finnCap Research Company Notes - 24 October 2018

Oct 24, 2018 / Research Notes

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Sector: Energy

Anglo African Oil & Gas (AAOG): Ops update and financing facility

Key data                              

  • Share price (p): 10.4
  • Target price (p): 40.0
  • Market cap (£m): 16.8
  • Enterprise value (£m): 10.3         

AAOG’s TLP-103C well is progressing according to plan and has passed the level at which it previously incurred problems. The well is on track to reach all three target zones by end-November. Management is also pursuing an option to keep the rig for a second well, TLP-104, and SMP has agreed in principle for the rig to remain on site, offering significant mob/demob savings. A short-term financing facility has been agreed that ensures sufficient funds to complete TLP-103C. The £5m Convertible Loan Note facility is relatively benign, and provides management the flexibility to use the facility at any time in the next 12 months. It has an effective coupon of 10% and only converts if AAOG chooses not to redeem the convertible loan notes. Moreover, the facility is unsecured and has no warrants attached. This is probably the best that could have been expected and allows management, and the market, to focus back exclusively on drilling operations.

Jonathan Wright | jwright@finncap.com

Sector: Consumer & Other

Photo-Me (PHTM): Restructuring, deployment and innovation continue

Key data                              

  • Share price (p): 99.6
  • Target price (p): 183.0
  • Market cap (£m): 374.6
  • Enterprise value (£m): 353.4

Photo-Me has confirmed that trading in the first five months of the year has been in line with expectations and that H1 results will be in line with the prior year. This fits the profile of our full year forecasts and we make no changes. The issues in Japan have been addressed and this business is expected to return to growth in FY 2019. Laundry continues to expand, photo ID continues to deploy its encrypted upload technology and investment in new technologies and products is ongoing. We maintain our 183p target price based on a 5% FY 2019E free cash flow yield.

Guy Hewett | ghewett@finncap.com

 

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