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Research Tree provides access to ongoing research coverage, media content and regulatory news on Novozymes. We currently have 18 research reports from 1 professional analysts.
Novozymes reported mixed Q4 19 numbers – missing on topline but beating bottomline estimates. Sales came in at DKK 3,731m, up 1% on an organic basis, led by growth in Household. EBIT came in at DKK 922m and management proposed a final dividend of DKK 5.25/share. For FY 20, management expects topline growth of 1-5%, EBIT margin at ~27% and buybacks worth up to DKK 1.5bn. Following the Q4 numbers, we will be tweaking our estimates.
Novozymes reported soft Q3 19 numbers – missing estimates. Sales came in at DKK3,704m, up 1% on organic basis – driven by Household and Agriculture & Feed. EBIT came in at DKK852m with the associated margin at 23%. However, excluding on-offs, the underlying margin came in at 30%. Management re-iterated its FY 19 guidance: top-line growth of -2% to -0%, 27-28% EBIT margin and -5% to -0% net income growth. Following the soft Q3, we will be revising our estimates marginally downwards.
In an announcement post-market close yesterday (9 October), Novozymes cut its FY 19 guidance for the third time this year (citing a slower-than expected recovery in bioenergy, a weakness in global agriculture and a softness in the US grain processing market). FY 19 organic revenue growth is now expected to be -2% to 0%, the EBIT margin at 27-28% and net profit growth of -5% to 0%. Following the latest guidance cut, we will be reducing our estimates and target price.
Novozymes reported soft Q2 19 numbers – missing street consensus but meeting our estimates. Sales were down 2% on an organic basis – driven by Agriculture & Feed and Food & Beverages. Q2 EBIT came in at DKK1,189m. Management re-iterated its FY 19 guidance: top-line growth of 1-3% and an EBIT margin of 28-29%. Following the largely in line Q2 numbers (vs our estimates), we do not expect any significant changes to our estimates or recommendation.
Novozymes reported soft Q1 2019 numbers. Sales declined 4% on an organic basis, led by an 8% drop in Bioenergy and a 6% drop in Agriculture & Feed revenue. The EBIT margin came in at 25.7%, a 3.2ppt drop from Q1 18 – driven by higher raw material and staffing costs. Following the soft Q1, management lowered FY 2019 top-line guidance to 3-5% from 3-6% earlier and continues to expect an EBIT margin of 29-30% and 5-10% growth in net income.
FY2018 results slightly missed our estimates. The Middle East crisis took a heavy toll on the performance of the Household, Food & Beverage and Technical & Pharma segments. The US policy paralysis on E-15 framework negatively affected Bioenergy’s growth, which was more than offset by the robust demand originating from the emerging markets. FY2019 revenue growth outlook was widened on the lower side, while the EBIT margin outlook remained largely unchanged. We will revise our estimates downwards. No change in the stock recommendation.
The Q3 results were below our estimates and market expectations. Each segment continues to tussle with its respective problems and adopt mitigating strategies. We expect Household segment to end its year in positive territory. Our optimism on the Bioenergy segment is fuelled by recent events in the US, China and Brazil. We understand that new product launches are still in the nascent stages. Thus, we opt for a watchful approach. Estimates are revised upwards. No change in stock recommendation.
The company Q2 results were below our estimates. Revenue increased 5%, in-line with our estimates, whereas operating margin came-in 60bp lower than our expectation (+27.4%). Revenue from Household declined, whereas Bioenergy’s current momentum gained further strength (benefitting from the pickup in the US and global ethanol production). Moving forward, the company’s strategy to expand the geographical outreach of its (latest) freshness and hygiene product-line is rightly placed. We have increased our estimate upward. No change in the stock recommendation.
The company reported its Q1 results which came in below our estimates. Its biggest segment, household, came back into the black after being in the red for a quarter, benefiting from the robust demand from regional players. Both Food & Beverages and Bioenergy witnessed a weakening of last year’s growth momentum, whereas Agriculture & Feed revenue fell for the second straight quarter on the back of lower BioAg and animal feed revenue. We have revised our estimates slightly downward. No change in our stock recommendation.
FY 17 was a mixed bag for Novozymes, with F&B and Bioenergy thriving but the high potential Agriculture & Feed segment being held back by low crop prices in the US. With most end markets expected to remain challenging in the near term, the outlook for the company remains soft. Increased investments in R&D, manufacturing and emerging markets are likely to keep margin progression in check. We remain cautious and maintain our Sell recommendation on the stock.
Coming on the heels of a strong Q4 16, Novozymes reported another healthy quarter with Q1 17 sales marginally ahead and net profit in-line with both consensus and our estimates. Organically, sales nudged up 3% (ahead of management’s own guidance of flat growth) to DKK3.7bn, driven by growth across all segments, with the exception of Technical & Pharma (flat growth vs. 37% in Q1 16). This, along with a 2% currency gain and a 1% acquisition impact, lifted reported sales growth to 4% (second straight quarter of yoy expansion, both organically and on a reported basis). Organically, Food & Beverages (6% vs. 4% in Q4 16 and 2% in Q1 16) and Bioenergy (6% vs. 7% in Q4 16 and -6% in Q1 16) led the charge while Household Care (1% vs. 5% both in Q4 16 and Q1 16) and Agriculture & Feed (2% vs. 22% in Q4 16 and -8% in Q1 16) disappointed. On the profitability front, the adjusted operating margin (excluding the c.DKK75m one-off cost related to layoffs) improved to c.29% from c.28% in Q1 16 supported by productivity improvements, but partially offset by adverse pricing/mix change. Despite a lower tax rate (21% vs. 22% in Q1 16), DKK12m of forex losses in the quarter meant that the net margin remained flat at 20.6% (3.6% yoy growth to DKK771m). Geographically, growth was driven by the developing markets of Latin America (+13%) and Asia-Pacific (+5%), while the developed markets of EMEA and North America (together contributing c.70% of revenue) remained soft (+3% and 0% growth, respectively). Despite the better-than-expected Q1 result, management maintained its previous guidance for the year (2-5% organic, 3-6% reported) citing end-markets risks/uncertainties. Separately, Novozymes recently announced that its CFO Benny D. Loft will be leaving the company by 1 September 2017, after 17 years with the organisation (ten years as CFO).
After a string of disappointing results, Novozymes ended the year on a strong footing with both Q4 and FY 16’s numbers coming slightly ahead of ours as well as consensus estimates. After a poor Q3 (sales contracted 4% and 3% on a reported and organic basis, respectively), sales rebounded 8% (6% organic and a 2% positive currency impact) to DKK3.7bn driven by surge across segments, except for Technical & Pharma (-17% reported basis and -12% organically). The outperformance was primarily driven by a sturdy performance in Agriculture & Feed (+22% vs. -3% in Q3 16, organically) and a turnaround in Bioenergy (+7% vs. -8% in Q3 16, organically) segments. Healthy performances from the larger segments – Household Care (+5% vs. -5% in Q3 16, organically) and Food & Beverages (+4% vs. -2% in Q3 16, organically) also supported the quarterly uptick. Strong sales performance percolated down to profitability too with EBIT growing 10% to DKK1,062m. For FY 16, revenue inched up 1% (2% organic and -1% currency impact) while EBIT rose by c.2% (EBIT margin slightly up to 27.9% vs. 27.7% in FY 15). The dividend has been upped by 14% to DKK4 per share, while a new share buy-back programme of DKK2bn running over FY 17 has been announced. The FY 17 sales growth guidance of 3-6% (in DKK) and 2-5% (organically) is below its long-term ambition (6-7% organically). On the profitability front, management expects EBIT growth to range 3-6% (margin: c.28%) and net profit to expand 2-5%. Also, to ramp-up capacity and fuel innovations, management intends to increase investments in the next few years (DKK1.7-1.9bn guided for FY 17 compared to DKK1.2bn in FY 16).
Yet another disappointing quarter for Novozymes – in fact, it witnessed a decline at both the organic and reported level for the first time in a long period. Both sales and net income were below (all ~ 6%) our, as well as consensus, expectations as all the segments turned negative organically, except for the smaller Technical & Pharma (+16%). The reported sales decline of 4% at the group level was a function of 3% organic contraction and 1% negative currency impact, to DKK3.4bn. Segment-wise, Household Care and Food & Beverages fell by 5% and 2% (all sales growth rates in organic terms, unless otherwise specified), respectively, after 4% growth in Q2 16. Moreover, as expected, the Bioenergy segment contracted at an accelerated pace (-8% vs. -6% in both Q2 16 and Q1 16) while the Agriculture & Feed segment again turned negative (-3% vs. 13% (including the impact of deferred income) in Q2 16 and -8% in Q1 16). Lower sales translated into an adjusted operating profit decline of c.4% to DKK973m. Lower net financial expenses (DKK14m compared to DKK53m in Q3 15) and the tax burden (DKK205m vs. DKK216min 3Q 15) rendered some support to net income, which was up by c.1% to DKK750m). In effect, management has materially (for the fourth time in the year) downgraded its guidance. Organic sales are now expected to expand by c.2% from the previous 2-4% while in DKK terms it is 0-1% from the previous 1-3%, EBIT to grow by 1-2% from the previous 1-3%, net profit to increase by 8-9% from the previous 8-10%). However, the EBIT margin expectations remain unchanged at c.28%.
Novozymes reported unsatisfactory Q2 16 results, below both consensus as well as our expectations, primarily on lower than expected sales from the Agriculture & Feed segment. After successive growth in multiple quarters, sales contracted 1% in reported figures to DKK3.4bn following a negative currency impact of 5% (pervasive across all the segments) that more than eclipsed the 4% organic sales expansion. On the positive side, both Household Care and Food & Beverages segments grew moderately at 4%. Technical & Pharma also expanded robustly, albeit at a slower pace qoq (+9% vs. +37% in Q1 16) while Bioenergy continued its deceleration (-6%). However, the major disappointment stemmed from Agriculture & Feed which, although it grew ~5% organically (excluding the impact of deferred income), reflected a substantial slowdown from last year (+19% in FY 15) and dented the expectations of solid growth for the year (now moderate growth expected). On the profitability metrics, adjusted operating profit declined c.2% to DKK961m (margin down by 40bp to 28%) while a lower net financial expense of DKK6m compared to DKK48m in Q2 15 augmented attributable net profit by 10.0% to DKK750m (margin up by 2.1ppt to 21.9%). Factoring in the Q2 sales performance and the unexpected weakness in BioAg resulting from uncertainties in the end-markets, management has downgraded its guidance for the third time this year (organic sales growth range decreased to 2-4% from the previous 3-5%). However, the sales growth range in DKK (1-3%) and other profitability forecasts (EBIT margin: ~28%, EBIT growth in DKK: 1-3% and net profit growth: 8-10%) remain unchanged.
Novozymes’ Q1 16 top-line number came in slightly below our expectation (although largely in line with consensus estimates), while profitability remained strong. Sales grew 2% yoy (sales growth rates in organic terms, unless otherwise specified) and 1% in DKK (following waning currency tailwinds) to DKK3.6bn, driven by the Household Care and Technical & Pharma segments, offset partially by weakness in the Bioenergy and Agriculture & Feed segments. The adjusted EBIT margin (excluding the reorganisation costs of c.DKK70m) was up c.90bp to c.28.3% (including the DKK70m reorganisation costs, it declined c.100bp to 26.3%) led by productivity improvements and a slightly favourable product mix. Hedging gains and a lower effective tax rate allowed net profit to improve 5% to DKK745m. Following the unfavourable movement in exchange rates, the company has downgraded its FY 16 reported sales and EBIT growth guidance to 1-3% (down from the earlier 3-5%). However, organic sales growth, EBIT margin and net profit growth expectations remain unchanged at 3-5%, 28% and 8-10%, respectively. Management expects Q2 16 organic growth to be higher than in Q1 16, mainly on account of easier comps. Amid the challenges being faced by the company, it has announced major organisational and leadership changes (in February 2016), in an effort to streamline operations and become more customer centric. It has consolidated its earlier structure of five divisions into three (Household Care & Technical Industries, Agriculture & Bioenergy and Food & Beverages), appointing new heads for the three new divisions. In addition, it has formed a central Research, Innovation & Supply centre, with COO Thomas Videbæk as its head. While Thomas Nagy, Head of Supply Operations, has left the company, Per Falholt stepped down as head of R&D but is continuing to serve the company in a consulting role.
Research Tree provides access to ongoing research coverage, media content and regulatory news on Novozymes. We currently have 18 research reports from 1 professional analysts.
Bioventix delivered a strong set of interims, with revenues up 21%. Given the 9% decline in operating expenses, this resulted in a 31% increase in adjusted EBITDA, with adjusted pre-tax profit also rising 31% to £4.4m (52% of full-year forecasts) and adjusted EPS up 29% to 69.4p. An interim dividend of 36p was declared (+20%) with net cash at period end of £5.5m. Growth was driven by both Vitamin D antibody sales/royalties (+c.25%), its portfolio of other antibodies (+c.12%) and a more meaningful contribution from troponin. Given the inevitable disruption that COVID-19 will have to some testing volumes (although tests such as NTproBNP are likely to benefit from high risk COVID patients), we leave forecasts unchanged, confident that the strong H1 and weaker sterling in H2 should offset any potential H2 trading shortfall. We leave our forecasts unchanged and reiterate our 3750p target price. At this level, the stock would trade on a 30x FY 2020 P/E with a free cashflow yield of 3.1x
With the moratorium on publishing audited preliminary results in place, EKF has instead provided a comprehensive trading update with headline FY19 financials and an update on the outlook, including regarding the potential impact of Covid-19. In short, no impact has been seen to date and, whilst ordering patterns may experience some short term disruption, the testing of vulnerable groups such as Diabetes and Anaemia patients is more important than ever. Added to that, EKF has recently entered into a contract manufacturing agreement to produce sample collection tubes for Covid-19 testing in the US, with initial orders of $1m expected to grow significantly in the coming weeks. At the very least, this should compensate for any short term hiatus in ordering patterns in the core business. Net cash of £14.3m gives a substantial financial buffer and news the board still intends to pay a maiden dividend of 1p (>5% yield) is a strong signal of confidence. In short, we remain extremely confident in EKF’s business model and prospects.
Companies: EKF Diagnostics Holding
We are initiating coverage on specialist pharmaceutical services provider Ergomed. We believe it should prove relatively resilient during the COVID-19 crisis and has the fundamentals in place to execute its growth strategy. Ergomed announced impressive audited numbers for FY19, with revenue up 26% to £68.3m and EBITDA up 5.5x to £12.5m. The FY19 announcement is effectively Ergomed’s fourth profit upgrade for FY19 and a small beat on recently reset FY19 expectations. Ergomed trades at a discounted EV/EBITDA of 10.1x vs the contract research outsourcing (CRO) sector average of 11.5x (FY20). We value Ergomed at £186m or 399p/share. Ergomed’s strong organic growth is benefiting from a clear strategic focus on high growth pharma sectors, margin control and order book growth (up 15% to £125m in FY19, giving 90% visibility to 2020).
Synairgen has raised £14.0m to fund a Phase II trial for SNG001 in COVID-19 disease, which is due to commence enrolment imminently after gaining rapid permissions for the UK’s MHRA and HRA. This is a significant breakthrough for the company and the global fight against COVID-19, having achieved these permissions ahead of the expected rapid increase in number of hospitalised COVID-19 patients. A successful outcome from the pilot phase will have substantial commercial value. The risk/reward profile, given earlier evidence that SNG001 has a beneficial in vitro effect in MERS and SARS coronaviruses and has been shown to be safe and well tolerated in asthma/COPD patients, is skewed significantly to the upside, particularly given the potential for first revenues in 2020. Not only would a positive trial help to address the current COVID-19 crisis but it could enable governments to stockpile a broad-spectrum antiviral product for future pandemics. We introduce a 120p target with potential further upside.
MaxCyte’s (MXCT's) deal with clinical-stage industry leader Allogene Therapeutics (ALLO) is a clear endorsement of the features of its Flow Electroporation technology for enabling the production of the next generation of ‘off-the-shelf’ CAR-T therapies. Not only is this an impressive deal since ALL
Fundamentally, EKF is an attractive investment proposition but its shares have been range-bound for the last couple of years. This note previews the upcoming results and looks at a number of potential catalysts that could add materially to revenues over the next few years. Combined, they provide scope to lift top line organic growth towards mid-high single digits and lead to margins trending towards a viable target of 25% over time. Ultimately, this should lead to double-digit organic EPS growth. In addition, there is effectively a free carry on the Mt Sinai relationship, which offers further potentially material prospects for shareholder value creation.
Companies: EKF Diagnostics Holding
Creo Medical has announced that the FDA has cleared its HS1 haemostasis device, making it the second of Creo's devices to receive such clearance. We expect this significant milestone to be the first of a wave of regulatory clearances for Creo's pipeline of devices in both the US and EU. This news follows Creo's recent trading update in which the company discussed the impact of COVID-19 on its Clinical Education Programme and its current financials and cash position, which as of the end of February was £77.6m. We maintain our Buy recommendation.
Companies: Creo Medical Group
Hutchison China MediTech’s (HCM’s) investment case is focused on evolution into a global R&D and commercial-stage biopharma company with a marketed portfolio of innovation-led oncology drugs. 2020 is a golden year as HCM moves towards multiple domestic drug launches and is progressing key assets into registration studies globally. We expect surufatinib (NET) and savolitinib (exon 14 deletion NSCLC) China launches in 2020 and 2021, respectively, following in the footsteps of Elunate (thirdline CRC), which is establishing its presence by its inclusion on the National Reimbursement Drug List. HCM is investing in its oncology commercial presence in China and its global clinical and regulatory capabilities (in the US, Europe and Japan). 2022 and 2023 should benefit from global drug launches providing continued pipeline progression. We value HCM at $5.9bn.
Companies: Hutchison China Meditech
There are four key reasons we expect Genus to be relatively resilient as the world battles with COVID-19. 1) Farming and food-supply is a critical industry for governments to keep operational; 2) Genus's geographic diversity: For example Chinese demand is now recovering, helping to offset challenges elsewhere; 3) Around 60% of Genus's profits stem from a resilient royalty revenue stream in porcine; 4) Genus's strong balance sheet and cash flow.
Evolva's FY19 results were above our expectations in terms of sales and EBITDA. Cash flow was also far better than expected as the company has materially reduced its cash burn. Nootkatone is on track for EPA registration and a new product, EVE-X157/Z4, is due to be launched later this year, for the Flavours and Fragrances and Health Ingredients segments. Management has reiterated its commitment to reach cash break-even by FY23 (previous guidance was FY21/23) and is evaluating options to finance future growth until cash break-even, including a capital increase. We have cut our sales and profit forecasts to reflect the guidance that the FY19 growth trajectory will be replicated in FY20 and our fair value is now CHF0.42/share.
Companies: Evolva Holding
Silence Therapeutics announced on 25 March 2020 that it has signed a collaboration agreement with AstraZeneca to develop novel drugs for cardiovascular, renal, metabolic and respiratory diseases. The deal includes an upfront of $60m, $20m in equity investment, and for each of the planned targets $400m in milestones, and high single- to low double-digit royalties. Additionally, the company announced that it would elevate SLN360 to the status of lead asset and expects to file an IND later in 2020 and to have interim results in mid-2021.
Companies: Silence Therapeutics
Intelligent Ultrasound has announced its unaudited results for the year ended 31 December 2019. As expected in the January Trading Statement, the Group delivered revenues of £5.9m, while the adjusted EBITDA loss of £3.1m was slightly improved on the anticipated range £3.3m to £3.4m. Cash1 at year end was £7.3m, as expected. Strong progress was made through the year with significant agreements signed by both divisions. In light of the current COVID-19 uncertainty, we withdrew our forecasts yesterday and moved our recommendation to Under Review.
Companies: Intelligent Ultrasound Group PLC
IXICO has reported a strong financial performance for FY19A built on continued commercial focus and a strengthened organisation. Revenues of £7.6m were up 40% and gross margin was up 600bps versus FY18A and the company delivered its first year of profitability since IPO. EBITDA of £0.5m was strongly ahead of our forecast (+£0.1m) and delivered an EBITDA margin of 6%. We have maintained our revenue growth expectations of 20% for FY20E and FY21E but have upgraded our profit expectations given the strong reported performance. We maintain our Buy recommendation.
OptiBiotix ("OPTI") has announced that Holland & Barrett, a global nutritional food and supplement retailer, has launched a new product range under the SlimBiome brand. The weight management products, which contain OPTI's proprietary weight management formulation, will initially be available on the Holland & Barrett website and physical stores in the United Kingdom, Republic of Ireland, Netherlands, Belgium and Sweden. The deal marks the 22nd commercial partnership for SlimBiome and the first with a major retailer, further validating SlimBiome's potential in the c.$25bn dietary weight management market. We note the significance of the SlimBiome brand being marketed by a global market player, further enhancing brand awareness among both consumers and other potential partners.
Companies: Optibiotix Health
We are initiating coverage of Silence Therapeutics (SLN), a developer of siRNA drugs for diseases that can be genetically targeted. Silence has a proprietary platform for developing siRNA therapeutics, the strength of which was highlighted by preclinical development deals with Mallinckrodt and Takeda (details below). The company will also be re-entering the clinic in Q120 with SLN124, its own drug for iron overload. We are initiating with a valuation of £345m or 440p per share.
Companies: Silence Therapeutics