NAHL (NAH) : Corp

Protecting cash and reducing costs

Key data

  • Share price (p) 43.0
  • Target price (p) U/R
  • Market cap (£m) 19.8
  • Enterprise value (£m) 37.6

NAHL has detailed that following the emergence of COVID-19, the Board’s focus has switched to tackling the immediate short-term challenges and taking action to protect cash, reduce costs and ensure there is sufficient liquidity to run the business through a prolonged period of disruption. Critical Care has remained resilient and the £5m of operating profit we forecast for this division in 2019 will continue to provide an important source of cash generation. Residential Property has been affected by the significant decline in this market, but costs can and have been cut quickly. Personal Injury has seen a significant reduction in enquiries and significant cuts have been made to marketing and personnel costs. The Group has suspended all forward guidance and we have withdrawn our forecasts, but make the points that management is experienced in navigating difficult markets, Critical Care continues to generate meaningful profits and cash, there is a positive net working capital balance to unwind and the £21m net debt balance is well within the £25m facility.

Guy Hewett 020 7220 0549

Omega Diagnostics (ODX) : Corp

COVID-19 antibody test – manufacturing Mologic test

Key data

  • Share price (p) 28.5
  • Target price (p) 25.0
  • Market cap (£m) 42.9
  • Enterprise value (£m) 44.4

Further to the announcement on 9 April (Omega’s participation in a UK Rapid Test Consortium for a point-of-care COVID-19 antibody test), Omega has announced that it will separately manufacture Mologic’s COVID-19 laboratory-based ELISA antibody test at scale (c.16m tests per annum equivalent), should Public Heath England (PHE), which is currently evaluating the test, approve it. In doing so, Omega has made available both of its manufacturing facilities (Alva, Scotland and in Littleport, Cambs, UK) to produce antibody tests. While commercial terms have yet to be finalised, the capacity indicates potential maximum revenues in a c.£15-£30m range. No change to forecasts or target price, which are underpinned by Food Intolerance and VISITECT CD4. The antibody tests, however, provide significant upside potential, which is dependent on PHE approval and confirmation of orders.

Mark Brewer 020 7220 0556

Proactis (PHD) : Corp

Reassuring trading update

Key data

  • Share price (p) 18.5
  • Target price (p) 80.0
  • Market cap (£m) 17.7
  • Enterprise value (£m) 59.8

Proactis has released a positive trading update for the year to July 2020, reiterating performance in line with unchanged pre-Coronavirus management expectations and reinstated forecasts (4 March 2020). Despite COVID-19, the recurring revenue model, based on long-term contracts, typically with both public and private sector organisations, offers visibility and a defence against uncertainty. As with listed enterprise software peers, there is a risk new sales may be challenging, but churn is expected to be reduced. Total Contract Value (TCV) won in the year continued to grow from the £7.5m for 1H20 to January, by £2.9m (£1.9m in Feb, £1m in March) in 2H20 (to July) so far, compared with £5.2m won in the whole of 2H19. Organic growth in core ARR (reported in March at an annualised 8%) has been maintained. FY20 & FY21 forecasts are reiterated and unchanged – FY21 forecasts suggest 8% organic revenue growth and 6% EBITDA growth as the Group includes investment for further acceleration of growth into FY22, and while medium-term prospects are more obscure until the world normalises, we maintain forecasts, confident that if revenue growth is threatened (while recurring revenue remains secure), cost savings are achievable to maintain profit and cash. Interims 29 April. Proactis trading update shows confidence in unchanged forecasts for FY20 (July year end) with continuing positive growth in both ARR and TCV won in the year. Both of these add to the development of the already strong visibility in the model from long-term contracts with customers, approximately 40% by number of which are in the public sector. As highlighted for H1FY20, £3.4m of ARR from high risk clients was up for renewal in 1H20, of which £2.2m was retained, surpassing expectations. Total ARR was £43.4m total ARR (of which £40.7m, 94%, is not “high risk”) which will continue to grow as more TCV is won and contracts implemented – with bePayd, the accelerated payment facility for smaller suppliers to large enterprise buyers on the platform, offering exciting upside. We look forward to interims scheduled for 29 April with the opportunity to review greater detail in cash flow and net debt, with which management is comfortable – and for detail of the newly launched, newly branded bePayd.

Andrew Darley 020 7220 0547

Wameja (WJA) : Corp

KPIs confirm strong growth as Wameja invests €3.6m

Key data

  • Share price (p) 4.0
  • Target price (p) 20.0
  • Market cap (£m) 49.0
  • Enterprise value (£m) 46.0

The Q1 2020 update reveals a very impressive quarter for HomeSend, on track with our expectations for a landmark year in 2020. This was expected on the back of the growth in implementations in Q3 and Q4 of 2019; with many new customers going live, we suspected that this year would see a significant uplift in transactional volumes across the platform, and the Q1 KPIs clearly demonstrate that is happening. To fund the early-stage losses, Wameja is investing a further €3.6m in HomeSend, in proportion with Mastercard, to maintain its 35.68% stake and leaves Wameja with €3.5m in cash. This, along with €6.4m from the US financials giant, is money to support HS operations. The facility that Wameja provides to HS is drawn to €2.5m. This is a float (again matched by Mastercard) to fund the timing gaps in the HS real time settlement model. We are reassured to see it has been extended to mid-August to allow HS to find third-party funding as the volumes grow. Mastercard has similarly extended its facility. With funding underpinned, we continue to expect an excellent year ahead for HS despite the COVID-19 issues.

Lorne Daniel 020 7220 0545

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