finnCap Research Company Notes - 6 February 2020

Feb 06, 2020 / News

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Sector: Technology & Telecoms

Access Intelligence (ACC) : Corp

Repayment after Pulsar accounting review

Key data                              

  • Share price (p)                  50.5
  • Target price (p)                84.0
  • Market cap (£m)                              38.5
  • Enterprise value (£m)                    36.5

Following the trading update in December 2019, Access Intelligence has announced the successful completion of an independent review into accounting questions associated with the recently acquired Pulsar business. Access Intelligence will receive £1.6m in cash and 4.1m shares (equivalent to £2.1m) from Cello Health to reflect the lower net asset position of the business and as such, the revalued purchase price for Pulsar will be just £0.8m (originally £4.5m). The board remains confident in its acquisition of the Pulsar platform, which has significantly accelerated the product roadmap for Vuelio at a substantial discount to the R&D spend alternative. Going forward, as the company ramp up the realigned sales team, it has committed to ongoing investment in its sales and marketing force to drive future growth. We adjust forecasts to reflect the restatement of Pulsar’s accounts, and look forward to additional detail at prelims in March.

Andrew Darley

020 7220 0547


Sector: Technology & Telecoms

Filtronic (FTC) : Corp

H1 sees a strong platform for growth built

Key data                              

  • Share price (p)                  11.1
  • Target price (p)                15.0
  • Market cap (£m)                              23.3
  • Enterprise value (£m)                    25.5       

The £4.2m sale of the Filtronic Telecoms Antenna Operations (FTAO), coupled with ongoing strong demand for 5G back/cross-haul, mmWave development and a revamped operating and management structure across a more efficient footprint, puts Filtronic in a strong financial and market position going forward. Its strengthened balance sheet underwrites plans to strengthen the sales and marketing and engineering capabilities this year. The continuing business will thus be well positioned to capitalise on the growth opportunities in its high-margin markets like 5G backhaul, critical coms, aerospace & defence; the recent design wins to develop cross-haul technology for major players in 5G mmWave and High-Altitude Pseudo-Satellite (HAPS) point the way ahead, although revenue will be seen in FY 2021. Overall, a strong platform for growth is being built here.

Lorne Daniel

020 7220 0545


Sector: Life Sciences

SDI Group (SDI) : Corp

Running the Slide Rule over SDI

Key data                              

  • Share price (p)                  79.8
  • Target price (p)                105.0
  • Market cap (£m)                              77.6
  • Enterprise value (£m)                    78.2

SDI was selected in finnCap’s Slide Rule QVGM+ top 30 stocks in Q1 2020, reflecting the projected strong sales and EPS growth over the next two financial years of 30% and 31% respectively, buoyed by recent acquisitions but more importantly the rising ROCE. The prospect of sustainable organic growth is considered likely for this buy-and-build model given ongoing investment to support portfolio companies’ ambitions. These quality metrics are also seen in Judges Scientific (a larger buy-and build investment story), which despite three-year 9% EPS CAGR, trades on a FY 2020 P/E of c.25x and FCF yield of 4.2%. Given the successful acquisition and integration of 11 businesses over the past six years, and mindful of opportunities that still exist for SDI, we are raising our target price to 105p, which brings the valuation into line with Judges. This implies FY 2021 EV/EBIT and P/E multiples of 19.6x and 24.5x, respectively.

Mark Brewer

020 7220 0556



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