finnCap Research Company Notes - 6 August 2018

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Sector: Support Services

Lok'nStore (LOK): Three stores opened, nine in development

Key data                              

• Share price (p): 402.5
• Target price (p): 521.0
• Market cap (£m): 119.5
• Enterprise value (£m): 143.0

In a positive year end trading statement Lok’nStore has detailed group revenue up +6.0% year-on-year driven by self storage occupancy up +7.7% and pricing up +0.5%. Three new landmark stores have been opened in the year which are all trading well and there are nine new landmark stores in the pipeline. The pipeline will add 39% to the freehold trading space and 35% to total space. We make no change to forecasts or our short-term NAV-based price target of 521p but highlight that our 10-year target of £10 is now largely justified by the current pipeline, with prospects remaining good for further site additions over time.

Guy Hewett | ghewett@finncap.com

Sector: Technology and Telecoms

Netcall (NET): Netcall contract win

Key data                              

• Share price (p): 66.5
• Target price (p): 75.0
• Market cap (£m): 95.1
• Enterprise value (£m): 95.8

Netcall has announced a new contract win with a NYSE-listed company to deliver both the MatsSoft Low-code platform and Netcall’s Liberty omnichannel Contact Centre solution as a combined digital services platform. Deployed via the cloud, the combined platform will support the delivery of a UK Government Agency’s services – including multi-channel communications, web and mobile portals, as well as case management and integration with back office systems. Worth a minimum of £1.4m over a 4-year period, with an additional 2-year extension opportunity, this contract demonstrates the synergies between the Liberty platform and the recently acquired MatsSoft platform, and highlights the strong pipeline of opportunities for both platforms. Following their recent trading update, this contract reiterates the ongoing transition within Netcall towards an increasing proportion of SaaS-based contracts. We reiterate the 75p target price, and look forward to the upcoming results for the full year to June 2018.

Andrew Darley | adarley@finncap.com

Sector: Life Sciences

Omega Diagnostics (ODX): FY results – rebasing investment case

Key data                              

• Share price (p): 15.5
• Target price (p): U/R
• Market cap (£m): 19.7
• Enterprise value (£m): 20.4

Full year results to 31 March were in line with the trading update in April, with revenues of £13.6m and an adjusted pre-tax loss of £0.7m. The closure of its loss-making German and Indian businesses, disposal of infectious diseases and corporate restructuring in June largely net off these losses in FY 2019. Strategic priorities now reside within Food Intolerance, Visitect CD4 testing and the commercialisation of Allersys allergy tests through IDS. We reintroduce forecasts for FY 2019, which indicate an adjusted pre-tax loss of £0.3m. Importantly, the company has the cash resources/banking facilities to meet the ongoing cash needs of the business. We await clearer visibility over the timing of Visitect’s launch plans as well as progress with Allersys before introducing our FY 2020 forecasts and a target price. Suffice to say, the current valuation is underpinned by the profitable and growing Food Intolerance business, leaving aside upside from the potentially significant opportunity that exists for CD4 and Allersys.

Mark Brewer | mbrewer@finncap.com