Iofina (IOF) : Corp

CBD oil licence approved

Key data

  • Share price (p) 16.0
  • Target price (p) 27.0
  • Market cap (£m) 31.1
  • Enterprise value (£m) 36.6

Iofina has taken its first step towards developing its new CBD business, IofinaEX, receiving conditional approval for its Hemp Processor/Handler Licence Application. This business is seen as a natural fit for Iofina, both operationally and geographically, with many of the same process required in cannabinoid production as in its iodine extraction and specialty chemicals businesses. It’s very early days, but this is a rapidly growing market with high levels of investor interest; no bad thing.

Jonathan Wright jwright@finncap.com

Sopheon (SPE) : Corp

AGM statement

Key data

  • Share price (p) 1 140.0
  • Target price (p) 1 500.0
  • Market cap (£m) 115.7
  • Enterprise value (£m) 102.5

Sopheon’s AGM statement confirms performance in line with unchanged expectations for continuing momentum in revenue growth alongside investment for acceleration of future growth. Recent wins in Thailand and Pakistan highlight the success in penetrating new territories, and through new channel partners. Contracted revenue visibility of $23m represents 61% of FY expected revenue, in line with a more typical 2H-heavy pattern of delivery (as per FY17) after an unusually more even 1H/2H in FY18. The new version of Accolade, v12.3, is released this morning, delivering further features as the software remit extends beyond innovation into digital and business transformation – a potentially third pillar of modern enterprise software, alongside CRM or ERP. We look forward to further newsflow and interims (expected August). Target 1500p reiterated.

Andrew Darley adarley@finncap.com

Taptica (TAP) : Corp

Integration on track as Performance division struggles

Key data

  • Share price (p) 98.0
  • Target price (p) 550.0
  • Market cap (£m) 125.0
  • Enterprise value (£m) 70.0

Today’s AGM will hear that the integration of the Tremor Video and RhythmOne businesses is proceeding rapidly and well, and in fact will deliver greater cost savings than originally thought (now an annualised $20m in the current year). However, while demand for the brand advertising remains strong, revenues continue to fall in the original Performance-based business. We had expected to see a Performance recovery by now and on through H2. That now looks unlikely and to be prudent we are cutting our sales forecasts for that operation. With the Branding strength and additional synergies found, our earnings and cashflow expectations are currently unchanged. There is no news on the recent Uber issue, which we feel has been overblown considering there was no direct relationship between Taptica and Uber, and many adtech businesses are involved, not just Taptica’s subsidiaries. Finally, the $15m share buyback has been completed.

Lorne Daniel ldaniel@finncap.com

Tekcapital (TEK) : Corp

Follow-on order for MicroSalt®

Key data

  • Share price (p) 11.2
  • Target price (p) 32.0
  • Market cap (£m) 6.1
  • Enterprise value (£m) NM

The group has announced a follow-on order for its proprietary salt MicroSalt®, and the completion of test production for a potato chip snack.

Mark Paddon mpaddon@finncap.com

Evgen Pharma (EVG) : Corp

Full-year results – await SAH Phase IIb data

Key data

  • Share price (p) 20.3
  • Target price (p) 35.0
  • Market cap (£m) 26.8
  • Enterprise value (£m) 21.1

Evgen reported full-year results to 31 March that were c.£0.3m better than expected, resulting in year-end cash of £2.0m. Together with a £5m placing in May, the company is funded through to mid-2021 at its current run rate. Whilst we await the Phase IIb trial read-out for SFX-01 in sub-arachnoid haemorrhage (SAH) in late Q3/early Q4, the company continues to plan for a placebo-controlled Phase IIb trial in metastatic breast cancer (mBC), which, funding-permitting, could start in H2 2019. We reiterate our price target of 35p, 65% of which is underpinned by the mBC indication. A positive outcome for SAH would add c.50p to our target valuation, whilst the downside is protected by the mBC indication and the prospect of announcing an agreement to support investigator-led and funded trials for SFX-01 or analogues in other indications, for which Evgen retains all future commercial rights; this is not included in our target valuation.

Mark Brewer mbrewer@finncap.com

Zambeef (ZAM) : Corp

Performing despite unhelpful macro environment

Key data

  • Share price (p) 7.4
  • Target price (p) 10.0
  • Market cap (£m) 22.2
  • Enterprise value (£m) 137.0

Zambeef has reported FY2019 interim results for the six-month period ending 31 March 2019. In what is a tough macro environment in Zambia, we believe that the company has delivered a creditable performance, with underlying growth in revenue of 15.5% y-o-y and 4.5% y-o-y underlying growth in gross profit. The underlying gross margin slipped 370bps in the period, reflecting the lack of pricing power given the tough economic environment and customers gravitating to lower-margin products. We had largely anticipated these issues, so we are not changing our forecasts for the operations at this stage. Our US dollar forecasts are trimmed slightly on translation, as we now believe that the kwacha will be weaker for longer than we have previously assumed.

Raymond Greaves rgreaves@finncap.com

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