finnCap Research Company Notes - 25 January 2019
Jan 25, 2019 / News
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Sector: Life Sciences
Destiny Pharma (DEST) : Corp
UK-China AMR £1.6m grant award
- Key data
- Share price (p) 65.5
- Target price (p) 250.0
- Market cap (£m) 28.5
- Enterprise value (£m) 13.5
Destiny Pharma announced that it has been awarded a £1.6m grant by the UK-China AMR (antimicrobial resistance) programme, to fund additional research into Destiny’s novel XF platform and its use in preventing, controlling and eradicating life-threatening bacteria (‘superbugs’) without generating resistance. This is a prestigious award and reflects both the platform’s novelty as well as the clinical results seen to date. We await the outcome of the second Phase I tolerability study for its lead product, XF-73, after which the large Phase IIb study for the prevention of post-surgical staphylococcal infections will commence, with results expected by year end. No change to 250p target price.
Mark Brewer | mbrewer@finncap.com
Sector: Technology & Telecoms
Elecosoft (ELCO) : Corp
FY 2018 results comfortably in line
Key data
- Share price (p) 69.5
- Target price (p) 88.0
- Market cap (£m) 54.1
- Enterprise value (£m) 51.4
We are very encouraged to hear that results for the year to December 2018 will be in line with forecasts of strong growth in both revenue and profit. There is continued organic growth in the group’s construction and visualisation software business despite macroeconomic uncertainty and forex fluctuations. This growth was augmented in H2 with the profitable acquisitions of Shire Systems in the UK and Active Online in Germany. We are reassured that both acquisitions have performed as expected following purchase, and the year ahead should be very exciting for the expanded enterprise. We reiterate our forecasts and target price.
Lorne Daniel | ldaniel@finncap.com
Sector: Energy
Europa Oil & Gas (EOG) : Corp
And the fight goes on
Key data
- Share price (p) 2.7
- Target price (p) 41.0
- Market cap (£m) 12.5
- Enterprise value (£m) 6.0
A small win for Europa in the ongoing saga that is the Wressle field development consent, or lack of it. A one-year extension to the Wressle site planning consent was approved, to January 2020, giving Europa time for another appeal against the refusal of development consent by North Lincolnshire Council. Nevertheless, the main reason to own Europa remains its exposure to Offshore Ireland, where final sign-off is awaited on a farm-out deal that will secure funding for three wells. A new financial year and recovering oil prices hopefully help the decision along. A successful conclusion to the negotiations would be a major catalyst for the shares.
Jonathan Wright | jwright@finncap.com
Sector: Technology & Telecoms
Mporium Group (MPM) : Corp
Strategic collaboration
Key data
- Share price (p) 5.1
- Target price (p) U/R
- Market cap (£m) 29.8
- Enterprise value (£m) 29.0
Subject to General Meeting on 11 Feb, Mporium has announced a strategic collaboration agreement with Allay (UK) Ltd, a claims management specialist in consumer compensation claims for mis-sales such as PPI, timeshares, flight delays, payday loans and solar panels, Allay’s lead generation will be fulfilled by Mporium’s pay-per-performance platform MporiumX, demonstrating the potential for the IMPACT platform. Allay currently spends low single digit millions per month with a number of providers, suggesting the agreement has the potential to deliver revenue and EBITDA “several orders of magnitude” ahead of current performance, leading to expected profit and positive cash flow for FY19. In consideration for the exclusive agreement with Allay, Allay will be issued and allotted 211.3m shares, amounting to 25% of the enlarged share capital. With delivery of certain revenue targets paid by Allay to Mporium, this may extend to a further 59.1m shares, escalating Allay’s stake to 29.9%. We see this as a very positive fillip to Mporium’s performance, with a strong industry confirmation of the value of Mporium’s IMPACT platform, in a growing market. We look forward to initiating in due course.
Andrew Darley | adarley@finncap.com
Sector: Technology & Telecoms
SCISYS (SSY) : Corp
FY 2018 meets guidance with strong order book at YE
Key data
- Share price (p) 173.0
- Target price (p) 205.0
- Market cap (£m) 50.7
- Enterprise value (£m) 53.8
The supplier of bespoke software systems and support services to the space, media & broadcast, government, defence and commerce sectors has revealed its FY 2018 will meet revenue and earnings expectations. Looking ahead, the order book is strong after c.£23m of contract wins, predominantly in the Space division, since mid-December. At YE the order book was an impressive £100m (2017: £91.3m), giving us great comfort over our £59m revenue forecast for FY 2019. Cashflow seems to have been good despite the costs of moving the registered office to Ireland, reducing net debt to £3.1m. We reiterate our forecasts and outlook.
Lorne Daniel | ldaniel@finncap.com
Sector: Technology & Telecoms
eServGlobal (ESG) : Corp
Mastercard’s Earthport bid highlights HomeSend value
Key data
- Share price (p) 5.3
- Target price (p) 20.0
- Market cap (£m) 48.5
- Enterprise value (£m) 29.5
Well ‘the game is afoot’. Today’s news that Mastercard has trumped Visa’s agreed bid for Earthport by 10% highlights the opportunity eServGlobal has in HomeSend (HS). This bid demonstrates Mastercard’s determination to be the industry ‘gorilla’ in the global money transfer/payment solutions industry and it follows that sooner, rather than later, it will want to take complete control of their HomeSend JV through bidding for eServGlobal’s 35.69% stake. HS and Earthport have both competing and complementary technology but there is room and need for both. Furthermore it shows the value Mastercard ascribes to payment solutions; HomeSend looks significantly undervalued by comparison.
Lorne Daniel | ldaniel@finncap.com
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