LiDCO’s AGM statement makes for pleasing reading. Whilst the exceptional conditions in Q1 have abated somewhat, Q2 is seeing signs of a return to normality as hospitals start to prepare for the return of elective surgeries. Sales orders in May have been consistent with last year and, whilst the situation remains fluid, we take that as an encouraging sign for the rest of the year. With £4.4m of revenues booked in Q1 and recurring revenues expected to continue at the FY20 exit run rate level, we have sufficient confidence in the outlook to upgrade our revenue forecasts for the year by £0.4m and EBITDA/FCF by £0.3m. Postupgrades, the shares trade on a Yr1 EV/Sales of just 2.1x. With scope for further upgrades and the company at an inflection point in sustainable profitability, we view this as exceptionally attractive.
Companies: Lidco Group
Independent Oil & Gas (IOG): Corp | LiDCO (LID): Corp | Maintel (MAI): Corp | Savannah Resources (SAV): Corp
Companies: IOG LID MAI SAV
LiDCO provided a trading update, in which revenues in May are said to have returned to normal levels after an exceptional Q1 FY 2021 (£4.4m, some 26% higher than H1 FY 2020). With indications that elective surgeries, which fell during the peak of the COVID pandemic in its key territories, are beginning to rise again from recent lows, the outlook is for sustained growth during the rest of FY 2021. We have adjusted our FY 2021 forecasts to reflect the exceptional Q1 performance (primarily capital sales to NHS), but with scope to raise forecasts further as evidence of rising elective surgery rates occurs, coupled with the prospect that the recent capital sales should drive incremental per-use disposables. With cash balance of £3.2m at 28 May (£1.4m at FY 2020 year-end), the company is well positioned to explore additional sales & marketing opportunities in its key markets as customer hospitals exit lockdown and sales reps are able to access hospitals for evaluations. We upgrade target price to 12p.
LiDCO has provided an update on how its technology is being used to treat Covid-19 patients more effectively using two of its guided clinical protocols that are, uniquely, pre-loaded on LiDCO’s monitors. It has also quantified Q1 sales, which came in at £4.4m, significantly ahead of H1-20 revenues of £3.5m and providing a very strong start to the year. When added to revenues under the HUP and other contracted revenues, we estimate LiDCO already has coverage of ~80% of our FY21 estimate irrespective of underlying activity over the rest of the year. This is testament to the resilience of the HUP model and the increasing quality of earnings, an aspect we continue to believe is significantly underappreciated by investors. The shares have retrenched recently and currently trade on an EV/Sales multiple of 2.0x on our current forecasts, which we believe could be materially upgraded later in the year.
LiDCO (LID.L): Final year results
LiDCO has delivered FY20 results in line with expectations, with the key metric of own product sales coming in at +19%, a strong performance especially in light of the ongoing transition to the HUP SaaS model. Post period-end, LiDCO has experienced a surge in demand for its monitors, particularly as UK hospitals scramble to increase critical care capacity. As a result, LiDCO has sold 195 monitors YTD vs 219 in the whole of FY20. Whilst some of the associated revenue uplift is likely to be short term, it bodes well for driving future adoption and building further recurring revenues. We prudently make no change to estimates at this stage, but clearly, the sensitivity lies to the upside after such a strong start to the year. Despite a recent rally in the shares, the valuation remains undemanding on 2.5x EV/Sales (on current forecasts).
Caribbean Investment Holdings. Incorporated in Belize . CIHL primarily operates financial services businesses through its subsidiaries The Belize Bank Limited and Belize Bank International Limited, both located in Belize and international corporate services through Belize Corporate Services Limited. CIHL shares are also traded on the Bermuda Stock Exchange. Lord Ashcroft holds 75%. No capital raise. Due 28 April. £36m . 2019 net profit US$ 10.7m
Companies: PANR TON PRSM TAM KMK RBGP LID MERC BARK TM17
Abal Group (formerly on AIM) to relist as Supply@Me, a growing innovative "inventory monetisation" platform, having originated more than EUR300m of prospective "inventory monetisation deals" in its first six months of operating (to June 2018). In the first half of 2019, an additional prospective EUR300m was originated. As at the date of the publication of the Prospectus and Circular to Abal shareholders, dated 4 March 2020 , EUR972m of prospective contracts have been originated. Raising £2.2m. Due 23 March.
The Proof Of Trust has announced its intention to list on the Standard Market. The Blockchain based business, owns patents to a protocol which facilitates dispute resolution based upon smart contract disputes. Transaction details TBC.
Companies: LVCG MSYS RED MRL SIM SQZ ORPH VLG LID SQZ
LiDCO (LID): Corp Increased sales in China due to COVID-19 | Telit (TCM): Corp Resisting the virus and returning the cash
Companies: Lidco Group Telit Communications
Evgen Pharma (EVG): Corp | Flowtech Fluidpower (FLO): Corp | LiDCO (LID): Corp |Oncimmune Holdings (ONC): Corp
Companies: FLO LID EVG ONC
A positive trading statement for the year to 31 January indicates a positive adjusted EBITDA compared with our forecast £0.2m loss, with adjusted PBT in line with expectations. Whilst ROW distributor sales, which can be lumpy, helped to offset lower than expected US revenues, LiDCO is gaining traction with the HUP offering. Whilst growth in the US was strong YoY, it was however somewhat below our expectations, due to the rate of HUP licence wins being slower than originally anticipated, rate-limited in part by the number of sales reps. Net cash at year-end was £1.4m (FC est. £1.2m) and is considered sufficient to execute on LiDCO’s strategic objectives. Despite FY 2021 revenue downgrade to reflect the lower exit of HUP adoption, we maintain our 11p target price. Rolling forward the multiples, the stock would trade on 3.0x FY 2021 EV/Sales.
Diurnal Group PLC (DNL.L): US FDA Accepts NDA Application for Alkindi | LiDCO Group (LID.L): Pre-Close Trading Update | Evgen Pharma (EVG.L): MoU with the University of Rochester
Companies: DNL LID EVG
Inspecs, a UK designer, manufacturer and distributor of eyewear frames to global retail chains announces its intention to IPO onto AIM raising £94m with a market cap of £138m. Admission expected 27th February. FY Dec 2018 numbers show revenue of $57m and underlying EBITDA of $11m 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: ANIC DNL POLR LID FLTA TPFG ACSO ORPH ANG ALS
Amryt Pharma (AMYT.L): Trading update | LiDCO (LID.L): New cardiac output monitor launched in China
Companies: Amryt Pharma Lidco Group
Best of the Best (BOTB): Corp Positive end to H1 FY20 confirmed with more profit upgrades | Castleton Technology (CTP): Corp Interims – mapping out a steady second half | LiDCO (LID): Corp China launch
Companies: BOTB CTP LID
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A number of REITs have the ability to thrive in current market conditions and thereafter. Not only do they hold assets that will remain in strong demand, but they have focus and transparency. The leases and underlying rents are structured in a manner to provide long visibility, growth and security. Hardman & Co defined an investment universe of REITs that we considered provided security and “safer harbours”. We introduced this universe with our report published in March 2019: “Secure income” REITs – Safe Harbour Available. Here, we take forward the investment case and story. We point to six REITs, in particular, where we believe the risk/reward is the most attractive.
Companies: AGY ARBB ARIX BUR CMH CLIG DNL HAYD NSF PCA PIN PXC PHP RE/ RECI SCE SHED VTA
Laboratory Services Contracts Signed
Companies: Open Orphan
The announcement announced today highlights the potential breadth of the KidneyIntelX platform, opening up new routes to expand data inputs and test utility, and create opportunities alongside pharmacological therapy as a companion diagnostic. The first agreement with the University of Michigan adds an additional 800 chronic kidney disease (CKD) patients (adding to Mount Sinai’s 1,500 patients and the University of Groningen’s 3,500 patients) to analysis the performance of KidneyIntelX in different settings. This will ultimately carry additional sway with healthcare centres, regulators, and payers. The option to exclusively license a new urinary biomarker, urinary Epithelial Growth Factor (uEGF), shows the potential to add additional biomarkers and body fluids into the platform to further enhance the prognostic performance of KidneyIntelX. We understand there is a relatively immaterial upfront payment to access this new biobank, and a similar immaterial cash payment to gain the biomarker license option with additional milestones and standard tiered royalties payable if exercised. The second data sharing agreement with a major undisclosed pharma partner highlights KidneyIntelX’s potential use as a companion diagnostic (e.g. for SGLT2 inhibitors) and the potential to use the test multiple times to monitor drug response. This builds on work being conducted in Groningen with data expected H2 CY’20. Ultimately, pharmaceutical collaborations could drive additional long-term value creation and may open opportunities for lucrative licensing and M&A deals. At this juncture we make no changes to our forecasts and eagerly await further updates. We reiterate our positive stance on Renalytix.
Companies: Renalytix AI
Today Ergomed held its annual general meeting (AGM). As expected, no new financial details were provided, although the executive chairman released a statement with a general business update. Q120 trading was good with ‘solid overall growth in revenue’ and cash generation ‘remained strong’. In Q220, Ergomed continued to grow the order book across the business and maintained its ‘revenue growth trend’. Its staff successfully adapted to remote working conditions and no employees were made redundant or furloughed. The H120 trading update will be released in July 2020 as usual, but Ergomed stated within its AGM update (June 10) that it is confident the results will be ‘in line with current market expectations’.
Renalytix’s US IPO filing document went live overnight (having previously been filed confidentially). Whilst there are no details on size of offering, but the document is rich with details of the use of proceeds which we encourage UK investors to read. We are doing the same and will update our views in due course. Associated with the US filing document, another release this morning announces the publication of a circular, and outlines details for a new General Meeting on the 13 July 2020 to approve the issue of new shares, as well as board changes if the US IPO goes ahead. Namely, Julian Baines (Non-executive Chair) and Richard Evans (NED and Audit committee Chair) are stepping down from the board, Christopher Mills will assume the role of interim chair whilst a search for a successor is conducted.
Cambridge Cognition ("COG") has provided a trading update for the 6 months to 30 June and presented its growth strategy at an excellent Capital Markets Day. The Group continues to build on an impressive H1 2020, announcing additional contract wins that take the order intake to £4.9m (+88% vs H1 2019). COG is currently 'seeing unprecedented demand' for its solutions which enable pharmaceutical companies to continue clinical trials even while participants are unable to physically visit clinical trial sites.
Companies: Cambridge Cognition
With CHF13bn ($14bn) annual sales, Roche is a dominant force in the global diagnostics market. Interestingly, in recent years, most diagnostics majors have witnessed material re-ratings – also a function of increased M&A euphoria. Now, in the backdrop of COVID-19, Roche has also emerged as a prominent player on the testing front. With big pharmas moving away from (low-growth) non-pharma offerings, is it time for Roche to consider unlocking value from Diagnostics?
Companies: Roche Holding
AVO’s goal is to deliver an affordable and novel proton therapy (PT) system, called LIGHT, based on state-of-the-art technology developed originally at the worldrenowned CERN. Over the past two years, the project has been significantly derisked through important technical milestones. AVO is working on the verification and validation phase, prior to LIGHT being used on the first patients to support CE certification. A recent equity issue, new loan facilities and some commercial announcements earlier in 2020 highlight the increasing confidence that is building in AVO’s ability to achieve its goal to deliver LIGHT in the near future.
Companies: Advanced Oncotherapy
RenalytixAI (RENX.L): Proposed dual-listing on Nasdaq | e-therapeutics (ETX.L): Covid-19 project update | RedX (REDX.L): Appointment of Non-Executive Director
Companies: RENX ETX REDX
ReNeuron has released further follow-up data from the ongoing human retinal progenitor cell (hRPC) trial, which shows a robust sustained averaged response. This data set completes the six-month data on eight patients and extends, for one individual, to 18 months, who showed a good net gain. The next dose level, two million cells in nine patients, remains delayed due to COVID-19. A filing to start a pivotal study is expected in the second half of CY21. Our indicative value remains at £107m.
Companies: Reneuron Group
Hutchison China MediTech (HCM) is on the brink of global launches of two assets from its internally developed oncology portfolio. In 2022 we expect US launches of surufatinib (broad NET indication) two years earlier than forecast as well as savolitinib (NSCLC). Recently the FDA granted fast-track designation to fruquintinib in mCRC and we forecast global launch in 2023. In China, HCM has laid the foundations to capitalise on the slew of additional novel oncology drugs (expected by end 2021). HCM is well funded (following the recent $100m equity investment from General Atlantic, plus warrants granted for an additional $100m in 18 months) as it accelerates the global development of its unpartnered assets and expands its global commercial outreach. Beyond 2024 we expect sustainable profitability and margin expansion. Our increased valuation is $6.3bn.
Companies: Hutchison China Meditech
Hutchison China MediTech (HCM) is on the brink of global launches of two assets from its internally developed oncology portfolio. In 2022 we expect US launches of surufatinib (broad NET indication) two years earlier than forecast as well as savolitinib (NSCLC). Recently the FDA granted fast-track designation to fruquintinib in mCRC and we forecast global launch in 2023. In China, HCM has laid the foundations to capitalize on the slew of additional novel oncology drugs (expected by end 2021). HCM is well funded (following the recent $100m equity investment from General Atlantic, plus warrants granted for an additional $100m in 18 months) as it accelerates the global development of its unpartnered assets and expands its global commercial outreach. Beyond 2024 we expect sustainable profitability and margin expansion. Our increased valuation is $6.3bn.
We are introducing our Best Ideas for 2019 and also review the performance of last year’s picks. We suggest ten solidly financed stocks with good business dynamics that ought to be considered for core portfolio holdings and six UK domestically focused stocks that our analysts believe should perform strongly in the event that uncertainties unwind. We also introduce a new style of research from N+1 Singer which presents a Company’s dynamics and metrics in a clear and concise manner and concentrates on the pivotal issues affecting that Company and an investment decision.
Companies: BCA CLIN CLG CBP DNLM EAH STU FCRM FUTR GTLY INS GLE NICL SDL SPR TRI
Alongside FY2019 results, Advanced Oncotherapy ("AVO") announced two new debt facilities which provide access to an additional c.£42m in strategic financing. The financing provides greater financial stability and flexibility for AVO moving forward, allowing the company to progress the development of the LIGHT system towards regulatory approval. LIGHT is now largely de-risked from a technology perspective, in our opinion, with development activities focused on the verification and validation of the system. In addition to an equity subscription completed in May (c.£15m), AVO has secured access to financing totalling nearly £60m in the 6 months to the end of June; an impressive achievement in our view which is credit to AVO's disruptive potential in the radiotherapy market, especially given COVID related headwinds currently faced by many companies today.
Collagen Solutions (COS.L): Supply agreement with NovaBone
Companies: Collagen Solutions