Morning Brief – 23-Jul-2019

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Morning Brief Images 23-Jul-2019

UK Stock Market News Today – 23-Jul-2019

Morning all!

Animalcare (ANCR) – 158p – £94m – PER 13

Trading Update For The 6 Months To End June 2019 – In-line with Net Debt down slightly, seems FY will be in-line too.

In-line makes this seem fairly valued (at best) around this level.

Beeks Financial Cloud (BKS) – 89p – £45m – PER 21

Trading Update – 2 Tier 1 clients signed and confirmed FY to end 2019 has traded in-line.

Sold out here after the interims and estimating a fair value circa 100p – I wonder if these new clients mean others will now be knocking down the door and if so, what will the lead times be? Based on the latest Broker note this morning, in my opinion, this still looks overvalued on a 1 Year and way undervalued on a 2 Year view – I am not a buyer as I just have no idea if or when those additional Tier 1 clients will come on board.

Colefax (CFX) – 510p – £46m – PER 13.1

Results For The 12 Months To End April 2019 – Revenue flat at £86.36m (in a challenging trading environment), PBT up 8% to £5.10m (£4.72m last time), EPS up 3.2% to 39.3p (38.1p last time), Net Cash at £9.5m (£9.2m last time) with the Total Dividend up 4%.  Trading environment remains challenging into this year.

Plenty of Cash and seems well managed but just can’t see where growth is going to come from so it’s not for me at present.

Dotdigital (DOTD) – 101p – £296m – PER 23.3

Results For The 12 Months To End June 2019 – Revenue up 19% to £51.3m (£43.1m) with £42.5m organic, Adjusted EBITDA expected to be slightly ahead of market expectations. Momentum has continued into the new financial year.

I still reckon this is fairly priced around this level.  Based on the latest Broker note this morning, in my opinion, this still looks overvalued on a 1 Year and 2 Year view.

DX Group (DX.) – 13p – £74m – PER 18.5

Trading Update For The 12 Months To End June 2019 – Expects FY to be in-line with market forecasts.

In-line with forecasts, from what I can see, means a loss so I will wait until I see the actuals.

Franchise Brands (FRAN) – 89p – £68m – PER 20

Interim Results For The 6 Months To End June 2019 – Revenue up 19%, PBT up 27%, EPS up 22% and the Interim Dividend is up 43%. No clear guidance on FY.

Still quite like this and see 100p as fair value (at best).  Based on the latest Broker note this morning, in my opinion, this looks way looks about fairly valued on a 1 Year and a 2 Year view – A 10% upgrade to 2020E EPS would make it more attractive.

Getbusy (GETB) – 38p – £18m – PER n/a

Results For The 6 Months To End June 2019 – Revenue up 18%, losses being reduced. Expects FY Revenue to be ahead of market expectations.

I finally sold out here last month and would need to see signs of a profit this time before considering buying back in.  Based on the latest Broker note this morning, 2019E and 2020E EPS are both forecast as negative (-0.9p and -0.5p), as is PBT – So no signs of a profit just yet.

Gresham Technologies (GHT) – 121p – £82m – PER 63

Results For The 6 Months To End June 2019 – Revenue up 36%, Adjusted EBITDA up 525% and it looks like there’s a real profit here too – No clear guidance on FY.

Quite like this but will have to wait and see those actuals reflect a return to FY profitability. Based on the latest Broker note this morning, in my opinion, this looks way undervalued on a 1 Year view and fairly valued on 2 Year view – This is based on a return to +ve EPS in 2019E after being -ve in but 2020E EPS will still be half that of 2017A.

Huntsworth (HNT) – 93p – £343m – PER 9.8

Interim Results For The 6 Months To End June 2019 – Expecting a strong H2 to meet FY expectations.

Looks like there’s value here on the assumption that H2 is strong so it’s a case of waiting to see the actuals. Based on the latest Broker note this morning, in my opinion, this looks way undervalued on a 1 Year view and about fairly valued on a 2 year view – Considering the Net Debt would like to see a 10% upgrade to 2020E EPS to make this more attractive.

Joules (JOUL) – 257p – £224m – PER 16.8

Results For The 12 Months To End May 2019 – Revenue up 17.2% to £218m, Underlying PBT up 19.4% to £15.5m, Statutory Basic EPS up 17.3% to 11.6p, Net cash of £5.8m, the Total Dividend will be up 5% to 2.1p. This year is trading in-line with expectations.

I don’t see enough value here and given I am not a huge fan of the sector at the moment I will not be getting involved for now. Based on the latest Broker note this morning, in my opinion, this looks overvalued on 1 Year view and about fairly valued (at best) on a 2 Year view.

McColl’s Retail (MCLS) – 68p – £80m – PER 8.6

Results For The 26 Weeks To End May 2019 – Mostly flat all round with PBT and the Interim Dividend the stand outs, PBT down from £2.3m to £0.2m and the Interim Dividend down from 3.4p to 1.3p. Still expects FY to be in-line.

I remain uninterested here.

Motorpoint (MOTR) – 211p – £200m – PER 10.8

AGM Trading Update – Q1 growth achieved although margin is lower than last year, H1 profit to be below last year but still remains confident of meeting FY expectations.

I remain Neutral on this sector and still expect “blood on the streets” of some sort before I become a buyer.

Norcros (NXR) – 218p – £175m – PER 6.3

Trading Update – LFL Revenue similar to last year, hopes to continue to win market share and make progress in-line with FY expectations.

Still quite a lot to like here but comes with just a few too many risks – the Net Debt, the Pension Liability (£29m or so, last I looked) and the exposure to South Africa (30% or so of Revenues, last I looked).

Quixant (QXT) – 268p – £177m – PER 11.8

Trading Update For The 6 Months To End June 2019 – Looks to be in-line but with a little more H2 weighting that usual.

Perhaps some value here at this level but not enough for, especially with the “little more H2 weighting than usual”.

Synectics (SNX) – 185p – £31m – PER 8.3

Results For The 6 Months To End May 2019 – Revenue down slightly, PBT down -20%, EPS up slightly, Interim Dividend up slightly and the Order Book is up 23%. Expects FY to be in-line based on a stronger performance in H2.

The (at times) 10% Spread, the low margins and the H2 weighting put me off investing here – Looks quite appealing otherwise.

As always, all comment most welcome!

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