Tremor International Ltd

Tremor International Ltd (LON: TRMR) is FTSE AIM 100 listed Company which provides Video and Connected TV advertising offerings.

Investment Rationale – SPECULATIVE BUY at GBX 542.00

• Statement re Press Speculation: On 23 November 2021, TRMR clarified that it is routinely engaged with third parties as a part of its business. The underlying performance of the Company remained strong, and the Board is confident about its future performance.
• Solid Platform for Growth: In the FY21 so far, Tremor demonstrated a robust financial performance as it continued to witnessed growth in CTV and Video spending. It has also expanded the partnership with Roster and achieved significant business wins to sustain the strong trading momentum.
• Guidance: Tremor expects to deliver the adjusted EBITDA of at least US$149 million in FY21.
• Technical Indicator: From a technical standpoint, TRMR’s stock price is approaching the lower Bollinger Bands, reflecting an oversold scenario. Meanwhile, 14-day RSI (~44.08) is also reiterating the same.

Key Risks:

• Weak UK GDP: The UK economy witnessed a slowdown as the GDP grew quarter-on-quarter by around 1.3% during Q3 FY21, which remained merely lower-than-expected growth of around 1.50%.
• Covid-19 Pandemic: The concerns related to the Omicron variant has prompted tight border controls, which can impact consumer and investor sentiments.

Financial Update (for the third quarter ended 30 September 2021, as on 11 November 2021)

 (Source: Company Website)

• Financial Performance: TRMR recorded a strong financial performance, driven by its performance strengthened by significant programmatic activity.
• Operational Growth: The adjusted EBITDA jumped by 116% year-on-year in Q3 FY21 to US$42.3 million.
• Strategic Focus: The CTV remained a key strategic focus for the Company as the industry continued to shift towards programmatic buying.

One Year Share Price Chart

 (Data Source: REFINITIV, analysis done by Kalkine Group)

Valuation Methodology: Price/Earnings Approach (FY21) (Illustrative)

Conclusion

Tremor bolstered its end-to-end CTV capabilities for customers, and recently announced a partnership with VIDAA, to expand its US and international footprint. Moreover, it looks forward to evaluating additional strategic acquisition opportunities, making further investment in R&D, and increasing market share. It also expects FY21 organic Contribution ex-TAC and Adjusted EBITDA growth of approximately 62% and 150%, respectively. The stock made a 52-week High and Low of GBX 870.65 and GBX 350.00, respectively.

Based on the significant revenue growth, enhanced CTV capabilities, clear financial guidance, and favourable valuation conducted above, we have given a “SPECULATIVE BUY” recommendation on Tremor International Ltd at the closing market price of GBX 542.00 (as on 30 December 2021), with lower double-digit upside potential based on 11.85x Price/NTM Earnings (approx.) on FY21E Earnings Per Share (approx.).

Sensyne Health PLC

Sensyne Health PLC (LON: SENS) is a FTSE AIM All-Share listed Company that provides clinical artificial intelligence related services.

Investment Rationale – SPECULATIVE BUY at GBX 80.50

• Partnerships: Recently, it signed a strategic partnership for SENSIGHT; attained one-year agreement with Exscientia; and collaborated with with Cambridge University Hospitals NHS Foundation Trust, to find better ways to treat cancer.
• Solid Momentum for Growth: SENS has strengthened its business development activities, launched several platforms, and looked confident of generating strong revenue growth in FY22.
• Response to disciplinary notice: On 30 November 2021, SENS settled terms with the LSE by paying a discounted fine of £406,000, for historical breaches of AIM Rules 13 and 31 in relation to the payment of certain IPO bonuses in 2018.
• Technical Indicator: From a technical standpoint, 14-day RSI (~30.41) indicating an oversold scenario, while the stock price is hovering close to the lower Bollinger Band.

Key Risks

• Economic Slowdown: Fall in the UK Composite Purchasing Managers' Index in December 2021, weak industrial date, global shortage of semiconductors, supply constraints, tightening of monetary policy can hamper early enthusiasm about demand.
• Liquidity Risk: The Company is yet to be profitable even operationally, while it reported net cash outflows of £8.1 million in FY21 (FY20: £17.6 million). Therefore, it is exposed to a significant liquidity risk.

Financial Highlights (for the 12 months ended 30 April 2021, as on 1 October 2021)

(Source: Company Website)

• Operational Highlights: SENS increased its patient records to 8.9 million by 30 April 2021 through significant of new Strategic Research Agreements. It also launched MagnifEye™ and collaborated with Phesi, Inc, Alexion, and Bristol Myers Squibb.
• Fundraise: In January 2021, it raised £27.5 million via equity placing and invested US$10 million into Phesi as part of strategic collaboration.
• Liquidity: At the end of FY21, the Company reported cash and cash equivalents of £23.6 million.

One Year Share Price Chart

 (Data Source: REFINITIV, Analysis done by Kalkine Group)

Conclusion 

Sensyne demonstrated a solid growth over the past year and made some strategic collaborations and accelerate the development of new medicines. Moreover, it is progressing well to achieve 100 million patient records by December 2024. The stock made a 52-week High and Low of GBX 190.00 and GBX 76.00, respectively.

Based on the revenue growth, considerable collaborations, strategic partnerships, equity placing, we have given a “SPECULATIVE BUY” recommendation on Sensyne Health PLC at the closing price of GBX 80.50 (as on 30 December 2021).

*All forecasted figures and Industry Information have been taken from REFINITIV.

*The reference data in this report has been partly sourced from REFINITIV.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached or if the price closes below the support level (indicative stop-loss price).

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