Latest Updates On Three Small-Cap Stocks: GHH, BOOM, and INFA

Gooch & Housego PLC

Gooch & Housego PLC (GHH) is an Ilminster, the United Kingdom-headquartered photonics technology business which enables effective OEM system supply and development through advanced optical engineering and manufacturing. The group is a world leader in optical designing, testing and manufacturing and its expertise is in optical systems, subsystems and components, with operations in thirteen sites across the UK, USA and Asia. The operations of the group are differentiated in three operating segments, namely Aerospace and Defence, Industrial and Telecom, and Life Sciences and Biophotonics.

Full Year Trading Update (as on 7th October 2019)

The company announced a trading update for the year ended 30th September 2019 that the performance as per expectation will be in line with group’s management previous estimates. On 3rd December 2019, the group will release its results for the year ended 30 September 2019.

During the financial year 2019, the company witnessed a slowdown in demand mainly from China for the vital gears utilized in the industrial lasers for semiconductor and microelectronic business. However, the company’s life science products along with hi-reliability fibre couplers used in submarine networks, are at record levels.

The group reported a challenging period due to the continued US-China trade dispute coupled with a cyclical nature of the semiconductor equipment and microelectronics sectors, affecting sales and margins in certain markets. The company believes that technological novelty in end-market applications, like the introduction of new manufacturing techniques and 5G, combined with the market-foremost position, will eventually drive improved demand for industrial laser products.

The fibre optics division remained well-positioned with hi-reliability fibre couplers undergoing a multi-year development stage. The company had invested accordingly to take benefit of the market-foremost position in this region. Within the company, the life sciences division had currently established itself as a significant sector, due to the progress in the current life science market.

The company had delivered a decent order book in the new financial year. On 30th September 2019, the order book decreased by 1.8 per cent to £94.4 million as compared with the corresponding period of the last year, due to the impact of foreign exchange. The order book reflects robust demand for hi-reliability fibre couplers, fibre optics, and the A&D and life sciences capabilities, while industrial laser demand is still to recuperate to more normalised levels.

Outlook

This challenging macro environment is not expected to subside soon, resulting in lower guidance for an adjusted profit before tax for FY 2019 by £3.5-4.0 million and expectations that the industrial laser business will not return to normal levels in FY 2019. Revenue and profitability is also likely to decline as a result of price erosion due to the activities of competitors or the loss of market share.

Share Price Performance

On 9th October 2019, at the time of writing (before the market close, at 11:00 am GMT), GHH shares were trading at GBX 1,185, up by 0.42 per cent against the previous day closing price. Stock’s 52 weeks High and Low is GBX 1,900/GBX 897. The company’s stock beta was 1.04, reflecting high volatility as compared to the benchmark index. The outstanding market capitalisation was around £294.53 million, with a dividend yield of 0.95 per cent.

Audioboom Group PLC

Audioboom Group PLC (BOOM) is a Saint Helier, Jersey-based company, which provides an audio platform for distributing, hosting, and monetizing content. The group works with around 4,000 active podcasters, broadcasters, and content creators around the world, and hosting in more than 13,000 content channels. The company’s audio, cloud-based, SaaS (software as a service) platform permits the syndication, creation, and broadcast of digital audio content over several devices, networks and geographies. The company’s subsidiaries comprise of One Delta Limited, Audioboom Limited, Audioboom Pty Limited, and Audioboom Inc.

Q3 FY2019 Trading Update (as on 7th October 2019)

The company provided a trading update for the third quarter ended 30th September 2019. The trading result was in line with company management estimates. The company reported that revenue increased by 86 per cent to US$5.7 million in Q3 FY19 as compared with the corresponding period of the last year. For the nine months to 30th September 2019, the total revenue rose by 127 per cent to US$15.5 million against the same period in 2018. On 30th September 2019, the number of brand advertiser stood at 244, an increase of 15 per cent against the previous year same period data (30 September 2018: 168) and was also up from the prior period (30 June 2019: 212). For September 2019, the international revenue per 1,000 downloads (eCPM) surged by 28 per cent to US$27.38 as compared with the same period of the previous year. In Q3 FY19, the total available premium advertising impressions stood at 446 million, an increase of 66 per cent against the same period in 2018. For the nine months to 30 September 2019, the total available premium advertising impressions increased by 46 per cent to 1,138 million against the corresponding period of the last year. On 30th September 2019, company’s cash position stood at US$2.5 million, a decrease from the previous period (30 June 2019: US$3.4 million) but an increase from the same period in 2018 (30 September 2018: US$1.6 million).

Main Contracts

The company’s main contract renewals comprise the total football show, the morning toast, and “no such thing as a fish”. During the current quarter, the new AON (Audioboom Originals Network) shows launched the star of Netflix’s Fuller House, “Never Thought I’d Say This” hosted by Jodie Sweetin, and co-produced with Key Event Media, “After The Whistle”, and “A Life Lived” hosted by Lewis Moody. In Q3 FY19, the notable new shows signed by the company include Ohoney, Morbid, Limitless with Josh Patterson, Confessionals, Waveform with Marques Brownlee, rSlash, Silent Waves, Mental Podcast, 50 Facts Podcast.

Recent Developments

The company improved its technology partnership with Voxnest to deliver programmatic technology and ad-serving. The company had done the new partnership with international data and analytics company Nielsen. In New York City, the company started new production facilities and recording studios. The company also has a robust development pipeline of Audioboom Originals Network shows for presentations, scheduled in the 4th quarter of 2019 and the 1st quarter of 2020.

Outlook

Amid all the headwinds faced by the company. The overseas markets also provide a challenging condition for the company. However, amidst all the favourable micro- and macro factors, the downside risk overweighs the prospects of the company. The company’s international reach presents many possibilities within the digital marketplace. This platform will create new commercial prospects as audio and podcasting continue to attract international investors.

Share Price Performance

On 9th October 2019, at the time of writing (before the market closed, at 11:05 am GMT), BOOM shares were trading at GBX 173.50, up by 2.06 per cent against the previous day closing price. Stock’s 52 weeks High and Low is GBX 284/GBX 90.10. The company’s stock beta was 1.99, reflecting high volatility as compared to the benchmark index. The outstanding market capitalisation was around £23.95 million.

Infrastrata PLC

The United Kingdom based InfraStrata PLC (INFA) is involved in the construction and development of gas storage and related facilities. The group is concentrating on its Islandmagee Gas Storage Facility situated in County Antrim. The group’s operations are located in two regions: Dorset and Northern Ireland. The company’s subsidiaries comprise Portland Gas Limited, Portland Gas Storage Limited, and Islandmagee Storage Limited.

Recent News

On 4th October 2019, the company announced that it had received a notice to convert £100 thousand of the £700 thousand drawn down from the 2.2 million pounds loan facility released on 1st October 2019 into 26,295,030 new ordinary shares of 0.01 pence in the company at a price per new ordinary share of 0.3803 pence. The new ordinary shares had been allotted in 2 equal amounts to the providers of the Loan, YA II PN Limited and Riverfort Global Opportunities PCC Limited. The principal balance of the Loan had decreased to £600 thousand. The company is anticipated that admission will occur on or around 10th October 2019.

On 1st October 2019, the company announced that they had entered into heads of terms to buy the principal assets of Harland and Wolff Group Plc and Harland and Wolff Heavy Industries Limited from administrator BDO NI for a total value of 6 million pounds.

Islandmagee Gas Storage Project Update (as on 2nd October 2019)

The company informed that the residual indicators planned for September 2019 at the Islandmagee Gas Storage venture in Northern Ireland had now been accomplished. Further, 2019 milestones are on the path to be accomplished on time.

The group’s board continues to work in tandem with the DAERA (Department of Agriculture, Environment and Rural Affairs) and NIEA (Northern Ireland Environment Agency) as it progresses towards achieving the full marine licence. The group’s board was further advancing the negotiations with debt and equity partners with the objective of taking the conclusive investment decision for the Islandmagee project towards the end of 2019.

John Wood, as an Interim Chairman and CEO of the Company

John Wood said that the company had accomplished additional milestones for the Islandmagee Project. The company is also confident of seeing the level of support the broader Northern Irish community and the project are getting from main investors, who comprehend the important necessity for the project in order to generate employment, deliver security of energy supply, and deliver a financial improvement to the Northern Irish economy. When the project is accomplished, the acquisition of the Assets (the Harland and Wolff Group PLC) will decrease the Capex and will also reduce the construction timeline.

Share Price Performance

On 9th October 2019, at the time of writing (before the market closed, at 11:07 am GMT), INFA shares were trading at GBX 0.49, up by 4.26 per cent against the previous day closing price. Stock’s 52 weeks High and Low is GBX 2.17/GBX 0.39. The company’s stock beta was 1.15, reflecting high volatility as compared to the benchmark index. The outstanding market capitalisation was around £7.01 million.

Stock price comparison of GHH, BOOM, and INFA on the London Stock Exchange over the past month along with that of FTSE AIM All-Share index.

 (Source: Thomson Reuters)