finnCap Research Company Note - 8 January 2018
Jan 08, 2019 / News
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Sector: Energy
Independent Oil & Gas (IOG) : Corp
Goddard added to core project
Key data
- Share price (p) 13.1
- Target price (p) 72.0
- Market cap (£m) 16.6
- Enterprise value (£m) 40.5
IOG’s Southern North Sea gas core project has been expanded to include the Goddard field, boosting the project’s expected economics. The shares have been hit hard by concerns over financing, more than halving since late November. This has created a deep-value opportunity, with the shares trading at a hefty 83% discount to our 72p NAV, which includes a risked valuation of Goddard. Either the market closes this gap, or likely industry will. Funding is key to the project launch, an issue not made easier by difficult markets and an FCA investigation into a related party. Nevertheless, management still expects funding to be secured in Q1 2019, with project start-up expected 20 months after.
Jonathan Wright | jwright@finncap.com
Sector: Technology & Telecoms
Sopheon (SPE) : Corp
Contract win
Key data
- Share price (p) 1 250.0
- Target price (p) 1 295.0
- Market cap (£m) 126.7
- Enterprise value (£m) 114.5
Sopheon has announced that it is partnering with Hershey, the well known US based confectionery brand, to support digital transformation of Hershey’s product innovation portfolio. Sopheon’s Accolade solution will connect existing and new processes, enabling collaboration, synchronisation, focus and decision making to maximise the benefit of group innovation priorities. The partnership follows on from Sopheon’s experience assisting dozens of food and consumer goods companies in delivering insights and responding to opportunities to continue to compete in an increasingly fast moving and disrupted environment. We look forward to a trading update in the next few weeks as 2019 is expected to build on the momentum established in the past four years, attracting ever more high-profile global brands as customers.
Andrew Darley | adarley@finncap.com
Sector: Life Sciences
Yourgene Health (YGEN) : Corp
New product launch – Sage™ 32 plex
Key data
- Share price (p) 9.4
- Target price (p) 16.0
- Market cap (£m) 39.5
- Enterprise value (£m) 51.4
Yourgene announced the launch of the Sage™ 32 plex, a new high throughput non-invasive prenatal testing (NIPT) and analysis solution for clinical laboratories. It provides a more flexible, scalable and cost-effective solution for its customers, enabling up to 32 samples to be processed in one sequencing run, compared with 12 samples previously. The introduction will be particularly attractive to high-volume, developing NIPT markets such as India and Asia, ensuring that Yourgene can maintain gross margins despite the Illumina licence fees that will be paid following the resolution of its IP dispute. We reiterate our target price of 16p, which implies CY 2020 EV/Sales of 4.9x; justified in our view given the strong revenue momentum and clear progress towards profitability.
Mark Brewer | mbrewer@finncap.com
Sector: Support Services
Gateley (GLTY) : Corp
Lawyer up
Key data
- Share price (p) 131.0
- Target price (p) 193.0
- Market cap (£m) 145.3
- Enterprise value (£m) 153.5
H1 results evidence continued strong growth with adj. EPS up +28%, DPS up +18% and a positive outlook. Gateley continues to attract talent and is generating increasing opportunities to act for new and existing clients. Its focus on client service, a strong and growing brand, service line enhancements and acquisition opportunities all support upgrade potential. Strong cash generation and a low level of debt mean management has a range of investment options. With the P/E low at 10x and the dividend yield high at 6%, we initiate with a 193p price target based on an average small/mid cap. free cash flow yield of 5.5% (despite above-average prospects).
Guy Hewett | ghewett@finncap.com