finnCap Research Company Notes - 20 February 2019
Feb 20, 2019 / News
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Sector: Technology & Telecoms
Castleton Technology (CTP) : Corp
Castleton India acquisition
Key data
- Share price (p) 90.0
- Target price (p) 125.0
- Market cap (£m) 73.2
- Enterprise value (£m) 77.8
Castleton has announced the acquisition of Castleton India (previously CarbonNV InfoLogic India) for a total consideration of £350,000 (200,331 shares and £154,678 cash). For the past 11 months, Castleton has held a service agreement with the Indian operation to provide additional capacity for their software development; this has enabled the group to bring to market a number of products more quickly and at a reduced cost, including Castleton.DIGITAL. The acquisition is therefore a logical progression for the group, to bring these services in house, as well as gain access to the 21 developers based in India.
Andrew Darley adarley@finncap.com
Sector: Industrials
Gooch & Housego (GHH) : Corp
AGM warns of softer microelectronics but better subsea
Key data
- Share price (p) 1 485.0
- Target price (p) 1 475.0
- Market cap (£m) 366.2
- Enterprise value (£m) 376.8
The AGM update points to a change in the business mix, with weaker microelectronics demand, particularly in China, partly offset by better-than-expected growth in subsea fibre couplers. 2H order books and demand profile signals a stronger 2H. The change results in a less rich margin mix and prompts us to downgrade 2019 EPS by 11.6%. We reduce our price target by a similar amount from 1,675p to 1,475p, pointing to a 2020 P/E of 22x. We anticipate that the shares will react to this disappointing statement but believe that the group’s fundamental attractions remain, but may need confirmation of a stronger level of microelectronics demand to restore outperformance.
David Buxton dbuxton@finncap.com
Sector: Life Sciences
LiDCO (LID) : Corp
Full-year trading update
Key data
- Share price (p) 4.3
- Target price (p) 11.0
- Market cap (£m) 10.6
- Enterprise value (£m) 8.9
The transition from a capital purchase to HUP SaaS model is proving harder than expected. The level of interest in HUP remains strong, with no evidence of pipeline withdrawals. The active pipeline of contracts in the US as well as feedback from key customers in the US and UK, who report increased haemodynamic monitoring usage and commensurate consumable savings, gives us confidence in the future. Full-year revenues were £0.4m lower than expected at £7.3m, but with lower costs (c.£0.3m), we expect the adjusted pre-tax loss to be c.£2.0m. Net cash at year-end was £1.7m and is considered sufficient to execute on strategic objectives. We reiterate our target price of 11p. At this level, the stock would trade on a FY 2020 EV/Sales of 3.0x, falling to 2.5x in FY 2021.
Mark Brewer mbrewer@finncap.com
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
Register here to access all finnCap corporate finance research
Sector: Technology & Telecoms
Castleton Technology (CTP) : Corp
Castleton India acquisition
Key data
- Share price (p) 90.0
- Target price (p) 125.0
- Market cap (£m) 73.2
- Enterprise value (£m) 77.8
Castleton has announced the acquisition of Castleton India (previously CarbonNV InfoLogic India) for a total consideration of £350,000 (200,331 shares and £154,678 cash). For the past 11 months, Castleton has held a service agreement with the Indian operation to provide additional capacity for their software development; this has enabled the group to bring to market a number of products more quickly and at a reduced cost, including Castleton.DIGITAL. The acquisition is therefore a logical progression for the group, to bring these services in house, as well as gain access to the 21 developers based in India.
Andrew Darley adarley@finncap.com
Sector: Industrials
Gooch & Housego (GHH) : Corp
AGM warns of softer microelectronics but better subsea
Key data
- Share price (p) 1 485.0
- Target price (p) 1 475.0
- Market cap (£m) 366.2
- Enterprise value (£m) 376.8
The AGM update points to a change in the business mix, with weaker microelectronics demand, particularly in China, partly offset by better-than-expected growth in subsea fibre couplers. 2H order books and demand profile signals a stronger 2H. The change results in a less rich margin mix and prompts us to downgrade 2019 EPS by 11.6%. We reduce our price target by a similar amount from 1,675p to 1,475p, pointing to a 2020 P/E of 22x. We anticipate that the shares will react to this disappointing statement but believe that the group’s fundamental attractions remain, but may need confirmation of a stronger level of microelectronics demand to restore outperformance.
David Buxton dbuxton@finncap.com
Sector: Life Sciences
LiDCO (LID) : Corp
Full-year trading update
Key data
- Share price (p) 4.3
- Target price (p) 11.0
- Market cap (£m) 10.6
- Enterprise value (£m) 8.9
The transition from a capital purchase to HUP SaaS model is proving harder than expected. The level of interest in HUP remains strong, with no evidence of pipeline withdrawals. The active pipeline of contracts in the US as well as feedback from key customers in the US and UK, who report increased haemodynamic monitoring usage and commensurate consumable savings, gives us confidence in the future. Full-year revenues were £0.4m lower than expected at £7.3m, but with lower costs (c.£0.3m), we expect the adjusted pre-tax loss to be c.£2.0m. Net cash at year-end was £1.7m and is considered sufficient to execute on strategic objectives. We reiterate our target price of 11p. At this level, the stock would trade on a FY 2020 EV/Sales of 3.0x, falling to 2.5x in FY 2021.
Mark Brewer mbrewer@finncap.com
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