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Contents
Global perspectives 2 Company profiles 7 Edison dividend list 65 Stock coverage 66
Prices at 19 February 2021 Published 25 February 2021 US$/£ exchange rate: 0.7242 NOK/£ exchange rate: 0.0850 €/£ exchange rate: 0.8763 CHF/£ exchange rate: 0.8100 C$/£ exchange rate: 0.5691 ZAR/£ exchange rate: 0.0487 A$/£ exchange rate: 0.5595 HKD/£ exchange rate: 0.0934 NZ$/£ exchange rate: 0.5225 HUF/£ exchange rate: 0.0024 SEK/£ exchange rate: 0.0868 KZT/£ exchange rate: 0017 JPY/£ exchange rate: 0.0070
Welcome to the February 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 global markets have
hesitated as yields on government bonds rise from ultra-low levels as economic recovery beckons. Despite the high-profile distortions arguably introduced by the resurgence in retail trading and ultra-low interest rates, we believe ‘value’ is poised for a recovery over recently outperforming growth stocks as lockdowns in developed markets are released. Relative earnings momentum is starting to favour the
real economy as upgrades become concentrated in traditional sectors such as oil, mining and banks. We remain neutral on equities as attention turns to a sector rotation from growth towards value. Still- positive earnings momentum suggests the conditions are not in place for a large equity market drawdown however. Global bond yields are likely to face continued but steady upward pressure. Nominal yields may have risen during February but the still ultra-low 10-year real rate on offer suggests that should the recovery broaden then government bond markets are likely to remain under pressure and we remain underweight. This month we have added Centaur Media, Draper Esprit, Newmont Corporation, Supermarket Income REIT and Triple Point Social Housing REIT 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 | 25 February 2021 1
Global perspectives: Value rotation Analyst Global markets have hesitated as yields on government bonds rise from Alastair George ultra-low levels as economic recovery beckons. It remains an unusual market +44 (0)20 3077 5700 environment with a number of the high-profile distortions arguably introduced by [email protected]
the resurgence in retail trading and ultra-low interest rates. However, we believe ‘value’ is poised for a recovery over recently outperforming growth stocks as lockdowns in developed markets are released.
The valuation excursion for the fastest growing stocks has been extraordinary. These valuations are now at risk of mean-reverting as yields increase on long-term bonds. Relative earnings momentum is starting to favour the real economy as upgrades become concentrated in traditional sectors such as oil, mining and banks.
We remain neutral on equities as attention turns to a sector rotation from growth towards value. Such a rotation is by nature offsetting and unlikely to push global equity indices significantly higher in aggregate in the short term. However, with positive earnings momentum continuing the conditions are also not in place for a large equity market drawdown.
We remain of the view that global bond yields are likely to face continued but steady upward pressure. Nominal yields may have risen during February but the still ultra-low 10-year real rate on offer suggests that should the recovery broaden as we expect, then government bond markets are likely to remain under pressure and we remain underweight.
Edison Insight | 25 February 2021 2
Rotating to value as COVID-19 cases decline
Global markets have hesitated as ultra-low yields on government bonds have risen just as economic recovery beckons. Rising yields should hardly have been a surprise to investors given the consensus assumption that the world would record a strong economic recovery in 2021. We believe there is a rotation to value sectors underway. This is in part due to a shifting pattern of earnings upgrades and in part due to a striking overshoot in valuations of the world’s fastest growing companies.
Provided the trajectory is not overly steep, rising real or nominal yields are unlikely to derail the nascent economic recovery. On the contrary, the primary restraint on economic recovery is government-imposed restrictions on social activity rather than the cost or availability of credit. Social restrictions are on track to be progressively relaxed over the coming quarter as new COVID- 19 infections are falling in all major economic regions.
We are encouraged by the recent data on vaccines from an economic perspective, even if the goalposts have been quietly shifted from the original aim of achieving herd immunity. In the UK, data now show vaccinated individuals have an approximately 90% reduced risk of a severe case of COVID-19. While some would have preferred the original goal of immunity rather than protection from a severe case, governments are likely to quickly ease lockdown restrictions as pressure on healthcare provision declines. From the start of the pandemic, for investors it has been the economic impact of public health measures rather than the virus itself that has held greater importance.
At this stage we have increased confidence that a progressive relaxation of developed market lockdowns may be permanent. The aim of governments is to have a sufficient percentage of the population vaccinated so that no further lockdowns are required. Some countries have already made significant progress in this endeavour while EU nations are likely to catch up in coming months. We believe this development is likely to change the sector leadership within global equity markets over the course of 2021 towards the real economy and away from the digital themes which performed so strongly in 2020.
Exhibit 1: COVID-19 cases declining in most major markets
4%
2%
0%
-2%
-4%
-6% Daily decline in in cases new decline Daily -8%
Source: Our World in Data. Chart shows daily percentage rate of decline in new infections averaged over past seven days.
Growth stocks expensive relative to history Despite a marked underperformance of ‘value’ indices in recent years, the value investment discipline should remain at the core of investors’ processes in our view. The confluence of a range of factors positive for higher growth stocks have driven an extraordinary outperformance of this segment of the market in recent years. However, growth valuations now appear stretched and fundamentals are favouring more traditional sectors of the market.
Edison Insight | 25 February 2021 3
The emotional discipline and diligence required in value investing has been rewarded in practice, but only over the much longer term as historically a bias to owning securities at lower valuation multiples has resulted in stronger returns. The most prominent example of this is the US, where we see that since the 1880s investing in the S&P 500 has been significantly more profitable if shares are bought at the lowest valuation decile on a cyclically adjusted P/E basis. Currently the S&P 500 cyclically adjusted P/E is 34x, as high as at any time outside the original dot-com boom.
Resistance to the value investing style has grown following the recent long period of outperformance of growth versus value indices, discrediting the approach in the eyes of at least some investors. The outperformance of growth is also a key factor behind the relative underperformance of UK markets since 2017. The UK might have faced Brexit uncertainty but it also has a value-heavy sector weighting in its largest indices. The global underperformance of value following the Brexit referendum has therefore cast a further shadow onto the UK market relative to developed market peers.
Growth stock outperformance has been driven by several factors over the past year. COVID-19 created a perfect tailwind for e-commerce but by its nature is a one-off and hopefully unlikely to be repeated in the foreseeable future. Nevertheless, ‘value’ investors must accept the very recent outperformance of growth has some fundamental support from a relatively better earnings performance of digital and technology sectors during the pandemic. COVID-19 induced an accelerated transition to the digital economy.
COVID-19 has also triggered a quite extraordinary yet temporary surge in monetary and fiscal support for the economy. This has driven real interest rates to record lows, reducing discount rates for profits expected a long way into the future.
Exhibit 2: Growth stock valuations have surged post 2018
200% 150% 100% 50% 0%
-50%Price/book -100% Premium to historic average average historic to Premium 2007 2009 2011 2013 2015 2017 2019
Slowest quartile Second quartile Third quartile Fastest quartile Fastest growing decile
Source: Refinitiv, Edison calculations In combination, these two factors have led to an extraordinary surge in growth stock valuations, which based on the history of stock market bubbles we expect to revert to more normal levels over time, Exhibit 2. We note that the fastest growing quartile of the world’s listed equities are trading close to a 100% premium to longer-run average multiples of forward price/book.
Therefore, while for much of the past decade it was the delivery of profits that drove the performance of growth stocks, a significant re-rating relative to value has occurred since 2019 and is the focus of our concern. Until this point, the differentials between the valuations for each segment of the market had been comparatively stable.
Return to normality favours physical over digital As vaccines bring the developed world into a post COVID-19 mode by H221 and as economies continue to recover, real interest rates are likely to continue to rise steadily from their recent record low levels. We do not expect this process to be disruptive to markets as central banks will be keen
Edison Insight | 25 February 2021 4
to reinforce their message that there is no hurry to step back from accommodative policies until the recovery has broadened sufficiently.
We acknowledge there is for now a modest risk, given the rapid rise in commodity prices during the past six months, that inflation numbers will change the direction of monetary policy sooner. However, we believe based on the recent behaviour of the US Fed and European Central Bank (ECB) that this uptick will be dismissed as only a transient pick-up in prices.
A period of rising long-term rates should favour value over growth indices as near-term cashflow becomes worth proportionately more. Furthermore, value-driven markets such as the UK would be expected to outperform in this scenario.
Separately to monetary conditions, a further boost for physical businesses is that there has been a savings boom among consumers in the UK and US. As both incumbent governments have indicated they are unlikely to swing back to austerity and will at least maintain current levels of spending until the recovery is well underway, a significant fraction of these savings may find their way back into consumer spending.
Therefore, while the growth of the digital economy is unlikely to be fully reversed, later this year the consumer may switch back to the physical economy, catching up on discretionary spending which involves face-to-face social interaction whether eating out, entertainment or holiday travel.
A pause in the digitisation trend and some challenging comparables could therefore mean relative earnings momentum could even favour value over growth for the remainder of 2021. The long recovery in consensus earnings expectations has continued during February and we note that from a sector perspective the largest US upgrades have been in the traditional sectors of oil, banks, mining and media during the past month, Exhibit 3.
Exhibit 3: Value sectors now driving US upgrades to 2021 forecasts
10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0%
1 month revision % 1 revision month -4.0% -6.0%
Source: Refinitiv, Edison calculations US earnings forecasts for 2021 have now recovered all of their COVID-19 related declines while 2021 forecasts for Europe and the UK are within 5% of their pre COVID-19 levels. This is testament to the continued support provided by governments during the pandemic and more recently the recovery in energy and commodity markets has provided a further lift to forecasts.
Investors are now catching onto this trend of value over growth; we note that over the past month the list of the top performing European equities is populated with travel, leisure and bank stocks, which are benefiting from the prospect of a relaxation of COVID-19 restrictions and a normalisation of interest rates.
Edison Insight | 25 February 2021 5
Exhibit 4: One-month STOXX 600 leaders dominated by travel, leisure and banks
40.0%
35.0%
30.0%
25.0%
1m gain % gain 1m 20.0%
15.0%
Source: Refinitiv to 23 February 2021
Conclusion
We remain neutral on equities as attention turns to a sector rotation from growth towards value as the possibly final COVID-19 lockdowns are progressively relaxed and vaccination becomes the first choice for managing the pandemic. The offsetting nature of this rotation may have relatively limited impact on global equity indices in aggregate.
We believe growth stock valuations are now a concern as relative earnings momentum shifts back towards more traditional sectors. In this still unusual market environment, we think investors are better off focused on companies that have a future but also meet normal investment criteria for valuation and shareholder returns.
We remain of the view that government bond yields will continue to face upward pressure, although volatile surges are likely to face central bank jawboning to keep interest rate expectations in check, as seen in recent days from the US Fed and ECB. Real yields may have risen modestly during February but the still ultra-low real rate on offer suggests that as the recovery gains traction, the bond market is likely to remain under pressure and we remain underweight.
Edison Insight | 25 February 2021 6
Sector: Technology 1Spatial (SPA) Price: 31.0p Market cap: £34m INVESTMENT SUMMARY Market AIM Several recent contract wins (CalOES in the US plus NGN and ENA in the UK) showcase the strengths of 1Spatial’s 1Integrate platform and the potential of the LMDM (Location Share price graph (p) Master Data Management) segment the company is addressing. The economic impacts of COVID-19 may be clouding the macro outlook but, at a company level, these wins, coupled with rising recurring revenue and a growing order book of contracted sales, suggest growing momentum.
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 10.7 19.2 3.3 2019 17.6 1.2 (0.5) (0.57) N/A N/A Relative* 11.4 13.2 14.0 2020 23.4 3.2 0.8 0.58 53.4 59.7 * % Relative to local index Analyst 2021e 23.4 2.8 (0.5) (0.35) N/A 8.7 Dan Gardiner 2022e 25.1 3.6 0.3 0.22 140.9 7.4
Sector: Technology 4iG (4IG) Price: HUF645.00 Market cap: HUF60630m INVESTMENT SUMMARY Market Budapest stock exchange In its Q320 update in November, 4iG reported continuing robust operational performance, with limited impact from COVID-19. We raised our revenue estimate for FY20 by 10% and Share price graph (HUF) FY21 by 5% after management reiterated its 20% revenue growth guidance for FY20 ahead of its seasonally strongest quarter. 9M20 revenues were HUF33.5bn, up 34% y-o-y, with EBITDA up 13% to HUF2.8bn and EBITDA margins climbing to 10.8% in Q320 from 6.7% in H120. On the M&A front, 4iG announced two acquisitions and a satellite j/v during Q320 and a third acquisition after period-end. Summary FY20 results are due on 26 February.
INDUSTRY OUTLOOK
Management anticipates consolidation-driven growth of over 20% in FY20, with organic growth supplemented by market share gains and accelerating market consolidation. Company description Management is positioning the group for growth benefiting from high-demand new 4iG is one of the leading IT services technologies including digitalisation, blockchain, deep learning, artificial intelligence, and systems integrators in Hungary, working with public sector clients, large industry 4.0, cyber security and fintech. 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. Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (HUFm) (HUFm) (HUFm) (HUF) (x) (x) % 1m 3m 12m Actual 1.4 7.0 5.1 2018 14007.0 842.0 219.0 1.08 597.2 N/A Relative* 2.7 (7.4) 10.1 2019 41129.0 4075.0 3344.0 31.09 20.7 N/A * % Relative to local index Analyst 2020e 53988.0 4389.0 3594.0 33.26 19.4 N/A Richard Williamson 2021e 62076.0 5669.0 4720.0 43.18 14.9 N/A
Edison Insight | 25 February 2021 7 Sector: Media 4imprint Group (FOUR) Price: 2390.0p Market cap: £671m INVESTMENT SUMMARY Market LSE 4imprint’s trading update indicated that order intake in Q4 was a little better than we had anticipated. Unaudited FY20 revenue was reported at c $560m, or 5% above our prior Share price graph (p) forecast. We remain circumspect around trading prospects for FY21, given the impact of the pandemic on corporate America and have left our forecast unchanged for now. The indicated year-end net cash balance at $39.8m (excluding lease debt) was well ahead of our projected figure ($22.5m in our modelling), and close to the $40.1m reported in October, implying that cash collections have held up strongly. We continue to view 4imprint as a high-quality investment proposition.
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 US, Canada, the UK and Ireland. In FY19, includes US$6bn of PPE sales, without which sales would have fallen by 43% year-on-year. 97% of revenues were generated in Notwithstanding its market-leading position, 4imprint’s share is therefore less than 3% the US and Canada. (3.6% excluding PPE).
Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual 8.4 0.0 (30.1) 2018 738.4 48.5 46.1 129.4 25.5 20.3 Relative* 9.1 (5.1) (22.9) 2019 860.8 59.1 55.6 157.2 21.0 16.0 * % Relative to local index Analyst 2020e 535.0 3.9 0.5 0.3 11000.6 1540.1 Fiona Orford-Williams 2021e 600.0 18.8 15.0 40.6 81.3 44.6
Sector: General industrials AAC Clyde Space (AAC) Price: SEK3.60 Market cap: SEK530m 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 enhanced by growing services revenue. Management is navigating the growth phase and targeting opportunities in New Space. We have updated our numbers for the acquisitions of Hyperion and SpaceQuest and the recent SEK52m fund-raise supports further investment. FY20 results showed good growth with sales growing 48% to SEK98.4m and adjusted EBITDA loss falling to SEK17.5m (FY19 SEK27.3m).
INDUSTRY OUTLOOK
Of over 1,000 nanosatellites launched since 1998, AAC Clyde Space is represented on Company description 30–40%. Over the next five years around 3,000 nanosatellites should be launched as Headquartered in Sweden, AAC Clyde technology development extends the applications for low earth orbit (LEO) constellations, Space is a world leader in nanosatellite end-to-end solutions, subsystems, especially for communications. AAC Clyde Space has operations in Glasgow, Sweden, platforms, services and components, Holland and the US and is developing its 'Satellite as a Service' offering, as well as sales of including supply to third parties. It has production and development subsystems to third-party satellite providers. operations in Sweden, Scotland, the Netherlands and the US. Y/E Dec Net Sales EBITDA PBT EPS P/E P/CF Price performance (SEKm) (SEKm) (SEKm) (öre) (x) (x) % 1m 3m 12m Actual (9.9) 30.1 (27.5) 2019 66.4 (27.3) (38.2) (44.46) N/A N/A Relative* (12.9) 19.3 (35.4) 2020 98.4 (17.5) (38.8) (29.00) N/A N/A * % Relative to local index Analyst 2021e 193.6 6.4 (6.4) 0.0 N/A 63.8 Andy Chambers 2022e N/A N/A N/A N/A N/A N/A
Edison Insight | 25 February 2021 8 Sector: General industrials Accsys Technologies (AXS) Price: 143.2p Market cap: £236m INVESTMENT SUMMARY Market LSE Accsys maintained an EBITDA and EBIT positive position in H121 in line with the second half of last year despite initial market disruption from the COVID-19 lockdowns early in the Share price graph (p) financial year. Accoya wood revenues were down slightly but the divisional operating margin improved to 18.2%. The new Tricoya Hull reactor build is on track to complete in this financial year with commissioning thereafter; this will improve the Tricoya segment profitability and also free up Accoya capacity to facilitate market growth. Positive net cash inflow in excess of €7m reduced core net debt to c €12m. The company also emphasised its environmental, social and governance credentials through the publication of a new sustainability report. 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 0.5 42.5 38.7 2019 75.2 0.9 (6.2) (0.38) N/A N/A Relative* 1.2 35.3 53.0 2020 90.9 7.0 (2.2) (0.08) N/A 98.0 * % 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$0.72 Market cap: A$429m INVESTMENT SUMMARY Market ASX Alkane's Q221 production of 15.9koz (cf 11.5koz in Q121) at an AISC of A$1,201/oz was materially above our expectations and caused the company to increase its guidance for the Share price graph (A$) year from 45–50koz to 47–52koz at an unchanged AISC of A$1,450–1,600/oz. At the same time, Alkane has more than replenished reserves and resources as well as intersecting grades as high as 104g/t at Tomingley's San Antonio and Roswell extensions. To date, this has resulted in an increase in Roswell's resource of 50% and the promotion of substantially all of San Antonio's inferred resource into the indicated category (NB Feasibility studies for both are expected in the coming quarter).
INDUSTRY OUTLOOK
Post the de-merger of ASM, our most recent valuation of Alkane attributes 21c/share in Company description value to Tomingley plus net cash (A$33.3m as at end-Q221). To this should then be added Alkane Resources is an Australian up to 27c for its Roswell and San Antonio resources plus up to a further 67c from contingent production and development company. It previously produced 70,000oz of assets such as Boda and 10c from other investments. gold per year from the open-pit operations at its Tomingley gold mine, but is transitioning to underground operations and expects to produce c 47,500oz in FY21. Y/E Jun Revenue EBITDA PBT EPS P/E P/CF Price performance (A$m) (A$m) (A$m) (c) (x) (x) % 1m 3m 12m Actual (17.2) (28.0) (23.8) 2019 94.0 33.0 25.4 4.57 15.8 10.0 Relative* (17.8) (31.3) (21.9) 2020 72.5 29.4 20.6 2.56 28.1 14.0 * % Relative to local index Analyst 2021e 104.2 34.8 22.9 2.89 24.9 18.9 Charles Gibson 2022e 125.3 41.4 26.3 3.31 21.8 12.8
Edison Insight | 25 February 2021 9 Sector: Technology Allied Minds (ALM) Price: 27.8p Market cap: £67m INVESTMENT SUMMARY Market LSE In its portfolio update in January, management highlighted robust commercial progress across the majority of the portfolio in FY20 (notably at Federated Wireless, BridgeComm Share price graph (p) and Orbital Sidekick), which is expected to lead to multiple funding rounds in FY21. However, management flagged a likely down-round at Spin Memory as COVID-19 restricted commercial progress. Subsequently, as part of a streamlining process, the board announced that the CEO had decided to step down, with the board taking on direct responsibility for the portfolio. FY20 results are scheduled for 25 March, to be followed by a capital markets day in April.
INDUSTRY OUTLOOK
Discounts to NAV have been narrowing or closing amongst the early-stage tech investors Company description as COVID-19 fears ease. Investors have preferred stocks that demonstrate progress and Allied Minds is a technology offer the potential for meaningful exits in a realistic timeframe. Transparency, NAV growth, investment company with a concentrated portfolio focused on consistency of performance, capital preservation and investor returns are the key metrics by early-stage spin-outs from US federal which to judge success. 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 (3.8) (27.0) (28.9) 2018 5.6 (77.5) 53.3 19.0 2.0 N/A Relative* (3.2) (30.7) (21.5) 2019 2.7 (47.2) 49.5 21.0 1.8 N/A * % Relative to local index Analyst 2020e N/A N/A N/A N/A N/A N/A Richard Williamson 2021e N/A N/A N/A N/A N/A N/A
Sector: Technology Applied Graphene Materials (AGM) Price: 40.0p Market cap: £20m INVESTMENT SUMMARY Market AIM Applied Graphene Materials (AGM) has raised c £6.0m (gross) through a placing, subscription and PrimaryBid offer at 41p/share. Management estimates that the funds Share price graph (p) raised will extend the company’s cash runway from October 2021 well into calendar 2023, enabling it to convert the current opportunity pipeline into meaningful annual revenues during the period.
INDUSTRY OUTLOOK
Revenue growth is driven by innovative businesses incorporating AGM’s graphene-based dispersions in new products with enhanced properties which they are developing. One of AGM's existing customers, Infinity Wax, a major manufacturer of car care products in Company description Europe, has recently launched its second product enhanced with AGM's graphene Applied Graphene Materials (AGM) technology. The new Graphene Wax product offers superior water beading and sheeting develops graphene dispersions that customers use to enhance the properties as a result of increased hydrophobicity, resulting in long term paint protection. It properties of coatings, composites and also makes it easy to wipe away dirt, enabling car owners to achieve a professional wax functional materials. It also manufactures high-purity graphene shine. 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 (37.5) 17.7 158.1 2019 0.1 (4.6) (4.8) (7.9) N/A N/A Relative* (37.1) 11.7 184.7 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
Edison Insight | 25 February 2021 10 Sector: Financials Appreciate Group (APP) Price: 41.2p Market cap: £77m INVESTMENT SUMMARY Market AIM Appreciate Group's (APP's) sales performance continued to improve in the seasonally important Q321 period, driven by continuing strong digital growth. Core underlying billings Share price graph (p) (excluding Christmas Savings where billings are driven by fulfilment of the annual order book) were up 13.1% compared with Q320 and December was APP’s strongest month ever. Including c £12m of billings in respect of the free summer school meals partnership with Iceland, one-off in nature and low margin, core billings of £166.0m in the first nine months of FY21 are now little changed y-o-y. Management is confident H221 will see the normal swing back to profitability, with the full-year performance at least in line with its expectations that underlay the H121 reinstatement of dividends. Accelerated digitalisation of the business has mitigated the effects of the pandemic, supported the Q321 progress and positions APP well for sustainable growth beyond the current financial year. Company description INDUSTRY OUTLOOK Appreciate Group is a specialised financial services business and is the UK’s leading provider of multi-retailer The market is estimated at c £6bn by the UK Gift Card & Voucher Association, and is redemption products. Consumers can fragmented, providing significant opportunities for market share growth. access products directly through its market-leading Christmas Savings offering while corporate customers use these products to supply a range of incentive and reward products. Y/E Mar Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual (2.8) 42.6 (33.8) 2019 110.4 12.3 12.5 4.8 8.6 11.1 Relative* (2.2) 35.3 (27.0) 2020 112.7 11.7 11.4 4.9 8.4 11.2 * % Relative to local index Analyst 2021e 93.5 6.0 4.2 1.9 21.7 N/A Martyn King 2022e 101.0 9.2 7.1 3.1 13.3 28.8
Sector: General industrials ArborGen Holdings (ARB) Price: NZ$0.18 Market cap: NZ$90m INVESTMENT SUMMARY Market NZSX ArborGen’s underlying H1 trading performance was robust with good control of opex leading to a reduced seasonal EBITDA loss despite market challenges. The US selling season Share price graph (NZ$) started well in H2 though the 13 January update noted that recent sales had been slower than previously anticipated. Our headline FY21 PBT estimate reduced by c 1% (or c 30% underlying before COVID-19 employment support monies) with no material change for FY22. An increase in supply of higher-value seedlings in the US remains on track and is expected to drive group earnings higher from FY22.
INDUSTRY OUTLOOK
Prior to the COVID-19 outbreak, the economic growth outlook in each of its core countries, the US, Brazil, New Zealand and Australia, was either good or improving, according to Company description OECD data. At this point, the primary end-markets served by its plantation forestry ArborGen Holdings (formerly Rubicon) customer base (ie construction and the pulp and paper industries) were in a positive cyclical is an NZX-listed investment company. Its subsidiary ArborGen is the world’s phase. largest integrated developer, commercial manufacturer and supplier of advanced forestry seedlings with operations in the US, 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 7.1 35.3 (1.1) 2019 49.1 4.6 4.7 1.0 13.0 15.7 Relative* 10.0 35.8 (3.4) 2020 56.9 7.7 6.0 1.4 9.3 13.5 * % Relative to local index Analyst 2021e 54.7 7.1 9.4 2.0 6.5 5.7 Toby Thorrington 2022e 65.3 12.1 12.3 2.5 5.2 5.4
Edison Insight | 25 February 2021 11 Sector: Industrial support services Augean (AUG) Price: 199.0p Market cap: £209m INVESTMENT SUMMARY Market AIM The recent trading update for FY20 indicated adjusted PBT was at least in line with FY19 despite the c £4m H120 pandemic impact. H120 sales were reduced by c £10m. The Share price graph (p) positive momentum in H220 continues to be primarily driven by strong growth in EfW ash treatment. Year end net cash of £6.4m was ahead of our expectations and reflects the continued strong cash flow, with management indicating a return to dividend payments in FY21. Augean continues to pursue appeals for the repayment of landfill tax (LFT) related to engineering materials (fluff layer). Any additional rebates could provide a meaningful reward for investors. While markets remain challenging for the low margin North Sea business, growth continues in the EfW segment and activity has bounced back elsewhere with limited disruption from the renewed lockdowns. FY20 results will be reported on 1 March.
INDUSTRY OUTLOOK Company description Augean is a UK-based specialist waste A growing trend towards treatment, recovery and recycling in the waste hierarchy supports management business. The business operates via two divisions: Treatment Augean's specialist industry knowledge model. & Disposal and North Sea Services.
Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual (7.4) 7.6 (8.7) 2018 79.7 18.9 11.4 9.14 21.8 11.8 Relative* (6.9) 2.1 0.7 2019 107.1 28.8 19.2 20.98 9.5 N/A * % Relative to local index Analyst 2020e 93.5 29.9 19.5 15.21 13.1 6.5 Andy Chambers 2021e 100.0 32.1 21.7 17.00 11.7 7.6
Sector: Mining Auriant Mining (AUR) Price: SEK4.78 Market cap: SEK472m INVESTMENT SUMMARY Market NASDAQ OMX First North Auriant’s Tardan plant has been re-modelled to a single carbon-in-leach process, which has resulted in a c 40pp increase in metallurgical recoveries and an approximate halving in cash Share price graph (SEK) costs to c US$580/oz cf its previous heap leach operation. Up to the end of Q320, this has resulted in an almost 6x increase in EBITDA and an almost 4x increase in cash flows. Currently, Auriant is 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. Simultaneously, confirmatory drilling is underway with a view to accelerating the development of Solcocon.
INDUSTRY OUTLOOK
Our financial forecasts are under review after Q420 production was almost 10% above our Company description forecasts at 203kg. In the event that it raises US$20m in equity (NB Subject to the gold Auriant Mining is a Swedish junior gold price and cash flows and could be less) at a share price of SEK5.46/share, we value Auriant mining company focused on Russia. It has two producing mines (Tardan and at US$1.71/share. In the meantime, it is trading on a multiple of less than 4.6x FY20 Solcocon), one advanced exploration earnings. property (Kara-Beldyr) and one early stage exploration property (Uzhunzhul).
Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual (9.8) (20.6) 42.7 2018 17.4 (1.7) (10.2) (10.8) N/A 13.3 Relative* (12.9) (27.2) 27.1 2019 29.8 7.2 (2.2) (1.2) N/A 6.2 * % Relative to local index Analyst 2020e 53.9 30.3 16.5 14.0 4.1 1.6 Charles Gibson 2021e 55.3 30.4 16.7 10.9 5.3 2.9
Edison Insight | 25 February 2021 12 Sector: Aerospace & defence Avon Rubber (AVON) Price: 3025.0p Market cap: £938m INVESTMENT SUMMARY Market LSE Avon is delivering on its growth strategy focused on organically growing its core, supported by selective product development and value-enhancing M&A. Avon Protection is now the Share price graph (p) sole focus. The enhancing purchases in the US of the Helmets & Armor division in Q220 and Team Wendy helmet systems business on 2 November 2020 extended the product portfolio and deepened customer engagement. FY20 trading was strong in most areas, with clear momentum in H220 for the ongoing activities. However, the deferral of volumes from new body armor contracts to FY22 from FY21 lowered our FY21 sales estimates by $50m, and our EPS expectation by 19%.
INDUSTRY OUTLOOK
Avon's long-standing, multi-level relationship with the US DoD is important to the group and Company description the end market backdrop is supportive. The focus on higher-price sophisticated mask Avon Rubber designs, develops and systems is proving successful, with M50 mask system replenishment and the addition of manufactures personal protection products for Military and First helmets and body armour provides further opportunities. We believe that Avon has the Responder markets. Its main market position, product portfolio and strategic ambition to continue its growth through customers are national security agencies such as the US DOD and c organic and inorganic means. 90% of sales are from the US.
Y/E Sep Revenue EBITDA PBT EPS P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual (11.6) (30.4) 10.6 2019 162.0 36.2 28.3 85.6 48.8 144.8 Relative* (11.0) (33.9) 22.0 2020 213.6 49.0 36.0 97.6 42.8 N/A * % Relative to local index Analyst 2021e 284.9 71.5 50.2 132.7 31.5 15.5 Andy Chambers 2022e 362.0 93.6 69.4 183.6 22.8 17.0
Sector: Travel & leisure bet-at-home (ACXX) Price: €41.70 Market cap: €293m INVESTMENT SUMMARY Market Xetra bet-at-home’s Q320 results showed a strong increase in EBITDA of 27% whereas revenue continued to be affected by prior regulatory changes. After many years of uncertainty (and Share price graph (€) confusion), new regulations in Germany effective from July 2021 and transition regulations effective from the middle of October 2020 will broadly halve expectations for EBITDA next year. The FY20 trading update highlighted revenue of €126.9m (prior guidance €120–132m) and EBITDA of €30.9m (prior guidance of €23–27m). Our forecasts will be reviewed on publication of final results in March.
INDUSTRY OUTLOOK
According to H2 Gambling Capital, the European online sports betting and gaming market is expected to grow 6.5% CAGR between 2018 and 2023 to c €33bn (pre COVID-19 impact). Company description BAH operates in 'grey' markets (no formal regulation but not illegal), which are Founded in 1999, bet-at-home is an characterised by strong cash flow, but also carry commensurately higher regulatory risks. online sports betting and gaming company with c 300 employees. It is licensed in Malta and headquartered in Dusseldorf, Germany. Since 2009 bet-at-home has been part of Betclic Everest, a privately owned French online 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 18.3 35.4 (14.1) 2018 143.4 35.8 34.6 458.56 9.1 11.8 Relative* 16.8 26.6 (15.3) 2019 143.3 35.2 33.2 426.20 9.8 9.8 * % Relative to local index Analyst 2020e 127.9 26.1 24.0 278.66 15.0 13.8 Russell Pointon 2021e 107.8 13.8 11.6 134.98 30.9 26.5
Edison Insight | 25 February 2021 13 Sector: Technology Boku (BOKU) Price: 155.0p Market cap: £446m INVESTMENT SUMMARY Market AIM Boku continued to see strong demand after its early December trading update, finishing the year with revenue and EBITDA ahead of consensus expectations. The Payments business Share price graph (p) was the driver of revenue upside, and lower costs in both businesses contributed further to EBITDA upside. We have revised our forecasts to reflect the strong H220 performance, upgrading FY20 normalised EPS by 15.5%. We maintain our FY21/22 forecasts as we expect the company to revert to pre-COVID-19 spending behaviour when lockdown restrictions are removed.
INDUSTRY OUTLOOK
DCB is an alternative payment method that uses a consumer’s mobile bill as the means to pay for digital content or services such as games, music or apps. Growth in the underlying Company description digital content markets as well as the increasing penetration of smartphones is expected to Boku operates a billing and identity drive growth in DCB transactions. Boku is the dominant DCB player serving the largest verification platform that connects merchants with mobile network merchants such as Apple, Sony, Facebook, Spotify and Netflix. Boku's identity verification operators in more than 50 countries. It service enables merchants to sign up and transact with users while meeting regulatory has c 300 employees, with its main offices in the US, UK, Estonia, requirements and avoiding fraud. Germany and India.
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 6.9 33.6 112.3 2018 35.3 6.3 4.3 1.55 138.1 N/A Relative* 7.6 26.8 134.2 2019 50.1 10.7 4.1 1.20 178.4 N/A * % Relative to local index Analyst 2020e 56.3 15.0 10.6 2.89 74.1 N/A Katherine Thompson 2021e 66.4 17.7 12.2 3.15 67.9 N/A
Sector: Travel & leisure Borussia Dortmund (BVB) Price: €5.35 Market cap: €492m INVESTMENT SUMMARY Market FRA Borussia Dortmund’s Q221 trading update showed higher profitability y-o-y due to active cost control despite lower revenue in aggregate as a result of COVID-19. Revenue declined Share price graph (€) by 3% y-o-y (we note that three of its five sources of revenue increased) and a 13% reduction in cash costs led to EBITDA 23% higher than the prior year. Our forecasts are broadly unchanged. For FY21, management previously guided that the restrictions required to counter COVID-19 will lead to a 5% decline in revenue which, coupled with other effects (eg lower transfer activity and high operational gearing) will translate into a reported operating loss due to amortisation of intangibles.
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, Bundesliga runners up in 2019/20, ban from UEFA competition, fines and a cap on wages and squad size. DFB Super Cup winners in 2019/20 and DFB Cup winners in 2016/17. The club has qualified for the Champions League in eight 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) (0.9) (40.7) 2019 370.3 116.0 101.5 87.95 6.1 16.3 Relative* (4.7) (7.3) (41.5) 2020 370.2 63.0 45.6 46.77 11.4 166.1 * % Relative to local index Analyst 2021e 331.5 39.4 22.9 24.91 21.5 101.3 Russell Pointon 2022e 346.6 60.8 43.8 42.89 12.5 99.6
Edison Insight | 25 February 2021 14 Sector: Oil & gas Brooge Energy (BROG) Price: US$10.45 Market cap: US$1145m INVESTMENT SUMMARY Market NASDAQ Brooge Energy (BROG) is an independent oil and refined oil products storage and service provider located in the Port of Fujairah, in the UAE. The company is initially developing its Share price graph (US$) terminal’s storage capacity in two 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 late 2017 and Phase II is expected to start in mid 2021. The company has commenced preconstruction work for Phase III and this will increase storage capacity by 3.5x once operational (due 2023). The company recently signed new offtake contracts for 58% of its Phase I storage capacity at premiums of 50% and 60% to previous contracts, reflecting current high demand for storage in the Middle East, and these will drive increased revenue in 2021. Our valuation currently stands at $11.00/share. Company description INDUSTRY OUTLOOK Brooge Energy is an oil storage and service provider strategically located in the Port of Fujairah in the United Arab The COVID-19 pandemic highlighted the importance of oil storage infrastructure and the Emirates (UAE). Current storage vital role the business plays in the logistics and trading of crude oil and refined oil products, capacity stands at 399,324m3 and will be increased by 602,064m3 once as oil demand slumped in H120. Phase II is completed.
Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual (3.5) 17.4 (13.3) 2018 36.0 30.0 16.0 20.1 52.0 29.9 Relative* (6.1) 7.7 (24.9) 2019 44.0 (63.0) 25.0 28.6 36.5 17.4 * % Relative to local index Analyst 2020e 46.0 36.0 15.0 14.0 74.6 76.4 Marta Szudzichowska 2021e 127.0 115.0 88.0 80.4 13.0 10.9
Sector: Oil & gas Canacol Energy (CNE) Price: C$3.63 Market cap: C$652m INVESTMENT SUMMARY Market TSX Canacol offers investors a pure play on the Colombian natural gas market where it holds a c 20% market share of national demand. With gas export capacity now in place, the company Share price graph (C$) is focusing on converting its 4.7tcf of net unrisked prospective resource into reserves, with its 2021 exploration capex the largest in its history. 12 wells are planned this year, nine exploration and three development, at an estimated cost of c$66m. 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 the company’s existing cash and cash generation. We currently value Canacol at a core NAV of C$3.62/share and a RENAV of C$5.87/share.
INDUSTRY OUTLOOK
Company description The Colombian, Caribbean Coast gas market is expected to move into gas deficit in the Canacol Energy is a natural gas absence of LNG imports, incremental piped gas or the development of recent deepwater exploration and production company primarily focused on Colombia. discoveries. Canacol sells gas under long-term, fixed-price gas contracts, typically of five to 10 years’ duration with inflation clauses to protect cash flows.
Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual (1.1) (4.2) (20.6) 2018 204.5 138.6 7.3 (12.32) N/A 5.4 Relative* (3.4) (11.9) (22.6) 2019 219.5 162.8 64.7 19.21 14.8 4.7 * % Relative to local index Analyst 2020e 234.3 195.1 92.7 42.95 6.6 2.9 Ian McLelland 2021e 228.4 187.2 85.7 29.92 9.5 3.3
Edison Insight | 25 February 2021 15 Sector: General industrials Carr's Group (CARR) Price: 128.0p Market cap: £118m INVESTMENT SUMMARY Market LSE Carr’s trading update for the first 19 weeks of FY21 noted that trading in Agriculture was ahead of management expectations because of strong sales of supplements. This was Share price graph (p) offset by a weaker than expected performance in the Engineering division caused by continued low crude oil prices. Net debt (excluding leases) was 24% lower year-on-year at the end of November, reflecting close inventory control and lower commodity prices. We reiterated our indicative valuation of 170p/share.
INDUSTRY OUTLOOK
Cattle prices in the US have remained robust since the recovery noted towards the end of FY20, stimulating demand for feed blocks. Exports of both feed blocks and Animax supplements to the Republic of Ireland have increased following deployment of additional Company description sales personnel there. Both these positive trends are likely to continue. Long-term Carr's Group's Agriculture division engineering projects for the nuclear and defence sectors are progressing well. We note that serves farmers in the North of England, South Wales, the Welsh global oil prices are recovering, encouraging investment by the oil and gas industry, which Borders and Scotland, the US, should have a beneficial impact on the group's UK manufacturing activity. 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 (4.8) 5.1 (13.5) 2019 403.9 23.8 18.0 14.2 9.0 8.6 Relative* (4.2) (0.2) (4.6) 2020 395.6 23.4 14.9 11.8 10.8 6.0 * % Relative to local index Analyst 2021e 421.2 24.1 15.4 12.0 10.7 6.2 Anne Margaret Crow 2022e 436.5 25.0 16.5 12.8 10.0 7.0
Sector: Financials Cenkos Securities (CNKS) Price: 69.0p Market cap: £39m INVESTMENT SUMMARY Market AIM Cenkos's H120 results in October showed revenue +21% vs H119 at £12.9m. Corporate finance contributed £9.2m (+48%) while Nomad, broking and research were down 6% and Share price graph (p) Execution achieved a trading gain but was down 52%. Lower admin costs (-18%) limited the increase in underlying costs to 2% giving an underlying PBT of nearly £2m vs a marginal loss in H119. Restructuring costs and a one-off, short-term incentive plan cost of £1.1m left pre-tax profit at £0.75m (£0.2m loss). The balance sheet remained strong (cash of £22.4m and a capital surplus of £15.8m over the Pillar 1 requirement). The interim dividend was held at the same level as the 2020 final of 1p compared with the H119 dividend of 2p.
INDUSTRY OUTLOOK
In December CEO Jim Durkin informed the board of his intention to resign and, subject to Company description FCA approval, Julian Morse (executive director and head of Growth Companies) will Cenkos is a leading UK securities assume the role. The board has approved a strategy designed to deliver growth over the business, which acts as nominated advisor, sponsor, broker and financial next three years by focusing on Cenkos' core strengths in serving growth companies and adviser to companies across all investment trusts. The group reported that it performed well in 2020 with the flow of sectors and stages of growth. Since inception in 2005 it has raised more transactions continuing in H220 including the IPOs of Round Hill Music Royalty Fund than £20bn in equity capital for corporate clients, which stood at 97 at ($282m, November) and HeiQ (£60m,December). end June 2020. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 14.1 36.6 7.0 2018 45.0 3.4 3.2 4.4 15.7 11.3 Relative* 14.8 29.7 18.0 2019 25.9 0.4 0.1 (0.2) N/A N/A * % Relative to local index Analyst 2020e N/A N/A N/A N/A N/A N/A Andrew Mitchell 2021e N/A N/A N/A N/A N/A N/A
Edison Insight | 25 February 2021 16 Sector: Media Centaur Media (CAU) Price: 33.0p Market cap: £48m INVESTMENT SUMMARY Market LSE Centaur has undergone a significant transformation over recent years. It is now a focused provider of market intelligence and consultancy, with growing subscription revenue, Share price graph (p) addressing two verticals, the marketing and legal markets. Management’s updated three-year plan, MAP23, sets out how its portfolio, including four key flagship brands, will be developed as a growing, profitable and sustainable B2B business, with attractive cash-flow characteristics. Under MAP23, revenues are targeted to exceed £45m in FY23 on a 23% EBITDA margin, which sits comfortably with our FY22 forecasts. The shares are priced at a notable discount to B2B media peers, with cash at 17% of the market capitalisation. FY20 results are scheduled for 17 March.
INDUSTRY OUTLOOK
Company description The events industry has faced particularly difficult challenges with the COVID-19 pandemic, Centaur Media is an international but it has forced accelerated innovation and it seems likely that at least an element of virtual provider of provider of business information, training and specialist delivery will be maintained as restrictions ease. In other areas of B2B market intelligence, consultancy for the marketing and there may be a greater propensity for clients to adopt digital solutions, albeit on a slower legal professions. Its Xeim and The Lawyer business units serve the sales conversion cycle, provided they deliver greater efficiencies. marketing and legal sectors respectively and offer customers a range of products and services that Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF help them add value. Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 20.0 40.4 (17.5) 2019 38.4 3.1 (2.3) (1.9) N/A 10.0 Relative* 20.8 33.3 (9.0) 2020e 32.2 3.6 (0.4) (0.3) N/A 20.7 * % Relative to local index Analyst 2021e 36.1 4.9 1.1 0.5 66.0 9.7 Fiona Orford-Williams 2022e 41.5 7.6 3.6 2.0 16.5 6.5
Sector: Technology CentralNic Group (CNIC) Price: 94.2p Market cap: £220m INVESTMENT SUMMARY Market AIM Following its US$36m acquisition of Codewise in October 2020, in January CentralNic announced a further small acquisition of SafeBrands, an online brand protection software Share price graph (p) provider and corporate ISP based in Paris, for up to €3.6m in cash (0.9x FY19 revenue). CentralNic has also increased the issuance cap on its H219 bond issue from €90m to €150m, and subsequently placed a €15m tap issue to support the acquisition of 'near-term identified targets' as the group continues to consolidate a globally fragmented market of sub-scale, cash-generative businesses. FY20 results are scheduled to be released on 1 March 2021.
INDUSTRY OUTLOOK
CentralNic supplies the tools needed for businesses to develop their online presence, Company description providing domain names, hosting, websites, email, website security, brand protection and CentralNic is a leading provider of monetisation services. It delivers services to c 40m domains, with cross-selling and global domain name services, operating through three divisions: upselling important drivers of future growth - with organic growth supported by M&A. Indirect, Direct and Monetisation. Services include domain name reselling, hosting, website building, security certification and website monetisation. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual (1.6) 11.9 11.5 2018 42.7 7.0 5.6 0.06 2167.9 N/A Relative* (0.9) 6.2 23.0 2019 109.2 17.9 12.8 8.16 15.9 N/A * % Relative to local index Analyst 2020e 217.8 30.7 17.4 5.58 23.3 N/A Richard Williamson 2021e 295.3 40.3 27.7 8.67 15.0 N/A
Edison Insight | 25 February 2021 17 Sector: Technology Checkit (CKT) Price: 54.5p Market cap: £34m INVESTMENT SUMMARY Market AIM Checkit saw better-than-expected performance in Q421 and closed the year ahead of our forecasts. In FY21, Checkit Connect grew 13% y-o-y on a pro forma (PF) basis while Share price graph (p) Checkit BEMS saw business rebound in H2 after lockdown restrictions in the construction sector were relaxed. The company made good progress with its strategy to build its subscription contract base: recurring revenue grew to 39% of FY21 revenue (30% for FY21 PF). We have revised our forecasts to reflect better-than-expected trading in FY21 and the recent acquisition of Tutela in the US.
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 Company description working environment. Only a small proportion of the current enterprise software market is Checkit optimises the performance of designed for this group of workers. Checkit’s sweet spot is supporting workers who perform people, processes and physical assets with connected digital solutions. The a combination of routine tasks and infrequent but important tasks where the volume and company is headquartered in variety of tasks is such that it is difficult to build a targeted application. 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 4.8 14.7 65.2 2019 1.0 (2.3) (4.4) (2.48) N/A N/A Relative* 5.5 8.9 82.2 2020 9.8 (2.6) (5.1) (3.10) N/A N/A * % Relative to local index Analyst 2021e 13.2 (2.5) (3.3) (5.39) N/A N/A Katherine Thompson 2022e 15.1 (2.4) (3.2) (5.17) N/A N/A
Sector: General industrials China Water Affairs Group (855) Price: HK$6.15 Market cap: HK$9747m INVESTMENT SUMMARY Market HKSE Despite a challenging environment, CWA performed strongly in FY20, achieving growth in all key financial metrics. Revenue rose 4.7%, helped by a strong performance from the Share price graph (HK$) water business (c 90% of profits) and operating profit rose by 5.3%. Lower finance costs, a stronger than forecast associate line and a lower than expected tax rate delivered a 17.7% rise in net profits (2.8% ahead of forecast). A lower than forecast attribution to minorities and a small fall in the share count (buy-back) saw EPS rise 20%. The DPS of HK$0.30 was below our forecast (HK$0.33), but still up 7.1% y-o-y. Based on our forecasts CWA's share price rating appears modest despite requirements for significant environmental expenditure in the Chinese water sector presenting it with an opportunity to grow.
INDUSTRY OUTLOOK
Company description Water supply in China remains fragmented. The central government encourages local China Water Affairs (CWA) is a governments to deleverage their own balance sheets with private–public partnerships. This pioneer in the privatisation of water supply assets in China. The company trend remains positive for CWA. seeks to create growth via volume/price increases.
Y/E Mar Revenue EBITDA PBT EPS P/E P/CF Price performance (HK$m) (HK$m) (HK$m) (c) (x) (x) % 1m 3m 12m Actual (6.8) 3.9 (4.7) 2019 8302.0 3536.0 2772.0 85.1 7.2 N/A Relative* (9.9) (10.7) (14.0) 2020 8694.0 3781.0 3165.0 102.1 6.0 N/A * % Relative to local index Analyst 2021e 9731.0 4278.0 3374.0 108.0 5.7 N/A Dan Gardiner 2022e 10787.0 4725.0 3810.0 122.0 5.0 N/A
Edison Insight | 25 February 2021 18 Sector: Financials Civitas Social Housing (CSH) Price: 108.6p Market cap: £675m INVESTMENT SUMMARY Market LSE The Q321 trading update for the three months ended 31 December 2020 shows the portfolio continuing to perform in line with expectations, with no COVID-19 impact on rent Share price graph (p) collections or property valuations. A Q221 quarterly DPS of 1.35p leaves the company well on track to meet its annual targeted 5.4p (+1.9%) while continuing moderate growth in the portfolio and inflation-linked rental uplifts have delivered 100% cover by EPRA earnings on a run-rate basis. Q321 IFRS NAV per share increased slightly to 108.17p (Q221: 108.01p) and including DPS paid the quarterly NAV total return was 1.4%. A new £85m debt facility has been agreed that will increase gross gearing closer to the 35% target and provide funding for acquisitions from an active pipeline of accretive opportunities.
INDUSTRY OUTLOOK
Company description Private capital is crucial in meeting the current and future needs for care based social Civitas is the leading listed UK social housing which is widely recognised to improve lives in a cost-effective manner compared housing REIT. Its investment objective is to provide an attractive level of with the alternatives of residential care or hospitals. income, with the potential for capital growth, from investing in a diversified portfolio of fully developed social homes, particularly specialist supported housing (SSH) for vulnerable adults. Y/E Mar Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 4.8 4.0 9.0 2019 35.7 26.1 19.9 3.6 30.2 19.8 Relative* 5.5 (1.3) 20.3 2020 46.2 36.4 38.0 4.6 23.6 20.5 * % Relative to local index Analyst 2021e 49.0 39.5 35.8 5.1 21.3 15.0 Martyn King 2022e 55.2 45.7 46.8 5.8 18.7 14.7
Sector: Technology Claranova (CLA) Price: €6.76 Market cap: €269m INVESTMENT SUMMARY Market Euronext Paris Claranova generated 17% constant currency (cc) organic revenue growth in H121, despite COVID-19 related supply challenges. Demand remains high in PlanetArt, which reported Share price graph (€) 23% cc organic growth in H121. Avanquest H121 revenue declined 4% y-o-y (cc) due to the shift to subscription licensing and the planned decline of non-strategic business, although profitability is still expected to improve in FY21 versus FY20. myDevices revenue was 4% higher y-o-y (cc). Management expects H121 group EBITDA to nearly double y-o-y and we have upgraded our FY21 profitability forecasts to reflect this.
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 Company description consumer software business, is focused on developing and marketing software in three key Claranova consists of three product areas: PDF, photo editing and security/privacy. The IoT business's myDevices businesses focused on mobile and internet technologies: PlanetArt (digital platform provides a simple and effective way for SMEs and corporates to deploy IoT photo printing; personalised gifts), applications. Avanquest (consumer software) and myDevices (internet of things (IoT)).
Y/E Jun Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual (3.7) 0.4 (8.2) 2019 262.3 16.0 12.0 24.7 27.4 N/A Relative* (6.2) (4.8) (2.8) 2020 409.1 20.6 11.3 20.0 33.8 N/A * % Relative to local index Analyst 2021e 479.3 34.2 24.5 36.0 18.8 N/A Katherine Thompson 2022e 549.1 40.0 30.4 44.3 15.3 N/A
Edison Insight | 25 February 2021 19 Sector: Aerospace & defence Cohort (CHRT) Price: 573.0p Market cap: £235m INVESTMENT SUMMARY Market AIM Cohort's defence and security orientation has proven relatively resilient during the pandemic. It delivered higher H121 operating profits on 10% lower revenues. There will be a Share price graph (p) significant H220 weighting as management expects a similar overall FY21 performance from the continuing businesses to FY20. A record order backlog of £219m provides 92% cover for FY21 consensus sales and ELAC SONAR will makes its initial contribution in H221. Our estimates are maintained and the shares trade at a modest discount to UK defence peers.
INDUSTRY OUTLOOK
Cohort is heavily influenced by activities in defence and security (90% of FY20 sales). These markets require highly differentiated technologies and services with high barriers to Company description entry based on customer relationships, regulation and high-level security clearances. Cohort is an AIM-listed defence and Defence is generally quite resilient in periods of significant economic disruption and the security company operating across six divisions: MASS (31% of FY20 sales), £4bn pa increase in the UK defence budget announced in November 2020 appears to SEA (24%), MCL (11%), 80%-owned mitigate concerns over imminent budget constraints. EID (14%), 81%-owned Chess Technologies (19%) and newly acquired ELAC SONAR.
Y/E Apr Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual (9.8) (4.7) (15.6) 2019 121.2 17.3 15.9 33.6 17.1 20.1 Relative* (9.2) (9.5) (6.9) 2020 131.1 20.9 17.5 37.1 15.4 17.9 * % Relative to local index Analyst 2021e 142.1 21.4 17.7 33.6 17.1 15.4 Andy Chambers 2022e 158.9 23.3 19.4 36.3 15.8 10.8
Sector: Technology CREALOGIX Group (CLXN) Price: CHF124.50 Market cap: CHF174m INVESTMENT SUMMARY Market Swiss Stock Exchange In FY20, revenues grew 1.7% to CHF103.7m and adjusted EBITDA rose to CHF2.4m, with little impact seen from COVID-19. Recurring revenues were 44% of total revenues, with Share price graph (CHF) SaaS 17%. CLX is targeting 10%+ EBITDA margins and 60% recurring revenues in the medium term. The SaaS transition is expected to drag on FY21 results before a full year of benefit in FY22. As part of its ongoing rationalisation strategy, in January, CLX spun-off its product implementation business for the German-speaking region (c 50 employees) to an MBO. H121 results are due on 16 March 2021.
INDUSTRY OUTLOOK
CREALOGIX is a leading, global digital banking engagement platform provider, based in Switzerland, offering front-end software solutions that enable ‘the digital bank of tomorrow’. Company description Its market is dynamic and fast changing, with the group’s solutions typically used by retail, The CREALOGIX Group is a Swiss private and commercial banks, as well as wealth managers that need to upgrade legacy Fintech 100 company and is among the global market leaders in digital systems to meet the threat of neo-banks and challenger banks. banking, providing front-end digital banking technology solutions to banks, wealth managers and other financial services companies.
Y/E Jun Revenue EBITDA PBT EPS P/E P/CF Price performance (CHFm) (CHFm) (CHFm) (CHFc) (x) (x) % 1m 3m 12m Actual (3.5) 7.8 8.3 2019 101.9 1.9 (1.7) (93.57) N/A 344.3 Relative* (1.9) 5.6 13.9 2020 103.7 2.4 (0.9) (14.79) N/A 17.8 * % Relative to local index Analyst 2021e 108.8 5.9 3.0 155.54 80.0 26.9 Richard Williamson 2022e 114.3 10.3 7.5 383.77 32.4 15.9
Edison Insight | 25 February 2021 20 Sector: Property Custodian REIT (CREI) Price: 91.5p Market cap: £384m INVESTMENT SUMMARY Market LSE DPS for the three months ended 31 December 2020 (Q321) was further increased by 19% to 1.25p, fully covered by net cash receipts and well covered by EPRA earnings of 1.5p. Share price graph (p) CREI targets a similar level for Q421, also covered by net cash receipts, with a minimum aggregate 5.0p for the year ending 31 March 2022 (FY22), based on rent collection levels in line with expectations. Positive valuation movements, driven by asset management and industrial properties, contributed towards an increase in NAV per share to 96.4p (Q221:95.2p) and including DPS paid the quarterly NAV total return was 2.4%. The portfolio is well-diversified and gearing is moderate (Q321 net LTV of 24.0%) with good liquidity, no short-term refinancing risk and borrowing headroom.
INDUSTRY OUTLOOK
Company description The commercial property market is cyclical, historically exhibiting substantial swings in CREI is a London Main Market-listed valuation through cycles while income returns have been more stable. The pandemic and REIT focused on commercial property in the UK outside London. It is Brexit contribute to a highly uncertain UK economic outlook and while the supply demand income-focused, with a commitment to balance for regional office and industrial property has hitherto remained generally firm with pay a high but sustainable and covered dividend. the exception of the industrial sector the weakness that was previously confined to the retail sector has broadened. Y/E Mar Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 2.8 4.2 (19.7) 2019 37.6 32.7 28.5 7.26 12.6 10.0 Relative* 3.5 (1.1) (11.5) 2020 38.1 33.4 28.7 7.00 13.1 12.1 * % Relative to local index Analyst 2021e 35.5 29.3 24.3 5.79 15.8 13.0 Martyn King 2022e 35.4 30.7 25.7 6.12 15.0 12.7
Sector: Technology Datatec (DTCJ) Price: ZAR26.80 Market cap: ZAR5399m INVESTMENT SUMMARY Market JSE As was seen in H121, Datatec is resilient, profitable, cash-generative and on an improving financial track despite the impact of COVID-19. H121 group sales fell 1% to US$2bn (2.8% Share price graph (ZAR) rise in constant currency (cc)), with adjusted EBITDA of US$67m. Westcon sales rose 4% to US$1.3bn, while Logicalis sales fell by 10% to US$0.7bn (1.9% fall cc), due to currency weakness in Latin America. The group is benefiting from the surge in remote working, including business investment in security and communications. Datatec trades on a valuation that neither reflects the group's recent transformation nor its future prospects.
INDUSTRY OUTLOOK
While a challenging global economic environment may affect top-line growth in the short term, Datatec’s high variable cost base and resilient business model should mitigate the Company description impact on its underlying performance. We expect Datatec to continue to benefit from the Datatec is a South Africa-listed streamlining of its operations and cost base, with progressive margin improvement at multinational ICT business, serving clients globally, predominantly in the Logicalis and improving profitability at Westcon. networking and telecoms sectors. The group operates through three main divisions: Westcon International (distribution); Logicalis (IT services); and Analysys Mason (consulting). Y/E Feb Revenue EBITDA PBT EPS P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual 0.9 (1.3) (24.5) 2019 4332.4 86.8 65.7 2.95 61.1 14.1 Relative* (4.8) (17.0) (35.2) 2020 4304.8 158.7 79.1 10.59 17.0 2.1 * % Relative to local index Analyst 2021e 4258.4 136.5 67.0 10.15 17.8 3.6 Richard Williamson 2022e 4418.9 165.0 84.6 16.39 11.0 3.6
Edison Insight | 25 February 2021 21 Sector: Electronics & elec eqpt discoverIE Group (DSCV) Price: 664.0p Market cap: £594m INVESTMENT SUMMARY Market LSE Trading has improved through the course of H221, with order intake for the four months to the end of January up 10% y-o-y on an organic basis and average monthly sales up 4% Share price graph (p) compared to H121. On an organic basis, Design & Manufacturing sales were 3% lower y-o-y, while Custom Supply sales were 10% lower y-o-y, with group sales down 5% y-o-y. As discoverIE expects to report underlying EPS at the upper end of consensus forecasts, we have raised our FY21 forecasts, driving a 4% EPS upgrade. Already factored into our forecasts, the Limitor acquisition completed on 11 February.
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 (11.2) 6.1 14.5 2019 438.9 37.0 28.4 28.4 23.4 N/A Relative* (10.7) 0.7 26.3 2020 466.4 50.9 34.6 31.8 20.9 N/A * % Relative to local index Analyst 2021e 448.6 46.4 29.4 23.9 27.8 N/A Katherine Thompson 2022e 486.5 49.8 32.4 26.4 25.2 N/A
Sector: Technology Draper Esprit (GROW) Price: 824.0p Market cap: £1146m INVESTMENT SUMMARY Market AIM Draper Esprit is the leading listed VC in Europe. Through a diversified investment holding company, Draper Esprit provides liquid exposure to a growing portfolio of Europe’s leading, Share price graph (p) high-growth tech start-ups, an investment class that is hard to access for the public market investor. Since 2016, Draper Esprit has been building the breadth and maturity of its underlying portfolio, with multiple core holdings ready to exit in 2021. In our view, Draper Esprit’s 15.1% FY16–20 NAV/share CAGR, together with the latent value in its portfolio, justify a premium rating.
INDUSTRY OUTLOOK
Over the last 12 months, investors have started to appreciate the opportunity offered by listed direct investment companies, with discounts to NAV closing and moving to premia as Company description COVID-19 fears ease. Investors prefer stocks that offer the potential for meaningful exits in Draper Esprit is a London-based a realistic timeframe. Transparency, NAV growth, consistency of performance, capital venture capital firm that invests in the European technology sector. Draper preservation and investor returns are the key metrics by which to judge success. 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 P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 24.9 28.0 36.9 2019 120.8 N/A 114.3 118.35 7.0 N/A Relative* 25.6 21.5 51.0 2020 52.0 N/A 41.4 34.51 23.9 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
Edison Insight | 25 February 2021 22 Sector: Media Ebiquity (EBQ) Price: 25.8p Market cap: £20m INVESTMENT SUMMARY Market AIM Ebiquity’s pre-close trading update indicated recovery as expected in H220, from both a pick-up in demand from existing clients and a good performance in winning new business. Share price graph (p) The group therefore returned to profit in the second half, leaving it with a small adjusted operating loss for the full year, slightly below our earlier estimate of a small profit. The performance on net debt was better than our modelling, with the group ending the year with net debt of £7.7m (Edison estimate £8.8m). Ebiquity’s share price has not kept pace with those of the UK-based agencies since our November Outlook report, exaggerating the rating differential.
INDUSTRY OUTLOOK
Ebiquity has now launched its Digital Innovation Centre, based around Digital Decisions. Company description This offering is designed to address the depletion prevalent in digital marketing, which Ebiquity is a leading, tech-enabled, remains beset by issues of transparency, fraud and wastage, with up to 30% of digital ad independent marketing and media consultancy. It helps the world's spend wasted. Total global digital ad spend is set to have exceeded a 50% share of total ad biggest brands leverage data and spend in 2020, so this opportunity is clearly substantial, with no major incumbents providing analytics to drive greater transparency in the marketing ecosystem, to create this service. more impactful customer experiences and to deliver greater returns on marketing investment. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 32.3 27.7 (16.8) 2018 69.4 7.8 5.2 3.7 7.0 N/A Relative* 33.2 21.2 (8.2) 2019 68.7 9.2 5.3 3.6 7.2 4.8 * % Relative to local index Analyst 2020e 57.0 1.8 (0.5) (0.8) N/A 28.2 Fiona Orford-Williams 2021e 60.0 5.4 3.1 2.6 9.9 5.7
Sector: Technology EMIS Group (EMIS) Price: 1088.0p Market cap: £689m INVESTMENT SUMMARY Market AIM EMIS saw trading gradually improve through H220 to finish the year slightly ahead of expectations. Revenue and adjusted operating profit were maintained at similar levels to Share price graph (p) FY19 (FY19 £159.5m and £39.3m respectively) whereas previous guidance was for adjusted operating profit to be slightly below the FY19 level. EMIS continued to support customers in dealing with the pandemic, with the recently acquired Pinnacle Systems’ software now being used in the nationwide vaccination programme. Progress was also made in product development with the launch of the first EMIS-X analytics product. We maintain our forecasts pending FY20 results on 18 March.
INDUSTRY OUTLOOK
EMIS is the leading software supplier to the UK GP market, with a greater than 50% market Company description share. It has a strong position in community pharmacies, community health, A&E and EMIS is a software supplier with two hospital pharmacies. The EMIS-X platform is being developed to promote greater divisions. EMIS Health supplies integrated care technology to the NHS, interoperability between NHS departments, in line with the NHS Long Term Strategy. 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 blockchain. Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual (1.1) 11.5 (11.1) 2018 149.7 48.9 33.4 40.4 26.9 13.7 Relative* (0.5) 5.8 (2.0) 2019 159.5 55.6 41.0 53.5 20.3 13.7 * % Relative to local index Analyst 2020e 158.8 53.7 43.3 55.7 19.5 11.6 Katherine Thompson 2021e 164.1 55.3 44.0 56.4 19.3 12.4
Edison Insight | 25 February 2021 23 Sector: Technology EML Payments (EML) Price: A$5.08 Market cap: A$1838m INVESTMENT SUMMARY Market ASX EML Payments reported robust H121 results, with gross debit volume growth of 54%, revenue growth of 61% and NPATA growth of 30% y-o-y. The GPR division, which post the Share price graph (A$) PFS acquisition now makes up 57% of group revenue, saw strong organic growth in H1, compensating for the lower volumes experienced in the malls segment of the G&I division. Management has reinstated guidance for FY21 and we have upgraded our forecasts to reflect the more positive outlook. We remain conservatively at the lower end of the guidance range, while upgrading FY21 revenue by 5.0%, EBITDA by 3.3% and NPATA by 9.1%.
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 34.0 33.3 5.8 2019 97.2 29.7 25.6 7.8 65.1 N/A Relative* 33.1 27.3 8.4 2020 121.0 32.5 21.6 5.5 92.4 N/A * % Relative to local index Analyst 2021e 182.2 50.1 34.7 7.5 67.7 N/A Katherine Thompson 2022e 226.3 70.7 52.4 11.3 45.0 N/A
Sector: Mining Endeavour Mining (EDV) Price: C$25.48 Market cap: C$6192m INVESTMENT SUMMARY Market Toronto Endeavour Mining's (EDV's) acquisitions of SEMAFO and Teranga have projected it into the top 10 gold producing companies globally with output of c 1.5Moz pa and a targeted AISC Share price graph (C$) of US$800/oz with at least US$35–40m pa in synergies. It is also now net debt free and targeting inclusion in the FTSE 100 index mid-year. Adjusted EPS in both Q120 and Q220 were materially ahead of expectations, while production in Q420 has been higher and AISC lower than our prior forecasts (not least as a result of the restart of the Boungou mine).
INDUSTRY OUTLOOK
After only four years, EDV’s exploration programme has yielded 84% of its five-year target of 10–15Moz Au, which has already increased medium-term production levels at Ity and Hounde to 0.5Moz pa (combined) until 2028. Since end-June, EDV has been hedge-free Company description and has now also announced a maiden dividend of US$0.37/share for FY20 payable on 5 Following its acquisition of SEMAFO, February. Prior to the Teranga transaction announcement, we valued EDV shares at Endeavour joins the ranks of the major gold producers, with two mines in Côte US$45.32/share as at 1 January 2021. d’Ivoire and four in Burkina Faso plus three major development projects, all in the West African Birimian greenstone belt.
Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual (6.4) (17.4) (4.1) 2018 1048.6 378.9 75.8 (10.43) N/A 7.9 Relative* (8.5) (24.1) (6.5) 2019 1362.1 618.4 220.4 56.95 35.2 5.0 * % Relative to local index Analyst 2020e 1793.5 927.3 440.9 171.69 11.7 3.5 Charles Gibson 2021e 2016.0 1060.9 511.0 180.32 11.1 3.3
Edison Insight | 25 February 2021 24 Sector: Construction & blding mat Epwin Group (EPWN) Price: 83.6p Market cap: £121m INVESTMENT SUMMARY Market AIM Epwin saw a positive end to 2020 with improving momentum in Q4. Specifically, revenue of +2–3% y-o-y in July and August amplified to +5% for the five months to November. Implicitly Share price graph (p) then, the months of September, October and November – seasonally important in any year – were ahead in the order of 6–8%. (We note that the H219 comparators were reasonably firm also.) Management has flagged FY20e group revenue of £240m, PBT in line with consensus raised in December and year-end net debt (pre-IFRS 16) of c £18m. We expect earnings to start to recover from COVID-19 affected FY20 in FY21. The company’s business resilience is reflected in good cash flow management and a likely FY20 final dividend payment. It also made a small plastics distributor acquisition at the start of FY21.
INDUSTRY OUTLOOK
Company description Epwin is exposed to both RMI (c 70% revenue) and newbuild (c 30%) in the UK housing Epwin supplies functional market. RMI activity is currently stronger that other sectors which are also recovering low-maintenance exterior building products (including windows, doors, gradually. There is some caution associated with potential impacts of rising unemployment roofline and rainwater goods) into a on consumer confidence. number of UK market segments and is a modest exporter.
Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual (8.1) (1.7) (21.9) 2018 281.1 38.2 16.5 9.8 8.5 4.6 Relative* (7.6) (6.6) (13.8) 2019 282.1 25.4 15.0 8.5 9.8 3.4 * % Relative to local index Analyst 2020e 239.1 30.7 4.1 2.3 36.3 5.2 Toby Thorrington 2021e 260.5 34.4 9.0 5.1 16.4 4.3
Sector: Technology EQS Group (EQS) Price: €35.80 Market cap: €269m INVESTMENT SUMMARY Market Scale EQS has raised a further €13.6m (at €38) in a placing to accelerate its investment in sales and marketing ahead of the implementation of the EU whistle-blowing directive, with further Share price graph (€) acquisitions in the corporate client area on the cards. Preliminary FY20 figures show revenue growth of 18%, adjusted for last year’s sale of ARIVA. This is broadly in line with our estimates, with EBITDA of €4.8m (Edison forecast €4.9m), near double the prior year as the increasing scale of the business delivers efficiencies. FY21 should see good demand for compliance solutions as the whistleblowing regulations come into force, and the group is opening new offices in Milan and Madrid to help capture greater share.
INDUSTRY OUTLOOK
The EU Directive on whistle-blowing needs to be incorporated into member state legislation Company description by end 2021, giving a good opportunity to win new clients, who can then be cross- and EQS is a leading international provider upsold to. The pandemic has provided fertile territory for selling online communications of regulatory technology in the fields of corporate compliance and investor solutions, with virtual general meetings being used broadly across the DACH area, where relations. Its products enable corporate voting is normally at the meeting, with questions also submitted ahead of time. Against this, clients to fulfil complex national and international disclosure obligations, the number of IPOs in European markets has unsurprisingly dwindled. 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 11.9 46.7 126.6 2018 36.2 0.2 0.7 6.12 585.0 N/A Relative* 10.5 37.2 123.3 2019 35.4 2.5 (0.3) (6.26) N/A N/A * % Relative to local index Analyst 2020e 38.0 4.9 1.4 13.67 261.9 N/A Fiona Orford-Williams 2021 47.0 6.1 2.2 20.31 176.3 N/A
Edison Insight | 25 February 2021 25 Sector: Technology Esker (ALESK) Price: €223.50 Market cap: €1296m INVESTMENT SUMMARY Market Euronext Growth Esker has confirmed it is still generating revenue growth, despite the continued COVID-19 restrictions around the world, with constant currency growth of 11% for Q420 and 9% for Share price graph (€) FY20. Order intake was 17% higher in FY20, accelerating to 30% growth in Q4, providing support for the company’s double-digit revenue growth expectations for FY21. We have trimmed our forecasts to reflect FY20 revenues and the stronger euro, reducing normalised diluted EPS by 3.4% in FY20e and 5.1% in FY21e. In our view, Esker is well positioned to benefit from the accelerating adoption of digital automation solutions within the corporate world.
INDUSTRY OUTLOOK
Esker's DPA software operates across five areas: document delivery, accounts payable, Company description accounts receivable, procurement and sales order processing. Competitors are different for Esker provides end-to-end document each business process and consist of business process outsourcers and specialist DPA automation solutions, offering on-premise and on-demand delivery software companies. Customers move to using DPA software to reduce paper-related costs models. In FY19, the business and errors in processing, to speed up the cash conversion cycle, to improve process generated 57% of revenues from Europe, 38% from the US and the visibility within the enterprise and to improve customer service. 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 6.4 49.0 96.1 2018 86.9 18.3 12.2 165.0 135.5 N/A Relative* 3.7 41.4 107.6 2019 104.2 20.1 13.6 179.0 124.9 N/A * % Relative to local index Analyst 2020e 112.3 21.3 13.1 163.0 137.1 N/A Katherine Thompson 2021e 128.7 25.3 17.1 210.0 106.4 N/A
Sector: Food & drink Evolva (EVE) Price: CHF0.24 Market cap: CHF197m INVESTMENT SUMMARY Market Swiss Stock Exchange Evolva's overall geographical and product footprint continues to expand and the pipeline remains robust. In January 2021 Evolva announced the launch of a new product, Share price graph (CHF) L-arabinose, a natural sugar blocker and reducing sugar. The company's aim remains to reach cash break-even by FY23. Due to COVID-19, Evolva has witnessed a softening in demand for some of its flavour and fragrance products, but recent result demonstrate Evolva's progress in transforming itself from an R&D-driven enterprise towards a commercial company with a product-based revenue model.
INDUSTRY OUTLOOK
Food and health ingredients continue to be in the sweet spot as consumers demand healthier products with cleaner labels without compromising on taste or convenience. Company description Evolva's fermentation platform aims to deliver these benefits while reducing production Evolva is a Swiss biotech company costs. focused on the research, development and commercialisation of products 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 7.6 15.9 (9.6) 2018 8.9 (23.4) (25.4) (3.0) N/A N/A Relative* 9.4 13.6 (4.9) 2019 11.6 (12.3) (15.6) (2.0) N/A N/A * % Relative to local index Analyst 2020e 9.8 (15.8) (16.8) (2.1) N/A N/A Sara Welford 2021e 16.8 (10.7) (11.8) (1.4) N/A N/A
Edison Insight | 25 February 2021 26 Sector: Technology Expert System (EXSY) Price: €3.34 Market cap: €169m INVESTMENT SUMMARY Market Borsa Italiana In January, Expert launched commercial options for its NL API, which had previously been available under a freemium model. Continuing with its success in the insurance field, Expert Share price graph (€) has announced two new contracts. Le Conservateur, a French independent co-operative group with specialised insurance products, has selected expert.ai software to speed up its contract review and verification process. Patra, a technology services provider to the insurance industry, plans to integrate expert.ai software into its Policy Checking solution.
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 demand for cognitive computing and smarter artificial intelligence solutions, such as those Company description offered by Expert System. ResearchAndMarkets estimates that the global text analytics Expert System has developed and market was worth $4bn in 2018 and is forecast to grow at a CAGR of 17.3% to 2023. patented an AI-based technology platform that extracts useful information from 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 42.5 57.7 23.3 2018 30.5 4.6 (0.6) (1.4) N/A 46.3 Relative* 38.2 46.5 35.5 2019 33.7 5.5 (0.5) (1.6) N/A 52.0 * % Relative to local index Analyst 2020e 31.2 (0.4) (7.7) (15.5) N/A N/A Katherine Thompson 2021e 32.5 (5.7) (13.5) (24.0) N/A N/A
Sector: Industrial support services Forward Industries (FORD) Price: US$4.59 Market cap: US$45m INVESTMENT SUMMARY Market NASDAQ Q121 revenues grew by $1.3m year-on-year during Q121 to $9.7m. $0.4m of the increase was attributable to Kablooe Design, acquired in August 2020. Other design revenues Share price graph (US$) declined slightly because the pandemic affected demand. The pandemic also delayed roll-out of smart furniture to big-box retail stores, so growth here was slower than management had planned. Losses from operations widened by $0.1m to $0.2m, reflecting additional costs associated with developing smart furniture sales channels and the Kablooe acquisition, and a rise in bad debt expenses. Noting the adverse impact of the pandemic, we have withdrawn our estimates.
INDUSTRY OUTLOOK
The group's two product design activities, Intelligent Product Solutions and the more recent Company description acquisition Kablooe Design, have launched a complete medical device design and Forward Industries provides engineering service, integrating the expertise of both firms. The combined services offer outsourced design, manufacturing, sourcing and distribution services. It includes human factors engineering, verification and regulatory support along with upfront creates innovative products based on research and testing. IoT and wearable technology for a wide range of global partners. It also sources carry cases for some of the world’s leading healthcare companies. Y/E Sep Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual 106.8 170.0 313.5 2019 37.4 (0.2) (0.7) (7.06) N/A N/A Relative* 101.1 147.5 258.4 2020 34.5 0.0 (0.4) (4.16) 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 | 25 February 2021 27 Sector: Consumer support services Games Workshop Group (GAW) Price: 9905.0p Market cap: £3246m INVESTMENT SUMMARY Market LSE Games Workshop’s interim PBT of £91.6m announced in January compares with the 'not less than £90m’ indicated in the December trading statement. Demand continues to be Share price graph (p) driven, predominantly, by the recent new Warhammer 40,000 release and through the Trade and Online channels, while Retail is still recovering from the COVID-19 closures. Retail outlets are closed where required by governments but, unlike during the previous lockdown, the factory and warehouses are still operating following investment to make the locations compliant with social distancing requirements. There was a significant uplift in gross margin of 6pp to 75.2%, and the operating margin pre-royalties of 11.9pp to 44.6%. Following the announcement of the interim results our forecasts are under review.
INDUSTRY OUTLOOK
Company description Games Workshop is the global leader for tabletop miniature gaming, a market it created. Games Workshop is a leading Tabletop miniature gaming is the fastest-growing segment of the global non-digital games international specialist designer, manufacturer and multi-channel market, which is expected to grow at a CAGR of 9% between 2017 and 2023 and reach a retailer of miniatures, scenery, artwork value exceeding $12bn. 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 (7.3) (0.4) 39.9 2019 256.6 97.1 81.3 200.8 49.3 44.7 Relative* (6.7) (5.5) 54.3 2020 269.7 115.6 89.4 217.8 45.5 31.1 * % Relative to local index Analyst 2021e 349.1 168.3 140.4 342.0 29.0 26.2 Russell Pointon 2022e 381.2 186.2 156.6 381.4 26.0 21.2
Sector: Travel & leisure Gamesys Group (GYS) Price: 1352.0p Market cap: £1478m INVESTMENT SUMMARY Market LSE Gamesys Group’s strong momentum continued into Q420 and at the recent trading update, management said it expects FY20 pro forma revenue and adjusted EBITDA will be at or Share price graph (p) above the upper end of market expectations. This implies pro forma revenue growth for Q420/FY20 of at least 25.6%/27.8% respectively. The FY20 EBITDA margin of at least 27.5% is higher than our prior forecast of 26.9%, even though internal investment increased. The higher than expected profit outturn is likely to have led to a further improvement in the group’s financial position at the year end. We increased our FY21 and FY22 adjusted EBITDA forecasts by 4–6%.
INDUSTRY OUTLOOK
Retail gambling and sports are currently faced with the impact of COVID-19, but we note Company description that Gamesys is not exposed to either sector. Gaming companies have been subject to Gamesys is a leading international ongoing regulatory intervention in the UK, including a ban on the use of credit cards to online gaming operator. The group was formed after JPJ Group acquired gamble online from April 2020, and recent new guidance to protect consumers during the Gamesys for £490m in September COVID-19 lockdown. In December 2020, the DCMS launched a review of the 2005 2019. Gambling Act with a Call for Evidence until 31 March 2021.
Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 4.3 28.3 73.6 2018 319.6 112.7 92.7 118.5 11.4 9.4 Relative* 5.0 21.8 91.4 2019 565.3 158.9 119.5 100.4 13.5 14.6 * % Relative to local index Analyst 2020e 724.0 200.8 159.8 132.2 10.2 8.4 Russell Pointon 2021e 796.4 220.8 183.8 151.9 8.9 7.5
Edison Insight | 25 February 2021 28 Sector: Technology GB Group (GBG) Price: 860.0p Market cap: £1688m INVESTMENT SUMMARY Market AIM GB Group (GBG) has sold its marketing services business to HH Global Group for an undisclosed amount. This was not an area of focus for GBG and has been in managed Share price graph (p) decline for several years. Just before Christmas, GBG boosted its Fraud business with the acquisition of fraud investigation automation software from HooYu for £4m in equity. We have revised our forecasts to reflect the disposal and acquisition, leading to small upgrades to our EPS forecasts. Both deals emphasise the company’s strategy to focus on Identity, Location and Fraud.
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 Company description turn, is driving the demand for more complex and comprehensive solutions for the GB Group specialises in identity data verification of personal data. intelligence. Its products/services enable customers to understand and verify clients and employees in fraud, risk management, compliance and customer on-boarding services. Headquartered 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 (1.5) 1.1 24.3 2019 143.5 34.1 31.3 15.4 55.8 N/A Relative* (0.9) (4.1) 37.1 2020 199.1 51.7 45.7 17.9 48.0 N/A * % Relative to local index Analyst 2021e 213.1 57.2 51.5 19.8 43.4 N/A Katherine Thompson 2022e 212.5 52.1 46.9 17.9 48.0 N/A
Sector: Mining Gemfields Group (GML) Price: ZAR1.60 Market cap: ZAR1874m INVESTMENT SUMMARY Market JSE Although Gemfields was only able to hold one full auction in 2020, successful November and December emerald mini-auctions generated US$10.9m in sales. Given the ongoing Share price graph (ZAR) international travel restrictions, it remains unclear when Gemfields will next be able to hold regular auctions. If auctions cannot take place within the next six months the company may need to seek additional funding.
INDUSTRY OUTLOOK
Gemfields generates more than 90% of its revenues from six emerald and ruby auctions annually. Auctions rely on customers travelling from multiple countries to inspect the stones and determine the value of their bids. For Gemfields to hold auctions thus requires the lifting of worldwide travel restrictions to allow movement of both stones and customers between Company description countries. Gemfields is a world-leading supplier of responsibly sourced coloured gemstones. It owns 75% of Montepuez Ruby Mining in Mozambique, 75% of the Kagem emerald mine in Zambia, the Fabergé jewellery business and an investment in Sedibelo Platinum.
Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual 7.4 6.7 (22.0) 2018 206.1 58.9 (22.5) (2.6) N/A N/A Relative* 1.2 (10.3) (33.0) 2019 216.2 80.9 55.9 1.3 8.3 N/A * % Relative to local index Analyst 2020e 30.1 (51.2) (94.2) (5.9) N/A N/A Alison Turner 2021e 183.5 29.2 1.8 (1.6) N/A N/A
Edison Insight | 25 February 2021 29 Sector: Food & drink Greggs (GRG) Price: 2090.0p Market cap: £2121m INVESTMENT SUMMARY Market LSE Greggs’ Q420 sales performance was better than we expected due to a faster recovery in sales despite ongoing COVID-19 restrictions; a strong contribution from delivery; and more Share price graph (p) net new store openings. The sales performance, improved profitability and a stronger financial position gives management the confidence to return to prior levels of space expansion. We upgraded our FY21 PBT forecast by c 2%. Greggs has many opportunities to accelerate growth in the medium term: more and larger stores; the shift from a single channel to multichannel; further product innovation; and more investment in its supply chain.
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 2,078 shops, eight manufacturing squeezed consumer is a potential concern, although Greggs is well placed for the value and distribution centres and 23,000 employees, Greggs is the leading 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 6.6 22.4 (13.2) 2018 1029.3 145.7 89.8 70.3 29.7 13.8 Relative* 7.3 16.2 (4.3) 2019 1167.9 231.9 114.2 89.7 23.3 8.6 * % Relative to local index Analyst 2020e 811.0 109.0 (15.0) (12.9) N/A 37.4 Russell Pointon 2021e 1042.6 188.1 62.0 48.9 42.7 10.6
Sector: Oil & gas Hellenic Petroleum (ELPE) Price: €5.45 Market cap: €1666m INVESTMENT SUMMARY Market Athens Stock Exchange Hellenic Petroleum (ELPE) reported adjusted EBITDA of €256m in 9M20 in a reversal of part of the losses in stocks from the fall of prices in the first quarter. Demand fell in 2020 Share price graph (€) due to the reduction in air traffic and tourism in the wake of COVID-19, leading to a decline in refining margins to historically low levels in Q320. Although these margins recovered slightly in Q420, we expect this pressure will continue for the next three to six months as economies around the world slowly recover and lockdown measures begin to ease. Hellenic’s high complexity index and large storage capacity allow for flexibility in times of uncertainty and given ELPE’s healthy balance sheet, we expect it to weather this period. In October, the company announced the completion of the acquisition of Kozani 204MW Photovoltaic projects, as part of its goal to improve its environmental footprint. Our valuation stands at €6.55/share. Company description INDUSTRY OUTLOOK Hellenic Petroleum (ELPE) operates three refineries in Greece with a total capacity of 341kbd, and 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/US) hold structural advantages. To offset this, and petrochemicals divisions. changing regulations should put complex, middle distillate-orientated refineries such as ELPE'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 (3.4) 4.8 (29.7) 2018 9769.0 730.0 388.0 95.2 5.7 3.3 Relative* (1.1) (6.2) (17.5) 2019 8857.0 570.0 205.0 54.8 9.9 3.4 * % Relative to local index Analyst 2020e 6088.0 330.0 15.0 19.4 28.1 12.7 Marta Szudzichowska 2021e 5977.0 573.0 234.0 57.5 9.5 3.8
Edison Insight | 25 February 2021 30 Sector: Oil & gas Hurricane Energy (HUR) Price: 3.6p Market cap: £72m INVESTMENT SUMMARY Market AIM HUR cut its Lancaster and Lincoln fields reserves and resources estimates in September 2020 after confirming significantly shallower oil water contacts than previously estimated Share price graph (p) and a more complex Lancaster reservoir system. Lancaster EPS 2P reserves have reduced from 37.3mmbbls to 16mmbbls with remaining reserves of 9.4mmbbls at 1 September. 2C resources are now 58mmbbls from 486mmbbls. Lincoln 2C resources have been cut to 45mmbbls from 565mmbbls. HUR is working with stakeholders to assess the merits of side-tracking the existing Lancaster 205/21a-7z well to an up-dip oil producer from late 2021 followed by a water injection well in late 2022. Production of 12,100bopd (at mid January) is expected to decline slowly without further activity. Higher oil prices increased net free cash at end 2020 by $19m (vs end November) to $106m. We will review our suspended valuation once HUR publishes its updated Competent Person’s Report, due by the end of Q121. Our Company description core NAV is likely to be significantly reduced from our previous estimate of 13.6p/share. Hurricane Energy is an E&P focused on fractured basement exploration and INDUSTRY OUTLOOK development in the West of Shetland region. The company’s 100%-owned HUR’s ability to mitigate declines at Lancaster will depend on the outcome of its ongoing Lancaster oil discovery achieved first oil on target in H119. engagement with stakeholders regarding the nature and timing of future investment in the field. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual 35.8 6.1 (76.6) 2018 0.0 (12.6) (18.5) (2.2) N/A N/A Relative* 36.7 0.7 (74.1) 2019 170.3 (11.7) 30.0 (2.5) N/A 0.9 * % Relative to local index Analyst 2020e N/A N/A N/A N/A N/A N/A Ian McLelland 2021e N/A N/A N/A N/A N/A N/A
Sector: Property Impact Healthcare REIT (IHR) Price: 109.0p Market cap: £348m INVESTMENT SUMMARY Market LSE Rents have continued to be paid in full, as expected, and with the Q420 DPS declared, meeting the aggregate FY20 DPS target of 6.29p (+1.9%), the FY21 target has been Share price graph (p) increased by 1.9% to 6.41p. We expect this to be fully covered by adjusted (cash) earnings. With the portfolio continuing to perform as expected, unaudited end-FY20 NAV increased to 109.6p per share and including DPS paid the quarterly NAV total return was 1.9% (FY20 NAV total return was 8.5%). Tenant care providers have shown operational and financial resilience during the pandemic and their occupancy levels remained stable in Q420; although below usual levels, the roll-out of vaccinations is a very positive development. Against this background, and with modest gearing (Q420 LTV 17.8%) and strong pipeline, we anticipate further accretive acquisitions.
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 0.0 1.9 0.0 2018 17.3 13.0 12.4 6.5 16.8 20949.8 Relative* 0.6 (3.3) 10.3 2019 24.0 19.4 17.6 6.9 15.8 18581.2 * % Relative to local index Analyst 2020e 30.6 25.2 23.0 7.2 15.1 17650.3 Martyn King 2021e 36.4 30.9 27.5 8.6 12.7 13853.0
Edison Insight | 25 February 2021 31 Sector: Technology IQE (IQE) Price: 78.5p Market cap: £629m INVESTMENT SUMMARY Market AIM IQE has announced that it expects FY20 revenues to be c £178m. Demand for IQE’s epitaxy in smartphones remained strong throughout Q420 with positive momentum Share price graph (p) continuing into Q121. The outlook for FY21 appears favourable, though the outcome will depend on the severity of any coronavirus-related recession and what consumers choose to do with their reduced disposable income. Production for IQE’s major vertical cavity surface emitting laser (VCSEL) customer, which we have previously inferred is involved in the Apple supply chain, was also strong throughout Q420. Demand is benefitting from the launch of the iPhone 12 Pro, which includes a world-facing LiDAR scanner to improve augmented reality (AR) experiences.
INDUSTRY OUTLOOK
Company description Data from customer trials of IQE's IQepiMo template technology for high-performance RF IQE is the leading global supplier of filters used in 5G handsets shows that filters fabricated using these templates demonstrate advanced semiconductor wafer products and material solutions to the improved performance when compared to the incumbent technology. The filter market is semiconductor industry. Applications significantly larger than the power amplifier market, which is where IQE’s wireless activity is include radio frequency semiconductors, optical network currently focused, so this technical development represents an opportunity for IQE to grow devices, VCSELs and infrared semiconductors. wireless revenues substantially more quickly than the handset market. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 3.8 29.2 36.9 2018 156.3 26.4 14.0 1.38 56.9 35.2 Relative* 4.4 22.6 50.9 2019 140.0 16.2 (7.0) (2.46) N/A 69.1 * % Relative to local index Analyst 2020e 178.3 33.3 6.6 0.63 124.6 19.3 Anne Margaret Crow 2021e 183.3 38.8 12.0 1.16 67.7 24.4
Sector: Investment companies John Laing Group (JLG) Price: 303.0p Market cap: £1495m INVESTMENT SUMMARY Market LSE CEO Ben Loomes set out his strategic vision for John Laing Group (JLG) at its capital markets day in November. He intends to accelerate growth by investing in ‘core-plus’ Share price graph (p) infrastructure while also enhancing operating and balance sheet efficiency. Many of the initiatives will take time to fully realise, but the direction of travel is clear and, with a growing number of shortlisted positions in the US, activity levels look to be rising. JLG's shares have recovered recently but the rating remains below its peers.
INDUSTRY OUTLOOK
Substantial boosts to infrastructure spending are expected as developed economies look to stimulate growth following the COVID-19 pandemic. Meeting the challenges of climate change will require a transformation of key parts of the energy system and is a key part of Company description many countries investment plans. John Laing is an international originator, active investor and manager of infrastructure projects.
Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual (6.7) (5.4) (15.6) 2018 397.0 331.0 296.0 63.1 4.8 N/A Relative* (6.1) (10.2) (6.9) 2019 179.0 111.0 100.0 20.4 14.9 N/A * % Relative to local index Analyst 2020e 89.5 20.1 0.0 0.0 N/A N/A Dan Gardiner 2021e 98.5 36.5 23.0 4.6 65.9 N/A
Edison Insight | 25 February 2021 32 Sector: Technology Kcell Joint Stock Company (KCEL) Price: US$5.85 Market cap: US$1170m INVESTMENT SUMMARY Market LSE The recovery from the COVID-19 affected Q2 continued in Q4. Service revenue growth (ex bulk SMS) accelerated to 7.6% y-o-y, resulting in FY20 sales and EBITDA ahead of both Share price graph (US$) our forecasts and guidance. This trend is further evidence of an improving market in our view and leads us to raise our FY21 and FY22 adjusted EPS forecasts by 5% and 6% respectively. Following a directors meeting on 23 February, Kcell has announced its intention to delist its GDRs from the LSE and AIX. It expects to remain listed on the Kazakhstan Stock Exchange (KASE).
INDUSTRY OUTLOOK
Kcell’s prospects have been transformed following KT taking a 75% stake in the business. Consolidation is helping to sustain a recovery in the Kazakhstan mobile market, new Company description management successfully introduced a strategy targeting higher margin segments and Kcell Joint Stock Company (Kcell) is a Kcell’s major shareholder is now the dominant national telecom player. 2019 saw the mobile operator in Kazakhstan and a listed subsidiary of Kazakhtelecom company deliver its first growth in service revenues in five years. With little near-term risk of (KT), a state-owned incumbent with a regulatory intervention or a resurgence in aggressive competition, the current market 70% share of the market. structure appears sustainable.
Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (KZTbn) (KZTbn) (KZTbn) (KZT) (x) (x) % 1m 3m 12m Actual (24.0) (18.8) (2.2) 2019 156.7 64.4 23.2 50.0 49.8 N/A Relative* N/A N/A N/A 2020 174.7 72.1 31.6 88.0 28.3 N/A * % Relative to local index Analyst 2021e 189.0 78.7 39.4 148.0 16.8 N/A Dan Gardiner 2022e 196.6 81.5 40.5 158.0 15.8 N/A
Sector: Mining KEFI Gold and Copper (KEFI) Price: 2.0p Market cap: £42m INVESTMENT SUMMARY Market LSE KEFI is in the process of finalising the specifics of the remaining funding sources for Tulu Kapi by end-March ahead of major mine site works and production in Q422. Inter alia, this Share price graph (p) may involve a higher beneficial interest in the project for KEFI (eg 65% versus 45%) and production of 190koz pa (cf 140koz pa). The Ethiopian central bank has approved the project's debt financing structure and community resettlement was authorised in January 2020.
INDUSTRY OUTLOOK
Prior to November's equity raising (which increased the number of shares by 14.2%), we calculated that KEFI was capable of generating free cash flow of c £65m pa, which we valued at 4.05p/share. However, this excluded Hawiah (19.3Mt at 1.86% CuE), on which Company description KEFI has completed a recent preliminary economic assessment showing a post-tax NPV KEFI Gold and Copper is an (8%) of US$96m (1.37p/share attributable). It also excluded any beneficial interest for KEFI exploration and development company focused on gold and copper deposits in Tulu Kapi above 45% (potentially 1.35p/share) and also the value of its other assets in the highly prospective (potentially 3.83–8.74p/share). 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 2.9 18.1 18.4 2018 0.0 (4.1) (4.6) (1.0) N/A N/A Relative* 3.5 12.1 30.6 2019 0.0 (2.4) (3.5) (0.6) N/A N/A * % Relative to local index Analyst 2020e 0.0 (3.2) (3.4) (0.2) N/A N/A Charles Gibson 2021e 0.0 (1.0) (4.6) (0.1) N/A 109.8
Edison Insight | 25 February 2021 33 Sector: Technology Keywords Studios (KWS) Price: 2728.0p Market cap: £2029m INVESTMENT SUMMARY Market AIM We remain positive on the outlook for Keywords. In FY20, Keywords benefited from strong games industry growth to deliver underlying organic revenue growth of 12%, with revenues Share price graph (p) of €373m and adjusted PBT of €55m (14.7% margin). Although Keywords trades on a demanding valuation, assuming no worsening impact from COVID-19 in FY21, we expect heightened game releases to mean that demand for the company's services will continue to build in the short to medium term. With net cash of c €100m (plus €100m of undrawn facilities), Keywords remains well placed to participate in earnings-enhancing M&A.
INDUSTRY OUTLOOK
Keywords Studios operates in the global games sector, a net beneficiary from COVID-19-related lockdowns (Newzoo: 20% y-o-y growth in FY20). Although Keywords has Company description experienced some short-term business disruption (particularly Audio and QA), as lockdowns Keywords Studios is the largest and ease, it will quickly be business as usual, with potential catch-up from pent-up demand as most diverse supplier of outsourced services to the games industry. the industry returns to trend growth (Newzoo: 10.5% CAGR 2019–23e). Through regular acquisitions, it is building its scale, geographic footprint and delivery capability to become the ‘go to’ supplier across the industry.
Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual 7.0 30.5 68.2 2018 250.8 43.7 37.9 43.7 71.2 59.0 Relative* 7.7 23.9 85.5 2019 326.5 57.6 40.9 47.2 66.0 44.0 * % Relative to local index Analyst 2020e 373.0 72.9 55.0 58.8 52.9 32.0 Richard Williamson 2021e 464.5 89.7 67.8 69.3 44.9 28.8
Sector: Mining Kopy Goldfields (KOPY) Price: SEK1.94 Market cap: SEK1723m INVESTMENT SUMMARY Market NASDAQ OMX First North Kopy Goldfields produced 53koz of gold equivalent in FY20 following the reverse takeover by Amur Zoloto and plans to grow organically to 100koz within five years. This does not Share price graph (SEK) include the substantial potential of the 1.8Moz Krasny project, where Kopy retains 49% ownership. Kopy Goldfields is investigating a possible listing on the Nasdaq Nordic main market, which could enhance its appeal to a broader range of investors.
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 historically strong and statistically significant correlation of 0.909 between the gold price and Company description the total US monetary base from 1967 to 2018, there is very little visibility as to how, or to Following the reverse takeover of Kopy what extent, the total US monetary base may be expected to evolve. In the four months to Goldfields by Amur Zoloto in September 2020, the new Kopy boasts November 2020, the US monetary base was expanding at an average rate of approximately production of >50koz pa of gold from US$98bn per month, which would equate to an expected increase in the gold price (using two hard rock mines and a number of smaller placer deposits. Kopy also the historical correlation) of approximately US$391/oz per year. retains a 49% interest in the Krasny project and 100% of the Maly Patom exploration licences. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual (17.9) (11.2) 106.5 2018 60.0 20.6 1.7 N/A N/A N/A Relative* (20.7) (18.6) 84.0 2019 70.1 25.5 11.7 N/A N/A N/A * % Relative to local index Analyst 2020e 98.1 38.3 26.9 2.4 9.7 N/A Alison Turner 2021e 116.1 46.6 34.1 3.0 7.8 N/A
Edison Insight | 25 February 2021 34 Sector: Food & drink La Doria (LD) Price: €14.54 Market cap: €451m INVESTMENT SUMMARY Market Borsa Italiana The COVID-19 pandemic has increased demand as consumers eat more meals at home. The ongoing industrial plan is boosting capacity in the higher-margin products and Share price graph (€) structurally reducing costs in the longer term. The first three quarters benefitted significantly from increased home consumption and we expect this trend continued for the rest of FY20. We believe there will also be a structural 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. We therefore expect FY21 profitability to improve, with increased pricing and a more positive industry backdrop. FY results are due on 15 March.
INDUSTRY OUTLOOK
Company description La Doria's strategic objectives, published as part of its three-year plan, are broadly La Doria is the leading manufacturer of unchanged: the priority is to expand the higher margin and less volatile parts of the private-label preserved vegetables and fruit for the Italian (18% FY19 business to reduce the dependence on the more unpredictable ‘red line’. revenues) and international (82%) market. It has 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 8.8 13.8 56.3 2018 687.9 52.8 33.1 88.2 16.5 9.4 Relative* 5.5 5.7 71.7 2019 717.7 56.0 32.7 64.0 22.7 11.6 * % Relative to local index Analyst 2020e 839.7 72.3 53.8 133.5 10.9 8.3 Sara Welford 2021e 814.5 72.5 52.0 129.2 11.3 7.9
Sector: Alternative energy Leclanché (LECN) Price: CHF1.03 Market cap: CHF267m INVESTMENT SUMMARY Market Swiss Stock Exchange Leclanché has launched a modular, off-the-shelf battery system for deployment in pure-play electric and hybrid trucks and buses. This product introduction is in response to strong Share price graph (CHF) demand from potential customers for an off-the-shelf solution because having a standard, pre-qualified system shortens factory lead times and results in a significantly reduced pack price. Importantly, the system has a cycle life almost three times greater than the system offered by the main competitor, helping reduce total cost of ownership, without compromising the amount of charge that can be stored per kilogram. The company expects to sell several dozen systems during FY21 with a selling price in the low tens of thousands of euros per system.
INDUSTRY OUTLOOK
Company description Leclanché has been selected to provide a 5.2MW, 2.9MWh battery storage system for a Leclanché is a fully vertically integrated natural gas-fired power plant in Slovakia. The system will be used to help the plant comply energy storage solution provider. It delivers a wide range of energy with new European secondary frequency control regulations which become effective in storage solutions for utilities and January 2022 and require a plant to deliver its full power in just 7.5 minutes instead of the micro-grids as well as hybridisation for mass transport systems such as bus current 15. This the first time in Eastern Europe that an energy storage system is being fleets and ferries. deployed to help an existing power plant to support secondary frequency control. Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (CHFm) (CHFm) (CHFm) (CHFc) (x) (x) % 1m 3m 12m Actual (0.5) 46.4 (19.9) 2018 48.7 (36.9) (47.8) (61.5) N/A N/A Relative* 1.1 43.5 (15.7) 2019 16.3 (57.5) (71.5) (52.6) N/A N/A * % Relative to local index Analyst 2020e N/A N/A N/A N/A N/A N/A Anne Margaret Crow 2021e N/A N/A N/A N/A N/A N/A
Edison Insight | 25 February 2021 35 Sector: Mining Lepidico (LPD) Price: A$0.02 Market cap: A$125m INVESTMENT SUMMARY Market ASX Lepidico's patented technologies produce lithium hydroxide plus a range of by-products from less contested minerals such as lepidolite. Both its Karibib operation in Namibia and its Share price graph (A$) chemical plant in Abu Dhabi are now fully permitted. Technically, the project has been de-risked by a successful pilot plant campaign and, in May, LPD announced the results of a definitive feasibility study (DFS) to produce c 4,900t of battery grade lithium hydroxide monohydrate pa (7,800tpa equivalent) over 14 years.
INDUSTRY OUTLOOK
The DFS calculated a project NPV of US$221m (US$0.045/share) at an 8% discount rate and a 31% IRR after initial capex of US$139m. Offtake discussions are underway and the US DFC has confirmed that it is evaluating the project for potential preferential debt Company description financing. In the meantime, a strategic collaboration with Cornish Lithium has allowed LPD Via its Karibib project in Namibia and to fully retire its convertible bond such that, we value the company at 4.91c if it now raises unique IP, Lepidico is a vertically integrated lithium development equity at 2.9c/share (or 4.50c at 1.9c/share). business that has produced both lithium carbonate and lithium hydroxide from non-traditional hard rock lithium-bearing minerals using its registered L-Max and LOH-Max processes. Y/E Jun Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (A$m) (A$m) (A$m) (c) (x) (x) % 1m 3m 12m Actual 4.3 200.0 102.5 2019 0.0 (4.0) (5.1) 0.0 N/A N/A Relative* 3.6 186.4 107.5 2020 0.0 (4.9) (10.8) 0.0 N/A N/A * % Relative to local index Analyst 2021e 0.0 (3.1) (4.4) 0.0 N/A N/A Charles Gibson 2022e 0.0 (26.0) (27.1) 0.0 N/A N/A
Sector: Financials London Stock Exchange Group (LSEG) Price: 9722.0p Market cap: £44711m INVESTMENT SUMMARY Market LSE In January, following London Stock Exchange Group's (LSEG) agreement to sell the whole of Borsa Italiana to Euronext (for €4.3bn), the European Commission approved LSEG's Share price graph (p) acquisition of Refinitiv. This completed on 29 January and is transformational for the group, substantially strengthening its proposition in data and analytics and adding high-growth execution platforms in FX and fixed income. The combined business, with pro forma FY19 revenue of c £6.5bn, has three core business areas: Data & Analytics including real-time data, fundamental data and indices which together account for c 71% of revenue; Capital Markets (LSE markets plus FXall and Tradeweb), 16% of revenue; and Post Trade (OTC and non OTC clearing and collateral cash management), 13% of revenue.
INDUSTRY OUTLOOK
Company description Post-Refinitiv transaction financial targets include: year-five revenue and cost synergies of London Stock Exchange Group £225m (3.4%) and £350m (7.1%), respectively, a three-year post deal revenue CAGR of (LSEG) is a diversified global financial markets infrastructure and data 5–7% and a medium-term EBITDA margin of 50%. FY20 results are due to be released on business. Its core areas of activity are: 5 March. 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 N/A N/A N/A 2018 2135.0 1066.0 865.0 173.8 55.9 N/A Relative* N/A N/A N/A 2019 2314.0 1265.0 994.0 200.3 48.5 N/A * % Relative to local index Analyst 2020e N/A N/A N/A N/A N/A N/A Andrew Mitchell 2021e N/A N/A N/A N/A N/A N/A
Edison Insight | 25 February 2021 36 Sector: General retailers Lookers (LOOK) Price: 42.0p Market cap: £164m INVESTMENT SUMMARY Market LSE Lookers is the second largest UK new car retailer. Following the fraud investigation, FY19 results show revenues fell 1% to £4.8bn and Lookers reported an underlying PBT of £4.2m. Share price graph (p) For COVID-affected FY20, a £36.1m H120 underlying PBT loss has been followed by strong H220 trading. At 31 December 2020 net debt (ex leases) was around £45m (FY19 £59.5m). The shares resumed trading after H120 results were released on 29 January 2021. The ongoing disruption and uncertainties for car retailers in FY21 arising from Brexit and COVID-19 continue, although the vaccination programme and progressive lifting of Lockdown 3 should provide some hope for a more normal, if still challenged, trading environment.
INDUSTRY OUTLOOK
Company description Market dynamics favour larger motor dealership groups against smaller independent Lookers is vying to be the largest UK groups, which still command c 60% of the franchise market. Global manufacturing motor vehicle retailer, with its new car operations supported by the strength overcapacity still points to OEM support. However, the sector is normally rated for of used and aftersales activities. It recessions and economic shocks like these and survived a dramatic crisis for the sector in operates 148 franchises, representing 31 marques from 100 sites around the 2008/9. 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 100.0 100.0 (18.5) 2018 4828.3 117.1 42.8 8.41 5.0 1.3 Relative* 101.3 89.8 (10.1) 2019 4787.2 90.9 4.2 0.84 50.0 1.2 * % 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
Sector: General retailers Marshall Motor Holdings (MMH) Price: 145.0p Market cap: £113m 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. Trading in Q420 was more resilient than management expected despite the national lockdown during November. Building on the strong Q320 performance, management expect an adjusted FY20 PBT of at least £19m, c 27% higher than previous guidance. We increased our estimates accordingly, with an improved cash performance. Challenges remain for 2021 (Brexit/COVID-19 etc), and we assume a relatively flat year overall.
INDUSTRY OUTLOOK
Market dynamics favour larger motor dealership groups against smaller independent Company description groups, which still command c 60% of the franchise market. The large rating discount to the Marshall Motor is the seventh largest General Retailers Index is generally a reflection of concerns about economic recession. UK motor retailer, operating 117 franchises across 24 brands. It is one Shocks like the current COVID-19 pandemic are more challenging, but may throw up of six UK dealership groups that opportunities in the future. represent each of the top five volume and premium brands and has a strong 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 12.0 6.2 (7.6) 2018 2186.9 52.3 24.7 26.3 5.5 2.9 Relative* 12.7 0.8 1.9 2019 2276.1 52.0 22.1 22.9 6.3 2.6 * % Relative to local index Analyst 2020e 2129.8 53.3 19.1 19.2 7.6 1.4 Andy Chambers 2021e 2240.3 50.2 19.0 19.0 7.6 4.4
Edison Insight | 25 February 2021 37 Sector: Investment companies Mercia Asset Management (MERC) Price: 24.5p Market cap: £108m INVESTMENT SUMMARY Market AIM In its H121 results, with fee income (87% recurring) growing in line with growth in FUM (£722m, AUM £872m), Mercia delivered an adjusted operating profit of £1.1m and EPS of Share price graph (p) 1.87p, allowing management to declare a maiden interim dividend. Mercia has demonstrated real progress on its strategic plan to achieve operating profitability, expand AUM to £1bn and ‘evergreen’ the balance sheet by end FY22. Mercia’s shares trade at a material discount to NAV (H121: 34.1p/share) and an even larger discount once the 5–8p value of the FM business is reflected.
INDUSTRY OUTLOOK
Mercia's management has set out a clear vision for the company, with the acquisition of NVM’s VCT business accelerating Mercia's transition towards managing fee-paying Company description third-party funds. Among the early stage tech investors, discounts to NAV have been Mercia Asset Management is a closing and moving to premia in 2020. Transparency, growth, consistency of performance, regionally focused specialist asset manager. Its stated intent is to become capital preservation and investor returns 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 0.0 21.0 (3.9) 2019 10.7 (1.4) 3.0 1.00 24.5 N/A Relative* 0.6 14.8 6.0 2020 12.7 0.2 (15.5) (4.55) 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: Consumer support services Mondo TV (MTVI) Price: €1.23 Market cap: €54m INVESTMENT SUMMARY Market Milan Stock Exchange Mondo TV continues to report production, distribution and licensing deals that will drive its future revenue and profits, supported by the €10.5m funding agreed with Atlas Special Share price graph (€) Opportunities. Importantly, this includes the pre-sale of 52x 11-minute episodes of Grisù to Italian national broadcaster RAI, to be made in-house in 3D CGI, using the group’s upgraded studios in Tenerife. Completion is due in H222. Good international licensing deals are also being struck for MeteoHeroes and Sissi. 35 of the 42 Atlas bonds have now been converted, with the outstanding bonds likely to be converted in spring 2021.
INDUSTRY OUTLOOK
Global appetite for children’s TV content remains good - if anything strengthened by the impact of COVID-19, with animation benefiting from the reduced filming of live action. Company description Additional launches of new advertising and streaming video-on-demand platforms ensure Mondo TV is a global media group that the appetite for quality content remains high, with children’s content particularly valued focused on the production, acquisition and exploitation of animated children’s in order to attract household subscriptions. Licensing and merchandising markets are more television series. It owns the rights to difficult with household spending under pressure and lower advertising budgets. >1,600 TV episodes and films, which it distributes across 75 markets.
Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual (4.5) (19.5) (34.3) 2018 18.9 11.2 (30.1) (56.3) N/A 2.4 Relative* (7.4) (25.2) (27.8) 2019 23.1 16.4 6.2 11.3 10.9 8.4 * % Relative to local index Analyst 2020e 24.5 18.0 7.0 11.7 10.5 3.0 Fiona Orford-Williams 2021e 28.0 22.0 8.7 13.9 8.8 2.8
Edison Insight | 25 February 2021 38 Sector: General industrials Mytilineos (MYTI) Price: €12.80 Market cap: €1829m INVESTMENT SUMMARY Market Athens Stock Exchange Mytilineos is a leading industrial company with international presence in all five continents. Mytilineos’s FY20 results, published 4 February, showed a strong H2 turnaround. This not Share price graph (€) only demonstrates that the company's strategy is resilient and capable of withstanding headwinds from the ongoing pandemic, but also provides a platform for solid performance in 2021. Strong maturing pipelines of renewables (0.6GW own + €0.6bn third party) and sustainable engineering (>€1.5bn) projects should drive growth in these businesses. Mytilineos recently announced an acquisition of solar (1.5GW) development projects and 25 electricity storage projects for €56m. Also, it contracted a 10–15-year power purchase agreement for 33/MWh from 200MW of solar parks. The company held an environmental, social and governance summit on 18 February.
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 2.7 24.3 41.8 2019 2256.0 313.0 180.0 103.0 12.4 7.5 Relative* 5.1 11.2 66.4 2020 1899.0 315.0 N/A 91.0 14.1 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: 15.6p Market cap: £48m INVESTMENT SUMMARY Market LSE At the AGM in December, management noted that the group was continuing to deliver R&D services under a number of development programmes with different customers in the Share price graph (p) sensing and display markets. Good progress was made on the most significant of these projects, which is with ST Micro, during the period and management is currently negotiating the potential next phase. Financial performance during the period was in line with management's expectations. The group remains focused on new commercial revenues to sustain organic activities in H221 and beyond, with contingency plans in place if needed.
INDUSTRY OUTLOOK
The litigation against Samsung for patent infringement is proceeding in line with Company description expectations. A trial date has been set for October 2021, though this may be delayed by the Nanoco is a global leader in the pandemic. As expected, Samsung has submitted requests for Inter Partes Reviews of the development and manufacture of cadmium-free quantum dots and other patents relevant to the case with the US Patent Office and these are being managed as a nanomaterials. Its platform includes c normal part of the litigation process. Management remains confident that it will obtain a 740 patents. Focus applications are advanced electronics, displays, lighting positive outcome. 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 56.0 57.9 (46.4) 2019 7.1 (3.8) (5.0) (1.34) N/A N/A Relative* 57.0 49.9 (40.9) 2020 3.9 (2.9) (4.9) (1.38) N/A N/A * % Relative to local index Analyst 2021e 1.4 (2.9) (4.4) (1.14) N/A N/A Anne Margaret Crow 2022e 3.2 (1.3) (2.6) (0.65) N/A N/A
Edison Insight | 25 February 2021 39 Sector: Mining Newmont Corporation (NEM) Price: US$56.67 Market cap: US$45354m INVESTMENT SUMMARY Market New York Stock Exchange Newmont is the world’s largest gold mining company with forecast production of 6.5Moz in FY21 plus a further 1.3Moz AuE (at standardised prices) out of attributable (end-FY20) Share price graph (US$) 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, 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 in the form of Tanami Expansion 2, Ahafo North and Yanacocha Sulphides that we forecast will Company description result in a 47.4% increase in pre-financing cash flows at NEM to US$3.9bn (or Newmont has interests in 14 mines in US$4.83/share) by FY25, supporting both its market leading dividend and our valuation of North America, South America, Australia and West Africa, including the company of US$76.34/share (based on three methodologies). eight world-class assets (three within the Nevada Gold Mines jv plus Pueblo Viejo, Penasquito, Ahafo, Boddington and Tanami) and two emerging world-class assets (Merian and Yanacocha). Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual (8.4) (7.7) 22.7 2018e 7253.0 2160.0 738.0 134.7 42.1 N/A Relative* (10.9) (15.4) 6.4 2019e 9740.0 5954.0 3693.0 133.3 42.5 N/A * % Relative to local index Analyst 2020e 11492.0 5867.0 3283.0 239.6 23.7 N/A Charles Gibson 2021e 12737.0 6325.0 3612.0 273.0 20.8 N/A
Sector: General industrials Norcros (NXR) Price: 219.0p Market cap: £177m INVESTMENT SUMMARY Market LSE H121 revenues were in line with the pre-close update and underlying EBIT came through slightly stronger than we expected. UK mix effects contributed to this and while South Share price graph (p) African trading was more challenging, a positive contribution was a respectable outturn in our opinion. Cash flow was a particular highlight of H1 trading with a c £24m reduction in core net debt to just c £7m with a significant working capital inflow. As expected, no H1 dividend was declared. Our reinstated earnings estimates take a cautious view on the rate of recovery from COVID-19 affected FY21; we expect a broadly similar group trading outturn by FY23 to that delivered in FY20.
INDUSTRY OUTLOOK
RMI has been a stronger sub-sector during/exiting the UK COVID-19 lockdown phase while Company description new residential new-build gathered momentum more gradually. The South African economy Norcros is a leading supplier of has faced a number of challenges; wider distribution of wealth and an emerging middle showers, enclosures and trays, tiles, taps and related fittings and class should benefit consumer spending over time. Management's new (pre-COVID-19) accessories for bathrooms, kitchens, 2023 financial targets are to attain £600m revenue with a balanced UK/overseas split and to washrooms and other commercial environments. It has operations in the sustain a 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 1.9 12.9 (24.7) 2019 331.0 42.2 30.9 29.6 7.4 5.0 Relative* 2.5 7.2 (17.0) 2020 342.0 38.8 27.1 26.1 8.4 5.1 * % Relative to local index Analyst 2021e 289.0 30.7 19.5 18.8 11.6 4.6 Toby Thorrington 2022e 312.0 35.3 24.3 23.4 9.4 5.7
Edison Insight | 25 February 2021 40 Sector: Financials Numis Corporation (NUM) Price: 350.0p Market cap: £377m INVESTMENT SUMMARY Market LSE In February Numis reported that revenues in the first four months of FY21 (to end January) were c 50% ahead of the prior year, despite the absence of COVID-19-related fund-raising. Share price graph (p) The strength was more broadly based than seen in H220, with all areas of the business performing well. A number of high-value public and private capital markets transactions in the technology and digital consumer sectors contributed to the performance, pushing up average deal fees. Equities benefited from increased market confidence with strength in both institutional and trading income. Following this announcement and reflecting operational gearing we increased our FY21 pre-tax profit estimate by 30% to £37.3m.
INDUSTRY OUTLOOK
FY21 has started well with the pipeline still healthy. Nevertheless, the incidence of capital Company description markets transactions is always uncertain and we assume some normalisation of activity in Numis is one of the UK's leading capital markets and trading revenues in the second half of the year but, on a longer view, independent investment banking groups, offering a full range of the strength of the franchise and the investment the firm has made in resources to underpin research, execution, equity capital client service and growth are positive features. 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 P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 7.5 5.7 21.3 2019 111.6 15.3 12.4 8.1 43.2 N/A Relative* 8.2 0.4 33.8 2020 154.9 39.6 37.1 26.7 13.1 N/A * % Relative to local index Analyst 2021e 162.0 42.2 37.3 26.1 13.4 N/A Andrew Mitchell 2022e N/A N/A N/A N/A N/A N/A
Sector: Investment companies Ocean Wilsons Holdings (OCN) Price: 840.0p Market cap: £297m INVESTMENT SUMMARY Market LSE Ocean Wilsons Holdings (OCN) reported FY19 earnings of $46.9m (our forecast $37.9m), up 252% y-o-y, driven by strong investment returns from its investment portfolio. Wilsons Share price graph (p) Sons’ (WSON) EBITDA fell by 5% y-o-y and was in line with expectations. Although FY19 was not an easy year due to a sluggish Brazilian economy, competition and a slow Brazilian oil and gas sector, WSON still delivered a ROE of 6%. The firming up of prices in the under-pressure towage business was a key positive. The current 45% discount to a look-through valuation is above its long-term average in the mid-20s.
INDUSTRY OUTLOOK
The current oil price slump means a postponement of the recovery of Brazil’s deepwater pre-salt industry to 2021. This will affect businesses such as the offshore support Company description companies as well as towage. The coronavirus crisis initially hurt China and Asian shipping, Ocean Wilsons Holdings is an but the impact broadened as it became a pandemic. We have suspended our FY20 and investment company based in Bermuda. It has a controlling FY21 forecasts until we get more clarity on the impact of COVID-19. OCN cut its final shareholding in Wilson Sons, a quoted dividend (paid in June 2020) from $0.70 to $0.30. maritime services company in Brazil, and holds a portfolio of international investments.
Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual (4.0) 23.1 (15.6) 2018 460.2 156.0 60.2 37.6 30.8 2.6 Relative* (3.4) 16.8 (6.9) 2019 406.1 147.9 82.5 132.6 8.7 2.6 * % Relative to local index Analyst 2020e N/A N/A N/A N/A N/A N/A Pedro Fonseca 2021e N/A N/A N/A N/A N/A N/A
Edison Insight | 25 February 2021 41 Sector: Travel & leisure OPAP (OPAP) Price: €10.45 Market cap: €3568m INVESTMENT SUMMARY Market Athens Stock Exchange OPAP’s Q320 results showed a strong sequential improvement in revenue from Q220 as trading returned towards normality, which led to an improvement in profitability and free Share price graph (€) cash flow generation. Further regional lockdowns and a second full national lockdown from November led us to downgrade revenue forecasts for FY20 by c 15%. Most significantly, the new licence for Lotteries and Sports Betting from FY20–30 with reduced taxes on revenue, agreed in FY11, became effective in October 2020 with no reaction from the Greek government, leading to significant upgrades to our forecasts for EBITDA, free cash flow and distributions to shareholders in FY21.
INDUSTRY OUTLOOK
The Hellenic Gaming Commission estimates that the total legal Greek gaming market Company description amounted to €2.2bn GGR in 2019, of which OPAP games comprised €1.36bn GGR. OPAP was founded in 1958 as the OPAP's other activities (lottery games and horse racing betting) took its total Greek GGR to Greek national lottery and it is the exclusive licensed operator of all €1.54bn. Revenue from land-based casinos comprised an estimated €247m and total legal numerical lotteries, sports betting and online amounted to €437m for the overall market. Regulation of the online gaming market is horse racing. OPAP listed in 2001 and was fully privatised in 2013. Sazka currently underway. Group has a 41.7% 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 (5.3) 22.5 (13.6) 2018 1547.0 356.6 238.0 52.57 19.9 N/A Relative* (3.0) 9.6 1.4 2019 1619.9 411.2 286.6 67.69 15.4 N/A * % Relative to local index Analyst 2020e 1155.0 269.6 123.8 27.11 38.5 N/A Russell Pointon 2021e 1656.0 658.5 489.3 104.20 10.0 N/A
Sector: Technology Osirium Technologies (OSI) Price: 24.0p Market cap: £5m INVESTMENT SUMMARY Market AIM Osirium expects to report FY20 bookings ahead of our forecast, with revenue in line. FY20 bookings will exceed £1.55m versus our £1.51m forecast. FY20 revenue will be at least Share price graph (p) £1.4m (our forecast £1.4m). End FY20 cash stood at £1.4m (versus our £0.7m) and deferred income at £1.5m (our forecast £1.5m).The flurry of contracts announced in Q4 reflects the pick-up in order activity after COVID-19 depressed activity in Q2/Q3. Management is confident that the momentum achieved in Q4 will continue into FY21. We maintain our forecasts pending FY20 results. Osirium recently announced that it had been granted a patent in the US for its shadow authentication technology.
INDUSTRY OUTLOOK
The market for privileged access management (PAM) software is currently worth US$2.2bn Company description and is forecast to grow to US$5.4bn by 2025 (source: KuppingerCole), with demand driven UK-based Osirium Technologies by regulation, the shift to the cloud and adoption spreading to smaller organisations. The designs and supplies subscription-based cybersecurity complexity of established solutions means fewer mid-market businesses use PAM software software. Its PAM platform includes than enterprises, so this is a market ripe for development. 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 (4.0) 14.3 2.1 2018 1.0 (1.8) (2.7) (18.14) N/A N/A Relative* (3.4) 8.5 12.7 2019 1.2 (2.2) (3.5) (19.45) N/A N/A * % Relative to local index Analyst 2020e 1.4 (1.9) (3.7) (15.97) N/A N/A Katherine Thompson 2021e 1.7 (1.8) (3.8) (16.54) N/A N/A
Edison Insight | 25 February 2021 42 Sector: Financials OTC Markets Group (OTCM) Price: US$38.01 Market cap: US$444m INVESTMENT SUMMARY Market OTC QX OTCM Q320 results showed revenue +13% y-o-y, 6% ahead of our estimate. Divisionally, OTC Link was up 28% on strong trading volumes; Market Data Licensing was up 18% on Share price graph (US$) price and user number increases; and Corporate Services was up 1% but above our estimate. Positively, new client additions for OTCQX and OTCQB markets increased strongly versus Q120 and Q220 and OTCQB has made net additions since Q320. Operating costs were up 7% allowing pre-tax profit to increase by 15% to $5.4m and net earnings by 11%. A quarterly dividend of $0.15 (unchanged) and a special dividend of $0.65 (the same as 2019) were announced. Following the results we raised our EPS estimates by 9% and 16% for FY20 and FY21 respectively.
INDUSTRY OUTLOOK
Company description Looking ahead, we assume trading activity levels will normalise at some point, potentially OTC Markets Group operates the reducing OTC Link revenues. However, the Corporate Services segment is set to benefit OTCQX, OTCQB and Pink financial markets for over 11,000 US and global from fee increases of 15% or more for corporate clients in both its premium markets in FY21 securities. OTC Link LLC, a member of and may also sustain the improvement in client additions seen recently. Over 80% of FINRA, operates OTC Link ATS and OTC Link ECN, both SEC-registered revenues are subscription-based. On a longer view, the group keeps its focus on delivering Alternative Trading Systems. In 9M20 c 84% of revenues were of a better informed and more efficient markets. subscription-based recurring nature. Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual 8.6 12.6 11.0 2018 59.3 20.7 19.8 136.3 27.9 18.0 Relative* 5.6 3.3 (3.8) 2019 62.8 19.4 18.0 124.7 30.5 19.3 * % Relative to local index Analyst 2020e 68.9 21.9 20.2 141.5 26.9 17.9 Andrew Mitchell 2021e 70.4 23.0 21.3 144.1 26.4 16.5
Sector: Property Palace Capital (PCA) Price: 190.0p Market cap: £88m INVESTMENT SUMMARY Market LSE In late January, PCA reported continuing robust rent collection, continuing the H121 trend, although COVID-19 had slowed letting activity in the period, reducing both rent roll and Share price graph (p) rental income. H121 adjusted PBT was £3.4m (H120: £3.9m) and adjusted EPS 7.3p, 1.46x the 5.0p of DPS declared in the period. Net revaluation losses of £10.0m reflected COVID-19 and the lag in capex recognition until completion and letting with EPRA NAV per share of 347p (FY20: 364p). The Hudson Quarter development was reported to be on track for completion by end-FY21 and is a key driver of our forecasts for the following two years. Residential pre-sales were continuing and occupier interest in the commercial space was good.
INDUSTRY OUTLOOK
Company description The commercial property market is cyclical, historically exhibiting substantial swings in Palace Capital is a UK property valuation through cycles while income returns have been more stable, but still fluctuating investment company. It is not sector-specific and looks for according to tenant demand and rent terms. The pandemic and Brexit contribute to a highly opportunities where it can enhance uncertain UK economic outlook and while the supply demand balance for regional office and long-term income and capital value through asset management and industrial property has hitherto remained generally firm the weakness that was previously strategic capital development in locations outside London. confined to the retail sector is likely to continue to broaden. Y/E Mar Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual (1.2) (7.3) (40.5) 2019 18.8 12.4 8.9 17.3 11.0 N/A Relative* (0.5) (12.0) (34.4) 2020 21.1 14.6 8.0 17.5 10.9 N/A * % Relative to local index Analyst 2021e 16.7 10.0 6.7 14.5 13.1 N/A Martyn King 2022e 17.2 10.3 6.9 14.9 12.8 N/A
Edison Insight | 25 February 2021 43 Sector: Mining Pan African Resources (PAF) Price: 18.9p Market cap: £364m INVESTMENT SUMMARY Market AIM Pan African (PAF) produced a forecast beating 179.6koz gold in FY20, resulting in net debt declining by 52.6% in H220 alone to just US$62.0m and allowing it to increase its dividend Share price graph (p) more than five-fold such that it is among the top 20 yielding precious metals companies, globally. Since then, in a record H121, EPS has almost doubled again to 2.11c/share after production of 98.4koz (cf guidance of 190koz for FY21).
INDUSTRY OUTLOOK
With the 8 Shaft pillar project having now achieved steady state, near-term development opportunities for PAF include Egoli (ZAR2.01bn NPV and 50.1% IRR), which has now been sanctioned, the Prince Consort shaft pillar, the Fairview sub-vertical shaft (adding 7–10koz to production pa) and the Royal Sheba project (c 30koz pa). In the meantime, its acquisition Company description of two Mintails assets holds out the possibility that it could develop another Elikhulu. Until Pan African Resources has three then, we value PAF at 40.48c/share (31.31p/share) plus the value of c 19.2m underground major producing precious metals assets in South Africa: Barberton Witwatersrand oz (estimated 0.22–5.24c/share). (target output 95koz Au pa), the Barberton Tailings Retreatment Project (20koz) and Elikhulu (55koz), now incorporating the Evander Tailings Retreatment Project (10koz). Y/E Jun Revenue EBITDA PBT EPS P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual (22.9) (8.7) 51.7 2019 218.8 65.5 37.1 1.64 15.9 8.4 Relative* (22.4) (13.3) 67.3 2020 274.1 115.2 80.8 3.78 6.9 6.9 * % Relative to local index Analyst 2021e 307.9 153.6 129.5 6.42 4.1 4.0 Charles Gibson 2022e 316.0 164.5 142.1 6.42 4.1 3.1
Sector: General industrials paragon (PGN) Price: €10.02 Market cap: €45m INVESTMENT SUMMARY Market Xetra The market disruptions developed rapidly due to COVID-19 and management focused on mitigating its impact. The sale process of its remaining stake in Voltabox now looks likely to Share price graph (€) be more protracted but it is to be accounted for as discontinued. In Q320 paragon's continuing Automotive sales rose 9%, and ytd sales are €83.8m with an EBITDA margin of 9%. The reported 9M20 EBIT loss was €6.5m, a modest year-on-year improvement in Q320 benefiting from previous cost reduction measures, as well as management's COVID-19 mitigation efforts. Management has indicated sales for Automotive for FY20 should be c €120m with potential for €125m and a 12% EBITDA margin.
INDUSTRY OUTLOOK
We believe paragon's identification of, and investment in, solutions to address megatrends Company description in global automotive and electromobility markets is understood by the capital markets. It is paragon designs and supplies growing substantially faster than its markets due to innovative products that are driving automotive electronics and solutions, selling directly to OEMs, including changes in customer perceptions, creating new growth engines for the group. These should sensors, interior, digital assistance and reassert themselves when the COVID-19 pandemic wanes. body kinematics. Production facilities are in Germany, the US and China. It retains 58% 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 0.9 9.3 (48.4) 2018 187.4 30.3 14.8 144.58 6.9 N/A Relative* (0.4) 2.2 (49.2) 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 | 25 February 2021 44 Sector: Property Phoenix Spree Deutschland (PSDL) Price: 334.5p Market cap: £321m INVESTMENT SUMMARY Market LSE Resolution of the legal challenge to the Berlin rent-cap law will determine Phoenix Spree Deutschland's (PSD’s) strategy for extracting the value embedded in its portfolio. PSD and Share price graph (p) its advisers firmly believe the cap is unconstitutional and will ultimately be repealed during H121; and in this case, we expect a return to focusing on capturing reversionary rent potential to drive income and capital growth. If not repealed, we expect a significant reduction in recurring income and a focus on accelerated condominium sales and increased disposal gains to realise embedded value. H220 condominium sales increased strongly at a healthy c 20% average premium to book value, with disposal proceeds supporting share repurchases at an accretive c 30% discount to NAV. The FY20 external portfolio valuation, assuming the rent cap is in place for 5 years, showed 6.3% like for like growth and PSD expects the FY20 NAV per share to be in the range of €5.27–5.33, above our €5.14 Company description forecast. PSD is a long-term investor in mid-market residential property in INDUSTRY OUTLOOK Berlin. Its core strategy is to acquire unmodernised apartment blocks that With strong demand for housing in Berlin driven by net migration and a relative lack of may be improved to the benefit of tenants, generating attractive returns supply, free market rents and capital values have steadily increased. The rise in for shareholders based on improved rents and capital values. condominiums market values appears to be continuing. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual (2.5) 5.2 4.5 2018 22.7 65.9 56.4 45.57 8.4 44.5 Relative* (1.9) (0.2) 15.3 2019 22.6 44.6 28.6 21.83 17.5 278.4 * % Relative to local index Analyst 2020e 24.1 33.4 23.7 19.18 19.9 80.2 Martyn King 2021e N/A N/A N/A N/A N/A N/A
Sector: Financials Picton Property Income (PCTN) Price: 87.0p Market cap: £476m INVESTMENT SUMMARY Market LSE With continuing strong rent collection and progress with leasing, Q321 DPS increased 14% to 0.8p (an annualised 3.2p), following the 12% increase in Q221 DPS to 0.7p. EPRA NAV Share price graph (p) per share increased 3.0% to 95.5p (Q220: 92.7p) reflecting a 2.7% like-for-like increase in portfolio value, driven by the industrial assets that make up c 52% of the portfolio. Q321 NAV total return was 3.7% and DPS paid was 122% covered by EPRA earnings which included additional provisions against outstanding rents. Net LTV remains low (21.3%) with £50m of undrawn borrowing facilities available and the portfolio continues to offer significant opportunities to grow income, primarily through void reduction (end-Q321 occupancy steady at 90%) from leasing recently refurbished assets.
INDUSTRY OUTLOOK
Company description The commercial property market is cyclical, historically exhibiting substantial swings in Picton Property Income is an internally valuation through cycles while income returns have been more stable, but still fluctuating managed UK REIT that invests in a diversified portfolio of commercial according to tenant demand and rent terms. The pandemic and Brexit contribute to a highly property across the UK. It is total uncertain UK economic outlook and while the supply demand balance for regional office and return driven with a strong income focus and aims to generate attractive industrial property has hitherto remained generally firm the weakness that was previously returns through proactive management of the portfolio. confined to the retail sector is likely to continue to broaden. Y/E Mar Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 5.1 18.5 (14.2) 2019 38.3 32.5 31.4 4.25 20.5 13.5 Relative* 5.7 12.5 (5.4) 2020 33.6 28.1 22.4 3.66 23.8 22.2 * % Relative to local index Analyst 2021e 32.7 27.7 10.2 3.60 24.2 20.3 Martyn King 2022e 33.9 28.3 20.4 3.74 23.3 15.5
Edison Insight | 25 February 2021 45 Sector: General industrials PIERER Mobility (PMAG) Price: €69.00 Market cap: €1555m 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. It has Share price graph (€) added e-bikes as a new organic growth stream as urban e-mobility markets continue to develop. Strong global demand for motorcycles and e-bikes continued in H220. Production was increased to meet demand and recovered most of the volume lost in H120. FY20 sales of €1.53bn beat revised guidance with operational gearing expected drove FY20 EBIT of €107.2m, a margin of 7% despite the pandemic. Management expects the positive trends to continue in FY21.
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 0.7 24.3 42.6 2019 1520.0 241.0 118.0 241.8 28.5 6.0 Relative* 1.0 5.0 48.8 2020 1530.0 239.0 91.0 155.1 44.5 5.0 * % Relative to local index Analyst 2021e 1829.0 306.0 143.0 262.1 26.3 7.9 Andy Chambers 2022e 2014.0 335.0 168.0 312.9 22.1 5.6
Sector: Technology Piteco (PITE) Price: €11.65 Market cap: €235m INVESTMENT SUMMARY Market Borsa Italiana FY20 had an excellent start, although the COVID-19 pandemic subsequently slowed down progress. Piteco SpA once again generated good revenue and EBITDA growth in H1, of Share price graph (€) 11% and 24%, respectively. While Piteco’s products can help steer financial and treasury decision-making at times of crisis, at the height of lockdown, the acquisition of new clients slowed. During H1 Piteco acquired EveryMake for an initial €0.55m in cash, which has been integrated into the Piteco SpA business. A new product in the data matching space was launched in H2. Piteco continues to trade at a discount to its international software peers. FY20 results are due on 24 March.
INDUSTRY OUTLOOK
Piteco is the leading player in the Italian treasury management systems (TMS) market. TMS Company description are software solutions used by corporate treasuries and finance departments to manage Piteco is Italy’s leading company in transactions and support decision-making. The software and ICT solutions market in Italy is designing, developing and implementing software for treasury, valued at €6.3bn (Assinform 2016). A small slice of this (Piteco suggests c 5%) represents finance and financial planning the treasury and financial planning software market. IDC forecasts the worldwide treasury management. and risk management applications market to grow by 4.9% to reach $2.7bn in 2022.
Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual 3.1 30.3 84.9 2018 20.2 8.3 6.1 31.49 37.0 N/A Relative* 0.0 21.1 103.1 2019 24.0 10.2 6.7 33.47 34.8 N/A * % Relative to local index Analyst 2020e 25.9 11.0 8.6 40.39 28.8 N/A Sara Welford 2021e 28.3 12.2 9.9 45.61 25.5 N/A
Edison Insight | 25 February 2021 46 Sector: General industrials Polypipe (PLP) Price: 555.0p Market cap: £1372m INVESTMENT SUMMARY Market LSE After a positive end to FY20 Polypipe has made an active start to FY21. The £210 acquisition of ADEY (part funded by a c £96m gross new equity raise) is a significant step Share price graph (p) and fits well with the company’s product portfolio (which now also includes Nu-Heat), market positions and its sustainable water/climate management business strategy. ADEY is the UK’s leading provider of protection solutions for water-based heating systems, mainly for residential use, and has a profitable growth track record. Polypipe management had earlier flagged expected FY20 EBIT ‘slightly ahead of £40m’ and the full year results are to be announced on 16 March. Our estimates are under review.
INDUSTRY OUTLOOK
The Construction Products Association estimates that sector activity contracted by c 14% Company description overall in 2020 and expects this to be followed by a similar percentage rise in output in Polypipe is a leading supplier of largely 2021, followed by almost 5% in 2022. plastic building products and systems. Operations in the UK (c 90% of revenue) address a broad range of 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 5.7 13.0 (10.3) 2018 433.2 90.6 67.1 28.1 19.8 12.3 Relative* 6.4 7.3 (1.1) 2019 447.6 99.1 70.6 29.1 19.1 12.4 * % Relative to local index Analyst 2020e N/A N/A N/A N/A N/A N/A Toby Thorrington 2021e N/A N/A N/A N/A N/A N/A
Sector: Property Primary Health Properties (PHP) Price: 149.0p Market cap: £1977m INVESTMENT SUMMARY Market LSE Reflecting the low risk business model, FY20 results produced no surprises. With a Q121 DPS of 1.55p already declared, annualising at 6.2p (+5.1%), PHP is now in its 25th year of Share price graph (p) consistent DPS growth. FY20 adjusted NTA per share increased to 112.9p (FY19: 107.9p) and including DPS paid the total return was 10.1%. FY21 will benefit from continuing acquisitions, development completions, asset management projects and underlying rent growth. Management internalisation is expected to deliver cost savings of c £4.0m pa and allow shareholders to fully benefit from further portfolio growth. The investment pipeline is strong and the PHP has significant funding headroom.
INDUSTRY OUTLOOK
The sector enjoys strong income visibility, with long leases and upwards-only rents, 90% Company description backed directly or indirectly by government bodies, with little exposure to the economic Primary Health Properties is a cycle, or fluctuations in occupancy. Healthcare planning, with broad political support, long-term investor in primary healthcare property in the UK and the already suggests strong underlying demand for modern healthcare properties in both the Republic of Ireland. Assets are mainly UK and the Republic of Ireland while the pandemic highlights existing pressures and may long-let to GPs and the NHS or the HSE, organisations backed by the UK well lead to increased healthcare spending over the longer term. and Irish governments, respectively.
Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 2.1 2.3 (8.5) 2018 76.4 66.5 36.8 5.2 28.7 15.4 Relative* 2.7 (2.9) 1.0 2019 115.7 103.4 59.7 5.4 27.6 17.3 * % Relative to local index Analyst 2020e 131.7 118.6 73.2 5.7 26.1 15.8 Martyn King 2021e 138.6 124.8 77.5 5.8 25.7 15.9
Edison Insight | 25 February 2021 47 Sector: Financials ProCredit (PCZ) Price: €8.35 Market cap: €492m INVESTMENT SUMMARY Market FRA ProCredit (PCB) has extensive experience in supporting SMEs in emerging economies (coupled with a strong ESG profile), with a focus on Southeastern (SEE) and Eastern Share price graph (€) Europe (EE) and banking operations in Ecuador. It has recently streamlined its business, involving a digital direct bank strategy for private clients and a reduced branch network and headcount. While lately PCB’s return on equity has been below peers, we underline its relative stability throughout the cycle and believe that its mid-term ROE and CIR targets of 10% and below 60%, respectively, are achievable (close to our FY24 forecasts).
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 is expected to have triggered a recession with the Company description IMF forecasting a 2.8% decline in Emerging and Developing Europe, rebounding to c 4.0% ProCredit Holding is a Germany-based growth in 2021. PCB’s in-depth, impact-oriented relationships with SME borrowers (94% of group operating regional banks across Southeastern and Eastern Europe, as loan book at end-Q320), prudent credit risk management and solid capital base (CET-1 ratio well as in Ecuador. The banks focus of 14.1% at end-Q320) should help reduce the impact of macro headwinds. Longer term, on small and mid-size enterprises (SMEs) and private middle-income and PCB’s business should be assisted by the low banking sector penetration in the region (with high earners. At end-September 2020, the group’s total assets stood at a loan book to GDP of 40–45% on average vs over 70% in Western Europe). €7.1bn. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual 19.3 39.2 16.0 2018 245.4 N/A 77.5 90.0 9.3 N/A Relative* 17.8 30.1 14.3 2019 252.6 N/A 76.9 89.0 9.4 N/A * % Relative to local index Analyst 2020e 222.1 N/A 51.0 70.1 11.9 N/A Milosz Papst 2021e 238.7 N/A 64.0 87.3 9.6 N/A
Sector: General industrials Quadrise Fuels International (QFI) Price: 3.2p Market cap: £36m INVESTMENT SUMMARY Market AIM Recent independent tests on Quadrise's new bioMSAR fuel variant demonstrate a reduction in NOx emissions in the order of 20–25% compared to diesel and no loss of efficiency, Share price graph (p) making bioMSAR a viable candidate for fossil fuel replacement in larger engines. At present, the main lower-carbon alternative to HFO for shipping applications is liquefied natural gas (LNG). bioMSAR offers similar CO2 reductions (20–30%) to LNG without the need to invest in expensive cryogenic storage and liquefaction systems or the risk of methane escaping during use. The new bioMSAR variant provides a potential route for MSAR adopters to reduce their CO2 emissions, which should in our opinion help increase Quadrise’s market opportunity and the speed and scale of market penetration.
INDUSTRY OUTLOOK
Company description Quadrise has also advised that it expects the phase 2 study and the industrial-scale trial for Quadrise Fuels International is the the client in Morocco to be completed during calendar H121, subject to its personnel being innovator, supplier and global licensor of disruptive residual oil technology able to gain safe access to the test sites. While it is still waiting to receive samples for that produces a synthetic, enhanced laboratory testing prior to an on-site trial in the US, the other elements are ready to enable heavy fuel oil called MSAR. The technology enables refiners to produce this trial to complete in calendar H121 as well. 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 51.3 70.7 16.4 2019 0.0 (2.8) (3.0) (0.32) N/A N/A Relative* 52.3 62.0 28.4 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 | 25 February 2021 48 Sector: Aerospace & defence RADA Electronic Industries (RADA) Price: US$14.21 Market cap: US$621m INVESTMENT SUMMARY Market NASDAQ With a growing order backlog, significant operating leverage, improving working capital and an eye on new vertical markets, RADA is in our view a compelling proposition. Our revenue Share price graph (US$) forecasts remain broadly unchanged following full year results. However, we have increased our EPS forecasts by 64.5% in 2021 and by 66.3% in 2022 as operating leverage becomes increasingly apparent. We have increased our valuation to $17 from $12, supported by our DCF model and PEG ratio analysis.
INDUSTRY OUTLOOK
While defense spending could be pressured due to a less hawkish incoming US administration and COVID-19-related factors, RADA’s markets are deemed priorities and as such are likely to remain broadly unaffected. RADA’s participation in major multi-year Company description programs increases visibility as it transforms into a supplier to the US Army for long-term RADA Electronic Industries develops, programs rather than on an urgent needs basis. manufactures, markets and sells defence electronics to various armed forces and companies worldwide. It offers military avionic systems and land-based tactical radars for defence forces and critical infrastructure protection solutions. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual 40.4 84.5 141.7 2019 44.3 0.4 (1.1) (2.01) N/A N/A Relative* 36.5 69.2 109.5 2020 76.2 9.7 7.1 16.40 86.6 94.7 * % Relative to local index Analyst 2021e 120.8 23.8 21.3 48.65 29.2 45.7 Will Manuel 2022e 157.1 31.7 30.1 66.47 21.4 26.2
Sector: Property Raven Property Group (RAV) Price: 29.0p Market cap: £170m INVESTMENT SUMMARY Market LSE The H120 underlying performance was robust, with occupancy increased (from 90% to 93%) and rent collection strong (at 99%), although headline results were affected by FX Share price graph (p) movements. We expect similar trends in H220 and anticipate that stronger sterling (versus both the rouble and US dollar) will have a negative impact on our published forecasts (based on an end-FY20 exchange rate of £:R98). We will adjust our forecasts when the FY20 results are released on 15 March. Following the re-designation of convertible preferred shares into new ordinary and preference shares in September – a proposed complex transaction provisionally agreed with major shareholder Invesco, and subject to shareholder approval – a significant overhang from both the ordinary shares and listed preference shares will be removed from the market.
INDUSTRY OUTLOOK Company description Raven Property Group (formerly Although the pandemic has had a negative impact on the Russian economy it has Raven Russia) invests mainly in Class A warehouses in Russia. It also owns accelerated structural distribution shifts. Agents indicate a continuing healthy positive three office buildings in St Petersburg, demand-supply balance in the warehouse sector, with speculative development being a third-party logistics company in Russia and a residential development deferred. company in the UK.
Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 5.1 7.2 (39.0) 2018 118.3 N/A 26.2 3.1 9.4 N/A Relative* 5.7 1.8 (32.7) 2019 126.5 N/A 53.7 7.7 3.8 N/A * % Relative to local index Analyst 2020e 113.3 N/A (10.7) (4.0) N/A N/A Martyn King 2021e 106.4 N/A 24.9 2.7 10.7 N/A
Edison Insight | 25 February 2021 49 Sector: Financials Record (REC) Price: 65.0p Market cap: £129m INVESTMENT SUMMARY Market LSE Record’s end-Q321 (December) AUME stood at $74.6bn or £54.6bn, growth of 13% or 7% respectively since end September. This reflected a $5.1bn AUME net inflow; an increase of Share price graph (p) $2.4bn from FX moves and scaling to match mandate volatility targets; and a $1.2bn uplift from market movements affecting underlying assets. Within the $5.1bn inflow, the largest movement was $4.7bn arising from the large dynamic hedging mandate announced in September (a balance of c $2.3bn is likely to be included over the next two quarters). Following the update we increased our FY21 and FY22 EPS estimates by 8% and 17% respectively.
INDUSTRY OUTLOOK
The increase in AUME in Record’s third quarter confirms a rapid build-up in the large Company description dynamic hedging mandate (c $7bn) which accounts for a large part of the 18% increase in Record is a specialist independent revenue we estimate for FY22. With the soon-to-be-launched Currency Impact Fund it will currency manager that provides a number of products and services, also contribute to a greater diversity of income. Other new products are in development. including passive and dynamic Deployment of new software and technology services is making progress and will both hedging, and a range of currency for return strategies, including funds and enable new product offerings and deliver efficiency savings. 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 45.1 66.7 71.7 2019 25.0 8.2 8.0 3.25 20.0 18.3 Relative* 46.0 58.2 89.4 2020 25.6 8.5 7.7 3.26 19.9 19.6 * % Relative to local index Analyst 2021e 25.5 7.2 6.3 2.61 24.9 24.3 Andrew Mitchell 2022e 30.1 11.3 10.4 4.29 15.2 14.6
Sector: Property Regional REIT (RGL) Price: 76.1p Market cap: £328m INVESTMENT SUMMARY Market LSE The Q420 DPS has been confirmed at 1.50p as previously indicated, taking the FY20 total to 6.4p. Detailed annual results will be released on 25 March but the company has Share price graph (p) previously indicated it expected FY20 DPS to be fully covered by EPRA earnings. Underpinning this, rent collection has continued to strengthen with 97.8% of FY20 rents due already collected or agreed to be collected and expected to increase further. EPRA occupancy and gross rents roll both slightly increased from H120. The end-FY20 portfolio valuation was £732.4m (FY19: £787.9m) with the reduction primarily reflecting a 7.2% like-for-like decline in valuations (of which 2.9% in H220). LTV of 40.8% was broadly in line with target.
INDUSTRY OUTLOOK
Company description The commercial property market is cyclical, historically exhibiting substantial swings in Regional REIT owns a highly valuation through cycles while income returns have been more stable, but still fluctuating diversified commercial property portfolio of predominantly offices and according to tenant demand and rent terms. The pandemic and Brexit contribute to a highly light industrial units located in the uncertain UK economic outlook and while the supply demand balance for regional office and regional centres of the UK. It is actively managed and targets a total industrial property has hitherto remained generally firm the weakness that was previously shareholder return of at least 10% with a strong focus on income. confined to the retail sector is likely to continue to broaden. Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual (2.2) (5.7) (37.8) 2018 54.4 36.8 67.9 7.5 10.1 N/A Relative* (1.6) (10.5) (31.4) 2019 55.0 44.1 26.3 7.8 9.8 N/A * % Relative to local index Analyst 2020e 53.3 41.8 (24.4) 6.5 11.7 N/A Martyn King 2021e 53.3 42.4 28.8 6.7 11.4 N/A
Edison Insight | 25 February 2021 50 Sector: Oil & gas Renergen (RENJ) Price: ZAR18.86 Market cap: ZAR2216m INVESTMENT SUMMARY Market JSE Renergen secured final funding for Phase 1 of its Virginia Gas Project in H219. The project is now in the development phase, major equipment orders have been placed and first liquid Share price graph (ZAR) production of both LNG and helium is now expected in H221 (reflecting some delays due to Covid-19). In January 2021 Renergen awarded contracts with three companies to carry out engineering studies for Phase 2, to be completed around Q221. Our risked NAV stands at ZAR23.9/share, although this does not reflect the COVID-19-related project delays. 2020 saw a number of wells drilled, including a horizontal exploration well, and an inclined well which was designed as a production well but was abandoned due to drilling issues. Drilling at the re-drill well, P2V2, is ongoing, albeit at a slower rate than expected and results are now expected in Q121. An independent estimate from Sproule from 1 July 2020 estimates that the Virginia Project holds 2U (P50) prospective helium resources of 106bcf. Global Company description helium demand is c 6bcf/pa. Renergen is an emerging producer of helium and liquefied natural gas INDUSTRY OUTLOOK (LNG), with existing production and sales of compressed natural gas. Renergen is targeting the heavy-duty LNG truck market which is a rapidly evolving market globally. Meanwhile helium prices are likely to remain buoyant following the shutdown of the US strategic reserve in 2018. Y/E Feb Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (ZARm) (ZARm) (ZARm) (c) (x) (x) % 1m 3m 12m Actual 47.9 53.8 25.7 2018 2.9 (26.9) (27.1) (0.3) N/A N/A Relative* 39.5 29.4 8.0 2019 3.0 (43.2) (46.9) (0.5) N/A N/A * % Relative to local index Analyst 2020e N/A N/A N/A N/A N/A N/A Ian McLelland 2021e N/A N/A N/A N/A N/A N/A
Sector: General industrials Renewi (RWI) Price: 39.9p Market cap: £319m INVESTMENT SUMMARY Market LSE A Q3 update reaffirmed Renewi’s existing FY21 expectations, with an underlying mix modestly more in favour of Commercial activities – which improved slightly y-o-y - offsetting Share price graph (p) a slower than planned ramp up of thermally treated soil shipments. Cash generation appears to have been very good in Q3 also and – notwithstanding some outflow in Q4 - the year-end net debt position could well be below our current projection (of pre IFRS 16 core net debt of c £424m). The reassuring update confirmed the resilience of waste stream activities with full year and strategic aspirations maintained.
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 (fd) P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual (4.3) 43.8 (1.5) 2019 1780.7 179.7 63.1 6.0 7.6 4.2 Relative* (3.7) 36.5 8.7 2020 1775.4 167.1 54.3 5.4 8.4 2.2 * % Relative to local index Analyst 2021e 1587.1 133.3 22.2 2.0 22.8 2.1 Toby Thorrington 2022e 1691.3 159.0 46.4 4.3 10.6 2.5
Edison Insight | 25 February 2021 51 Sector: Technology Riber (ALRIB) Price: €1.54 Market cap: €33m INVESTMENT SUMMARY Market Euronext Paris Riber has announced that FY20 revenues will total €30.2m, which was in line with its guidance of around €30m and our estimates. The year-end order Share price graph (€) book is around half the prior year level, reflecting delays in customers signing contracts and difficulties obtaining export licences. We left our FY20 estimates broadly unchanged but cut our FY21 revenue estimate by 9% and EPS estimate by 56%.
INDUSTRY OUTLOOK
FY20 revenues were €3.2m lower year-on-year at €30.2m. Ten MBE systems were shipped compared with 12 in FY19, though the FY19 total included two MBE systems where deliveries had slipped into Q119. As expected, evaporator sales Company description were minimal (€0.3m), compared with €1.0m in FY19, as the pause in investment in Riber designs and produces molecular the OLED screen industry continued. Sales of services and accessories jumped by beam epitaxy (MBE) systems and evaporator sources and cells for the €2.3m to €11.7m, reflecting management’s stated strategy of growing this activity. semiconductor industry. This Total revenues would have been over €31m had the French government not equipment is essential for the manufacturing of compound refused export licences for R&D systems and certain types of spares to China. 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 (2.8) (8.1) (18.7) 2018 31.3 3.3 2.0 6.59 23.4 N/A Relative* (5.3) (12.8) (13.9) 2019 33.5 2.5 1.8 6.16 25.0 N/A * % Relative to local index Analyst 2020e 30.2 1.5 0.0 0.11 1400.0 N/A Anne Margaret Crow 2021e 29.1 2.4 0.9 2.98 51.7 N/A
Sector: Financials S&U (SUS) Price: 2250.0p Market cap: £273m INVESTMENT SUMMARY Market LSE S&U released its year-end update in February. Advantage motor finance has continued to see strong demand with record loan application numbers. Prudent underwriting criteria Share price graph (p) meant that the H2 new deal level was similar to H1 giving a total for the year of c 15,600 compared with the pre-COVID-19 level of 23,300 for FY20. Collections remained strong leaving year-end net receivables at £247m compared with £281m at end FY20. Aspen property bridging is making strong progress, benefiting from a resilient residential market and the experience and reputation the business is building. Net receivables stood at £34m compared with £21m at end FY20. Experienced new staff have been added to support growth.
INDUSTRY OUTLOOK
Company description The group is planning for a strong rebound in motor finance transaction volume once S&U’s Advantage motor finance lockdown restrictions ease and also a substantial increase in Aspen lending. The bounce business lends on a simple HP basis to lower- and middle-income groups back seen in motor finance between lockdowns and the resilience of the residential property who may have impaired credit records market thus far provide encouragement here. A prospective recovery in lending volumes restricting access to mainstream products. It has c 63,000 customers. should become progressively more apparent in results during FY22 and FY23. 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 0.9 26.9 (10.0) 2019 83.0 39.5 34.6 232.0 9.7 25.6 Relative* 1.5 20.5 (0.7) 2020 89.9 40.4 35.1 239.4 9.4 54.6 * % Relative to local index Analyst 2021e 82.0 22.8 18.4 122.7 18.3 8.4 Andrew Mitchell 2022e 82.0 28.5 23.8 158.9 14.2 N/A
Edison Insight | 25 February 2021 52 Sector: General retailers SandpiperCI Group (SANDPI) Price: 82.0p Market cap: £82m 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, while the tax differential between the Channel Islands and the rest of the UK allows it to arbitrage the additional logistics and employment costs. It owns a high-quality freehold property portfolio, valued at £60m in January 2020, which provides a barrier to entry for the competition. Over the last three years, Sandpiper has witnessed revenue CAGR of 6.6% and trading EBITDA CAGR of 16.7%. 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. 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 2019 189.1 10.0 3.8 3.04 27.0 17.0 Relative* N/A N/A N/A 2020 188.5 11.0 4.5 3.56 23.0 28.4 * % Relative to local index Analyst 2021e 195.2 11.3 5.4 4.33 18.9 10.1 Sara Welford 2022e 202.2 11.7 5.1 4.10 20.0 8.5
Sector: Oil & gas SDX Energy (SDX) Price: 17.5p Market cap: £36m INVESTMENT SUMMARY Market AIM, TSX-V SDX's 2020 production was c 6,400boed, despite the challenging environment the oil and gas industry has been facing and ahead of guidance of 6,000–6,250boed. Guidance for Share price graph (p) 2021 is 5,620–5,920boed, reflecting expected downtime for planned maintenance in South Disouq. SDX continues to deliver strong cash generation, with c 90% of cash flow resulting from fixed-price gas contracts. Increasing cash flow is likely to be directed to reserves expansion but also provides the opportunity to return capital to shareholders from 2022. Nine wells are planned for drilling across Egypt and Morocco in 2021. SDX has highlighted the potentially high-impact Hanut prospect in South Disouq, which it estimates holds 139bcf of prospective recoverable resources and is due to be drilled in late Q221/early Q321. Capex guidance of US$25.0–26.5m in FY21 mainly relates to well costs for Hanut and the Ibn Yunus-1 development well. Our core NAV is 36.2p/share and RENAV is 45p/share. Company description INDUSTRY OUTLOOK SDX Energy is a North African E&P listed in Toronto and London. It has oil and gas production in Egypt and gas SDX remains open to adding to its portfolio and sees Egypt as a natural market for production in Morocco. consolidation, given the large number of small players. Its acquisition of Circle Oil's Egyptian and Moroccan assets in early 2017 show that it is able to negotiate and complete transactions efficiently. Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual 0.7 9.4 (21.4) 2018 53.7 35.5 7.1 3.8 6.4 1.2 Relative* 1.4 3.8 (13.3) 2019 53.2 34.4 (12.3) (1.5) N/A 0.8 * % Relative to local index Analyst 2020e 42.6 31.0 10.0 5.3 4.6 0.8 Ian McLelland 2021e 43.5 31.7 13.5 6.3 3.8 0.8
Edison Insight | 25 February 2021 53 Sector: Financials Secure Trust Bank (STB) Price: 947.0p Market cap: £176m INVESTMENT SUMMARY Market LSE Secure Trust Bank's (STB) pre-close update confirms the upbeat trends evident in its Q3 update in November. The strong lending rebound continued into Q4, loan repayment Share price graph (p) holidays are at low levels and the balance sheet has remained robust and liquid. STB reiterated that FY20 PBT would be well ahead of £9.7m (we forecast £13.0m). However, COVID-19 restrictions introduced in December 2020 have affected consumer loan demand into 2021 and the Motor Finance business. Management expects to be better placed to disclose its FY21 outlook when FY20 results are released on 25 March. Our forecasts (FY21 PBT £31.6m, ROE 9.1%) and fair value (1,756p per share) remain unchanged.
INDUSTRY OUTLOOK
STB’s relatively short loan book duration allows it to de-risk quicker and protect capital and Company description maintain liquidity. But impairments will inevitably rise and loan book shrinkage also Secure Trust Bank is a adversely affects results. The bank is focused now on managing the risks and supporting well-established specialist bank addressing niche markets within clients. Management believes M&A opportunities may exist as the economy emerges from consumer and commercial banking. the crisis. Operationally, the bank can increase lending fairly quickly as the economy improves. The key challenge will be assessing the new lending conditions and risk parameters in the recovery phase. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 0.7 14.1 (37.7) 2018 151.6 N/A 36.7 161.0 5.9 N/A Relative* 1.4 8.3 (31.3) 2019 165.5 N/A 41.1 177.3 5.3 N/A * % Relative to local index Analyst 2020e 167.0 N/A 13.0 54.3 17.4 N/A Pedro Fonseca 2021e 172.9 N/A 31.6 134.7 7.0 N/A
Sector: Engineering Severfield (SFR) Price: 70.0p Market cap: £216m INVESTMENT SUMMARY Market LSE H121 revenue was healthy at £186m despite COVID-19 disruption which had some impact on the 5.1% UK EBIT margin. The UK order book at £287m picked up a little, which is Share price graph (p) notable given H1 revenue levels. The Indian JV contributed a small loss (50% share equal to £0.7m) with an order book of £98m up slightly from September’s though lower than in June. The company declared an unchanged 1.1p interim dividend and retains a strong liquidity position having repaid £15m end FY20 bank drawings. Management commented positively on pipeline prospects and sector breadth with some caveats; FY21 EBIT of at least £20m is inferred (with a H2 improvement on the £9.5m reported in H1) and a better JV H2 performance vs H1 is anticipated.
INDUSTRY OUTLOOK
Company description The primary strategic aim is to maintain Severfield’s position as the leading UK structural Severfield is a leading UK structural steelwork supplier. The Indian JV targets similar sectors to those served in the UK; steelwork fabricator operating across a broad range of market sectors. An management has valued the Indian construction market at c £100bn pa, with a very low Indian facility undertakes structural penetration of steel structures currently and the JV has recently expanded capacity. steelwork projects for the local market and is currently being expanded.
Y/E Dec / Mar Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual (1.6) 9.4 (22.1) 2019 274.9 29.0 24.7 6.66 10.5 11.8 Relative* (0.9) 3.8 (14.0) 2020 327.4 33.2 28.6 7.75 9.0 7.6 * % Relative to local index Analyst 2021e 353.0 28.4 21.8 5.73 12.2 9.2 Toby Thorrington 2022e 343.6 31.1 24.6 6.52 10.7 7.7
Edison Insight | 25 February 2021 54 Sector: General industrials Stern Groep (STRN) Price: €12.25 Market cap: €73m INVESTMENT SUMMARY Market AMS Downturns tend to be opportunities to invest in car dealerships, especially those that are likely to emerge stronger. Stern is well positioned to weather the current storm with its Share price graph (€) significantly restructured organisation, despite currently closed showrooms. The valuation is undemanding at an FY21e P/E of c 10.1x, certainly taking into account the value of the Bovemij stake of €3.17 per share.
INDUSTRY OUTLOOK
While Stern has to deal with market-wide structural changes such as the transition from combustion engines to hybrid/EVs, a higher proportion of less profitable lease clients and shared car concepts, all of which are having a profound impact on the market, COVID-19 has presented another big challenge to car dealerships. Flexibility is what is required in this Company description environment, and fortunately Stern has already started optimising its dealer network by With 75 locations and revenues of reducing geographical overlap and moving out of unattractive car brands, while eyeing new almost €1bn Stern Groep is the second largest car retailer group in the network additions and executing stringent cost controls. Netherlands. The company has over 1,850 employees.
Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual (1.2) 2.1 (30.8) 2018 988.7 6.1 (5.8) (73.0) N/A N/A Relative* (5.2) (10.3) (35.8) 2019 989.3 47.4 (1.4) 29.0 42.2 N/A * % Relative to local index Analyst 2020e 815.5 11.7 0.6 100.0 12.3 N/A Edwin De Jong 2021e 922.8 17.8 7.8 123.0 10.0 N/A
Sector: General retailers Studio Retail Group (STU) Price: 280.0p Market cap: £243m INVESTMENT SUMMARY Market LSE In December 2020, the board determined that it is to undertake a comprehensive review of the strategic options open to it in order to maximise value for shareholders. These options Share price graph (p) include a sale of the group which will be conducted under the framework of a 'formal sale process' in accordance with the Takeover Code.
INDUSTRY OUTLOOK
For the purposes of the Takeover Code, Edison is deemed to be connected with Studio Retail 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) Company description by an offeror or the offeree company (as appropriate) in accordance with the requirements Studio Retail Group is a multi-channel of the Code. Consequently we have removed our estimates until the offer period ends. retailer operating across the business-to-consumer and business-to-business market places. It is a market-leading online value retailer and educational resource supplier in the UK.
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) 12.0 17.9 2019 506.8 45.1 25.6 23.2 12.1 10.8 Relative* (3.0) 6.3 30.0 2020 434.9 35.0 11.0 12.0 23.3 14.6 * % 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 | 25 February 2021 55 Sector: Financials Supermarket Income REIT (SUPR) Price: 109.0p Market cap: £726m INVESTMENT SUMMARY Market LSE SUPR has continued its transformation growth in recent months, providing increased diversification and economies of scale, and will report results for the six months ended 31 Share price graph (p) December 2020 (H121) on 2 March. The proceeds of October’s highly successful £200m equity offering were swiftly deployed by January and, including leverage, are now effectively fully deployed in accretive acquisitions. Most recently, SUPR has invested a further £57.5m (before costs) in its JV which has increased its beneficial interest in a large portfolio of well-performing, predominantly omnichannel stores. We expect the investment to provide an attractive return on investment, ahead of the 7–10% pa group target, while offering potential access to a valuable pipeline of assets. With leading supermarket operators providing a strong tenant covenant and 100% of store rents received in advance as expected, there has been no pandemic interruption to inflation-linked dividend growth. Company description INDUSTRY OUTLOOK Supermarket Income REIT, listed on the special funds segment of the LSE, invests in supermarket property, let to Supermarket property has a long record of positive total returns underpinned by stable leading UK supermarket operators, on income returns in part due to long-leases, a strong occupier covenant, and the non-cyclical long, RPI-linked leases. The investment objective is to provide an nature of grocery retailing. 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 1.2 4.3 1.4 2019 16.9 14.1 9.9 5.0 21.8 15.5 Relative* 1.8 (1.0) 11.8 2020 25.5 21.2 16.8 5.0 21.8 13.4 * % Relative to local index Analyst 2021e 44.9 38.7 39.6 6.4 17.0 17.9 Martyn King 2022e 52.8 46.7 48.3 7.2 15.1 16.2
Sector: Property Target Healthcare REIT (THRL) Price: 112.2p Market cap: £513m INVESTMENT SUMMARY Market LSE In the three months ended 31 December 2020 (Q221) EPRA NAV increased to 108.2p and including DPS paid, the EPRA NAV total return was 1.8%. A Q221 DPS of 1.68p was Share price graph (p) declared (+0.6% v FY20), an annualised rate of 6.72p. As at 1 February 2021, COVID-19 cases within the portfolio homes remained well below the April 2020 peak and vaccinations had been made available to residents and staff in all of the group's operational homes. With current capital resources substantially committed, and an identified pipeline of investment opportunities, the company is seeking to raise c £50m through a placing, open offer and intermediaries offer at 111p per share. At a general meeting of shareholders on 1 March 2021 shareholders will also be asked to approve a placing programme under which up to 150m additional new shares may be issued over a 12-month period.
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 (2.1) (1.2) (8.8) 2019 34.3 N/A 20.1 5.45 20.6 22988.5 Relative* (1.5) (6.3) 0.6 2020 44.3 N/A 23.2 5.27 21.3 23524.6 * % Relative to local index Analyst 2021e N/A N/A N/A N/A N/A N/A Martyn King 2022e N/A N/A N/A N/A N/A N/A
Edison Insight | 25 February 2021 56 Sector: Technology Technicolor (TCH) Price: €2.00 Market cap: €471m INVESTMENT SUMMARY Market Euronext Paris In January, Technicolor announced the disposal of the post-production house of Production Services for €30m, for completion in H121. This leaves the segment focused on VFX and Share price graph (€) animation, where growth and margin prospects are higher. FY21 has a good project pipeline, with around two-thirds of the year’s expected film and episodic VFX sales in place. No group level update was given, although Connected Home had recently passed the milestone of shipping 20m DOCSIS 3.1 boxes. We made a precautionary trim of 3% to our FY21e revenue to reflect the continuing COVID impact, reducing EBITA by €7m to €97m. CEO Richard Moat purchased €1.1m of shares in December, as agreed at the restructure.
INDUSTRY OUTLOOK
COVID-19 has highlighted the importance of reliable domestic broadband and high-quality Company description wi-fi as homes increasingly act as devolved workplaces alongside greater content Technicolor is a worldwide technology consumption. This is unlikely to change as the global economy reopens. In Production leader operating in the media and entertainment industry. Its activities are Services, the live content industry is slowly re-emerging. Animation demand is still strong. organised in three business segments, Fresh, high-quality content will be crucial to reinforce the attractiveness of VoD platforms to Production Services, DVD Services and Connected Home. subscribers and advertisers.
Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual 5.0 20.8 (77.4) 2018 3988.0 266.0 7.0 (306.94) N/A 0.3 Relative* 2.3 14.6 (76.0) 2019 3800.0 325.0 (73.0) (492.18) N/A 0.4 * % Relative to local index Analyst 2020e 3100.0 169.0 10.0 (7.33) N/A N/A Fiona Orford-Williams 2021e 3350.0 329.0 (28.0) (19.25) N/A 2.4
Sector: Technology Thin Film Electronics (THIN) Price: NOK1.00 Market cap: NOK1041m INVESTMENT SUMMARY Market Oslo Following the strategic shift announced in January 2020, Thinfilm is using its proven printed technology to develop solid-state lithium micro-batteries for manufacture in its and roll-to-roll Share price graph (NOK) (R2R) production facility. It is targeting markets where the high energy density, flexible form factor, enhanced cycling and improved safety features offered by its innovative technology should be able to command a premium compared with conventional batteries.
INDUSTRY OUTLOOK
Consistent with this strategy, in January 2021 Thinfilm announced that it had taped out its first product design. This micro-battery is optimised for form-factor constrained applications such as hearing aids, earbuds and wearable medical devices. In addition, its marketing initiatives have resulted in signed technology evaluation agreements with potential Company description customers and partners ahead of volume deliveries of batteries towards the end of FY21. Thin 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 63.6 163.3 13.2 2019 1.2 (30.6) (35.9) (61.23) N/A N/A Relative* 67.0 139.9 12.3 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
Edison Insight | 25 February 2021 57 Sector: General industrials Thrace Plastics (PLAT) Price: €4.06 Market cap: €178m INVESTMENT SUMMARY Market Athens Stock Exchange Building on an impressive H1 performance, Thrace produced some record quarterly achievements in margins and profitability for both Technical Fabrics and Packaging in Q3. Share price graph (€) Favourable mix development, good pricing discipline and control over operating costs all contributed to this performance. The company delivered EBITDA of €27.8m in the quarter, which exceeded H120 overall and approached its FY19 full-year equivalent. Strong profitability drove a further reduction in core net debt. We raised our PBT estimates again, up more than 60% for FY20 with uplifts exceeding 40% in the next two years.
INDUSTRY OUTLOOK
Thrace manufactures a wide range of products that are used in a variety of sectors, ranging from construction/infrastructure to food packaging, medical and horticulture primarily in Company description Europe. Management’s high-level financial objective is to pursue profitable growth using two Thrace Plastics is an established primary levers: increased capacity and value capture. international producer of Technical Fabrics (FY19: 72% of net revenues) 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 12.0 29.1 109.5 2018 322.7 29.0 11.5 21.0 19.3 7.6 Relative* 14.6 15.5 145.8 2019 327.8 30.6 10.2 12.8 31.7 6.7 * % Relative to local index Analyst 2020e 342.2 72.6 52.0 90.6 4.5 2.3 Toby Thorrington 2021e 360.9 73.2 52.2 90.1 4.5 2.8
Sector: Media Tinexta (TNXT) Price: €21.85 Market cap: €1031m INVESTMENT SUMMARY Market Borsa Italiana STAR In October 2020, Tinexta announced acquisitions that will lead to the creation of a fourth business unit, Cybersecurity. We estimate it could accelerate organic revenue growth from Share price graph (€) 4-5% to 8%+ from FY21, but do not change our forecasts until the acquisitions complete, mostly in FY21. Q320 results were much better than expected, with particular strength in Credit Information & Management, and a good recovery post COVID-19 in other business units, which led management to upgrade guidance for FY20: it now expects y-o-y EBITDA growth of c 12%.
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 three business divisions: changes, in Digital Trust the group is leveraging its Italian expertise to expand on an Digital Trust – solutions to improve digital security; Credit Information & EU-wide basis with a unified legal base across the region. At the same time, Tinexta is likely Management – information services to to make acquisitions in Italy and Europe that will further expand its addressable markets help manage corporate credit; and Innovation & Marketing Services – and seek cross-selling opportunities between the business units. consulting services to help clients develop and/or grow their businesses. Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (€m) (€m) (€m) (c) (x) (x) % 1m 3m 12m Actual 6.1 14.6 59.5 2018 238.7 66.0 52.3 77.36 28.2 23.5 Relative* 2.8 6.5 75.2 2019 258.7 71.3 55.0 79.71 27.4 18.6 * % Relative to local index Analyst 2020e 272.7 81.0 57.3 86.62 25.2 18.3 Russell Pointon 2021e 283.8 83.9 60.9 92.08 23.7 16.7
Edison Insight | 25 February 2021 58 Sector: Financials Town Centre Securities (TOWN) Price: 109.0p Market cap: £58m INVESTMENT SUMMARY Market LSE H121 results showed significant strategic progress with asset disposals and debt reduction while the continuing business has been resilient. Including £3.2m of negative COVID-19 Share price graph (p) impacts (H220: £3.6m), focused on the car parking operations, EPRA earnings before tax were £0.2m (H120: £4.1m) or 0.4p per share. The increasingly diversified property business (retail & leisure reduced to c 39%) delivered consistently robust rent collection (almost 90%, including agreed deferrals) with valuations reduced by just 0.8% on a like-for-like basis. EPRA NTA was 278p (end-FY20: 285p) and adjusted LTV was 48.6% (end-FY20: 53.2%). An interim dividend of 1.75p has been declared which management says reflects its expectation of a quick recovery of the car park operations in particular.
INDUSTRY OUTLOOK
Company description The commercial property market is cyclical, historically exhibiting substantial swings in Town Centre Securities is a UK REIT valuation through cycles while income returns have been more stable. The pandemic and focused primarily on Leeds, Manchester, Scotland and (mainly Brexit contribute to a highly uncertain UK economic outlook and while the supply demand suburban) London. It also has a car balance for regional office and industrial property has hitherto remained generally firm with parking operation (CitiPark). The investment portfolio is intensively the exception of the industrial sector the weakness that was previously confined to the retail managed for income and capital growth. sector has broadened. Y/E Jun Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual (6.8) (1.4) (51.6) 2019 19.6 N/A 6.4 12.0 9.1 5.2 Relative* (6.3) (6.4) (46.6) 2020 16.1 N/A 2.1 4.9 22.2 4.0 * % Relative to local index Analyst 2021e N/A N/A N/A N/A N/A N/A Martyn King 2022e N/A N/A N/A N/A N/A N/A
Sector: Technology Trackwise Designs (TWD) Price: 281.0p Market cap: £80m INVESTMENT SUMMARY Market AIM In January management announced that it expected FY20 revenues to be c £6.1m, which was lower than our £7.1m estimate, reflecting disruptions to supply chains caused by tighter Share price graph (p) coronavirus restrictions and uncertainty about the Brexit deal. However, careful cost control meant that management expected adjusted operating losses to be c £0.2m, in line with our estimate. We updated our FY20 forecasts but left our FY21 estimates unchanged as these are underpinned by the EV order which is worth up to £38m over three years.
INDUSTRY OUTLOOK
The main growth drivers are broadly unaffected by either the pandemic or Brexit. IHT revenues are supported by the major EV contract. Having delivered samples to its lead electro-surgical catheter customer, a large US medical OEM, management anticipates Company description further orders in 2021 and is targeting early 2022 for production revenues. While the Trackwise Designs is a UK commercial aerospace industry has been badly affected by the pandemic, investment in manufacturer of specialist products using printed circuit technology. These new technology such as IHT, which cuts both carbon emissions and operating costs, include a lightweight replacement for continues. The number of IHT customers and qualified opportunities rose from 82 in June to conventional wiring harnesses known as IHT and RF antennae. In FY19, 87 in December. 64% of revenues related to exports.
Y/E Dec Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual (10.5) (22.2) 224.4 2018 3.5 0.6 0.3 2.14 131.3 N/A Relative* (9.9) (26.2) 257.8 2019 2.9 0.6 0.2 1.13 248.7 N/A * % Relative to local index Analyst 2020e 6.1 0.7 (0.3) 0.35 802.9 N/A Anne Margaret Crow 2021e 14.3 2.7 1.3 4.86 57.8 N/A
Edison Insight | 25 February 2021 59 Sector: Food & drink Treatt (TET) Price: 948.0p Market cap: £565m INVESTMENT SUMMARY Market LSE Treatt has once again delivered an exceptional performance in the first four months of FY21, with strong momentum across multiple categories contributing to growth. Operating Share price graph (p) margins have 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 relocation project continues, with a move to the new site expected in mid 2021, and the outlook for FY21 is cautiously optimistic.
INDUSTRY OUTLOOK
Treatt has migrated its business from that of a pure supplier to the food and beverage industries to being a valued partner in the development of new ingredients. Citrus, tea, fruit Company description and vegetable flavours and sugar reduction are core areas of focus, with the latter Treatt provides innovative ingredient undergoing a structural growth trend. solutions from its manufacturing bases in Europe and North America, 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 25.4 45.4 76.2 2019 112.7 15.8 14.0 19.0 49.9 27.3 Relative* 26.2 38.0 94.4 2020 109.0 17.9 15.8 21.3 44.5 36.2 * % Relative to local index Analyst 2021e 123.2 23.3 19.4 26.4 35.9 34.7 Sara Welford 2022e 130.6 28.0 21.5 29.3 32.4 23.3
Sector: Property Triple Point Social Housing REIT (SOHO) Price: 108.5p Market cap: £437m INVESTMENT SUMMARY Market LSE Results for the year-ended 31 December 2020 (FY20) will be published on 5 March. The portfolio has grown strongly since IPO, bringing a much-needed new supply of supported Share price graph (p) housing to market and building a base of secure long-term income. We expect acquisitions, rent indexation and the completion of forward-funded developments to have driven further strong earnings growth in FY20. This should continue in FY21 as the £55m (gross) proceeds from October’s equity issue, along with increased debt funding, are deployed into a strong identified acquisition pipeline. Full DPS cover had been achieved on a run-rate basis prior to the equity raise, and with rent collection unaffected by the COVID-19 pandemic we expect a continued growth in DPS in FY21 as the equity proceeds are deployed, with FY21 DPS fully covered on a reported basis
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 (1.4) 0.9 11.0 2018 11.5 7.0 5.4 2.27 47.8 47740.0 Relative* (0.7) (4.2) 22.4 2019 21.1 15.1 11.9 3.39 32.0 23370.8 * % Relative to local index Analyst 2020e 28.0 21.7 16.1 4.45 24.4 15600.7 Martyn King 2021e 35.8 29.0 22.8 5.67 19.1 14282.3
Edison Insight | 25 February 2021 60 Sector: Financials Tungsten Corporation (TUNG) Price: 34.0p Market cap: £43m INVESTMENT SUMMARY Market LSE Tungsten announced its H121 results in December. COVID-19 effects caused a 6% fall in transaction volume versus H120 but the stability of recurring revenue meant group revenue Share price graph (p) of £18m was down just 1%. Adjusted EBITDA at £0.8m was down £0.2m. A further non-cash goodwill impairment (£26.2m) has been taken against the core Tungsten Network business, reflecting the negative effect of the pandemic both on trading and the time taken to sign up new customers. This resulted in a pre-tax loss of £30.5m (versus £2.4m). Period-end net cash stood at £1m (£1m) with £2m available on a rolling credit facility.
INDUSTRY OUTLOOK
The diversity of Tungsten's customer mix and presence of over 50% of subscription and software maintenance revenues is supportive. So far in FY21 six new contracts have been Company description added, a partnership with a large US bank has been secured and the trade finance Tungsten Corporation operates a partnership with Orbian, which signed an agreement with a UK retailer to access its supplier transaction platform with services including e-invoicing, e-billing and base, is now generating income. For FY21 management guides to maintained revenues and purchase order handling. Spending adjusted EBITDA of at least £3.2m. Longer term, the benefits of adopting e-invoicing analysis, invoice data capture and, through a partnership, supply chain provide an underlying driver of growth. finance are also offered, providing additional benefits to customers. Y/E Apr Revenue EBITDA PBT EPS P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 14.1 4.3 (5.6) 2019 36.0 0.6 (5.3) (3.1) N/A N/A Relative* 14.8 (1.0) 4.2 2020 36.8 2.7 (26.0) (20.6) N/A 9.3 * % Relative to local index Analyst 2021e 36.8 3.3 (30.2) (23.9) N/A 20.4 Andrew Mitchell 2022e 40.1 5.7 0.5 0.4 85.0 7.5
Sector: Technology TXT e-solutions (TXT) Price: €7.19 Market cap: €94m INVESTMENT SUMMARY Market Borsa Italiana STAR So far this year, TXT has continued to execute its M&A strategy. It has acquired the remaining 49% of Assiopay for €1.65m (half in cash, half through the issue of treasury Share price graph (€) shares). It has also taken a 9% stake in Banca del Fucino SpA for €14.3m, funded from existing cash resources. The bank ultimately controls IGEA Digital Bank, a digital-only bank with a strong fintech focus. TXT reports FY20 results on 9 March.
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 range of software and services (eg risk management, digital payments, supply chain finance Company description solutions, credit management software) to an international customer base. TXT e-solutions provides IT, consulting 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 (3.0) (7.6) (22.4) 2018 40.0 4.1 1.5 10.25 70.1 N/A Relative* (5.9) (14.1) (14.8) 2019 59.1 7.0 7.6 45.55 15.8 N/A * % Relative to local index Analyst 2020e 67.2 8.1 6.1 35.07 20.5 N/A Katherine Thompson 2021e 84.2 10.5 8.2 46.69 15.4 N/A
Edison Insight | 25 February 2021 61 Sector: Construction & blding mat Tyman (TYMN) Price: 330.0p Market cap: £648m INVESTMENT SUMMARY Market LSE Tyman’s December update indicated that trading had remained solid with FY20 revenues and EBIT likely to be slightly above consensus at that time. Like-for-like group revenue in Share price graph (p) the first two months of Q4 was +1% (after +3% in Q3); By region, the combined October/November like-for-like sales performances were: North America +2% (-6%, ytd), UK & Ireland flat (-14%) and International -1% (10%). Consequently, the group LFL year-to-date equivalent improved to -8%, slightly better than half of the rate of decline seen at the interim stage (including the main COVID-19 impact in Q2). Our estimates increased modestly for FY20 and were unchanged subsequently on an underlying basis before updating for slightly adverse current FX rates.
INDUSTRY OUTLOOK
Company description Prior to the COVID-19 outbreak, leading North American and European markets were Tyman’s product portfolio substantially expected to grow modestly and the new-build sector has generally been firmer than RMI addresses the residential RMI and building markets with increasing spend which has been more patchy. commercial sector exposure following acquisitions. It manufactures and sources window and door hardware and seals, reporting in three divisions.
Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual (5.2) 10.7 15.4 2018 591.5 98.5 72.7 27.5 12.0 7.4 Relative* (4.6) 5.1 27.3 2019 613.9 100.8 71.0 27.4 12.0 5.8 * % Relative to local index Analyst 2020e 565.0 93.1 64.9 24.9 13.3 6.7 Toby Thorrington 2021e 569.7 94.2 66.0 25.3 13.0 7.7
Sector: Technology WANdisco (WAND) Price: 468.0p Market cap: £246m INVESTMENT SUMMARY Market AIM WANdisco’s FY20 trading statement highlights the significant strategic progress made during the year and confirms its expectations for FY21 (revenues of at least $35m). Share price graph (p) Revenues for FY20 are expected to be at least $10.5m – below our $13.0m forecast – however momentum in Q4 is described as encouraging. We estimate Q4 revenues were c $5.0m, implying a significant acceleration in the 9M20 run-rate. The company also signed 11 customers (predominantly in Q4) including eight on Azure and three on AWS and has migrated 3PB of data into the Azure cloud so far. We expect both the rate of customer acquisition and quarterly revenues to build through the year.
INDUSTRY OUTLOOK
WANdisco has set out its ambition to generate annual revenue of at least $100m in the next Company description three to five years from a combination of 1) data migration; 2) hybrid cloud; and 3) WANdisco’s proprietary replication multi-cloud. Ahead of a shift to recurring revenue visibility is limited but our updated analysis technology enables its customers to solve critical data management suggests that the Microsoft relationship alone could generate more than $80m in annual challenges created by the shift to cloud revenues by 2023 and highlighted that the data migration element alone could present a computing. It has established partner relationships with leading players in $1.4bn opportunity in total. the cloud ecosystem including Amazon and Microsoft. Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual (6.4) 2.7 (10.0) 2018 17.0 (9.4) (16.3) (37.5) N/A N/A Relative* (5.8) (2.5) (0.7) 2019 16.2 (11.7) (18.4) (38.8) N/A N/A * % Relative to local index Analyst 2020e 13.0 (19.2) (26.3) (52.9) N/A N/A Dan Gardiner 2021e 37.0 (0.4) (7.4) (14.6) N/A N/A
Edison Insight | 25 February 2021 62 Sector: Mining Wheaton Precious Metals (WPM) Price: C$47.46 Market cap: C$21331m INVESTMENT SUMMARY Market TSX Wheaton Precious Metals (WPM) generated record operating cash flow, revenue and sales in Q1-Q320, resulting in its quarterly dividend being increased by 20% to 12c per share. Share price graph (C$) While production remained solid in Q4, sales lagged in a coronavirus-disrupted year to result in an increase in ounces produced but not yet delivered to the company. Nevertheless, the finalisation of new streaming agreements with Caldas and Capstone proves that WPM is still able to conclude new business in a coronavirus context.
INDUSTRY OUTLOOK
Under normal circumstances, we believe that WPM could easily justify a valuation of US$53.37, or C$67.44, per share. In the current environment however, we believe that a valuation of US$75.98, or C$96.01, in FY21 is achievable. At the same time, it remains Company description cheaper than the average valuations of its peers in a majority of cases. This follows the Wheaton Precious Metals is the settlement reached between WPM and the CRA in December 2018 whereby income from pre-eminent ostensibly precious metals streaming company, with 30 WPM’s international subsidiaries will remain exempt from Canadian tax. high-quality precious metals streaming and early deposit agreements relating to assets in Mexico, Peru, Canada, Brazil, Chile, Argentina, Sweden, Greece, Portugal and the US. Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (US$m) (US$m) (US$m) (c) (x) (x) % 1m 3m 12m Actual (7.5) (11.3) 11.5 2018 794.0 496.6 203.1 48.0 77.7 31.9 Relative* (9.7) (18.4) 8.8 2019 861.3 548.3 242.7 56.0 66.6 30.3 * % Relative to local index Analyst 2020e 1094.4 756.2 498.2 108.0 34.5 20.5 Charles Gibson 2021e 1493.9 1116.2 810.4 180.0 20.7 15.0
Sector: Technology XP Power (XPP) Price: 5340.0p Market cap: £1049m INVESTMENT SUMMARY Market LSE XP reported a strong finish to 2020, with Q4 revenues up 24% y-o-y and 4% ahead of our forecast, driving FY20 profitability ahead of expectations. Order intake has normalised to Share price graph (p) pre-COVID-19 levels (Q420 £55.9m, down 4% y-o-y), reflecting continued strong demand from the semiconductor sector. Year-end net debt of £18.0m was substantially lower than our £38.2m forecast, mainly due to good working capital management, but aided by the weaker dollar at year-end. We have revised our estimates to reflect the strong Q420 performance and the weaker dollar, driving a 3.0% increase in FY20 EPS and a 2.3% cut to our FY21 EPS.
INDUSTRY OUTLOOK
XP supplies four end-markets: healthcare, industrial electronics, semiconductors and Company description technology, across Europe, North America and Asia. The industrial electronics segment is XP Power is a developer and designer relatively fragmented, but the company sees demand across various applications. The of power control solutions with production facilities in China, Vietnam healthcare business continues to gain market share, with corporate approvals from the and the US, and design, service and major suppliers in place. The semiconductor segment is the most cyclical, tracking the sales teams across Europe, the US and Asia. capex requirements of semiconductor manufacturers.
Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF Price performance (£m) (£m) (£m) (p) (x) (x) % 1m 3m 12m Actual 1.1 20.8 62.3 2018 195.1 49.2 41.2 172.8 30.9 38.2 Relative* 1.8 14.7 79.0 2019 199.9 45.4 33.2 145.5 36.7 22.2 * % Relative to local index Analyst 2020e 232.9 55.3 41.9 167.9 31.8 21.4 Katherine Thompson 2021e 227.4 55.5 42.2 169.2 31.6 24.8
Edison Insight | 25 February 2021 63 Sector: Media YouGov (YOU) Price: 1050.0p Market cap: £1161m INVESTMENT SUMMARY Market AIM YouGov’s January pre-close update indicated trading in line to meet the full-year target of its growth plan, with a heavier weighting towards H2. This reflects several larger, more Share price graph (p) strategic projects won by Data Products and Custom Research over autumn and winter, which will start to contribute in H221 and provide good momentum into FY22. H121 results will show a pick-up in Data Services as clients looked to tactical projects to inform their marketing strategies. Our full-year forecasts were unchanged except for a minor adjustment to the share count. YouGov is valued towards the top of its peer set, reflecting its strong market positioning, attractive cash generation and cash-positive balance sheet.
INDUSTRY OUTLOOK
YouGov has seen no material impact from COVID-19, with any weakness from clients in the Company description most affected verticals (such as retail) offset by additional work from governments, YouGov is an international research technology and healthcare clients. YouGov’s constantly refreshed online data has enabled it data and analytics group. Its data-led offering supports and improves a wide to service its clients without interruption and it has not needed to adapt its business model spectrum of marketing activities of a beyond a transition to home working. Advertising-related spend has remained under customer base including media owners, brands and media agencies. It pressure, but forecasts are for recovery from Q221 on. 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 (3.7) 9.6 43.8 2019 136.5 31.7 20.4 13.8 76.1 29.0 Relative* (3.1) 4.0 58.7 2020 152.4 39.2 24.7 15.7 66.9 29.2 * % Relative to local index Analyst 2021e 163.0 41.3 28.5 17.2 61.0 27.6 Fiona Orford-Williams 2022e 175.0 47.7 34.2 20.8 50.5 24.2
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Edison dividend list
Company name FY0 period end Currency DPS FY0 DPS FY1 DPS FY2 4imprint Group 2019/12 USD 84.0 0.0 20.0 Appreciate Group 2020/03 GBP 0.0 1.2 1.5 Augean 2019/12 GBP 0.0 0.0 4.0 bet-at-home 2019/12 EUR 200.0 240.0 135.0 Canacol Energy 2019/12 USD 0.1 0.2 0.2 Cenkos Securities 2019/12 GBP 3.0 Centaur Media 2019/12 GBP 1.5 0.5 1.0 China Water Affairs Group 2020/03 HKD 30.0 32.0 36.0 Cohort 2020/04 GBP 10.1 11.1 12.2 discoverIE Group 2020/03 GBP 3.0 10.4 10.7 Ebiquity 2019/12 GBP 0.0 0.0 0.5 Epwin Group 2019/12 GBP 1.8 1.0 2.5 Esker 2019/12 EUR 33.0 35.0 40.0 Games Workshop Group 2020/05 GBP 145.0 200.0 220.0 Gamesys Group 2019/12 GBP 0.0 36.0 37.8 GB Group 2020/03 GBP 0.0 6.0 3.3 Greggs 2019/12 GBP 46.9 0.0 15.0 Hellenic Petroleum 2019/12 EUR 50.0 50.0 50.0 Impact Healthcare REIT 2019/12 GBP 6.2 6.3 6.4 John Laing Group 2019/12 GBP 11.0 12.0 13.0 La Doria 2019/12 EUR 18.0 18.0 19.0 Lookers 2019/12 GBP 1.5 Marshall Motor Holdings 2019/12 GBP 2.9 0.0 6.0 Norcros 2020/03 GBP 3.1 3.6 6.5 Numis Corporation 2020/09 GBP 12.0 12.0 Ocean Wilsons Holdings 2019/12 USD 70.0 OTC Markets Group 2019/12 USD 125.0 125.0 125.0 Palace Capital 2020/03 GBP 12.0 12.0 12.0 Pan African Resources 2020/06 USD 0.8 1.4 1.2 Phoenix Spree Deutschland 2019/12 EUR 7.5 7.5 Polypipe 2019/12 GBP 4.0 Primary Health Properties 2019/12 GBP 5.6 5.9 6.1 Record 2020/03 GBP 2.3 2.3 2.3 Renewi 2020/03 EUR 0.5 0.0 0.0 Secure Trust Bank 2019/12 GBP 87.2 0.0 0.0 Severfield 2020/03 GBP 2.9 2.9 3.0 Supermarket Income REIT 2020/06 GBP 5.8 5.9 6.0 Sureserve Group 2019/09 GBP 0.5 0.5 0.8 Target Healthcare REIT 2020/06 GBP 6.7 The MISSION Group 2019/12 GBP 2.3 Thrace Plastics 2019/12 EUR 4.6 4.6 4.6 Treatt 2020/09 GBP 6.0 7.5 8.3 Triple Point Social Housing REIT 2019/12 GBP 5.1 5.2 5.3 TXT e-solutions 2019/12 EUR 0.0 10.0 12.0 Tyman 2019/12 GBP 3.9 0.0 10.0 Wheaton Precious Metals 2019/12 USD 36.0 42.0 69.0 YouGov 2020/07 GBP 5.0 5.5 6.5
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Company Sector Most recent note Date published
EJF Investments Investment companies Flash 27/04/20 Electra Private Equity Investment companies Initiation 16/12/20 EMIS Group Software & comp services Update 21/01/21 EML Payments Software & comp services Update 19/02/21 Endeavour Mining Metals & mining Update 17/12/20 Epwin Group Industrials Update 06/01/21 EQS Group Media Flash 16/02/21 Esker Technology Update 13/01/21 European Assets Trust Investment companies Investment company review 28/08/20 European Investment Trust (The) Investment companies Investment company review 19/06/19 Evolva Food & beverages Flash 20/01/21 Expert System Technology Update 01/10/20 Fidelity Asian Values Investment trusts Investment company review 03/02/21 Fidelity China Special Situations Investment companies Investment company review 11/12/20 Fidelity European Trust Investment companies Investment company review 04/11/20 Fidelity Japan Trust Investment companies Investment company review 26/08/20 Fidelity Special Values Investment companies Investment company review 09/02/21 FinLab Investment companies Initiation 27/08/19 Finsbury Growth & Income Trust Investment companies Investment company review 26/01/21 Foresight Solar Fund Investment companies Initiation 18/02/21 Forward Industries Consumer discretionary Initiation 02/11/20 Fundsmith Emerging Equities Trust Investment companies Initiation 29/01/21 Games Workshop Group Consumer goods Update 07/12/20 Gamesys Group Travel & leisure Update 12/01/21 GB Group Technology Update 25/02/21 GCP Student Living Real estate investment trusts Outlook 05/10/20 Gemfields Group Metals & mining Update 16/12/20 Genesis Emerging Markets Fund Investment companies Investment company review 01/04/20 Georgia Capital Investment companies Initiation 08/12/20 Greggs Food & drink Update 07/01/21 Gresham House Strategic Investment companies Investment company review 08/10/20 Hansa Investment Company Investment companies Investment company review 20/11/20 HarbourVest Global Private Equity Investment companies Investment company review 29/09/20 HBM Healthcare Investments Investment companies Investment company flash 04/02/21 Hellenic Petroleum Oil & gas Update 18/11/20 Henderson Far East Income Investment companies Investment company review 03/12/20 Henderson International Income Trust Investment trusts Investment company review 01/02/21 Henderson Opportunities Trust Investment trusts Investment company review 14/01/21 HgCapital Trust Investment companies Investment company review 22/12/20 Hurricane Energy Oil & gas Update 18/08/20 ICG-Longbow SSUP Investment companies Investment company review 08/01/20 Impact Healthcare REIT Real estate Update 01/02/21 Invesco Asia Trust Investment companies Investment company review 02/09/20 IQE Tech hardware & equipment Update 21/01/21 Jersey Electricity Industrials Outlook 14/03/19 John Laing Group Investment companies Outlook 17/02/21 JPMorgan Global Growth & Income Investment companies Investment company review 17/09/20 Jupiter UK Growth Investment Trust Investment trusts Investment company review 13/05/19 Kcell Joint Stock Company Telecoms Flash 24/02/21 KEFI Gold and Copper Mining Outlook 30/09/20 Keywords Studios Software & comp services Update 28/01/21 Kopy Goldfields Metals & mining Initiation 25/01/21 La Doria Food & drink Update 23/11/20 Leclanché Alternative energy Flash 04/02/21 Lepidico Metals & mining Update 08/12/20 Lookers General retailers Update 24/08/20
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Company Sector Most recent note Date published
Lowland Investment Company Investment companies Investment company review 24/07/20 Marble Point Loan Financing Investment companies Outlook 23/11/20 Marshall Motor Holdings Automotive retailers Update 09/12/20 Martin Currie Global Portfolio Trust Investment companies Investment company review 21/01/21 Merchants Trust (The) Investment companies Investment company review 26/11/20 Mercia Asset Management Investment companies Update 03/12/20 Mirriad Advertising Media Update 11/09/20 Monarch Gold Metals & mining Update 06/11/20 Mondo TV Media Flash 18/12/20 Murray Income Trust Investment companies Investment company review 26/11/20 Murray International Trust Investment companies Investment company review 09/11/20 Mynaric Technology Initiation 30/10/20 Mytilineos General industrials Flash 10/02/21 Nanoco Group Tech hardware & equipment Update 26/11/20 NB Private Equity Partners Investment companies Initiation 14/10/20 Newmont Corporation Metals & mining Initiation 09/02/21 Norcros Construction & materials Update 21/12/20 Numis Corporation Financial services Update 09/02/21 Ocean Wilsons Holdings Investment companies Outlook 11/09/19 OPAP Travel & leisure Update 07/12/20 Osirium Technologies Software & comp services Flash 15/01/21 OTC Markets Group Financial services Outlook 24/11/20 Palace Capital Real estate Outlook 25/11/20 Pan African Resources Metals & mining Update 17/11/20 paragon General industrials Update 27/11/19 Phoenix Spree Deutschland Real estate Update 05/02/21 Picton Property Income Property Update 01/02/21 PIERER Mobility Automobiles & parts Update 15/02/21 Piteco Software & comp services Update 29/09/20 Polypipe Construction & materials Update 17/07/20 PowerHouse Energy Group Alternative energy Flash 15/07/20 Premier Miton Global Renewables Trust Investment companies Initiation 05/02/21 Primary Health Properties Property Flash 11/12/20 Princess Private Equity Holding Investment companies Investment company review 10/12/20 ProCredit Holding Banks Update 23/11/20 Quadrise Fuels International Alternative energy Flash 21/01/21 RADA Electronic Industries Industrials Update 12/02/21 Raven Property Group Property Outlook 10/09/20 Record Financials Update 26/01/21 Regional REIT Real estate Update 17/11/20 Renergen Oil & gas Update 30/01/20 Renewi Industrial support services Update 01/02/21 Riber Tech hardware & equipment Update 02/02/21 Rock Tech Lithium Metals & mining Update 18/12/20 S&U Financials Update 15/02/21 SandpiperCI Group Retail Initiation 15/01/21 S Immo Real estate Update 01/09/20 SDX Energy Oil & gas Update 21/12/20 Secure Trust Bank Financials Update 22/01/21 Securities Trust of Scotland Investment companies Initiation 02/12/20 Severfield Construction & materials Update 08/12/20 Silver One Resources Metals & mining Initiation 28/08/20 Standard Life Private Equity Trust Investment companies Investment company review 24/02/21 Standard Life UK Smaller Cos Trust Investment companies Investment company review 23/11/20 Stern Groep Automotive retail Update 18/11/20 Studio Retail Group Retail Flash 30/09/20
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Company Sector Most recent note Date published
Supermarket Income REIT Property Outlook 18/02/21 Target Healthcare REIT Property Update 11/02/21 Technicolor Media Update 21/01/21 Templeton Emerging Markets Inv Trust Investment companies Investment company review 28/01/21 Tetragon Financial Group Investment companies Investment company review 12/11/20 The Bankers Investment Trust Investment trusts Investment company review 31/07/20 The Law Debenture Corporation Investment trusts Investment company review 05/08/20 The MISSION Group Media Update 20/01/21 The Scottish Investment Trust Investment trusts Investment company review 02/12/20 Thin Film Electronics Technology Flash 28/01/21 Thrace Plastics General industrials Update 18/12/19 Tinexta Professional services Update 19/10/20 Town Centre Securities Real estate Update 27/01/20 Trackwise Designs Tech hardware & equipment Update 25/01/21 TR European Growth Trust Investment trusts Investment company review 18/05/20 Treatt Basic industries Update 22/01/21 Triple Point Social Housing REIT Real estate Initiation 29/01/21 Tungsten Corporation e-invoicer & invoice financier Outlook 11/02/21 TXT e-solutions Technology Update 10/11/20 Tyman Construction & materials Update 15/12/20 Utilico Emerging Markets Trust Investment companies Investment company review 23/09/20 VEF Investment companies Initiation 06/11/20 Vietnam Enterprise Investments Investment companies Investment company review 22/01/21 VietNam Holding Investment companies Investment company review 15/12/20 VinaCapital Vietnam Opportunity Fund Investment companies Investment company review 18/12/20 Volta Finance Investment companies Investment company review 22/01/21 WANdisco Technology Flash 07/01/21 Wheaton Precious Metals Metals & mining Update 17/02/21 Witan Investment Trust Investment companies Investment company review 06/10/20 Worldwide Healthcare Trust Investment companies Investment company review 05/01/21 XP Power Electronic & electrical equipment Update 12/01/21 YouGov Media Update 29/01/21
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