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A bullish presentation gave confidence in the multi-pronged international growth strategy and provided comfort that momentum in the US is beginning to build. This helped illustrate the substantial growth opportunity ahead as new management brings a keener commercial focus to the business. Guidance for a sustainable double-digit growth opportunity and high margins was retained, implying our forecasts could prove conservative over time.
Tristel Plc
Continued strong momentum in H2. Tristel has this morning released a trading update for the year to 30th June. Revenue for the period was £46.5m, in line with our £46.3m estimate, with PBT as reported (excluding share-based payments) of no less than £10.1m vs. our £10.0m forecast on an equivalent basis. Cash at period-end stood at £12.8m vs. our £11.5m estimate. Since the H1’25 stage, trading has remained solid across all main geographies (H2 revenue growth +15% in CER). In the US (where, as previously announced, Tristel OPH for high-level disinfection of ophthalmic devices gained FDA clearance during the period), demand has remained robust. Our view A solid update, flagging overall trading in line with our expectations for the year. Although early US sales have been lower than initially anticipated, we remain positive on the US opportunity for ULT and OPH. In Europe, we also expect a more focused sales effort to drive increasing uptake of Tristel’s Cache range of product for surface disinfection. We leave our forecasts unchanged. Reiterate Buy.
Tristel has published a trading update for its FY25 reporting period to the end of June 2025. The company notes strong trading during the period with revenue growth of 11% (H2 growth 15% at CER) YoY to £46.5m coming in slightly ahead of our Cavendish estimate of £46.1m and in line with the group’s performance target of annual average revenue growth of 10-15% over three years. Adjusted profit before tax (PBT) will be no less that £10.1m, in line with our FY25E forecasts, indicating a margin of at least 21.7%. Importantly, the press release speaks to the demand for Tristel’s infection prevention products remaining strong across all regions including North American markets. Through Tristel ULT and its partner Parker Labs, Tristel has an established base in the US, a key strategic territory, where we continue to see strong potential for the Tristel range going forward.
The announcement of job cuts in the FDA at the end of last week has added further uncertainty to the US healthcare sector, following the cutting of NIH grant funding in February and the looming prospect of tariffs, although with the latter we believe a carve out healthcare products is likely. As the largest healthcare market globally, the US is an important market for most healthcare companies, be they in the pharmaceutical, medical device or service sectors. We review our coverage, highlighting those where slower interactions with the FDA are likely to be significant, either because of a direct interaction or partner’s progress.
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Tristel has published interim results for the 6-months to December 2024, reporting revenues of £22.6m, up 8% YoY (9% CER), driven by volume of 6% and price of 2%. Revenue growth driven by Tristel Medical device revenues, grew 8% to £19.7m. Tristel expanded its strong margins during the period, delivering gross margin of 82% (1H24: 81%) and adjusted EBITDA margin of 28% (1H24: 26%). Adjusted profit before tax grew 19% to £4.9m. The company has proposed an 8% increase in DPS to 5.68p and closed the period with cash of £11.7m and no debt. Tristel’s US strategy is gaining traction with the healthcare facilities targeted by the partners, with the use of Tristel ULT being increased and expanded across early adopting systems. We believe the US opportunity remains significant and Tristel’s commercial strategy is the correct approach for the market; however, as discussed with the FY24 results, the sales process in the US is slower than anticipated and we have updated our forecasts to reflect this. We remain positive on Tristel’s chemistry and opportunity.
While on the face of it Tristel’s interims were in line with expectations and showed strong EBITDA growth and excellent cash generation, there were a few wrinkles. Firstly, while we knew that progress in the US had been slower than expected, royalty revenue of only £37k is lower than we were expecting. The commentary was more positive but Tristel is now firmly in the show me camp. Secondly, progress with Cache was also slower than expected and while Tristel is refining its sales strategy, we remain sceptical about the scale of the opportunity in disinfection. That all sounds very negative and we think it is important not to lose sight that Tristel’s Decontamination business continues to make good progress elsewhere in the world but it is hard to see the shares performing on the back of today’s statement. We leave our forecasts and TP unchanged and remain Holders.
High-single digit revenue growth, improved margin Tristel has this morning released H1 results for the period to 31st December. Revenue for the period was £22.6m (+8% YoY, +9% in CER), representing a record first-half performance, as indicated in the trading update on 16th December. Gross margin improved to 81.8% (+129bps YoY), and adjusted EBITDA and adjusted PBT were £6.3m (+14% YoY) and £4.9m (+19%), respectively. Adjusted EPS (Investec: excl. exceptionals net of tax, incl. SBPs) was 7.2p from 6.3p in H1’24. Net cash (incl. leases) at period-end stood at £5.8m, from £5.9m at the FY’24 stage and £4.8m at H1’24. Hospital device decontamination sales (Tristel) increased by 7.3% to £19.6m, with surface disinfection (Cache) sales up by 4.3% to £1.7min, other products up by 22% to £1.2m. Operational measures underway to improve growth include addressing temporary staff disruptions in France and Australia, and refining the Cache sales model, including a focus on high-priority areas for disinfection such as ICUs’, operating rooms and neonatal wards. In the US, Tristel Duo is gaining rising traction with existing and new accounts, although, as previously announced, the sales process is taking longer than initially expected. During the period, Tristel conducted over 2,200 online training events to help drive uptake. Solid results, reiterate Buy A strong set of results, highlighting an earnings growth trajectory in line with our expectations. We leave our forecasts unchanged and reiterate Buy.
We update our thoughts on our coverage, setting out expectations for the upcoming reporting season which we expect to be relatively benign, with peer reporting suggesting that market conditions are steady to improving. After a period of underperformance the sector has had a good first couple months of the year but there are still plenty of interesting names out there. Our favoured stocks at the value end are SPI and HVO, while we like CTEC, OPT and AMS as GARP names and SCLP, KOO and CVS as event driven stocks. In terms ways to play the turnaround in the pharma services sector we like MXCT and OXB.
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Growth targets to be met or exceeded Tristel has this morning released an AGM trading update, flagging a record half-year performance. Management expects the business to hit, if not exceed, its 3-year CAGR target of 10-15% by 30th June 2025 (FY’22-25e: 15.2%) and it continues to trade in line with expectations for the full year. Growing US uptake Although initial uptake of ULT has been impacted by lengthy hospital procurement processes, as previously announced, the growing sales pipeline remains robust, supported by positive customer feedback and, importantly, the inclusion of Tristel ULT in the American National Standard for high-level disinfectants. Meanwhile, the regulatory process for Tristel OPH (ophthalmic devices, not in our model) remains underway. A strong update A confident trading update, highlighting solid growth in line with our expectations. We forecast an FY’24- 27e revenue & EPS CAGR of 13% & 16%, respectively. We leave our forecasts unchanged and reiterate our Buy.
Tristel has published its results for the 12 months to June 2024, reporting revenues of £41.9m, up 16% YoY and adjusted EBITDA of £10.8m at a margin of 26%. Revenues were driven by the Tristel brands, which generated revenues of £36.4m, up 18% YoY and representing c87% of group sales. The board has proposed a final dividend that takes the full-year DPS to 13.52p, up 29% YoY. Tristel closed FY24 with cash and equivalents of £11.8m and no debt. We have upgraded our FY25 forecasts, driven by an increase of 2% to our FY25 revenue forecast and have introduced FY26 forecasts, which anticipate an uptick in revenue growth, which we see supported by expansion in the US and European growth of the Cache product portfolio. We believe Tristel is in a strong position to deliver growth with the US opportunity offering significant value creation potential in our opinion.
Strong results Tristel has this morning announced results for the year to 30th June. Revenue for the year was £41.9m (+16% YoY), as indicated in the trading update on 22nd July. Hospital decontamination sales were £36.4m (in line with our £37.7m forecast), representing 87% of revenue. The UK represented 39% of total sales, up from 35% in FY’23, helped by price increases in longer-term supply agreements. PBT for the period was £7.1m vs. £5.1m in FY’23 (£8.2m vs. £6.2m excluding share-based payments), in line with our £7.3m forecast. EPS (FD) was 13.54p, a touch ahead of our 12.90p estimate as a result of a lower-than-expected tax charge net of patent box credits. Early US traction Although lengthy US hospital system procurement processes continue to present a challenge, Parker Laboratories has started manufacturing and commercialising Tristel ULT, with an increasing number of clinics and hospitals onboarded during Q4. Our view A strong set of results in line with our expectations and guidance. Tristel expects continued growth across all markets in FY’25 and remains committed to the financial targets set out in its financial plan for FY’22-25. We continue to expect strong growth in US royalties from FY’25e: around 215 million ultrasound examinations are performed in the US every year, approx. 20% of which (mainly endocavity exams) require high-end disinfection. We expect Tristel ULT to, over time, capture around 35% of the addressable volume (the product gained De Novo FDA approval in 2023 as the first topically applied, high-end disinfectant in the US market). We place our forecasts and target price under review. We reiterate Buy.
There weren’t any surprises in Tristel’s numbers with the company delivering impressive revenue growth and holding EBITDA margins flat. However, progress in the US has been slow, with the evaluation and approval phases taking more time than expected. Speaking to the company it sounds like most of the delays are bureaucratic in nature, but it does mean that it will take longer than expected for the US opportunity to derisk. The company is leaving guidance broadly unchanged but, in our view, the slow US progress means that forecast risk is increased. We will review our numbers post the analysts’ meeting, but we lower our price target to 360p, reducing the multiple we use to value the business from 15x to 13x NTM EBTIDA to capture this risk. We remain of the view that the opportunity in the US is sizeable, hence we remain Holders.
Tristel has published a trading update for its FY24 reporting period to the end of June 2024. The company notes strong trading through the period, generating growth ahead of both our forecasts and the company’s own performance targets. FY24 revenues grew 16.4% to £41.9m versus the Cavendish estimate of £40.0m and Tristel’s performance target of annual average revenue growth of 10-15% over three years. Adjusted profit before tax (PBT) will be no less than £8.0m versus our estimated £7.6m, indicating a margin of at least 19.1% (Cavendish estimate: 19.0%). With the start of commercialisation of Tristel ULT disinfectant in US and recent EU approvals for the Cache brand, we believe Tristel is in excellent shape to maintain growth and cash generation going forward.
We’d love to turn buyers on Tristel as we believe that it will ultimately be successful in the US but we continue to struggle with the valuation that leaves no room to manoeuvre, in our view. Our forecasts are based on pretty aggressive markets shares – 8% of TAM and 23% of SAM by FY25E and in our experience it always takes longer than expected for US hospitals to convert. With the shares at a premium to all of our valuation methodologies, that leaves Tristel vulnerable to any bumps along the way. We therefore remain Holders.
Tristel has reported results for the 6-months to December 2023, noting ‘record performance on all levels’. Revenue for the period grew 20% YoY to £20.9m supported by both volume and price. Gross margin improved to c84% for H1/24A from 81% in H1/23A, and though investment in employees (including new hires) saw increased SG&A expenses, adjusted EBITDA grew 18% YoY to £5.4m at a margin of 26%. Tristel is proposing a dividend of 5.24p, doubling the previous interim dividend and reflecting the company’s updated dividend policy. The company remains debt free and increased its cash position to £10.8m during the period. With a strong existing business and sales in North America just beginning, we believe Tristel is in an excellent position to deliver further revenue growth, improving profitability while continuing to return cash to shareholders.
Tristel delivers a record first half, with 20% revenue growth and higher gross margins, leaving current FY consensus expectations more than achievable, and as result, we expect to see 5-10% upgrades to PBT. The business is underpinned by increased diagnostic procedure demand and appears in very str
Strong results in-line with 19th December trading update Tristel has this morning released H1 results for the period to 31st December. Revenue for the period was £20.9m vs. £17.5m in H1’23 (+20), in line with the projections in the trading update on 19th December, with growth across all major geographical markets. Gross margin improved to 84% vs. 81% in H1’23 (and FY’23), with adjusted EBITDA of £5.4m vs. £4.6m (+18%). The Board is recommending a doubling of the interim dividend to 5.24p vs. 2.62p in both H1’23 and H1’22 In a separate announcement, the company has confirmed that its TANK system has received a positive recommendation following review under the EU MDR regime and UKCA, with launch expected before the end of the financial year. Increasing North America traction expected Tristel’s US partner, Parker Laboratories, completed its first production run of Tristel ULT in October. ULT is expected to gain increasing commercial traction in the US market through the remainder of the current financial year and beyond, as the first chlorine dioxide based (and first topically applied) disinfectant to gain FDA approval for high-end disinfection of ultrasound probes. Following a successful beta launch by Parker, an extensive marketing and trade show programme is planned for the rest of 2024. Our view A positive set of results with encouraging gross margin improvement ahead of expectations (FY’24e: 82%), with a positive outlook. We place our target price under review.
There weren’t any surprises in Tristel’s interims with the numbers in line. New information was the UK / European approval of Cache, Tristel’s surface disinfection offering and that Tristel has generated revenue of £46k from ultrasound decontamination in the US in the first 10 weeks since launch. The company is now guiding to US sales for FY24E of around £500k which is less than the £1.5m we’d pencilled in, but strength elsewhere will more than offset this and we anticipate upgrading our FY24E EBITDA forecasts by around 5%. Our Hold call hasn’t been right so far, but we stand by our thesis – we think there is good chance the US ramp up will take longer than expected and that risk isn’t adequately factored into the current valuation. We increase our TP to 420p to reflect the passage of time and remain Holders.
Tristel announces Health Canada has approved Tristel ULT well ahead of the original target, and could see a commercial launch during FY24. Along with the FDA approval received in Jun-23, Tristel ULT can now be manufactured & sold throughout North America. Furthermore, Tristel is preparing its d
In this report, we refine our US model, now including the expansion of Tristel ULT into our financial forecasts. We assess how this impacts the Group, while also exploring the opportunities beyond ultrasound, which the Jun-23 De Novo approval has now paved the way for. Along with a well underpinned
Meeting Notes - Nov 28 2023
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Given Tristel had already updated on trading in July, we weren’t expecting any surprises so a lower-than-expected tax charge (which will be ongoing) and a positive change in the dividend policy should be well received. That aside there wasn’t any new information in the statement and while the company is making progress in the US it is too early for any meaningful evidence of uptake. We leave our forecasts and price target unchanged and remain holders, with the shares already assuming a positive US outcome.
Tristel’s FY 2023 results were in-line with the July trading update, with revenues of £36.0m (+16% or 22% for continuing operations) and adjusted pre-tax profit of £6.2m (+36%, vs. Cav £6.0m), resulting in 41% adj. EPS growth (helped by lower tax charge). We leave adj. PBT for FY 2024E unchanged at £7.6m (+24%), although increase adj. EPS by 11%, due to a lower tax charge, and introduce FY 2025 forecasts, calling for adj. PBT and adj. EPS of £10.0m (+31%) and 16.5p (+20%), respectively; driven in large part by the royalty stream from Parker Labs in the US, for which the nationwide launch of Tristel ULT is underway. We increase our target price to 525p, at which level, the stock would trade on c.38x FY 2024E P/E with a free cashflow yield of 2.6% and rising ROCE (24.6% rising to 30.0% in 2025E), of which c.173p is represented by the NPV of royalties for Tristel ULT/Tristel DUO in the US.
Strong performance, dividend raised Tristel has announced results for the FY to 30th June. Revenue for the period was £36.0m, +16% YoY, ahead of our £34.4m estimate, with adj EBITDA of £9.0m vs. our £8.7m forecast and adj PBT (including share-based payments) of £5.1m, in line with our £5.0m. The revenue beat was a result of higher-than-expected sales of device disinfection products. Cash & equivalents (incl. deposits) of £9.5m at period-end was a touch ahead of our £8.9m estimate. A proposed final dividend of 7.88p (vs. 3.93p in FY’22) brings the total dividend for the year to 10.50p, from 9.55p (including a 3.0p special dividend) in FY’22, a 10% increase YoY, ahead of estimates. Going forward, the company intend to grow dividends in line with EPS (and at a minimum rate of 5% pa). North America on track In June, the US FDA granted Tristel ULT approval as a Class II device, for immediate sale as a high-level disinfectant for endocavity ultrasound probes and transducers that may come into contact with non-intact skin. A US launch is expected during the current financial year. Meanwhile, sales of OPH (for ophthalmic devices) commenced in Canada during Q1’24. Positive outlook, reiterate Buy Against a background of normalised market conditions, strong cash generation and shareholder returns, and with a significant US opportunity ahead, we reiterate Buy (we upgraded from Hold on 29th June – see here). We currently expect ULT to gain a 35% share of its US addressable market at peak (by FY’29e), with a 24% royalty receivable on net sales by Tristel’s US partner, Parker Laboratories. We place our forecasts and target price under temporary review.
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Any reference to a partner in relation to Hybridan LLP is to a member of Hybridan LLP or an employee with equivalent standing and qualifications. A list of the members of Hybridan LLP is available for inspection at the registered office, 2 Jardine House, The Harrovian Business Village, Bessborough Road, Harrow, Middlesex HA1 3EX. *A corporate client of Hybridan LLP ** Arranged by most recent first *** Alphabetically arranged Dish of the day Joiners: No joiners today. Whilst we were away: Friday 25 August: RegTech Open Project PLC (RTOP) joined the Main Market of the London Stock Exchange via a direct listing without raising any monies. RTOP’s Italian owner The AvantGarde group valued the firm at circa £65m on the first day of dealings and shares opened at 111p. Leavers: Trackwise Designs has left AIM today. Whilst we were away: Friday 1 September: Axiom European Financial Debt Fund left the Main Market of the London Stock Exchange. Thursday 31 August: Pelatro plc left AIM. Friday 25 August: BlueRock Diamonds left AIM. Thursday 24 August: Best of the Best Plc left AIM. What’s cooking in the IPO kitchen?** Announced ITF 18 August: Tribe Technology, a disruptive developer and manufacturer of autonomous mining equipment intends to IPO on the AIM market. The Company plans to raise gross proceeds of approximately £4.59m from a placing and subscription at 10p per new Ordinary Share. A market capitalisation of £22..2m is anticipated upon Admission on 5 September. Announced ITF 12 July: Substrate Artificial Intelligence, an artificial intelligence company based in Spain that creates, buys and scales companies around AI in diverse sectors such as fintech, agritech, energy, human resources, and health, intends to join the Access Segment of the AQSE Growth Market. Admission delayed. Announced ITF 6 July: Blackpoint Biotech plc, a medical cannabinoids company established to fulfil gaps in the medical cannabis market by creating products that provide fast onset of action and accurate dosing, intends to join the Access Segment of the AQSE Growth Market. Admission delayed. Our daily digest of news from UK listed Small and Mid caps Banquet Buffet*** Advanced Medical Solutions Group 187.5p £407.3m (AMS.L) The specialist in tissue-healing technologies announces a trading update for the year ending 31 December 2023. The Company believes it to be prudent to remove the royalty from Organogenesis in its entirety from Q4 2023 guidance onwards. The 2023 full year impact is expected to be a reduction of £2m to adjusted pre-tax profit. In FY24 and FY25, the removal of the royalty is expected to reduce adjusted pre-tax profit by £4m p.a. with a similar pro-rata impact in FY26 until the end of the agreement in September 2026. As reported in the July trading update, the first half was impacted by reduced royalty income from the patent licencing agreement with Organogenesis. In August 2023, Organogenesis announced that changes to US reimbursement coverage for the treatment of diabetic foot ulcers and venous leg ulcers has created uncertainty regarding the revenue outlook for some of its key products, including those utilising AMS patents. ANGLE 11.75p £30.6m (AGL.L) The liquid biopsy company with innovative circulating tumor cell (CTC) diagnostic solutions for the research and diagnostic oncology market announced the launch of its Portrait™ Flex CTC assay. The assay is provided as a service from ANGLE's Onc-ADaPT GCP-compliant laboratories and conducted by an expert team with over 10 years' experience in CTC analysis. CTCs captured and harvested using ANGLE's Parsortix technology are subsequently enumerated and characterised with the Portrait Flex assay. Samples are analysed using immunofluorescence staining for epithelial, mesenchymal, blood lineage and nuclear markers, with the opportunity to include an additional biomarker tailored to customer needs. Arecor Therapeutics 190p £58.2m (AREC.L) The biopharmaceutical group advancing today's therapies to enable healthier lives announces that its subsidiary company, Tetris Pharma Ltd, has established an exclusive commercialisation agreement with Goodlife, who will act as sole partner for the import, marketing and distribution of Ogluo in the Benelux region. The Zorginstiuut Nederland (the National Healthcare Institute of the Netherlands) has approved Ogluo at the requested price on List 1B and Goodlife is expected to launch the product in the Netherlands during H1 2024. CleanTech Lithium 54p £57.5m (CTL.L) The exploration and development company advancing sustainable lithium projects in Chile provides an update on the commissioning of the DLE Pilot Plant. The plant is designed for process optimisation and to produce a purified concentrated eluate that will feed the downstream process to deliver 1 tonne per month of lithium carbonate equivalent. The first of two parts of the DLE columns, and rotary valve, arrived recently at the Company's facility in Copiapó and are being installed. The second shipment, which will comprise an electrical cabinet, pumps and auxiliary equipment, is due to arrive in the coming weeks. Commissioning of the plant is expected to be finalised in Q4 2023. Lexington Gold 6.15p £20.4m (LEX.L) The gold exploration and development company with projects in North and South Carolina, United States, announces its unaudited interim results for the six-month period to 30 June 2023. Net loss for H1 2023 from continuing operations was US$0.4m (H1 2022: US$0.37m). The cash position was US$0.28m as at the half-year end (31 December 2022: US$0.42m). Post-period end, the Company announced that it had raised approximately £2.5m (gross) to the proposed acquisition of a 76% interest in White Rivers Exploration Proprietary Limited, which holds interests in a series of significant gold exploration tenements in South Africa's Witwatersrand gold field. Physiomics* 1.95p £2.6m (PYC.L) The oncology consultancy using mathematical models to support the development of cancer treatment regimens and personalised medicine solutions, announces the hiring of a new member of its senior management team. Effective today, Dr Peter Sargent will be joining the Company as Chief Operating Officer (COO). Prior to joining, Dr Sargent held a senior management role at global consultancy business Syneos Health Inc (NASDAQ: SYNH). The initial focus of the COO role will be to strengthen the operational performance of the Company and in particular drive the key priorities: expansion and diversification of its client base; expansion of its consulting business into the adjacent area of pharmaceutical biostatistics services; and exploration of opportunities around its personalised oncology software offering. Sareum Holdings* 82.5p £57.8m (SAR.L) The clinical-stage biotechnology company developing next generation kinase inhibitors for autoimmune disease and cancer, announces the successful dosing of the first subjects in the multiple ascending dose part of its Phase 1a clinical trial for lead programme SDC-1801. SDC-1801 is a dual TYK2/JAK1 kinase inhibitor being developed as a potential new therapeutic for a range of autoimmune diseases with an initial focus on psoriasis. The safety and pharmacokinetics data from the initial cohorts in Part 1 of the trial indicate a favourable profile and fully support oral dosing of patients once daily. Full safety data from the Phase 1a trial are expected to be available during the first half of 2024 and, provided satisfactory results are obtained, a Phase 1b clinical study is expected to commence as soon as possible thereafter in psoriasis patients. Trident Royalties 41.5p £120.9m (TRR.L) The diversified mining royalty company announces that it has entered into a binding sale and purchase agreement to acquire an existing lithium royalty from Atherton Resources LLC over projects owned by Anson Resources Ltd. (Anson, ASX:ASN) in the Paradox Basin in Utah, USA. The Royalty notably covers Anson's flagship Paradox Lithium Project. The Royalty is a 2.50% net smelter return (NSR) royalty tied to Anson's ownership of the projects. At spot prices of approximately US$35,000 per tonne of lithium carbonate equivalent, the Royalty would pay approximately US$11m p.a. for the first ten years. Tristel 340p £16.9m (TSTLL) The manufacturer of infection prevention products announces that it has submitted its application to Health Canada to approve Tristel ULT as a Class II Medical Device for endocavity ultrasound probes and skin surface transducers. Tristel ULT is a hand-applied high-level disinfectant foam for medical devices and was approved by the United States Food and Drug Administration (FDA) in June this year for use on endocavity ultrasound probes and skin surface transducers. If the application succeeds, this will allow commercial launch during H2 FY 2024 instead of during H2 FY 2025. Zenova Group 5p £5.3m (ZED.L) The provider of proprietary fire safety and heat management solutions announces an inaugural order in Greece for its proprietary fire-retardant intumescent Zenova IP paint combined with proprietary thermal insulation for solar panelled roofs of a large international coffee producer with lots of warehouses across the globe. This initial order with a value of £39,800 is important for Zenova for commercial reasons. Solar panels can be seen to add to fire risk to the roof and Zenova's FP paint fire retardant properties can address that concern and make a key difference to insurability. If you would like to unsubscribe, please email enquiries@hybridan.com with “unsubscribe me”. Hybridan Chefs research@hybridan.com
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In an FY23 update, Tristel notes demand for its infection prevention products continue to be very robust across all geographical markets, with an 8% increase in disinfection events y/y and 42% higher than 2019. FY23 revenues are expected to be up 16% to £36m, ahead of NSe/consensus forecasts (£34.2
Upgrade to Buy. With 25% implied upside to our target price, we upgrade to Buy, leaving our forecasts and DCF-based target price of 448p unchanged. Recent FDA approval paves the way for US rollout. As a reminder, on 2nd June, the US FDA granted Tristel ULT approval as a Class II device, for immediate sale as a high-level disinfectant for endocavity ultrasound probes and transducers that may come into contact with non-intact skin. We continue to believe that Tristel’s US partner, Parker Laboratories, is an ideal partner for the commercialisation of ULT in the US, with a well-established, nationwide distributor network and a leading position in the ultrasound gel market. A competitive US offering. We believe the market for high-level disinfection of devices in the US is ripe for change through innovation. Compared with its main competitor, Trophon (a hydrogen peroxide mist system), ULT offers both a faster turnaround time (simplified processing & shorter microbial kill time) and potentially reduced device damage. We estimate that approx. 215,000 ultrasound procedures are performed pa in the US, an estimated 20% of which require high-level disinfection, growing at 3% pa. We expect ULT to gain a 35% market at peak (by FY’29e), with a 24% royalty receivable on Parker net sales. Non-US business continues to perform. Supported by continued growth in non-US markets, we expect a Group FY’22-25e revenue and adjusted EBITDA CAGR of 12% and 19% respectively, with >90% cash conversion. Buy.
De Novo request granted for Tristel ULT. On 5th June, Tristel announced that the US FDA had granted Tristel ULT approval for immediate sale as a high-level disinfectant for endocavity ultrasound probes and for ultrasound transducers that may come into contact with non-intact skin. The approval mandates that the foam is applied using Duo Wipes. Parker Laboratories: an ideal partner. In our view, Parker Laboratories is an ideal partner for commercialisation of ULT in the US, with a well-established, nationwide distributor network, experience of disinfectant products and a leading position in the ultrasound gel market. We believe the market for high-level disinfection of devices in the US (where older modalities such as aldehydes and peracetic acid baths are still widely used) is ripe for change through innovation. Forecast changes. As detailed overleaf, we add US ULT royalties of £0.4m and £1.1m to our FY’24e and FY’25e forecasts, respectively. We are not making any changes to our pre-existing royalty forecasts for Tristel Duo (surface disinfection), which is now registered in all US states. Our revised DCF valuation implies a target price of 448p from 409p (+9.5%). We await updates on the Tristel ULT sales trajectory in due course. In the short term, however, the share price appears up with events, and we move to Hold.
Tristel has received FDA approval for ULT, a high-level disinfectant for use on endocavity ultrasound probes and skin surface transducers, a signifiant inflection point for the company. As discussed in our recent initiation report (Here), our provisional US model suggests revenues of £6-10m p.a. is
‘De Novo’ clearance for Tristel ULT Tristel has this morning announced that the FDA has granted approval for Tristel ULT, for high-end disinfection of ultrasound probes. The decision makes Tristel ULT the first FDA-approved, topical product for high-level medical device disinfection. The company has also confirmed that Tristel Duo, for intermediate-level surface disinfection, is now registered in all US states. Our view FDA clearance of Tristel ULT is, in our view, excellent news for the company; prior high-end disinfection of probes is a requirement for endocavity examinations, which represent around 20% of total ultrasound procedure volume. Compared with its principal competitor, Trophon (an automated hydrogen peroxide mist system), Tristel ULT offers both a faster turnaround time (through simplified processing and a shorter microbial kill time) and potentially reduced device damage. We await more detail on the planned commercialisation in the US in due course. We note that in the US, Tristel has partnered with Parker Laboratories, a leading supplier to the US ultrasound market (including gels and surface disinfectants). We reiterate our Buy recommendation.
Tristel received FDA clearance to market Tristel ULT as a high-level disinfectant (HLD) for use on endocavity ultrasound probes and skin surface transducers that may contact non-intact skin. This is a significant and arguably long-awaited, value-enhancing milestone for the company, enabling it to market DUO in the single largest ultrasound market in the world: a market with c.215m annual procedures and one that Tristel is very familiar with, given ultrasound accounts for c.50% of its annual revenues. We estimate the NPV of future royalty streams for Tristel ULT in the US to be worth c.£82m or 173p per share, with a range of 117-315p. We raise FY 2024 adjusted pre-tax profit by £0.8m (12%) to £7.6m, with adjusted EPS rising 6% to 12.3p (+23% growth on FY 2023), held back by a higher tax rate. We raise our target price to 500p.
Tristel is a unique play within UK Medtech, offering high-level disinfectants, backed by a proprietary chemistry, used for the decontamination of medical devices & surfaces in hospitals. We think Tristel could more than double revenue & profits over five years, with the base business underp
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Any reference to a partner in relation to Hybridan LLP is to a member of Hybridan LLP or an employee with equivalent standing and qualifications. A list of the members of Hybridan LLP is available for inspection at the registered office, 2 Jardine House, The Harrovian Business Village, Bessborough Road, Harrow, Middlesex HA1 3EX. *A corporate client of Hybridan LLP ** Arranged by most recent first *** Alphabetically arranged Dish of the day Joiners: No joiners today. Leavers: No leavers today. What’s cooking in the IPO kitchen?** PanGenomic Health Inc, currently traded on the Canadian Securities Exchange market. intends to dual list on the AQSE Growth Market, as a springboard to expand footprint of its personalised and self-care digital health platforms in the UK/EU markets. The Company has three platforms: Nara App, Mindleap.com and the PlantGx Platform. PanGenomic Health Inc is currently traded on the CSE. 88.6% of the total issued shares will be floated. Admission is expected 21 February. Our daily digest of news from UK listed Small and Mid caps Banquet Buffet*** Goldplat SHARES SUSPENDED (GDP.L) The mining services group, with international gold recovery operations located in South Africa and Ghana, servicing the African and South American Mining Industry, announces an operational update for Q2. The two recovery operations continued to produce operating profit during Q2, albeit down 41% to £1.382m (Q2 2021: £2.356m). The Ghanaian operation continues to perform as a result of the steady supply of material and achieved an operating profit for Q2 of c.£1.026m (Q2 2021: £1.012m), however the South African operations have been impacted during the last two months of Q2 by electricity cuts in the country. Harland & Wolff Group Holdings 15.4p £26.6m (HARL.L) The UK quoted company focused on strategic infrastructure projects and physical asset lifecycle management announces that it has secured six new contracts within the defence, cruise & ferry and commercial fabrication markets. These contracts are expected to be completed during the next 12-18 months and have an aggregate value in excess of £10m. The Board announced that the Company must continue to rely on securing and executing smaller projects across its yards to build on the experience and skills of the workforce. Jade Road Investments* 1.25p £1.4m (JADE.L) The London quoted global investment vehicle focused on providing shareholders with attractive uncorrelated, risk-adjusted long-term returns announces, following the Company's announcement on 31 January 2023, that it has launched its Equity Fundraise of US$1.75m at a price of £0.0075p per share. The Company reports that circa $183k in gross proceeds have been raised by Hybridan LLP on behalf of the Company, reducing the total fundraise amount to $1.567m by the underwriting investor Heirloom LLC. The completion of the fundraise will provide additional working capital, as well as for new investments in accordance with the revised investing policy which is focused on looking for investing opportunities producing income returns with a secondary focus on capital gains for its shareholders. Keystone Law Group 530p £166.2m (KEYS.L) The network and tech enabled challenger law firm announces the following trading update for the year ended 31 January 2023 (FY 2023). The Company has a total of 507 fee earners at the year end, despite the ongoing competitive nature of the legal recruitment market. The Board now expects both revenue and adjusted profit before tax for FY 2023 to be marginally ahead of current market expectations. LungLife AI 100p £25.5m (LLAI.L) A developer of clinical diagnostic solutions for lung cancer announces its audited preliminary results for the year ended 31 December 2022. The Company generated revenues of US$24k in the year (2021 US$195k) comprising wholly of royalty income from its sub licensee in China. The total loss for the year was US$7.6m, (FY2021: US$7.4m). EBITDA loss for 2022 excluding share-based payments was $6,841,000 (FY2021: c.US$5.4m). Cash and cash equivalents at the end of the year was US$3.088m (FY2021 - US$9.2m). The focus is the conclusion of the Group’s clinical validation study and, while optional, subsequent submission to FDA, and planning for the clinical utility study as part of the commercialisation pathway. Proteome Sciences 4.72p £13.9m (PRM.L) A specialist provider of contract proteomics services to enable drug discovery, development and biomarker identification provides an unaudited trading update for the financial year ended 31 December 2022. The Company expects to report a c.53% increase in Group revenues to c£7.8m (2021: £5.1m), with sales, royalties and milestones attributable to TMT®/ TMTpro™ reagents increased by 56% to c£5.0m (2021: £3.2m). The Company expects to report an increase in operating costs to c£5.9m in 2022 (2021: £4.7m). The Company expects an estimated EBITDA of c£2.0m (2021: £0.6m) for the year. The Board anticipates growth in TMT®/TMTpro™ and strong progress for proteomics biomarker services, with over £1.1m in purchase orders being carried forward into 2023. Roquefort Therapeutics* 7p £9.0m (ROQ.L) The biotech company focused on developing first in class medicines in the high value and high growth oncology market, announces that it has signed an exclusive licence and royalty agreement, for the field of medical diagnostics only, with a leading international diagnostics company, Randox Laboratories Ltd (Randox), in relation to its Midkine antibody portfolio (Randox Licence Agreement). Roquefort Therapeutics has granted an exclusive worldwide licence (excluding Japan,) for a period of ten years to utilise its Midkine antibodies in the field of medical diagnostics. Roquefort Therapeutics estimates that the total overall transaction value to the Company over the life of the agreement is in excess of £5m. This highly complementary and synergistic partnership with the UK’s leading diagnostics company, Randox, enables Roquefort Therapeutics to remain focused on developing first-in-class medicines. Tekcapital 16.925p £25.5m (TEK.L) The UK intellectual property investment group focused on creating valuable products announces that it has raised a total of £2.25m (c.US$ 2.7m) before expenses at a price of 16p per share. The net proceeds of the Placing will primarily be used to accelerate the growth of the Company's portfolio companies, specifically, £0.6m to build commercial inventory of MicroSalt Limited; £1m to purchase autonomous shuttles for Guident’s Remote Control Monitoring Centre; and the remainder of the funds will be used for working capital. Ten Lifestyle Group 96.5p £80.9m (TENG.L) The platform driving customer loyalty for global financial institutions and other premium brands announces that it has won a new mandate to launch a new digitally enabled concierge programme in the Americas to premium customers in the second half of calendar year 2023. A banking product on-sale with a corporate client in EMEA, that includes the Group’s digitally enabled concierge and lifestyle services, has proved popular with its customers, resulting in the corporate client agreeing to pay Ten more per member to further drive their customer loyalty objectives. These contract developments are incorporated within the Board's current expectations for the year. Tristel 330p £155.9m (TSTL.L) The manufacturer of infection prevention products utilising proprietary chlorine dioxide technology announces its interim results for the six months to 31 December 2022. The Group announced revenues up 16% to £17.5m (2021: £15.1m); overseas sales up 12% to £11.2m (2021: £10m); UK sales up 24% to £6.3m (2021: £5.1m); and reported EBITDA up at £3.9m (2021: £0.2m). The Group further reports it has no debt and cash reserves of £8.4m (2021: £8.8m) after paying dividends of £3.3m (2021: £1.9m). Tristel have launched Tristel Duo into the North American ultrasound and ophthalmology markets and the Group looks to the future with confidence. If you would like to unsubscribe, please email enquiries@hybridan.com with “unsubscribe me”. Chef: Emily Liu 0203 764 2344 emily.liu@hybridan.com Chef: Sacha Morris 0203 764 2345 sacha.morris@hybridan.com
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Tristel reported a strong set of interims, demonstrating a return to pre-pandemic growth rates. Revenues rose 16% (21%, excluding one-off distortions in H1 2022), with adjusted EBITDA of £4.6m (+29% and margins +90bps to 26.4%) and adjusted pre-tax profit of £3.1m (+43%). Cash at 31 December was £8.4m, after a £3.3m dividend payment (including £1.4m special dividend), with FCF rising 20% to £3.3m. We look forward to FDA clearance later in 2023, the value for which has been boosted by re-negotiated commercial terms with its US partner, Parker Labs. H1 represented 51% of forecast FY 2023 revenues. Historically, Tristel has recorded 52-54% of FY sales in the second half, which provides the potential for forecast upgrades. We reiterate our target price of 480p, recognising that this potentially excludes the full value of the US opportunity.
Strong growth, high profitability Tristel has this morning released interims for the period to 31st December. Revenue for the period was £17.5m (+16% YoY: volume +12%, price +4%) with adjusted EBITDA of £4.6m (+28% YoY), representing an EBITDA margin of 26%. EPS (including share-based payments) was 3.14p, and an interim dividend of 2.62p (flat YoY) has been proposed. The Tristel range of products (for high-end disinfection of medical devices, including ultrasound probes) represented 84% of sales, Cache (surface disinfection products) 10%, Other 6%. North America progress on track Tristel Duo OPH (Ophthalmology) was launched in Canada over the period, and Duo ULT (Ultrasound) was launched in the US under the existing EPA approval (for external & surface use). An FDA approval decision for Duo ULT remains expected in June 2023. Our view We expect continued strong growth over the forecast period and beyond, supported by a well-documented post-Covid backlog of diagnostic procedures, normalised hospital procurement, expanding sales in North America, and market share gain by Cache, over time, at the expense of pre-wetted (plastic) wipes across the Group’s main markets. We expect Duo ULT to become the first FDA-approved, topical product for high-level medical device disinfection. Compared with its principal competitor, Trophon (an automated hydrogen peroxide mist system), Tristel Duo ULT offers both a faster turnaround time (through simplified processing and a shorter microbial kill time) and potentially reduced device damage. We are not making any changes to our estimates at this time. We reiterate Buy, target price 396p.
FY’22 results flagged demand recovery. FY’22 sales were H2 weighted (H1:H2 44:56) as expected, and the solid H2 performance has continued into FY’23 (Q1’23 +20% YoY), driven primarily by a recovery in ultrasound examination procedure volume across all main markets. Driven by Tristel. The Tristel range of products for high-end, sporicidal disinfection of medical devices (including ultrasound probes for endocavity examinations, representing approx. 20% of diagnostic ultrasound procedures) represented 89% of core products sales. We expect a continued positive trend over the forecast period (FY’22-25e CAGR 14%), supported by a well-documented backlog of diagnostic procedures post-Covid. Cache well-placed for medium-term growth. Although sales of Cache surface disinfectants remain subdued, we expect sales to benefit, over time, from a normalisation of hospital procurement and a return to face-to-face marketing. In our view, Cache is well-placed to disrupt the pre-wetted wipes market through superior cost efficiency and a reduction in plastic waste. FDA approval of Tristel DUO ULT expected by the end of FY’23. We expect Tristel DUO ULT to become the first FDA-approved, topical product for high-level disinfection. Compared with its principal competitor, Trophon (an automated hydrogen peroxide mist system), Tristel DUO ULT offers both a faster turnaround time (through simplified processing and a shorter microbial kill time) and potentially reduced device damage. Minor forecast changes, reiterate Buy. As shown overleaf, we make immaterial changes to FY’23-24e EBITDA, with a lower expected share-based payment charge resulting in EPS upgrades. Our valuation implies a target price of 396p (from 415p).
Dish of the day Joiners: Guanajuato Silver Company (AQSE: GSVR) has joined the AQSE Growth Market. Leavers: Eastinco Mining and Exploration left the AQSE Growth Market and joined the Standard List of the Main Market (yesterday we incorrectly said it had joined AIM.) Lamprell has left the Main Market. What’s cooking in the IPO kitchen?** Ithaca Energy, a UK independent exploration and production company focused on the UK North Sea, intends to join the Premium Segment of the Main Market. Ithaca Energy is one of the largest independent oil and gas companies in the UKCS, ranking 2nd by resources and 3rd by production. The offer will initially comprise new ordinary shares and the proceeds will be used to repay existing shareholder debt, including a capital note in favour of DKL Energy Limited, the Company’s immediate shareholder. Immediately following Admission, the Company will target a free float of at least 10% of its issued share capital and expects to be eligible for inclusion in the FTSE UK indices. BWP REIT, a newly formed single asset company, announces its intention to raise £35m through the issue of 35m ordinary shares at the issue price of £1 per share, to acquire Bridgewater Place, an office-led mixed use property situated in central Leeds and valued at £63m. BWP REIT will apply for listing on the Wholesale Segment of the International Property Securities Exchange (PSX). Expected 27 October 2022. World Chess plc, a leading chess organisation, intends to join the Main Market. World Chess Plc is the holding company of a group which aims to promote the mass market appeal of chess globally through the commercial offering of chess related activities. Euro 8m to be raised. Expected November 2022. OTAQ plc, (OTAQ.L) the technology company with three divisions: Aquaculture, Geotracking Devices and Offshore intends to delist from the Main Market and join the AQSE Growth Market. OTAQ is developing adjacent technologies to take advantage of a number of growth initiatives that will broaden the Group’s current product portfolio in the global marine aquaculture sector and facilitate entry and growth into the geotracking devices sector. Expected 9 November 2022. Raising a total of £3.6m, £2m raised. Cooks Coffee Company ltd, an international coffee focused café chain which currently owns the Esquires Coffee and Triple Two Coffee Brands, intends to join the AQSE Growth Market. The Company is the 4th largest coffee focused café chain in the UK. Cooks Coffee is currently listed on the New Zealand Stock Exchange. Raising £1.5m through a rights issue in New Zealand and a private placement. Expected 2 November 2022. TECC Capital plc, to be renamed EDX Medical Group, intends to join the AQSE Growth Market. EDX operates a molecular biology and diagnostics laboratory in Cambridge, UK, from which it performs research & development, provides Polymerase Chain Reaction (PCR) testing and genomic sequencing services, undertakes quality assurance and has established expertise in the design, development, validation and sourcing of Lateral Flow Tests on a commercial scale. Due 31 October 2022. Streaks Gaming plc, a UK-based provider of conversational gaming products intends to join the Standard Segment of the Main Market this autumn. The flotation is expected to value Streaks at approximately £10.2m (pre-money) and will make it the first LSE-listed "pure-play" conversational gaming company. Raising between £5-10m. Delayed but due in October. Georgina Energy, focusing on the exploration, development and monetisation of helium, hydrogen and hydrocarbon interests located in Australia intends to join AIM. Georgina Energy has two principal onshore interests: (1) Mount Winter Prospect in the Amadeus Basin in Northern Australia, which the Company has a right to earn an initial 75% interest; (2) Hussar Prospect, 100% owned by the Company, located in the Officer Basin in Western Australia. Expected late October. Welkin China Private Equity, a newly established closed-ended investment company dedicated to investing in unquoted Chinese companies, has decided to pause its IPO, it says “due to macroeconomic uncertainty.” The Board will reassess an IPO it said “at a later date once macroeconomic conditions have improved”. Our daily digest of news from UK listed Small and Mid caps Banquet Buffet*** Altitude Group 22.5p £15.9m (ALT.L) The operator of a leading marketplace for personalised products, issues a trading update for the six months ended 30 September 2022 (H1 23). Unaudited revenue is expected to be no less than £7.6m, up 30% year-on-year. As a result of the strong business performance, an advantageous exchange rate, and having not experienced any negative impact of the macro-economic turbulence, the Group continues to trade well and expects to be at least in line with market expectations for the financial year to 31 March 2023. Deepverge 2.75p £6m (DVRG.L) The environmental and life science group of companies that develops and applies AI and IoT technology for the analysis and identification of bacteria, virus and toxins, advises that the fundraising process continues to progress. Meanwhile, the following Board changes are expected to take effect immediately upon the announcement of the Proposed Financing: Gerard Brandon will step down as Chief Executive remaining on the board as Executive Director with responsibility for the Modern Water Division. Dr Nigel Burton will become interim Chief Executive while the Company commences the search for a new Chief Executive. Fionan Murray will remain as Executive Director with responsibility for the Skin Trust Club and Labskin Division. Camillus Glover will leave the board but will remain as CFO while the Company commences the search for a new Group Finance Director. A further independent non-executive director will be appointed as soon as practicable. Deepverge also provides details of two historical related party transactions dating back to 2018 and 2019 respectively. Jubilee Metals Group 11.45p £306.2m (JLP.L) The diversified leader in metals processing with operations in Africa, announces its audited results for the year ended 30 June 2022 (FY22). Revenue increased by 5.4% to £140m, attributable to the increased production of PGM, chrome production and copper. EBITDA was £37m, down 29% from £52m in FY21, primarily due to a lower gross margin. The Company confirms its guidance of 44000 PGM ounces for FY23, with potential for growth in earnings as it benefits from the full exposure of the enlarged South African operations. Whilst the cooper has softened into the new financial year, the Company remains positive on the fundamentals of this metal key to the electrification story going forward. KEFI Gold and Copper 0.588p £23.2m (KEFI.L) The gold exploration and development company provides an operational update on the period from 1 July 2022 to 30 September 2022. The Tulu Kapi Gold Project in Ethiopia is under TKGM (planned to be c.70% owned by KEFI). The Hawiah Copper-Gold Project, the Jibal Qutman Gold Project and other Saudi projects are under G&M (planned to be c.30% owned by KEFI). Both TKGM and G&M are technically guided and supported by KEFI. The Tulu Kapi Gold Project and the Jibal Qutman Gold Project are heading for commissioning in 2024 and steady-state production from 2025, with 95% of development financing to be met at the subsidiary levels. The Preliminary Feasibility Study on copper-gold VMS discovery at Hawiah in Saudi Arabia is expected to be completed in Q4 2022. One Heritage Group* 11.5p £4.4m (OHG.L) The residential developer focused on the North of England, announces its audited results for the year ended 30 June 2022. Revenue increased 276% to £1.7m from a combination of the disposal of a co-living property in Burnley, and revenues from development management, co-living, and property services. Operating loss was £2.1m (FY21: £0.8m loss), impacted by an impairment of £1.3m on two development projects due to higher construction price. Net debt increased from £5.38m to £14.95m. Posted period, the completion of its first development, Lincoln House, Bolton in August 2023 has made a positive change to its balance sheet. The Group is expecting to complete a further 3 of its developments in the financial year ended on 30 June 2023. Renalytix 50p £37.4m (RENX.L) The artificial intelligence-enabled in vitro diagnostics company announces that, building on recently established private payer and Medicaid insurance coverage contracts for KidneyIntelX, Federal Medicare Administrative Contractor (MAC) National Government Services (NGS) has initiated payment of claims for KidneyIntelX testing for eligible patients. KidneyIntelX has a CPT code (0105U) that was priced at $950 and became effective as of January 1, 2020. Roquefort Therapeutics* 7.125p £9.2m (ROQ.L) The biotech company focused on developing first in class medicines in the high value and high growth oncology market, announces that its Midkine antibody program update will be presented on 3 November 2022 at the Festival of Biologics conference in Basel, Switzerland. The ROQA1 (CAB 102) and ROQA2 (CAB101) programs have demonstrated efficacy in validated in vivo models of breast cancer and osteosarcoma resulting in a significantly reduced metastatic index (P
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PBT in line with July TU, important post-period events Tristel has this morning announced FY results for the period to 30th June. As indicated in the TU on 18th July, disinfection procedure volumes increased materially in H2 across major markets, resulting in revenue for the year of £31.1m (flat YoY, H1:H2 44:56), with adjusted PBT (before £0.6m of share-based payments and a £2.4m impairment of intangibles) of £4.5m. Disinfection of devices represented 82% of total revenue. On 30th June, Tristel submitted an application for FDA clearance of Tristel DUO ULT for high-end disinfection of ultrasound probes. Tristel DUO ULT is the first high-end disinfectant entering the De Novo pathway, reflecting the lack of comparable products on the US market. Post-period, Tristel announced an additional information request by the FDA, but with unchanged guidance for the expected timing of potential clearance. On 20th Sept, Tristel announced the launch of Tristel DUO for disinfection of medical surfaces in the US, in partnership with Parker Laboratories. Solid outlook The strong H2 trading has continued into FY’23, with Q1’23 sales +20% YoY. Reiterate Buy In our view, Tristel’s chlorine dioxide - based products are differentiated not only in terms of potency but also user-friendliness and reduction of plastic waste. We continue to expect FDA clearance of Tristel DUO ULT in mid-2023. We reiterate Buy. Our forecasts and target price are under review.
FY 2022 results were in line with the July trading update, with revenues of £31.1m (flat, albeit continuing product sales +3% and masking 15% growth in H2) and adjusted pre-tax profit of £4.5m. With NHS Supply stock levels now normalised, the company indicated 20% sales growth Q1 2023. We upgrade FY 2023 adjusted EBITDA and PBT by 6% and 8%, respectively, and introduce FY 2024 forecasts, which call for adjusted PBT of £6.8m (+13%) and adjusted EPS of 11.6p (+9%) that exclude the impact of potential FDA approval. FDA clearance for its medical device disinfection product (DUO ULT) remains on track for mid-2023. Meanwhile, Parker has launched the EPA-approved DUO surface disinfection product that should build awareness of the brand prior to FDA approval. We reiterate our target price of 480p, recognising that this potentially excludes the full value of the US opportunity, but reflecting the pull back in market valuations.
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Any reference to a partner in relation to Hybridan LLP is to a member of Hybridan LLP or an employee with equivalent standing and qualifications. A list of the members of Hybridan LLP is available for inspection at the registered office, 2 Jardine House, The Harrovian Business Village, Bessborough Road, Harrow, Middlesex HA1 3EX. *A corporate client of Hybridan LLP Dish of the day Joiners: Haleon Plc (HLN.L) joined the Main Market following the demerger of the Consumer Healthcare business from the GSK Group to form the Haleon Group. Haleon is a global leader in consumer health, with brands trusted by millions of consumers globally. The group employs over 22,000 people across 170 markets. Leavers: No leavers today. What’s cooking in the IPO kitchen? Unigel Group, intends to join the Aquis Growth Market. Unigel Group is a pioneer in the field of thixotropic gels for the fibre optic cable industry. The Company is also a leading supplier of laminated steel tapes to the fibre optic cable industry in the US. Thixotropic gels and laminated steel tapes are essential components to the rapidly growing global fibre optic cable market. The Group exports to over 40 countries and is a key supplier to almost every leading fibre optic cable manufacturer worldwide and is the industry’s only organisation with multiple manufacturing facilities spread across 3 continents. The Company acts as the holding company for its wholly-owned operating subsidiary, Unitape Limited and its 60% owned operating subsidiary, Unigel (UK) Limited. Expected 1 August. Equipmake Holdings intends to join the Aquis Growth Market. Equipmake is a UK-based technology company, which has developed a range of electrification products for the provision of electric vehicle drivetrains to meet the needs of the automotive, aerospace and other sectors in support of the transition from fossil-fuelled to zero emission powertrains. The Company now has a significant pipeline of opportunities of in excess of £400m at various stages of negotiation, as demand for electric vehicles increases as part of the global decarbonisation movement. Expected 29 July. Georgina Energy, an early-stage resource company with a strategy of actively pursuing the exploration, commercial development and monetisation of helium, hydrogen and hydrocarbon interests located in the Amadeus and Officer Basins in Northern and Western Australia intends to join AIM. Georgina Energy has two principal onshore interests. The first, the Mount Winter Prospect is located in the Amadeus Basin in Northern Australia, which the Company has a right to earn an initial 75% interest. The second interest, the Hussar Prospect is 100% owned by the Company and is located in the Officer Basin in Western Australia. Expected late July. Macaulay Capital is due to join the Aquis Growth Market on 22 July. The Group was formed to originate and manage corporate transactions, raise funds from third parties, invest the Group’s own funds alongside those of external investors and to manage the Group’s investment portfolio with the aim of maximising its value. Our daily digest of news from UK listed Small and Mid caps Banquet Buffet Active Energy Group 4.4p £7.1m (AEG.L) The international biomass based renewable energy business announced the award of Malaysia Patent No. MY-191174-A in respect of the process for beneficiating and cleaning biomass. This patent will be valid until May 2038 and allows Active Energy to exclude others from making and/or selling its biomass product, CoalSwitch® in Malaysia according to the patented processes and systems. The Malaysia patent combines with patents awarded in the United States in 2020 for the manufacturing and production of CoalSwitch ® and in Canada in 2021. Barkby Group 11.2p £16.1m (BARK.L) The diversified business group provided a trading update for the financial year ended 2 July 2022 (FY2022). Revenues are expected to increase by c.29% to £19.4m, with EBITDA returning to a positive contribution of £1.6m for the year. The continuing core business will report revenue of £10.4m and EBITDA of £2.5m for FY2022. Meanwhile, the Board has resolved to dispose of certain non-core divisions and investments, and these will be deemed as discontinued operations. The disposals will also ensure a focus on roadside property development, more likely to attract new investors. CyanConnode Holdings 13p £28.6m (CYAN.L) The UK-based designer and developer of narrowband radio frequency (RF) smart mesh networks for machine-to-machine (M2M) communications, provided a trading update for the financial year ended 31 March 2022. Unaudited turnover for the period exceeds market expectation of £9.3m (FY2021: £6.4m). Cash received from customers during the period is approx. £8.2m (FY2021: £5.3m). It has been a record year for CyanConnode in terms of revenue. Momentum has continued into the new financial year, especially in the Indian market. DeepVerge 11.7p £24.2m (DVRG.L) DeepVerge announced that its environmental division, Modern Water, has been chosen to supply 27 fully integrated Microtox® solutions to monitor water toxicity and pollution in the Qatar region ahead of the 2022 FIFA World Cup. This £1.4m order from Avanceon is the result of a strategic move away from equipment only sales to supplying fully integrated regional monitoring solutions. This order is additional to the £3m of orders in Q2 2022, for China and South Asia and is expected to be shipped later this year. Dianomi 194p £58.3m (DNM.L) The provider of native digital advertising services provided a trading update for the first six months to 30 June 2022 (H1 2022). H1 revenues are expected to be up 4% year-over-year. Management expects revenues for the full year to be broadly in line with market expectations. However, the investments in Dianomi's contextually-led programmatic platform, marketing and people and the additional costs as a public company, have contributed to a decrease in Adjusted EBITDA margin from 10% for H1 2021 to approximately 5% for H1 2022. Adjusted EBITDA margin is expected to improve in the second half of the year. Great Western Mining 0.15p £5.2m (GWMO.L) The exploration company provided an update on its 2022 drilling programme at the OMCO Mine area of the Olympic Gold Project in Mineral County, Nevada where initial results exceed management expectations. Chairman indicated that the most significant development is the apparent identification of unmined portions of the OMCO vein itself. Should laboratory analysis establish grades of gold comparable to those achieved from material mined in the past at the main OMCO vein, a shallow gold resource could potentially be defined and expanded in short order, with minimal additional work. Kore Potash 1.1p £38.4m (KP2.L) The potash development company with 97%-ownership of the Kola Potash Project and Dougou Extension (DX) Potash Project in the Sintoukola Basin located in the Republic of Congo, provided the quarterly update for the period ended 30 June 2022. Engineering, Procurement and Construction contract proposal for the construction of Kola will be based on the outcomes of the study expected in August 2022. This will be followed with the financing proposal. As of 30 June 2022, the Company held US$7.6m in cash. Northern Bear 54.5p £10.2m (NTBR.L) The specialist building and support services provider in Northern England announced its unaudited preliminary results for the year ended 31 March 2022 (FY22). Revenue is £61.1m (2021: £49.2m). Adjusted EBITDA is at £3.6m (2021: £2.3m) prior to the impact of impairments of £2.6m, amortisation, and other one-off costs. Reported loss for the year is £1.3m (2021: £1.8m loss). The net cash position was £2.2m at 31 March 2022 (£2.1m at 31 March 2021). The company is in the process of a strategic review for future growth either by geographic expansion or additional product/service offerings. Tortilla Mexican Grill 125p £48.3m (MEX.L) The largest fast-casual Mexican restaurant group in the UK provided a trading update for the half year ended 3 July 2022 (H1 2022): revenue up by 60% to £26.9m (up by 55% excluding the impact of the Chilango acquisition). During the period, 6 new sites were opened, taking the total number to 84, including the 8 acquired Chilango sites (H1 2021: 58) and with 41% of company-run sites located outside of the M25. Net cash position as at 3 July 2022 was £3.1m. To mitigate the macroeconomic risks, management is updating pricing, driving operational efficiencies, and adopting a multi-platform delivery proposition by partnering with Uber Eats, Just Eat and Deliveroo. Tristel 360p £170.0m (TSTL.L) The manufacturer of infection prevention products provided a trading update for the year ended 30 June 2022 and declares a special dividend. Revenue and adjusted profit before tax for the year from the continuing operations will be in line with consensus forecasts of £28.4m and £4.5m respectively. The consensus expects a 8% decline in revenue and adjusted profit before tax at the same level as the previous financial year. Net cash balances on 30 June 2022 were £9m (30 June 2021: £8.1m). The Company announced a special dividend of 3p per share payable on 10 August 2022. Management indicates a positive outlook this year as the Company is emerging from the disruption caused by Brexit and the pandemic.
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FY trading update Tristel has this morning released a FY’22 trading update, ahead of its Open Day for Shareholders to be held at the company’s HQ in Snailwell. The number of patient & disinfection procedures increased significantly in H2 across all major markets, resulting in a strong H2 performance, as expected. Sales of the Cache range of surface disinfection products also grew during the period. Revenue for the year was £28.4m, in line with our forecast. Adj PBT for the period (before share-based payments) was £4.5m vs. our £4.4m estimate (£2.7m forecast post share-based payments). Cash & equivalents at period-end stood at £9.0m. A special dividend of 3p/share has been declared, payable in August. Recent US filing bodes well for medium-term upside On 30th June, Tristel announced that it had submitted an application for FDA clearance of Tristel Duo ULT, a chlorine dioxide product in a foam formulation for high-end disinfection of ultrasound probes, an indication representing around 40% of Tristel’s global revenue. Tristel Duo is the first high-end disinfectant entering the De Novo pathway, reflecting the lack of comparable products on the US market. Meanwhile Tristel’s US partner, Parker Laboratories (a leading supplier of disposables into US ultrasound clinics), is also progressing state registrations of a separate, surface disinfection version of Tristel Duo. As of 30th June, 24 state approvals had been achieved. Our view The strong H2 performance is in line with our expectations. In our view, Tristel’s chlorine dioxide based products are differentiated in terms of not only potency but also user-friendliness and reduction of plastic waste. We continue to anticipate FDA clearance of Tristel Duo in mid-2023. We reiterate Buy.
Tristel’s interim results were accompanied by the strategic decision to withdraw from non-ClO2 based products. Whilst impacting FY 2022/23 forecasts, the resulting business will be a more robust and focused one, removing the drag that these products had on sales growth and gross margin. Moreover, it should substantially reduce operational risk, simplify production processes and ensure that its regulatory affairs and quality assurance function are able to focus on its core Tristel and Cache products, particularly as it prepares for entry into the North American market, with a De Novo filing to the FDA due by June 2022. As previously noted, the interim results were distorted by a £0.9m Brexit-related order in H1 2021, without which underlying growth was 5% and 17% ahead of pre-pandemic levels. With the COVID impact receding, we expect the business to return to historic rates of 10%+. We reduce FY 2022/23 adjusted EPS by 12-13%, to reflect discontinued product sales and, as a result, reduce our target price by 12% to 480p.
Increased focus on proprietary chemistry. H1’s reflect the company’s decision to discontinue its Anistel (animal health) and Crystel (pharma) products, to focus exclusively on products for hospital use based on chlorine dioxide chemistry. The discontinued products delivered £1.5m of revenue in H1’22 (H1’21: £2.0m; FY’21: £3.8m) on a below-average gross margin. Recovery remains volatile. Revenue from continuing operations was £13.6m (-7% YoY), including a negative £0.9m impact from NHS de-stocking, which completed during the period, with PBT of £1.0m (H1’21: £2.5m), also impacted by a higher SBP charge. In spite of signs that hospital and outpatient activity is increasing across most markets, order patterns have remained inconsistent. US on track. Whilst a first filing with the FDA for the approval of Tristel Duo is on track for mid-year, the state-by-state registration of the product as an intermediate-level disinfectant (leveraging its existing EPA clearance) has gained renewed commercial impetus, in partnership with Parker Laboratories. Forecast changes. We have removed Anistel and Crystel revenue from estimates (FY’22e: -£2.4m; FY’23-24e: -£1.2m), and assume a FY’22e net loss from discontinued operations of £2.5m, including impairments. In addition, to reflect residual uncertainty around demand recovery, we have taken a significantly more conservative stance on underlying Tristel (devices) and Cache (surfaces) revenue, as detailed overleaf. Valuation. We remain highly positive on the longer-term outlook and believe the reduced business complexity (incl. the culling of nearly one-half of the Group’s SKUs) have optimally positioned Tristel to benefit from post-Covid recovery and the US rollout. However, our revised estimates implies a reduced target price of 405p. We move from Buy to Hold on valuation grounds.
Full-year results were in line with the trading update of 21 July, with revenues of £31m (-2%), reflecting the impact of COVID-19 on out-patient procedure rates, resulting in 14% and 24% declines in adjusted EBITDA and pre-tax profit, respectively. Lower than expected procedure growth rates and the decision to discontinue non-core (non-chlorine dioxide products) reduces forecast revenues by c.£3m to £33m in FY 2022. However, higher gross profit and tight control of costs (+6%) results in an unchanged adjusted pre-tax profit of £6.0m. This also reduces the overhead needed to support non-core chemistries and aligns with the strategic focus on its chlorine dioxide chemistry. We introduce FY 2023 forecasts, which point to c.4% EPS growth given rising UK corporation tax. The prospect of filing its medical device disinfection product (Duo ULT) with the FDA by FY 2022 year-end is dependent on completing on-site clinical evaluations in the US, but this should result in first sales in FY 2024. We reiterate our target price of 550p, recognising that this potentially excludes the full value of US opportunity.
FY’21 in line with expectations This morning’s results are in line with the trading update on 21st July, with revenue for the year of £31.0m (-2% YoY) and PBT of £3.8m vs. our £3.9m forecast (£4.6m vs. £4.7m expected on an adjusted basis, excluding a previously announced impairment). Cash & cash equivalents at period-end stood at £8.1m vs. our £8.9m estimate. As previously indicated, the YoY sales decline was principally the result of weaker UK sales (37% of total sales, -10% YoY to £11.4m). The EBITDA margin of 27% was in line with historic levels, post the record 31% in FY’20 (primarily a result of early-pandemic stocking of disinfectants by customers). During the year, increased investment was made in people and systems to ensure continued regulatory and quality compliance, particularly ahead of anticipated US launch. Good regulatory progress Good regulatory progress was made during the year, with Tristel Duo approved as high-level disinfectant for medical devices in India, South Korea and Canada, and an expanded label for the Jet surface disinfectant granted by the US EPA. Importantly, the required work to enable an application for FDA clearance of Tristel Duo under the De Novo route (for novel devices of low to moderate risk) is progressing well, and work is underway to secure the 2-3 clinical centres and laboratory staff to conduct the final clinical studies. Our view: well positioned for post-Covid recovery We remain positive on the outlook for Tristel, an innovation-led product development company with a focus on sustainability, user-friendliness and health economics. With stocking levels, procedure volumes and order patterns normalising, we anticipate a return to strong growth in FY’22e. In addition, we continue to expect US sales of Jet from FY’23e, and the application for Tristel Duo US marketing rights to be submitted by end-FY’22e, with US commercial launch in FY’24e underpinning our longer-term estimates. Our forecasts and valuation are under review.
Rising hospital activity results in strong Q4 This morning’s trading update indicates expected revenue for the FY to 30th June of £31m, broadly flat YoY and in line with our £31.6m estimate. Gross margin is expected at 80%, in line with our expectations, with PBT before share-based payment of £5.5m, a touch ahead of our £5.2m estimate (£4.7m post SBPs). Results are also expected to include a minor exceptional £0.8m impairment charge relating to a non-core equity investment. Propelled by increasing hospital activity (including outpatient examinations), demand for device decontamination products (such as Tristel Duo) accelerated through Q4, with continued growth in sales of surface disinfection products. A final dividend of 3.93p will be declared, in line with previous guidance. Volume resurgence bodes well for continued growth In our view, the resurgence in hospital activity bodes well for continued growth, as waiting lists are addressed through the remainder of the calendar year and into 2022. In its April 2021 trading update, Tristel highlighted particularly lengthy waiting lists in several important end-markets for its device decontamination solutions, including gynaecology, ophthalmology and urology. We also expect that many of the more rigorous hospital surface decontamination procedures implemented during the pandemic will remain in place, driving sustained demand for Tristel’s Cache® range of high-level surface disinfection products, which offer an attractive combination of user-friendliness, sustainability and anti-microbial activity. Our forecasts and valuation are under review.
Tristel’s trading update reflects the impact of the lockdown in January-March and the outlook for the remainder of FY 2021. The hoped-for recovery in UK medical device disinfection sales in H2 FY 2021, which was highlighted at its interim results in February, has not materialised, and with little sign of this weakness reversing meaningfully before the end of June, Tristel has indicated that FY 2021 revenues and adjusted pre-tax profit should be not less than £31m and £5m, respectively. Albeit disappointing, the long-term outlook remains very strong, and with a c.£1.5bn Elective Recovery Fund to accelerate the restoration of services and treatment, we expect demand conditions in the UK to improve significantly and for patient examinations to recover as restrictions are eased/lifted. We adjust forecasts accordingly but maintain our target price at 550p, which reflects both our base case recovery in FY 2022 and prospect for US introduction in due course.
Tristel reported interim results that were c.2% above the trading update at its AGM on 17 December with adjusted pre-tax profit of £3.4m (+12%) driven by a 15% increase in revenues. Despite the strong first half there is a cautionary tone to the second half, given the lacklustre start to H2 FY 2021 as a result of lockdown in many of its markets impacting out-patient procedures. That said, our forecasts assume 5% revenue growth in H2 with adjusted PBT 5% below H2 FY 2020. With the prospect of vaccination rollout opening markets, there is a clear route to achieving and exceeding our forecasts, but for the time being we leave forecasts unchanged. However, confirmation that it has completed a Usability and Form Factor study in the US is a significant milestone, underpinning our confidence for US market access and the reason for increasing our target price to 550p, which implies a prospective 3.0% free cashflow yield.
A market-leading innovator: Tristel is a leading developer of products for high-level disinfection of ultrasound probes and other semi-critical devices, with a growing presence in the hospital surface disinfection market. The company has a strong innovation ethos, leveraging its proven and validated chlorine dioxide chemistry expertise and product development know-how. Outperforming in device decontamination: In spite of lower medical procedure volumes during the Covid pandemic, direct sales of medical device decontamination products grew by 17% in FY20, driven mainly by EU demand. We expect Tristel to benefit as procedure volumes normalise over FY21-22e. Sustainable growth in surface disinfection: Many of the more rigorous decontamination procedures implemented in response to Covid are likely to be maintained over the longer term, supporting the take-up of Tristel’s new Cache range of user-friendly products for high-level surface disinfection. High and sustainable returns: Tristel is generating consistently high returns (FY15-20 CAGR in revenue, EPS and regular DPS of 16%, 17% and 15%, respectively). We believe the attractive return profile (ROCE >20%) is sustainable over the forecast period, improving further post US launch of Cache (FY22e) and Tristel Duo (FY23e). A “hidden gem” in the disinfection space: Our DCF-based valuation (7% discount rate, 1% TGR) implies a target price of 644p. In spite of high returns, Tristel is under-owned by mainstream investors – we initiate with a Buy.
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.
A positive trading update for the year ending 30 June 2020 indicates revenues of £31.6m (+21%), some £1.6m (5%) above expectations, driven by a c.£1.5m net benefit from COVID-19 related sales and a strong international performance (+32%). Adjusted pre-tax profit is expected to be at least £6.8m (+21%), £0.3m above expectations. Although the exact path to ‘normality’ post-COVID is difficult to predict, the breadth of product range and geographic mix and the fact that hospitals should employ more rigorous disinfection regimes and product selection in the future all benefit Tristel and point to long-term sustained growth. We make upward revisions to our forecasts and increase our target price to 450p.
FRP Advisory Group, UK professional services firm specialising in restructuring advisory. Raising £80m (£20m primary). Expected market cap £190m. Compound annual growth of 16.4 per cent. in revenue and 10.9 per cent. in operating profit since the beginning of FY17.o Strong average EBITDA margins of 51 per cent. over FY17 to FY19, and consistently strong cash conversion 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. 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. DRI Healthcare—investment company focused on investments in healthcare Royalty Assets looking to raise $350m. Due 11 Mar. Ninety One –proposed demerger and public listing of Investec’s global asset management business on LSE and JSE. 30 Sep 2019 AUM £121bn. Sale of existing shares. Expected free float of >60%. Due 16 march. Cabot Square—Closed ended investment fund focussed on alternative assets and asset manager. Looking to raise £200m. Will target investment opportunities that are expected to generate an attractive risk adjusted return and that can also make a positive ESG impact by focusing on some of the biggest challenges facing societies and economies. Due 14 Feb. The Global Sustainable Farmland Income Trust will invest in a diversified portfolio of operational farmland assets located in major agricultural markets including the United States, Europe, New Zealand, Australia and certain countries within Latin and South America. Raising up to $300m. Due 28 February. Incanthera—Specialist oncology company focused on transforming cancer treatment by creating environments in which cancer cannot survive . Due 28 Feb. Zapp Scooters, a developer and manufacturer of electric two-wheeled vehicles announced its intention to IPO on the NEX Exchange Growth Market. The Company intends to raise up to £3.5m. Admission is expected to occur on NEX in February 2020.
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Tristel reported interim results that were c.7% above the trading update at its AGM on 17 December with adjusted pre-tax profit of £3.0m (+25%) driven by a 22% (22% CER) increase in revenues. Stripping out the impact of recent acquisitions, underlying growth was still a robust 13%. Despite the strong first half and potential for a “COVID-19 bonus” in H2, we are not making any changes yet, recognising instead that current FY forecasts are underpinned. We are however, increasing our target price to 375p, cognisant of the upside potential that international growth offers as well as quality and momentum of growth. On current forecasts, this would imply a prospective 3.5% free cashflow yield.
Destiny Pharma (DEST): Corp Reinforcing the value of XF-73 | Tristel (TSTL): Corp FY 2019 results: new three-year financial plan
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Full-year results were in line with July’s trading update. Revenues grew by 18% CER, with a stronger-than-expected UK performance (+9% vs +2% in FY 2018), driven in part by the launch of new products, supporting the continued expansion in international markets (+26%) that now account for 55% of group revenues. The expected response to Tristel’s pre-submission request to the FDA, expected in December, should help determine the next steps for US registration. We maintain our FY 2020 adjusted pre-tax profit forecasts (+16%) with changes to reflect IFRS16 and introduce FY 2021 forecasts for 10% and 7% revenue and EPS growth. These are towards the bottom of Tristel’s newly set three-year financial plan, which bodes well for potential upside given the strong delivery over the past three years. Our unchanged 325p target price implies a 4% FY 2020 FCF yield.
Tristel provided a positive trading update for the year ending 30 June 2019, indicating revenues of £26m (+17%), some £0.3m above expectations, driven by a stronger UK performance, and adjusted pre-tax profit of at least £5.5m (+18%), in line with current forecasts. Tristel also announced the buy-out of its associate in Italy (80% of Tristel Italia) for c.£0.6m (3.3x EBITDA), for which it intends to invest in a sales force to drive future growth. This should be broadly neutral to FY 2020 earnings but accretive thereafter. This is a well-trodden path that Tristel has followed over the past two to three years, taking greater control of its overseas markets, and underpins the solid and sustained performance that we have seen over the past five years. We make minor changes to forecasts and increase our target price to 325p.
Tri-Star Resources (TSTR): Corp First antimony metal produced | Tristel (TSTL): Corp FY trading update and Italian acquisition
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Interim results reflected the two sustained strategic themes for Tristel: (i) strong growth from its international markets (53% of revenues, growing at 23% CER or 16% ex-Ecomed acquisition); and (ii) growth in Human Healthcare (91% of revenues and rising 16% CER). The need to complete more extensive human usability studies to comply with the FDA de novo 510(k) filing process in the US has no real impact on our forecast horizon, with international markets more than offsetting the c.£50k built into our 2020 forecasts, which are removed. The US remains an attractive market but by no means the only opportunity for substantial growth. We reiterate our 300p price target, which is based on current unchanged forecasts, cognisant of the upside potential that international growth offers.
ANGLE (AGL): Corp New use of Parsortix | Independent Oil & Gas (IOG): Corp Core project funding update | President Energy (PPC): Corp Turbocharging growth | Synairgen (SNG): Corp Finals – Phase II patient selection as good as it gets | Tekcapital (TEK): Corp Significant fair value uplift | Tristel (TSTL): Corp Interims underpin full-year outlook
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Tristel has acquired Ecomed (distributor for Benelux and France) for a maximum consideration of €6.8m (£6.0m), of which €5m is paid up front with the balance contingent on achieving a minimum of €0.8m of EBITDA in calendar year 2018 and revenue growth in excess of 15%. This is in line with the company’s strategy to have a direct sales presence in markets where possible. The maximum consideration represents c.2.1x and 6.8x prospective EV/Sales and EV/EBITDA respectively, and is expected to be accretive to EPS by 5% in FY 2019 (includes the cost of acquisition and integration) and 10 in FY 2020. We increase our target price by 7% to 300p, implying FY 2020 P/E of 24.0x and supported by 2-year CAGR EPS growth of 17%.
Full-year results were marginally ahead of the July trading update. Revenue growth (10%), albeit at the lower end of target range, was affected by lower UK growth (+1%) but international markets (+19%) now account for 51% of revenues and EBITDA rose 16%. Clarity from the US FDA with regards the regulatory process for a high-level disinfectant has been received, and the revised process will delay the filing by six months. We still expect royalty income from Parker Labs in the US for its EPA-registered product in FY 2019. We make minor upgrades to our FY 2019 forecasts (+4% to EPS) and introduce FY 2020 forecasts for 12% EPS growth. Our 280p target price implies a FCF yield of 3.2%, although scope for upgrades from better than expected launch of SHOT should not be discounted.
FY results were marginally ahead of July’s trading update, boosted by FX tailwinds and stronger-than-expected gross margins. Revenue growth of 19% was driven by overseas markets (+42%), despite intentional declines in non-ClO2 chemistry-based products. We make only minor changes to our FY 2018 forecasts, with EPS 2% higher than previously forecast and representing c.2% growth (+10% if adjusted for 2017 lower tax charge) during a period of higher investment ahead of the US launch expected in FY 2019. We re-introduce a target price of 275p, underpinned by a DCF analysis, which depends on the timing and success of the company’s entry into the US market.
Tristel* (TSTL): FY 2017 results – RoW now dominates (CORP) | Capital Drilling* (CAPD): Q3 trading update, on track for FY forecasts (CORP) | Europa Oil & Gas* (EOG): Holmwood planning update (CORP)
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One golden rule of investing is not to ‘count chickens’. A prudent view that we’ve adopted when modelling Tristel’s application to the EPA/FDA to launch chlorine dioxide (Clo2) based infection, hygiene and contamination control products in the US. Whilst our approach is admirable, there is nonetheless a danger of us being too conservative for too long. Especially when, in Tristel’s case, the opportunity of accessing the world’s biggest healthcare market is now almost within striking distance.
Tristel* (TSTL): Trading update drives upgrades (CORP) | Cello (CLL): On track and investing for growth (BUY) | The People’s Operator* (TPOP): Board changes (CORP) | Tax Systems* (TAX): Trading update: on track (CORP)
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In “Alice in Wonderland”, Lewis Carroll tells the story of a girl, who falls through a rabbit hole into a world populated by peculiar, anthropomorphic creatures. Here, Alice crosses swords with the Queen of Hearts, meets the Cheshire Cat and is invited to the "Mad Hatters” tea party, which she subsequently discovers is “stupid”.
Interim results showed a strong performance for Tristel, 6% ahead of its AGM statement on 12 December at which it indicated adjusted pre-tax profits to be no less than £1.6m. Revenues increased by 22% (16% at constant exchange rates – CER or 12% CER excluding the impact of the Australian acquisition) and adjusted pre-tax profits were up 15% to £1.71m. Despite the strong half, we leave our full-year forecasts unchanged, given FX uncertainty and a one-off stocking order in H1 from the NHS, although at current FX rates the risk to our forecasts is considered to be to the upside. However, we raise our target price by 10% to 165p to reflect the solid progress as well as rolling forward our multiples to calendar-adjusted 2017.
Tristel has announced in its AGM statement that it expects to report first half adjusted (share-based payments) pre-tax profits to be no less than £1.6m. This compares with £1.5m in the 6 months to December 2015 and is in line with management’s expectations and stated strategic financial goals: (i) revenue growth within a range of 10% to 15% as an annual average over the 2016-19 period, (ii) maintaining a minimum pre-tax profit margin of 17.5% and (iii) distributing cash that is not required for the operational and investment needs of the business to shareholders in the form of dividends. Our forecasts for the full year are for adjusted pre-tax profits of £3.6m, and include a contribution from the acquisition of its previous Australian distributor for its Wipes System from 21 July 2016 (ie 11 months contribution in the full year). Our forecasts also include £0.5m of US development expenses for the full year (incremental £370k), which impacts margins by c190bps. We make no changes to either our forecast or target price; however, note that risks to both of these are on the upside.
In medieval times moats were built around castles to protect their inhabitants. Today, they are used by companies to generate superior returns for their shareholders. However, rather than being constructed out of bricks and mortar, they are now based on intellectual property, brands, networking benefits and such like. The $64m question of course for investors is: “what price to pay” for these type of high quality business?
Two traits that investors love about a company are predictability and execution. The former underpins confidence and lowers the risk premium, while the latter drives valuation. On both counts, we think Tristel scores favourably, with the stock rallying from 20p in April 2013 to 160p today – equivalent to a 700% capital gain, supplemented by 14p of dividend income.
Full-year results were ahead of July’s trading update, boosted by a year-end Fx benefit and stronger than expected gross margins. Revenue growth of 12% was driven by overseas markets (+22%) and assisted by a stronger UK performance in the second half. A broader and deeper strategy for the US market, including the registration of surface and water disinfectants with the EPA, is now being pursued, with expected launches in FY 2019. We have increased our target price to 150p to reflect a 6% EPS upgrade to 2017 earnings and introduced a 2018 forecast, calling for EPS of 7.0p.
Avacta* (AVCT): Act now (CORP) | Tristel* (TSTL): A strong FY 2016 (CORP) | Bioventix* (BVXP): FY 2016 results (CORP) | Elecosoft* (ELCO): SaaS model strengthened through acquisition (CORP) | Lok’nStore* (LOK): NAV up 28% (CORP) | Omega Diagnostics* (ODX): Mid year trading update (CORP) | Mortice* (MORT): Positive trading update (CORP)
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The company announced that it has received regulatory approval for two surface cleaners from the Australian Therapeutics Goods Association. This follows the acquisition of its Australian distributor's business in July, thereby broadening its product offering to include Tristel Fuse and Tristel Jet. We have made minor changes to forecasts, raising EPS by 1.8% to 3.59p for FY 2017. We are raising our target price to 140p to reflect these changes and likely acceleration of growth in FY 2018. At this level, the stock would trade on FY 2017 EV/EBITDA and PE of 12.1x and 21x, respectively; justified in our opinion by the rising post-tax ROCE.
The cream ultimately rises to the top, or so that is the case with Tristel. You see, despite fears over the global economy, NHS budgetary constraints and BREXIT, the company this morning said that it had enjoyed a “very strong” 2 nd half – reporting H2 revenues of >£9m, up 13.5% YoY. Better still, FY16 adjusted PBTA (pre SBP and unrealised forex gains) and net cash came in above expectations too, at £3.1m (+20% vs £2.6m LY) and £5.7m (vs ED at £4.5m) respectively - driven by an outstanding performance from overseas (42% of H2 sales vs 36% in H1), augmented by an encouraging rebound in UK Healthcare following a slight decline in H1.
After January’s wild swings on the FTSE, RBS’ erudite analysts advised their clients to “sell everything except investment grade bonds”, warning that 2016 would be “cataclysmic”. Blind panic, though, is not the answer. Long term investing is all about building a diversified portfolio of quality names at attractive prices – each being able to deliver predictable earnings across the economic cycle.
Interim results were slightly ahead of January’s trading update/AGM statement. Revenue growth of 8% was driven by overseas growth of 21%, offsetting c1-2% growth in the UK. The balance sheet is healthy, with £4.3m net cash, despite the payment of a 3p special dividend (£1.2m) in the period. We are reducing 2016 and 2017 EPS by 3% and 21%, respectively, to reflect the increased R&D investment (£0.45m) expected to secure US approvals. Our 110p price target remains unchanged despite these changes.
‘Running winners’ is a successful strategy for generating wealth. The difficult part of course is buying those high potential stocks at the right price, and then being prepared to stick with them over the long term. One good hunting ground is in Healthcare - especially for those companies that are globally scalable, deliver double digit top line growth and enjoy strong patent protection. Tristel possesses all three, along with high recurring revenues and predictable cashflows.
Britain often gets unfairly knocked for all sorts of things – lack of manufacturing, uncouth behaviour, the weather and even the food. However, what cannot be denied is that we are a nation of great inventors – coming up with marvellous ideas such as the steam train, jet engine, internet, lightbulb, TV, telephone and many more.
Tristel comfortably beat our forecasts for the year ending June 2015, with sales, EBITDA (adj.) and PBT (adj.) ahead of expectations by 2.4%, 5.0% and 14.1%, respectively. Dividend per share for the full year increased to 5.7p (FY 2014A: 1.6p), including a special dividend of 3.0p per share. Net cash increased from £2.6m to £4.0m. We are upgrading our sales forecasts for FY 2016 by 6.1% and our PBT (adj.) forecast by 12.3%. We are also raising our target price to 110p from 90p. Based on our FY 2016 forecasts, this would place Tristel on an EV/Sales of 2.4x, an EV/EBITDA of 10.7x and P/E of 20.9x, whilst still yielding 2.5%.
Looking for a high growth stock with a cast-iron balance sheet, throwing off buckets of cash and trading at a discount to its peers (see below)? Sounds impossible right? Well maybe not.
Tristel*: Detergent wipes lack efficacy (CORP) | Zambeef*: Core divisions performing well (CORP)
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This morning, despite being impacted by geopolitics in Russia and forex headwinds (ie higher £ vs € and EM currencies), Tristel reminded investors once again the resilience, strength and underlying momentum behind its business. Saying that both revenues and profit were ahead of budget for the 10 months to 30 April 2015 – and raising adjusted FY15 PBTA expectations to at least £2.5m (£1.4m H2 vs £1.1m H1), or +39% up on last year’s £1.8m.
