articles Proactiveinvestors articles RSS feed en Mon, 19 Feb 2018 13:27:40 +0000 Genera CMS (Proactiveinvestors) (Proactiveinvestors) Tag Oil Ltd - Operational Update TAG Oil Ltd (TSE:TAO) has announced that it and its joint venture partner, Melbana Energy (30%), have commenced drilling operations operations on the Pukatea-1 exploration well, with the Nova-1 drill rig mobilized to the drilling pad in mid-January and drilling currently underway

Fri, 09 Feb 2018 11:13:00 +0000
Rose Petroleum - Update on 3D seismic data interpretation Rose Petroleum (LON:ROSE) announced the completion of the initial structural interpretation of the 3D seismic data it acquired over its Gunnison Valley Unit (GVU) which is part of its larger lease holding in the Paradox Basin, Utah, U.S.A. As a result of this work, key geological structures and multiple drilling targets have been identified, with to date 53 well locations identified in the Cane Creek reservoir zone alone.

Wed, 07 Feb 2018 08:56:00 +0000
PCF Group - Forecast Update Following the release of the 2017 full year results for the financial year to end September 2017 on the 5th December 2017, and ahead of the release of the 2017 annual report due on the 6th February 2018, we have updated our forecasts for profit and earnings for the period 2018e to 2020e.

Mon, 29 Jan 2018 11:45:00 +0000
Avacta Group Plc - On track and undervalued At the AGM of January 18th, Avacta reported good progress for both the Affimer therapeutic and reagents programs.

Their lead immuno-oncology development program is proceeding according to plan and multiple development milestones are expected in the course of 2018 (see next section for further details).

Wed, 24 Jan 2018 10:18:00 +0000
Genedrive -On Track to Launch the First CE-market Decentralised HCV Test
  • Overall Genedrive PLC (LON: GDR) reported a business and financial update for the six months to December 2017 in line with expectations
  • Launch preparation of Genedrive® HCV test with partner Sysmex on track, expect sales to start coming through in CY2018
  • £1.3mln income from the ongoing collaboration with the US DoD, in line with expectations
  • Discussions for the disposal of the Services business are in progress
  • With £4.6mln of cash at end-2017, and given the company's expected cash burn, a capital raise in the next 12 months can't be ruled out
  • Full financial results for the six months to December 2017 to be published on March 20th
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    Thu, 18 Jan 2018 09:48:00 +0000
    Spirent Communications Plc - Smarter Connectivity Spirent Communications is a world leader in providing products and services for test and measurement of communications systems across fixed and mobile voice, data and video applications and networks.
    In this report we argue that the company is positioned for increased earnings growth in the coming years, based on the success of the recent cost-base reduction program, and the company’s strategic alignment to the major growth drivers in the market place.

    Mon, 08 Jan 2018 15:24:00 +0000
    McColl's - Positioned to Succeed McColl’s (LON:MCLS) is one of the UK’s leading neighbourhood retailers, with a growing estate of over 1,600 managed convenience stores (80%) and newsagents (20%). The term “neighbourhood” refers to residential locations, for example villages or housing estates, which tend to mean a loyal customer base and little immediate local competition.


    Mon, 08 Jan 2018 14:22:00 +0000
    Northbridge Industrial Services Plc - Taking the long view Northbridge Industrial Services plc (LON:NBI) hires and sells specialist industrial equipment to industries including utility companies, oil and gas, shipping, construction and the public sector. The customer base spans major markets globally (see chart p2).

    Northbridge Industrial Services plc (LON:NBI)  has two core operating activities.

    Mon, 08 Jan 2018 14:09:00 +0000
    Harvest Minerals - Capital Network: It Remains All About Cashflow The key attraction for investors here is significant, near-term, cashflow generation. The simple, low cost, low capex Arapua fertilizer project has begun production on a trial mining basis. We believe the company can generate free cashflow yields of between 30-80%pa from Arapua, based on a range of reasonable sales price & volume assumptions. The most likely outcome being around ~55%pa FCF Yield (based on US$55/t sales price). The same assumptions generate a project NPV@10% of ~£60m for this project (compared to a current market cap of ~£18m).  We note that the company has no debt, and should not require any fundraising to develop this project further, in our view.

    Wed, 13 Dec 2017 10:45:00 +0000
    Green Dragon Gas - Plans to List Production Subsidiary Green Dragon Gas Ltd (LON:GDG) announced its plans to list its production subsidiary on the Hong Kong Stock Exchange as a dividend in specie. This operation requires shareholders’ approval and a vote will take place at the AGM to be held on 20/12/17 at 11:00 am. We expect the details of the listing, in particular the shareholding structure of the listed entity as well as the amount of capital increase, to be released on this occasion. However, the intention is for the company to be debt free as a result which we take as a positive; we keep our 221p valuation unchanged.

    Wed, 13 Dec 2017 08:35:00 +0000
    PCF Group PLC - Final Results 2017 PCF Group Plc (LON:PCF) announced full year results to the end of September 2017, on the 5th December. The newly established specialist bank, which only received UK regulatory approval to accept retail deposits in July, has delivered a strong set of results, exceeding market expectations and beating our forecast for portfolio asset growth by £1m. The recent strategy to diversify funding away from wholesale bank funding has paid dividends with a stunning £53m raised in retail deposits in a little over 2 months.

    Tue, 12 Dec 2017 12:48:00 +0000
    Diploma PLC - Precision delivering results Diploma PLC is an international group of businesses supplying specialised technical products and services. The company acts as a value-added distributor of products sourced from third parties. The high value-add business model produces strong operating margins – 17-19% in the last 5 years. 

    Mon, 11 Dec 2017 09:17:00 +0000
    Morgan Sindall - Secular Growth Trends Morgan Sindall (LON:MGNS) operates in construction and regeneration, with activities in partnership housing, UK infrastructure, office fit out, and general construction. Morgan Sindall (LON:MGNS) operates through six divisions:  Construction & Infrastructure, Fit Out, Property Services, Partnership Housing, Urban Regeneration, and Investments.

    Wed, 06 Dec 2017 13:58:00 +0000
    Plastics Capital Plc - Reaction to the Interim Results Plastics Capital Plc (LON: PLA) reported interim results (H1 end Sep 2017) on Wednesday 6th. These show positive progress on new business wins, reflected in the H1 organic revenue growth of 13.5%, and an increased pipeline of new business (see chart p2).

    At the same time the company guided to a less favourable margin mix for FY Mar 2018, with some projects delayed in the Bearings business, and more of the FY revenue to come from the lower margin Films business.

    Wed, 06 Dec 2017 10:31:00 +0000
    Stride Gaming Plc - Eye Catching Metrics Stride Gaming (LON:STR) is a leading online online gaming operator, working within the regulated markets, with a top 4 presence in the UK bingo market. Stride recently reported FY Aug 2017 results which confirmed strong operating progress, cashflows, and balance sheet.

    The UK bingo market continues to grow at mid-high single digits, and within that Stride has been gaining market share rapidly. The company is led by a management team with a proven track record of shareholder value creation (see GlobalCom or Wink Bingo for examples).

    Mon, 04 Dec 2017 08:36:00 +0000
    Widecells - Fast-growing Provider of Stem Cell Services WideCells Group PLC ( LON:WDC) was originally set-up in 2012 in Portugal, as a provider of stem cell storage services for the Portuguese and Spanish markets. In 2016 the company was listed on the London Stock Exchange, raising £1.7mln - net of fees, largely used to establish a new research and storage facility in Manchester, UK and to support the ongoing international expansion.

    Thu, 30 Nov 2017 13:02:00 +0000
    Norcros PLC - Smartest player in the smallest room Norcros PLC (LON:NXR) is a market leader in supplying innovative branded showers, taps, bathroom accessories, tiles, and adhesives. The company operates a multi-brand strategy, with operations primarily in the UK and South Africa.

    Thu, 30 Nov 2017 11:05:00 +0000
    Gamma Communications - The Beauty of Being Different Gamma Communications (LON:GAMA) is a communications services provider to the UK business market, with a focus on specific services where the company has a competitive edge.
    The share price has dramatically outperformed UK business telco peers in recent years (chart p2). In this report we focus on some of the key differentiators.

    Mon, 27 Nov 2017 14:19:00 +0000
    Robert Walters - Leadership Through Experience Robert Walters PLC (LON:RWA) shares have gained 79% in the last 12m, 219% in the last 5 years, strongly outperforming peers. We argue this is driven by growth in NFI (Net Fee Income), up 18% like-for-like in H1 2017, or 11.5% overall NFI CAGR in the last 15 years, with only one down year.

    In this report we examine some of the drivers which underpin this sustained organic growth trend.

    Wed, 22 Nov 2017 13:55:00 +0000
    Empresaria Group Plc - Perspective on the trading Update Empresaria released a trading update on November 21st, lowering the expected growth rate for FY2017 PBT. This was due to the weak market conditions in the Mideast which were flagged in the H1 results, and also to changes in legislation in Germany. The German issue, also previously know, relates to rules restricting the length of tenure for contract workers (Empresaria’s main focus) and the introduction of equal pay after 9 months. These rules take full effect in 2018, but employers appear to be adjusting their behaviour ahead of implementation

    Wed, 22 Nov 2017 13:15:00 +0000
    Genedrive PLC: Overlooked Story Entering the Launch of their HepC Diagnostic Kit
  • Genedrive (LON:GDR) on track to become a commercial stage, point-of-need diagnostics company
  • Launch of Genedrive® Hepatitis C (HCV) test at IFCC World Lab October 2017, with commercial sales expected in the coming quarters (African markets)
  • Distribution agreement signed for HCV test for Asia Pacific
  • Collaboration with the US Defense Department (bio-hazard program) to generate further income (c. $1.9mln) in the current fiscal year
  • Re-launch of Genedrive® MTB (tuberculosis) test is being reassessed
  • Management actively engaged in the disposal of the legacy service business (preclinical research and pharmacogenomics)
  • Cash position of £4.2mln as of 30 September 2017, enough to finance the ongoing business well into fiscal year 2019
  • Our SOTP valuation yields an equity value of c. £24mln, over 3x current market capitalization
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    Wed, 15 Nov 2017 20:56:00 +0000
    Tag Oil - Primed for Future Reserves & Production Growth TAG Oil Ltd (TSE:TAO) is a Canada-based oil and gas production and exploration company publicly listed in Toronto and with extensive operations and production infrastructure in the Taranaki Basin of New Zealand, as well as in Australia’s Surat Basin. We believe that development and exploration opportunities, in proven discovery fairways within the current portfolio, position TAG Oil Ltd (TSE:TAO) for future reserves and production growth. As a low cost/high netback oil and gas producer, TAG Oil Ltd (TSE:TAO) is debt free and has the reinvestment capacity to fully pursue these growth opportunities. We estimate a value of C$0.46 per share for TAG, based on EV multiples derived from a peer group of similar companies, whilst our DCF-based valuation indicates a core value of C$0.66 and risked value of C$0.82. We believe that our core value estimate of C$0.66, based on 2P reserves only, provides a strong support to current share price and represents a material upside.

    Thu, 09 Nov 2017 08:28:00 +0000
    Amur Minerals - Capital Network:Further Resource Upgrades Likely Amur Minerals (LON:AMC) is a London AIM listed minerals exploration and Development Company, currently focussed on developing the Kun Manie project, located in the far east of Russia. The project is primarily a nickel project, but with significant by products of copper, cobalt, platinum and palladium.



    Mon, 06 Nov 2017 13:54:00 +0000
    Midpoint Holdings - Capital Network: Announcement of Financial Results, 12 Months Ending June 2017 Midpoint Holdings Limited (TSX.V: MPT) announced on the 31st October 2017 its annual financial results for the 12-months (12m) and the quarterly results for the 4th quarter (4Q) ending June 2017. The Company has been able to demonstrate considerable financial progress during the year reporting significant growth in revenues and a greatly reduced net loss which benefitted also from the improved expense performance. Midpoint Holdings Limited’s (TSX.V: MPT) previous financial statements have always carried material uncertainty and substantial doubt about the Company’s ability to continue as a going concern. These are the first set of annual results announced where the current management team led by David Wong, CEO and Corbin Comishin, CFO has been in place for the entire period. We are very pleased to note from the independent auditor’s report that the improvement relieves company of past going concern. Midpoint Holdings Limited’s (TSX.V: MPT) filings noted that Wong and Comishin were appointed in November 2015 and as of September 30th, 2015 the business had cash of $129,827 with liabilities of $447,813. Investors have also taken notice of management’s efforts which have been reflected in the share price performance.

    Fri, 03 Nov 2017 08:33:00 +0000
    Optibiotix Health - Rapidly Transitioning to Commercial Phase
  • Preventing and treating diseases through the modulation of the microbiome is one of the most exciting frontiers of healthcare, and a fast growing market
  • OptiBiotix Health PLC (LON:OPTI), an innovative life sciences company focused on human microbiome, is rapidly transitioning from product development to the commercial stage with early revenues and commercial deals with major corporates including Tata and DSM
  • Underpinned by a strong scientific rationale and clinical studies, OptiBiotix Health PLC (LON:OPTI) products help managing significant health problems as weight loss, high cholesterol and hypertension
  • OptiBiotix Health PLC (LON:OPTI) commercial push is currently directed towards the rapidly growing consumer health market
  • A rich deal pipeline is likely to translate in material revenue growth (£1mln+) within 12 months
  • ]]>
    Thu, 02 Nov 2017 10:14:00 +0000
    Chariot Oil and Gas - Capital Network: Large-cap Portfolio with Small-cap Leveraged Upside Chariot Oil & Gas (LON:CHAR) is a UK-based oil and gas exploration company listed on the AIM market of the London Stock Exchange. The company has assembled a very prospective portfolio of assets located on both sides of the Atlantic in West Africa and South America, and has carried out the necessary adjustments to weather the commodity downturn, reducing staff from 22 to 12 and cutting G&A to less than US$5M. With a US$22M cash position significantly exceeding commitments, and no debt, Chariot Oil&Gas (LON:CHAR) is now in a position to drill three company-making wells in Morocco and Namibia in the near-term. Chariot Oil & Gas (LON:CHAR) intends to remain an exploration company, returning value to shareholders from the proceeds of the divestment of future discoveries at the point of maximum monetisation potential. We believe this is an opportune time for potential investors to revisit the equity story.

    Thu, 26 Oct 2017 15:05:00 +0100
    e-Therapeutics - Capital Network: Undervalued Stock with a Unique Approach to Drug Discovery
  • e-Therapeutics (LON:ETX) focuses on the discovery of  new drugs in a more efficient and effective way and aims to be a valued partner to address the productivity challenge that the pharma industry faces.
  • e-Therapeutics (LON:ETX) has developed a novel and unique in-silico approach to drug discovery: starting from the analysis of complex interactions between proteins in biological systems (networks), they apply advanced computational techniques to identify new drug candidates.
  • This approach was labeled Network-driven Drug Discovery (NDD) and has been validated across several therapeutic areas (cancer, central nervous system, auto-immunity, infectious diseases) and molecular pathways.
  • e-Therapeutics (LON:ETX) discovery platform has generated three drug candidates for multiple cancer indications which are ready to be out-licensed to pharma partners for their further development.
  • We estimate e-Therapeutics intrinsic value to be roughly 3x higher than current market capitalisation. The latter doesn't reflect the commercial potential of e-Therapeutics' most advanced drug candidates and of the platform itself.
  • e-Therapeutics ability to finalise a co-development or licensing agreement in the near term will represent a key inflection point for its stock re-rating.
  • ]]>
    Wed, 25 Oct 2017 11:14:00 +0100
    Midpoint Holdings - Capital Network: Midpoint approaches all time high Midpoint Holdings Ltd (TSXV: MPT), shares have closed at $0.22 CAD with approximately 2 million shares traded last Friday. Following our previous capitalisation update published on the 17th October 2017, the company’s share price has surged 70%.

    Mon, 23 Oct 2017 14:47:00 +0100
    Rose Petroleum - Capital Network: An Encouraging Update Rose Petroleum plc (LON:ROSE) provided an update on the likely completion date for the 3D seismic survey they are in the process of acquiring in the Paradox Basin, following the successful completion of a £3M funding. The 3D seismic data will be key to identify drill targets in the Cane Creek interval and other potential clastic reservoirs of the Paradox Formation, but also to steer the horizontal leg of the wells within the natural fracture system for optimal drilling and completion. Data acquisition started on 4/10/17 and should take up to five weeks; management expects to be in a position to select drilling targets by the end of the first quarter 2018. We have updated our project timeline accordingly, and believe the Company is well on track and has also indicated it may well advance this timeline. Management also identified a source of potential in the Leadville Limestone formation, additional to the resources estimated by Ryder Scott in 2014, in which the 3D seismic could identify potential structures.

    Mon, 23 Oct 2017 10:31:00 +0100
    Midpoint Holdings - Capital Network: Capitalisation Update Report New Investment into Midpoint, Significant Increase in Subscription Price.
    Midpoint Holdings Ltd (CVE: MPT), has announced a significant new share offering to raise up to S1.2m CAD through a non-brokered private placement of 16,000,000 Common Shares at $ 0.075 CAD. The investment will be led by Halifax (Canada) based Numus Capital Corp. and PowerOne Capital Group of Toronto. Upon announcement, Midpoint Holdings Ltd (CVE: MPT), shares jumped 62.50% and was TSX.V top gainer at the closed of market yesterday. Midpoint will pay an arm's length finder's fee comprised of Common Shares equal to 7% of funds related to investments in Midpoint Holdings Ltd (CVE: MPT), and no broker warrants.

    Tue, 17 Oct 2017 15:04:00 +0100
    Genedrive - Capital Network: FY 2017 Preliminary results: HepC test launch in sight KEY INVESTOR MESSAGES

    • Commercial launch of Genedrive® Hepatitis C (HCV) test expected to start in    the coming quarters (African markets)
    • Collaboration with the US Defense Department (bio-hazard program) to generate further income in the current fiscal year
    • Re-launch of Genedrive® MTB (tuberculosis) test in India is being reassessed
    • Divestment options for the Services business are being pursued
    • Cash position of £4.2mln as of 30 September 2017
    Tue, 17 Oct 2017 08:36:00 +0100
    Zenith Energy - Capital Network: Encouraging Progress in Azerbaijan Zenith Energy (LON:ZEN) provided an update on the redevelopment project in Azerbaijan. The update included the results of the successful perforation of unexploited pay zones in well C-21 in the Jafarli field, as well as the start of the workover on well Z-28 in the Zardab field. We are encouraged by the outcome of the work undertaken on C-21 where the application of new technology to identify new pay zones enabled the company to raise production by 35 bbl/d, in excess of the target of 15 bbl/d per well over the scope of the project. Although it has no impact on our 41p valuation of Zenith (LON:ZEN), continuing to demonstrate successful progress will be essential to secure the necessary financing to ramp up operations in the near future, as per the development plan.

    Zenith (LON:ZEN) is current redeveloping the Muradkhnali, Jafarli and Zardab oil fields, which form the largest onshore oilfield of Azerbaijan. The fields were discovered and brought to production in the 1970s; Zenith intends to apply new technology to recover some 33 MMbbl of additional oil reserves potential (Figure 1).

    Mon, 16 Oct 2017 14:38:00 +0100
    Midpoint Holdings - Capital Network: Strengthening of Board Operational Progress Continues, Board of Directors Strengthened with Key Appointment.

    Midpoint Holdings Ltd (CVE:MPT), cross-border payments and foreign exchange provider, has announced significant operational improvements to its user platform following nine months of intensive planning and development. The new updated platform, an enterprise grade platform, delivers enhanced features and benefits to users as well as significant improvements in operational efficiency. Announced at the end of September 2017, the new platform addresses issues of scalability and user experience and also provides increased flexibility and functionality to customers when managing their payments and FX requirements.

    Tue, 10 Oct 2017 13:56:00 +0100
    Avacta Group - Capital Network: Preliminary Results Avacta’s FY 2017 Preliminary Results: Reagents and therapeutics programs all on track


    • Avacta’s Affimer® technology is a proprietary alternative to antibodies with key technical and commercial benefits
    • Avacta is building a pipeline of Affimer drugs for immuno-oncology and growing revenues based on a licensing model for Affimer reagents
    • Excellent progress in both parts of the business during the reporting period substantially de-risking the opportunity
    • A pipeline of potential valuable and licensable drugs is being built and the company is targeting first clinical trials in 2019
    • A sum-of-the-parts model now suggests an equity value four times the current market capitalisation



    On the 4th October, Avacta Group Plc (LON:AVCT) has reported preliminary results for the fiscal year ending July 2017, including a detailed update on the business.

    Overall Avacta Group Plc (LON:AVCT) is delivering according to management's guidance and has made significant progress in both the Affimer reagents' business and the Affimer therapeutics programs (please refer to our initiation report of March 2017 for an overview of Avacta's Affimer technology and business strategy).

    As regards the Reagents business, Avacta Group Plc (LON:AVCT) announced in April 2017 that, after a trial period, they have granted a leading diagnostic company exclusive rights to specific Affimer reagents. Although financial details weren't disclosed, this was the first time that Avacta signed an agreement of this nature, representing an important inflection point in de-risking the reagents business.

    As such we remove any risk adjustment from our valuation of the Affimer reagents business, which we now value approx. £140mil, from about £110mil before this deal was signed.

    Wed, 04 Oct 2017 09:30:00 +0100
    PCF Group - Capital Network: Trading ahead of expectations TRADING AHEAD OF EXPECTATIONS

    PCF Group Plc (LON:PCF), the UK specialist finance bank, released yesterday morning a trading update ahead of the full year results for the financial year ending 30th September 2017 in which the bank reported strong trading during 11 months of the year and now expects full year results to be ahead of market expectations. The full year results will be released on the 5th December 2017.

    The very pleasing out-turn now expected for the year has been due to a number of specific factors which includes the decision to move into direct retail deposits taking operations, the result of several years’ progress with UK regulatory authorities.

    The bank’s persistence in working towards receiving UK regulatory approval to raise retail deposits was finalised on the 27th July with the commencement of retail deposit taking activities and the bank has raised in the two months since approximately £51m, exceeding management expectations. The PCF Group Plc (LON:PCF) retail deposit strategy is to access the UK retail savings market on a measured basis, matching the internal need for funding to customer financing requirements and thus not to attract an excess of deposits that cannot be utilised. When appropriate, PCF Group Plc (LON:PCF) will also use retail deposits to pay down wholesale debt.

    However, the rate at which the bank has gathered deposits since commencement of deposit activities bodes extremely well for management expectations for the future loan book, which is expected to grow to £350m by financial year end 2020 and then to £750m by financial year end 2022. By our estimates the loan book should therefore grow above £200m by the end of financial year end 2018 which this trading statement, in our view, supports. The loan book has grown by 17.5% in the 11 month period to £141.6m, in-line with our expectations for the whole of financial year 2017.

    The growth in new business origination has accelerated in the year so far to £74.1m up from the £62.1m reported in 2016. The growth across the bank was +19.3%, supported, we suspect, by better pricing in the latter stages of the year afforded by the less expensive retail deposits gathered. Portfolio quality remains high with a loan loss impairment charge of just 0.5%. Once again, PCF has reminded investors that the bank does not offer Personal Contract Purchase (PCP) products in which the customer can receive credit on an interest payment only credit arrangement instead of a fully amortising hire purchase contract arrangement in which both interest and principal must be paid at each payment date.


    Thu, 28 Sep 2017 15:18:00 +0100
    Itaconix Plc – Capital Network: Breakthrough opportunity PROGRESS YTD

    Itaconix PLC (LON:ITX) reported H1 results (18/09/2017) which showed good progress, with revenues of £0.3m (H1 2016 ongoing: nil) and new collaborative partnerships in key product segments.

    In this report we examine some of the drivers which are supporting this rapid commercial adoption of Itaconix PLC (LON:ITX) technologies, including productspecific performance attributes and the long-term mega-trend towards environmental sustainability in specialty chemicals.


    Itaconix PLC (LON:ITX) has transformed (and renamed) itself in recent years towards a tight focus on specialty polymers for home care, personal and consumer health care, and industrial products. The H1 results demonstrate that the strategy is now delivering real commercial progress. Some of the drivers include:

    • A patented production process that combines the versatile chemistry of Itaconic acid with breakthrough economics. • A range of bio-based products which can replace petrochemical ingredients. Industry-wide changes are being driven by consumer preferences, regulatory changes and the “Together for Sustainability initiative within the specialty chemicals sector. • Virtually limitless headroom for growth, with addressable end markets of $30bn. • Existing commercial revenues growing strongly. • Strategic partners including Akzo Nobel, Croda, and Solvay broaden the available channel to market.

    In this report we examine some of the drivers in detail, with an overview of product categories and key differentiators.


    At this early stage of growth we don’t believe that there is any basis to value the shares on 2017/18 multiples. But by 2020 we believe the company could be generating £12m of revenue which would imply the shares trade on a 2020 multiple of 1.2x EV/Sales compared to peers on 3-4x (e.g. Croda plc.). With growth potential extending well beyond 2020, it’s unlikely that the market would value Itaconix this cheaply, in our view.

    In the meantime, we believe the main driver for the share price will be adoption of Itaconix products by additional commercial customers. We expect progress across all three end markets – home care, personal and consumer health care, and industrial.

    Mon, 25 Sep 2017 10:13:00 +0100
    Judges Scientific - Capital Network: Interim Results 1H 2017 INTERIM RESULTS

    Judges Scientific Plc (LON:JDG) reported strong 1H 2017 results delivering record figures across revenues, adjusted profit before tax, adjusted earnings per share, and dividends. The management expects to meet the current market consensus for FY2017 earnings thanks to ongoing order intake recovery driving organic growth.

    ■ Strong demand recovery continued since June 2016

    Judges Scientific Plc (LON:JDG) revenues were up 20% to record high £32.7mn for 1H 2017 (14% organic growth) with adj. operating profit increasing 48% to $4.4mn. Organic sales growth was seen across the region except UK with the biggest growth coming from China/Hong Kong (up 40%). Given most of subsidiaries’ business are international, the management expects healthy demand growth from China and relatively stable growth in EU/US to continue regardless of dampened growth in UK post Brexit. The group’s total order intake saw the same geographical pattern with China/Hong Kong posting the strongest growth of 85% Y/Y for the 1H 2017. The organic order book has improved from 11.2 weeks in June 2016 to 14.9 weeks in January 2017 and 16.5 weeks as of 2H 2017. Demand issues at two subsidiaries in 2016 have receded and management are progressing with resolving the production problems at a third business. As a result, the company’s 12M-trailing ROTIC has improved to 17.4% from 15.2% at the end of 2016.

    ■ New acquisition: Oxford Cryosystems

    During 1H 2017, Judges Scientific Plc (LON:JDG) acquired Oxford Cryosystems, a manufacturer of cryogenic cooling systems used for X-Ray crystallography and other applications. Oxford Cryosystems' products are sold to original equipment manufacturers (OEM) for integration into X-ray Diffraction systems or to users in university research laboratories. While the acquisition is immediately earnings accretive, the acquisition is not a near term growth driver and is no different from Judges’ core strategy of long-term buy and build.

    ■ Solid dividend growth continues along with prudent debt management

    Judges announced interim dividend of 10.0p (vs. 9.0p in 2016), which is well in line with the company’s dividend policy and its historical track record. The management reaffirmed that enhancing shareholder return is its priority as long as the business continues scaling up both organically and through acquisitions, hence c.10% p.a. dividend growth in the near term appears realistic in our view. Overall cash flow has improved during the period, and the company successfully lowered the adj. net debt to £5.8mn from £9.9mn at the beginning of the year bringing net debt/ adj. EBITA ratio to below 1x or close to historical average of around 0.5x.


    Wed, 20 Sep 2017 12:05:00 +0100
    Green Dragon Gas - Capital Network: Alignment of Interests between Partners in GSS and GSN Green Dragon Gas Ltd (LON:GDG) announced that it has finalised agreements with CUCBM, a subsidiary of CNOOC and Green Dragon Gas Ltd (LON:GDG) partner in the GSS and GSN Blocks, which conclude eight years of discussions regarding Green Dragon Gas Ltd (LON:GDG) interest in the wells historically drilled by CUCBM in the two Blocks. These agreements confirm the respective interests of the partners as well as the amount of costs recovery resulting from CUCBM’s work programme for the period 2007-2014. Although we welcome this announcement, it is unclear from the RNS whether these agreements have an immediate impact on either GDG’s gas reserves or on future production, revenue and cash flows. We suspect most of the positive impact to be expressed in a closer future cooperation between the two partners focussed on the monetisation of gas resources, which should be positive for investors’ sentiment and have a positive impact on the share price. However, we keep our 221p valuation unchanged.

    This announcement follows an earlier announcement by GDG (15/09/17) of the approval of a Project Code for the Overall Development Plan (ODP) on the GCZ block by the China National Development and Reform Commission (NDRC), confirming its final approval. The Block is jointly operated by CNPC and GDG through a joint management team based in Jincheng, Shanxi. The development cost for GCZ will be c.US$53.8m over 2017 and 2018. CNPC will invest US$28.5m according to its 53% participating interest and GDG US$25.3m based on its 47% participating interest in the Block.


    Wed, 20 Sep 2017 11:10:00 +0100
    Corero Network Security PLC - Capital Network: Gathering Pace YEAR-TO-DATE PROGRESSING STRONGLY

    Corero Network Security Plc (LON:CNS) H1 results release (14/092017) showed strong progress, with revenue up 51% for the flagship SmartWall product. Perhaps even more importantly the recurring revenue element for SmartWall was up 177%. This reinforces the growth profile going forward because licence fee income grows cumulatively as new customers are added. 

    We believe these results demonstrate that the company has essentially completed its transition from a software generalist to a DDoS protection specialist, and that the SmartWall DDoS protection product continues rapidly gaining traction in the market.

    In this report we review the progress of the group. We also revisit some of the fundamental drivers, and how the DDoS protection market functions. We argue that SmartWall’s real-time threat mitigation represents a disruptive new presence in the space.


    Among the main attractions of Corero Network Security Plc (LON:CNS) as an investment:

    • A highly differentiated product in SmartWall which offers game-changing performance compared with anything else in the market place. • Substantial headroom for further market share gains, within a continuously growing end market for DDoS protection. • An expanding range of channels to market, and technology partners including Juniper Networks, Gigamon, and McAfee to extend Corero Network Security Plc (LON:CNS) market reach. • Support of a shareholder base that includes specialist institutions such as Miton and Herald Investment Management, and also the Chairman and principal shareholder Jens Montanana.

    In this report we examine some of these themes in more detail.


    The shares have gained 81% since the successful fund raising in April. Still, looking forward we believe the company could reach revenues of $50m in 3-5 years. This would imply a market cap of £115m based on peer-group multiples (e.g. Radware, RDWR:NSQ), with no further fundraising required in our view, or 4x upside from the current level. If Corero continues to deliver on milestones, there is still everything to play for here for investors.

    Fri, 15 Sep 2017 14:44:00 +0100
    Zenith Energy Ltd – Capital Network: Valuable Oil Redevelopment Play in Azerbaijan Zenith Energy Ltd (LON:ZEN) (Zenith) is an oil and gas production company incorporated in Canada and dual-listed in London and Toronto. Zenith’s strategy of investing in low costs producing assets with relatively material upside potential, culminated in the recent award of a PSA in Azerbaijan for the redevelopment of mature onshore assets with potentially material remaining oil resources. Meanwhile, Zenith Energy Ltd (LON:ZEN) has continued to pursue a measured development strategy in Italy, centred around monetisation of gas resources. We estimate a potential upside of up to 41p (C$0.66) per share, based on third-party reserves assessment and recognising the risks and challenges facing Zenith Energy Ltd (LON:ZEN) in Azerbaijan. We believe that Zenith’s strategy to own its rigs is a critical risk-mitigating factor for the project, whilst management’s ownership of c. 20% of the equity provides perfect alignment of interests with shareholders.

    On 16/3/16, Zenith entered into a Rehabilitation, Exploration, Development and Production Sharing Agreement (REDPSA) with the State Oil Company of Azerbaijan Republic (SOCAR) and SOCAR Oil Affiliate (SOA). Following Cabinet of Ministers’ approval (25/4/16) and Parliament ratification into law (14/6/16), the official handover of the assets to Aran Oil, a newly incorporated operating joint venture between Zenith (80%) and SOA (20%), was completed on 11/8/16. The REDPSA has now the dignity of an Ordinary law in the Civil Code of the Republic of Azerbaijan, and consequently cannot be cancelled or rescinded unless for reasons of extreme gravity.

    The REDPSA area (Muradkhanli Contract Area) has a duration of 25 years, with a possible additional 5-year extension to be approved by SOCAR, and covers some 642km2 in the lower Kura Basin some 300km West of Baku, the capital city. The Contract Area covers the largest onshore oil fields discovered in Azerbaijan, Muradkhanli, Jafarli and Zardab, which have been producing since the 1970s (Figure 1).

    Tue, 12 Sep 2017 10:12:00 +0100