Ideagen Plc – Offering World-class Software to Optimise Business Performance

Ideagen Plc (LON: IDEA) is a software & computer services company engaged in the sale and development of information management software to customers from multiple industries with related professional support and services.

Recent News
On 28^th April 2020, Ideagen announced the exercise of options by an employee of more than 208,334 Shares and allotted new 208,334 shares at 1 penny per share in the Company’s capital.

Update on Trading Performance and Impact of Covid-19 Pandemic
On 7^th April 2020, Ideagen released an update on the trading performance and impact of coronavirus on business performance. The Company entered Q3 FY2020 with strong momentum achieved in H1 FY2020 and won many new contracts across, US Federal markets, Life Sciences, UK Healthcare, and Internal Audit. The Group expect its revenue to be around GBP 56 million for the period and is slightly below the previous forecast of GBP 58.5 million. The adjusted EBITDA is expected to be around GBP 18.5 million on IFRS16 basis and GBP 17.5 million in IAS17 basis and remained in line with market expectations. IDEA has a well-positioned balance sheet with decent funding position. In the second half of the FY2020, the group expect its cash collection to be robust and expect gross cash of around GBP 7 million with gross bank borrowings of GBP 15 million. The company intended to pay a dividend as per progressive dividend policy. The group has taken multiple steps to preserve cash and reduce costs to support business continuity.

Share Price Performance

Daily Chart as of May 13^th, 2020, before the market close (Source: Refinitiv,Thomson Reuters)

Ideagen Plc shares were trading at GBX 158.55 at the time of writing before the market close (at 3:09 PM GMT+1) on 13th May 2020 and down by 0.91% versus the previous day closing price. Stock's 52 weeks High is GBX 207.97 and Low is GBX 127.00.

Valuation Methodology

*Peers: SDL Plc, GB Group Plc and Learning Technologies Group Plc.

Growth Catalysts
The company continues to implement the strategy and business model to deliver returns. There remained a significant pipeline of business opportunity for the company.

Conclusion
Despite the uncertain times due to the spread of Covid-19,the group has a strong business model and operates in defensive markets. The group entered the second half of the financial year 2020 with strong momentum and expect cash collection to be robust and expect the same momentum in the financial year 2021. IDEA has a well-positioned balance sheet with decent funding position. The adjusted EBITDA increased both on IFRS16 basis and IAS17 basis by 29 per cent and 22 per cent, respectively, in FY to 30^th April 2020 versus the same period of last year. In FY2021, the company expect its quarterly run-rate revenue to be GBP 15 million, including recurring revenues.
Based on the decent growth prospects and the valuation done using the above method, we have given a “Speculative Buy” recommendation at the current price of GBX 158.00 (as on 13^th May 2020, before the market close at 3:15 PM GMT+1) with high single-digit upside potential based on 32x NTM Price/Earnings (approx.) on FY20E earnings per share (approx.).

Volga Gas Plc – Oil & Gas Exploration Company with Decent International Shipments

Volga Gas Plc (LON: VGAS) is an oil & gas producer company, which is engaged in the business of development, exploration, and acquisition of hydrocarbon assets. The company also conduct production activities related to hydrocarbons in the Russian Federation based Volga Region.

April 2020Production Report Impacted by Covid-19 and Currency Devaluation
On 4^th May 2020, Volga Gas released an update on the average production volumes for the month of April 2020. The average production stood at 2,316 barrelsof oil equivalentevery day in April 2020 and was lower than 43 per cent versus March 2020. Due to the impact of covid-19 and drop in international oil pricingresulted in lower demand for LPG & gas condensate in thedomestic markets and reduced throughputin a gas plant. Due to plant maintenance, the group shut down operations for 5 days. The Group’s cash balances stood at USD 10.6 million with no debt at on 30^th April 2020. The price of oil in the international market declined significantly, and devaluation of RUR (Russian Ruble) impacted local pricing as well. The gas price remained fixed in Russian Ruble (RUR) but still impacted negatively due to currency devaluation against USD.

Share Price Performance

Daily Chart as of May 13^th, 2020, before the market close (Source: Refinitiv,Thomson Reuters)

Volga Gas Plc shares were trading at GBX 23.10 at the time of writing before the market close (at 3:15 PM GMT+1) on 13th May 2020 and down by 9.41% versus the previous day closing price. Stock's 52 weeks High is GBX 86.00 and Low is GBX 17.01.

Key Risks
Any change in regulations and government policies could affect the overall business of the company. Risks related to environment and climate change could hamper the operations of the company. Liquidity and interest rate risks could affect the operations of the company.

Conclusion
The company has shown a decline in financial performance in the financial year ending 31^st December 2019. The group’s revenue remained flat, but the bottom-line performance has declined significantly, and profitability remained in the negative zone for the period. VGAS need to manage its operating costs more effectively to improve its financial performance and bring operational stability in the near future. Due to the impact of Covid-19 and a decline in oil prices globally, the production of the company has been hampered significantly in April versus production in the month of March. The devaluation of the local currency against USD impacted the gas prices.
On the basis of the above rationale, we have given a "Watch" recommendation at the current price of GBX 26.00 (as on 13^th May 2020, before the market close at 8:10 AM GMT+1), while we look for any upcoming catalysts in the near term.
 
*All forecasted figures and Peer information have been taken from Refinitiv, Thomson Reuters.

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