finnCap Research Company Note - 29 November 2018

Nov 29, 2018 / News

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Sector: Technology & Telecoms

eServGlobal (ESG): HomeSend capital injection commences

Key data                              

  • Share price (p)                  5.6
  • Target price (p)                20.0
  • Market cap (£m)                              50.6
  • Enterprise value (£m)                    30.7

In September, eServGlobal raised £19m to fund an expected cash call from its 35.7% owned HomeSend JV. This capital requirement was originally anticipated to be €50m funded pro-rata by ESG and the other owner, Mastercard, with the majority coming from the latter. However, this total has now been scaled back to €47m, of which an initial €6.1m will be invested before the end of this month. Timing for the requirement of the balance is under discussion. HomeSend itself continues to make progress and roll out its network focussing on B2B while still servicing the established P2P corridors and the ramp in transaction volumes continues to be expected. Meanwhile, conversations on the sale of eServGlobal’s core PayMobile business continue with several parties. We maintain our forecasts and TP at this stage.

Lorne Daniel | ldaniel@finncap.com

KRM22 (KRM): New contract wins

Key data                              

  • Share price (p)                  106.0
  • Target price (p)                U/R
  • Market cap (£m)                              17.4
  • Enterprise value (£m)                    NM

KRM22 continues to gain market traction for its risk management solutions, as it announces two new contract wins for Irisium and ProOpticus, respectively. Irisium (acquired in June) will provide its market monitoring and analytics platform to Bitstamp. Irisium’s solutions will enable Bitstamp, the largest cryptocurrency exchange in Europe, to effectively monitor market activity, and provide transparency and confidence in the cryptocurrency market. The second customer contract relates to a large US-based future commissions merchant, who will use ProOpticus’s real-time post-trade risk management solution. ProOpticus, the primary solution of Prime Analytics (acquired in September), enables institutional clients to manage market risk in derivative options portfolios. These contracts represent the growing recognition of KRM22 as a risk management specialist within the capital markets industry, and its position to serve the increasing need of risk management applications among this sector. We look forward to further news flow as the Company continues to make progress within the industry, and in the development of its risk management platform.

Andrew Darley | adarley@finncap.com   

Sector: Energy

Europa Oil & Gas (EOG): Wressle consent denied again

Key data                              

  • Share price (p)                  2.6
  • Target price (p)                41.0
  • Market cap (£m)                              12.4
  • Enterprise value (£m)                    5.9

This is turning into a real battle, as planning consent for Europa’s Wressle development has been turned down for a third time. While not totally unexpected, this is still disappointing given Wressle is a highly profitable potential development. Nevertheless, it is just a rounding error in our 38p/sh risked-NAV and we had already assumed start-up would be delayed by a year. The project partners will appeal this decision again. However, the main reason to own Europa remains its exposure to Offshore Ireland, where negotiations are in the final stages to secure a partner and funding for three wells. A successful conclusion to these negotiations would be a major catalyst for the shares.

Independent Oil & Gas (IOG): SNS gas project and Harvey update

Key data                              

  • Share price (p)                  28.5
  • Target price (p)                72.0
  • Market cap (£m)                              36.0
  • Enterprise value (£m)                    59.9

All engineering work required for the final investment decision (FID) on IOG’s Southern North Sea gas developments is complete. The project is just waiting on financing, which is expected to comprise a senior secured bond and equity issuance. However, given current sector and market volatility, closure of this funding, and project launch, has been pushed into Q1 2019. This is likely to see project start-up slip marginally. However, the conclusion of a financing package at this point will pave the way for the first phase of this highly profitable project to be launched, which will rapidly start to generate material production, earnings and cash flow.

Jonathan Wright | jwright@finncap.com

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