Bilby plc (LON:BILB) – BUY*: Initiation
Market Cap: £17.1m; Current Price: 43p; Target Price: 75p
Initiation of coverage; building on experience and quality
Bilby is a specialist social housing services and building company serving local authorities, housing associations and domestic customers in London and the South East. The Group comprises four companies: P&R Installation Company Ltd; Purdy Contracts Ltd; Spokemead Maintenance Ltd; and DCB (Kent) Ltd. Bilby provides gas heating installation and maintenance of plumbing and electrical systems, building repair and upkeep. Demand for social housing backed by legislation creates a positive environment for Bilby’s services resulting in a strong, transparent recurring revenue stream.
Bilby focuses on London and the South East - a market totalling 1.332m social housing units - a local concentration which results in operational efficiencies. It currently supplies services to over 300,000 dwellings. The Company has a ‘buy-and-build’ strategy, targeting similar businesses close to its operational area, mostly recently the acquisitions, in April 2016, of DCB and Spokemead.
The Company is also successful in winning contracts. We note the H116 contract win for the provision of gas heating services for Shepway and East Kent Housing, a significant contributor to the 16% revenue growth we forecast for FY18.
NORTHLAND CAPITAL PARTNERS VIEW: In our view Bilby is currently under-valued compared to its quoted UK peers, being at a 4% discount to the 7.7x weighted average FY16/17 EV/EBITDA and a 31% discount to weighted average PE (11.7x). Our target price of 75p is based on peer parity, on our outlook for Bilby’s earnings, the advantage Bilby retains in its local operational area and its strong reputation for quality of service.
Feedback plc (LON:FDBK) – CORP*: Placing
Market Cap: £7.4m; Current Price: 3.4p
Placing to raise £750k
Feedback announced the completion of a placing of 27,272,727 new ordinary shares of 0.25p each in the Company at a price of 2.75p per share to raise a total of £750,000.
The net proceeds from the placing will be used to invest in product development, sales and marketing, primarily for TexRAD, Feedback's patented quantitative medical imaging software, as well as for general working capital purposes.
NORTHLAND CAPITAL PARTNERS VIEW: A positive development for Feedback. The funds will be instrumental in further rolling out flagship product TexRAD, a medical imaging software package which aims to identify imaging biomarkers that can be used in the early detection of cancer.
Arian Silver Corporation (LON:AGQ) – CORP*: Noche Buena option expiry
Market Cap: £1.7m; Current Price: 0.9p
To focus on Mexican Lithium Projects
Arian Silver Corporation has decided to let its option over the Noche Buena Gold and Silver Tailings Project lapse. The Company will instead continue to focus on its lithium projects located in the Zacatecas State of Mexico.
The metallurgical test work undertaken by Resource Development Inc., demonstrated that the gold and silver within the tailings was highly refractory and include various gangue minerals that would not only inhibit extraction of the silver and gold, but also lead to significant penalties levied by any purchasers of any concentrate produced.
Arian expects to announce the first set of assay results from its recently acquired lithium projects imminently, and will be followed by a preliminary technical report.
The Company is also in discussions regarding additional lithium projects in Mexico and will provide a further update on these projects in due course if appropriate.
NORTHLAND CAPITAL PARTNERS VIEW: A necessary part of the exploration game is rationalisation when results are not sufficient to justify further expense. Arian Silver Corporation structured the option on the Noche Buena Gold and Silver Tailings Project in a way that allowed it to assess the projects potentially fully, before incurring an acquisition cost, reducing the Company’s financial exposure risk. This has proven to be a prudent decision by the Company as the gold-silver mineralisation is refractory. Arian will now focus its efforts on its lithium projects located in Mexico.
Connemara Mining Company (LON:CON) – CORP*: Inishowen update
Market Cap: £1.4m; Current Price: 1.85p
Connemara to focus on expand Inishowen Gold Project
Connemara Mining Company has been awarded six additional prospecting licences on the Inishowen Peninsula in Donegal.
The new ground covers an area of 229km2, adjoining Connemara’s five licence block were the Company previously intercepted 4.82m grading at 5.48g/t Au in 2016.
Additional drilling planned for Q217.
The Company has relinquished ground in the south Donegal to focus its resources on Inishowen, where the Company believes there is greater potential for a commercial gold discovery.
NORTHLAND CAPITAL PARTNERS VIEW: A logical decision for Connemara Mining Company that sees the company rationalise its portfolio and focus on, and indeed expand, the prospective Inishowen Gold Project, located in County Donegal. The Company believes that the new ground could contain extensions to the existing mineralisation and gold has been noted in several streams.