finnCap Research Company Notes - 4 June 2020

Jun 04, 2020 / News

Elecosoft (ELCO) : Corp

Technology & Telecoms

An impressive first four months despite lockdown

Key data

 

 

Share price (p)

 

76.5

Target price (p)

 

U/R

Market cap (£m)

 

62.9

Enterprise value (£m)

 

59.8

 

This AGM update suggests a good H1 2020 in the face of the COVID-19 crisis. ELCO had previously noted a strong Q1 but Q2 disruption. Now management accounts for the first four months show the global lockdown has so far had a relatively mild impact on revenue, and that profit has risen markedly on LY. Results to 30 April show revenue is down just 3% YoY (2% at constant currency) assisted by 6% YoY growth in recurring maintenance, support and subscription revenues from the extensive existing user base. Moreover, with that strong Q1 and cash being conserved, PBT has increased by 25% and generated significant cash in the period. As at 30 April the group had £3.1m net cash – up from £1.1m at the start of this year. The management team reacted swiftly to the crisis and rapidly switched the various offices (UK, Germany, Sweden and the Low Countries) over to remote working and online delivery of its training consultancy and support. With an impressive first four months to the end of April and the lockdown easing across Europe in May and June, this AGM update suggests ELCO is weathering the storm well. Guidance is still withdrawn and our forecasts and TP remain Under Review, but ELCO has a strong balance sheet, underpinned by a good level of cash to see it through whatever H2 might bring.

 

Lorne Daniel

020 7220 0545

ldaniel@finncap.com

 

Oncimmune Holdings (ONC) : Corp

Life Sciences

Trading update underlines improved momentum

Key data

 

 

Share price (p)

 

112.5

Target price (p)

 

150.0

Market cap (£m)

 

71.2

Enterprise value (£m)

 

71.2

 

The trading update for the year to 31 May points to full-year sales being in line with our forecasts with year-end cash of c.£4.2m, but more importantly reveals the strong momentum within both the product (EarlyCDT Lung) and service businesses; demonstrating both commercial progress as well as delivering on its strategic plan to broaden and its diversify revenues streams – best exemplified by three contracts signed with pharma/biotech in Q4 FY 2020 that are expected to build into long-term, value-accretive partnerships. A positive outlook statement, pointing to an acceleration in EarlyCDT Lung revenues and an enlarging pipeline of contracts within the ImmunoINSIGHTS services business, encourages us to leave forecasts for FY 2021 unchanged. We reiterate our 150p target.

 

Mark Brewer

020 7220 0556

mbrewer@finncap.com

 

Open Orphan (ORPH.L) : Corp

Life Sciences

COVID-19 antibody test now launched

Key data

 

 

Share price (p)

 

14.5

Target price (p)

 

19.0

Market cap (£m)

 

95.9

Enterprise value (£m)

 

81.5

 

The announcement of the launch of its COVID-19 antibody testing service, following successful completion of installation testing, is line with our expectations of an early June launch. The company will offer this service to large employer group and channel partners, some of whom it has been in active dialogue with since it announced on 11 May its intention to offer this service. We leave forecasts unchanged, but with room for upside depending on uptake of the test, and reiterate our target price of 19p.

 

Mark Brewer

020 7220 0556

mbrewer@finncap.com

 

President Energy (PPC) : Corp

Energy

Trafigura taking a strategic stake

Key data

 

 

Share price (p)

 

2.4

Target price (p)

 

3.9

Market cap (£m)

 

47.0

Enterprise value (£m)

 

53.6

 

President is again demonstrating its ability to adapt rapidly to extreme macro conditions to maintain the balance sheet and keep its asset portfolio intact. A further US$6m subscription from Trafigura alongside a US$4.1m debt for equity swap will reduce debt to ~US$15m. Working capital will also be boosted by up to US$3.1m from the equity placing plus £2.2m from the retail offering. These not only materially improve the balance sheet but also bring President into strategic alignment with a strong industry partner. This, together with the benefit of Argentine fixed oil prices, leaves it primed to pursue a dynamic growth plan.

 

Jonathan Wright

020 7220 0543

jwright@finncap.com

 

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