Alliance Pharma’s H1 interims are relatively robust, with trading conforming to recent commentary. Whilst there has been an impact in some areas of the business in H1 (Prescription Medicine) as expected per the trading update in July, the rest of the business particularly Kelo-cote, has proved very resilient and highlights the defensive nature of the business, and underlying adj. PBT (excl. amortisation and impairment charges) was solid in H1 2020 at £16.3m (+7% YoY). We anticipate some push and pulls in H2 2020 but net we anticipate a better performance as demand recovers, and the Board have reiterated that full year results are expected to be in line with market expectations. The reinstatement of an interim dividend of 0.536p signals confidence in this. We have used today’s announcement to reinstate our forecasts, which are broadly in line with guidance and consensus. Our new FY’20 forecasts are c.10% below our previous estimates prior to the Covid-19 pandemic with YoY revenue and adj. EBITDA growth rates of -6.5% and -10.1%. We forecast a return to growth in FY’21 and have used the opportunity to introduce our FY’22 numbers looking for ‘see-through’ revenue of £153.2m and adj. EBITDA of £41.5m. Our main ongoing concern is that growth is highly dependent on Kelo-cote, a situation that has been augmented during the Covid-19 pandemic, and the Group needs to turn once again to deal-making to supplement organic growth to grow the portfolio. On our revised estimates, our new DCF/Peer group multiple derived target price is 91p/share and we move from Hold to Buy.
Companies: Alliance Pharma plc
Intention to float by Gemfields Group. No Capital Raise. Currently listed on JSE. (GML:JNB) at circa £122m. The Group's key producing assets, the Kagem emerald mine in Zambia (believed to be the world's single largest producing emerald mine) and the Montepuez ruby mine in Mozambique (one of the most significant recently discovered ruby deposits in the world), are both expected to have long mine-lives with potential for expansion. Also owns the Faberge brand. Due Valentines Day 2020.
Companies: DEMG TMG CRCL APH ORR VANL PPH TRX PEBB SUMO
The Hardman & Co Healthcare Index (HHI) has been running since 2009. Its main function is to highlight the attractions of life sciences investments over the long term. 2018 was a difficult year; however, the index still outperformed its comparative London indices, falling 10.0% to 393.2, compared with -13.0% and - 18.2% for the Allshare index and the AIM index, respectively. Furthermore, several (17) companies in our index increased their capital base – 15 of our 50 constituents raised new funds, two issued shares as part consideration for acquisitions, and two had share buybacks – all factors that influence the performance of the index. Even allowing for both capital increases and share buybacks, the 12.5% fall in the index still represented a modest outperformance compared with the decline in the Allshare index. With active industry consolidation, shareholder returns remain attractive.
Companies: TIME AVO AGY APH ARBB AVCT BUR CLIG DNL DPP GTLY GDR HAYD KOOV MCL MUR NSF OXB PCA PHP REDX SCE SIXH TRX TON VTA
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Alliance Pharma (APH) is a profitable, cash-generative, specialty pharma business. The proportion of sales generated from higher margin international star brands is rising rapidly, and will be boosted by the recent acquisition of Nizoral in APAC, and UK approval and launch of Xonvea for nausea and vomiting in pregnancy, where conservative management has failed. Investment behind these brands together with compliance with new regulatory directives will limit short term growth but positions the company well for the medium term. APH is cash-generative allowing it to pay down debt at a fast rate. Meanwhile, it offers a dividend yield of 2.0%.
In addition to Hardman’s monthly analysis of client stocks, the thorny issue of market disruption – a popular theme currently - is also addressed. In a wide-ranging article, Hardman’s utilities analyst, Nigel Hawkins, assesses the impact that market disruption has already made. In some sectors, notably telecoms and aviation, market disruption has been apparent for many years, as the rise of Vodafone, Ryanair and easyJet demonstrates. However, in some sectors, such as oil and housebuilding, structural changes have been modest – the dominance of the big players endures. For investors, there is real interest in those sectors where changes are underway. The UK groceries market, which may shortly become a duopoly, is a case in point. And, intriguingly, who knows if there is a company currently languishing in AIM, which will attain a £50bn market valuation within the next decade?
Companies: OPM AVO AGY APH ARBB AVCT DISH BNO BUR CMH CLIG CSH DNL DPP GTLY GDR HAYD KOOV MCL MUR NSF OXB PHP RE/ REDX SCE SIXH TON VTA W7L
PetroTal (TAL.TO) - The exploration and production company focused on oil assets in Peru is seeking a secondary AIM quoting before the end of 2018.
Path Investments— First acquisition of a 50 per cent. participating interest in the producing Alfeld-Elze II gas field located 22 kilometres south of Hannover in Germany. Seeking £10m raise. Due early Oct
Green Man Gaming—pure play e-commerce and technology company in the digital video games industry. revenue CAGR growth of 26.7% in the last three years to £47.5m. Due Mid October 2018. EBITDA Profitable. Offer TBA
Crossword Cybersecurity PLC* (NEX:CCS)—the technology commercialisation company focusing exclusively on the cyber security sector is exploring its options in relation to a potential move to the AIM market of the London Stock Exchange which, if it were to proceed, would likely take place over the next few months.
Companies: PEN PCA IHC APH SRE WBI ATM ITX
September’s Hardman Monthly features an article from guest contributor, Tim Ward. Tim is the Chief Executive of the Quoted Companies Alliance (QCA), an organisation that champions the interests of small to mid-size quoted companies.
Companies: TIME AVO AGY APH ARBB AVCT BNO CMH DNL EVG GDR INL KOOV MCL MUR NSF OXB PHP RE/ REDX SCLP SCE SIXH TRX TON W7L
Hardman & Co’s analysts have direct experience of uncovering accounting frauds. In this article, Steve Clapham outlines why we might see a surge in them over the next few years. He is engaged by institutions to teach their fund managers and analysts how to identify risks brought about by such frauds. Hardman & Co is pleased to offer this service to private investors.
Companies: TIME AVO AGY APH ARBB AVCT BUR CMH CLIG DNL EVG GDR INL KOOV MCL MUR NSF PHP RE/ REDX SCLP SCE SIXH TRX TON W7L OXB
Alliance Pharma (APH) is continuing with its buy-and-build strategy, having evolved through 35 acquisitions over a period of 20 years into a profitable, cashgenerative, specialty pharma business. The company has a mix of international growth brands – Kelo-cote, MacuShield, Vamousse – and a bedrock of solid, local, low-growth products. A fourth international growth brand in the portfolio, Nizoral, was acquired from J&J on 21 June 2018 in the APAC region. The cash consideration of £60m was funded by a Placing and an increased debt facility. Adding also to growth prospects, Diclectin (now registered as Xonvea®) was approved in the UK in July.
Ovoca Gold (to be renamed Ovoca Bio PLC) - RTO of IVIX, a Russian company developing a drug candidate for the treatment of female sexual dysfunctions. No monies to be raised, market cap of £8.5m, due 30 July
Nucleus Financial—independent wrap platform provider . FYDec17 revs £40.36m and PBT of £5.1m. Offer TBA. Due late July. Kropz PLC-Intention to float by the emerging plant nutrient producer with an advanced stage phosphate mining project in
South Africa and exploration assets in West Africa
Immotion Group - aims to become the market leader in "out of home" Immersive Entertainment Experiences. Offer TBA. Due 12 July
Companies: HUR BCA APH EQLS VAST RRL IPX OCI FAN BBSN
Research Tree provides access to ongoing research coverage, media content and regulatory news on Alliance Pharma plc.
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Robust FY21 performance forecast, despite pandemic
Companies: SDI Group plc
Ongoing strong demand for EKF’s products, both in the core business and the Primestore MTM Covid-19 sample collection device, means the FY20 outturn will be “comfortably ahead” of already upgraded expectations. This pattern is expected to persist throughout Q1’21 and beyond and management is confident that the performance in Q1 will be materially ahead of expectations. Having previously left FY21 estimates untouched, we are today putting through the first in what we expect to be a series of material upgrades. Given the dynamic situation around Covid-19, we expect regular updates throughout the course of the year and will adjust our forecasts accordingly as visibility over ordering patterns increases.
Companies: EKF Diagnostics Holdings plc
Although 2020 will probably go down in history as one of the most challenging years experienced during our lifetime, it will also likely be chronicled as one of the best years for the recognition and appreciation of science. As we entered 2020, the COVID-19 pandemic was in its infancy. However, it rapidly evolved through the exponential rise in infections and mortality globally. Much has been achieved during the past 12 months in the fight against COVID-19, but, as we enter 2021, there are considerable concerns about the emergence of a mutant version of the virus and the second wave that we are now facing.
Companies: AVO ARBB ARIX BBGI CLIG DNL FLTA ICGT OCI PCA PIN PHP RECI STX SCE TRX SHED VTA YEW
For many reasons, 2020 was a transformational year for Circassia as the new management team set to work streamlining the business, addressing legacy issues and positioning the group to benefit from the strong market position of NIOX, a gold standard diagnostic device for asthma. Whilst the pandemic has had an impact, recovery is underway, with Q4 revenues back to 86% of Q1 levels. The EBITDA breakeven point of the business has been reduced further to £32.0m and there was £7.4m of net cash on the balance sheet at the year end. Whilst the pace of recovery remains difficult to predict, the business looks well set for the medium term.
Companies: Circassia Group PLC
Q4 trading has led sales to guidance being raised 8%. This has been driven by better than expected UK sales, incl. success with new customers like Wilko/Tesco. Some of the benefit is offset by a non-cash FX debit, but it still leads to an upgrade and higher net cash. As a result of successful trials in Tesco Express, W7 is also being rolled out to 469 more stores. This, and previously announced distribution gains, bodes well for incremental sales/PBT in 2021, and underlines the appeal of its value-for-money brands. On 11x 2019 cash-adjusted EV/EBITDA, valuation is undemanding, particularly with the added attraction of dividends/income.
Companies: Warpaint London PLC
After an eventful 2020, ReNeuron released updated 12-month Phase ll data in January on its lead human retinal progenitor cell (hRPC) project. This continues to show a consistent and robust, sustained average gain in visual acuity in retinitis pigmentosa (RP). A continuation study in nine patients using two million cells is underway with three- and six-month data due over H2 CY21 and the first three patients treated. This will facilitate partnering negotiations. A pivotal hRPC study may start in 2022. Deals are possible in CY21 on the exosome genetic drug delivery platform, which could be very valuable. The valuation remains at £190m with strong cash.
Companies: ReNeuron Group plc
Foresight Group , the award-winning infrastructure and private equity investment manager to IPO on the Main Market (premium). The Offer will primarily comprise a sale of shares by existing shareholders (c.80% of the Offer) with a smaller offering of new shares (c.20% of the Offer) to be issued by the Company. Details TBA. Cornish Metals (TSX-V: CUSN) intends to list on AIM. The Company is proposing to raise £5 million by way of private placement of new Common Shares (the "Fundraising") to advance the United Downs copper-tin project. The Company expects that Admission will become effective in February 2021. The Company's Common Shares will continue to be listed and trade on the TSX-V in Canada. VH Global Sustainable Energy Opportunities plc, a closed-ended investment Company focused on making sustainable energy infrastructure investments, today announces intends to launch an initial public offering of shares on the Official List (Premium) of the Main Market of the London Stock Exchange. Due by Early Feb.
Companies: TYM W7L BEG CRPR EUZ IRR CMCL FARN KETL AUG
Allergy Therapeutics’ European commercial business remains resilient despite COVID-19 impacts. The H121 trading statement indicates sales growth of 7% (+5% CER), while steady pipeline progress is also being made. Recruitment and treatment in the G309 Grass MATA MPL Phase III study is on track, with post period key events including initiation of the P001 ex vivo peanut allergy biomarker study and publication of positive challenge chamber results for ImmunoBON in a peer reviewed journal. This bodes well for news flow delivery over the rest of calendar 2021. G309 results in the autumn are expected to inform design of the G306 pivotal grass trial; P001 data in the spring will support IND submission; and ImmunoBON is set to launch in Germany later this month. A record cash balance of £48m (at end-December 2020) covers nearterm requirements taking the company through to material value-inflection points. Ahead of H121 results on March 3, we maintain our £325m (51p/share) valuation.
Companies: Allergy Therapeutics plc
Cambridge Cognition provided a positive FY 2020 trading update, with revenues (+34%), net losses and cash all ahead of expectations, and delivering an EBITDA-positive Q4. After a year of record order intake (£12.7m) and with a year-end order book of £11.2m (+96% on the prior year), the company is positioned to deliver another year of strong growth. This update provides further evidence of (i) the commercial focus that the CEO has instigated, (ii) the cross-selling opportunities for its newer digital solutions, and (iii) the prospect of a period of sustained strong growth in what are large (c.£1.2bn) and high growth (c.20%) addressable markets for digital solutions for clinical trials. We increase FY 2021 revenues by 18% to £8.5m, implying 26% growth and raise our target price 31% to 105p.
Companies: Cambridge Cognition Holdings Plc
Cambridge Cognition ("COG") has provided a trading update for the year ended 31 December 2020 that is ahead of our expectations. Group Revenues grew +34% to £6.7m (2019: £5.0m) and were +7% ahead of DCe of £6.3m. COG delivered significant revenue growth from digital solutions for clinical trials as it increased its focus on commercialisation. The strong beat in Revenue is due to an improved commercial execution across a wider portfolio of products as the Group has placed a key emphasis on crossselling CANTAB with newer electronic Clinical Outcome Assessment (eCOA) and digital solutions for frequent, remote testing of patients outside of the clinic setting. The Group's order intake for the year closed at a record £12.7m, up +158% on the previous year's order intake of £4.9m and maintaining the growth trajectory reported in the interim results. The Group experienced a mixed effect due to Covid-19 as some orders and revenue recognition was delayed in the year. However, the pandemic has provided an impetus for an industry shift towards evaluating virtual clinical trials, which opened new opportunities for the Group. We move our target price to 89p (from 80p).
A year in which we expect the company to make significant advancements in the development and commercialisaon of LIGHT, AVO kicked off 2021 with a new financing partnership with specialist asset financing company DiamedCare and technical updates. With its differenated technical and commercialsoluon supported by growing clinical evidence base for proton therapy ("PT"), AVO remains well posioned to disrupt the radiotherapy market. We expect further progress in 2021 to connue to de-risk the AVO story, with much of the risk now lying on commercial execuon, in our view. Part of AVO's turnkey PT soluon, the new lessor financing agreement with DiamedCare covering Europe and the US should facilitate faster adopon in smaller radiotherapy centers which currently represent an underserved and largely untapped market. We maintain and reiterate both our OUTPERFORM recommendaon and 135 GBp target price.
Companies: Advanced Oncotherapy Plc
ReNeuron’s Dec’20 £17.5m raise now means the Group is sufficiently funded through key upcoming milestones for its lead hRPC candidate and the exosome platform – mitigating a previous pivotal issue. 2021 could promise to be the critical year for the Group, with the potential to unlock value from its programmes well beyond its current modest market value. We refresh our forecasts post yesterday’s analyst briefing, and reiterate our positive stance.
The six-month trading update to 31 December demonstrates solid underlying growth, with revenues rising 7% to £54.0m, or c.5% at constant exchange rates (CER), despite ongoing COVID-19 restrictions. Period-end cash was £48.3m, which implied a c.30% increase (+£11.3m) in underlying cashflows in the period. With relevant and potentially significant commercial and regulatory newsflow through 2021, we expect the shares to perform well. We leave our forecasts unchanged for FY 2021 at this point and reiterate our 45p target price, pointing out the substantial and unwarranted discount to its nearest peer (ALK-abello - 6.1x EV/Sales). This target also excludes the value for US market entry for Grass MATA MPL or its early-stage pipeline, including VLP Peanut allergy vaccine.
On 30th December 2020, RUA reported that shareholders had approved resolutions regarding the placing along with a strongly oversubscribed Open Offer. RUA now start 2021 with the resources and mandate to accelerate the development of its products, where we anticipate reports of progress during the year. We have slightly increased our R&D and CapEx spend for FY 2022 to reflect this investment and the cash utilization. RUA’s issued share capital now comprises 22,184,797 shares and the increases in FY 2022 investment in its products, modestly change our valuation by about £2.0m to £113.2m for the Company, equating to 510p per share.
Companies: RUA Life Sciences Plc
Alcon, a dominant force in the $25bn ophthalmology space, is set to outgrow the industry in the mid-term – driven by the pick-up in demand for recently-launched products, PanOptix and Precision1. Moreover, with robust margin expansion potential – led by an improving product mix and targeted cost-savings – earnings should grow healthily. A sturdy balance sheet increases its appeal further. Interestingly, Alcon is recovering faster than rivals from the COVID-19-hiccups and its sales and profitability profile should inflect once the situation normalises. Add.
Companies: Alcon, Inc.