finnCap Research Company Notes - 24 September 2018

Sep 24, 2018 / Research Notes

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Sector: Technology & Telecoms

Nasstar (NASA): Interims

Key data                              

  • Share price (p): 11.8
  • Target price (p): 15.0
  • Market cap (£m): 67.8
  • Enterprise value (£m): 66.9

Interims are in line with unchanged FY18 forecasts, as confirmed at the July trading update: EBITDA of £3.0m, revenue of £12.5m, representing 50% and 54% of FY expectations respectively, with investment in a large contract implementation team delivering a growing base from which to accelerate client on-boarding. Forecasts are restated as illustrated at prelims (May) and reiterated in July, translating into post IFRS9, 15, and 16 equivalence, as expected. 6% (all organic) revenue growth delivered continuing growth in the recurring revenue to £1.914m per month (+6%), recurring revenue representing 91% (1H17: 92%) of total reported revenue. The Nasstar 10-19 initiative has delivered marked margin improvement alongside a deeper leadership team, technological consolidation, automation, focused client account management and improved ARPU and client retention. With the successful delivery of the 1,000-seat, fully managed hybrid cloud solution, and two other complex projects ongoing, Nasstar retains visibility and consistent growth in high quality earnings. Target 15p reiterated.

Andrew Darley | adarley@finncap.com

CyanConnode (CYAN): More success in India

Key data                              

  • Share price (p): 12.1
  • Target price (p): U/R
  • Market cap (£m): 15.5
  • Enterprise value (£m): 12.7

A $2.9m, five-year support and maintenance contract will help to underpin our forecasts. It follows on from last week’s $11.6m order for Omnimesh IPv6-based hardware, perpetual software licences and services, received from a Tier-1 Metering Partner for deployment by a State-Owned Utility in India. This was always expected following the contract win but the sheer scale of this order shows the opportunity ahead for the company. As noted by the management, the company will need some sort of financing over the next few months to deliver that opportunity.

Sector: Support Services

Minds + Machines (MMX): .luxe progress update

Key data                              

  • Share price (p): 7.2
  • Target price (p): 17.0
  • Market cap (£m): 50.4
  • Enterprise value (£m): 38.3

An update on the progress of .luxe (due to enter General Availability in early November) reveals 57 registrar partners around the world already signed up to support the TLD including the leading registrars in China, Japan and Europe – as well as 16 in the US market. Furthermore, MMX is in advanced discussions about the support and integration of .luxe domains with a leading global Ethereum wallet, imToken.

Lorne Daniel | ldaniel@finncap.com

Sector: Energy

President Energy (PPC): Puesto Flores development drilling kicks off

Key data                              

  • Share price (p): 8.6
  • Target price (p): 18.0
  • Market cap (£m): 93.4
  • Enterprise value (£m): 106.5

After two successful workover programmes on its Puesto Flores field in Argentina, attention now turns to development drilling, with a three-well programme underway. These will be internally funded and are expected to materially boost production, delivering rapid cash flow and payback. This sets President up for another year of strong growth in 2019, augmented by its gas well reactivation plans on Estancia Vieja and the expected addition of two new Neuquen basin concessions later this year. Argentine macro concerns still loom large for investors, but interim results this week should go some way to assuaging fears.

Jonathan Wright | jwright@finncap.com

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