Independent Oil & Gas (IOG) : Corp

Taming the storm

Key data

  • Share price (p) 11.0
  • Target price (p) 60.0
  • Market cap (£m) 52.8
  • Enterprise value (£m) 31.8

An impressive checklist of achievements in IOG’s FY 2019 results, which ultimately leaves it fully funded for its Southern North Sea gas development project. This not only puts it in a very strong position to weather the current storm, but will even allow it to benefit by locking in distressed drilling rig rates. The pursuit of complementary growth opportunities is also likely to benefit as competitive pressures ease and distressed assets come to market. Gas prices are weak, but this is coronavirus and seasonally warm weather related. Structurally, the UK gas market remains robust and IOG’s Core Project has a low gas price breakeven. With production not expected to start up until H2 2021, there’s plenty of time for prices to recover.

Jonathan Wright 020 7220 0543

IQGeo Group (IQG) : Corp

Contract extension & Covid-19 update

Key data

  • Share price (p) 61.5
  • Target price (p) U/R
  • Market cap (£m) 45.1
  • Enterprise value (£m) 32.0

We are very pleased to see Tokyo Electric Power Company (TEPCO), Japan’s largest electrical network operator, is expanding its contract with IQGeo, valued in total at £1.8m on a subscription basis over the next three years. The contract was expected and already factored into management expectations, however it illustrates both the strength of IQGeo’s MyWorld offering and the quality of its partner channels, with NEC being the channel partner delivering the contact. We believe that an increasing frequency of extreme weather events will see more adoptions by utility networks around the world.

Lorne Daniel 020 7220 0545

Bigblu Broadband (BBB) : Corp

Strong FY19 results reflect a robust investment case

Key data

  • Share price (p) 62.5
  • Target price (p) 155.0
  • Market cap (£m) 36.0
  • Enterprise value (£m) 58.7

Bigblu Broadband (BBB) has reported a strong set of FY19 results that demonstrate strong organic growth, and are in line to ahead of the previous consensus estimates. This establishes a strong foundation for BBB’s future growth, and we expect that BBB will see revenue, EBITDA, and EPS growth in FY20 and FY21 despite the uncertainty caused by Coronavirus. This reflects that BBB has a robust and resilient investment case, which we explain in depth in this report. We consequently believe that BBB is undervalued on 12m fwd multiples of 5x EV/EBITDA and 7x adj P/E, and initiate with a TP of 155p or 15x FY21 adj EPS.

Michael Hill 020 7220 0554

Synairgen (SNG) : Corp

£14m placing to fund COVID-19 activities

Key data

  • Share price (p) 46.5
  • Target price (p) 120.0
  • Market cap (£m) 69.5
  • Enterprise value (£m) 67.0

Synairgen has raised £14.0m to fund a Phase II trial for SNG001 in COVID-19 disease, which is due to commence enrolment imminently after gaining rapid permissions for the UK’s MHRA and HRA. This is a significant breakthrough for the company and the global fight against COVID-19, having achieved these permissions ahead of the expected rapid increase in number of hospitalised COVID-19 patients. A successful outcome from the pilot phase will have substantial commercial value. The risk/reward profile, given earlier evidence that SNG001 has a beneficial in vitro effect in MERS and SARS coronaviruses and has been shown to be safe and well tolerated in asthma/COPD patients, is skewed significantly to the upside, particularly given the potential for first revenues in 2020. Not only would a positive trial help to address the current COVID-19 crisis but it could enable governments to stockpile a broad-spectrum antiviral product for future pandemics. We introduce a 120p target with potential further upside.

Mark Brewer 020 7220 0556

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