finnCap Research Company Notes - 28 January 2019
Jan 28, 2019 / News
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Sector: Technology & Telecoms
Maintel (MAI) : Corp
Positive trading update
Key data
- Share price (p) 423.0
- Target price (p) 900.0
- Market cap (£m) 60.1
- Enterprise value (£m) 85.5
Maintel has reported a positive trading update for the year ending December 2018, detailing performance comfortably in line with market expectations and adjusted EBITDA expected to be at the top end of the Board’s guidance of £12.0m to £12.5m. After a challenging 1H18, this suggests a strong 2H18 with EBITDA of £7.2m or more, demonstrating an acceleration of pace and margin (1H18: £5.4m after FY17 performance of 1H: £5.1m; 2H: £6.0m). Closing net debt of £25.5m indicates cash generation outperformance, reiterating the absurdly generous 13.1% free cash flow yield the current share price offers, rising to an astonishing 16.5% in FY19 – and very comfortably affording an 8.2% div yield, rising to 8.7%. With cloud sales, and hence earnings quality and visibility, accelerating; two significant multi-year public sector contracts; and the ICON Now platform broadening the addressable market to the mid market, Maintel has confronted its demons. Target 900p reiterated.
Andrew Darley | adarley@finncap.com
Sector: Support Services
Minds + Machines (MMX) : Corp
ICM and channel sales see results beat expectation
Key data
- Share price (p) 5.7
- Target price (p) 17.0
- Market cap (£m) 45.4
- Enterprise value (£m) 39.8
Boosted by the strategic acquisition of ICM, FY 2018 has been a year of growth, so both revenue and earnings will be ahead of expectations. Q4 sales, notably through the registrars, are helping to transform MMX into a “stable, growing, cash generative business built around organic growth, innovation and accretive acquisitions”. The momentum has continued into 2019 supported by ICM, which is delivering to plan. We nudge up our FY 2018 forecasts in response and will take a view on 2019 with the FY 2018 results published in March.
Lorne Daniel | ldaniel@finncap.com
Sector: Technology & Telecoms
PCI Pal (PCIP) : Corp
H1 sales impress
Key data
- Share price (p) 17.5
- Target price (p) 50.0
- Market cap (£m) 7.5
- Enterprise value (£m) 4.0
A brief H1 trading update reveals management is pleased with progress and feels the company is on track to meet FY earnings forecasts. H1 has a seen strong sales performance on the back of the launch of the AWS service. With trials on transaction volumes and early adopters going live, Total Contract Value (TCV) signed, and the critical recurring Annual Contract Value (ACV) on contracts signed, have soared; both are significantly higher in this first half than achieved across the whole of last year on the old platform. This contracting success highlights the attraction of the new AWS offering to call centre operators and helps to underpin our growth expectations.
Lorne Daniel | ldaniel@finncap.com
Sector: Life Sciences
Destiny Pharma (DEST) : Corp
Positive safety data. Phase IIb study good to go….
Key data
- Share price (p) 74.0
- Target price (p) 250.0
- Market cap (£m) 32.2
- Enterprise value (£m) 17.2
The announcement of positive Phase I safety data further de-risks Destiny’s lead asset, XF-73, which will now enter a Phase IIb study in the US for the prevention of post-surgical bacterial infections, with data readout from this study still expected in H2 2019. The Phase I study achieved the primary objective of a low cumulative irritancy score with high statistical significance when compared with a placebo of distilled water, and can now be classified as a non-irritant. The company remains funded through to H2 2020, at which point it will have a valuable Phase III-ready package with Fast Track designation awarded by the FDA. Our target price remains unchanged at 250p, given that we had assumed a clean safety profile in our probability-adjusted DCF calculation.
Mark Brewer | mbrewer@finncap.com