Zeus Capital Equity Research & Stock Reports
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Strong H1 17 performance, confident outlook for H2
20 Jan 17
Following on from the positive AGM statement at the end of November, MySale has released an upbeat pre-close trading update. Group revenue increased 6% to A$136.1m, while higher margin online revenue, now representing over 90% of the total group, experienced a strong rate of growth of 18% to A$126.5m. As a result, gross margin showed continued improvement of 270bps driving a 17% uplift in gross profit to A$38.4m (versus A$32.7m). Strong trading for the half, combined with a carefully controlled cost base, led to a doubling in EBITDA to A$3.0m. Management are confident going into the second half period and following the increase in guidance at the end of November, the company remains comfortable with current full year forecasts. More detail and an update on trading will be given at the interims expected on 1st March 2017.
Update post NASDAQ IPO
20 Jan 17
Motif Bio (LSE: MTFB, NASDAQ: MTFB), is a late clinical stage antibiotic development company. The company completed its IPO on NASDAQ in November last year raising $25m before expenses. With the funds from the IPO the company is now funded to completion of REVIVE-1, the first of its two phase III clinical trials of its lead drug candidate, iclaprim. This antibiotic is being developed for the treatment of serious and life threatening bacterial infections, particularly those caused by drug resistant bacteria. It is a next-generation antibiotic targeting an under-utilised mechanism of action which causes rapid killing of bacteria making it an attractive candidate for acute infections. Given our belief in iclaprim showing positive results in REVIVE-1 and Motif’s current share price, we think an investment now would be timely with REVIVE-1 on-track to report soon (Q2’17). Our risk-adjusted fair value estimate for Motif Bio now stands at £210m (107p per share).
H1 trading update – strong performance
19 Jan 17
Allergy Therapeutics (AGY), the UK-based, specialty pharmaceutical company focused on the development, manufacture and sale of vaccines and other products for the treatment and prevention of allergies, this morning released a pre-close trading update for the 6 months to Dec 31, 2016. The company has highlighted a period of strong growth in revenue, driven through gains in market share and also currency movements. AGY anticipates that it will report H1 revenues of approximately £40.4m (we had expected £35.4m). Importantly, the company has confirmed that its clinical development plans as outlined last year for Pollinex Quattro (PQ) Birch and PQ Grass have been agreed with regulators in Europe and the USA. The company had cash of £27.8m at December 31st 2016. We have revised our financial forecasts for the coming years with increases in sales and gross margins as well as overheads. Our risk-adjusted fair value estimate now stands at 69p per share (previously 66p).
Strong trading in the final few weeks leads to further upgrades to forecasts
19 Jan 17
Strong trading in the last eight weeks of the year lead to further upgrades to forecasts, this follows the upgrades put through at the time of the ten-month trading statement on December 1st . Revenue forecasts increase slightly, c. 1.0%, in FY16 to £693.5m (prev. £689.0m), showing 6% yoy growth (FY15: £654.1m). This is magnified at the operating level due to the August price increase in the UK leading us to increase margin assumptions at the operating level by 30bps. As a result, PBT increases 7.0% to £40.1m (prev. £37.5m) and equates to c. 13% yoy growth. Our FY17 revenue forecast increases to £710.8m (prev. ££695.9m) and, again with the benefit of operational gearing, leads to a 10.7% increase in PBT to £42.7m (prev. £38.6m). FY18 forecasts remain conservative with just 1.0% revenue growth assumed but the flow through from the higher base in FY17 means earnings forecasts increase c. 10%. Despite wider equity markets having been buoyant, Headlam shares are up only c.2% since the increase to forecasts in December. Post today’s upgrade, the shares on just 12.0x FY17 earnings and offer a 4.4% yield. Appealing, considering Headlam’s best in class performance during the year.
23% profit growth in FY16 and a positive outlook in FY17 and FY18
18 Jan 17
FY16 results show a strong performance with 9.3% increase in revenue to £267.0m leading to a 23% increase in profitability as adj PBT increased to £40.2m (FY15 £32.8m). The 220bp improvement in gross margin underpinned the increase in profitability as legacy low margin projects continued to fall out of the mix. The 20.2% gross margin was ahead of the 19.5% forecast and in line with Group’s target of generating a through the cycle 20% margin. The forward sale announcements of five developments since the year end provide an increasing level of visibility on both FY17 and FY18, we estimate c. 70% of FY17 gross profit is currently derived from forward sold projects. The announcement on Duncan Road Stratford means the forward sold pipeline is already building into FY19. Current valuation does not reflect the forecast certainty with the shares trading on 9.0x FY17 earnings and yielding a prospective 5.1%.
A year of expansion
17 Jan 17
Final results are broadly in line with our revised forecasts on most headline levels in what proved to be a difficult year for the Group. That said, it has significantly increased room capacity, which is now +40% ahead at the time of the IPO (+14.5% yoy), which improves its competitive position and offering. We are maintaining our headline forecasts, and with the dividend expected to be held for the foreseeable future producing an 8.7% yield with a NAV in excess of 180p, we continue to believe there is strong long term value offered at present.
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