EDISON INSIGHT Strategic perspective | Company profiles - October 2021 Published by Edison Investment Research
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EDISON INSIGHT Strategic perspective | Company profiles October 2021 Published by Edison Investment Research
Contents
Global perspectives 2
Company profiles 8
Edison dividend list 65
Stock coverage 66
Prices at 22 October 2021 Published 28 October 2021
US$/£ exchange rate: 0.7321 NOK/£ exchange rate: 0.0859
€/£ exchange rate: 0.8499 CHF/£ exchange rate: 0.7912
C$/£ exchange rate: 0.5858 ZAR/£ exchange rate: 0.0493
A$/£ exchange rate: 0.5379 HUF/£ exchange rate: 0.0024
NZ$/£ exchange rate: 0.5133 KZT/£ exchange rate: 0017
SEK/£ exchange rate: 0.0842 JPY/£ exchange rate: 0.0065
Welcome to the October edition of Edison Insight. We now have c 400 companies under coverage, of which 114
are profiled in this edition. Healthcare companies are covered separately in Edison Healthcare Insight. Click here to
view the latest edition.
This month we open with a strategy piece by Alastair George, who believes that despite the recent bounce in
global equity markets there has been little change in the outlook. Survey data in every major economic region
confirm a slowing of growth since the summer while consensus earnings forecasts appear to have completed their
COVID-19 related upgrade cycle. High energy prices may reflect a lack of investment in recent years as much as
the resurgence in demand during 2021. We observe that capex levels within the listed global oil sector have been
sharply reduced since 2016. ESG-focused investors have not rewarded energy investment with higher share prices.
This lack of investment suggests that fossil fuel-based energy prices could remain elevated for some time.
Furthermore, China’s US dollar high yield market remains under stress. Despite the absence of a formal default by
China’s Evergrande to date, the market appears effectively shuttered, with yields on US dollar high yield bonds
issued by Chinese corporates still close to 25%. We believe investors should be watching closely for evidence of
slower growth in China and any consequent effect on global materials prices. Our cautious position on global
equities remains in place. Post COVID-19 normalisation along the dimensions of monetary policy, fiscal policy and
economic growth in our view correspond to a high likelihood of a period of normalising equity valuations. Globally,
equity valuations remain extended on a price/book and forward P/E basis.
This month we have added CI Games, CoinShares International and Smiths News to the company profiles.
Readers wishing for more detail should visit our website, where reports are freely available for download
(www.edisongroup.com). All profit and earnings figures shown are normalised, excluding amortisation of acquired
intangibles, exceptional items and share-based payments.
Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East
and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise.
At Edison Investment Research, our research is widely read by international investors, advisors and stakeholders.
Edison Advisors leverages our core research platform to provide differentiated services including investor relations
and strategic consulting.
Edison is authorised and regulated by the Financial Conduct Authority. Edison is a registered investment adviser
regulated by the state of New York.
We welcome any comments/suggestions our readers may have.
Neil Shah
Director of research
Edison Insight | 28 October 2021 1Global perspectives: Fundamentally unchanged
Analyst
Despite the recent bounce in global equity markets there has been little Alastair George
change in the outlook, in our view. Survey data in every major economic region +44 (0)20 3077 5700
confirms a slowing of growth since the summer while consensus earnings institutional@edisongroup.com
forecasts appear to have completed their COVID-19 related upgrade cycle.
High energy prices may reflect a lack of capital expenditure (capex) in recent
years as much as the resurgence in demand during 2021. We observe that
capex levels within the listed global oil sector have been sharply reduced since
2016. ESG-focused investors have not rewarded energy capex with higher share
prices. This lack of capex suggests that fossil fuel-based energy prices could
remain elevated for some time.
China’s US dollar high yield market under stress. Despite the absence of a
formal default by China’s Evergrande to date, the market appears effectively
shuttered with yields on US dollar high yield bonds issued by Chinese corporates
still close to 25%. We believe investors should be watching closely for evidence of
slower growth in China and any consequent effect on global materials prices.
Our cautious position on global equities remains in place. Post COVID-19
normalisation along the dimensions of monetary policy, fiscal policy and economic
growth in our view corresponds to a high likelihood of a period of normalising
equity valuations. Globally, equity valuations remain extended on a price/book and
forward P/E basis.
Edison Insight | 28 October 2021 2Equities rebound while fundamentals unchanged
Despite the recent bounce in global equity markets from the near-term lows of September, we
cannot discern any meaningful change in the global economic outlook. Survey data continue to
weaken, pointing to slower growth ahead, while inflation readings remain uncomfortably high.
Central banks seem keen to prove they will act on higher inflation with higher rates, which has in
recent days contributed to a flattening of the yield curve as investors start to anticipate a transient
period of tighter monetary policy, only to be later unwound.
We believe it is important not to be distracted by what are still relatively modest short-term swings
in market sentiment in recent weeks. The fundamental picture remains that risk premia in global
equity and corporate credit markets remain very low compared to historical norms and growth is
slowing from the breakneck pace earlier in the year. Global monetary policy remains on a tightening
track as COVID-19 stimulus is gradually withdrawn.
During 2021, despite some high-profile individual stock performances within the technology sector
traditional valuations have once again proved their relevance. Year-to-date, the strongest global
equity sector performers have been previously out-of-favour fossil fuel energy companies and
banks with returns of over 20% in US dollar terms – more than double the 11% return of the global
technology sector.
Exhibit 1: Global sector performance year-to-date
35%
30%
25%
20%
15%
10%
5%
0%
-5%
Source: Refinitiv. Note: Price return in US$, 31 December 2020 to 27 October 2021.
High energy prices associated with declining investment spend
The recent strength of energy markets can in part be attributed to the sheer rapidity of the post
COVID-19 recovery. However, we can also see there has been something of a collapse in capital
expenditure within the listed oil sector. Measured as a percent of total assets of the largest global oil
companies, industry capex has fallen to 8% of total assets compared to 14% before 2016. This is
below typical depreciation rates for plant and machinery, suggesting the sector has responded both
to low oil prices towards the middle of the prior decade but also to pressure from shareholders and
governments to avoid investing in potentially stranded assets, even as oil prices rebounded in the
2018–2019 period.
The ESG investment theme has created a clamouring for diverting cash flows to either
shareholders or green energy investments, rather than maintaining infrastructure and extending
reserves. The sector could be forgiven for its failure to divine with precision the necessary balance
between short-term demands for fuel and the decades-long trend towards net-zero carbon
emissions, especially in the context of the economic shocks of the COVID-19 era.
Edison Insight | 28 October 2021 3However, as a supply-side factor with companies’ investment criteria subject to non-monetary
factors such as ESG rather than forecast oil prices, the risk is that higher energy prices may persist
for longer than investors expect. Furthermore, by-products of the petrochemical industry, which
include plastics and fertiliser, imply further upward price pressure on global goods supply chains.
In particular, rising input prices for farmers on a global basis suggest that agricultural commodity
prices are likely to remain firm well into 2022. This is perhaps less of an issue for developed
markets where food is a smaller component of overall consumer purchasing but nevertheless,
these price rises could yet represent an example of market forces and supply chain disruption
ultimately playing into the political domain, should food prices remain elevated.
Exhibit 2: Global energy sector capex as a percentage of total assets
20%
18%
16%
14%
12%
10%
Axis Title
8%
6%
4%
2%
0%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: Refinitiv, Edison calculations
Positive economic and profits momentum fading
Purchasing managers’ indices have fallen from the strong levels seen earlier in 2021 in the United
States, Europe, Japan and China. With the exception of China, these indices remain in positive
territory but the temporary boost to GDP growth from the re-opening of national economies post
COVID-19 is clearly on the wane.
We can also see in consensus earnings forecasts that economic momentum is fading during Q321.
With central banks now focused on uncomfortably high inflation readings and national governments
more focused on sovereign balance sheet repair rather than COVID-19 stimulus, it is not
immediately clear which policy levers might be pulled to reverse this trend.
The narrowing of output gaps during 2021 to date gives good reason to believe that developed
market economic growth from this juncture is likely to be significantly slower than in the prior three
quarters. For the corporate sector, rising input prices and supply chain bottlenecks have become a
consistent feature of corporate earnings reports, which serves to highlight the supply-led nature of
the slowdown in growth.
Edison Insight | 28 October 2021 4Exhibit 3: Positive trend in global earnings revisions has stalled during Q321
110
105
Revision index
100
95
90
85
80
Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21 Mar-21 May-21 Jul-21 Sep-21
Weighted Index Equal-weighted Index
Source: Refinitiv, Edison calculations
We can see rather starkly from an analysis of sector revisions in Exhibit 4 the extent of the decline
in earnings momentum since the end of Q221. As recently as July, the average monthly sector
revision was +3% for FY21, an abnormally large figure, which demonstrates that both analysts and
corporate guidance were still playing catch-up to the re-opening of the economy.
Since mid-September however, revisions have slowed to levels more typical of a normal year, with
a mix of upgrades and downgrades with most sectors recording effectively unchanged earnings
expectations over the month. The data support the idea there is relatively little benefit now in
positioning portfolios for COVID-19 specific dynamics, as the ‘re-opening of trade’ appears to be
complete.
Exhibit 4: Declining momentum in global sector profits forecasts since July 2021
4%
3%
2%
Revision %
1%
0%
-1%
-2%
-3%
1m sector revision Average 1m sector revision Jul-21
Source: Refinitiv, Edison calculations. Note: Chart shows one-month 2021 consensus profits revision compared to July average.
In terms of the COVID-19 pandemic itself, there has also been some concern in the UK for example
that infection rates could lead to the need to re-impose social restrictions during the winter.
Furthermore, in eastern Europe COVID-19 is spreading relatively quickly as a number of eastern
European nations have both relatively high levels of current infection and reproduction rates well
above one.
Edison Insight | 28 October 2021 5Exhibit 5: COVID-19 reproduction rates by region
3
2.5
2
Reproduction rate
1.5
1
0.5
0
Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21 Mar-21 May-21 Jul-21 Sep-21
South America Asia W Europe N America E Europe Middle East
Source: Our World in Data, government statistics and Edison calculations
However, viral reproduction rates outside eastern Europe have on a global basis remained
relatively contained at close to 1.0, even as social restrictions have been lifted and more infectious
strains of the virus have become dominant. This is encouraging in respect of the durability of the
recovery as it implies a relatively steady rather than rapidly increasing burden on healthcare
provision and in our view should place renewed lockdown risks for portfolios below those of tighter
monetary policy and high equity valuations.
China: Real estate trouble still brewing
The slowing of China’s economy has brought property developer risks into sharp relief with the yield
on internationally issued high yield Chinese corporate bonds surging to as much as 25% since the
end of August.
Despite Evergrande’s recent payment on a US dollar bond coupon which had previously been
missed, this market remains in effect shuttered to new issuance, adding to the corporate distress in
the sector. While not a systemic issue on a global basis as China’s internal banking system is
largely separated from the rest of the world, we believe China’s response to this recent round of
property sector volatility warrants close attention given the potential consequences for global
growth and the outlook for the materials sector.
Exhibit 6: Average yield on China domiciled and US dollar-denominated high yield corporate debt
30
25
Yield to maturity %
20
15
10
5
0
Feb-21 Mar-21 Mar-21 Apr-21 May-21 May-21 Jun-21 Jul-21 Jul-21 Aug-21 Sep-21 Sep-21 Oct-21
Source: Refinitiv, Edison calculations
Conclusion
The recent rebound in global markets represents in our view a swing in sentiment rather than any
change in the fundamentals. This should not therefore distract investors from the challenges of
normalisation ahead. Normalisation along the dimensions of monetary policy, fiscal policy and
Edison Insight | 28 October 2021 6growth in our view corresponds to a higher likelihood of a period of normalising valuations. This
could either be abrupt, an outcome that monetary policymakers will be keen to avoid, or more
gradual, which would represent a longer period of sub-par equity returns in overvalued markets.
We believe investors should be maintaining a cautious approach to equities at present, especially in
those sectors and markets which are trading well above long-term valuation averages. Globally,
equity valuations remain extended on a price/book and forward P/E basis. We would also highlight
that year-to-date the best performing sectors have been the lowly valued and out of favour banks
and energy.
We remain underweight on global bonds despite the recent increase in yields and continue to
believe, given the very low yields on investment grade corporate credit, that the optimal shift in
portfolios may be towards a tactical allocation to cash and other lower risk assets.
Edison Insight | 28 October 2021 7Sector: Technology 1Spatial (SPA)
Price: 45.5p
Market cap: £50m INVESTMENT SUMMARY
Market AIM
1Spatial continued its record of contract wins with the announcement of a multi-year
framework agreement by Land and Property Services (LPS) in Northern Ireland. The
Share price graph (p)
contract was won after a competitive tender process and done in partnership with a
consortium led by Version 1. As part of the governmental digital transformation, 1Spatial will
be a special consultant focused on delivering location master data management solutions in
supporting the Northern Ireland Department of Finance’s NOVA Programme. The
framework is for three years, and while no contractually committed value has been set, it
should be confirmed following a scoping period. This contract follows two other significant
wins over the past few weeks.
INDUSTRY OUTLOOK
Company description
1Spatial’s core technology validates, The GIS industry is large and growing. P&S Market Research estimates the total market
rectifies and enhances customers’
geospatial data. The combination of its size at US$7.5bn in 2019 and should grow at 12.1%, reaching US$13.3bn by 2024.
software and advisory services
reduces the need for costly manual
checking and correcting of data.
Y/E Jan Revenue EBITDA PBT EPS (fd) P/E P/CF
Price performance (£m) (£m) (£m) (p) (x) (x)
% 1m 3m 12m
Actual 12.4 19.7 51.7 2020 23.4 3.2 0.8 0.58 78.4 87.7
Relative* 11.6 16.3 20.7 2021 24.6 3.6 0.2 0.17 267.6 13.1
* % Relative to local index
Analyst 2022e 26.0 3.8 0.4 0.31 146.8 13.1
Kenneth Mestemacher 2023e 28.5 4.5 0.9 0.80 56.9 11.1
Sector: Technology 4iG (4IG)
Price: HUF910.00
Market cap: HUF90279m INVESTMENT SUMMARY
Market Budapest stock exchange
Driven by a combination of organic growth and M&A, 4iG reported H121 net revenues of
HUF32.1bn, 59% y-o-y growth. Gross profit rose by 65% y-o-y to HUF10.2bn with EBITDA
Share price graph (HUF)
rising 30% y-o-y to HUF1.8bn, as EBITDA margins fell to 5.5%. 4iG looks on track to meet
our FY21e revenue estimate. 4iG also has a full M&A pipeline, with five deals still expected
to complete in H221, DIGI Group, Spacecom, Antenna Hungária, Telenor Montenegro and
TeleGroup, which will transform the group. We estimate that, collectively, these deals will
deliver run-rate EBITDA in excess of c HUF88bn (c US$300m) but we are not yet able to
update our estimates for these acquisitions.
INDUSTRY OUTLOOK
4iG’s strategy is focused on three pillars: IT services; telecoms & infrastructure; and space
Company description & defence. The group is targeting market leadership in Hungary, but recent acquisitions
4iG is one of the leading IT services point to an increasingly diversified regional footprint in FY21 and FY22, with organic growth
and systems integrators in Hungary,
working with public sector clients, large supplemented by M&A.
corporates and SMEs. Management is
focused on becoming the market
leader in Hungary by FY22 as well as
targeting expansion in Central and
Eastern Europe (CEE).
Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF
Price performance (HUFm) (HUFm) (HUFm) (HUF) (x) (x)
% 1m 3m 12m
Actual (4.3) 37.9 63.1 2019 41129.0 4075.0 3314.0 30.77 29.6 11.5
Relative* (11.2) 19.2 (0.7) 2020 57300.0 5047.0 4175.0 36.09 25.2 23.3
* % Relative to local index
Analyst 2021e 82710.0 8916.0 7254.0 55.88 16.3 14.3
Richard Williamson 2022e 93048.0 9903.0 8511.0 63.67 14.3 12.2
Edison Insight | 28 October 2021 8Sector: Media 4imprint Group (FOUR)
Price: 2840.0p
Market cap: £798m INVESTMENT SUMMARY
Market LSE
4imprint’s interim results showed a strong pick-up in demand from both existing and new
customers. Management’s decisions taken early in the onset of the pandemic to retain the
Share price graph (p)
staff base and maintain a market presence through advertising have put the group in a
strong position to capitalise on the rebound in the US economy. A return to paying dividends
is a clear indication of confidence and we increased our revenue forecasts for FY21 and
FY22 by 11% in both years. The step-up in projections at an earnings level are lower, given
the higher US tax charges. 4imprint’s balance sheet remains strong, with end-June net cash
of $53m.
INDUSTRY OUTLOOK
INDUSTRY OUTLOOK
Company description The Advertising Specialty Institute (ASI), an industry body, estimated the value of the US
4imprint is the leading direct marketer promotional products distribution market in 2020 at US$20.7bn, down 20% on prior year,
of promotional products in the United
States, Canada, the UK and Ireland. In after an extended period of growth at a 10-year CAGR of 5.0%. However, the FY20 figure
FY20, 98% of revenues were includes US$6bn of PPE sales, without which sales would have fallen by 43% year-on-year.
generated in the United States and
Canada. 4imprint has dipped from the top of table but had negligible PPE sales.
Y/E Dec Revenue EBITDA PBT EPS P/E P/CF
Price performance (US$m) (US$m) (US$m) (c) (x) (x)
% 1m 3m 12m
Actual (7.9) 8.0 33.7 2019 860.8 59.1 55.6 157.2 24.7 19.3
Relative* (8.6) 4.9 6.3 2020 560.0 8.4 5.0 13.8 281.1 148.3
* % Relative to local index
Analyst 2021e 775.0 26.6 22.6 62.6 62.0 43.4
Fiona Orford-Williams 2022e 850.0 36.1 32.0 88.6 43.8 35.5
Sector: General industrials AAC Clyde Space (AAC)
Price: SEK2.72
Market cap: SEK506m INVESTMENT SUMMARY
Market Nasdaq FN Premier
AAC Clyde Space is at the forefront of the rapidly growing and innovative market for small
satellites. As nanosatellite build rates and deployments rise sharply over the next decade,
Share price graph (SEK)
increasing systems and platform sales should be surpassed by growing services revenue.
Management is navigating the growth phase and targeting opportunities in New Space to
extend AAC's reach, capabilities and technologies. Recent deals support the SEK500m in
FY24 revenue goal. Order intake remains healthy with several avionics contracts won
recently and an MOU entered into with Saab and Orbcomm to develop the next generation
of maritime communication services.
INDUSTRY OUTLOOK
AAC Clyde Space has a strong space heritage in small and nanosatellites. Over the next
Company description five years around 3,000 nanosatellites should be launched as technology development
Headquartered in Sweden, AAC Clyde extends the applications for low earth orbit (LEO) constellations, especially for
Space is a world leader in nanosatellite
end-to-end solutions, subsystems, communications. Its growing capabilities bring together three divisions: Space Data as a
platforms, services and components, Service, Space Missions and Space Products & Components. AAC Clyde Space aims to
including supply to third parties. It has
production and development become a world leader in commercial small satellites and services from space.
operations in Sweden, Scotland, the
Netherlands, the US and a start-up in
Africa. Y/E Dec Net Sales EBITDA PBT EPS (fd) P/E P/CF
Price performance (SEKm) (SEKm) (SEKm) (öre) (x) (x)
% 1m 3m 12m
Actual (6.4) (11.3) (4.7) 2019 66.4 (27.3) (38.2) (44.55) N/A N/A
Relative* (9.3) (12.0) (30.0) 2020 98.4 (17.5) (26.7) (25.79) N/A N/A
* % Relative to local index
Analyst 2021e 202.1 (2.0) (13.9) (8.00) N/A N/A
Andy Chambers 2022e 292.7 25.4 16.2 8.00 34.0 19.5
Edison Insight | 28 October 2021 9Sector: General industrials Accsys Technologies (AXS)
Price: 158.5p
Market cap: £305m INVESTMENT SUMMARY
Market LSE
The addition of a fourth reactor at capacity constrained Arnhem is on track for completion
by the end of FY22 and a US JV with Eastman Chemicals is making progress with
Share price graph (p)
evaluating a new greenfield Accoya facility with a decision expected this summer. The new
Hull/Tricoya facility is now expected to be commissioned and operational by July 2022.
AGM comments noted good revenue progress in the first five months of FY22 driven by a
combination of higher volumes, pricing and mix. The group debt refinancing (announced 5
October) simplifies facilities and reduces borrowing costs, reflecting increasing profit and
cash flow maturity within the business.
INDUSTRY OUTLOOK
Accsys has a technically proven process and wide international market acceptance for its
Company description modified wood output. As well as successful capex execution, the sales and marketing
Accsys Technologies is a chemical challenge is to pull through demand to absorb newly available capacity and develop licence
technology company focused on the
development and commercialisation of partners. Management has previously stated long-term market potential of 1m m3 pa of
a range of transformational Accoya wood and 1.6m+ m3 of Tricoya panel products.
technologies based on the acetylation
of solid wood and wood elements for
use as high performance,
environmentally sustainable
construction materials. Y/E Mar Revenue EBITDA PBT EPS P/E P/CF
Price performance (€m) (€m) (€m) (c) (x) (x)
% 1m 3m 12m
Actual (6.5) (5.5) 83.4 2020 90.9 5.9 (2.2) (0.09) N/A 111.8
Relative* (7.1) (8.2) 45.9 2021 99.8 9.3 1.1 0.08 2331.2 15.3
* % Relative to local index
Analyst 2022e 106.1 10.7 0.2 (0.01) N/A 41.0
Toby Thorrington 2023e 149.3 28.0 12.3 0.43 433.7 13.6
Sector: Mining Alkane Resources (ALK)
Price: A$0.89
Market cap: A$530m INVESTMENT SUMMARY
Market ASX
Alkane exceeded its (already twice increased) production guidance of 50–55koz for FY21
by 1,958oz, at an AISC of A$1,320/oz (cf guidance of A$1,400–1,550/oz). At the same time,
Share price graph (A$)
exploration at Tomingley's San Antonio and Roswell extensions has led to an extension of
the mine's life from CY23 until at least CY31 at higher levels of production (eg up to 115koz
pa) and lower levels of cost (eg AISC of A$1,350–1,450/oz) than currently.
INDUSTRY OUTLOOK
Our most recent valuation of Alkane attributes 35c/share in value to Tomingley plus net
cash. To this may then be added 1) 6c for the eventual development of the Roswell
underground extension, 2) 12c given the current level of the gold price, 3) 4c for residual
resources, 4) 3c for ongoing exploration success, 5) 9c for ALK's investments in Calidus
Company description and Genesis and 6) up to 61c for exploration at Boda (where drilling has recently identified
Alkane Resources has two main shallow, high grade cemented breccia plus a potential feeder structure to the porphyry
assets in Central West New South
Wales: 1) the Tomingley gold mine, system).
where recent exploration has
increased the mine life by at least eight
years, from FY23 to FY31, and 2) its
Boda prospect at Northern Molong,
which is shaping up to be a tier 1
alkalic porphyry district. Y/E Jun Revenue EBITDA PBT EPS P/E P/CF
Price performance (A$m) (A$m) (A$m) (c) (x) (x)
% 1m 3m 12m
Actual 7.2 (21.2) (31.8) 2020 72.5 29.4 20.6 2.56 34.8 N/A
Relative* 5.4 (21.9) (43.7) 2021 127.8 70.5 46.3 5.35 16.6 N/A
* % Relative to local index
Analyst 2022e 134.3 52.9 28.4 3.34 26.6 N/A
Lord Ashbourne (formerly Charles Gibson)
2023e 130.8 59.9 34.1 4.01 22.2 N/A
Edison Insight | 28 October 2021 10Sector: Mining Alphamin Resources (AFM)
Price: C$0.96
Market cap: C$1146m INVESTMENT SUMMARY
Market JSE , TSX-V
Alphamin offers rare exposure to a metal that both Rio Tinto and MIT regard as the most
likely to benefit from the electrification of the world economy. Moreover, its Bisie mine in the
Share price graph (C$)
DRC is hitting its stride at just the moment that the tin price is experiencing its biggest
squeeze in decades. It is already net debt free and in a position to make distributions to
shareholders in the near future. Production from Q221 to Q222 will be temporarily affected
by lower mined grades. However, EBITDA for Q321 was nevertheless a new quarterly
record (after Q221).
INDUSTRY OUTLOOK
Assuming that the current three-month price of tin (US$33,835/t) prevails for the remainder
of Bisie’s life (ie adopting the current tin price as our long-term price), we calculate a
Company description valuation for Alphamin (excluding any blue-sky exploration potential) of US$0.70/share or
Alphamin Resources owns (84.14%) C$0.881/share. However, this rises to as high as US$1.58/share (C$2.00/share) in the
and operates the Mpama North tin
mine in the North Kivu province of the event of successful exploration expanding and/or extending the life of operations.
DRC with a grade of c 4.5% Sn (the
world’s highest). Accounting for c 4%
of the world’s mined supply, it is the
second largest tin mine in the world
outside China and Indonesia.
Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF
Price performance (US$m) (US$m) (US$m) (c) (x) (x)
% 1m 3m 12m
Actual 16.4 35.2 346.5 2019 27.2 8.5 (2.6) 0.48 160.0 N/A
Relative* 11.9 28.1 242.6 2020 187.4 58.3 (0.7) (0.71) N/A 45.0
* % Relative to local index
Analyst 2021e 310.7 166.1 117.8 5.12 15.0 10.6
Lord Ashbourne (formerly Charles Gibson)
2022e 265.4 120.6 93.9 4.60 16.7 8.8
Sector: Technology Applied Graphene Materials (AGM)
Price: 29.5p
Market cap: £19m INVESTMENT SUMMARY
Market AIM
Applied Graphene Materials’ (AGM’s) FY21 results advise of a doubling in the number of
ongoing customer engagements and cumulative number of products launched by customers
Share price graph (p)
during the year. Customers collectively launched 11 new products during FY21, primarily in
the car care sector. A further three have been launched since end FY21 suggesting that
market adoption of AGM's group’s nanoplatelet dispersions is accelerating.
INDUSTRY OUTLOOK
Revenue growth during FY21 was not as fast as customer engagement, 48% y-o-y to
£0.1m, because coronavirus-related travel restrictions prevented some customers from
deploying their graphene-enhanced coatings on projects. Growth accelerated in H221 (67%
vs 20% H121) as restrictions eased. Full year EBITDA losses were similar to the prior year
Company description at £3.1m. AGM raised £5.5m (net) in January at 41p/share. Management estimates the
Applied Graphene Materials (AGM) funds raised have extended the cash runway beyond January 2023, enabling it to convert
develops graphene dispersions that
customers use to enhance the the opportunity pipeline into meaningful annual revenues during the period to January 2023.
properties of coatings, composites and
functional materials. It also
manufactures high-purity graphene
nanoplatelets using a proprietary
process based on sustainable, readily
available raw materials instead of Y/E Jul Revenue EBITDA PBT EPS (fd) P/E P/CF
graphite.
Price performance (£m) (£m) (£m) (p) (x) (x)
% 1m 3m 12m
Actual 0.0 5.7 (13.2) 2020 0.1 (3.1) (3.5) (6.1) N/A N/A
Relative* (0.7) 2.7 (31.0) 2021 0.1 (3.2) (3.6) (6.3) N/A N/A
* % Relative to local index
Analyst 2022e N/A N/A N/A N/A N/A N/A
Anne Margaret Crow 2023e N/A N/A N/A N/A N/A N/A
Edison Insight | 28 October 2021 11Sector: General industrials ArborGen Holdings (ARB)
Price: NZ$0.27
Market cap: NZ$138m INVESTMENT SUMMARY
Market NZSX
ArborGen’s FY21 results were US$1m ahead of our expectations at the US GAAP EBITDA
level (at US$8.1m after central costs, which was above FY20’s US$7.7m comparable) but
Share price graph (NZ$)
slightly lower at the PBT level including lower R&D and other adjustments. The US in
particular – and South America to a lesser extent – showed some revenue impact from the
COVID-19 pandemic but underlying operations are strengthening through investment,
self-help actions and growing availability of higher value seeds which are expected to
facilitate a ramp up in seedling sales and revenue growth in future periods. The August
ASM included FY22 US GAAP EBITDA (pre central costs) of US$13–14m and the
previously announced strategic review is ongoing.
INDUSTRY OUTLOOK
Company description Prior to the COVID-19 outbreak, the economic growth outlook in each of its core countries,
ArborGen Holdings (formerly Rubicon) the United States, Brazil, New Zealand and Australia, was either good or improving,
is an NZX-listed investment company.
Its subsidiary ArborGen is the world’s according to OECD data. At this point, the primary end-markets served by its plantation
largest integrated developer, forestry customer base (ie construction and the pulp and paper industries) were in a positive
commercial manufacturer and supplier
of advanced forestry seedlings with cyclical phase.
operations in the United States, Brazil
and Australasia.
Y/E Mar Revenue EBITDA PBT EPS P/E P/CF
Price performance (US$m) (US$m) (US$m) (c) (x) (x)
% 1m 3m 12m
Actual (5.2) (15.4) 99.3 2020 56.9 7.7 6.0 1.4 13.5 19.6
Relative* (4.1) (17.0) 93.4 2021 52.7 8.1 8.9 1.9 10.0 9.6
* % Relative to local index
Analyst 2022e 62.1 12.0 12.1 2.4 7.9 7.3
Toby Thorrington 2023e 69.3 13.4 12.9 2.6 7.3 7.2
Sector: Travel & leisure Aspire Global (ASPIRE)
Price: SEK75.90
Market cap: SEK3532m INVESTMENT SUMMARY
Market Nasdaq FN Premier
Aspire Global (AG) announced the proposed disposal of its B2C business, which will lead to
AG becoming a focused B2B provider of iGaming solutions. These have recently generated
Share price graph (SEK)
higher rates of revenue growth and profitability than the B2C segment and therefore should
be positive for AG’s valuation multiple. In addition, the resulting strong pro forma net cash
position means AG is well placed to consider further M&A to extend its product and service
offering.
INDUSTRY OUTLOOK
AG is exposed to favourable growth trends. First, the online gaming market is enjoying
structural growth due to increasing global wealth, internet/mobile penetration and regulation.
The geographic markets to which AG currently has some exposure are forecast to grow
Company description gross gaming revenue (GGR; ie customer wagers less their winnings) from US$37.6bn in
Aspire Global is a leading B2B 2019 to US$69.1bn by 2025 (source: H2 Gambling Capital). Secondly, online gaming
provider of iGaming solutions, offering
partners all relevant products to markets are highly competitive with differing levels of regulation. These combine to make
operate a successful iGaming brand. It the operation of an online gaming brand challenging, particularly when working across many
also owns/offers B2C online gaming
brands, including Karamba. Aspire geographies.
operates in 30 regulated markets
across Europe, the US, South America
and Africa. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF
Price performance (€m) (€m) (€m) (c) (x) (x)
% 1m 3m 12m
Actual (0.7) 22.4 125.6 2019 131.4 21.7 17.9 32.7 23.0 76.9
Relative* (3.7) 21.5 65.7 2020 161.9 27.1 18.4 32.6 23.1 11.8
* % Relative to local index
Analyst 2021e 214.9 36.5 32.4 59.8 12.6 9.0
Russell Pointon 2022e 241.4 42.7 35.7 68.5 11.0 8.3
Edison Insight | 28 October 2021 12Sector: Financials Attica Bank (TATT)
Price: €3.97
Market cap: €96m INVESTMENT SUMMARY
Market Athens Stock Exchange
There were some encouraging signs in Attica’s Q221 results, with good momentum in core
revenue while impairments have now been at relatively low levels for two quarters. But
Share price graph (€)
Attica needs to gain scale before it can be profitable and needs more equity: Attica’s
statutory CET1 is now only 3.1% (3.7% in Q121). Attica is pushing forward with its capital
strategy. The law regarding the DTC conversion has been activated, which resulted in
approximately €152m of DTC having been paid in cash to Attica Bank and in an
amelioration of the quality of the bank’s equity.
INDUSTRY OUTLOOK
Attica has a market cap of c €40m and although the shares do reflect the ongoing
restructuring risk, we believe there is a risk of much shareholder dilution. However, if the
Company description securitisations and capital raisings are successful, Attica will likely have a healthy balance
Attica Bank is the fifth-largest bank in sheet that would allow it to pursue its strategy of doubling the loan book in three years by
Greece, with assets of €3.5bn and 48
retail branches in the main cities of focusing on the energy, green and infrastructure business loan segments. We have
Greece. It has an approximately 2% suspended our forecasts and valuation until there is greater clarity on the outcomes of these
market share of business banking and
around 2% market share of most retail capital actions.
banking products.
Y/E Dec Revenue EBITDA PBT EPS P/E P/CF
Price performance (€m) (€m) (€m) (c) (x) (x)
% 1m 3m 12m
Actual (25.2) (54.7) (57.3) 2019 71.6 N/A (23.6) 1.08 367.6 N/A
Relative* (26.0) (57.0) (71.2) 2020 69.2 N/A (284.7) (66.18) N/A N/A
* % Relative to local index
Analyst 2021e N/A N/A N/A N/A N/A N/A
Pedro Fonseca 2022e N/A N/A N/A N/A N/A N/A
Sector: Mining Auriant Mining (AUR)
Price: SEK3.85
Market cap: SEK380m INVESTMENT SUMMARY
Market NASDAQ OMX First North
Relative to its earlier heap leach operation, Auriant's new Tardan CIL plant has increased
metallurgical recoveries by c 40pp and reduced cash costs by c 25% (to c US$700/oz) to
Share price graph (SEK)
result in a c 4x increase in EBITDA and a c 3x increase in operational cash flows in FY20 cf
FY19. Currently, it is in the process of completing a definitive feasibility study on
Kara-Beldyr and, combined, the two mines are expected to achieve management’s goal of
3t (96.5koz) of gold output pa in c FY25. Confirmatory drilling is also underway with a view
to accelerating the development of Solcocon.
INDUSTRY OUTLOOK
After adjusting for an under-sale of gold relative to production, we estimate that underlying
pre-tax profits were 3% above our prior forecast in Q221. Auriant has now repaid all of its
Company description high cost debt and, assuming that it raises US$20m in equity at SEK3.84/share within the
Auriant Mining is a Swedish junior gold next year (NB Subject to the gold price, cash flows etc and could be less), we value the
mining company focused on Russia. It
has two producing mines (Tardan and company at US$1.59/share (SEK13.61/share).
Solcocon), one advanced exploration
property (Kara-Beldyr) and one early
stage exploration property
(Uzhunzhul).
Y/E Dec Revenue EBITDA PBT EPS P/E P/CF
Price performance (US$m) (US$m) (US$m) (c) (x) (x)
% 1m 3m 12m
Actual 1.3 (14.4) (31.0) 2019 29.8 7.2 (2.2) (1.3) N/A 4.8
Relative* (1.8) (15.1) (49.3) 2020 53.4 31.2 16.6 13.7 3.2 1.6
* % Relative to local index
Analyst 2021e 50.4 24.2 12.4 10.3 4.3 1.9
Lord Ashbourne (formerly Charles Gibson)
2022e 55.6 34.9 22.5 11.7 3.8 1.9
Edison Insight | 28 October 2021 13Sector: Aerospace & defence Avon Protection (AVON)
Price: 2046.0p
Market cap: £635m INVESTMENT SUMMARY
Market LSE
The more focused Avon Protection has an unchanged strategy to grow the core organically,
supported by selective product development and value-enhancing M&A. The US
Share price graph (p)
acquisitions in 2020 extended the product portfolio and deepened customer engagement.
The company has met its guidance for FY21 with revenues of $250m and adjusted EBITDA
margins of 17–18% in FY21 before a $4m inventory write down in ballistic protection. FY22
revenue guidance is unchanged at $320–340m and margins should improve with stronger
volumes as ballistic protection gets back on track. A 34% increase in order intake and an
opening order book of $141m also underpin the stronger organic growth expectations in
FY22.
INDUSTRY OUTLOOK
Company description Avon's long-standing, multi-level relationship with the US DoD is important to the group and
Avon Protection designs, develops and the end market backdrop is supportive. The focus on higher-price sophisticated mask
manufactures personal protection
products for Military and First systems is proving successful, with M50 mask system replenishment and the addition of
Responder markets. Its main helmets and body armour provides further opportunities. We believe that Avon has the
customers are national security
agencies such as the US DOD and c market position, product portfolio and strategic ambition to continue its growth through
90% of sales are from the United organic and inorganic means.
States.
Y/E Sep Revenue EBITDA PBT EPS (fd) P/E P/CF
Price performance (US$m) (US$m) (US$m) (c) (x) (x)
% 1m 3m 12m
Actual 11.6 (20.2) (48.9) 2019 162.0 36.2 28.3 84.9 32.9 96.9
Relative* 10.8 (22.5) (59.3) 2020 213.6 52.3 36.0 96.2 29.1 N/A
* % Relative to local index
Analyst 2021e 248.0 43.5 25.6 66.7 41.9 251.5
Andy Chambers 2022e 328.9 71.5 46.8 122.2 22.9 10.1
Sector: Travel & leisure bet-at-home (ACXX)
Price: €18.12
Market cap: €127m INVESTMENT SUMMARY
Market Xetra
Management reduced FY21 guidance to revenue of €93–98m (previously €100–110m) and
an EBITDA loss of €10–14m (profit of €8–10m previously). The guidance includes €24.6m
Share price graph (€)
for litigation claims re Austrian online casino. Excluded from the reduced guidance are
potential gaming levies paid by bet-at-home on the player losses to be reimbursed, which
management will pursue with Austrian tax authorities. We estimate these at c €18m
(€24.6m provision grossed up for the 40% levy). We assume no annual dividend will be
declared for FY21 due to the expected loss.
INDUSTRY OUTLOOK
According to H2 Gambling Capital, the European online sports betting and gaming market is
expected to grow 7.4% CAGR between 2019 and 2024. BAH operates mainly in 'grey'
Company description markets (no formal regulation but not illegal), which are characterised by strong cash flow,
Founded in 1999, bet-at-home is an but also carry commensurately higher regulatory risks. Its main market, Germany, is
online sports betting and gaming
company with c 300 employees. It is becoming fully regulated in FY21.
licensed in Malta and headquartered in
Dusseldorf, Germany. Since 2009
bet-at-home has been part of Betclic
Everest, a privately owned gaming
company.
Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF
Price performance (€m) (€m) (€m) (c) (x) (x)
% 1m 3m 12m
Actual (24.5) (40.8) (46.9) 2019 143.3 35.2 33.1 425.53 4.3 4.2
Relative* (24.7) (40.9) (57.1) 2020 126.9 30.9 28.8 331.92 5.5 7.0
* % Relative to local index
Analyst 2021e N/A N/A N/A N/A N/A N/A
Russell Pointon 2022e N/A N/A N/A N/A N/A N/A
Edison Insight | 28 October 2021 14Sector: Technology BluGlass (BLG)
Price: A$0.04
Market cap: A$42m INVESTMENT SUMMARY
Market ASX
During FY21 BluGlass continued the transition from an equipment sales and licensing
business to a direct-to-market components operation focused on rapidly expanding
Share price graph (A$)
opportunities in the laser diode industry. While the launch of its first laser diodes has been
delayed by reliability issues relating to third-party processing steps, management notes that
the fund-raising activities this June and July collectively raising A$6.4m (gross) should
provide a cash runway through to initial customer revenues from laser diode sales.
INDUSTRY OUTLOOK
Revenues from customers, which were entirely attributable to epitaxy services, fell by 45%
year-on-year during FY21 to A$0.4m because orders were delayed by coronavirus related
lockdowns and the company was focused on laser diode development. Costs widened,
Company description reflecting high levels of R&D activity on laser diodes and investment in the US operation,
BluGlass is an Australian technology which was set up to manage the sequence of third-party processing steps required once the
company that is developing and
commercialising a breakthrough laser diode epitaxy has been manufactured in the group’s Australian manufacturing facility.
compound semiconductor technology Adjusted EBITDA losses consequently widened by A$1.0m to A$4.6m.
for the production of high efficiency
devices such as laser diodes, light
emitting diodes (LEDs) and
micro-LEDs.
Y/E Jun Revenue EBITDA PBT EPS (fd) P/E P/CF
Price performance (A$m) (A$m) (A$m) (c) (x) (x)
% 1m 3m 12m
Actual 23.5 44.8 (57.9) 2020 0.7 (3.6) (4.8) (1.01) N/A N/A
Relative* 21.4 43.6 (65.2) 2021 0.4 (4.6) (6.8) (0.94) N/A N/A
* % Relative to local index
Analyst 2022e N/A N/A N/A N/A N/A N/A
Anne Margaret Crow 2023e N/A N/A N/A N/A N/A N/A
Sector: Technology Boku (BOKU)
Price: 180.0p
Market cap: £532m INVESTMENT SUMMARY
Market AIM
Boku reported H121 results in line with its recent trading update and management believes
the company is on track to meet recently raised expectations for FY21. Building on the
Share price graph (p)
success of helping merchants gain mobile-centric customers through its direct carrier billing
service, Boku has launched its Mobile First (M1ST) network to provide a single integration
to multiple mobile payment methods. With mobile-based payments already outpacing
traditional card-based payments in Asia, and growing fast elsewhere, this provides a simple
and efficient way for merchants to address the widest range of customers.
INDUSTRY OUTLOOK
Direct carrier billing (DCB) is an alternative payment method that uses a consumer’s mobile
bill as the means to pay for digital content or services such as games, music or apps. Boku
Company description is the dominant DCB player, serving the largest merchants such as Apple, Sony, Facebook,
Boku operates a billing and identity Spotify and Netflix, and is expanding into alternative payment methods such as digital
verification platform that connects
merchants with mobile network wallets. Boku's identity verification service enables merchants to sign up and transact with
operators in more than 80 countries. It users while meeting regulatory requirements and avoiding fraud.
has c 300 employees, with its main
offices in the United States, the UK,
Estonia, Germany and India.
Y/E Dec Revenue EBITDA PBT EPS P/E P/CF
Price performance (US$m) (US$m) (US$m) (c) (x) (x)
% 1m 3m 12m
Actual (11.8) 1.1 58.6 2019 50.1 10.7 4.1 1.31 187.7 N/A
Relative* (12.4) (1.8) 26.2 2020 56.4 15.3 11.0 3.21 76.6 N/A
* % Relative to local index
Analyst 2021e 68.9 19.6 14.5 3.95 62.2 N/A
Katherine Thompson 2022e 79.0 22.0 15.3 4.10 60.0 N/A
Edison Insight | 28 October 2021 15Sector: Travel & leisure Borussia Dortmund (BVB)
Price: €4.79
Market cap: €529m INVESTMENT SUMMARY
Market FRA
Borussia Dortmund completed the equity increase, the proceeds from which will repay
financial debt and provide financial stability in the event of further losses that may arise from
Share price graph (€)
COVID-related restrictions. Estimated gross proceeds are €86.5m from c 18.4m new shares
(currently 92m shares in issue) at a price of €4.70, with an initial subscription ratio for
existing shareholders of one new share for five existing shares. Any unsubscribed shares
will be offered in a private placement and the offer is fully underwritten. Prior to the
announcement the shares were trading at c €6.20. The company published its full financial
statements on 28 September.
INDUSTRY OUTLOOK
Unsustainable spend on wages and transfers is increasingly being penalised by UEFA
Company description Financial Fair Play requirements. A 'break-even requirement' obliges clubs to spend no
The group operates Borussia more than they generate over a rolling three-year period. Sanctions vary from a warning to a
Dortmund, a leading football club,
placed third in the Bundesliga in ban from UEFA competition, fines and a cap on wages and squad size.
2020/21, DFB Super Cup winners in
2019/20, and DFB-Pokal winners in
2020/21. The club has qualified for the
Champions League in nine of the last
10 seasons.
Y/E Jun Revenue EBITDA PBT EPS P/E P/CF
Price performance (€m) (€m) (€m) (c) (x) (x)
% 1m 3m 12m
Actual (9.5) (20.7) 10.8 2019 370.3 116.0 101.5 87.95 5.4 14.6
Relative* (9.7) (20.9) (10.6) 2020 370.2 63.0 45.6 46.77 10.2 148.7
* % Relative to local index
Analyst 2021e 335.2 32.3 16.1 17.50 27.4 100.0
Russell Pointon 2022e 369.9 80.8 63.9 62.47 7.7 22.2
Sector: Oil & gas Brooge Energy (BROG)
Price: US$9.10
Market cap: US$997m INVESTMENT SUMMARY
Market NASDAQ
Brooge Energy is an independent oil and refined oil products storage and service provider
located in the Port of Fujairah, in the UAE. The company is developing its terminal’s storage
Share price graph (US$)
capacity in phases and differentiates itself from competitors by providing fast order
processing times and high accuracy blending services with low oil losses using the latest
technology. Phase I has been operational since 2017 and Phase II started operations in
September 2021. Additionally, Brooge is moving towards Phase III with a positive feasibility
study (preparing to secure project funding and contracts for storage capacity); this will
increase oil storage capacity by 2.5x once operational (2023/24). In Q221 Brooge renewed
contracts for 58% of its Phase I storage capacity at a 70% premium to the starting fixed
lease storage price of H120 contracts, as it benefitted from high oil storage demand. We
expect further increases in storage fees, that would support margin increase. Our valuation
Company description stands at $10.3/share.
Brooge Energy is an oil storage and
service provider strategically located in INDUSTRY OUTLOOK
the Port of Fujairah in the United Arab
Emirates (UAE). Current storage The COVID-19 pandemic highlighted the importance of oil storage infrastructure and the
capacity stands at 399,324m3 and will
be increased by 602,064m3 once vital role the business plays in the logistics and trading of crude oil and refined oil products.
Phase II is completed.
Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF
Price performance (US$m) (US$m) (US$m) (c) (x) (x)
% 1m 3m 12m
Actual (1.4) 4.6 (0.9) 2019 44.0 37.0 (75.0) (85.5) N/A 15.1
Relative* (4.6) 0.5 (24.7) 2020 42.0 29.0 17.0 19.5 46.7 21.6
* % Relative to local index
Analyst 2021e 68.0 54.0 29.0 26.4 34.5 25.6
Marta Szudzichowska 2022e 130.0 112.0 88.0 80.0 11.4 9.8
Edison Insight | 28 October 2021 16Sector: Oil & gas Canacol Energy (CNE)
Price: C$3.89
Market cap: C$694m INVESTMENT SUMMARY
Market TSX
Canacol offers investors a pure play on the Colombian natural gas market where it holds a c
20% market share of national demand. A newly secured gas sales contract will connect the
Share price graph (C$)
company to interior markets via a new pipeline to be completed by 2024. It is focusing on
converting its 5.7tcf of net unrisked prospective resource into reserves, with its 2021
exploration capex the largest in its history. In 2020, Canacol replaced 61.9bcf of production
with 75bcf of reserves (a reserves replacement ratio (RRR) of 122%). It has targeted a RRR
of 200% in 2021 by drilling up to 12 wells at an estimated cost of c $66m. 11 wells will now
be drilled in 2021, with the Aguas Vivas 1 discovery encountering the thickest net pay yet of
412ft. The historical success rate of over 80% underpinned by AVO analysis of 3D seismic
keeps risks low, while the planned capex and cash dividends are covered by Canacol’s
existing cash and cash generation.
Company description
INDUSTRY OUTLOOK
Canacol Energy is a natural gas
exploration and production company
primarily focused on Colombia. The Colombian, Caribbean Coast gas market is expected to move into gas deficit in the
absence of LNG imports, incremental piped gas or the development of recent deepwater
discoveries. Canacol sells gas under long-term, fixed-price gas contracts, typically of five to
10 years’ duration with inflation clauses to protect cash flows.
Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF
Price performance (US$m) (US$m) (US$m) (c) (x) (x)
% 1m 3m 12m
Actual 12.1 23.5 8.4 2019 219.5 162.8 64.7 19.21 16.2 5.1
Relative* 7.8 17.0 (16.9) 2020 246.8 184.6 79.8 (1.27) N/A 3.7
* % Relative to local index
Analyst 2021e 237.0 193.1 88.9 31.68 9.8 3.4
Ian McLelland 2022e 287.9 240.4 125.9 48.05 6.5 2.8
Sector: General industrials Carr's Group (CARR)
Price: 153.0p
Market cap: £143m INVESTMENT SUMMARY
Market LSE
Carr’s Group provided an update in July which noted that strong performances from both
the Speciality Agriculture and Agricultural Supplies divisions had continued into H221,
Share price graph (p)
supported by buoyant livestock and milk prices and an improvement in UK farmer
confidence generally as the prospect of a no-deal Brexit disappeared. The H221
Engineering divisional recovery that management expected has been realised, supported by
contracts from the nuclear and defence markets, a recovery in the oil & gas market and
reduced overhead costs resulting from minor restructuring programmes at the end of FY20
and during H121.
INDUSTRY OUTLOOK
Hugh Pelham has stepped down from his role as chief executive officer and Peter Page,
Company description chairman, has become executive chairman on an interim basis. Group performance remains
Carr's Group's Agriculture divisions in line with the improved guidance provided in July.
serve farmers in the North of England,
South Wales, the Welsh Borders and
Scotland, the US, Germany, Canada
and New Zealand. The Engineering
division offers remote handling
equipment and fabrications to the
global nuclear and oil and gas
industries. Y/E Aug Revenue EBITDA PBT EPS (fd) P/E P/CF
Price performance (£m) (£m) (£m) (p) (x) (x)
% 1m 3m 12m
Actual (1.9) 1.8 51.3 2019 403.9 23.8 18.0 14.2 10.8 10.3
Relative* (2.6) (1.1) 20.4 2020 395.6 23.4 14.9 11.8 13.0 7.2
* % Relative to local index
Analyst 2021e 440.0 24.2 16.1 11.4 13.4 6.1
Anne Margaret Crow 2022e 447.0 24.7 16.5 12.7 12.0 8.3
Edison Insight | 28 October 2021 17Sector: Financials Cenkos Securities (CNKS)
Price: 75.0p
Market cap: £43m INVESTMENT SUMMARY
Market AIM
H121 saw continued strength in UK equity market activity levels as corporate investment
and M&A activity revived with the progressive easing of lockdown restrictions. Reflecting the
Share price graph (p)
strength of its team, Cenkos was able to expand its client base (by six to 100) and carried
out 16 transactions, raising £0.58bn for clients in the period. It reported H121 revenue of
£18.2m, 37% ahead of H120 and, after a 40% increase in staff and administrative
expenses, underlying operating profit increased by 44% to £2.8m. Lower restructuring and
incentive plan costs left reported pre-tax profit up 124% at £1.7m and diluted EPS 146%
higher at 2.7p. The interim dividend was 1.25p, up from 1.0p for H120.
INDUSTRY OUTLOOK
After a strong first half, Cenkos has remained active with corporate transactions completing
Company description two IPOs and eight other transactions to date. The company indicated its pipeline of further
Cenkos is a leading UK securities transactions is good although, as always, subject to changing market conditions. Reported
business, which acts as nominated
advisor, sponsor, broker and financial earnings in H221 should benefit from the likely absence of restructuring costs. Cenkos is
adviser to companies, focusing on investing selectively in staff and systems, which should support service levels to clients and
entrepreneurial growth companies and
investment trusts. Since inception in efforts to increase the client count further.
2005 it has raised more than £21bn in
equity capital for corporate clients,
which stood at 100 at end June 2021. Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF
Price performance (£m) (£m) (£m) (p) (x) (x)
% 1m 3m 12m
Actual (12.3) (5.7) 50.0 2019 25.9 1.0 0.1 0.1 750.0 N/A
Relative* (12.9) (8.4) 19.3 2020 31.7 3.1 2.3 3.3 22.7 6.7
* % Relative to local index
Analyst 2021e N/A N/A N/A N/A N/A N/A
Andrew Mitchell 2022e N/A N/A N/A N/A N/A N/A
Sector: Media Centaur Media (CAU)
Price: 55.0p
Market cap: £81m INVESTMENT SUMMARY
Market LSE
Centaur’s recent trading update, issued alongside a capital markets day (CMD), indicated
good progress in H221 to date, building on the post-pandemic recovery in revenues and
Share price graph (p)
margin reported for H1. We edged up our expectations, particularly on the pace of
improvement in EBITDA margin towards the FY23 management target of 23%. The CMD
showcased the ‘Flagship 4’ brands, with operational management describing the business
transformations, opportunities and strategies for improving margins and quality of earnings.
The share price has held the gain made after the interim results and is now up 80%
year-to-date, yet the rating remains at a discount to peers.
INDUSTRY OUTLOOK
Pandemic-accelerated disruption to the marketing sector should provide a fertile backdrop
Company description for demand for B2B market intelligence. With a greater propensity for clients to adopt digital
Centaur Media is an international solutions, their digital skill sets need constant enhancement. The need for comprehensive
provider of business information,
training and specialist consultancy for and timely market intelligence should also support demand at The Lawyer, with further
the marketing and legal professions. growth opportunities particularly with in-house corporate lawyers.
Its Xeim and The Lawyer business
units serve the marketing and legal
sectors respectively and, across both,
offer customers a wide range of
products and services targeted at Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF
helping them add value.
Price performance (£m) (£m) (£m) (p) (x) (x)
% 1m 3m 12m
Actual 8.9 20.9 144.4 2019 39.6 4.0 (1.5) (1.4) N/A 16.7
Relative* 8.2 17.4 94.5 2020 32.4 3.8 (0.3) 0.2 275.0 37.7
* % Relative to local index
Analyst 2021e 37.5 5.6 2.0 0.9 61.1 9.8
Fiona Orford-Williams 2022e 42.8 7.9 4.2 2.2 25.0 10.0
Edison Insight | 28 October 2021 18Sector: Technology CentralNic Group (CNIC)
Price: 135.0p
Market cap: £339m INVESTMENT SUMMARY
Market AIM
9M21 trading was ahead of market expectations, with organic growth accelerating to 29%
(H120: 20%), driven by the group’s investment programme. Management expects to trade
Share price graph (p)
comfortably at or above the upper end of market expectations for the year for both revenue
and adjusted EBITDA (expectations disclosed as US$355.3m and US$42.0m respectively).
Adjusted operating cash conversion was in excess of 100%, meaning that net debt fell to
US$79m as at 30 September 2021. Our forecasts are under review.
INDUSTRY OUTLOOK
CentralNic supplies the tools needed for businesses to develop their online presence,
providing domain names, hosting, websites, email, security certification, brand protection
and marketing. It delivers services to c 40m domains, with cross-selling and upselling
Company description important drivers of future growth – organic growth is supported by M&A.
Leading global domain name services
provider CentralNic operates via two
divisions: Online Presence provides
domain names, hosting, websites,
email, security certification and brand
protection; and Online Marketing helps
domain name owners monetise online
traffic using an anonymised, privacy
protected marketing platform. Y/E Dec Revenue EBITDA PBT EPS P/E P/CF
Price performance (US$m) (US$m) (US$m) (c) (x) (x)
% 1m 3m 12m
Actual 18.4 52.0 70.4 2019 109.2 17.9 16.1 9.24 20.0 N/A
Relative* 17.6 47.7 35.5 2020 241.2 30.6 19.8 10.57 17.4 N/A
* % Relative to local index
Analyst 2021e 350.1 41.1 27.8 11.01 16.7 N/A
Richard Williamson 2022e 378.8 45.2 30.9 11.40 16.2 N/A
Sector: Technology CI Games (CIG)
Price: 1.67PLN
Market cap: PLN305m INVESTMENT SUMMARY
Market Warsaw Stock Exchange
CI Games is a global video games developer and publisher with two main franchises: an
FPS, Sniper: Ghost Warrior (SGW); and a soulslike fantasy action RPG, Lords of the Fallen
Share price graph (PLN)
(LotF). With SGWC2 launched in H121, no major new games are expected in FY22, before
LotF2 and the next iteration of the SGW franchise launch in 2023. The company then
expects to launch one major title every 12–18m, incrementally broadening its portfolio. CI
Games’ current valuation takes no account of the potential for success in FY23, which could
justify a c 5x increase in the share price.
INDUSTRY OUTLOOK
Market analyst, Newzoo, estimates that 3bn gamers are set to generate global revenues of
c US$176bn in 2021, a fall of 1.1% after annual growth of more than 20% in 2020, driven by
Company description lockdown demand for content. From 2021–24 more regular growth of 7.6% is expected to
Founded in 2002, CI Games is a return, building to a total market size of over US$219bn by 2024. Long-term demand for
Warsaw-based developer and
publisher of AA+/AAA multi-platform games is underpinned by strong secular and technology trends.
video games for a global audience. It
has specialised in first person shooter
and action-driven titles, and owns IP
including the SGW and LotF
franchises.
Y/E Dec Revenue EBITDA PBT EPS P/E P/CF
Price performance (PLNm) (PLNm) (PLNm) (gr) (x) (x)
% 1m 3m 12m
Actual 11.1 17.7 30.2 2019 47.5 21.6 2.0 (1.00) N/A N/A
Relative* 7.3 8.5 (11.5) 2020 46.0 28.9 9.2 4.53 36.9 6.9
* % Relative to local index
Analyst 2021e 105.0 62.1 37.9 16.6 10.1 6.3
Richard Williamson 2022e 55.6 33.5 13.8 6.0 27.8 8.0
Edison Insight | 28 October 2021 19You can also read
