Following the integration of LiveData with leading cloud vendors (Microsoft and AWS) and the recent signing of major partnership deals, all the pieces are now in place for a big Share price graph (p) acceleration in growth in FY21. WANdisco expects commercialisation of these deals to begin shortly and, predicated on migrating over 130PB of data in FY21, is guiding to sales of ‘at least $35m’. We expect sales to rise to $60m in FY22.
INDUSTRY OUTLOOK
The rapid adoption of cloud computing coupled with WANdisco’s proprietary technology creates a significant opportunity for both long term growth and high margins in our view. The company has set out its ambition to generate annual revenue of at least $100m in the next three to five years from a combination of 1) data migration; 2) hybrid cloud; and 3) Company description multi-cloud. Our analysis suggests that the Microsoft relationship alone could generate more WANdisco’s proprietary replication than $80m in annual revenues by 2023 with the data migration element alone presenting a technology enables its customers to solve critical data management $1.4bn opportunity in the long term. challenges created by the shift to cloud computing. It has established partner relationships with leading players in the cloud ecosystem including Microsoft and AWS. Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual (18.5) (21.1) (43.5) 2019 16.2 (11.7) (18.4) (38.8) N/A N/A Relative* (21.5) (22.6) (53.6) 2020 10.5 (22.2) (30.4) (57.3) N/A N/A * % Relative to local index Analyst 2021e 37.0 (2.4) (9.4) (16.9) N/A N/A Dan Gardiner 2022e 60.0 15.3 8.4 14.2 32.1 17.2
Edison Insight | 26 August 2021 62 Sector: Mining Wheaton Precious Metals (WPM) Price: C$54.72 Market cap: C$24639m INVESTMENT SUMMARY Market TSX WPM reported record revenue in both Q121 and Q221, which contributed towards record cash-flow in H121 and resulted in its repaying all outstanding debt and approving a fourth Share price graph (C$) successive increase in its quarterly dividend to 15c/share. All of its partners' mines have now returned to normal operating conditions. WPM has also recently concluded new business in the form of a stream with Rio2's Fenix mine and published a sustainability report highlighting its strong ESG credentials.
INDUSTRY OUTLOOK
Under normal circumstances, we believe that WPM could easily justify a valuation of US$64.92 (or C$81.86) per share, in FY23. If precious metals return to favour however, we believe that a valuation as high as US$88.02 (C$111.24) is achievable. In the meantime, it Company description remains cheaper than the average valuations of its peers in at least 66% of cases. This Wheaton Precious Metals is the follows the settlement reached between WPM and the CRA in December 2018 whereby pre-eminent ostensibly precious metals streaming company, with 32 income from WPM’s international subsidiaries will remain exempt from Canadian tax. high-quality precious metals streaming and early deposit agreements relating to assets in Mexico, Peru, Canada, Brazil, Chile, United States, Argentina, Sweden, Greece, Portugal and Colombia. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual (1.0) (4.7) (20.9) 2019 861.3 548.3 242.7 54.0 80.6 35.4 Relative* (3.0) (8.4) (35.4) 2020 1096.2 763.8 503.2 112.0 38.8 24.9 * % Relative to local index Analyst 2021e 1320.8 939.1 646.9 143.0 30.4 20.4 Charles Gibson 2022e 1673.1 1276.5 966.5 214.0 20.3 15.3
Sector: Technology XP Power (XPP) Price: 5590.0p Market cap: £1098m INVESTMENT SUMMARY Market LSE XP Power has reported another strong set of results, with H121 revenue up 14% y-o-y and normalised EPS up 33% y-o-y. The semiconductor equipment sector continues to be a Share price graph (p) strong driver of revenue and orders, and industrial technology has returned to growth. As expected, healthcare declined from the exceptional levels seen last year with demand reverting back to non COVID-19 applications. Overall, exceptional revenue growth and order intake drive upgrades to our forecasts, with EPS up 5.4% in FY21 and 6.9% in FY22.
INDUSTRY OUTLOOK
XP supplies three end-markets: healthcare, industrial technology and semiconductor manufacturing, across Europe, North America and Asia. The industrial technology segment is relatively fragmented, but the company sees demand across various applications. The Company description healthcare business continues to gain market share, with corporate approvals from the XP Power is a developer and designer major suppliers in place. The semiconductor segment is the most cyclical, tracking the of power control solutions with production facilities in China, Vietnam capex requirements of semiconductor manufacturers. and the United States, and design, service and sales teams across Europe, the United States and Asia.
Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 11.8 14.0 27.1 2019 199.9 44.5 32.3 141.4 39.5 N/A Relative* 7.7 11.8 4.4 2020 233.3 56.8 44.3 198.4 28.2 N/A * % Relative to local index Analyst 2021e 241.1 57.0 43.9 180.6 31.0 N/A Katherine Thompson 2022e 252.0 61.4 47.9 198.0 28.2 N/A
Edison Insight | 26 August 2021 63 Sector: Media YouGov (YOU) Price: 1220.0p Market cap: £1351m INVESTMENT SUMMARY Market AIM YouGov’s year-end trading update indicated that results will be in line with management expectations, with a strong sales pipeline giving confidence for further progress in FY22. Share price graph (p) Particularly encouraging is that the progress is described as across ‘all divisions and geographies’ (on an underlying basis). The group is broadening its sales resource to keep driving the strategic, longer-term deals that are building recurring revenues and it continues to build its presence in the important US market. Our modelling suggests year-end net cash of £40.5m, giving plenty of flex for further technology and panel investment, and geographic expansion.
INDUSTRY OUTLOOK
Clients remain keen to understand short-term vacillations in markets as economies rebuild, Company description but the uncertain backdrop had been making sales conversion more difficult for the larger, YouGov is an international research multinational and longer-term contracts. The increasing emphasis on data privacy and the data and analytics group. Its data-led offering supports and improves a wide forthcoming changes to third-party cookie usage (despite the delay) highlight the benefits spectrum of marketing activities of a and value inherent in permissioned, first-party data. YouGov's developments, particularly customer base including media owners, brands and media agencies. It those such as YouGov Safe, sit well in this shifting environment. works with some of the world’s most recognised brands. Y/E Jul Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 2.5 8.4 42.5 2019 136.5 31.7 20.4 13.8 88.4 33.7 Relative* (1.2) 6.3 17.1 2020 152.4 39.2 24.7 15.7 77.7 33.9 * % Relative to local index Analyst 2021e 170.0 47.9 30.6 17.4 70.1 28.8 Fiona Orford-Williams 2022e 185.0 54.3 37.0 21.3 57.3 25.0
Edison Insight | 26 August 2021 64
Edison dividend list
Company name FY0 period end Currency DPS FY0 DPS FY1 DPS FY2 4imprint Group 2020/12 USD 0.0 35.0 45.0 Appreciate Group 2021/03 GBP 1.0 1.4 1.8 Canacol Energy 2020/12 USD 0.2 0.2 Cenkos Securities 2020/12 GBP 3.5 Centaur Media 2020/12 GBP 0.5 1.0 1.0 Cohort 2021/04 GBP 11.1 12.2 13.4 discoverIE Group 2021/03 GBP 10.2 10.7 11.0 Ebiquity 2020/12 GBP 0.0 0.5 1.3 Endeavour Mining Corp 2020/12 USD 37.0 56.0 60.0 Epwin Group 2020/12 GBP 1.0 2.5 3.4 Esker 2020/12 EUR 50.0 55.0 60.0 Games Workshop Group 2021/05 GBP 235.0 250.0 251.0 Gamesys Group 2020/12 GBP 40.0 GB Group 2021/03 GBP 6.4 3.5 3.6 GCP Student Living 2020/06 GBP 6.2 Genuit Group 2020/12 GBP 4.8 9.0 10.0 Greggs 2020/12 GBP 0.0 54.1 58.8 Hellenic Petroleum 2020/12 EUR 10.0 22.2 29.8 Impact Healthcare REIT 2020/12 GBP 6.3 6.4 6.6 Jersey Electricity 2020/09 GBP 16.5 17.3 18.2 La Doria 2020/12 EUR 50.0 41.0 44.0 Lookers 2020/12 GBP 0.0 2.0 3.3 LXi REIT 2021/03 GBP 5.6 6.0 6.2 Marshall Motor Holdings 2020/12 GBP 0.0 13.3 8.6 Norcros 2020/03 GBP 3.1 5.5 8.0 Numis Corporation 2020/09 GBP 12.0 12.0 Ocean Wilsons Holdings 2020/12 USD 70.0 70.0 70.0 OTC Markets Group 2020/12 USD 125.0 134.0 141.0 Palace Capital 2021/03 GBP 10.5 12.0 14.0 Pan African Resources 2020/06 USD 0.8 1.0 1.0 Primary Health Properties 2020/12 GBP 5.9 6.2 6.4 ProCredit AG 2020/12 EUR 53.0 39.6 42.7 Record 2021/03 GBP 2.3 2.3 S&U 2021/01 GBP 90.0 100.0 110.0 Secure Trust Bank 2020/12 GBP 44.0 53.0 39.1 Severfield 2020/03 GBP 2.9 2.9 3.0 Supermarket Income REIT 2020/06 GBP 5.8 5.9 6.0 Target Healthcare REIT 2020/06 GBP 6.7 6.7 6.8 Thrace Plastics 2020/12 EUR 4.6 4.6 4.6 Treatt 2020/09 GBP 6.0 8.5 9.2 Triple Point Social Housing REIT 2020/12 GBP 5.2 5.2 5.5 Tyman 2020/12 GBP 4.0 10.0 12.0 Wheaton Precious Metals 2020/12 USD 42.0 57.0 80.0 YouGov 2020/07 GBP 5.0 5.5 6.5
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Company Sector Most recent note Date published
discoverIE Group Electronics & electrical equipment Update 30/07/21 Diverse Income Trust (The) Investment companies Investment company review 29/04/21 Doctor Care Anywhere Group Healthcare equipment & services Update 24/08/21 Draper Esprit Listed venture capital Update 22/06/21 Ebiquity Media Update 14/07/21 EJF Investments Investment companies Flash 27/04/20 Electra Private Equity Investment companies Update 25/05/21 EMIS Group Software & comp services Update 13/07/21 EML Payments Software & comp services Update 20/08/21 Endeavour Mining Metals & mining Update 18/08/21 Epwin Group Industrials Update 13/08/21 EQS Group Media Update 23/08/21 Esker Technology Update 16/07/21 European Assets Trust Investment companies Investment company review 25/02/21 European Investment Trust (The) Investment companies Investment company review 19/06/19 Evolva Food & beverages Update 03/03/21 Expert System Technology Update 01/04/21 Filtronic Tech hardware & equipment Update 03/08/21 FinLab Investment companies Initiation 27/08/19 Finsbury Growth & Income Trust Investment companies Investment company review 07/06/21 Foresight Solar Fund Investment companies Initiation 18/02/21 Forward Industries Consumer discretionary Initiation 02/11/20 Foxtons Group Financial services Update 02/08/21 Fundsmith Emerging Equities Trust Investment companies Initiation 29/01/21 Games Workshop Group Consumer goods Update 10/08/21 Gamesys Group Travel & leisure Update 09/03/21 GB Group Technology Flash 29/07/21 GCP Student Living Real estate investment trusts Outlook 05/10/20 Gemfields Group Metals & mining Update 29/04/21 Genesis Emerging Markets Fund Investment companies Investment company review 07/06/20 Genuit Group Building & construction Update 28/05/21 Georgia Capital Investment companies Investment company review 05/03/21 Global Energy Ventures Industrial support services Update 23/08/21 Greggs Food & drink Update 06/08/21 Gresham House Strategic Investment companies Investment company review 08/10/20 Hansa Investment Company Investment companies Investment company review 06/05/21 HarbourVest Global Private Equity Investment companies Investment company review 29/09/20 HBM Healthcare Investments Investment companies Investment company review 03/06/21 Hellenic Petroleum Oil & gas Update 06/08/21 Henderson Far East Income Investment companies Investment company review 23/07/21 Henderson International Income Trust Investment trusts Investment company review 01/02/21 Henderson Opportunities Trust Investment trusts Investment company review 24/06/21 HgCapital Trust Investment companies Investment company review 09/06/21 Hurricane Energy Oil & gas Update 18/08/20 ICG-Longbow SSUP Investment companies Investment company review 08/01/20 Impact Healthcare REIT Real estate Outlook 13/07/21 Invesco Asia Trust Investment companies Investment company review 02/06/21 IQE Tech hardware & equipment Update 15/07/21 Jersey Electricity Industrials Outlook 03/06/21 JPMorgan Global Growth & Income Investment companies Investment company review 06/04/21 Jupiter UK Growth Investment Trust Investment trusts Investment company review 13/05/19 KEFI Gold and Copper Mining Outlook 06/07/21 Kendrion Industrial engineering Update 10/05/21 Kopy Goldfields Metals & mining Update 01/04/21 La Doria Food & drink Outlook 27/05/21 Lepidico Metals & mining Update 18/06/21
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Company Sector Most recent note Date published
Lookers General retailers Outlook 29/07/21 Lowland Investment Company Investment companies Investment company review 09/04/21 LXi REIT Real estate Update 23/08/21 Marble Point Loan Financing Investment companies Outlook 23/11/20 Marshall Motor Holdings Automotive retailers Update 12/08/21 Martin Currie Global Portfolio Trust Investment companies Investment company review 10/06/21 Medserv Industrial support services Flash 12/04/21 Merchants Trust (The) Investment companies Investment company review 26/07/21 Mercia Asset Management Investment companies Update 07/07/21 Mirriad Advertising Media Outlook 12/08/21 Monarch Gold Metals & mining Update 19/05/21 Monarch Mining Corporation Metals & mining Update 06/08/21 Mondo TV Media Outlook 09/06/21 Murray Income Trust Investment companies Investment company review 18/05/21 Murray International Trust Investment companies Investment company review 25/03/21 Mynaric Technology Initiation 30/10/20 Mytilineos General industrials Flash 10/02/21 Nanoco Group Tech hardware & equipment Update 12/08/21 NB Private Equity Partners Investment companies Investment company review 22/06/21 Newmont Corporation Metals & mining Update 02/08/21 Norcros Construction & materials Update 19/04/21 Numis Corporation Financial services Update 14/07/21 Ocean Wilsons Holdings Investment companies Update 23/08/21 OPAP Travel & leisure Outlook 15/06/21 OPG Power Ventures Utilities Update 22/06/21 Osirium Technologies Software & comp services Update 11/06/21 OTC Markets Group Financial services Update 19/08/21 Palace Capital Real estate Update 17/06/21 Pan African Resources Metals & mining Update 21/07/21 paragon General industrials Update 27/11/19 Phoenix Spree Deutschland Real estate Update 15/06/21 Picton Property Income Property Update 04/08/21 PIERER Mobility Automobiles & parts Update 15/02/21 PowerHouse Energy Group Alternative energy Flash 15/07/20 Premier Miton Global Renewables Trust Investment companies Initiation 05/02/21 Primary Health Properties Property Update 09/08/21 Princess Private Equity Holding Investment companies Investment company update 24/06/21 ProCredit Holding Banks Update 20/08/21 Quadrise Fuels International Alternative energy Update 29/06/21 Raven Property Group Property Update 19/03/21 Record Financials Update 29/07/21 Regional REIT Real estate Update 20/05/21 Renergen Oil & gas Update 30/01/20 Renewi Industrial support services Update 25/06/21 Riber Tech hardware & equipment Flash 24/08/21 Riverstone Credit Opportunities Income Investment companies Initiation 11/03/21 Rock Tech Lithium Metals & mining Update 18/12/20 Round Hill Music Royalty Fund Investment companies Initiation 17/08/21 S&U Financials Update 11/08/21 SandpiperCI Group Retail Update 21/05/21 Schaltbau Holding Industrial engineering Update 06/08/21 S Immo Real estate Outlook 16/06/21 SDX Energy Oil & gas Update 21/12/20 Secure Trust Bank Financials Update 11/08/21 Securities Trust of Scotland Investment companies Initiation 02/12/20 Severfield Construction & materials Update 27/04/21
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Company Sector Most recent note Date published
Silver One Resources Metals & mining Initiation 28/08/20 Standard Life Private Equity Trust Investment companies Investment company review 19/07/21 Standard Life UK Smaller Cos Trust Investment companies Investment company review 26/04/21 Stern Groep Automotive retail Update 25/08/21 Studio Retail Group Retail Flash 05/07/21 Supermarket Income REIT Property Update 24/03/21 SynBiotic Consumer Initiation 29/07/21 Target Healthcare REIT Property Outlook 07/05/21 Technicolor Media Update 14/05/21 Templeton Emerging Markets Inv Trust Investment companies Investment company review 05/08/21 Tetragon Financial Group Investment companies Investment company review 27/04/21 The Bankers Investment Trust Investment trusts Investment company review 30/07/21 The Law Debenture Corporation Investment trusts Investment company update 03/08/21 The MISSION Group Media Update 20/01/21 The Scottish Investment Trust Investment trusts Investment company review 23/03/21 Thin Film Electronics Technology Update 01/06/21 Thrace Plastics General industrials Update 10/06/21 Tinexta Professional services Outlook 09/08/21 Town Centre Securities Real estate Outlook 26/05/21 Trackwise Designs Tech hardware & equipment Flash 29/07/21 TR European Growth Trust Investment trusts Investment company review 11/08/21 Treatt Basic industries Outlook 18/05/21 Triple Point Social Housing REIT Real estate Update 18/05/21 TXT e-solutions Technology Update 09/08/21 Tyman Construction & materials Update 12/05/21 UIL Investment companies Investment company review 22/04/21 Utilico Emerging Markets Trust Investment companies Investment company review 20/08/21 Vietnam Enterprise Investments Investment companies Investment company review 22/01/21 VietNam Holding Investment companies Investment company review 28/06/21 VinaCapital Vietnam Opportunity Fund Investment companies Investment company review 18/12/20 VivoPower International General industrials Flash 25/08/21 Volta Finance Investment companies Investment company review 22/01/21 WANdisco Technology Update 06/05/21 Wheaton Precious Metals Metals & mining Update 18/08/21 Witan Investment Trust Investment companies Investment company review 11/03/21 Worldwide Healthcare Trust Investment companies Investment company review 20/07/21 XP Power Electronic & electrical equipment Update 02/08/21 YouGov Media Update 30/07/21
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