finnCap Research Company Notes - 16 January 2019
Jan 16, 2019 / News
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Sector: Technology & Telecoms
SCISYS (SSY) : Corp
Another contract win in Space
Key data
- Share price (p) 172.5
- Target price (p) 205.0
- Market cap (£m) 50.5
- Enterprise value (£m) 0.0
This is the latest in a recent raft of contract wins for the Space division in the wake of the group’s move to ‘re-domicile’ in Ireland; securing its European status has allowed a number of EU/ESA contracts to be awarded. SCISYS has won another contract with AIRBUS, this one for the development, integration, verification and maintenance of the EGNOS V3 Performance Assessment Facility (PAF). It is worth €1.3m, running through to 2025 and further underpins revenue and earnings expectations, as well as the group’s excellent market position and reputation in the European space industry.
Lorne Daniel | ldaniel@finncap.com
Sector: Technology & Telecoms
Tracsis (TRCS) : Corp
Acquisition
Key data
- Share price (p) 595.0
- Target price (p) 725.0
- Market cap (£m) 169.0
- Enterprise value (£m) 146.7
Tracsis has announced the acquisition of Compass Informatics, a Dublin-based systems development and data analytics company deriving most of its revenue from transport, asset management, planning and environmental customers. The first overseas acquisition for Tracsis, the maximum consideration of EUR5.15m (including EUR2m deferred conditional consideration over three years) acquires a business which generated £0.6m PBT from £4.8m revenue in the year to September 2018. Compass specialises in combining geographical information systems, location technologies, data analytics and field computing, sitting comfortably with and adding to existing Tracsis expertise in analytics, asset visualisation, and geo-location, with complementary cross sales potential. We resist reviewing forecasts until discussion with management, acknowledging the obvious upside benefit. Target price 725p reiterated.
Andrew Darley | adarley@finncap.com
Sector: Energy
President Energy (PPC) : Corp
Building critical mass
Key data
- Share price (p) 9.8
- Target price (p) 19.0
- Market cap (£m) 105.9
- Enterprise value (£m) 127.0
Our analysis of President’s recent acquisition of two new Argentine concessions – Las Bases and Puesto Prado – suggests that just an initial 1-year work programme can add ~400 boepd to production in 2019 and generate a positive NPV. We are also incorporating the successful Puesto Flores development drilling programme into our estimates and some heavily risked exploration potential in Paraguay, where a well is planned in H2. These items result in a 5% uplift to NAV, to 19p/sh, and an 8% increase to 2019E EBITDA. Our price target rises from 18p to 19p as a result. While it will be some time before we have confirmation of the full potential of these newly acquired assets, President’s significant success with its neighbouring Puesto Flores/Estancia Vieja concessions gives us confidence the transaction will be highly value accretive.
Jonathan Wright | jwright@finncap.com
Sector: Life Sciences
Allergy Therapeutics (AGY) : Corp
Trading update – strong rebound
Key data
- Share price (p) 13.7
- Target price (p) 47.0
- Market cap (£m) 87.2
- Enterprise value (£m) 69.0
The six-month trading update to 31 December 2018 demonstrates stronger-than-expected growth, with revenues rising 10.6% to £46.7m (c.11% at constant exchange rates (CER)). This led to a c.60% increase in cashflows before financing (+c.£5.9m) with cash balances at 31 December of £31.6m that included £10.2m from July’s placing. The stock trades at a c.65% discount to its peer group in terms of EV/Sales as the market anxiously awaits the Phase III PQ Birch data, due in Q1 2019. We leave our forecasts unchanged for FY 2019 at this point and reiterate our 47p target price.
Mark Brewer | mbrewer@finncap.com
Sector: Industrials
Somero Enterprises (SOM) : Corp
Trading ahead of expectations, 5% EPS upgrade
Key data
- Share price (p) 293.0
- Target price (p) 465.0
- Market cap (£m) 164.8
- Enterprise value (£m) 148.6
The company has announced a positive trading update signalling a stronger than expected H2, with sales and EBITDA moderately ahead and cash more meaningfully ahead of expectations. We upgrade our 2018 EPS forecast by 4.9% and raise 2019 by 4.6%, confirming robust trading continues. The company has also announced a small bolt-on acquisition of Line Dragon for $2.0m, which looks an ideal close fit. The shares have significantly derated and the trading update confirms robust trading continues, thus providing a strong buying opportunity. The 7% dividend yield and single digit P/E in 2019 highlight strong value – this quality stock is one of our favourites.
David Buxton | dbuxton@finncap.com