finnCap Research Company Notes - 21 January 2020
Jan 21, 2020 / News
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Sector: Technology & Telecoms
dotDigital (DOTD) : Corp
Interim trading update
Key data
- Share price (p) 106.0
- Target price (p) 135.0
- Market cap (£m) 315.2
- Enterprise value (£m) 295.9
dotDigital’s trading update confirms strong performance for the six months to December 2019, with adj. EBITDA and adj. PBT expected in line with expectations. Organic revenue grew 15% to £23.1m, primarily driven by direct sales to new and existing customers, whilst recurring revenue rose to £7.4m (1H19: £5.7m) as investment in product functionality bore fruit. ARPU grew to £999 per month, up 14% YoY, the combined result of higher value new sales and an increase in existing customer spend. With a strong cash balance of £22.5m (1H19: £16.7m) and an increasingly omnichannel-focused market, the group remains comfortable delivering FY20 expectations through the track record of success of the strategic blend of ongoing product development, territorial expansion and deepening strategic partnerships. We reiterate our forecasts and target price (135p).
Andrew Darley
020 7220 0547
Sector: Technology & Telecoms
Elecosoft (ELCO) : Corp
FY 2019 earnings on track for growth forecast
Key data
- Share price (p) 87.0
- Target price (p) 93.0
- Market cap (£m) 71.4
- Enterprise value (£m) 73.9
Today’s post-year-end update reveals that FY 2019 profit will indeed show YoY growth, in line with expectations. Management rightly point out that this means the group has shown impressive resilience through difficult trading conditions through last year. FY 2019 saw adverse FX movements combined with Brexit-related delays in the UK construction, manufacturing and retail sectors – all key markets for ELCO. We therefore adjusted our FY 2019 earnings expectations on the back of the Interims and these have been met through H2. To have still grown the profitability in this period highlights both the attractiveness of the building and construction software market and the quality of the group itself. We feel that greater political and economic clarity in 2020 should bring FX stability and the confidence to proceed with development and building programmes in those core markets. ELCO’s quality not only allows it to weather a difficult market – it also leaves it well positioned to benefit as confidence recovers.
Lorne Daniel
020 7220 0545
Sector: Consumer & Other
eve Sleep (EVE) : Corp
FY19 pre-close; EBITDA loss/cash burn materially reduced
Key data
- Share price (p) 2.0
- Target price (p) 4.0
- Market cap (£m) 5.1
- Enterprise value (£m) -0.9
Despite another intensely competitive half year for the industry, today’s FY19 pre-close trading update demonstrates that EVE has continued to sequentially stabilise its results and to substantially reduce its cash burn (-51% y/y), reflecting the early benefits of strategic, operational and structural changes implemented as part of EVE’s longer-term transformation to be a differentiated (“sleep wellness” positioning in the marketplace) and sustainably profitable premium brand within the growing category of mattresses and related sleep products. In short, whilst EVE’s rebuild strategy remains very much a work-in-progress, we believe this ‘steady-as-she goes’ progress should be well received by investors.
Peter Smedley
020 7220 0548
Sector: Industrials
Hardide (HDD) : Corp
Placing proceeds to further upgrade equipment
Key data
- Share price (p) 62.0
- Target price (p) 88.0
- Market cap (£m) 30.5
- Enterprise value (£m) 28.4
The company has announced a small-scale placing, raising £2.5m as it makes good progress with its substantial expansion, upgrade and relocation project for its UK facilities. The commercial progress being made across a number of sectors, but highlighting the huge potential of new aerospace customers, supports stepping up the pace of the investment programme and also future-proofing the business through investment in modern, efficient, new equipment.
David Buxton
020 7220 0542
Sector: Industrials
LPA Group (LPA) : Corp
LED lighting contract win and trading update
Key data
- Share price (p) 96.0
- Target price (p) 131.0
- Market cap (£m) 11.9
- Enterprise value (£m) 14.5
Ahead of the group’s forthcoming FY results, it has announced that Q1 trading has seen a pick-up in activity and a solid performance. It has also announced that it has been awarded a contract with Siemens on a significant rolling stock order for the Austrian Railway. We maintain existing forecasts until next week. Today’s statement is encouraging and points to a recovery in the group’s fortunes after a challenging 2019.
David Buxton
020 7220 0542
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