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15 Oct 20

Strong trading update

The Group has issued a trading update ahead of its interim results due on 12th November 2020. Overall, the first half has seen a strong recovery in activity and the Board now expects to report H1 revenues and operating profit of at least $200m and $20m respectively. This is materially ahead of market expectations and with a high degree of visibility through Q3 FY2021E we are upgrading our operating profit forecasts by 39% and 25% for FY2021E and FY2022E respectively. The Group is seeing strong growth in EV charging cables and bespoke high-performance cabling solutions, and consumer electronics demand has also remained robust. Together with investment in automation and cost efficiencies, the Group operating margin is now 10%, which is a testament to management’s operational and strategic focus. The shares trade on an FY2021E EV/sales multiple of 0.9x which compares to a sector based multiple of c.1.2x for companies with comparable operating margins and growth.

Companies: Volex plc

19 Oct 20

Bioventix - FY 2020 results

Bioventix reported a strong set of full-year results, that were 8% above expectations, assisted in part by a c.£0.2m (+3%) FX benefit, which helped offset the obvious drag on performance in Q4 due to the impact of COVID-19 on routine testing in hospitals. A 53p special dividend was proposed, resulting in a full-year dividend of 141p, up 18%. Due to the COVID-19-related disruption to testing, which only exacerbates the poor visibility to customer royalty streams, we are withdrawing forecasts until normality returns. That said, the business remains in very good shape, with evidence that: (i) high sensitivity troponin is gaining momentum; (ii) physical antibody sales growth remains robust (+34%); and (iii) progress in its development pipeline (particularly pollution monitoring programme) is being made. The business is expected to remain cash generative, and with c.£8.1m of cash at 30 June, the company is a strong position to weather this period of disruption before returning to growth.

Companies: Bioventix Plc

19 Oct 20

Tristel - FY 2020 results

Full-year results were 4% above expectations, with revenues and adjusted pre-tax profit rising 21% and 27%, respectively, boosted in part by acquisitions in FY 2018 and 2019 but also from COVID-19 related buying, particularly Cache surface disinfection products. We raise FY 2021 adjusted pre-tax profit by 3% to £7.2m and introduce FY 2022 forecasts, which point to c.11% EPS growth. FY 2021 growth is held back by the stated c.£0.75m commitment to developing a fuller pipeline of products to take to the FDA/EPA and Canada Health. We view this as a strong endorsement of the progress that has been made to date. We also lift our target price to 500p on the back of a small FY 2021 upgrade and outlook for growth in 2022, supported by renewed commitment and resourcing for North American regulatory approvals.

Companies: Tristel Plc

19 Oct 20

Highly scalable platform in growing self-care brands

Venture Life aims to become a global leader in the self-care branded product market, where there are a number of structural growth drivers. It has a unique and scalable platform to develop, manufacture and distribute products, including its own brands and international customers’ brands. What is already a high margin business is poised to deliver a compelling mixture of top line growth with significant operating leverage. Performance in H1 (EBITDA +347%) highlights the potency of VLG’s model. Acquisitions can also leverage the platform to drive growth, and management has a very strong track record here. On top of this exciting growth play, there is also a chance that its Dentyl dual-action mouthwash could have applications to slow/reduce CV19 transmission, adding to the upside potential.

Companies: Venture Life Group Plc

20 Oct 20

Open Orphan - £10m COVID-19 challenge contract with UK Govt

ORPH has signed a contract with the UK Government for the development of a COVID-19 human challenge model. This will involve manufacture of the challenge virus and a first-in-human characterisation study. The contract begins immediately and is likely to be worth c.£10m. The government has also reserved the first three slots to test vaccines using the challenge study at a total cost of £7.5m. We revise our forecasts and increase our SOTP target price to 28p (range 25-31p), reflecting ORPH’s world-leading position in traditional challenge models, and now COVID-19 challenge models, with additional upside from the potential development of new challenge models, the monetisation of valuable challenge model data and the potential sale of its non-core pharmaceutical assets.

Companies: Open Orphan Plc

20 Oct 20

Open Orphan* - Material UK Government COVID Study Contract

Open Orphan has announced a contract with the UK Government to develop and perform the UK's first COVID-19 (COVID) human challenge studies. The multi-faceted agreement provides strong endorsement and validation of hVIVO's capabilities, with material revenues driving forecast upgrades and further upside risk to earnings as pipeline conversion continues and industry awareness and penetration of challenge studies accelerates.

Companies: OPORF ORPH CRO VENN

14 Oct 20

SP Angel Healthcare Conditions

Kromek (KMK.L): New R&D project in cancer surgery

Companies: Kromek Group Plc

16 Oct 20

Synairgen - £80m funding for COVID-19 study and supply chain

Synairgen has raised £80m to fund a Phase III trial for SNG001 in COVID-19 disease, which is due to commence in Q4 2020 and will be run globally by Parexel, with results expected in Q2 2021, and scale up manufacturing. This follows a successful pre-IND meeting with the FDA, which provided the guidance to commence such a study. Assuming that this trial replicates the results seen in the 100-patient Phase II trial, we would expect Emergency Use Approval (EUA) to follow shortly thereafter. Meanwhile, the Managed Access Programme (MAP) in the UK and Europe, run by Clinigen, could generate early commercial revenues. We have made adjustments to forecasts to reflect these costs and raise our SOTP rNPV target price to 420p, which could rise further should stockpiling orders be received.

Companies: Synairgen plc

20 Oct 20

Cenkos: TP Group Plc -- Interim Results

TP Group (TPG) delivered robust organic growth of 13% during H1/20A. However, the impact of COVID-19, together with increased investment and a shift in business mix, meant that Adj EBITDA reduced by £0.9m YoY to £1.4m. TPG has today announced it is in advanced discussions to dispose of its non-core oil and gas focused engineering business. Despite the strong and expanding order book, COVID-19 continues to create uncertainty around the timing of contract deliveries. As such, our forecasts remain withdrawn and our rating Under Review.

Companies: TP Group Plc

14 Oct 20

Mercia Asset Management - Life sciences helping the COVID-19 fight

Life sciences is one of Mercia’s areas of focus and investment expertise. Seven of Mercia’s top 20 holdings at 31 March 2020 were in life sciences, valued at £29m in aggregate or 33% of total portfolio value (all of which had originated through Mercia’s third-party managed funds), with another c 40 earlier-stage life sciences investments across its third-party managed funds. COVID-19 has accelerated the opportunity for a new generation of novel and recombinant vaccines. This explosion of potential new treatments will require new diagnostics and bio-manufacturing support to scale supply once they are approved. These are areas where Mercia is already invested.

Companies: Mercia Asset Management PLC

20 Oct 20

Solid State - Encouraging H1 trading update

The group’s H1 trading update is reassuring, with a strong first half, pointing to a continuation of previously indicated trading patterns. Revenue and profit has been resilient, while cash flow has been strong, returning to normalised patterns having repaid PAYE and VAT and also its final dividend in September. H1 trading benefited from a strong order book heading into the lockdown and due to some delays in order intake over recent months has an order book around 7% less than last year. Management is cautiously optimistic, but still considers that the trading outlook remains uncertain, so guidance remains withdrawn. As such, we look to the December interims to resume forecasts, when order visibility will be clearer.

Companies: Solid State plc

13 Oct 20

Velocys - Interims

Velocys has shown real progress in the first half of FY 20 and done this while significantly reducing costs. This reflects the company’s move to a more efficient development strategy focused on demonstration projects followed by a licencing and royalty model. We see the interim numbers and achievements as evidence of this strategy paying off and we think it leaves the company well placed to maximise development going forward.

Companies: Velocys plc

16 Oct 20

Cenkos: Trinity Exploration and Production Plc --Q3/20 update

Despite the absence of new drilling activity, Trinity's Q3/20 production has remained robust, averaging 3,135bopd - an 11.3% YoY increase (Q3/19: 2,816bopd). YTD 2020 average production volumes have averaged 3,232bopd, a 9.8% YoY increase (YTD 2019: 2,943bopd), with 2020 production guidance remaining unchanged at 3,100-3,300bopd. Oil price realisations YTD 2020 have averaged US$37.3/bbl and, as a result, no Supplemental Petroleum Tax (SPT) will be payable in respect of the first three quarters of 2020. Cash as at 30 September 2020 was US$22.2m (30 June 2020 US$19.7m). Elsewhere, we view the proposed Budget reforms to the SPT regime as an important step forward by the Trinidad and Tobago Government and a recognition that SPT needs reforming. The proposed reforms will enhance cash flows between US$50-US$75/bbl and therefore allow companies to invest to grow production and deliver attractive returns for shareholders. We update our valuation and reiterate our price target at 31p per share, a 250% premium to the current share price.

Companies: Trinity Exploration & Production Plc

19 Oct 20

WHI Morning Comment: Judges Scientific (JDG) - Acquisition – small but well formed – small upgrades to FY2021E

Judges Scientific is focused on acquiring and developing companies in the scientific instrument sector. The acquisition of Korvus Technology, a UK-based but global supplier of vapour deposition systems, largely to academic institutions, marks Judges' third deal in less than 12 months. With Korvus generating revenues of £1.42m and adj. EBIT of £0.66m (46% margin), we choose to leave our FY2020E estimates unchanged but, after financing costs (all-cash initial consideration of £2.64m), we see a 3.5% uplift to FY2021E with our adjusted PBT increasing to £15.2m. Although a trading update is not provided this morning, we remain cautiously optimistic with respect to FY2020E. COVID-related business risks / restrictions remain; however the relative strength of H1:2020 (albeit at some expense to the order book) continues to provide some comfort, in our view.

Companies: Judges Scientific plc

14 Oct 20

Verditek (VDTK): Light, durable and potential for significant growth

Verditek’s core lightweight solar PV business is positioned in an attractive secular growth market with strong regulatory and technological drivers. Recent management changes have resulted in the company focusing on sales execution and moving the business into the initial phase of commercialisation. With first orders for its solar PV modules already in place, the company should report its first revenues later this year. Recent contract wins in the oil gas and mining sectors will act as reference contracts for future wins in the off grid solar market. In addition to energy and mining, significant opportunities exist for Verditek’s lightweight and durable solar PV product in the marine, telecoms, residential housing, commercial real estate and transport sectors. From its plant in Italy, the company has sufficient manufacturing capacity to produce up to 60 MW per year of solar modules (based on triple shift production). The Paragraf joint development program (to produce a graphene integrated solar PV cell provides a source of substantial optionality within the solar business.

Companies: Verditek Plc

20 Oct 20

Pharnext - R&D day highlights

Pharnext held an R&D day on 13 October 2020. It presented an updated vision of the state of Charcot-Marie-Tooth disease (CMT) and the company’s pathway to the approval of PXT3003, its therapy candidate for CMT type 1A, which is entering Phase III studies in Q121. The presentation provided an updated analysis of the planned endpoints of the study, including the primary endpoint of improvement in Overall Neuropathy Limitations Scale (ONLS). Additionally, the company provided an updated clinical plan for the study, which will follow 350 patients for 15 months.

Companies: ALPHA P0X PNEXF

20 Oct 20

Cost control leads to better than expected profits

Kuehne and Nagel posted a good set of numbers particularly for profitability even though sales were moderately lower. Cost control measures, the recovery in the sea freight market and a good positioning in pharma and healthcare bode well for the future.

Companies: KHNGF 0QMW KNIN KNIA

20 Oct 20

SGT German Private Equity - New name, new business, new shareholder

SGT German Private Equity (SGT, formerly German Startups Group, GSG) reported a minor €0.2m net loss in H120, following the deconsolidation of Exozet in FY19. The company is currently in a merger process with a private equity asset manager SGT Capital. Meanwhile, as at end-June 2020, SGT’s main operations covered a portfolio of 22 minority stakes in non-listed entities, which is expected to gradually wind down. Recently SGT announced the disposal of its Fiagon stake at a 2.0x exit multiple.

Companies: SGT German Private Equity GmbH & Co. KGaA

20 Oct 20

Open Orphan signs UK government contract to development COVID-19 Human Challenge Study Model

20 Oct 20

A record Q3 20 and a reorganisation implemented

Husqvarna had a record Q3 20 with organic sales growth of 22% driven by the Husqvarna (+27%) and Gardena (+26%) divisions. The group benefited from the stay-at-home trend related to the COVID-19 pandemic and the good weather in various geographies. The positive impact was significant on the operating margin (10.4% of sales, +5.5pts) so that the rolling 12m operating margin (10.3% of sales, +1pt yoy) exceeded the medium-term target. The group implemented a reorganisation to increase efficiency.

Companies: HUSQB HUSQB HRZ HUSQF

20 Oct 20

Momentum accelerates for Connected Care in Q3; Personal Health back in black

Philips returned to growth in Q3, driven by robust demand for patient monitors and ventilators and a solid rebound in Personal Health. D&T also saw an improvement, though it is still in the red. Profitability improved considerably, benefiting from operational leverage and productivity measures. Management anticipates low single-digit sales growth for FY21 and an acceleration in the mid-term (+5-6%) with all segments growing within this range. The EBITA margin is likely to improve 60-80bp annually, reaching the high teens by FY25.

Companies: Koninklijke Philips N.V.

20 Oct 20

Despite missing the street's expectations...

... Yara lifted FCF as well as ROIC to new levels. Operating figures were impacted by various effects, the most dominant one being lower sales prices. The impact of lower energy prices started to level out earlier than expected. This was not well explained as management shared future gas prices. Incidentally, AlphaValue had removed the share from the active portfolio just some days ago as investors had bought more into risk.

Companies: Yara International ASA

20 Oct 20

Clear Leisure 'turns page and moves on' after resuming trade on AIM

20 Oct 20

Hikma Pharmaceuticals and Arecor strike a second strategic partnership deal

20 Oct 20

SP Angel . Morning View

BHP (BHP LN) – FY2021 production and cost guidance largely unchanged following strong September quarter | Petra Diamonds (PDL LN) – Financial restructuring agreement | Scotgold Resources* (SGZ LN) – BUY, target 182p – Earnings update | Vale (VALE US) – Q3 iron ore production rises QoQ and YoY

Companies: BHP PDL SGZ VALE

20 Oct 20

Oil & Gas Daily Flow

Valeura Energy (VLU LN) Sale of shallow gas business for up to US$18m | Solo Oil Plc (SOLO LN): Helium One receives licence renewals at Rukwa

Companies: Valeura Energy Inc. (VLU:LON)Solo Oil Plc (SOLO:LON)

20 Oct 20

SP Angel Healthcare Conditions

ANGLE plc (AGL.L): Acceptance of FDA submission | Feedback plc (FDBK.L*): Partnership agreement | Open Orphan (ORPH.L): Human Challenge Study Model contract with UK Government

Companies: AGL FDBK ORPH

20 Oct 20

The contrarian's corner: buy it

The Q3 20 performance was much better than in Q2 20, the latter having been twice better than peers, retrospectively. Both footfall and retailers’ sales are back to normative levels, as far as Mercialys is concerned. We admit that the crisis is far from ending. However, we believe that the risk reward is improving progressively.

Companies: Mercialys SA