finnCap Research Company Notes - 17 March 2020

Mar 17, 2020 / News

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Sector: Consumer & Other

Best of the Best (BOTB) : Corp

Investment in marketing drives further upgrades

Key data                          

  • Share price (p)                375.0
  • Target price (p)              490.0
  • Market cap (£m)                          35.2
  • Enterprise value (£m)                 32.6

BOTB’s increased investment in marketing has continued to deliver better-than-expected results, with the strong start to the second half continuing. We consequently make further forecast upgrades, despite having already raised guidance twice in the past five months. We raise FY 2020E and FY 2021E PBT forecasts by 15% and 8% respectively to £3.0m and £3.2m, reflecting the improvements in customer engagement and new customer acquisition that BOTB has been able to achieve through its focused investment on marketing. As BOTB has transitioned to being a 100% pure-play online operator, we see scope for additional share price improvement and highlight the 26% upside offered by our 490p unchanged target price.

Mark Paddon

020 7220 0541

mpaddon@finncap.com

 

Sector: Life Sciences

Cambridge Cognition (COG) : Corp

eCOA contract win with new pharma client

Key data                          

  • Share price (p)                19.6
  • Target price (p)              75.0
  • Market cap (£m)                          4.7
  • Enterprise value (£m)                 3.8

Cambridge Cognition announced that it had won eCOA contracts worth £1.37m, which should be recognised over the next two years. The contract win is relevant for three reasons: (i) it delivers against its stated strategy of combining its CANTAB cognitive assessments with additional clinical outcome assessments; (ii) it is with a new pharma client; and (iii) it offers the potential to jointly develop a new cognitive test for future commercialisation. Despite this new win, we leave forecasts unchanged. However, it underpins our revenue forecast for FY 2020. We reiterate our target price of 75p.

Mark Brewer

020 7220 0556

mbrewer@finncap.com

 

Sector: Technology & Telecoms

PCI Pal (PCIP) : Corp

Contract win with major UK government agency

Key data                          

  • Share price (p)                28.5
  • Target price (p)              50.0
  • Market cap (£m)                          12.1
  • Enterprise value (£m)                 12.1

PCI Pal has announced a new contract win with a major UK government agency to deliver its Agent Assist Solution. The contract, signed for a minimum of two years with the potential for a further two-year extension, is worth £565,500 in ACV, and the company expects to invoice the first year’s licence during H1 FY21, upon delivery of agreed milestones. This customer joins a growing roster of UK local authorities and government organisations that use PCI Pal’s solutions, as the company continues to build its presence within the government sector and across large enterprise clients. Notably, PCI Pal Agent Assist was chosen following a competitive tender process, testament to the quality and value of the platform within the market. We reiterate TP and forecasts, and look forward to ongoing newsflow from the company.

Lorne Daniel

020 7220 0545

ldaniel@finncap.com

 

Sector: Consumer & Other

Shoe Zone (SHOE) : Corp

Deferral of dividend payment

Key data                          

  • Share price (p)                101.0
  • Target price (p)              220.0
  • Market cap (£m)                          50.5
  • Enterprise value (£m)                 48.8

The company have announced the deferral of the payment of its 8p/share 2019 final dividend, with a view to cancelling it through a resolution to be proposed at an EGM in May. The decision was made in light of the increasing disruption to consumers’ lives and shopping habits resulting from the spread of COVID-19, which has started to contribute to a decline in footfall across SHOE’s estate. The decision was made with unanimous backing from the Board and is one of many measures being put in place to shore up SHOE’s balance sheet and protect it from what is likely to be a prolonged period of challenging trading. The proactive decision to defer payment of the final dividend will make available an additional £4.0m cash, ensuring the company is on solid footing as it navigates the ongoing period of uncertainty. Since the short/medium term effects of COVID-19 on the UK retail sector and the wider economy are currently unclear, we leave FY20E forecasts unchanged until further updates have been issued by the company, but highlight to investors the range of successful initiatives SHOE’s refreshed management team have been implementing (Big Box, Digital, simplification of pricing, focus on cost etc.), and the strong base management will be able to take advantage of once the period of uncertainty has cleared.

Mark Paddon

020 7220 0541

mpaddon@finncap.com

 

Sector: Industrial Technology

Xeros (XSG) : Corp

First development agreement in Filtration

Key data                          

  • Share price (p)                0.3
  • Target price (p)              4.0
  • Market cap (£m)                          2.7
  • Enterprise value (£m)                 -2.8

Xeros has announced a JDA with a global leader in commercial laundry solutions with the aim of incorporating its world leading XFiltra micro-particle filtration technology into its commercial washing machines. The first of its type, imminent legislation in the EU is driving its adoption. We are not changing our forecasts or target price at this stage.

Raymond Greaves

020 7220 0553

rgreaves@finncap.com

 

Sector: Technology & Telecoms

Bango (BGO) : Corp

Bango swings into EBITDA profit in FY 2019

Key data                          

  • Share price (p)                62.0
  • Target price (p)              225.0
  • Market cap (£m)                          43.7
  • Enterprise value (£m)                 41.7

FY 2019 was an impressive year for the development of the Bango Platform. Yet again End User Spend (EUS) on it doubled, while it expanded its prospects with the rollout of the data monetization business. Bango Marketplace is now well established and began 2020 with a strong pipeline and several major deals in prospect. Management’s ambitious growth plans have now delivered cash profit and Bango’s unique combination of payments with data-driven market intelligence open additional opportunities ahead in FY 2020. With profit in sight and £2.7m cash on the balance sheet Bango is well positioned and during the pandemic EUS could see a substantial boost from stay-home spending in appstores and subscription services. We reiterate forecasts and our 225p TP.

Lorne Daniel

020 7220 0545

ldaniel@finncap.com

 

Sector: Technology & Telecoms

Telit (TCM) : Corp

FY 2019 leaves Telit well placed to build LT value

Key data                          

  • Share price (p)                80.0
  • Target price (p)              210.0
  • Market cap (£m)                          106.2
  • Enterprise value (£m)                 66.9

FY 2019 saw a strong financial and operational performance. The management team is working hard to optimise its sales strategy and pursue further cost reductions. The results of its efforts are already visible in much improved financials: growth in all the ongoing businesses and in all regions; and stronger margins from better revenue mix and streamlining. The sale of Automotive in February 2019 focused Telit on Industrial IoT, removed a heavy R&D burden and left the group very well-funded. Cash is to be partially returned to shareholders depending on the developing Covid-19 situation. Even in an uncertain times, the year leaves Telit very well placed with tremendous upside to build LT value through numerous opportunities as a global leader in the growing IoT market.

Lorne Daniel

020 7220 0545

ldaniel@finncap.com

 

 

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