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Northland Capital Partners View on the City - Veltyco Group plc, Edenville Energy, Arian Silver Corp

Published: 04:05 25 May 2017 EDT

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VELTYCO GROUP (LON:VLTY)
SECTOR – LEISURE
RATING – BUY*
MARKET CAP – £38m
CURRENT PRICE – 51.5p#
TARGET PRICE – 70p (From 52p)

 

COMPANY DESCRIPTION

Veltyco is a marketing and promotions business which refers customers to online casino, sports betting, lotteries and options trading brands.

Update: Expect another year of strong growth (note attached)

NORTHLAND VIEW

  FY16A was a year of significant growth for Veltyco, both from existing brands and from new marketing agreements struck in FY16. The 2H16 was particularly strong, which resulted in the business significantly outperforming expectations. Revenue was €6.1m (€4.9m FY16E) and EBITDA was €2.1m (€1.4m FY16E).

  Current trading looks strong where revenue increased significantly in the 1Q17. Average monthly revenue was +38% above the average monthly revenue in the 2H16. We increase our forecasts for the business and include forecasts for the newly acquired businesses Bet90, which importantly will be ready for the start of the football season, and T4U. We look for revenue of €11.6m (€9.8m previously) in FY17E growing to €15.9m (€11.8m previously) in FY18E. At the EBITDA line we look for further margin improvement in FY17E to c. 43% and EBITDA of €4.9m (€4.3m previously) growing to €7.2m (€5.4m previously).

  The shares trade on 8.8x FY17E EBITDA, a discount to peers on 10.8x FY17 EBITDA. The multiple falls to 6.0x FY18E EBITDA a larger discount of 35% compared to peers. Our DCF points to 75p per fully diluted share and our price target is based on the midpoint of our DCF (75p) and peer valuation (64p), which points to 70p per fully diluted share. We reiterate our BUY rating on Veltyco.

The business outperformed expectations in FY16 and produced a strong start to FY17, the catalyst for the increase to forecasts. Management is confident and we expect another year of strong growth.

 

Edenville Energy (LON:EDL)
SECTOR – MINING
RATING – CORP*
MARKET CAP – £7.8m
CURRENT PRICE – 0.7p#

 

COMPANY DESCRIPTION

Edenville Energy is moving the Rukwa Coal Project towards near-term production alongside advancing its Coal to Power Project.

FY16 Results – coal production to ramp up to full production in Q317

NORTHLAND VIEW

  LBT reduced to £3.2m in FY16 from £4.5m in FY15, largely due to a reduction in impairments associated with historic licenses.
  Net cash decreased to £0.1m in FY16 from £0.2m in FY15.
  Wash plant to be constructed in June/July 2017 and will take six to eight weeks to become operational.
  Coal production to ramp up to full production in Q317.

Edenville Energy will shortly be commencing production of processed coal from its Rukwa Coal Project, located in Tanzania. The Company has already purchased the wash plant it is currently transporting it to Tanzania. The purchase and construction of the plant has been accomplished without the use of debt and for a cost of £2m funded from existing cash resources. Edenville is planning to generate cash flow that will allow the Company to work towards being a self-sustaining entity.

 

ARIAN SILVER CORPORATION (LON:AGQ)
SECTOR – MINING
RATING – CORP*
MARKET CAP – £1.5m
CURRENT PRICE – 0.8p#

COMPANY DESCRIPTION

Arian Silver Corporation is a Mexican focused exploration company.

Placing to raise £600,000

NORTHLAND VIEW

  Arian Silver Corporation has raised £600,000 through the issue of 120,000,000 new shares at a price of 0.5p per share and 120,000,000 warrants at a price of 0.6p. The warrants will be valid for two years.
  Following the placing there are 303,694,941 shares in issue.

Arian Silver Corporation will use these funds to advance exploration at its lithium and silver projects located in Mexico. At its lithium salar projects, the Company believes that greater lithium concentrations are present at greater depths and the initial results from the surface exploration are merely indicative of the presence of lithium

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