TechFinancials Inc. (LON:TECH) – BUY*: AGM Statement
Market Cap: £7.5m; Current Price: 11p; Target Price: 27p
(Note Attached)
B2C turns the corner, on road to recovery
This morning’s AGM statement reads well, where TechFinancials is trading in line with expectations for FY16. The B2C business was impacted in FY15 but has now turned the corner and showing profitable growth on the back of the new JV deals struck by management. The balance sheet is in healthy shape with c. $3.9m of cash as at the end of June 2016, which we forecast will increase to c. $4.5m by the end of FY16. This bodes well for reinstating dividend payments to investors. We maintain our Buy rating and 27p price target.
The business is trading in line with current FY16 expectations, which shows +48% YoY revenue growth to $20m, EBITDA more than doubling to $1.6m and a dividend of $0.4c. We introduce new estimates for FY17 where we look for +12% YoY revenue growth to $23m, +72% YoY EBITDA growth to $2.8m and a dividend of $0.7c per share, +65% YoY.
The balance sheet is in healthy shape and well underpinned by high levels of net cash, forecast at c. $4.3m for FY16. The shares trade on an undemanding 3.5x FY16E EV / EBITDA falling to 2.0x FY17 EBITDA, which significantly undervalues a business showing significant profit growth. A return to paying dividends is a further significant point for investors to consider and based on the current price the implied yield is a short 3% growing to c. 5% for FY17 (note attached).
AdEPT Telecom (LON:ADT) – BUY*: FY16 Results
Market Cap: £56.37m; Current Price: 253p; Target Price: 310p
(Note attached)
March 2016 EBITDA +34%, in line; emphasis on unified communications offering
AdEPT reported strong performance for the year to March 31st 2016 led by EBITDA of £6.15m, +34%YoY, ahead of our initial outlook of £5.9m, and reduced year-end net debt at £6.0m (previous NCP estimate was £7.0m). The recommended full year dividend is 6.50p/share, +37%YoY.
During FY16 AdEPT continued to build on the public sector-oriented unified communications services platform established with the acquisition of Centrix in May 2015, developing inroads into local authority and NHS public sector institutions, built on its presence in around 70% of London-based private hospitals
Backed by its Barclays PLC revolving credit facility, AdEPT underpinned its Centrix platform with the post-period (May 2016) acquisition of unified communications provider Comms Group U.K. Ltd., for an initial cash consideration of £3.5m. We estimate that £5.0m of the Barclays facility currently remains undrawn, and expect AdEPT to continue its strategy of selective acquisition.
FY17-18 estimates. For FY17 we expect revenue of £32.6m, EBITDA at £7.0m (estimates unchanged); EBITDA margin of 21.5%. Our FY18 outlook takes a prudent stance at this point, mindful of the impact of medium-term economic uncertainty on potential for additional growth through new contract demand
Price target remains unchanged. We raised our price target from 305p to 310p on the acquisition of Comms Group U.K. Ltd., subsequent also to the April Trading Update at which AdEPT previewed FY16 earnings which were confirmed in today’s announcement
Mariana Resources (LON:MARL) – BUY*: Hot Maden update
Market Cap: £54.6m; Current Price: 45.5p; Target Price: 54p
95.5m at 32.1g/t Au and 3.3% Cu
An infill drill programme at the Hot Madan Gold-Copper-Zinc Project has returned the highest grade intercepts to date and confirm the continuity of the mineralisation. Results include; 83.3m at 15.9g/t Au and 1.57% from 167m (HTD-60) and 95.5m at 32.1g/t Au and 3.3% Cu from 36.5m.
Results from step back drilling that expands the known area of mineralisation with 56m at 0.8% Cu from 409m (HTD-54).
Exploration drilling in the southern target area continues to demonstrate the presence of high-grades over significant intercepts, including 23m at 16.1g/t Au (HTD-58) and 1.1% Cu from 157m, 1m at 93.5g/t Au and 0.46% Cu from 350m (HTD-58), 2m at 29.8g/t Au from 40m (HTD-61) and 8.5m at 11.9g/t Au and 2.51% Cu from 239m (HTD-61).
An updated mineral resource estimate is expected in early July that will include assay results from drill holes HTD-18 to HTD-62.
Drilling to be suspended between 01/07/16 to 11/07/16 in recognition of the Bayram holiday season.
No change to forecasts, rating or price target.
Premier African Minerals (LON:PREM) – CORP: Corporate update
Market Cap: £12.3m; Current Price: 0.65p
From yesterday: George Roach to provide guarantee to JRG settlement
George Roach, Chairman and CEO, of Premier African Minerals has agreed to provide a guarantee in respect to any amounts owing under the proposed Memorandum of Agreement (MoA) with JR Goddard Contracting (JRG), the contractor for open pit mining at RHA.
Prem is to settle the US$851,312 (as at 11/03/16) at a rate of US$54,626 per month over 20 months. Should Prem recommence open pit mining during the 20 month period then US$247,000 will be recovered by the Company through equal monthly payments against the mining certificates over the duration of the new agreement.
In consideration for providing Surety, the Company has entered into a put option agreement for its shares in Circum Minerals with George Roach. Should Prem fail to meeting it obligations under the MoA, and JRG exercises its rights under Surety against George Roach, and Prem fails to find an alternative buyer for its Circum shares the Company may require George Roach to purchase the number of shares in Circum at US$2 per share to equal the amount owed to JRG.