finnCap Research Company Notes - 29 March 2019

Mar 29, 2019 / News

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Sector: Energy

Anglo African Oil & Gas (AAOG) : Corp

TLP-103C update and SNPC repayment

Key data                              

  • Share price (p)                  9.9
  • Target price (p)                52.0
  • Market cap (£m)                              23.6
  • Enterprise value (£m)                    22.3

AAOG has disclosed that high-quality oil unexpectedly flowed to surface from the Djeno reservoir via its TLP-103C well. This is very good news as it confirms the earlier analysis by Schlumberger of the Djeno reservoir and demonstrates that the oil can flow to surface under its own pressure. This new information will be included in the CPR due to be published in April. In addition, SNPC has proposed a monthly repayment schedule for the $9.5m it owes AAOG in back-costs while negotiations continue over a debt for licence-equity swap, which provides a welcome boost to finances.

Jonathan Wright


Sector: Industrials

Zambeef (ZAM) : Corp

Tough macro environment

Key data                              

  • Share price (p)                  10.4
  • Target price (p)                20.0
  • Market cap (£m)                              31.3
  • Enterprise value (£m)                    114.9

Zambeef has this morning issued an H1 trading update for the six months ending 31 March 2019. This statement highlights a number of macro and cost pressures currently facing the business which taken together are likely to reduce our Gross Profit margin estimate by c100bps for the current year. Operational gearing magnifies this change such that we downgrade our FY 2019E adjusted EBIT forecast 20% (to US$9.5m) and our adjusted PBT forecast 44% (to US$3.0m). Despite tough trading conditions, we continue to forecast c10% organic revenue growth in the current financial year, highlighting the strength of its offering in the Zambian market.

Raymond Greaves


Sector: Mining

Kazera Global (KZG) : Corp

Interim results

Key data                               

  • Share price (p)                  1.9
  • Target price (p)                U/R
  • Market cap (£m)                              4.7
  • Enterprise value (£m)                    3.9

Kazera Global has released interim results for the period to 31 December 2018. Its principal asset is its investment in African Tantalum (Pty) Limited (Aftan), which has a controlling interest in the Namibia Tantalite Investment mine at Tantalite Valley in southern Namibia. We do not have a price target for Kazera Global.

Martin Potts


Sector: Life Sciences

Bioventix (BVXP) : Corp

The antibody that keeps on giving

Key data                              

  • Share price (p)                  3 600.0
  • Target price (p)                3 700.0
  • Market cap (£m)                              185.0
  • Enterprise value (£m)                    179.5

Bioventix delivered a strong set of interims, distorted by last year’s inclusion of c.£0.8m of back-dated royalty payments from one customer. Whilst statutory revenues rose 2% and pre-tax profits fell 5%, the underlying performance was considerably stronger, with revenues rising by 24% (21% CER) and underlying adjusted EPS up 27% to 53.8p. An interim dividend of 30p was declared (+20%), with net cash at period-end of £5.5m. Growth was driven by both Vitamin D antibody sales/royalties and other antibodies. Despite the strong performance, we are leaving our forecasts unchanged for the moment given the slower-than-expected ramp in troponin antibody revenues. However, we are raising our target price to 3,700p to reflect both the strong underlying and continued belief that Siemens will successfully transition to high-sensitivity troponin tests, driving growth as vitamin D sales ultimately slow. At this level, the stock would trade on a 30x FY 2020 P/E and an EV/EBITDA of 23.0x, with a free cashflow yield of 3.3%.

Mark Brewer


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