ANGLE (AGL) : Corp

Progress report since COVID-19 lockdown

Key data

  • Share price (p) 68.5
  • Target price (p) 135.0
  • Market cap (£m) 118.3
  • Enterprise value (£m) 102.8

ANGLE provided a positive update on business activities since the COVID-19 lockdown, confirming that both laboratories in the UK and Canada are operational and that progress is being made on multiple fronts despite the lockdown. ANGLE announced that it has completed the in-house development of an immunofluorescence assay for determining PD-L1 expression levels on Circulating Tumour Cells (CTCs), which creates a significant opportunity to address the pharma services market. Additionally, it expects to generate new ovarian cancer clinical data in mid-2020, using the further optimised HyCEAD Ziplex cancer gene panel on previous stored blood samples, which should help in negotiations with potential future clinical lab partners. We reiterate our 135p target.

Mark Brewer 020 7220 0556

Omega Diagnostics (ODX) : Corp

VISITECT CD4 supply agreement with CHAI

Key data

  • Share price (p) 60.5
  • Target price (p) 25.0
  • Market cap (£m) 91.0
  • Enterprise value (£m) 92.5

The announcement that Omega has signed a supply agreement with CHAI for up to 0.5m VISITECT CD4 Advanced Diseases tests is a positive endorsement of the VISITECT franchise and supports our current FY 2021 forecast for sales of c.£2m (0.5m tests). Our forecasts and current target price exclude any COVID-19 related revenues; instead, they are driven by Food Intolerance and VISITECT CD4. Clearly, Omega’s participation in both lab-based (ELISA test with Mologic) and Point-of-Care COVID-19 antibody tests (lateral flow device with UK RTI consortium) is driving the current valuation. With the potential production capacity at its two facilities to generate up to c.21m antibody tests per annum, the upside to our current target price will clearly depend on the orders received and the sustainable or recurring nature of those revenues.

Mark Brewer 020 7220 0556

Proactis (PHD) : Corp

Reset of banking facility

Key data

  • Share price (p) 21.5
  • Target price (p) 80.0
  • Market cap (£m) 20.5
  • Enterprise value (£m) 62.6

Proactis has reported a reset of its banking facility with HSBC, reflecting an improved financial position. The rescheduling of the amortisation profile provides an additional £3m short-term capital; revised covenants leave material headroom for the current business plan; and a conditional option extends expiry from 31/7/22 to 31/7/23. We look forward to interims, tomorrow.

Andrew Darley 020 7220 0547

Universe Group (UNG) : Corp

Strong FY19 trading update, strong FY20 order book

Key data

  • Share price (p) 2.9
  • Target price (p) 10.0
  • Market cap (£m) 7.3
  • Enterprise value (£m) 4.4

Universe has reported a strong FY19 trading update indicating EBITDA of £3.9m (vs £3.8mE) from revenue of £22.4m (£23.1mE), leading to net cash of £2.9m (net debt of £0.9mE). The strong performance led into a very encouraging 1Q of £5.2m in 1Q20, a £16.8m further visible revenue order book from new and existing clients, and a healthy pipeline. The customer base consists of the retailers of vital suppliers of food, drink and/or fuel, who are in the main enjoying strong sales. These retailers are seeing the maintenance of service levels from Universe, which has transitioned to remote working as expected. As supplier to these retailers, UNG is an ‘essential service provider’ for current business, with gross cash of £6.4m and customers in rude health. However, while the level of new sales orders are very encouraging so early in the year, not unreasonably in current circumstances, timing of delivery is not certain and we suspend forecasts, with certain site-work and implementation staff furloughed, and hope for restoration at interims assuming lockdown lifts in early summer. COVID-19 has generated understandable uncertainty for near-term growth delivery only, where longer-term momentum is clearly strong and bodes well for a post COVID-19 world.

Andrew Darley 020 7220 0547

NAHL (NAH) : Corp

Navigating change in difficult markets

Key data

  • Share price (p) 37.0
  • Target price (p) U/R
  • Market cap (£m) 17.1
  • Enterprise value (£m) 41.4

NAHL’s FY 2019 results are in line with our revised expectations. The immediate focus has now switched to tackling the challenges posed by COVID-19: working from home and remote access have been enabled; existing PI claims can be progressed relatively normally, supported by technology; and the group’s Critical Care business, which generated 50% of 2019 profits, is defensive. The Residential Property market will be very quiet in the short term. PI enquiries are likely to reduce significantly in the short term but marketing costs (£14m in 2019) will reduce in line with this and other significant cost savings are being made. Further cash flow will be maximised by increasing the mix of enquiries placed with the law firm panel and there are significant cash inflows to come from existing or previous cases. Management has stated it is too early to assess the full impact of COVID-19 with any certainty, and we leave our forecasts under review. Overall, we believe that with prudent management of short-term cash flow, NAHL can trade through the current challenges with its long-term potential undiminished.

Guy Hewett 020 7220 0549

STM (STM) : Corp

Transitioning into new markets from a robust base

Key data

  • Share price (p) 22.5
  • Target price (p) 53.0
  • Market cap (£m) 13.4
  • Enterprise value (£m) -3.8

Full-year results to 31 December 2019 show the company making significant progress towards a more UK-focused business offering pension administration services in adjacent markets (such as auto enrolment). It is pleasing to see top-line reported revenue growth of 8.6%, proving the growth is there to be capitalised on once operational improvements begin to bed in. Reported PBT comes in at £3.9m, down 2.7% YoY as the group invests in Carey.

Nik Lysiuk 020 7220 0546

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