Mind Gym PLC

Mind Gym PLC (MIND) is a UK based support services company providing business improvement and human capital solutions globally. The group offers a wide range of services which include management development, performance management, change, reorganization, ethics, diversity and inclusion, customer services, employee engagement, personal effectiveness and on-boarding.

Recent News
The company announced its audited full year results for the year ending 31st March 2019 on 25th June 2019, Tuesday.

Financial Highlights – Financial Year 2019 (£, million)

(Source: Annual Report, Company Website)
 
For the financial year ending 31^st March 2019, the company’s reported revenue surged by 14 per cent to £42.1 million from £37 million in the FY2018. The increase was driven by increased demand from existing clients and by new client acquisition. The company’s revenue from digital business increased by 72 per cent to £3.6 million. The company’s gross profit margin surged by 1.3 percentage points to 80.6 per cent in FY2019 against 79.3 per cent in FY2018. The increase was driven by improved sales mix which led to high margin services.In FY2019, the adjusted EBIT Margin declined slightly to 20.3 per cent versus 20.7 per cent in FY2018, due to excessive hiring to meet the growing demand. The company’s Adjusted diluted EPS surged by 19 per cent to 6.85 pence in FY2019 against 5.77 pence in FY2018. The company cash balance at the end of 31^st March 2019 stood at £8.3 million despite the company paid cash expenses of £2.3 million related to IPO and £3.2 million for a pre-IPO dividend. The company will pay a final dividend in August 2019 of 1.6 pence, which will bring total dividend to 2.4 pence for the year.

Share Price Performance

Daily Chart as at June-25-19, before the market close (Source: Thomson Reuters)

On 25th June 2019, at the time of writing (before the market close, GMT 10:51 AM), Mind Gym Plc shares were trading at GBX 126.00, up by 4.56 per cent against the last day closing price. Stock's 52 weeks High and Low is GBX 190.00/GBX 112.00.

Valuation Methodology


Conclusion
The company’s revenue increased in the financial year ending 31st March 2019 with the increase in business and acquisition of new clients. With the global market for Learning and Development is over $240 billion in size, the company is well positioned with a clear growth strategy to exploit the opportunities as it comes. The company is focusing on its digital business, contributing 9 per cent in the group’s total revenue.

Based on the strong growth prospects of the company and the valuation done using the above method, we have given a “Speculative BUY” recommendation at the closing price of GBX 120.50 (as on 24th June 2019) with single-digit upside potential based on 17.50x NTM Price/Earnings (approx.) on FY20E earnings per share (approx.).
 

 IMImobile Plc

IMImobile Plc (IMO) is a software and solutions provider company related to cloud communications. The company has divided its operations based on the geographic areas in which it operates which include Europe and the Americas, the Middle East and Africa (MEA) and India and South East Asia (SEA). The company’s product offerings include Textlocal, IMIchat, IMIsocial, IMIcampaign, IMIdigital and IMIconnect.

Recent News
On 19th June 2019, the IMImobile Plc notified that it is expecting to announce its full-year results ending 31st March 2019 on 2nd July 2019.

Trading Update (As on 31^st March 2019)
The company expected its full-year revenue to be up by 28 per cent to £142 million in FY2019 versus £111.4 million in FY2018. Organic growth in revenue will be around 18 per cent as expected. The company’s gross profit is expected to increase by 20 per cent to £62 million in FY2019 as against £50.7 million in FY2018. The expected Adjusted EBITDA for FY2019 will be around £17.8 million against £13.4 million in FY2018. The company is planning to increase its focus on the North American market with the acquisition of Impact Mobile.

Share Price Performance

Daily Chart as at June-25-19, before the market close (Source: Thomson Reuters)

On 25th June 2019, at the time of writing (before the market close, GMT 12:17 PM), IMImobile Plc shares were trading at GBX 316.90, up by 0.60 per cent against the last day closing price. Stock's 52 weeks High and Low is GBX 378.00/GBX 201.00.

Valuation Methodology
 

Conclusion
The company had shown decent financial performance with strong growth in the company’s revenue. The company had witnessed strong growth in the Americas and Europe region and the company’s enterprise business had performed well in MEA and SEA regions. The companyacquired Impact Mobile to focus on the North American market.

Based on the growth prospects of the company and the valuation done using the above method, we have given a “Speculative BUY” recommendation at the closing price of GBX 315 (as on 24th June 2019) with single-digit upside potential based on 23x NTM Price/Earnings (approx.) on FY19E earnings per share (approx.).
 

Redt Energy PLC

Redt Energy PLC (RED) is a support services company providing specialised solutions related to energy storage infrastructure. The company uses a wide range of technologies for providing solutions which includes lithium batteries, vanadium redox flow machines and Hybrid system which include a combination of both. The company has its experts located in the Australasia, Asia, Africa and the UK.

Recent News
The company announced its audited full year results for the year ending 31st December 2018 on 25th June 2019, Tuesday.

Financial Highlights – Financial Year 2018 (£, thousand)

(Source: Annual Report, Company Website)
 
In the financial year ending 31^st December 2018, the company’s reported revenue surged by 87 per cent to £4,162 thousand from £2,228 thousand in FY2017. The increase was driven by the installation of Second Generation (Gen 2) machines at customer sites. In FY2018, the company’s gross profit stood at £1,714 thousand against £1,872 thousand in FY2017. The company’s operating loss stood at £12,241 thousand in FY2018 versus a loss of £7,232 thousand in FY2017, due to a surge in the administrative expenses in the current financial year. The company’s loss before tax stood at £12,389 thousand in FY2018 versus a loss of £7,483 thousand in FY2017. In FY2018, the company’s loss for the year (continuing and discontinued) stood at £12,522 thousand in FY2018 versus a loss of £7,446 thousand in FY2017.

Share Price Performance

Daily Chart as at June-25-19, before the market close (Source: Thomson Reuters)

On 25th June 2019, at the time of writing (before the market close, GMT 1:40 PM), Redt Energy Plc shares were trading at GBX 1.023, down by 18.16 per cent against the last day closing price. Stock's 52 weeks High and Low is GBX 11.60/GBX 0.80.

Valuation Methodology


 Conclusion
Although the company’s revenue rose in the financial year ending 2018, the profitability margins have remained stagnant or declined. Moreover, the company is trading near its 52-week low, raising doubts at its upside potential at the current prices. The company operates in a challenging environment which requires continuous investment, sometimes at the cost of profitability, to stay ahead of competitors. 

Keeping in mind the weak relative valuation of the company and weak financial performance, we recommend investors to keep a cautious “Watch” on the stock at the closing price of GBX 1.25 (as on 24^th June 2019), while we look for any upcoming catalysts.

Tekmar Group Plc

Tekmar Group Plc (TGP) is a UK based company provider of flexible pipe protection systems, engineering services, subsea cable and umbilical cords. The company’s product offerings include Cable hang-offs, TEKDUCT, j-tube seals, bend stiffeners, SPLIT PIPE and bend restrictors.

Recent News
The company announced its audited full year results for the year ending 31st March 2019 on 25th June 2019, Tuesday.

Financial Highlights – Financial Year 2019 (£, thousand)

(Source: Annual Report, Company Website)
 
For the financial year ending 31^st March 2019, the company’s reported revenue surged by 28.28 per cent to £28,082 thousand from £21,891 thousand in the FY2018. The increase in revenue was driven by the acquisition of Subsea Innovation. In the FY2019, the company’s operating profit stood at £2,905 thousand against the £3,808 thousand in the FY2018. The company’s profit before tax surged by £2,366 thousand to £1,986 thousand in FY2019 from a loss of £380 thousand in FY2018. The company’s profit for the year stood at £2,393 thousand versus a loss of £110 thousand in FY2018. The company’s Basic EPS stood at 4.75 pence in FY2019 against a loss per share of 0.22 pence in FY2018.

Share Price Performance

Daily Chart as at June-25-19, before the market close (Source: Thomson Reuters)

On 25th June 2019, at the time of writing (before the market close, GMT 12:17 PM), Tekmar Group Plc shares were trading at GBX 134.50, up by 3.46 per cent against the last day closing price. Stock's 52 weeks High and Low is GBX 170.00/GBX 76.00.

Valuation Methodology


Conclusion
The company had shown decent financial performance in the financial year ending 31^st March 2019. There had been an increase in both top-line and bottom-line performance. The company is well positioned to grab maximum opportunity from the strong growth in the offshore wind market globally. The company’s balance sheet remained strong for the period. The company had established an entity in China to expand its operations internationally.

Based on the decent growth prospects of the company and the valuation done using the above method, we have given a “Speculative BUY” recommendation at the closing price of GBX 130 (as on 24th June 2019) with single-digit upside potential based on 13.80x NTM Price/Cash Flow (approx.) on FY20E cash flow per share (approx.).
 
*All forecasted figures and Peers information has been taken from Thomson Reuters.
*The Speculative Buy recommendation is valid for the current price as covered in the report (as on 25th June 2019).

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