ANT (ANTP, 28p, £6.80m) has partnered with global set-top box company Humax to launch the world’s first hybrid broadcast broadband (HBB) set-top box. The combination of broadcast and internet is a logical step and has launched first in Germany ahead of Christmas. We maintain our SPECULATIVE BUY recommendation.
Byotrol (BYOT, 33.25p, £27.84m) A US patent has now been accepted for the company’s antimicrobial technology with the US patent and will provide patent protection till 2022. The group’s consumer products company has entered a 6 month option agreement, extendable for another 3 months, with a Fortune 150 corporation for exclusive rights to enter negotiations for a licensing agreement for Byotrol’s technology. Byotrol has received $0.25m for the rights to talk and specifically exclude existing product areas but instead concentrate on pre-saturated wipes and liquids for certain surface care markets. While we continue to exercise some caution regarding the existing valuation, it is news flow like this that maintains the group as a SPECULATVIE BUY.
Nasstar (NASA, 9.75p, £3.11m) Final results from the “cloud computing” orientated company to September 2009 saw revenues of £2m (£2.1m) with a decline into losses at the EBITDA level (loss of £0.35m V.S. £0.24m profit the previous year) and an increased underlying loss before tax of £0.82m (loss before tax of £0.20m). The year saw substantial progress in its hosted exchange server subscribers to 9,151 (7,726) and in the number of hosted desktop clients which rose from 508 to 1,149. A key driver for this was the launch of its partner programme, launched last year, with 16 signed at the period end. The growth in partners and hosted service has enabled the group to report that the first 2 months of the year have been above EBITDA breakeven. There has been further growth across the board with 1,281 hosted desktop subscribers at the end of November, 9,402 hosted exchange subscribers and 23 partners signed with another 14 under discussion. With the model beginning to generate its own positive cash flow and good momentum for the start of the year we maintain our SPECULATVIE BUY stance, last iterated on 28/09/09 at 8p.
Catalytic Solutions (CTS, 4.5p, £0.73m) has sold the Asian rights to its three-way catalyst IP to TKK, its Asian joint venture partner, for a total of $4m and sees CTS’ share in the JV drop to just 5% to reflect the future contribution. The money will be received in 2 tranches, the first this month followed by the remainder in Q1 2010. CTS’ bank, Fifth Third Bank, has agreed to extend the repayment of its debt so the group has till the end of December to repay $0.9m with interest increased by 1% from the 1st of December and another 0.5% from the start of January. The shares have been suspended since 30 September and are now expected to recommence on 21st December. We maintain the SELL recommendation ahead of further dilution due to the remaining need for further financing.
Watermark Global (WET, 0.975p, £6.53m) has received approval for its final scoping report and plan of study foe an environmental impact assessment from the Gauteng Department of Agriculture and Rural Development (GDARD). This is an important step and removes a concern regarding the group’s ability to stay on the revised timetable. We maintain our SPECULATIVE BUY recommendation, last iterated on 07/12/09 at 8.75p, based on the wide potential for the extraction and refinement of acid mine drainage water.
Alkane Energy (ALK, 17.75p, £16.49m) The group has updated for trading for the year ending December 2009. Trading for the first 11 months has been in-line with market expectations with revenues up 22% - reflecting the additional contribution from the Bilsthorpe and Shirebrook sites which were commissioned in the second half of the year. The group expects to produce some 95GWh (91GWh) o0f electricity this year. Further projects are underway, including Florence (in Staffordshire), Kings Mill (in Nottinghamshire) and Newmarket (in West Yorkshire), which are expected to contribute during the 2010 year, in addition to the sale of excess capacity (called tolling) to GDF Suez which will bring in £0.3m of revenues a year. The group is warning regarding electricity prices which will depress profits this year – but investors should look through that temporary dip towards energy shortages in the UK and the fact Alkane’s energy output can regarded as on to the greenest as it uses coal mine sourced methane that is the worst gas for global warming instead of it escaping to the atmosphere. Highlighting Alkane Energy’s green credentials is the announcement of a collaboration agreement with TEG Group, whose prime expertise is industrial scale composting and anaerobic digestion, to provide the gas to energy part of the equation. The collaboration has already submitted joint bids to Welsh Assembly for biogas projects. We maintain our BUY stance on Alkane.
TEG Group (TEG, 38p, £20.15m) has announced a collaboration with Alkane Energy to bring in the expertise of how to convert the methane created by anaerobic digestion into electricity. We maintain our BUY recommendation.
Dawson Holdings (DWN, 9p, £6.46m) Final results to September 2009 saw revenues of £81.4m (£85.0m), PBT of £1.8m (£3.5m) and EPS of 2p (3.8p). Following the business reorganisation that saw Dawson News, a distributor, squeezed out of the market, the group now comprises 3 profitable operations. Dawson Media Direct maintained profits despite passenger volumes and advertising revenues falling. Dawson Books managed to just about overcome the dollar based pricing on library budgets. Dawson Marketing Services achieved a modest reduction in profits through the management of costs. The group ended the period with net cash of £0.1m (net debt £18.9m) following the reduction in working capital required by the news distribution business. There is no doubt 2010 will remain challenging – so a near to flat profit expectation of £1.6m PBT with 0.8p EPS would put the group on a prospective PER of 11.25x – fairly rated – HOLD.
DCD Media (DCD, 9p, £5.50m) Final results to June 2009, delayed so the group could reorganise its debt (as announced on 30/11/09) showed revenues of £34.5m (£34.0m) with underlying PBT of £2.4m (£2.6m). The group believes its wide spread of genres and a vertically integrated business model protected it from the worst of the down-turn in the media sector. This was a strong performance given the year still saw some 52% of revenues arising from UK sourced work, with 30% from international production and 18% arsing from ancillary rights exploitation. The second half saw the benefit of the reorganisation of the back office and improved occupancy. Outlook is modestly encouraging with 35% of annualised revues now arising from the USA where the group is currently producing for 3 major broadcasters with much more to growth available. We maintain our SPECULATIVE BUY recommendation with a 12p price target, last iterated on 30/11/09 at 9.75p.