finnCap Research Company Notes - 30 March 2020
Mar 30, 2020 / News
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Sector: Technology & Telecoms
Amino Technologies (AMO) : Corp
COVID-19 update
Key data
- Share price (p) 118.5
- Target price (p) 215.0
- Market cap (£m) 90.1
- Enterprise value (£m) 89.0
Amino has provided an update of the situation with regard to COVID-19. All staff are working from home and the group is working hard to ensure client video streaming services and apps are coping with increased usage, including remote management, support, and installation of devices, thus enabling new installations without engineer visits. Factory production in China is back at normal levels, albeit with challenges flowing from irregular flow of raw materials. Financial performance for the rest of the year is understandably uncertain, and while we retain forecasts for year ending November 2020, the board has decided to withdraw the final dividend for FY19 – removing the resolution and rescheduling the AGM. Through constant client interaction, management remains confident based on client confidence, but understandably cautious given its ever common-sensical approach. The 24i acquisition continues to prove itself a game changer for Amino’s ability to broaden its approach and satisfy clients’ end user requirements, and we look forward to further updates as appropriate.
Andrew Darley
020 7220 0547
Sector: Technology & Telecoms
Maintel (MAI) : Corp
COVID-19 update
Key data
- Share price (p) 148.5
- Target price (p) 600.0
- Market cap (£m) 21.3
- Enterprise value (£m) 45.3
Maintel has announced that in keeping with multiple listed peers, results for FY19 will be delayed; however, performance is reiterated in line with unchanged expectations as at the January trading update – EBITDA of £11.7m from revenue of £123m. With 70% recurring revenue, performance for the 1Q20 is also on track, with an increase in demand for cloud services, support for remote working, business continuity and flexibility. The group is, however, now seeing certain projects put on hold, and delayed placing of orders, as the country adjusts to decision making and cost control under lockdown. While in all cases, the project purpose will be to deliver cost saving or increased functionality and efficiency, there is an understandable element of uncertainty to forecasts. We expect to review them with greater insight into client intentions and behaviour when final results are announced.
Andrew Darley
020 7220 0547
Sector: Financial & Insurance
Morses Club (MCL) : Corp
Adapting quickly to an unprecedented environment
Key data
- Share price (p) 40.2
- Target price (p) 160.0
- Market cap (£m) 52.3
- Enterprise value (£m) 67.5
In line with sector competitors, the company withdraws forward guidance and envisages results to 29 February 2020, due 30 April, will now be delayed by the backlog of work facing all auditors. On a positive note, 41% of collections are already done via remote payments, with further strong demand made possible by Morses Club already having the technology in place to allow customers to take advantage of such services. In addition to Morses Club’s ongoing forbearance policies, government help is likely to aid customer repayments, although over 50% of client income is already assured by welfare or pension payments. As previously stated, the company’s EBITDA to interest cover is almost twice (9x) what covenants require (5x). 2019A dividend payment was £9.6m and in recognition of the current environment, the board will not be recommending a dividend in July, but will look to review the capacity to do so once the effects COVID-19 of become clearer.
Nik Lysiuk
020 7220 0546
Sector: Industrial Technology
Solid State (SOLI) : Corp
COVID-19 update
Key data
- Share price (p) 335.0
- Target price (p) 610.0
- Market cap (£m) 28.5
- Enterprise value (£m) 28.2
The group has announced a reassuring trading update, highlighting that its facilities are open and operating effectively. The group’s high level of stock has enabled it to fulfil customer demand and withstand any supply chain disruption, while its Asian supply chain now appears to be returning to more normal conditions. No change to forecasts. The shares have clearly been severely affected by the market fallout and left the shares trading on a P/E of 8.1x for the year just completed and 7.7x for 2021.
David Buxton
020 7220 0542
Sector: Industrial Technology
Somero Enterprises (SOM) : Corp
COVID-19 update, deferral of dividend
Key data
- Share price (p) 182.0
- Target price (p) U/R
- Market cap (£m) 102.5
- Enterprise value (£m) 83.3
The company has announced a trading update, highlighting the recent impact COVID-19 lockdowns have had on customer projects and group operations in many geographies. As such, with considerable uncertainty, but expecting a material impact, it is withdrawing guidance. We therefore also withdraw our forecasts. The group’s strong net cash position of over $24m provides comfort. It is implementing a range of cash conservation actions, including deferring for a year, the payment of its final and supplemental dividend totalling $11.7m.
David Buxton
020 7220 0542
Sector: Support Services
Belvoir Group (BLV) : Corp
Swift action enables us to look through a lost year
Key data
- Share price (p) 101.5
- Target price (p) 169.0
- Market cap (£m) 35.6
- Enterprise value (£m) 42.5
Belvoir’s FY 2019 results were strong, with adj. EPS up 13% (13.6p vs our forecast 13.0p) and strong cash generation. COVID-19 will affect property sales in FY 2020 but lettings (61% of 2019 gross profit) will be more resilient, helped by the Government’s measures to support employment and incomes. Management has reacted quickly, reducing costs and putting plans in place to support franchisees. We now forecast a ‘lost year’ in FY 2020, assuming five months of no sales activity, a significant reduction in financial services and a reduction in lettings fees, partly offset by a £1.5m cost reduction. The capital light franchise model, inherent high levels of cash generation and no final dividend for 2019 mean we forecast gross cash of £2.0m at December 2020, down from £3.6m. Belvoir is in good financial shape to weather the storm and support its franchisees before returning to normal activity. The success of the strategy was again evidenced by a strong start to 2020 prior to COVID-19.
Guy Hewett
020 7220 0549
Sector: Life Sciences
Bioventix (BVXP) : Corp
Interims – pre-COVID growth
Key data
- Share price (p) 3 220.0
- Target price (p) 3 750.0
- Market cap (£m) 165.5
- Enterprise value (£m) 160.0
Bioventix delivered a strong set of interims, with revenues up 21%. Given the 9% decline in operating expenses, this resulted in a 31% increase in adjusted EBITDA, with adjusted pre-tax profit also rising 31% to £4.4m (52% of full-year forecasts) and adjusted EPS up 29% to 69.4p. An interim dividend of 36p was declared (+20%) with net cash at period end of £5.5m. Growth was driven by both Vitamin D antibody sales/royalties (+c.25%), its portfolio of other antibodies (+c.12%) and a more meaningful contribution from troponin. Given the inevitable disruption that COVID-19 will have to some testing volumes (although tests such as NTproBNP are likely to benefit from high risk COVID patients), we leave forecasts unchanged, confident that the strong H1 and weaker sterling in H2 should offset any potential H2 trading shortfall. We leave our forecasts unchanged and reiterate our 3750p target price. At this level, the stock would trade on a 30x FY 2020 P/E with a free cashflow yield of 3.1x
Mark Brewer
020 7220 0556
Sector: Technology & Telecoms
PCI Pal (PCIP) : Corp
Now funded to reinforce N. American success
Key data
- Share price (p) 30.0
- Target price (p) 55.0
- Market cap (£m) 12.8
- Enterprise value (£m) 8.3
Management has taken an opportunity to raise a gross £5m in an equity placing at 30p. The funding will strengthen the balance sheet and provide plenty of general working capital in an uncertain time; however, the vast majority of the cash will be used to fund continued growth in the large and lucrative N. American market. This remains an exciting and key market to exploit and the funding will allow additional sales & marketing resources for channels there and targeted improvements in Time To Go Live (TTGL) on new partner and customer deployments. The cash will also enable new opportunities for future expansion. PCIP is now well funded and positioned to consolidate success.
Lorne Daniel
020 7220 0545