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Edison Insight | 28 January 2021 1

Contents Global perspectives 2

Company profiles 8

Edison dividend list 64

Stock coverage 65

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Welcome to the January edition of Edison Insight. We now have c 400 companies under coverage, of which 112 are profiled in this edition. Healthcare companies are covered separately in Edison Healthcare Insight. Click here to view the latest edition. This month we open with a strategy piece by Alastair George, who believes that global equity and credit markets now offer relatively little risk premium for bumps on the road towards a post COVID-19 recovery. It is remarkable at a time when much of the developed world continues to face a significant degree of COVID-19 disruption and is operating well below trend GDP that forward US price/book multiples are at a 12-year record high and the risk premium for corporate credit risk is at cyclical low. A surge in valuations for more speculative companies also lends weight to the idea of a bubble forming in certain sectors. We believe it is time for investors to stick to a value-based discipline as valuations for the world’s fastest growing stocks have expanded. Vaccines offer hope but no guarantee of a return to ‘normal’ in the short or medium term and the emergence of new and more contagious strains of COVID-19 highlights the new reality that social restrictions may be needed for some time. We expect a continued K-shape recovery as COVID-19 has resulted in a step-change in the nature of economic activity. Digital economic interactions have grown and the shift towards the 21st century economic objectives of new energy and environmental protection have accelerated. These sectoral shifts should be reflected in portfolio asset allocations as they are likely to persist even after the acute phase of the pandemic. While we started the year with a positive outlook on equities, the risk/reward balance is tilted back towards neutral as markets have risen. We now favour relatively COVID-secure and less cyclical sectors, preferring to accept lower expected returns for greater predictability. We remain of the view that bond yields will face upward pressure. Inflation expectations may have increased but real rates remain at record lows. This month we have added Checkit, Kopy Goldfields, Phoenix Spree Deutschland and SandpiperCI Group to the company profiles. Readers wishing for more detail should visit our website, where reports are freely available for download (www.edisongroup.com). All profit and earnings figures shown are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisors and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison is a registered investment adviser regulated by the state of New York. We welcome any comments/suggestions our readers may have.

Neil Shah Director of research

https://www.edisongroup.com/our-content/?contentType=regular-publications-and-sector-reportshttp://www.edisongroup.com/https://register.fca.org.uk/ShPo_FirmDetailsPage?id=001b000000MfYL6AANmailto:[email protected]


Global perspectives: Valuation-led downgrade

Global equity and credit markets now offer relatively little risk premium for bumps on the road towards a post COVID-19 recovery. It is remarkable at a time when much of the developed world continues to face a significant degree of COVID-19 disruption and is operating well below trend GDP that forward US price/book (P/B) multiples are at a 12-year record high and the risk premium for corporate credit risk is at cyclical low.

Evidence of speculative excess in pockets of the equity market. A bumper period for equity issuance highlights the current demand for risk by investors. A surge in valuations for more speculative companies also lends weight to the idea of a bubble forming in certain sectors. We believe it is time for investors to stick to a value-based discipline as valuations for the world’s fastest growing stocks have surged.

Vaccines offer hope but no guarantee of a return to ‘normal’ in the short or medium term. The emergence of new and more contagious strains of COVID-19 highlights the new reality that despite vaccine programmes, social restrictions may be in place for rather longer than expected as recently as December. Outside developed markets vaccination has been negligible which highlights the medium-term challenges facing the travel industry.

Continued K-shape recovery. COVID-19 has resulted in a step-change in the nature of economic activity. Digital economic interactions have grown and the shift towards the 21st century economic objectives of new energy and environmental protection have accelerated. These sectoral shifts should be reflected in portfolio asset allocations in our view as they are likely to persist even after the acute phase of the pandemic.

Global equity markets have risen since December even as the likely duration of pandemic disruption has increased. While we started the year with a positive outlook on equities, the risk/reward balance is tilted back towards neutral. We now favour relatively COVID-secure and less cyclical sectors, preferring to accept lower expected returns for greater predictability. We remain of the view that bond yields will face upward pressure. Inflation expectations may have increased but real rates remain at record lows.

Analyst Alastair George +44 (0)20 3077 5700 [email protected]

mailto:[email protected]


Valuations drive equity downgrade

Since the turn of the year, the race between the deployment of effective vaccines and the evolution of new, more contagious variants of COVID-19 has tightened considerably. Across the US and Europe there has been a steady drift towards longer lockdown restrictions as case numbers and hospital admissions have remained stubbornly high. For the listed corporate sector there is still a significant degree of cushioning provided by fiscal support for demand and the ability of larger companies to continue to operate under COVID-secure protocols compared to the SME sector. This cushioning has contributed to the resilience of 2021 consensus earnings forecasts despite the extended lockdowns now in place.

Due to the recent resilience of corporate earnings, in our view the risk is growing of a mis-placed confidence that the second wave of COVID-19 will represent the end of the affair. A more likely scenario at this time is that social restrictions will be removed only slowly across developed markets during 2021. Furthermore, international travel will remain significantly impeded by requirements for quarantine, regardless of vaccination or test status. Outside developed markets, vaccination programmes are moving only slowly. While it is easy to state that on the projected vaccination programme delivery much of the developed world will have received immunity by late 2021, this does not mean that social restrictions can be fully lifted.

For example, the extent to which vaccination prevents asymptomatic transmission is not well understood as confidence intervals in existing trials are large and further studies are necessary. The enhanced reproduction rates for new variants of COVID-19 point to very demanding levels of vaccination of 80% or more before social restrictions could be fully removed. Given the transmissibility of new variants, COVID-19 appears unlikely to be eradicated at this stage. The prospect of new variants in unvaccinated populations in developing nations may require an ongoing annual vaccination programme, similar to that of influenza.

Despite this scenario of an enduring impact from COVID-19, the global appetite for risk assets has only strengthened. In our view this tilts the overall equity risk/reward balance back to neutral from the positive outlook we expressed at the turn of the year. We note that market P/B valuations in the US are now at 12-year highs while continental European valuations have seen a full recovery from the sharp declines at the early stages of the pandemic, Exhibit 1. We note that UK markets still languish some way below their 15-year price/book average due in part to the years of uncertainty created by Brexit.

Exhibit 1: Forward P/B for developed markets

Source: Refinitiv, Edison calculations

Within corporate credit markets the impact of central bank policy and the fiscal support for the economy has been clearly felt. Policies designed to prevent a credit freeze have resulted in credit

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risk premia, as represented by the difference in yield between risky and risk-free bonds, narrowing back to 15-year lows. This is a remarkable feat at a time of such economic uncertainty, especially given the increasing levels of leverage within the corporate sector in recent years.

Exhibit 2: Investment-grade corporate credit spreads remain close to cycle lows

Source: Refinitiv

Recent evidence of speculative activity in markets, such as outsize gains for early stage or unprofitable US technology companies, highlights the turn in sentiment since the investor panic of Q120. For years during the long US bull market, investors have been comforted by the relative absence of retail investors as a sign that markets had not yet peaked. Since the pandemic there has been something of an explosion in retail trading, as evidenced by the number of small lots being traded in US markets, and the surprising performance of more speculative securities.

With both equity and credit markets buoyant, if not effervescent at times, further stimulus from central banks remains unlikely in the short term. We note that commodity prices have been rising sharply and inflation expectations have also rebounded sharply over the past six months. Without wishing to naively interpret central banks’ mandates, policies put in place over the past year could, on the face of it, represent a wholly successful monetary intervention in respect of maintaining inflation expectations and nothing further would be required.

Exhibit 3: US 10-year real rates remain low as market-implied inflation expectations increase

Source: Refinitiv. Note: TIPS = Treasury Inflation Protected Securities.

Therefore, we are not expecting further monetary fireworks at this point. In contrast, attention is likely to turn to the spill-over effects in asset prices. We note China’s interbank rates rose from 2.5% to 2.8% this week as an adviser to the PBOC gave a public warning of the risk of asset bubbles if monetary policy is not tightened during 2021. Furthermore, fiscal policy responses are old news in Europe and US President Biden’s headline $1.9trn stimulus package is likely to be watered down before being approved. While the willingness of governments to spend has been crucial to maintaining market sentiment to date, we also therefore see little further upside from fiscal policy in the short term.

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Equity valuations: Overvaluation concentrated in fastest growing sectors The recent warnings given by a number of prominent investors on extended equity valuations would carry greater weight were it not for the fact that since 2009 bearish equity investors have been repeatedly stymied by never-ending reductions in global interest rates and the ensuing prolongations of the economic cycle. It has been described as the most unloved bull market, in part because even pre COVID-19 it was happening for the ‘wrong’ reasons.

Revenue growth rates for the global markets in aggregate have been sluggish while EPS growth has at times been driven as much by financial engineering in the form of share buybacks as it has from growth in net income. Market performance has also been skewed towards a relatively narrow segment of the overall stock market, to the detriment of the generalist active manager.

Now, the surge in digital growth stocks in the most recent 12 months places another question mark over the actual value added by active value managers. The top-performing fund managers today are those who have continued to ride technology stocks to ever higher multiples or even invested in alternative digital assets such as Bitcoin. Ironically, coal miners may be out of favour from an environmental, social and governance (ESG) perspective, but highly energy consumptive Bitcoin miners appear to be exempt from such considerations.

For experienced investors who can remember periods of euphoria such as the stock market bubble of 2000 or the mortgage finance bubble of 2007, valuation alarm bells are ringing. The Nasdaq index was up over 40% in both 1999 and 2020 – and arguably for similar reasons. Central banks, which were in the process of removing the punch bowl as recently as 2019, have quickly reversed course and added a stronger brew in response to COVID-19. The bogeyman may be different – it was the millennium bug in 2000 – but the result has been the same. Loose monetary policy applied to the broad economy at the same time as a surge in spending on technology services has seen technology stocks rocket.

Historically, value has mattered. Periods in which US share prices were at a relatively low multiple of book value or alternatively 10-year trailing average earnings have been followed by the strongest 10-year returns. The quartile return ranking from the Shiller 10-year P/E for US equities is well known and accords with the intuitive result that investing at low valuations offers better returns than investing at high valuations. With the current Shiller P/E for US equities firmly in the top quartile, the measure currently indicates a relatively sluggish period for US equities in the decade ahead.

Collectively, this fact is both known and understood by institutional investors. However, institutional fund managers are also presented with few attractive alternatives at present. 10-year government bonds are priced to lock-in losses in real terms, if central banks can make good on their inflation targets. There is also a risk that the Rubicon of fiscal sustainability has been decisively crossed as there has been no substantive political opposition to a worldwide deficit spending spree in response to COVID-19. This fiscal determination to support the economy may have rescued equities and corporate credit, yet current government bond yields still offer a derisory risk premium for any unanticipated uptick in inflation in coming years.

The question of over-valuation should also not be over-simplified. Splitting the largest 2,000 global companies into revenue growth quartiles confirms that the surge in P/B valuations over the past year is concentrated in the highest growth segments of the market, Exhibit 4. We also find that valuations for these faster growing companies have been expanding since 2014, lending credence to the idea that a degree of complacency could now be setting in. Valuations for faster growing companies have not mattered for over six years. Furthermore, we can see a notable further increase in P/B valuations for the very fastest growing 10% of global equities (D10).


Exhibit 4: Valuations for faster growing companies have surged

Source: Refinitiv, Edison calculations. Note: Chart shows forward P/B premium by growth quartile for world’s largest 2000 companies

Outside these segments we observe that slower growing companies may be trading above their 10-year P/B multiple, but not excessively so. With corporate profits underwritten by fiscal policies and markets supported by ample liquidity, it is quite possible to argue this is precisely what should be expected at this stage in the pandemic and as vaccination programmes get underway. Therefore, framing the question of valuation in binary terms, such as all-in versus sell everything, may make for good headlines and stimulate trading activity but in our view, it provides the wrong context for long-term decision making.

The data suggest to us that outside the fastest growing segments of the market, long-term investors are balancing the low yields available on risk-free securities with genuine inflation uncertainty and the timing of the likely exit from COVID-19 social restrictions.

Current modestly higher than average valuations for ‘normal’ rather than ‘super-normal’ companies point to investors consciously accepting lower than average return expectations for equities at present. If so, this is a recipe for an equity market to move sideways rather than face any dramatic reversal, provided central banks do not remove the punch bowl too soon. In addition, new strains of coronavirus must not challenge the consensus that the economic impact of the pandemic will fade by mid-2021.

An additional strategic overlay that investors now must contend with is the K-shape recovery. The digital economy has on an earnings basis dramatically outperformed the remainder of the stock market during the pandemic and this is likely to continue during 2021, should social restrictions continue as we expect. This is the upper arm of the ‘K’ while the lower leg, such as traditional retail, travel, leisure and entertainment may continue to struggle.

While we are not expecting a major reversal in sentiment, valuations for the world’s fastest growing companies are at 10-year highs, relative to the other 75% of the market. We believe investors should now carefully review their holdings in this segment of the market with a view to taking profits. Nevertheless, for the remainder of the market the data suggest the argument for running for the hills with bond yields at such low levels has less merit. Instead, investors should carefully consider which leg of the ‘K’ their investments fall under as the economy slowly emerges from the pandemic.

Profits forecast still robust as COVID-19 rages While we are shifting from a positive to neutral outlook on global equities, this should not distract investors from the resilience of corporate sector profitability. Despite the re-introduction or extended duration of significant social and travel restrictions, consensus profits forecasts for 2021 have remained robust even as we note the recent softening of PMI indices in Europe. There may be concerns about valuations in certain sectors, given the remarkable central bank-driven rally during 2020, but for now corporate fundamentals in aggregate remain strong.

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Exhibit 5: Global earnings estimates for 2021 close to pre COVID-19 levels

Source: Refinitiv, Edison calculations. Note: Weighted data to 26 January 2021.

In view of the recent rise in infections, we have continued to track earnings estimates on a global basis as the collapse in 2020 profits forecasts during Q120 was the key driver for the stock market declines in that period. During this second wave, consensus earnings forecasts have been surprisingly resilient. Global profits estimates for 2021 are now close to pre COVID-19 levels and this optimism has not dimmed even where significant restrictions have been re-imposed, such as in the EU and the UK.

Outside certain sectors such as leisure and entertainment, it seems corporate profits have proved increasingly COVID-secure. Last year’s question over where the costs of coronavirus will fall appear to have been decided – and that is not at the feet of large companies but instead in the SME sector and on government balance sheets. Nevertheless, given the stubbornness of the second COVID-19 wave it appears there are still significant challenges to a return to business as usual, leaving us to wonder if investors are a little ahead of the actual evolution of events on the ground in the hotel and travel sectors.

Conclusion

We believe the risk/reward for global equities now only justifies a neutral position on valuation grounds. It is remarkable in many respects that we would downgrade equities on a valuation basis at a time when much of the developed world continues to face a significant degree of COVID-19 disruption and is operating well below trend GDP. Nevertheless, since our last outlook global equity indices have risen while at the same time new, more transmissible variants of COVID-19 have been discovered and the probability of a long period of disruptive social restrictions extending well into 2021 has increased.

With the fastest-growing companies trading at record-high valuations, investors should in our view focus on companies that meet traditional valuation criteria but are also on the right arm of the ‘K’ shaped recovery. This includes companies that may be slower growing but as importantly, are not struggling. We understand this may narrow the universe of potential investments, but it is in our view important to remain focused on growth, where it can be obtained at a reasonable price.

In terms of government bonds, the still ultra-low real rate on offer highlights that the bond market has still not bought into the recovery while inflation expectations have risen. We expect further upward pressure on yields during 2021 and would remain underweight.

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Sector: Technology

Price: 28.0pMarket cap: £31mMarket AIM

Share price graph (p)

Company description1Spatial’s core technology validates,rectifies and enhances customers’geospatial data. The combination of itssoftware and advisory servicesreduces the need for costly manualchecking and correcting of data.

Price performance% 1m 3m 12mActual 5.7 (6.7) 0.0Relative* 1.9 (19.4) 11.1* % Relative to local indexAnalystDan Gardiner

1Spatial (SPA)INVESTMENT SUMMARY

After a resilient performance in H1 (sales and EBITDA up y-o-y and positive FCF) there aresigns that 1Spatial is generating encouraging momentum in the US. A recent $0.6mcontract win with California’s Office of Emergency Services follows deals with the State ofMichigan ($2.6m) and the US Geological Service. The resurgence of COVID-19 and itsknock-on economic impacts means the macro outlook remains uncertain but, at a companylevel, rising recurring revenue and a growing order book of contracted sales is resulting inimproving visibility.

INDUSTRY OUTLOOK

The GIS industry is large and growing. P&S Market Research estimates the global GISsoftware, services and hardware market generates sales of US$9.0bn annually and willgrow at a 10% CAGR to reach annual sales of US$17.5bn by 2023.

Y/E Jan Revenue EBITDA PBT EPS (fd) P/E P/CF(£m) (£m) (£m) (p) (x) (x)

2019 17.6 1.2 (0.5) (0.57) N/A N/A

2020 23.4 3.2 0.8 0.58 48.3 53.9

2021e 23.4 2.8 (0.5) (0.35) N/A 7.9

2022e 25.1 3.6 0.3 0.22 127.3 6.6

Sector: Technology

Price: HUF629.00Market cap: HUF59126mMarket Budapest stock exchange

Share price graph (HUF)

Company description4iG is one of the leading IT servicesand systems integrators in Hungary,working with public sector clients, largecorporates and SMEs. Management isfocused on becoming the marketleader in Hungary by FY22 as well astargeting expansion in Central andEastern Europe.

Price performance% 1m 3m 12mActual 1.5 12.7 (7.2)Relative* (4.6) (13.1) (5.2)* % Relative to local indexAnalystRichard Williamson

4iG (4IG)INVESTMENT SUMMARY

In its Q320 update in November, 4iG reported a continuing robust operational performance,with limited impact from COVID-19, with management reiterating its 20% revenue growthguidance for FY20 ahead of its seasonally strongest quarter. As such, we raised ourrevenue estimate for FY20 by 10% and FY21 by 5%. 9M20 revenues were HUF33.5bn, up34% y-o-y, with EBITDA up 13% to HUF2.8bn and EBITDA margins climbing to 10.8% inQ320 from 6.7% in H120. 9M20 net income rose 11% y-o-y to HUF1.9bn. On the M&A front,4iG announced two acquisitions and a satellite j/v during the period and a third acquisitionafter period-end.

INDUSTRY OUTLOOK

Management anticipates consolidation-driven growth of over 20% in FY20, with organicgrowth supplemented by market share gains and accelerating market consolidation.Management is positioning the group for growth benefiting from high-demand newtechnologies including digitalisation, blockchain, deep learning, artificial intelligence,industry 4.0, cyber security and fintech.

Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF(HUFm) (HUFm) (HUFm) (HUF) (x) (x)

2018 14007.0 842.0 219.0 1.08 582.4 N/A

2019 41129.0 4075.0 3344.0 31.09 20.2 N/A

2020e 53988.0 4389.0 3594.0 33.26 18.9 N/A

2021e 62076.0 5669.0 4720.0 43.18 14.6 N/A

8Edison Insight | 28 January 2021

Sector: Media

Price: 2375.0pMarket cap: £667mMarket LSE


Company description4imprint is the leading direct marketerof promotional products in the US,Canada, the UK and Ireland. In FY19,97% of revenues were generated inthe US and Canada.

Price performance% 1m 3m 12mActual (6.1) 11.8 (30.4)Relative* (9.5) (3.5) (22.6)* % Relative to local indexAnalystFiona Orford-Williams

4imprint Group (FOUR)INVESTMENT SUMMARY

4imprint’s trading update indicated that order intake in Q4 was a little better than we hadanticipated. Unaudited FY20 revenue was reported at c $560m, or 5% above our priorforecast. We remain circumspect around trading prospects for FY21, given the impact of thepandemic on corporate America and leave our forecast unchanged for now. The indicatedyear-end net cash balance at $39.8m (excluding lease debt) was well ahead of ourprojected figure ($22.5m in our modelling), and close to the $40.1m reported in October,implying that cash collections have held up strongly. We continue to view 4imprint as ahigh-quality investment proposition.

INDUSTRY OUTLOOK

The Advertising Specialty Institute (ASI), an industry body, estimated the value of the USpromotional products distribution market in 2019 at US$25.8bn. 4imprint is the largestdistributor, yet has an estimated market share of less than 3%. The market reportedly grewat around 4.5% for FY19, with a 10-year CAGR of 5.0%, but is currently estimated toretrench by 24% in 2020, an improvement on expectation of -35% at the half-year. Thisfigure, though, includes some distributors switching to supplying PPE.

Y/E Dec Revenue EBITDA PBT EPS P/E P/CF(US$m) (US$m) (US$m) (c) (x) (x)

2018 738.4 48.5 46.1 129.4 25.0 19.9

2019 860.8 59.1 55.6 157.2 20.6 15.7

2020e 535.0 3.9 0.5 0.3 10782.7 1509.6

2021e 600.0 18.8 15.0 40.6 79.7 43.8

Sector: General industrials

Price: SEK4.03Market cap: SEK593mMarket Nasdaq FN Premier

Share price graph (SEK)

Company descriptionHeadquartered in Sweden, AAC ClydeSpace is a world leader in nanosatelliteend-to-end solutions, subsystems,platforms, services and components,including supply to third parties. It hasproduction and developmentoperations in Sweden, Scotland, theNetherlands and the US.

Price performance% 1m 3m 12mActual 32.8 41.4 (13.5)Relative* 25.0 27.4 (24.8)* % Relative to local indexAnalystAndy Chambers

AAC Clyde Space (AAC)INVESTMENT SUMMARY

AAC Clyde Space is at the forefront of the rapidly growing and innovative market for smallsatellites. As nanosatellite build rates and deployments rise sharply over the next decade,increasing systems and platform sales should be enhanced by growing services revenue.Management is navigating the growth phase and targeting opportunities in New Space. Wehave updated our numbers for the acquisitions of Hyperion and SpaceQuest and the recentSEK52m fund-raise supports further investment. New contract wins evidence the group'sexpanding technology offering such as laser communication terminals.

INDUSTRY OUTLOOK

Of over 1,000 nanosatellites launched since 1998, AAC Clyde Space is represented on30–40%. Over the next five years around 3,000 nanosatellites should be launched astechnology development extends the applications for low earth orbit (LEO) constellations,especially for communications. AAC Clyde Space has operations in Glasgow, Sweden,Holland and the US and is developing its 'Satellite as a Service' offering, as well as sales ofsubsystems to third-party satellite providers.

Y/E Dec Net Sales EBITDA PBT EPS P/E P/CF(SEKm) (SEKm) (SEKm) (öre) (x) (x)

2018 77.9 (28.5) (38.4) (0.50) N/A N/A

2019 66.4 (27.3) (38.2) (0.44) N/A N/A

2020e 101.6 (11.3) (21.3) (0.21) N/A N/A

2021e 193.6 6.4 (6.4) (0.04) N/A 71.5





Company descriptionAccsys Technologies is a chemicaltechnology company focused on thedevelopment and commercialisation ofa range of transformationaltechnologies based on the acetylationof solid wood and wood elements foruse as high performance,environmentally sustainableconstruction materials.Price performance% 1m 3m 12mActual 1.3 63.9 37.3Relative* (2.4) 41.5 52.6* % Relative to local indexAnalystToby Thorrington

Accsys Technologies (AXS)INVESTMENT SUMMARY

Accsys maintained an EBITDA and EBIT positive position in H121 in line with the secondhalf of last year despite initial market disruption from the COVID-19 lockdowns early in thefinancial year. Accoya wood revenues were down slightly but the divisional operating marginimproved to 18.2%. The new Tricoya Hull reactor build is on track to complete in thisfinancial year with commissioning thereafter; this will improve the Tricoya segmentprofitability and also free up Accoya capacity to facilitate market growth. Positive net cashinflow in excess of €7m reduced core net debt to c €12m. The company also emphasised itsESG credentials through the publication of a new sustainability report. Our estimates areunder review.

INDUSTRY OUTLOOK

Accsys has a technically proven process and wide international market acceptance for itsmodified wood output. As well as successful capex execution, the sales and marketingchallenge is to pull through demand to absorb newly available capacity and develop licencepartners. Management has previously stated long-term market potential of 1m m3 pa ofAccoya wood and 1.6m+ m3 of Tricoya panel products.

Y/E Mar Revenue EBITDA PBT EPS P/E P/CF(€m) (€m) (€m) (c) (x) (x)

2019 75.2 0.9 (6.2) (0.38) N/A N/A

2020 90.9 7.0 (2.2) (0.08) N/A 95.0

2021e N/A N/A N/A N/A N/A N/A


Sector: Mining

Price: A$0.85Market cap: A$506mMarket ASX

Share price graph (A$)

Company descriptionAlkane Resources is an Australianproduction and development company.It previously produced 70,000oz ofgold per year from the open-pitoperations at its Tomingley gold mine,but is transitioning to undergroundoperations and expects to produce c47,500oz in FY21.

Price performance% 1m 3m 12mActual (11.5) (34.9) 25.0Relative* (14.4) (41.3) 28.0* % Relative to local indexAnalystCharles Gibson

Alkane Resources (ALK)INVESTMENT SUMMARY

Alkane's Q221 production of 15.9koz (cf 11.5koz in Q121) at an AISC of A$1,201/oz wasmaterially above our expectations and caused the company to increase its guidance for theyear from 45–50koz to 47–52koz at an unchanged AISC of A$1,450–1,600/oz. At the sametime, Alkane has more than replenished reserves and resources as well as intersectinggrades as high as 104g/t at Tomingley's San Antonio and Roswell extensions. To date, thishas resulted in an increase in Roswell's resource of 50%. An update at San Antonio issimilarly expected shortly, after which feasibility studies for both are expected to be finalisedin the coming quarter.

INDUSTRY OUTLOOK

Post the de-merger of ASM, our most recent valuation of Alkane attributes 21c/share invalue to Tomingley plus net cash (A$33.3m as at end-Q221). To this should then be addedup to 27c for its Roswell and San Antonio resources plus up to a further 67c from contingentassets such as Boda and 10c from other investments.

Y/E Jun Revenue EBITDA PBT EPS P/E P/CF(A$m) (A$m) (A$m) (c) (x) (x)

2019 94.0 33.0 25.4 4.57 18.6 11.8

2020 72.5 29.4 20.6 2.56 33.2 16.5

2021e 104.2 34.8 22.9 2.89 29.4 22.3

2022e 125.3 41.4 26.3 3.31 25.7 15.2


Sector: Technology



Company descriptionAllied Minds is a technologyinvestment company with aconcentrated portfolio focused onearly-stage spin-outs from US federalgovernment laboratories anduniversities.

Price performance% 1m 3m 12mActual (11.8) (28.8) (30.6)Relative* (14.9) (38.5) (22.9)* % Relative to local indexAnalystRichard Williamson

Allied Minds (ALM)INVESTMENT SUMMARY

In a portfolio update in January, management highlighted robust commercial progressacross the majority of the portfolio in FY20 (notably at Federated Wireless, BridgeCommand Orbital Sidekick), which is expected to lead to multiple funding rounds in FY21.However, commercial progress at Spin Memory has been limited by COVID-19 withmanagement flagging a likely down-round. Subsequently, as part of a streamlining process,it was announced that the CEO had decided to step down, with the board taking on directresponsibility for the portfolio. We estimate year-end parent cash of c US$20m.

INDUSTRY OUTLOOK

Discounts to NAV have been narrowing or closing amongst the early-stage tech investorsas COVID-19 fears ease. Investors have preferred stocks that demonstrate progress andoffer the potential for meaningful exits in a realistic timeframe. Transparency, NAV growth,consistency of performance, capital preservation and investor returns are the key metrics bywhich to judge success.


2018 5.6 (77.5) 53.3 19.0 2.0 N/A

2019 2.7 (47.2) 49.5 21.0 1.8 N/A



Sector: Technology



Company descriptionApplied Graphene Materials (AGM)develops graphene dispersions thatcustomers use to enhance theproperties of coatings, composites andfunctional materials. It alsomanufactures high-purity graphenenanoplatelets using a proprietaryprocess based on sustainable, readilyavailable raw materials instead ofgraphite.Price performance% 1m 3m 12mActual 64.6 91.2 271.4Relative* 58.6 65.0 312.7* % Relative to local indexAnalystAnne Margaret Crow

Applied Graphene Materials (AGM)INVESTMENT SUMMARY

Applied Graphene Materials (AGM) has raised c £6.0m (gross) through a placing,subscription and PrimaryBid offer at 41p/share. Management estimates that the fundsraised will extend the company’s cash runway from October 2021 well into calendar 2023,enabling it to convert the current opportunity pipeline into meaningful annual revenuesduring the period.

INDUSTRY OUTLOOK

Revenue growth is driven by innovative businesses incorporating AGM’s graphene-baseddispersions in new products with enhanced properties which they are developing. One ofAGM's existing customers, Halo Autocare, has recently launched a graphene-enhancedwax for alloy wheels that can protect wheels for four to six months. This is Halo's secondproduct to incorporate AGM's Genable graphene dispersion technology. AGM continues toexpand its distribution network, most recently with the appointment of chemicals distributorManho Polymers in South Korea, enabling the company to access the fourth largestcoatings market in Asia.

Y/E Jul Revenue EBITDA PBT EPS (fd) P/E P/CF(£m) (£m) (£m) (p) (x) (x)

2019 0.1 (4.6) (4.8) (7.9) N/A N/A

2020 0.1 (3.1) (3.5) (6.1) N/A N/A




Sector: Financials



Company descriptionAppreciate Group is a specialisedfinancial services business and is theUK’s leading provider of multi-retailerredemption products. Consumers canaccess products directly through itsmarket-leading Christmas Savingsoffering while corporate customers usethese products to supply a range ofincentive and reward products.Price performance% 1m 3m 12mActual 43.0 65.8 (27.0)Relative* 37.8 43.1 (18.9)* % Relative to local indexAnalystMartyn King

Appreciate Group (APP)INVESTMENT SUMMARY

Appreciate Group's (APP's) sales performance continued to improve in the seasonallyimportant Q321 period, driven by continuing strong digital growth. Core underlying billings(excluding Christmas Savings where billings are driven by fulfilment of the annual orderbook) were up 13.1% compared with Q320 and December was APP’s strongest monthever. Including c £12m of billings in respect of the free summer school meals partnershipwith Iceland, one-off in nature and low margin, core billings of £166.0m in the first ninemonths of FY21 are now little changed y-o-y. Management is confident H221 will see thenormal swing back to profitability, with the full-year performance at least in line with itsexpectations that underlay the H121 reinstatement of dividends. Accelerated digitalisation ofthe business has mitigated the effects of the pandemic, supported the Q321 progress andpositions APP well for sustainable growth beyond the current financial year.

INDUSTRY OUTLOOK

The market is estimated at c £6bn by the UK Gift Card & Voucher Association, and isfragmented, providing significant opportunities for market share growth.

Y/E Mar Revenue EBITDA PBT EPS (fd) P/E P/CF(£m) (£m) (£m) (p) (x) (x)

2019 110.4 12.3 12.5 4.8 9.1 11.8

2020 112.7 11.7 11.4 4.9 8.9 11.8

2021e 93.5 6.0 4.2 1.9 22.9 N/A

2022e 101.0 9.2 7.1 3.1 14.1 30.4


Price: NZ$0.17Market cap: NZ$82mMarket NZSX

Share price graph (NZ$)

Company descriptionArborGen Holdings (formerly Rubicon)is an NZX-listed investment company.Its subsidiary ArborGen is the world’slargest integrated developer,commercial manufacturer and supplierof advanced forestry seedlings withoperations in the US, Brazil andAustralasia.

Price performance% 1m 3m 12mActual 14.6 19.6 (12.7)Relative* 10.4 11.6 (20.4)* % Relative to local indexAnalystToby Thorrington

ArborGen Holdings (ARB)INVESTMENT SUMMARY

ArborGen’s underlying H1 trading performance was robust with good control of opex leadingto a reduced seasonal EBITDA loss despite market challenges. The US selling seasonstarted well in H2 though the 13 January update noted that recent has been slower thanpreviously anticipated. Our headline FY21 PBT estimate is reduced by c 1% (or c 30%underlying before COVID-19 employment support monies) with no material change forFY22. An increase in supply of higher-value seedlings in the US remains on track and isexpected to drive group earnings higher from FY22.

INDUSTRY OUTLOOK

Prior to the COVID-19 outbreak, the economic growth outlook in each of its core countries,the US, Brazil, New Zealand and Australia, was either good or improving, according toOECD data. At this point, the primary end-markets served by its plantation forestrycustomer base (ie construction and the pulp and paper industries) were in a positive cyclicalphase.

Y/E Mar Revenue EBITDA PBT EPS P/E P/CF(US$m) (US$m) (US$m) (c) (x) (x)

2019 49.1 4.6 4.7 1.0 12.2 14.8

2020 56.9 7.7 6.0 1.4 8.7 12.7

2021e 54.7 7.1 9.4 2.0 6.1 5.4

2022e 65.3 12.1 12.3 2.5 4.9 5.0


Sector: Industrial support services



Company descriptionAugean is a UK-based specialist wastemanagement business. The businessoperates via two divisions: Treatment& Disposal and North Sea Services.

Price performance% 1m 3m 12mActual 0.0 9.7 (4.1)Relative* (3.6) (5.3) 6.6* % Relative to local indexAnalystAndy Chambers

Augean (AUG)INVESTMENT SUMMARY

The recent trading update for FY20 indicated adjusted PBT was at least in line with FY19despite the c £4m H120 pandemic impact. H120 sales were reduced by c £10m. Thepositive momentum in H220 continues to be primarily driven by strong growth in EfW ashtreatment. Year end net cash of £6.4m was ahead of our expectations and reflects thecontinued strong cash flow, with management indicating a return to dividend payments inFY21. Augean continues to pursue appeals for the repayment of landfill tax (LFT) related toengineering materials (fluff layer). Any additional rebates could provide a meaningful rewardfor investors. While markets remain challenging for the low margin North Sea business,growth continues in the EfW segment and activity has bounced back elsewhere with limiteddisruption from the renewed lockdowns. FY20 results will be reported in March.

INDUSTRY OUTLOOK

A growing trend towards treatment, recovery and recycling in the waste hierarchy supportsAugean's specialist industry knowledge model.

Y/E Dec Revenue EBITDA PBT EPS P/E P/CF(£m) (£m) (£m) (p) (x) (x)

2018 79.7 18.9 11.4 9.14 23.0 12.5

2019 107.1 28.8 19.2 20.98 10.0 N/A

2020e 93.5 29.9 19.5 15.21 13.8 6.8

2021e 100.0 32.1 21.7 17.00 12.4 8.1

Sector: Mining

Price: SEK5.20Market cap: SEK513mMarket NASDAQ OMX First North

Share price graph (SEK)

Company descriptionAuriant Mining is a Swedish junior goldmining company focused on Russia. Ithas two producing mines (Tardan andSolcocon), one advanced explorationproperty (Kara-Beldyr) and one earlystage exploration property(Uzhunzhul).


Auriant Mining (AUR)INVESTMENT SUMMARY

Auriant’s Tardan plant has been re-modelled to a single carbon-in-leach process, which hasresulted in a c 40pp increase in metallurgical recoveries and an approximate halving in cashcosts to c US$580/oz cf its previous heap leach operation. Up to the end of Q320, this hasresulted in an almost 6x increase in EBITDA and an almost 4x increase in cash flows.Currently, Auriant is completing a DFS on Kara-Beldyr and, combined, the two mines areexpected to achieve management’s goal of 3t (96.5koz) of gold output pa in c FY25.Simultaneously, confirmatory drilling is underway with a view to accelerating thedevelopment of Solcocon.

INDUSTRY OUTLOOK

Our financial forecasts are under review after Q420 production was almost 10% above ourforecasts at 203kg. In the event that it raises US$20m in equity (NB Subject to the goldprice and cash flows and could be less) at a share price of SEK5.46/share, we value Auriantat US$1.71/share. In the meantime, it is trading on a multiple of less than 4.6x FY20earnings.

Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF(US$m) (US$m) (US$m) (c) (x) (x)

2018 17.4 (1.7) (10.2) (10.8) N/A 14.6

2019 29.8 7.2 (2.2) (1.2) N/A 6.8

2020e 53.9 30.3 16.5 14.0 4.5 1.7

2021e 55.3 30.4 16.7 10.9 5.8 3.2


Sector: Aerospace & defence



Company descriptionAvon Rubber designs, develops andmanufactures personal protectionproducts for Military and FirstResponder markets. Its maincustomers are national securityagencies such as the US DOD and c90% of sales are from the US.

Price performance% 1m 3m 12mActual 3.3 (18.8) 38.0Relative* (0.4) (29.9) 53.4* % Relative to local indexAnalystAndy Chambers

Avon Rubber (AVON)INVESTMENT SUMMARY

Avon is delivering on its growth strategy focused on organically growing its core, supportedby selective product development and value-enhancing M&A. Avon Protection is now thesole focus. The enhancing purchases in the US of the Helmets & Armor division in Q220and Team Wendy helmet systems business on 2 November 2020 extended the productportfolio and deepened customer engagement. FY20 trading was strong in most areas, withclear momentum in H220 for the ongoing activities. However, the deferral of volumes fromnew body armor contracts to FY22 from FY21 lowered our FY21 sales estimates by $50m,and our EPS expectation by 19%.

INDUSTRY OUTLOOK

Avon's long-standing, multi-level relationship with the US DoD is important to the group andthe end market backdrop is supportive. The focus on higher-price sophisticated masksystems is proving successful, with M50 mask system replenishment and the addition ofhelmets and body armour provides further opportunities. We believe that Avon has themarket position, product portfolio and strategic ambition to continue its growth throughorganic and inorganic means.

Y/E Sep Revenue EBITDA PBT EPS P/E P/CF(US$m) (US$m) (US$m) (c) (x) (x)

2019 162.0 36.2 28.3 85.6 51.7 153.4

2020 213.6 49.0 36.0 97.6 45.4 N/A

2021e 284.9 71.5 50.2 132.7 33.4 16.5

2022e 362.0 93.6 69.4 183.6 24.1 18.0

Sector: Travel & leisure

Price: €36.35Market cap: €255mMarket Xetra

Share price graph (€)

Company descriptionFounded in 1999, bet-at-home is anonline sports betting and gamingcompany with c 300 employees. It islicensed in Malta and headquartered inDusseldorf, Germany. Since 2009bet-at-home has been part of BetclicEverest, a privately owned Frenchonline gaming company.

Price performance% 1m 3m 12mActual 14.7 6.6 (33.3)Relative* 10.9 (3.6) (35.0)* % Relative to local indexAnalystRussell Pointon

bet-at-home (ACXX)INVESTMENT SUMMARY

bet-at-home’s Q320 results showed a strong increase in EBITDA of 27% whereas revenuecontinued to be affected by prior regulatory changes. After many years of uncertainty (andconfusion), new regulations in Germany effective from July 2021 and transition regulationseffective from the middle of October 2020 will broadly halve expectations for EBITDA nextyear. Despite the favourable award of a nationwide online sports betting licence, newrestrictions to protect players, for example on betting limits and customer acquisition, willaffect sports and gaming. In addition, restrictions on the types of bets than can be offered(eg in-game betting), the types of casino games that can be offered (blackjack and rouletteare banned) and increased competition will affect the sports and gaming segments todifferent extents. The lower profit base and cash flow will also reduce dividend distributions.

INDUSTRY OUTLOOK

According to H2 Gambling Capital, the European online sports betting and gaming market isexpected to grow 6.5% CAGR between 2018 and 2023 to c €33bn (pre COVID-19 impact).BAH operates in 'grey' markets (no formal regulation but not illegal), which arecharacterised by strong cash flow, but also carry commensurately higher regulatory risks.

Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF(€m) (€m) (€m) (c) (x) (x)

2018 143.4 35.8 34.6 458.56 7.9 10.3

2019 143.3 35.2 33.2 426.20 8.5 8.5

2020e 127.9 26.1 24.0 278.66 13.0 12.1

2021e 107.8 13.8 11.6 134.98 26.9 23.1


Sector: Technology



Company descriptionBoku operates a billing and identityverification platform that connectsmerchants with mobile networkoperators in more than 50 countries. Ithas c 300 employees, with its mainoffices in the US, UK, Estonia,Germany and India.

Price performance% 1m 3m 12mActual (0.7) 25.1 78.6Relative* (4.3) 8.0 98.5* % Relative to local indexAnalystKatherine Thompson

Boku (BOKU)INVESTMENT SUMMARY

Boku continued to see strong demand after its early December trading update, finishing theyear with revenue and EBITDA ahead of consensus expectations. The Payments businesswas the driver of revenue upside, and lower costs in both businesses contributed further toEBITDA upside. We have revised our forecasts to reflect the strong H220 performance,upgrading FY20 normalised EPS by 15.5%. We maintain our FY21/22 forecasts as weexpect the company to revert to pre-COVID-19 spending behaviour when lockdownrestrictions are removed.

INDUSTRY OUTLOOK

DCB is an alternative payment method that uses a consumer’s mobile bill as the means topay for digital content or services such as games, music or apps. Growth in the underlyingdigital content markets as well as the increasing penetration of smartphones is expected todrive growth in DCB transactions. Boku is the dominant DCB player serving the largestmerchants such as Apple, Sony, Facebook, Spotify and Netflix. Boku's identity verificationservice enables merchants to sign up and transact with users while meeting regulatoryrequirements and avoiding fraud.


2018 35.3 6.3 4.3 1.55 124.8 N/A

2019 50.1 10.7 4.1 1.20 161.2 N/A

2020e 56.3 15.0 10.6 2.89 66.9 N/A

2021e 66.4 17.7 12.2 3.15 61.4 N/A

Sector: Travel & leisure

Price: €5.29Market cap: €487mMarket FRA


Company descriptionThe group operates BorussiaDortmund, a leading football club,Bundesliga runners up in 2019/20,DFB Super Cup winners in 2019/20and DFB Cup winners in 2016/17. Theclub has qualified for the ChampionsLeague in eight of the last 10 seasons.

Price performance% 1m 3m 12mActual (1.6) 18.9 (41.2)Relative* (4.8) 7.5 (42.7)* % Relative to local indexAnalystRussell Pointon

Borussia Dortmund (BVB)INVESTMENT SUMMARY

Borussia Dortmund’s Q121 results were affected, as expected, by the delayed start to the2020/21 season, and the severe restrictions on fan attendance at games as experiencedtowards the end of the prior season. Revenue declined by 46% y-o-y to €56.5m, and thecompany reported an EBITDA loss of €9.3m. There was good control of costs, wherepossible. For FY21, management previously guided that the restrictions required to counterCOVID-19 will lead to a 5% decline in revenue which, coupled with other effects, eg lowertransfer activity and high operational gearing, will translate into a reported operating lossdue to amortisation of intangibles.

INDUSTRY OUTLOOK

Unsustainable spend on wages and transfers is increasingly being penalised by UEFAFinancial Fair Play requirements. A 'break-even requirement' obliges clubs to spend nomore than they generate over a rolling three-year period. Sanctions vary from a warning to aban from UEFA competition, fines and a cap on wages and squad size.

Y/E Jun Revenue EBITDA PBT EPS P/E P/CF(€m) (€m) (€m) (c) (x) (x)

2019 370.3 116.0 101.5 87.95 6.0 16.1

2020 370.2 63.0 45.6 46.77 11.3 164.2

2021e 336.2 39.5 23.0 24.97 21.2 N/A

2022e 346.6 60.8 43.8 42.89 12.3 205.2


Sector: Oil & gas

Price: US$11.15Market cap: US$1222mMarket NASDAQ

Share price graph (US$)

Company descriptionBrooge Energy is an oil storage andservice provider strategically located inthe Port of Fujairah in the United ArabEmirates (UAE). Current storagecapacity stands at 399,324m3 and willbe increased by 602,064m3 oncePhase II is completed.

Price performance% 1m 3m 12mActual 3.2 21.5 18.6Relative* (0.9) 9.2 2.6* % Relative to local indexAnalystMarta Szudzichowska

Brooge Energy (BROG)INVESTMENT SUMMARY

Brooge Energy (BROG) is an independent oil and refined oil products storage and serviceprovider located in the Port of Fujairah, in the UAE. The company is initially developing itsterminal’s storage capacity in two phases and differentiates itself from competitors byproviding fast order processing times and high accuracy blending services with low oillosses using the latest technology. Phase I has been operational since late 2017 and PhaseII is expected to start in mid 2021. The company has commenced preconstruction work forPhase III and this will increase storage capacity by 3.5x once operational (due 2023). Thecompany recently signed new offtake contracts for 58% of its Phase I storage capacity atpremiums of 50% and 60% to previous contracts, reflecting current high demand for storagein the Middle East, and these will drive increased revenue in 2021. Our valuation currentlystands at $11.00/share.

INDUSTRY OUTLOOK

The COVID-19 pandemic highlighted the importance of oil storage infrastructure and thevital role the business plays in the logistics and trading of crude oil and refined oil products,as oil demand slumped in H120.


2018 36.0 30.0 16.0 20.1 55.5 31.9

2019 44.0 (63.0) 25.0 28.6 39.0 18.5

2020e 46.0 36.0 15.0 14.0 79.6 81.5

2021e 127.0 115.0 88.0 80.4 13.9 11.6

Sector: Oil & gas

Price: C$3.69Market cap: C$664mMarket TSX

Share price graph (C$)

Company descriptionCanacol Energy is a natural gasexploration and production companyprimarily focused on Colombia.

Price performance% 1m 3m 12mActual (3.4) 2.8 (15.4)Relative* (5.0) (6.2) (16.5)* % Relative to local indexAnalystIan McLelland

Canacol Energy (CNE)INVESTMENT SUMMARY

Canacol offers investors a pure play on the Colombian natural gas market where it holds a c20% market share of national demand. With gas export capacity now in place, the companyis focusing on converting its 4.7tcf of net unrisked prospective resource into reserves, withits 2021 exploration capex the largest in its history. 12 wells are planned this year, nineexploration and three development, at an estimated cost of c$66m. The historical successrate of over 80% underpinned by AVO analysis of 3D seismic keeps risks low, while theplanned capex and cash dividends are covered by the company’s existing cash and cashgeneration. We currently value Canacol at a core NAV of C$3.62/share and a RENAV ofC$5.87/share.

INDUSTRY OUTLOOK

The Colombian, Caribbean Coast gas market is expected to move into gas deficit in theabsence of LNG imports, incremental piped gas or the development of recent deepwaterdiscoveries. Canacol sells gas under long-term, fixed-price gas contracts, typically of five to10 years’ duration with inflation clauses to protect cash flows.


2018 204.5 138.6 7.3 (12.32) N/A 5.5

2019 219.5 162.8 64.7 19.21 15.1 4.8

2020e 234.3 195.1 92.7 42.95 6.7 2.9

2021e 228.4 187.2 85.7 29.92 9.7 3.3





Company descriptionCarr's Group's Agriculture divisionserves farmers in the North ofEngland, South Wales, the WelshBorders and Scotland, the US,Germany, Canada and New Zealand.The Engineering division offers remotehandling equipment and fabrications tothe global nuclear and oil and gasindustries.Price performance% 1m 3m 12mActual 6.9 30.8 (15.2)Relative* 3.0 12.9 (5.8)* % Relative to local indexAnalystAnne Margaret Crow

Carr's Group (CARR)INVESTMENT SUMMARY

Carr’s trading update for the first 19 weeks of FY21 notes that trading in Agriculture wasahead of management expectations because of strong sales of supplements. This wasoffset by a weaker than expected performance in the Engineering division caused bycontinued low crude oil prices. We note that net debt (excluding leases) was 24% loweryear-on-year at the end of November, reflecting close inventory control and lowercommodity prices. We leave our estimates broadly unchanged and reiterate our indicativevaluation of 170p/share.

INDUSTRY OUTLOOK

Cattle prices in the US have remained robust since the recovery noted towards the end ofFY20, stimulating demand for feed blocks. Exports of both feed blocks and Animaxsupplements to the Republic of Ireland have increased following deployment of additionalsales personnel there. Both these positive trends are likely to continue. Long-term engineering projects for the nuclear and defence sectors are progressing well. However,global oil prices remain relatively low, reducing investment by the oil and gas industry, whichis having a negative impact on some of the UK manufacturing activity.

Y/E Aug Revenue EBITDA PBT EPS (fd) P/E P/CF(£m) (£m) (£m) (p) (x) (x)

2019 403.9 23.8 18.0 14.2 9.3 8.9

2020 395.6 23.4 14.9 11.8 11.2 6.2

2021e 421.2 24.1 15.4 12.0 11.0 6.4

2022e 436.5 25.0 16.5 12.8 10.3 7.3

Sector: Financials



Company descriptionCenkos is a leading UK securitiesbusiness, which acts as nominatedadvisor, sponsor, broker and financialadviser to companies across allsectors and stages of growth. Sinceinception in 2005, it has raised morethan £20bn in equity capital forcorporate clients, which stood at 97 atthe end of June.Price performance% 1m 3m 12mActual 14.7 17.0 (1.7)Relative* 10.6 1.0 9.3* % Relative to local indexAnalystAndrew Mitchell

Cenkos Securities (CNKS)INVESTMENT SUMMARY

Cenkos's H120 results in October showed revenue +21% vs H119 at £12.9m. Corporatefinance contributed £9.2m (+48%) while Nomad, broking and research were down 6% (at£3.2m) and Execution achieved continued trading gains but was down 52% (to £0.4m).Lower admin costs (-18%) limited the overall increase in underlying costs to 2% and theresult was an underlying PBT of nearly £2m compared with a marginal loss in H119.Restructuring costs and a one-off, short-term incentive plan cost of £1.1m left pre-tax profitat £0.75m (£0.2m loss). The balance sheet remained strong with cash of £22.4m and acapital surplus of £15.8m over the Pillar 1 requirement. The interim dividend was held at thesame level as the 2020 final of 1p compared with the H119 dividend of 2p.

INDUSTRY OUTLOOK

In December CEO Jim Durkin informed the board of his intention to resign and, subject toFCA approval, Julian Morse (executive director and head of Growth Companies) willassume the role. The board has approved a strategy designed to deliver growth over thenext three years by focusing on Cenkos's core strengths in serving growth companies. Thegroup reported that it performed well in 2020 with the flow of transactions continuing inH220 including the $238m IPO of Round Hill Music Royalty Fund in November.


2018 45.0 3.4 3.2 4.4 13.3 9.6

2019 25.9 0.4 0.1 (0.2) N/A N/A




Sector: Technology



Company descriptionCentralNic is a leading provider ofglobal domain name services,operating through three divisions:Indirect, Direct and Monetisation.Services include domain namereselling, hosting, website building,security certification and websitemonetisation.

Price performance% 1m 3m 12mActual 21.6 26.2 13.0Relative* 17.2 8.9 25.6* % Relative to local indexAnalystRichard Williamson

CentralNic Group (CNIC)INVESTMENT SUMMARY

Following its US$36m acquisition of Codewise in October 2020, in January CentralNicannounced a further small acquisition of SafeBrands, an online brand protection softwareprovider and corporate ISP based in Paris, for up to €3.6m in cash (0.9x FY19 revenue).CentralNic has also called a bondholder meeting for 29 January 2021 to increase theissuance cap on its H219 bond issue from €90m to €150m, which we take as an indicator ofmore M&A to come as CentralNic consolidates a globally fragmented market of sub-scale,cash-generative businesses. The company trades on 9.4x FY21e EV/adjusted EBITDA.

INDUSTRY OUTLOOK

CentralNic supplies the tools needed for businesses to develop their online presence,providing domain names, hosting, websites, email, website security, brand protection andmonetisation services. It delivers services to c 40m domains, with cross-selling andupselling important drivers of future growth - with organic growth supported by M&A.


2018 42.7 7.0 5.6 0.06 2270.0 N/A

2019 109.2 17.9 12.8 8.16 16.7 N/A

2020e 217.8 30.7 17.4 5.58 24.4 N/A

2021e 295.3 40.3 27.7 8.67 15.7 N/A

Sector: Technology



Company descriptionCheckit optimises the performance ofpeople, processes and physical assetswith connected digital solutions. Thecompany is headquartered inCambridge, UK and has its operationscentre in Fleet, UK.

Price performance% 1m 3m 12mActual 0.0 10.9 67.2Relative* (3.6) (4.3) 85.8* % Relative to local indexAnalystKatherine Thompson

Checkit (CKT)INVESTMENT SUMMARY

Checkit has emerged from a period of corporate activity as a pure-play business focused ondriving the adoption of its connected SaaS software, in particular its workflow managementapplication. Checkit’s software is designed to enable smarter operations management,exploiting Internet of Things technology to connect people, processes and assets. With aproven ability to sign up blue-chip customers across a number of target verticals, growth inrecurring revenues and an expanding customer base should help to close the valuationdiscount to software peers

INDUSTRY OUTLOOK

With its workflow management software, Checkit is focused on connecting and empoweringdeskless mobile workers who are not able to use desktop software in their day-to-dayworking environment. Only a small proportion of the current enterprise software market isdesigned for this group of workers. Checkit’s sweet spot is supporting workers who performa combination of routine tasks and infrequent but important tasks where the volume andvariety of tasks is such that it is difficult to build a targeted application.

Y/E Jan Revenue EBITDA PBT EPS P/E P/CF(£m) (£m) (£m) (p) (x) (x)

2019 1.0 (2.3) (4.4) (2.48) N/A N/A

2020 9.8 (2.6) (5.1) (3.10) N/A N/A

2021e 13.0 (3.0) (3.8) (6.05) N/A N/A

2022e 14.1 (2.4) (3.2) (5.21) N/A N/A



Price: HK$6.44Market cap: HK$10207mMarket HKSE

Share price graph (HK$)

Company descriptionChina Water Affairs (CWA) is apioneer in the privatisation of watersupply assets in China. The companyseeks to create growth viavolume/price increases.

Price performance% 1m 3m 12mActual 2.4 15.0 (4.2)Relative* (9.2) (3.2) (7.8)* % Relative to local indexAnalystDan Gardiner

China Water Affairs Group (855)INVESTMENT SUMMARY

Despite a challenging environment, CWA performed strongly in FY20, achieving growth inall key financial metrics. Revenue rose 4.7%, helped by a strong performance from thewater business (c 90% of profits) and operating profit rose by 5.3%. Lower finance costs, astronger than forecast associate line and a lower than expected tax rate delivered a 17.7%rise in net profits (2.8% ahead of forecast). A lower than forecast attribution to minoritiesand a small fall in the share count (buy-back) saw EPS rise 20%. The DPS of HK$0.30 wasbelow our forecast (HK$0.33), but still up 7.1% y-o-y. Based on our updated forecastsCWA's share price rating appears modest despite requirements for significantenvironmental expenditure in the Chinese water sector presenting it with an opportunity togrow.

INDUSTRY OUTLOOK

Water supply in China remains fragmented. The central government encourages localgovernments to deleverage their own balance sheets with private–public partnerships. Thistrend remains positive for CWA.

Y/E Mar Revenue EBITDA PBT EPS P/E P/CF(HK$m) (HK$m) (HK$m) (c) (x) (x)

2019 8302.0 3536.0 2772.0 85.1 7.6 N/A

2020 8694.0 3781.0 3165.0 102.1 6.3 N/A

2021e 9731.0 4278.0 3374.0 108.0 6.0 N/A

2022e 10787.0 4725.0 3810.0 122.0 5.3 N/A

Sector: Financials



Company descriptionCivitas is the leading listed UK socialhousing REIT. Its investment objectiveis to provide an attractive level ofincome, with the potential for capitalgrowth, from investing in a diversifiedportfolio of fully developed socialhomes, particularly specialistsupported housing (SSH) forvulnerable adults.Price performance% 1m 3m 12mActual 3.5 1.3 7.2Relative* (0.2) (12.5) 19.1* % Relative to local indexAnalystMartyn King

Civitas Social Housing (CSH)INVESTMENT SUMMARY

The Q221 trading update for the 3 months ended 30 September 2020 shows the portfoliocontinuing to perform in line with expectations, with no COVID-19 impact on rent collections(as at 5 November, 98% of rents due to Civitas for Q221 had been received, with thebalance expected shortly) or property valuations. A Q221 quarterly DPS of 1.35p leaves thecompany well on track to meet its annual targeted 5.4p (+1.9%). Continuing moderategrowth in the portfolio and rent roll has delivered 100% cover by EPRA earnings on arun-rate basis and inflation-linked rental uplifts continue to support property valuations.Q221 IFRS NAV per share increased slightly to 108.01p (Q121: 107.92p) after acquisitioncosts. Negotiations to raise £80–120m of additional debt, moving gross gearing closer to the35% target, and providing funding for a sizeable acquisition pipeline, are at an advancedstage.

INDUSTRY OUTLOOK

The chronic shortage of SSH is forecast to increase, yet compared with the alternatives ofresidential care or hospitals it is widely recognised to improve lives in a cost-effectivemanner. SSH leases are of long duration and rents are paid directly to housing associationtenants by government via local authorities.

Y/E Mar Revenue EBITDA PBT EPS (fd) P/E P/CF(£m) (£m) (£m) (p) (x) (x)

2019 35.7 26.1 19.9 3.6 29.4 19.3

2020 46.2 36.4 38.0 4.6 23.0 20.0

2021e 49.0 39.5 35.8 5.1 20.8 14.6

2022e 55.2 45.7 46.8 5.8 18.3 14.3


Sector: Technology

Price: €6.90Market cap: €274mMarket Euronext Paris


Company descriptionClaranova consists of threebusinesses focused on mobile andinternet technologies: PlanetArt (digitalphoto printing; personalised gifts),Avanquest (consumer software) andmyDevices (internet of things (IoT)).

Price performance% 1m 3m 12mActual 1.6 14.1 (9.5)Relative* (0.3) (0.5) (2.9)* % Relative to local indexAnalystKatherine Thompson

Claranova (CLA)INVESTMENT SUMMARY

Claranova has reported another strong quarter of revenue growth in Q121, with reportedrevenue up 29% y-o-y and organic, constant currency revenue up 23% y-o-y. PlanetArt wasthe driver of growth, with good performance from the original photo-printing business andthe acquired personalised gifts business. We have increased our revenue forecasts toreflect Q1 performance but due to the high level of uncertainty caused by COVID-19, wemaintain our EBITDA forecasts for FY21 and FY22.

INDUSTRY OUTLOOK

PlanetArt is evolving from a digital photo printing business into a personalised e-commercebusiness and is focused on expanding its product offering geographically. Avanquest, theconsumer software business, is focused on developing and marketing software in three keyproduct areas: PDF, photo editing and security/privacy. The IoT business's myDevicesplatform provides a simple and effective way for SMEs and corporates to deploy IoTapplications.

Y/E Jun Revenue EBITDA PBT EPS P/E P/CF(€m) (€m) (€m) (c) (x) (x)

2019 262.3 16.0 12.0 25.10 27.5 N/A

2020 409.1 20.6 11.3 20.40 33.8 N/A

2021e 488.0 30.6 21.0 30.08 22.9 N/A

2022e 557.0 40.0 30.4 45.17 15.3 N/A

Sector: Aerospace & defence



Company descriptionCohort is an AIM-listed defence andsecurity company operating across sixdivisions: MASS (31% of FY20 sales),SEA (24%), MCL (11%), 80%-ownedEID (14%), 81%-owned ChessTechnologies (19%) and newlyacquired ELAC SONAR.

Price performance% 1m 3m 12mActual 0.7 2.0 (14.5)Relative* (3.0) (12.0) (5.0)* % Relative to local indexAnalystAndy Chambers

Cohort (CHRT)INVESTMENT SUMMARY

Cohort's defence and security orientation has proven relatively resilient during the pandemic. It delivered higher H121 operating profits on 10% lower revenues. There will be asignificant H220 weighting as management expects a similar overall FY21 performancefrom the continuing businesses to FY20. A record order backlog of £219m provides 92%cover for FY21 consensus sales and ELAC SONAR will makes its initial contribution inH221. Our estimates are maintained and the shares trade at a modest discount to UKdefence peers.

INDUSTRY OUTLOOK

Cohort is heavily influenced by activities in defence and security (90% of FY20 sales).These markets require highly differentiated technologies and services with high barriers toentry based on customer relationships, regulation and high-level security clearances.Defence is generally quite resilient in periods of significant economic disruption and the£4bn pa increase in the UK defence budget announced in November 2020 appears tomitigate concerns over imminent budget constraints.

Y/E Apr Revenue EBITDA PBT EPS P/E P/CF(£m) (£m) (£m) (p) (x) (x)

2019 121.2 17.3 15.9 33.6 18.5 21.8

2020 131.1 20.9 17.5 37.1 16.7 19.4

2021e 142.1 21.4 17.7 33.6 18.5 16.6

2022e 158.9 23.3 19.4 36.3 17.1 11.7


Sector: Technology

Price: CHF129.00Market cap: CHF180mMarket Swiss Stock Exchange

Share price graph (CHF)

Company descriptionThe CREALOGIX Group is a SwissFintech 100 company and is amongthe global market leaders in digitalbanking, providing front-end digitalbanking technology solutions to banks,wealth managers and other financialservices companies.

Price performance% 1m 3m 12mActual 11.2 10.3 9.3Relative* 5.8 0.9 9.0* % Relative to local indexAnalystRichard Williamson

CREALOGIX Group (CLXN)INVESTMENT SUMMARY

In FY20, revenues grew 1.7% to CHF103.7m and adjusted EBITDA rose to CHF2.4m, withminimal impact from COVID-19. Recurring revenues were 44% of total revenues, with SaaS17%. CLX is targeting 10%+ EBITDA margins and 60% recurring revenues in the mediumterm. The SaaS transition is expected to drag on FY21 results before a full year of benefit inFY22. In January, as part of an ongoing rationalisation strategy, CREALOGIX spun-off itsproduct implementation business for the German-speaking region (c 50 employees) to amanagement buyout.

INDUSTRY OUTLOOK

CREALOGIX is a leading, global digital banking engagement platform provider, based inSwitzerland, offering front-end software solutions that enable ‘the digital bank of tomorrow’.Driven by the consumer, as well as regulation, this market is dynamic and fast changing,with the group’s solutions typically used by retail, private and commercial banks, as well aswealth managers that need to upgrade legacy systems to meet the threat of neo-banks andchallenger banks.

Y/E Jun Revenue EBITDA PBT EPS P/E P/CF(CHFm) (CHFm) (CHFm) (CHFc) (x) (x)

2019 101.9 1.9 (1.7) (93.57) N/A 356.8

2020 103.7 2.4 (0.9) (14.79) N/A 18.4

2021e 108.8 5.9 3.0 155.54 82.9 27.9

2022e 114.3 10.3 7.5 383.77 33.6 16.5

Sector: Property



Company descriptionCREI is a London Main Market-listedREIT focused on commercial propertyin the UK outside London. It isincome-focused, with a commitment topay a high but sustainable andcovered dividend.

Price performance% 1m 3m 12mActual 3.9 0.3 (23.2)Relative* 0.1 (13.4) (14.7)* % Relative to local indexAnalystMartyn King

Custodian REIT (CREI)INVESTMENT SUMMARY

Q221 DPS increased to 1.05p taking the H121 total to 2.0p, well ahead of the 1.5p minimumannounced in April, reflecting better than expected H121 rental collection (88% adjusted forcontractual rent deferrals). DPS was fully covered by net cash receipts and well covered byH121 EPRA EPS of 2.6p, including accrued rents that are yet to be collected. H121 netrevaluation losses (£27.4m/5.1%) were focused on the retail sector and were tempered byasset management activity and a strong industrial weighting. NAV per share fell to 95.2p(FY20: 101.6p) and including DPS paid the H121 NAV total return was -3.7% (Q221 apositive 0.5%). The portfolio is well diversified and gearing is moderate (H121 net LTV of23.4%) with good liquidity, no short-term refinancing risk and borrowing headroom.

INDUSTRY OUTLOOK

The commercial property market is cyclical, historically exhibiting substantial swings invaluation through cycles while income returns have been more stable, but still fluctuatingaccording to tenant demand and rent terms. The pandemic and Brexit contribute to a highlyuncertain UK economic outlook and while the supply demand balance for regional office andindustrial property has hitherto remained generally firm the weakness that was previouslyconfined to the retail sector is likely to continue to broaden.

Y/E Mar Revenue EBITDA PBT EPS P/E P/CF(£m) (£m) (£m) (p) (x) (x)

2019 37.6 32.7 28.5 7.26 12.2 9.6

2020 38.1 33.4 28.7 7.00 12.6 11.7

2021e 35.5 29.3 24.3 5.79 15.3 12.6

2022e 35.4 30.7 25.7 6.12 14.4 12.2


Sector: Technology

Price: ZAR27.05Market cap: ZAR5449mMarket JSE

Share price graph (ZAR)

Company descriptionDatatec is a South Africa-listedmultinational ICT business, servingclients globally, predominantly in thenetworking and telecoms sectors. Thegroup operates through three maindivisions: Westcon International(distribution); Logicalis (IT services);and Analysys Mason (consulting).

Price performance% 1m 3m 12mActual 10.9 21.1 (16.7)Relative* 1.6 3.7 (24.6)* % Relative to local indexAnalystRichard Williamson

Datatec (DTCJ)INVESTMENT SUMMARY

Datatec is resilient, profitable, cash-generative and on an improving financial track despitethe impact of COVID-19 and the challenges faced by Cisco (40% of group revenues).Datatec’s high variable cost base and resilient business model should mitigate any impacton its underlying performance. While an uncertain global economic outlook may impacttop-line growth, the group is benefiting from the surge in remote working, including businessinvestment in security and communications. Datatec trades on a valuation that neitherreflects the group's recent transformation nor its growth prospects.

INDUSTRY OUTLOOK

While a challenging global economic environment may affect top-line growth in the shortterm, Datatec’s high variable cost base and resilient business model should mitigate theimpact on its underlying performance. We expect Datatec to continue to benefit from thestreamlining of its operations and cost base, with progressive margin improvement atLogicalis and improving profitability at Westcon.

Y/E Feb Revenue EBITDA PBT EPS P/E P/CF(US$m) (US$m) (US$m) (c) (x) (x)

2019 4332.4 86.8 65.7 2.95 60.9 14.0

2020 4304.8 158.7 79.1 10.59 17.0 2.1

2021e 4258.4 136.5 67.0 10.15 17.7 3.6

2022e 4418.9 165.0 84.6 16.39 11.0 3.6

Sector: Electronics & elec eqpt



Company descriptiondiscoverIE is a leading internationaldesigner, manufacturer and supplier ofcustomised electronics to industry,supplying customer-specific electronicproducts and solutions to originalequipment manufacturers.

Price performance% 1m 3m 12mActual 12.2 17.4 23.5Relative* 8.2 1.3 37.2* % Relative to local indexAnalystKatherine Thompson

discoverIE Group (DSCV)INVESTMENT SUMMARY

discoverIE reported resilient H121 results considering the expected drop in demand due toCOVID-19. Having taken action at the start of the pandemic to reduce costs and conservecash, the company was able to minimise the impact of the revenue shortfall on operatingprofit and pay down a substantial amount of debt. With order intake and design win activitynow moving in the right direction, the company is well positioned to resume its growth path.While we have reduced our forecasts to reflect the risk from ongoing lockdowns, thereinstated dividend and resumption of M&A underline management’s confidence in theoutlook.

INDUSTRY OUTLOOK

discoverIE Group is a designer, manufacturer and supplier of customised electronics toindustry with operations throughout Europe and increasingly outside Europe. The companyis focused on growing the percentage of higher-margin specialist product through organicgrowth and acquisition. Its key markets (more than two-thirds of sales) are medical,renewables, transportation and industrial connectivity, all of which are good growth markets.

Y/E Mar Revenue EBITDA PBT EPS P/E P/CF(£m) (£m) (£m) (p) (x) (x)

2019 438.9 37.0 28.4 28.4 25.2 N/A

2020 466.4 50.9 34.6 31.8 22.5 N/A

2021e 445.7 45.3 28.3 23.0 31.1 N/A

2022e 486.5 49.7 32.4 26.4 27.1 N/A


Sector: Media



Company descriptionEbiquity is a leading, tech-enabled,independent marketing and mediaconsultancy. It helps the world'sbiggest brands leverage data andanalytics to drive greater transparencyin the marketing ecosystem, to createmore impactful customer experiencesand to deliver greater returns onmarketing investment.Price performance% 1m 3m 12mActual 2.0 (2.4) (45.8)Relative* (1.7) (15.7) (39.8)* % Relative to local indexAnalystFiona Orford-Williams

Ebiquity (EBQ)INVESTMENT SUMMARY

Ebiquity’s November CMD outlined future strategy, building on the group’s strongpositioning as a genuinely independent adviser to global brands on optimising theirmarketing ROI. The key to delivering growth momentum and improving earnings quality isclearly in the digital marketing domain, developing embedded products and services toidentify and remove wasted spend. The group’s ambitions in the US are underlined by therecent appointment of Paul Williamson, ex Dentsu, as MD North America. We regard ourFY21e forecasts to have upside potential, depending on successful implementation.

INDUSTRY OUTLOOK

Digital marketing remains beset by issues of transparency, fraud and wastage, with theSource Data Monitoring product from Digital Decisions indicating that 15–30% of digital adspend is wasted. With total global digital ad spend set to have passed through the 50%share of total ad spend in 2020, the opportunity to help reduce depletion is clearlysubstantial, with no major incumbents providing this service.


2018 69.4 7.8 5.2 3.7 5.6 N/A

2019 68.7 9.2 5.3 3.6 5.7 3.8

2020e 57.0 1.8 (0.5) (0.8) N/A 22.5

2021e 60.0 5.4 3.1 2.6 7.9 4.6

Sector: Technology



Company descriptionEMIS is a software supplier with twodivisions. EMIS Health suppliesintegrated care technology to the NHS,including primary, community, acuteand social care. EMIS Enterprise is aB2B software provider to the UKhealthcare market, including medicinesmanagement, partner businesses,patient-facing services and blockchain.Price performance% 1m 3m 12mActual 8.3 11.9 (2.7)Relative* 4.4 (3.4) 8.1* % Relative to local indexAnalystKatherine Thompson

EMIS Group (EMIS)INVESTMENT SUMMARY

EMIS saw trading gradually improve through H220 to finish the year slightly ahead ofexpectations. Revenue and adjusted operating profit were maintained at similar levels toFY19 (FY19 £159.5m and £39.3m respectively) whereas previous guidance was foradjusted operating profit to be slightly below the FY19 level. EMIS continued to supportcustomers in dealing with the pandemic, with the recently acquired Pinnacle Systems’software now being used in the nationwide vaccination programme. Progress was alsomade in product development with the launch of the first EMIS-X analytics product. Wemaintain our forecasts pending FY20 results on 18 March.

INDUSTRY OUTLOOK

EMIS is the leading software supplier to the UK GP market, with a greater than 50% marketshare. It has a strong position in community pharmacies, community health, A&E andhospital pharmacies. The EMIS-X platform is being developed to promote greaterinteroperability between NHS departments, in line with the NHS Long Term Strategy.

Y/E Dec Revenue EBITDA PBT EPS (fd) P/E P/CF(£m) (£m) (£m) (p) (x) (x)

2018 149.7 48.9 33.4 40.4 28.4 14.5

2019 159.5 55.6 41.0 53.5 21.5 14.4

2020e 158.8 53.7 43.3 55.7 20.6 12.3

2021e 164.1 55.3 44.0 56.4 20.4 13.1


Sector: Technology

Price: A$4.00Market cap: A$1447mMarket ASX

Share price graph (A$)

Company descriptionEML Payments is a payment solutionscompany specialising in the prepaidstored value market, with mobile,physical and virtual card offerings. Itmanages thousands of programmesacross 28 countries in Europe, NorthAmerica and Australia.

Price performance% 1m 3m 12mActual (0.7) 7.8 (22.0)Relative* (4.0) (2.8) (20.2)* % Relative to local indexAnalystKatherine Thompson

EML Payments (EML)INVESTMENT SUMMARY

EML Payments is a specialist payment solutions provider with a focus on the prepaidmarket. The group’s strategy is to use acquisitions supported by organic development toestablish strong positions across a diverse range of use cases and markets. EML nowoperates in 28 countries and has grown revenues at a five-year CAGR of 53%. WhileCOVID-19 has slowed the pace of growth in the short term, the business is well-funded andremains profitable and cash generative. The launch of Project Accelerator is designed tokeep EML at the forefront of innovation in payments technology and to support thecompany’s aim to be ‘the fintech’s fintech’.

INDUSTRY OUTLOOK

In terms of market size, US$1,848bn was loaded onto prepaid cards in 2019 and this isforecast to grow to US$5,511bn by 2027, a CAGR of 14.6% (source: Applied MarketResearch). EML is keen to gain share of this fast growing market, in particular by providinginnovative solutions that enable fintech disruption.

Y/E Jun Revenue EBITDA PBT EPS (fd) P/E P/CF(A$m) (A$m) (A$m) (c) (x) (x)

2019 97.2 29.7 25.6 7.8 51.3 34.1

2020 121.0 32.5 21.6 5.5 72.7 53.3

2021e 173.4 48.4 35.3 7.6 52.6 29.5

2022e 218.8 70.6 53.7 11.6 34.5 23.1

Sector: Mining

Price: C$26.52Market cap: C$4324mMarket Toronto

Share price graph (C$)

Company descriptionFollowing its acquisition of SEMAFO,Endeavour joins the ranks of the majorgold producers, with two mines in Côted’Ivoire and four in Burkina Faso plusthree major development projects, allin the West African Birimiangreenstone belt.


Endeavour Mining (EDV)INVESTMENT SUMMARY

Endeavour Mining's (EDV's) acquisitions of SEMAFO and Teranga have projected it into thetop 10 gold producing companies globally with output of c 1.5Moz pa and a targeted AISCof US$800/oz with at least US$35–40m pa in synergies. It is also now net debt free andtargeting inclusion in the FTSE 100 index mid-year. Adjusted EPS in both Q120 and Q220were materially ahead of expectations, while production in Q420 has been higher and AISClower than our prior forecasts (not least as a result of the restart of the Boungou mine).

INDUSTRY OUTLOOK

After only four years, EDV’s exploration programme has yielded 84% of its five-year targetof 10–15Moz Au, which has already increased medium-term production levels at Ity andHounde to 0.5Moz pa (combined) until 2028. Since end-June, EDV has been hedge-freeand has now also announced a maiden dividend of US$0.37/share for FY20 payable on 5February. Prior to the Teranga transaction announcement, we valued EDV shares atUS$45.32/share as at 1 January 2021.


2018 1048.6 378.9 75.8 (10.43) N/A 8.2

2019 1362.1 618.4 220.4 56.95 36.6 5.2

2020e 1793.5 927.3 440.9 171.69 12.1 3.7

2021e 2016.0 1060.9 511.0 180.32 11.6 3.5


Sector: Construction & blding mat



Company descriptionEpwin supplies functionallow-maintenance exterior buildingproducts (including windows, doors,roofline and rainwater goods) into anumber of UK market segments and isa modest exporter.

Price performance% 1m 3m 12mActual 6.2 41.3 (12.0)Relative* 2.4 22.0 (2.2)* % Relative to local indexAnalystToby Thorrington

Epwin Group (EPWN)INVESTMENT SUMMARY

Epwin’s positive end to 2020 saw improving momentum in Q4. Specifically, revenue of+2–3% y-o-y in July and August amplified to +5% for the five months to November. Implicitlythen, the months of September, October and November – seasonally important in any year– were ahead in the order of 6–8%. (We note that the H219 comparators for H220 werereasonably firm also.) Management has flagged FY20 revenues of £420m, PBT in line withconsensus raised in December and year-end net debt (pre-IFRS 16) of c £18m. We expectearnings to start to recover from COVID-19 affected FY20 in FY21. The company’sbusiness resilience is reflected in good cash flow management and a likely FY20 finaldividend payment.

INDUSTRY OUTLOOK

Epwin is exposed to both RMI (c 70% revenue) and newbuild (c 30%) in the UK housingmarket. RMI activity is currently stronger that other sectors which are also recoveringgradually. There is some caution associated with potential impacts of rising unemploymenton consumer confidence.


2018 281.1 26.7 16.5 9

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