Once again, the close connection between Fresenius and its ‘subsidiary’ FMC can be easily detected. As a separation should not be expected any time soon, management might have to be reminded of its tasks as the US headquarters seems to live not only in a different time zone. Despite management’s confirmation, FMC’s contribution to cost savings will be welcomed, but not a necessary prerequisite. The leash looks to be too long in our view.
Fresenius reported an expected set of figures, despite a
Companies: Fresenius SE & Co. KGaA
Despite being mixed, Fresenius’ Q1 report looks a bit uninspiring, which is not bad as the world creaks under the weight of the virus. But not very things is running perfectly. Kabi’s issues seem to have worsened, which legitimises the CEO change ex-post. Unfortunately, management was not too good at providing many details about the cost-cutting programme.
Figures were a notch above our expectations and slightly above street expectations (top line: +1%; adjusted EBITDA: +2%).
As we had already speculated at a recent target price change (on 05/02/2021), the announced departure of Dr Krick, Fresenius’ dinosaur, could trigger some changes. The first ‘victim’ may be the head of Kabi and we clearly expect more to come. In essence, this could signal to the capital markets that there is something already set in motion. This might change sentiment towards Fresenius as we still see the share is clearly undervalued.
We had been really surprised by the announcement of a cost-cutting programme, which is expected to give Fresenius a nice profitability push by the end of 2023. This is earlier than FMC’s. However, we do not really believe in a coincidence as Fresenius’ management should be the master of the ceremonies but, interestingly, it could be able to achieve this.
The Q4 figures have beaten our cautious expectations as we had taken some provisions into account. Updated consensus was unavailable.
Fresenius’ broad portfolio stabilised the top-line and earnings but the picture has been mixed not just among the divisions. Interestingly this has also proved true on an intra-divisional basis in that the trends have followed the pandemic. The Q3 figures showed some relief, especially in Helios Spain.
The reported figures were a notch weaker than expected, but broadly met consensus.
Fresenius’ business model has shown to be quite resilient, but some businesses did better than others, which looks quite normal to us. However, Helios’ Spanish business seems to have a bit of a cold as its profitability has substantially deteriorated. This could be a communication issue, but we do not fully understand the reason.
Reported figures were a notch better than expected, but consensus was beaten (+3% to 5%). Adjusted for potential pandemic-related effects, FY guidance was lowered.
Despite the unquantified pandemic related costs, Fresenius was able to protect earnings (not margin). This was a bit unexpected as we had factored in some higher extra costs, especially in the clinics’ business and at Kabi. The latter also did better. All in all, the reported figures were stronger than expected.
We appreciate management’s qualitative approach to clarify potential impacts unless figures are available.
Fresenius’ figures were characterised by the mixed developments at FMC and Kabi. The latter division started to face a stronger impact from intensifying competition in North America. This had been expected, but kicked in more strongly than expected. Helios’ performance was in line. All in all, the figures were above our expectations, whereas consensus was broadly met.
We have envisaged for quite a while that Kabi will have to leave its IV drug Shangri La. This has now happened. Should one worry about this? The Q3 figures show that other segments could cushion the effects of greater competition in this segment to a certain extent. What looks more interesting is what is going on in the clinic business where some clouds are gathering over the sun (Helios). Or is it just a penumbral solar eclipse?
Fresenius’ Q2 figures benefited from good organic growth across all divisions, but profitability development showed a mixed picture. Kabi was a (still) positive surprise, Helios moderated as expected and FMC was hit by various expected as well as unexpected issues. Vamed became a small but shining star. Reported figures were more or less in line with our expectations and consensus was also broadly met. The higher top-line guidance is quite nice, but profitability is barely expected to follow.
Fresenius reported a strong set of figures, which confirmed our view. Consensus was beaten. Kabi continued to generate profitable growth and Helios signalled some positive developments in Germany and strong organic sales growth in Spain.
Fresenius’s Q4 figures were pretty much in-line with our expectations adjusted for our too low assumption on FMC, as Helios came in stronger than expected, but Kabi a notch weaker. Consensus was also broadly met.
US pharma giant Pfizer announced that the issues at its sterile injectables plan in Kansas could be solved by the end of 2019 as constant supply could not be maintained after a warning letter from the FDA in 2017.
Fresenius could not re-switch the light of strong growth. The full Q3 figures did nothing to change our past view on the company’s strong growth, but was good enough to light a candle. The increased detail was helpful in gaining a better understanding of the potential Q4 outcome, which we expect to be fairly positive.
The released preliminary Q3 did not fully match our expectations but neither did it destroy our view of the company. However, Fresenius reported some internal issues (e.g. Helios), which caused management to narrow its previously-given guidance to the lower end. The full set of figures will be reported on 30 October 2018.
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H1 EBITDA declined by 45% YoY, albeit this was slightly better than we had anticipated after the pre-close update in August. The beat was cost related (efficiencies/savings). There was a significant gross margin drag though and, while transitory in nature and diminishing in H2, this means further savings need to be realised to hit full year forecasts. This is our view and we retain a good level of confidence in next year’s forecasts. Having de-rated, valuation looks very undemanding now on just
Companies: Venture Life Group Plc
Venture Life has announced its interim results for the six months to June 2021. As previously announced in the August trading statement, revenues were down YoY due to lower HSG sales and sales to the Chinese partner, though revenues are expected to grow subsequently, benefiting from the two recent acquisitions. H1/21 gross margin was impacted by a number of factors including supply chain costs and stockholding costs; however, the company expect margins to improve in H2/21E. Despite the set-backs
Cambridge Cognition has announced strong interims which are consistent with our recently upgraded forecasts. Revenue increased 50% YoY, which outstripped growth in admin expenses leading the group to swing to a net profit. Demand for the company's software & services to support clinical trials continues to be strong, with a contracted order book of £15.2m at the end of H1 21 (+36% HOH; +105% YoY). Contract prepayments aided strong cash generation which led net cash to increase +37% versus FY20 Y
Companies: Cambridge Cognition Holdings Plc
Companies: SourceBio International Plc
Warpaint’s interim results for the six months ended 30th June demonstrate a highly encouraging rebound in sales and profitability as the markets have reopened post various degrees of Coronavirus lockdown. Strong strategic progress has been made, with the relationship with Tesco expanded and an 84-store trial with the UK’s leading cosmetics retailer Boots confirmed; this is very good news to us. Whilst ahead of our expectations for H1, we leave FY21 forecasts unchanged reflecting the very well do
Companies: Warpaint London PLC
Exactly one year ago, the FTSE 100 closed at 5,862, having fallen 100 points on the day, the lowest point since mid-May 2020, due in part, to the strength of sterling vs US$ at $1.34. One year on, the FTSE 100 has risen to 7,119, a rise of 21%, it remains 7% below the peak in January 2020. From an international viewpoint, US and European markets continue to trade at record highs. The US Federal Reserve is close to withdrawing some of its economic support this year as inflation picks up and the e
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Full year PBT is 4% ahead of our expectations and strong trading momentum has continued into FY22 (14.4% LFL). The strength of the results reflects favourably on the strategy new management put in place in 2019 to focus on optimal patient care and to make CVS an employer of choice. Having shown remarkable resilience through the pandemic, CVS is emerging as a stronger business with excellent ongoing growth prospects. Its integrated veterinary model is ideally positioned to capitalise on sector ta
Companies: CVS Group plc
Interim results to 30 June 2021 were in line with the trading update issued on 3 August, which resulted in upgrades to our forecasts and target price. On the back of a 50% (£1.5m) rise in revenues to £4.5m, adjusted EBITDA increased £0.5m to £0.2m, illustrating the operational leverage of 80% gross margin software & services. Period-end cash increased 38% (+£1.2m) in the period to£ 4.2m. Cambridge Cognition is well positioned to be a long-term beneficiary of the trend of running virtual decentra
Allergy Therapeutics reported FY 2021 results that were 95% (+£2.1m) ahead of adjusted pre-tax profit expectations, driven by lower than forecast overhead costs. This underpinned 20% growth in pre-R&D EBIT to £16.9m on 6% CER revenue growth. Year-end net cash was £36.9m, providing the company with the financial resources to complete both its Grass MATA MPL Phase III trial and complete the VLP Peanut Phase I trial. The readout of the exploratory Phase III (G309) Grass MATA MPL study in the autumn
Companies: Allergy Therapeutics plc
Deltex has reported 2021 interim results which reflect the challenges of the current healthcare environment with COVID cases causing disruption to the Company's core elective surgery market. That said, the Company has demonstrated it is able to keep costs low to match the current low activity, in anticipation of improving activity in 2022.
Companies: Deltex Medical Group plc
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Eurowag confirms its intention to undertake an initial public offering on the Main Market (Premium). The Offer would be expected to comprise both (i) new Ordinary Shares to be issued by the Company, raising gross proceeds of approximately EUR200m to support Eurowag's growth strategy and (ii) existing Ordinary Shares to be sold by existing Eurowag shareholders. Eurowag is a leading pan-European
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Momentum is building in Circassia, with the recovery from the pandemic gaining traction and actions taken by management to focus the business having a material impact on the bottom line. Having already upgraded in July, we are upgrading forecasts again today to reflect the further progress on reducing fixed costs. We now expect the group to trade close to EBITDA breakeven this year and for significantly improved profitability and cash generation from next year onwards.
Companies: Circassia Group PLC
Synairgen reported FY 2020 results that showed an adjusted net loss of £13.7m, with year-end cash of £75.0m, some £27m higher than our expectations. The delta can largely be accounted for by delays in starting enrolment into the Phase III trial as well as the treatment of prepayments for drug substance and nebulisers: the latter reflected in working capital rather than expensed through the income statement. Near-term focus remains on the outcome of the Phase III study (SG018), and with the enrol
Companies: Synairgen plc
Warpaint has issued a highly positive AGM trading update (covering the financial YTD). Trading is said to have been “encouraging”, with UK brand sales some 18% ahead of pre-covid levels, with good progress in international markets and online sales reported at 3x a year ago. We leave forecasts unchanged at this stage of the year, with 2021F at EPS of 5.3p, although we see growing scope for upgrades if the current momentum can be sustained into H2 2021, and if significant additional Covid disrupti
Trading has strengthened significantly since restrictions eased in April, especially in the UK. UK brand sales are now up 64% YTD (+18% vs 2019). Further distribution gains are being made, including in the USA and online sales have tripled, albeit off a small base. Net cash has increased to £6.6m (Dec’20, £4.9m). Risk appears to lie to the upside vs prudent forecasts. The re-rating looks well supported to us, and we look forward to the H1 update in July