finnCap Research Company Notes - 29 January 2020
Jan 29, 2020 / News
Register here to access all finnCap corporate finance research
Sector: Technology & Telecoms
Minds + Machines (MMX) : Corp
Strong H2 underpins forecasts and maiden dividend
Key data
- Share price (p) 8.1
- Target price (p) 17.0
- Market cap (£m) 74.8
- Enterprise value (£m) 67.9
The leading owner and operator of Internet Top-Level Domains (TLDs) has released a very positive YE update, leading us to reiterate our FY 2019 forecasts and expect a maiden dividend declaration alongside the results in March. With strong trading continuing in H2, MMX has seen fundamental improvement in revenue, mix and cash generation through 2019, gaining sufficient confidence to adopt a progressive dividend policy. We reiterate forecasts and 17p target price.
Lorne Daniel
020 7220 0545
Sector: Technology & Telecoms
Tremor (TRMR) : Corp
Reassuring trading update after a transformational year
Key data
- Share price (p) 180.0
- Target price (p) 500.0
- Market cap (£m) 237.6
- Enterprise value (£m) 179.7
Following a transformational year for Tremor, today’s trading update highlights FY19 numbers in line with those announced at the Unruly acquisition, and continued confidence in the outlook for 2020 and beyond. This confidence reflects management focusing Tremor’s platform on the substantial growth opportunity in Video and Connected TV (CTV) advertising, and moving the group away from lower margin activities that are outside of Tremor’s core market. We expect this focus to enable Tremor to capitalise on the substantial growth expected in Video and CTV, and we look forward to further detail on Tremor’s strategy at its FY results on 31 March and CMD on 3 April.
Michael Hill
020 7220 0554
Sector: Technology & Telecoms
Quixant (QXT) : Corp
Market weakness impacts H2 and cautions on FY 2020
Key data
- Share price (p) 205.0
- Target price (p) 250.0
- Market cap (£m) 136.0
- Enterprise value (£m) 123.6
Today’s trading update notes further softness in the gaming market last year. Guidance was cut in September on reduced demand from two large customers (notably Ainsworth) losing market share/floor space in the casinos. In the following months to the YE, Quixant experienced weaker demand for core gaming platform units across the wider client base, indicating general uncertainty amongst global machine manufacturers. FY 2019 revenues and adj. PBT will thus be below forecasts at $92.3m and $10.7m (down 20% and 40% YoY respectively) although H2 cash generation appears to have been strong, leaving $16.2m net cash at YE ($15.2m expected). Given this uncertainty we have cut our growth expectations for the year ahead to the very minimum likely case to rebuild confidence. The operational gearing increases the earnings impact. In light of the strong cash position, our dividend forecasts are unchanged. The issue of visibility has been addressed with the appointment of a new Sales Director this month and the introduction of improved systems during Q4 2019. The new sports-betting terminals should start to boost sales in 2020 and in 2021 we should see growth from a sizeable new customer in Japan. QXT remains well-funded, profitable and cash generative. Although facing short-term headwinds, it retains an excellent position to benefit from the underlying outsourcing trend in the global gaming machine industry. We ease our TP to 250p on this update.
Lorne Daniel
020 7220 0545