finnCap Research Company Note - 27 July 2018

Jul 27, 2018 / Research Notes

Read our regular corporate finance notes featuring updates from the finnCap Research team's sector experts.

Download the full research note here

Sector: Energy

President Energy (PPC): Argentina ops update

Key data                              

  • Share price (p): 9.3
  • Target price (p): 18.0
  • Market cap (£m): 100.4
  • Enterprise value (£m): 113.5

President’s latest ops update confirms that its Puesto Flores work programme is still performing ahead of expectations. Estancia Vieja extended gas well test results are also encouraging, with more than enough gas present to fuel both fields, offering potential savings of $150-200k/month. Domestic oil prices have been capped at $68/bbl since May, but pump price controls are expected to be lifted next month, which should help free up domestic oil prices. President remains for us a low risk, oil exposed growth story with an attractive valuation.

Jonathan Wright | jwright@finncap.com

Sector: Life Sciences

Scientific Digital Imaging (SDI): FY results – cashflow to the fore

Key data                              

  • Share price (p): 40.5
  • Target price (p): 42.0
  • Market cap (£m): 36.3
  • Enterprise value (£m): 35.7

Full-year results to 30 April 2018 were better than expected with revenues, adjusted pre-tax profit and EPS 3%, 9% and 13% above our forecasts, respectively. Driven by c.11% organic growth (Sentek and Atik) and boosted by acquisitions (a full year from Astles and 8 months from Applied Thermal Control), revenue growth of 35% translated to 77% adjusted pre-tax profit growth and 41% EPS growth. We are introducing 2020 forecasts as well as upgrading our FY 2019 adjusted EPS by 3%. The results were characterised by strong free cashflow, rising from £0.5m to £1.7m, driven by actions taken in its heritage business but mainly from inherently strong cashflows from recent acquisitions. Consequently, we are raising our target price by 13% to 42p, reflecting the stronger underlying cashflow and maintaining our target multiple of c.10.0x 2019 EV/EBITDA, which would imply an adjusted P/E of 17.9x and free cashflow yield of 5.4%.

Mark Brewer | mbrewer@finncap.com