finnCap Research Company Notes - 12 February 2019

Feb 12, 2019 / News

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Sector: Technology & Telecoms

eServGlobal (ESG) : Corp

APAC win for core business

Key data                               

  • Share price (p)                  7.6
  • Target price (p)                20.0
  • Market cap (£m)                              69.2
  • Enterprise value (£m)                    49.9

Yesterday, eServGlobal’s core PayMobile business revealed a new contract from an existing customer in the Asia Pacific region, valued at £1m over a three-year period with approximately half likely to be booked this year. The contract is for a recharge voucher management platform for a leading local operator; the APAC is one of the leading mobile markets in the world and recharge is an essential feature in this predominantly pre-paid arena. Another of the previously delayed orders, the contract is part of the expected pipeline of business and we make no change to forecasts or target price at this stage. However, it is encouraging that the core business has a strong pipeline of opportunities and continues to see success and growth ahead of the big mobile world show in Barcelona at the end of this month, traditionally a point when many deals are initiated.

Lorne Daniel | ldaniel@finncap.com

 

Sector: Financial & Insurance

Morses Club (MCL) : Corp

Seizing the aforementioned consolidation opportunities

Key data                              

  • Share price (p)                  151.3
  • Target price (p)                175.0
  • Market cap (£m)                              196.8
  • Enterprise value (£m)                    202.6

Another 1.2% added to customer numbers on the back of 1.3% through the Eccles acquisition, while the net loan book should increase 2.2%, on top of the 1.9% from Eccles. We keep numbers unchanged at present but suggest a net increase in the region of c.£200k to PBT when we revisit estimates at full year 2019.

Nik Lysiuk | nlysiuk@finncap.com

 

Sector: Technology & Telecoms

Mporium Group (MPM) : Corp

Update on Allay agreement

Key data                              

  • Share price (p)                  4.9
  • Target price (p)                U/R
  • Market cap (£m)                              28.8
  • Enterprise value (£m)                    28.0

Mporium has provided additional detail regarding the recent strategic collaboration agreement with Allay. As the exclusive customer lead generation channel for the consumer claims firm, Mporium will deploy its proprietary technology platform IMPACT to drive customer leads for a fixed price per lead. Since the agreement was signed last month, the lead generation business has already started to generate considerable revenues for the Group, billing £1.0m for each of the past two weeks, compared to £1.2m for the total of 1H18. Mporium anticipates the UK consumer regulation market to be a significant opportunity for the Group, due to the growing regulation surrounding consumer compensation. With a total addressable market of £100bn across a number of verticals (PPI, packaged bank accounts, flight delay compensation) and high value customer leads, we believe the Allay deal is the start of a significant transformation for Mporium. Notably, this is just one application for the MproiumX platform, the latest pay-for-performance division of the Group. We look forward to initiating on the Group over the coming weeks.

Andrew Darley | adarley@finncap.com

 

Sector: Energy

Iofina (IOF) : Corp

Removing the shackles

Key data                              

  • Share price (p)                  17.7
  • Target price (p)                34.0
  • Market cap (£m)                              22.6
  • Enterprise value (£m)                    40.5

Iofina has successfully restructured its convertible and term loan facilities, with convertibility removed and repayment pushed out a year to mid-2020. Iofina will incur a higher interest rate as a result and can no longer capitalise interest payments, although this still looks the best outcome that could have been expected and removes a major issue that has been weighing on the shares. In our forecasts we have delayed the assumed IOsorb™ plant expansions by 6-9 months, which reduces our EBITDA forecasts by 11-12%. This sees our DCF-based price target fall 3% to 34p. Nevertheless, Iofina still offers material upside and strong leverage to improving iodine prices and its continued operational recovery.

Jonathan Wright | jwright@finncap.com

 

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