Zeus Capital Equity Research & Stock Reports
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Ronez performing, debt facilities agreed
21 Feb 17
Confirming our view that Ronez is a high-quality maiden acquisition, SigmaRoc today announces that trading and operational performance at the verticallyintegrated aggregates business on the Channel Islands has been strong in the first few weeks of trading since the deal completed in early 2017. January sales volumes are reportedly above budget, a healthy order book is in place for the remainder of the quarter, and requisite back-office systems are being developed faster and at lower cost than initially anticipated. Furthermore, SigmaRoc has agreed terms with Santander Bank for a £2m revolving credit facility and is close to agreeing an £18m term facility – once finalized these debt facilities should see SigmaRoc sufficiently capitalized to progress initial projects in management’s pipeline of growth opportunities. We thus continue to believe that Ronez has potential to generate EBITDA to the group of at least £6m pa as efficiencies continue to be unlocked under the new independent ownership structure, providing SigmaRoc with a firm platform from which to leverage more acquisitions and/or organic investments and thus deliver further earnings growth as it progresses its niche buy-and-build strategy.
German lithium investment
21 Feb 17
Bacanora is acquiring for €5m in cash a 50% interest in the Zinnwald lithium project, a hard-rock deposit in eastern Germany that has historic resources of 706kt LCE (lithium carbonate equivalent). Though a relatively early-stage project, and in our view secondary in importance to the group’s core Sonora soft-rock lithium development in Mexico, the investment provides Bacanora with the potential for a strategic entry point into the fast-growing European markets for lithium and energy products. A work programme is planned to update the historic resource to NI 43-101 code compliant mineral resources, on conclusion of which we would look to incorporate Bacanora’s share of the project into our company valuation (which is currently based solely on Sonora, and which at 125p offers significant upside to Bacanora’s current share price).
1H PBT up 61%; EPS up 68%
20 Feb 17
As we expected CLIG’s 1H17 DPS remained unchanged at 8.0p (1H16: 8.0p). As 1H17 Diluted EPS rose 68%, while PBT rose 61%, the results are ahead of our expectations. After increasing our FY(June)17e PBT forecast 2.8% on 17 January, we maintain our forecasts. Year to date the MSCI emerging market index is up 9.7%. At 946 it is 13.4% above 30 June 2016 of 834, and 6.3% above our forecasts of 890. If markets remain strong, we may need to raise our forecasts. We will review our forecasts in April when CLIG releases its 3Q trading update.
Acarovac MPL into phase I clinical trial
14 Feb 17
Allergy Therapeutics (AGY) is a 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 AGY announced that it has obtained approval in Spain for its Clinical Trial Application (CTA) to advance its next generation house dust mite (HDM) vaccine candidate, Acarovac MPL, into phase I clinical development. This vaccine addresses a significant market for allergy sufferers estimated to be worth $1.5 billion annually. As with the recent news that the company is progressing its peanut allergy vaccine, this HDM vaccine further broadens AGY’s vaccine portfolio beyond the seasonal allergies to include this common perennial allergy. Our riskadjusted fair value estimate remains at 69p per share.
Final results 4% ahead at PBT level
14 Feb 17
Pendragon has delivered a good set of results, which are 4% ahead of our forecasts at the adjusted PBT level. The outlook for 2017 is confident as it expects to deliver double digit revenue growth in used cars this year. We maintain our cautious forecast assumptions for now, and even on this basis, believe the shares are looking good value particularly from a dividend yield and EV/EBITDA perspective.
Interim results - progressing
10 Feb 17
Oncimmune (ONC), a pioneering UK-based biotech developing and commercialising blood tests for early cancer detection, today released its Interim results for the 6 months to November 30, 2016 highlighting that its operational developments are progressing on plan. ONC’s technology has been extensively tested and validated in clinical trials and since 2012 over 150,000 lung cancer tests (EarlyCDT®-Lung) have been sold in the USA and elsewhere. In high-risk individuals the test can detect lung cancers up to 4 years earlier than other tests, including the recommended low-dose CT scans (with their high false-positive rate). ONC is poised for substantial growth as management continues to deliver on its operational plans i.e. expanding its portfolio of cancer detection tests, developing a ‘kit’ version of EarlyCDT®- Lung, and entering additional global markets. Our forecasts for the full year are unchanged and our risk-adjusted fair value estimate remains £78m (153p).
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