finnCap Research Company Notes - 17 January 2019

Jan 17, 2019 / News

Register here to access all finnCap corporate finance research


Sector: Support Services

Cello Health (CLL) : Corp

Health had an excellent year

Key data                              

  • Share price (p)                  107.5
  • Target price (p)                145.0
  • Market cap (£m)                              111.1
  • Enterprise value (£m)                    116.5

Cello has confirmed that the group traded well in 2018, with continued strong growth from Cello Health, offset to some degree by a slower performance from Cello Signal. Overall, results are expected to be in line with market expectations and we make no changes to our forecasts. We reiterate our view that the market backdrop for Cello’s technically based, strategic marketing services is strong and defensive, supporting good growth prospects

Guy Hewett |


Sector: Mining

Avesoro Resources (ASO) : Corp

Q4 and 2018 operating results

Key data                              

  • Share price (p)                  162.5
  • Target price (p)                293.0
  • Market cap (£m)                              132.6
  • Enterprise value (£m)                    217.7

Avesoro Resources has reported Q4 and 2018 operating results from its gold mines in Liberia and Burkina Faso. Total gold production of 44,962 ounces for the quarter and 220,458 ounces for the year was within FY 2018 guidance of 220,000 to 240,000 ounces. Both mines continue to perform well and we maintain our 293p price target.

Martin Potts |


Sector: Energy

Iofina (IOF) : Corp

Market update

Key data                              

  • Share price (p)                  13.7
  • Target price (p)                35.0
  • Market cap (£m)                              17.4
  • Enterprise value (£m)                    35.4       

IOF’s market update highlights ongoing solid operational performance, with record production achieved in H2 2018, while iodine pricing continues to improve. Management has taken the decision to repurpose the shut-in IO#5 plant to new locations and is reviewing potential sites and financing options for the new IO#8 unit. Debt restructuring negotiations are at an advanced stage and an update is expected in the coming weeks. A successful conclusion should prove a significant catalyst for the shares in our opinion.

Jonathan Wright |


Sector: Financial & Insurance

Kingswood Holdings (KWG) : Corp

Ex-CEO builds solid foundation, new CEO to execute

Key data                              

  • Share price (p)                  12.3
  • Target price (p)                26.0
  • Market cap (£m)                              19.0
  • Enterprise value (£m)                    14.4

A new face for a new stage of the company’s development. Successful restructuring completed in 2018 offers a strong springboard from which the company can grow. We estimate 44% revenue growth between 2018E and 2020E and retain our price target of 26p.

Nik Lysiuk |


Sector: Life Sciences

Synairgen (SNG) : Corp

Phase 2-ready asset

Key data                              

  • Share price (p)                  13.5
  • Target price (p)                54.0
  • Market cap (£m)                              12.3
  • Enterprise value (£m)                    7.5         

Pharmaxis’s announcement that it has completed the 13-week toxicity studies for its two LOXL2 inhibitors, in which Synairgen has a c.17% carried financial interest, is a key milestone. These data complete the overall Phase I data package enabling Pharmaxis to conduct a final series of scientific briefings with potential partners before licensing. Given the significant interest in NASH from large pharma and the sizable licensing deals (both upfront and long-term ‘bio-dollars’) that have historically completed in this field, the probability of Synairgen receiving a material upfront payment has substantially increased.

Mark Brewer |


Sector: Technology & Telecoms

Taptica (TAP) : Corp

FY 2018 in line and awaiting acquisition news

Key data                              

  • Share price (p)                  174.0
  • Target price (p)                550.0
  • Market cap (£m)                              117.6
  • Enterprise value (£m)                    75.3

A brief trading update reveals results will be in line with the guidance revised early last month; we continue to expect 33% YoY revenue growth in 2018 helped by the Tremor and Adinnovation acquisitions in 2017. We continue to forecast 49.5c adj. FD EPS, up 22% YoY. Margins appear to have been maintained and cash generation from operations seems to have been good, the group closing the year with net cash of $54.4m. We await further news on a proposed acquisition flagged earlier this month. Overall, the group appears to have had another good year in terms of trading despite the privacy concerns raised around Facebook and online personal data usage. The share price was also affected by the loss of long-time CEO last month on an issue unrelated to Taptica. However, with business performing to expectations this has left it trading on a notably low P/E of just 4.5x and should prove an attractive buying opportunity for a well-positioned rapidly growing global adtech player.

Lorne Daniel |


Sector: Support Services

4imprint (FOUR) : Corp

At least at the upper end of the range

Key data                              

  • Share price (p)                  1 855.0
  • Target price (p)                2 477.0
  • Market cap (£m)                              520.2
  • Enterprise value (£m)                    513.7

In a positive year-end update, 4imprint has detailed FY 2018E sales grew +18% on the prior year aided by encouraging progress in the brand marketing initiative launched in March 2018. Underlying PBT is expected to be at least at the upper end of the market range, meaning a small upgrade to our forecasts is highly likely. We will reassess our forecasts with the detail of the results and reiterate our view that 4imprint will continue to take market share in its large end market, driving double-digit growth in sales and earnings, with excess cash generated set to be returned to shareholders.

Guy Hewett |


finnCap operates an ‘access-for-all’ approach for corporate research, approved by the FCA and paid for by finnCap’s corporate clients.


Register here to access all finnCap corporate finance research