finnCap Research Company Notes - 3 July 2018

Jul 03, 2018 / Research Notes

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

Sector: Consumer & Other

Frontier Developments (FDEV): Jurassic World thrills both gamers and investors

Key data                              

  • Share price (p): 1 365.0
  • Target price (p): 1 750.0
  • Market cap (£m): 525.5
  • Enterprise value (£m): 496.4

Only three weeks after the digital launch of Jurassic World Evolution - and on the day of its release on disc - it is revealed that the game has “hit” potential, with strong initial digital sales across PCs and consoles. Based on JWE sales forecasts extrapolated from the initial performance, together with the expected sales from Elite Dangerous and Planet Coaster, the Board now believes that Frontier FY 2019 revenue will be at the upper end of the range (£58m to £88m). This is of course early stage in the FY and in the lifecycle of JWE, however the outlook is excellent and we raise our FY 2019 revenue forecast by 30% and earnings by 8%.

Lorne Daniel | ldaniel@finncap.com

Sector: Life Sciences

Proteome Sciences (PRM): £1m loan facility for working capital purposes

Key data                              

  • Share price (p): 3.6
  • Target price (p): 7.0
  • Market cap (£m): 10.7
  • Enterprise value (£m): 18.8

Proteome has entered into an unsecured £1.0m loan facility with its largest shareholder, Vulpes Lifesciences Fund. The loan will be used for working capital purposes as the company grows the service business. No material changes to forecasts. We retain a target of 7p, which implies an enterprise value of £30m; underpinned by the inherent value of TMT reagents, estimated to generate c.£1.5m of cash and worth an estimated £20m.

Mark Brewer | mbrewer@finncap.com

Sector: Support Services

Utilitywise (UTW): Significant collaboration with Vodafone and Dell

Key data                              

  • Share price (p): 27.9
  • Target price (p): U/R
  • Market cap (£m): 21.6
  • Enterprise value (£m): 36.6         

Utilitywise has announced a collaboration with Vodafone and Dell to develop a new Internet of Things energy and building management platform. Utilitywise and Vodafone sales teams will take the platform to market, engaging across existing and new customers. The platform offers detailed insight into how businesses use energy, enabling utility bill savings to be made plus the software developed by Utilitywise eliminates the need for expensive software licenses and maintenance agreements that are regularly part of existing building management systems. This provides further cost reduction potential. Management has previously set a target of developing a 5% share of the £1.5bn UK corporate energy controls market and this is a major step forward towards this goal.

Guy Hewett | ghewett@finncap.com

Sector: Industrials

Solid State (SOLI): Full-year results; trading in line

Key data                              

  • Share price (p): 315.0
  • Target price (p): 400.0
  • Market cap (£m): 26.5
  • Enterprise value (£m): 26.0         

FY results were in line with revised expectations – 2H performance reflected the flagged project delays. Management has confirmed that trading is on track to achieve current year forecasts with an 11% increase in the order book, recent contract wins in robotic power units and a new distribution agreement with a US power supplies company providing some optimism. No changes to forecasts. The shares are trading on undemanding multiples versus peers and we maintain our existing 400p price target, which offers upside as growth and new orders reassert themselves.

David Buxton | dbuxton@finncap.com