16th Apr 2020. 8.59am

Regency View:


Regency View:


Highland Gold Post Double-Digit Earnings Rise

Our primary gold position, Highland Gold Mining (HGM) is enjoying a market-beating run due to a resurgent gold price.

The little Russian miner released an impressive set of full-year 2019 numbers this week which saw revenues climb 27% to $395.4m and pre-tax profit surge 47% to $158.7m. The performance was fuelled by a strong underlying gold price and a fall in the Russian rouble due to the COVID-19 outbreak.

Full-year 2019 output came in at 300,7040z of gold equivalent, a 12% annual rise from 269,500oz in 2018 and slightly above Highland’s production guidance range of 290,000oz – 300,000oz.

All-in sustaining costs rose by 16% to $791 per ounce, partly due to the impairments at its Belaya Gora and Valunisty projects.

Highland have also increased their dividend by 0.7% higher to 15.3p per share.

Given the currency and gold tailwinds, it’s no surprise to see that Highland is a standout performer in our portfolio. The shares are now trading just 10% below their 10-year highs at 257p and we’ll be monitoring price action closely should this area get tested.

HGM 1-Year Chart

HGM 1-Year Chart

Eckoh reports another “record year”

Eckoh (ECK) released a bullish trading update last week reporting “another record year” for its business with double-digit revenue growth across the group.

The secure payments specialist saw their order book grow by 10% to £35.9m for the year ended March 31st.

In the UK, Eckoh said the business had seen “significantly higher order levels” in the second half of the year as a number of larger contracts renewed earlier than scheduled.

Across the pond, Eckoh’s US business is looking equally as robust. CEO Nik Philpot stated that they continue to benefit from their position as “the preferred supplier for large enterprises to secure payment data in their contact centre operations”, adding that its sales pipeline remained “extremely strong” despite the COVID-19 outbreak delaying the conclusion of some “significant deals” beyond March 31st.

Whilst Eckoh withdrew its guidance for the year due to the disruption caused by COVID-19, it said it remained “confident” for its prospects and that it had maintained its service levels.

A glance at Eckoh’s price chart shows that the market is yet to be fully convinced by Mr Philpot’s bullish rhetoric. However, Eckoh is a clear candidate to bounce back very quickly should lockdown in the UK and US end earlier than anticipated.  

ECK 1-Year Chart

ECK 1-Year Chart

D4T4 Lowers Full-Year Guidance as Business Model Shifts

D4T4 Solutions (D4T4) said it expects annual earnings to come in below expectations on customers switching to recurring software-as-a-service contracts.

The ‘Big Data’ analytics firm expects revenue for its financial year to the end of March to be £21.7m, down from £25.2m the year before. Adjusted pre-tax profit is expected to come in close to £5m, 20% lower than 2018.

The drop is largely due to clients moving away from one-off perpetual license contracts to recurring software-as-a-service contracts where revenue is recognised over a longer period. D4T4’s recurring revenue jumped 30% during the period and now represents 46% of the total group revenue.

CEO Peter Kear commented:

“Despite the backdrop, and at the time of writing, we are upbeat about our prospects as we continue to see good levels of sales activity amongst both existing and potential new corporate clients”.

We can see from D4T4’s share price that the market has actually welcomed this news and the shares have started to rally sharply during the last two weeks. With much of the bad news now priced in, we would expect to see this recovery continue.

D4T4 1-Year Chart

D4T4 1-Year Chart

Shifting Gears to Digital Delivery

Racing game maker Codemasters (CDM) are seeing an accelerating transition towards digital delivery due to the COVID-19 outbreak.

In a trading update released last week, Codemasters said that the digital transition had lead to increased profit margins. The firm anticipates full-year 2020 revenues of approx £76m versus £71.2m in 2019 and adjusted earnings is set to come in “comfortably ahead of expectations” at £18.1m.

As mentioned in our recent double purchase of Frontier Development (FDEV), we like gaming stocks and believe they are well insulated from the impact of COVID-19. Codemasters gapped higher on their trading update and now look to be resuming their long-term uptrend.

CDM 1-Year Chart

CDM 1-Year Chart


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