finnCap Research Company Notes - 8 May 2018

May 08, 2018 / Research Notes

Daily research updates from the finnCap Research desk

Sector: Technology and Telecoms

Ideagen (IDEA): Positive trading update and board changes

Key data                              

  • Share price (p): 112.5
  • Target price (p): 120.0
  • Market cap (£m): 228.0
  • Enterprise value (£m): 227.2

Ideagen has announced a positive trading update, detailing full-year performance in line with unchanged expectations. Revenue of £36.1m (£35.9mE) implies 33% headline revenue growth including 11% organic growth, and leading to EBITDA growth of 40% to £11.0m (£11.0mE) – in turn suggesting EPS growth of 32%. Revenue quality continues to develop with the “substantial” increase in recurring revenue, with robust cash generation delivering year-end net cash of £0.8m and implying £6.4m of free cash flow. The board has been realigned to provide a skillset aligned to the growth strategy: CEO David Hornsby will become Executive Chairman; Chief Customer Officer Ben Dorks, already familiar to investors who will have met him on recent roadshows and at Ideagen’s offices, will become CEO; and Non Executive Chairman Jonathan Wearing moves to Non Executive Director. The changes indicate the group is maturing positively, and we expect continuing strong underlying growth to be supported by yet further acquisitions. Target price 120p reiterated, and we look forward to prelims on or about the 17th July.

Andrew Darley - adarley@finncap.com

Sector: Support Services

4imprint (FOUR): Sales and profit ahead of expectations

Key data                              

  • Share price (p): 1770.0
  • Target price (p): 2346.0
  • Market cap (£m): 496.3
  • Enterprise value (£m): 487.0

4imprint has confirmed that trading in the first four months of the year has been ahead of expectations, with sales growth +16% on last year (our full-year forecast was +10%) and order intake +15%. While the comparatives will get harder as the year progresses, we have upgraded our FY 2018E sales forecasts by +2.2% (to give FY 2018E growth of 12.5%) and upgraded EPS and DPS by 3.8%. We reiterate that 4imprint operates in a large, fragmented market and with its proven marketing techniques, reinforced by growing brand awareness, has the opportunity to continue to generate double-digit growth in sales and earnings, with excess cash generated set to be returned to shareholders.

Guy Hewett - ghewett@finncap.com