iomart (IOM) : Corp

Prelims – as steady as ever

Key data

  • Share price (p) 350.0
  • Target price (p) 450.0
  • Market cap (£m) 380.3
  • Enterprise value (£m) 419.5

Prelims show FY19 to be in line with the April trading update, generating free cash flow (before a freehold acquisition) of £17.5m from adjusted PBT of £25.5m and revenue of £103.7m. Having cleared £100m revenue, it will take more and bigger contracts to generate organic growth of 10%, therefore the professionalisation of the sales team and addition of an enterprise focus adds capacity for larger contract delivery – with increased lead generation from new and existing customer apparent in 2H. The typical, successful, combination of organic growth (c.3%, with work in hand to improve it) and acquisitions is iomart’s bread and butter, with unfailing consistency in its participation in widespread cloud transition for business of all scales. With consistent avoidance of greater than 5% exposure to the public sector; >90% recurring revenue; measures in place to encourage stronger growth, strong margins and cash generation; and a sensible dividend policy allowing capacity for further acquisitions, we reiterate our 450p target – if the phrase hadn’t been ruined by politics, iomart would define ‘strong and stable’.

Andrew Darley

Taptica (TAP) : Corp

Uber widens its ad-fraud complaints

Key data

  • Share price (p) 130.5
  • Target price (p) 550.0
  • Market cap (£m) 178.7
  • Enterprise value (£m) 115.6

Taptica subsidiaries and many programmatic adtech peers have now become embroiled in the long-running Uber ad-fraud case over in the US. In late 2017, the US ridesharing giant sued its own ad agency, UK-based Fetch (now part of Dentsu Aegis) for US$40m, claiming millions of US$ it spent on programmatic ads were wasted as the adtech companies it employed were simply claiming payment for acquired users who downloaded its app organically (ie not through clicking on an ad). For its part, Fetch pointed out that it had built Uber’s business through mobile advertising and early last year it counter-sued for US$20m in unpaid invoices, highlighting Uber’s unscrupulous business practices (calling it a “faithless business partner”). Uber voluntarily dismissed its case but now seems to have extended the complaint to the numerous networks which Fetch used to place these ads. Clearly Taptica similarly feels the claim is without merit and will defend itself.

Lorne Daniel

Trifast (TRI) : Corp

Full-year results slightly exceed forecast

Key data

  • Share price (p) 235.0
  • Target price (p) 270.0
  • Market cap (£m) 283.7
  • Enterprise value (£m) 297.9

Full-year results were pleasing, coming in £0.2m ahead of our forecast at the PBT line and with net debt lower than forecast and a higher dividend than expected. The impact of UK automotive weakness and the effects of the Chinese-US trade dispute are being felt. The outlook is for no change to forecasts despite comments that market conditions remain tough. Market share and capabilities are still increasing and show the benefit of strong management and strategy. The shares trade on a forward P/E of 14.8x, and some upside remains to our 270p price target.

David Buxton

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