CareTech (CTH) – Corporate – Interim results demonstrate a highly creditable and resilient trading performance
Market Cap £438m Share Price 391p
CareTech is a specialist social care and educational services provider across the UK. This morning, the Group has released interims for the six months to 31 March, very much in line with the trading update provided in April and our own expectations. The £5m synergy target from the Cambian acquisition for FY 2020E is again reported to be on track, with all key metrics moving in the right direction. Reflecting actions taken, alongside the inherent resilience of CareTech's business model against the present COVID-19 backdrop, the Board reports it is confident of meeting market expectations for the full year – this confidence also demonstrated through the 7% increase in the proposed interim dividend.
Petards (PEG) – Corporate – Full year results illustrate a challenging year; pipeline opportunities remain but timing uncertain
Market Cap £4.8m Share Price 8.3p
Petards supplies advanced security and surveillance systems to the Rail, Defence and Traffic Technology markets. This morning, the group has released FY 2019A results that illustrate a previously reported challenging period. Group revenue declined by 21.5% to £15.7m, with two thirds of sales generated in Rail. The gross margin declined by 90bps to 30.8%, this impacted in part by increased and unplanned EyeTrain costs of £340k in the year. Administration costs increased by 7% to £6.1m, these principally reflecting a full year of ownership of RTS. This resulted in an operating loss for the group of £1.3m and a loss after tax of £0.2m post tax credits of £1.3m. The year-end net debt position stood at £0.1m (excluding IFRS 16 leases).
Companies: CareTech Holdings Plc Petards Group Plc
Interim results demonstrate a highly creditable and resilient trading performance
CareTech is a specialist social care and educational services provider across the UK. This morning, the Group has released interims to 31 March, very much in line with the trading update provided in April and our own expectations. The £5m synergy target from the Cambian acquisition for FY 2020E is again reported to be on track, with all key metrics moving in the right direction. Reflecting actions taken, alongside the inherent resilience of CareTech's business model against the present COVID-19 backdrop, the Board reports it is confident of meeting market expectations for the full year – this confidence also demonstrated through the 7% increase in the proposed interim dividend. Following the results, we leave our earnings expectations unchanged, with the potential for these to be raised in due course - our forecasts already implying EPS growth from FY 2019A to FY 2021E of over 20%. With the shares 20% below their January high, backed by the 3.0%+ dividend yield and £774m freehold property valuation, we view the current year PER of 9.3x and EV/EBITDA multiple of 8.9x as undemanding. Our estimate of fair value remains at 525p.
Companies: CareTech Holdings Plc
H1 update demonstrates resilience of the business model; forecasts unchanged
CareTech is a specialist social care and educational services provider across the UK. This morning, the Group has released an extremely robust H1 update to 31 March 2020, confirming that trading in the first six months of the financial year has been in line with expectations and with net debt declining by £3.7m to £287.4m. Against the backdrop of COVID-19, the resilience of CareTech's business model is highlighted through its security of revenue, flexibility in operations and continued cash generation giving management confidence to reconfirm the 7.95p final dividend to be paid next month. The £5m synergy target from the Cambian acquisition for FY 2020E is on track, whilst operations in the UAE are also trading in line. On the back of the update, we leave our forecasts unchanged, with the potential for these to be raised in due course - our forecasts already implying EPS growth from FY 2019A to FY 2021E of over 20%. With the shares some 26% off their January high, backed by the 3.0%+ dividend yield and £774m freehold property valuation, we view the current year PER of 8.8x and EV/EBITDA multiple of 8.6x as undemanding. Our estimate of fair value stands at 525p.
CareTech is a specialist social care and educational services provider across the UK. This morning, the Group has provided a brief update to coincide with its AGM, confirming that the business has performed in line with expectations in the first five and a half months of the current financial year.
Site visit illustrates successful integration approach and quality of services
CareTech is a specialist social care and educational services provider across the UK. Last week we had the opportunity to undertake a site visit to two of the Cambian school and residential care services in the South West – Hill House and Southlands. Key takeaways from the visit were: 1) confirmation of CareTech's successful tried and tested integration approach to the acquisition of services into the group, 2) the enthusiasm, ability and determination for continuous improvement shown by location management and staff, 3) strong demand for existing places in these services from local commissioners and 4) the potential to add further capacity to meet demand. With the shares having fallen by 13% from their peak, and with our forecasts implying EPS growth from FY 2019A to FY 2021E of 20%+, alongside a freehold property valuation of £774m and c.3% dividend yield, we view the valuation multiples ascribed as undemanding. We see fair value at 525p.
CareTech is a specialist social care and educational services provider across the UK. This morning, the Group has announced a £7.2m phased investment into the largest provider of private outpatient mental health services in the UAE. AS Group presently operates an out-patient facility in Abu Dhabi, alongside a number of mental health outpatient clinics, and already has an agreement in place with a leading NHS Foundation Trust Hospital in the UK. Given CareTech's depth of experience, the group will look to support the development of the existing services provided by AS, as well as expanding care pathways into specialist social care and special educational needs provision.
CareTech (CTH) – Corporate – Investment in UAE
Full year results ahead of expectations rounding off a transformational year | Upgrades in FY 2019E, FY 2020E unchanged
Companies: CareTech Holdings Plc Billington Holdings Plc
CareTech (CTH) – Corporate – Full year trading update in line closing a transformational year | Solid State (SOLI) – Corporate – Strong H1 update; well on course for the FY | Serinus Energy (SENX) – Corporate – Operational Update
Companies: CTH SOLI SEN
CareTech is a specialist social care and educational services provider across the UK. This morning, the Group has released an update for the year to 30 September 2019, which confirms that trading, in what has been a transformational year for the group, has been in line with expectations. The integration and synergies from the acquisition of Cambian are reported to be on track, whilst the cash performance has been strong, with net debt coming in some £5.5m better than forecast. On the back of the update, we leave our earnings expectations unchanged, with the potential for these to be raised in due course - our forecasts already implying EPS growth from FY 2019E to FY 2021E of over 30%. Against a positive market backdrop, we believe that CareTech is well positioned to execute its strategy, whilst the shares trade on a current year PER of just 9.2x, backed by the £774m freehold property valuation and 3.0%+ dividend yield. Our estimate of fair value stands at 525p.
African Export-Import Bank a supranational financial institution w hose purpose is to facilitate, prom ote and expand intra- and extra- African trade, of its potential intention to publish a registration document, the Bank hereby confirms its intention to proceed with an Initial Public Offering. The GDRs are expected to be admitted to the standard listing segment of the Official List of the FCA and to trading on the Main Market of the LSE.
DNEG Limited intends to apply for adm ission of its Shares to the premium listing segment of the Official List of the FCA and to trading on the London Stock Exchange's main market for listed securities. The Offer will be comprised of new Shares to be issued by the Company (to raise expected gross proceeds of £150m). Admission is expected to take place in November 2019.
Companies: MTFB SOLI SHOE BSE ITX CTH RMS MXCT BEM
CareTech is a specialist social care and educational services provider across the UK. This morning, the Group has released interim results which illustrate the progress that has been achieved in the period. The integration and synergies from the Cambian acquisition are reported to have remained on track, including visibility for anticipated synergies in FY 2020E. Importantly, trading remains in line with expectations. Reflecting both these results and the outlook, we have raised our FY 2019E earnings expectation by c.3% this morning, with the potential for FY 2020E and FY 2021E estimates to be raised in due course - our forecasts already implying EPS growth from FY 2019E to FY 2021E of over 30%. Against a positive market backdrop, we believe that CareTech is well positioned to execute its strategy, whilst the shares trade on a current year PER of 10.7x, backed by the £774m freehold property valuation and 3.0% dividend yield. Our estimate of fair value stands at 525p.
Alumasc Group plc, the prem ium building products, system s and solutions group, has announced its intention to m ove from the Premium Segment of the main market to AIM. Expected market cap of £33.4m. Expected 25 June 2019
Argentex a UK-based forex service provider founded in 2011 by its current management team which operates as a Riskless Principal for nonspeculative and forward foreign exchange as structured financial derivatives is looking to join AIM. Offer TBC, expected 25 June
Companies: SRB AVCT FCRM ADAM KAPE INSE SHG CTH LWRF LPA
CareTech is a specialist social care and educational services provider across the UK. This morning, the Group’s H1 update confirms that trading in the first six months of the year has remained in line with expectations and that the integration of Cambian has continued to plan. Net debt as at 31 March 2019 was in line at £297.5m. Fee rate discussions with Local Authorities are anticipated to result in a year on year increase, whilst both occupancy levels and CQC/OFSTED scores remain robust. On the back of the update, we leave our forecasts unchanged, which imply a 2-year EPS CAGR growth rate of 15%+ to FY 2021E, with scope for these to be raised in due course as the funds from the ground rent transaction are deployed. Against a positive market backdrop, we believe that CareTech is well positioned to execute its strategy, whilst the shares trade on a PER of 9.8x, backed by the £774m freehold property valuation and 3%+ dividend yield. Our estimate of fair value stands at 525p.
4imprint - Investment which has paid off, more to go for after a successful year | CareTech - AGM update in line; initial stages of Cambian integration on track
Companies: 4imprint Group Plc CareTech Holdings Plc
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Venture Life Group has reported on a very strong H1/20A period. Revenues were up 80% with operational leverage delivering c100% growth in gross profit and +350% adjusted EBITDA growth. Performance was supported by the acquisition of PharmaSource, strong sales to China, sales of new brand, DISINPLUS, and the group's ability to maintain production at its Italian manufacturing facility. With this report we have introduced FY21E forecasts, expecting the company to maintain its growth momentum and deliver 10% revenue growth. Venture Life is delivering a strong performance, we maintain our Buy recommendation.
Companies: Venture Life Group Plc
Today’s interims are in line with management’s expectations with losses before tax in the period of £15.7m (vs. £14.1m prior year). Cash was reported to be £10.0m, which after accounting for the post period-end £7.7m (gross) fundraising provides sufficient cash runway into Q1 2021 and through multiple key milestones across the pipeline. Whilst Covid-19 has impacted the timeline of data for two trials (asthma and pancreatic cancer), in the coming weeks we eagerly await full Phase II topline results for Blautix in IBS, a data catalyst that could potentially unlock significant value either through possible partnering discussions or independently. The IBS opportunity is vast with estimates of up to 45m IBS sufferers in the US; a patient population underserved with 2/3rd of patients dissatisfied with their current therapy’s ability to treat their symptoms and no FDA-approved disease-modifying therapy available on the market. Blautix has the potential to be that first disease-modifying therapy for moderate to severe IBS, offering physicians a sophisticated therapy option to address both IBS-diarrhoea and IBS-constipation patients.
Companies: 4D Pharma Plc
Synairgen reported interim results to 30 June in which the adjusted net loss was £3.9m with period-end cash of £10.9m. A fuller analysis and disclosure of the Phase II trial of inhaled interferon (SNG001) in hospitalised COVID-19 patients confirms the earlier optimism we had at the time of its first headline disclosure in July. The announcement that Clinigen is to launch a Managed Access Program (MAP) in the UK and Europe for SNG001 is a significant step enabling treatment of hospitalised COVID-19 patients under certain circumstances ahead of regulatory approval. With plans to scale manufacturing to c.100,000 treatment courses per month in 2021, Synairgen is clear in its ambitions. Based on pricing points for Rebif and Avonex and Gilead’s remdesivir, future supplies suggest significant potential revenues in 2021. We leave forecasts unchanged for the time being until we have greater visibility over the uptake of the MAP as well as the regulatory path. We reiterate our price target of 360p.
Companies: Synairgen Plc
Advanced Oncotherapy ("AVO") reported a wider H1 net loss of £12.2m (+8% YoY) as tightened administrative expenses of £9.8m (H1/2019: £11.0) were offset by increased finance cost totaling £2.4m (H1/2029: £0.59m) and a lack of tax credits (H1/2019: £0.38m). Despite the ongoing pandemic, we note that AVO has made good progress regarding both the development and initial commercialisation of LIGHT in 2020. We continue to believe in the potential for the LIGHT system to disrupt the radiotherapy market as a result of the proven clinical superiority of proton therapy ("PT"), combined with the implied economic advantages associated with linear accelerators. Now largely de-risked from a technical perspective, we see a number of important inflection points in the coming 6 - 12 months for AVO, maintaining our OUTPERFORM recommendation and GBp 135 target price.
Companies: Advanced Oncotherapy Plc
Allergy Therapeutics reported full-year 2020 results that were marginally ahead of expectations, driven by lower overhead costs (COVID-related) and lower R&D. This underpinned 25% growth in pre-R&D EBIT to £14.2m on 7% CER revenue growth and continued, albeit smaller, market share gains. Year-end net cash was £33.2m, providing the company with the financial resources to execute on current research programmes. The outlook remains characterised by the start of the Phase III Grass MATA MPL trial in US/Europe, enhanced by a broadening pipeline of opportunities and continued commercial traction in core European markets. We have made small upward adjustments to our forecasts and raise our target price to 45p, which is underpinned by the current commercial operations, with potential upside in Grass MATA MPL in the US (c.21p on risk-adjusted DCF), Polyvac peanut vaccine and the recently broadened VLP technology licence.
Companies: Allergy Therapeutics Plc
Allergy Therapeutics delivered a solid 6% revenue growth for FY20 to £78.2m, from £73.7m, despite COVID-19 impacts taking a 2% toll. The well-established European commercial platform produced operating profit before R&D of £14.2m, from £11.3m, with R&D spend of £9.0m, from £13.2m. Pollinex Quattro Grass is set to start a pilot Phase III study before initiating full registration trials. The promising VLP-based peanut vaccine reported highly encouraging preclinical data which, if maintained, could be transformational for future prospects. The fruits of the development portfolio are expected to enable the market entry into the commercially attractive US. Cash resources of £37.0m are ample to fund near-term requirements. We initiate coverage with a £325m (51p a share) valuation.
Novacyt (NCYT.L): R&D update
Companies: Novacyt SAS
Yourgene continues to progress across all areas of the business, with core trading on track. Demand has been increasing for Yourgene’s Covid-19 testing services, and is expected to reach 10k/month from early October onwards. This would equate to a £3.0m boost to revenues in the year to Mar-21 and we upgrade forecasts accordingly, with outer year estimates unchanged for now. We view this as a base level of demand, with scope for further upgrades if demand continues to increase and/or lasts beyond March. Our underlying estimates for the core are unchanged.
Companies: Yourgene Health Plc
CVS had what we regard as a good FY20 – showing excellent progress during the first 8 months, highlighting a keen focus on the core business, and then recovering strongly as lockdown conditions eased. This reflects very favourably on the new exec team and the underlying resilience / attractions of the veterinary sector. Pleasingly positive momentum has continued into Q1-21 with LFL sales growth of 3.9% (8.0% comp) and an improved EBITDA margin. In the current climate the veterinary sector has attractive defensive growth qualities, with CVS very well positioned to both protect earnings and take advantage of a positive environment for acquisitions. Ongoing CV19 uncertainty means guidance remains suspended but the broad thrust of today’s results underpin the premium rating.
Companies: CVS Group Plc
SDI reported full-year results to 30 April that were slightly ahead (+2%) of the trading update issued by the company on 23 April with net debt of £4.0m comparing favourably to our forecast of £4.3m. Underlying organic growth of 3.7% organic growth, despite the COVID-19 disruption in Q4, was supplemented by growth from acquisitions in FY 2019 and FY 2020. Adjusted pre-tax profit rose 44% to £4.3m with adjusted EPS up 21% to 3.4p. Net debt at 30 April was £4.0m. With evidence of trading activity normalising and the positive outlook statement, indicating adjusted pre-tax profit to be at least as good as FY 2019, we reinstate forecasts. We re-introduce a target price of 100p, which implies the stock trading on FY 2021 P/E of 27.5x falling to 24.6x in FY 2022 – in line with its peer group (e.g. Judges Scientific which trades on 33.8x, falling to 27.5x for slightly lower growth) and underpinned by a FY 2020 free cashflow yield of 3.2%.
Companies: SDI Group Plc
While disruption was significant in H1, Warpaint still made a small profit and generated cash. Crucially, even with some ongoing weakness in markets like the US, trading has recently bounced back to pre-CV19 budgeted levels. This is a function of the brand and range development work, and broadening distribution in the UK (Tesco/Wilko). It also highlights the appeal of its value-for-money on-trend brands. Improved visibility around the full year outcome has led to PBT guidance being reinstated for FY20, and dividends being proposed. This is likely to be well received by the market.
Companies: Warpaint London Plc
Creo Medical has reported strong H1/20A and post-period performance. While COVID has impacted the company's ability to market its products in hospitals, at commercial events and provide training during 2020 Creo has continued to book commercial orders, provide remote training, receive regulatory clearances for new devices and complete a significant acquisition. We believe that as healthcare systems begin to recover from the impact of the pandemic, the benefits of Creo's technology could come to the fore, offering shorter procedure times and outpatient treatments. The company closed H1/20A with cash of £70.6m.
Companies: Creo Medical Group Plc
The oncology consultancy using mathematical models and its Virtual Tumour™ technology to support the development of cancer treatment regimens and personalised medicine solutions has announced FY June 2020 results with total income including grants up 7% to £841.6k, driven by an 11.1% increase in revenue to £799k. Losses after tax fell 38% to £64.4k, with prudent cost management helping to keep net operating expenses of £976k marginally bellow FY June 2019 levels, and the Company continuing to enjoy R&D tax credits with £69k recognised in the period, down from £97k.
Companies: Physiomics Plc
Cambridge Cognition reported encouraging interim results to June, with revenues up +39% to £3.0m and the Pre-Tax Loss sharply reduced to £0.4m. The company has made strong progress on its commercialisation strategy this year and, having announced £4.9m of contract wins in H1, a major win for a schizophrenia trial has since increased this to £8.4m. Although CV19 led to some contracted clinical trials being delayed in H1, this has been offset by new contract wins and going forwards we see a structural shift to virtual clinical trials which plays to CamCog's strength in remote clinical testing. We raise our FY20 revenue forecast to £6.3m (was £6.2m), which we view as conservative given the sales contracted for 2H20, though we are mindful of possible delays due to CV19. We continue to model a FY20 loss of -£0.7m, with CamCog moving into profit in Q4. We forecast the group to be profitable for FY21 and believe profits can build materially given the tailwind of 17-20% industry growth. We retain our Buy recommendation and raise our target price to 80p (was 75p).
Companies: Cambridge Cognition Holdings Plc
Diurnal is a commercial-stage specialty pharmaceutical company focused on diseases of the endocrine system. Its products are targeting rare conditions where medical need is currently unmet, with the long-term aim of building an “Adrenal Franchise”. Alkindi® was approved by the European regulators in September 2018, and has been launched in 10 countries. Now it has been approved for the US market, with Diurnal receiving formal approval from the FDA. This is an important valueinflection milestone that only two other AIM-listed companies have reached. Marketing partner, Eton Pharmaceuticals (Eton), has high US sales expectations.
Companies: Diurnal Group plc