| Date | Reports available | Download |
|---|---|---|
| Mar 10 2010 |
SaaS revolution StatPro has released a solid set of results with revenue and operating profit slightly ahead of our forecasts. We understand the group has been experiencing a significant increase in interest in its new web-based product StatPro Seven, following a revised business model that significantly widens the target customer base, and StatPro Revolution is being launched for beta testing this month. These two new SaaS products have the potential to transform the business at a number of levels. Research type: Outlook |
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| Mar 10 2010 |
Positiver Ausblick PRESEPT study issues have been resolved by sample retesting. The reasons for the outlier results have not been disclosed. The academic steering group has shown that test sensitivity (percentage of true cases) is 62.75%. The specificity is low at 89% (percentage of true negatives). Helpfully, the negative predictive value (NPV) was calculated at 99.7%; this is the probability that a negative test results is really negative. Sadly, the positive predictive value (PPV), the chance that a positive SEPT9 result is true, was not estimated. To be helpful, we calculate this at 3.56%. Research type: QuickView |
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| Mar 10 2010 |
Positioned for growth In spite of the challenging market conditions, management notes there are signals that the pace in market activity is now increasing and we believe Brady is well placed to build on the momentum it has achieved over the last two years. The pipeline remains strong, support is being expanded to service global clients, and the group is positioned to benefit from the growing quality and scale of customers. Research type: Outlook |
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| Mar 09 2010 |
Seeding future growth Westminster has revealed the impressive growth in hits and enquiries driven by its revamped website, a core tool for its international agents. The development of the website has been a key driver in increasing the visibility and route to market of the group worldwide, and the benefits are beginning to feed through to increased quotation activity and ultimately future potential business. We feel that when this is combined with the recently announced framework contract for the MoJ and further wins for RMS, the group is demonstrating its potential in the UK and abroad. Research type: Flash note |
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| Mar 09 2010 |
Aiming high BrainJuicer’s preliminary results demonstrate that it continues to punch well above its weight in a weakened market research sector. The announcement of a second preferred supplier appointment by one of the world’s largest research buyers indicates the group’s revolutionary techniques are building credibility where it matters. Strong cash flows support ambitions to become a major player through continuing to invest in new product and new markets. The rating is being eroded by the superior earnings’ growth and does not look stretched in an international context. Research type: Outlook |
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| Mar 09 2010 |
Superb performance Lookers has delivered on its January trading statement, with a doubling of underlying pre-tax profits and a positive comment about the current year, which is running ahead of both internal budgets and the prior year. As we have indicated in earlier notes, there is a misconception in the City about the quality of earnings in certain leading motor dealership groups. Lookers has once again demonstrated the ability to grow in flat or modestly deteriorating markets. This factor is not recognised in the share price. Research type: Flash note |
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| Mar 09 2010 |
Ready for the recovery Fiberweb’s prospects remain healthy despite the uncertain economic environment. Restructuring initiatives supported robust 2009 results and increasing margin momentum in the second half helped push continuing operations into profit for the first time since Fiberweb’s 2006 demerger. Recent refinancing leaves the group in a strong position to pursue its goal to grow both organically and via acquisitions. The valuation, both on a peer comparison basis and DCF analysis, is undemanding. Research type: Outlook |
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| Mar 09 2010 |
Strong leverage platform Brewin Dolphin (BD) made a positive start to its financial year as income for Q110 increased 11.5%, and funds under management (FUM) rose 6% to £21.7bn. Investment Management revenue (the key to the group) was up 20.1% y-o-y. Since the December 2009 placing, the stock has underperformed and trades at a discount to its peers. BD’s growth strategy and its healthy balance sheet should secure good earnings momentum unless there is a significant downturn in equity markets. The 2010 dividend gives a yield of 5.5%, 1.8x covered by normalised earnings. Research type: Outlook |
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| Mar 09 2010 |
Targeting a growth market Blue Star Capital has transformed itself into a homeland security focused investment company with four core investments. The new management team has vast and complementary experience across defence, security, police and industry, providing a detailed understanding of emerging opportunities. We believe that the focus on the growing homeland security sector provides significant upside potential for Blue Star and the prospects for current investee companies are promising. With the added interest generated by the Digital Barriers flotation, we feel that Blue Star’s current valuation of a 20% premium to the published NAV is easily warranted. Research type: Outlook |
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| Mar 08 2010 |
Growth in a downturn In a tough market, K3 beat our forecast to grow revenues y-o-y. Recurring revenues increased to 42.5% (FY08: 41%) and total revenues from existing customers reached 79%. Recent contract wins will generate further higher margin service revenues in 2010 and the DigiMIS acquisition will open up cross-selling opportunities. In our view, the current valuation is undemanding. Research type: Outlook |
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| Mar 08 2010 |
Strong result 2009 has been a strong year for Lloyd’s insurers, with Hardy no exception. But rates are softening as ample capital chases available business, even as investment earnings remain low. If underwriting discipline holds then returns will remain attractive and drive the book value growth that underpins share prices. Hardy benefits from the growth in premiums that will improve returns on capital raised in 2009. Dividend growth is set to continue at 10%. Hardy has a very strong underwriting track record but recent rapid growth through diversification has not been tested in a soft market and clearly represents a potential risk. Research type: QuickView |
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| Mar 08 2010 |
Dacogen events coming SuperGen is approaching a key event in terms of the outcome of an Eisai-sponsored Phase III study of Dacogen in elderly AML, which is due in the next few weeks. If successful, this should allow label expansion of the product in the US (and filing in the EU). Meanwhile, the FDA should complete its review of the five-day Dacogen dosing regime in the next few days (PDUFA date is 8 March). Management guidance suggests of an up to 10% growth in revenues for FY10 looks conservative, while R&D costs remain budgeted to maintain cash flow neutrality. Research type: Update |
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| Mar 08 2010 |
By Jove Since our last note on Red Rock, the pound has fallen sharply on the foreign exchange markets, Resource Star has been relisted in Australia and Jupiter Mines has entered into a transformational deal that will quadruple the size of the company. All have consequences for Red Rock’s valuation. Research type: Update |
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| Mar 05 2010 |
Episil for oral pain relief IS Pharma purchased the rights to sell Episil, an oral spray that creates a protective CrystalFilm over damaged mouth surfaces (oral mucositis). This painful condition is particularly common in cancer therapy. A related product for dry mouth, Aequasyal (also applicable to cancer therapy side effects), was acquired for the UK market in January. IS Pharma will pay €1.75m cash for the rights plus royalties. We anticipate a trading update on FY10 in April and will revise forecasts at that time. Research type: Update |
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| Mar 05 2010 |
Trading update Since our initiation Cinpart has been making good progress in developing its subsidiary Active Energy and commercialising the VoltageMaster. Contracts with the Ministry of Justice (MoJ) help gain traction, and the strategy has now been refined to target three core areas: (1) small enterprises which generally qualify for government funding under the carbon trust; (2) government departments which hold competitive tendering through ESPO and; (3) via the relationship with SEC, target larger companies falling under the Carbon Reduction Commitment. Research type: Update |
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| Mar 05 2010 |
Admirable performance Admiral continues to show strong organic growth, with above industry margins achieved through its direct distribution (‘capital-light’) business model. In January 2010, the group extended its long-term agreements with Munich Re and Hannover Re, transferring a significant proportion of its underwriting risk. This is allowing Admiral to distribute the majority of its earnings as dividends and promote its expansion overseas. Nevertheless, the stock has risen strongly since December 2009 (20% absolute) and with the prospect of another challenging year, we believe a lot of these positives were factored in, hence there was some modest profit taking following the release of the results. Research type: QuickView |
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| Mar 05 2010 |
Door to door dosh IPF provides emerging-market, home credit through networks of local agents – a high risk, high return business. Its agents are the USPs as they live in the neighbourhoods where they lend, and so know the people intimately. No bank has a database to match that. Established businesses in Eastern Europe are the cash cows, while Mexico and Romania provide great growth opportunities. IPF is strongly capitalised (equity a very strong 49% of customer receivables), and has committed funding, well in excess of its probable needs, to October 2011. Research type: QuickView |
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| Mar 05 2010 |
Back on track A revised permit roadmap for the restart of the Rio Tinto Mine was confirmed and agreed in December 2009 and EMED is on track to commence production in 2011. Despite regulatory and permitting setbacks, EMED is well positioned to move the project forward; it owns the mine, the plant and the mineral deposit and enjoys the support of the government, labour unions and the local community. EMED needs to follow the revised process and submit independently supported, detailed back-up plans to obtain the necessary operating permits before the authorities will approve the mineral rights and mining operations. It is also reliant on compulsory property acquisition procedures before operations can commence. The shares are trading at a discount of 67% to our valuation of 39p/share for the Rio Tinto Mine alone. Research type: Update |
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| Mar 05 2010 |
Cautiously optimistic FY09 results were ahead of our expectations. We assume no volume growth for FY10, but strong capital management means the business is generating an impressive adjusted ROIC of c 15%. Operations have been right-sized and through restructuring, cost cutting and selective modernisation of equipment, BPI is positioning itself to improve returns in a difficult economic environment. We believe operating profit/tonne could improve further as a full year of cost reductions are realised, however polymer prices have risen significantly, with further increases indicated depending on how the supply/demand outlook unfolds. Our ROIC/WACC analysis points to c 30% upside on our base-case scenario. Research type: Update |
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| Mar 05 2010 |
Defying the market FY09 preliminary results illustrate LSL’s increasing capacity to deliver organic growth, even in an unhelpful UK residential market. When the latter does pick up, the group is well placed, but it is operationally and financially equipped to thrive whatever the direction of the market. Over the past 18 months LSL has used its strong cash generation to reduce debt, and built less cyclical revenue streams, such as lettings, and genuinely counter cyclical businesses such as repossession asset management. The resilience of the surveying division reflects its increased market share and contracted arrangements. The rapid integration of Halifax Estate Agencies Limited (HEAL) branches after the completion of the acquisition in January provides a strong base for growth, as do initiatives to drive up average branch revenues and profit. Research type: Update |
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| Mar 04 2010 |
Virgin's GP ventures The neat deal with Virgin gives Assura a cleaner market profile, allowing it to focus on the core property (£350m of assets mostly on long-term NHS rentals) and its growing pharmacy chain. Selling 75.1% of the GPCo stake, cutting £8.8m of costs and getting £8m of committed Virgin funding for the GPCos makes Assura profitable and cash generative. However, Virgin has no healthcare track record and Assura has to wait for the GPCos to mature to get a return. If Virgin loses interest, will Assura let its management and cash investment crumble or resume control of the operation? The GPCos may be off the accounts, but are not yet exited. Research type: QuickView |
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| Mar 04 2010 |
Future communications While today’s results proved that even high technology aerospace & defence equipment suppliers have been impacted by the civil downturn, we feel that the outlook provided by new CEO Andy Stevens demonstrates that Cobham is a company with further embedded potential. With the focus of the US Quadrennial Defence Review very much centred on capabilities such as communications that are dominant within Cobham, the group is well-placed to continue its medium-term growth target of 7-9% pa. In addition, the balance sheet is sufficiently strong to support continued company funded (PV) R&D investment and allow the group to make selected acquisitions to ensure technological progress is maintained. Research type: QuickView |
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| Mar 04 2010 |
Green shoots showing After a couple of horrendous years for Irish financials (FBD is currently trading 87% below its 2007 peak), there are green shoots of economic stability and modest GDP growth in 2010. The outlook for the non-life insurance market is better, with much-needed premium increases now sticking. FBD took market share every year from 2003 to 2008, stepping back marginally last year given uneconomic pricing. It has a material cost advantage over peers and a strong relationship brand. Capital is strong, and the yield of 5.4% is more than twice covered by normalised earnings. Research type: QuickView |
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| Mar 03 2010 |
Consistently good Sportingbet is continuing to deliver strong growth with first half net gaming revenue up by 24%, well above the industry average. Its core sports business is very well diversified, allowing it to achieve consistently above average margins, and results are benefiting from recent investment in marketing, new products and IT. Our full year estimates are unchanged with EPS growing by more than 10% despite the recessionary backdrop. The shares have drifted in recent months and the rating is well below the peer group average despite the above average growth. Research type: Update |
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| Mar 03 2010 |
BNC210 Phase I data Final data from an escalating single-dose Phase Ia study of the anxiety/depression compound BNC210 in healthy volunteers show the drug to be well tolerated at potentially therapeutic doses. Evidence of anxiolytic activity was seen through a lowering of plasma cortisol levels. A Phase Ib study is planned this year. The investment case for Bionomics rests on the twin pillars of BNC210 and BNC105, a vascular disrupting agent in Phase II studies for mesothelioma and kidney cancer. Licensing deals for both compounds are possible on completion of the current studies. Research type: Update |
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| Mar 03 2010 |
A purer play on COPD? Sosei’s investment case is highly reliant on the successful development of COPD therapies NVA237 and QVA149, jointly licensed to Novartis with Vectura. Key development and regulatory catalysts over the next two years should bring significant milestone revenues for Sosei ($77.5m in milestones are due before US/EU launch). Recurring royalties post-launch should enable expansion of its R&D pipeline through future partnering opportunities that address the Japanese ‘drug lag’. Research type: Outlook |
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| Mar 03 2010 |
Development contract Sarantel is making further progress in the high performance military market with the news that a US defence contractor has agreed to fund development of a customised dual-frequency antenna for portable military satellite communications. Research type: Flash note |
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| Mar 03 2010 |
Braking down barriers Meggitt's results demonstrated the twin-track nature of many companies in the sector with the defence businesses robust and civil weak, accentuated by severe customer destocking. Meggitt's quick action to restructure the group saw £34m of a £50m cost-cutting exercise delivered at a quicker pace than anticipated and this allowed the group to maintain EBITDA at a similar level. Meggitt's high-margin aircraft brakes businesses have been hit hard, however it is set to benefit from the gradual recovery in air traffic throughout 2010. The rating has recovered from the lows of 12 months ago, but we feel that further progress will be required to push it higher. Research type: QuickView |
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| Mar 02 2010 |
Reliable progress Retail investors’ activity continued at a high level in the fourth quarter of 2009, with annual trading volumes 75% ahead of 2008. An increase of 40% in the number of accounts opened supports the predictability of recurring revenues and gives us confidence in our operating assumptions. The shares are trading at the lower end of their historic valuation range, which fully takes into account short-term uncertainty. Research type: Update |
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| Mar 02 2010 |
Good strategy = reward Catastrophe revenue can be highly unpredictable, which is why Hiscox has an ongoing investment programme of building more stable specialist accounts. This strategy is certainly paying off. With the absence of any major catastrophes, the benefit of good underwriting discipline and prudent investment management, the group reported a record year of profits. Despite strong share price recovery since December 2009 and a more conservative outlook for investment returns in 2010, the stock is far from demanding, trading on less than 1.2x NAV and on low P/E multiples. Research type: QuickView |
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| Mar 02 2010 |
Good data filters through New data on delayed graft function strongly indicates a role for Rhucin in kidney transplantation, opening the way to clinical trials in 2010. EU approval of Rhucin may happen on 29 November, assuming a positive 23 September EMA opinion. An H1 deal should bring in an upfront with sales of €11m of inventory. FY09 results show an 11% rise in cash costs, taking operating cash burn to €24.6m. Up to €19.9m of cash debt and interest repayments may be due in 2010; net cash was €2.3m. Research type: Review |
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| Mar 02 2010 |
Sustainable quality Ultra Electronics continued its tradition of reporting results slightly ahead of expectations and showed the true benefit of the consistent strategy built since flotation in 1996. We feel that Ultra’s niche positions in critical products have allowed the group to maintain its growth trajectory, even in this most difficult of economic environments and we see no reason for that to change. In addition, with the core businesses operating in the sweet spot of future spending priorities and a strong balance sheet to continue investing in R&D and acquisitions, we believe that Ultra warrants its 20% premium to the sector rating. Research type: QuickView |
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| Mar 02 2010 |
On track, but tough H1 ClearStream is benefiting from strong economic growth in the leading developing ‘BRIC’ economies, Brazil in particular. Other core own-brand markets, like Pakistan, have recovered from trade credit issues seen in late 2008. The move to peripheral devices with stronger brand recognition and margins continues. In stents, SatinFlex, the cobalt alloy stent, is showing higher than expected growth. Manufacturing upgrades may have lowered H1 margins, but FY10 should see strong overall growth. Research type: Update |
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| Mar 02 2010 |
Growing revenues Key highlights from today’s interims are less about reported performance and more about the steps being taken to grow the revenue base. A significant new contract, action to ensure fleet availability at agreed rates, and funding lines to finance growth all suggest revenues are likely to accelerate compared to current consensus earnings. The fall in the gross margin can be explained by less pilot and service-based projects in the current period, while measures have been taken to improve efficiency and working capital flows. Research type: QuickView |
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| Mar 02 2010 |
Hosting acquisition K3 has agreed to acquire DigiMIS, a hosting service provider, for an initial consideration of £803k, potentially rising to £2.1m. This takes K3 into a new but complementary business area, opening up opportunities to sell hosting and ultimately a fully outsourced ERP service to its customers. In addition, as customers experience K3’s hosting abilities and become comfortable with the concept of their IT systems being hosted and maintained off-site, we believe that this will prepare the ground for offering software-as-a-service. Research type: Update |
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| Mar 01 2010 |
Binary events ahead 2010 should be an interesting year for Biotie. Recent positive Phase I rheumatoid arthritis data from VAP-1 antibody BTT-1023, coupled with results of an ongoing study in psoriasis, provide the trigger for the exercise of an option-to-license held by Roche during H110. This could be a means for Biotie to capture significant economic value. Later in the year, results from dose ranging Phase I trials of ELB353 (H110) could also stimulate partnering interest, and read out of the pivotal programme of nalmefene could ensure that Biotie starts 2011 in a stronger financial position. Research type: Outlook |
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| Mar 01 2010 |
Resilience back on track Nexus has today announced that its wholly-owned subsidiary, Resilience Technology Corp, has won several new orders for its security appliances. NASA, the US space agency and an existing Resilience customer, has made additional orders for firewalls while sales have been made to three other new customers. The news is encouraging as it suggests that the shake-up at the recently acquired Resilience unit is now bearing fruit and that Resilience is firmly back on track to profitability. Research type: Update |
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| Mar 01 2010 |
Less is more With most of the write-offs out of the way, management is focusing on right-sizing the business. Overheads and operating costs have been pared back, with further closures and headcount reductions in the pipeline. Management is confident that the new operating model is robust, but we are concerned that receivables have only fallen 2% during the first half, while adjusted revenues declined 11%, despite the progressive changing of the operating model to accelerate payments from insurers. Research type: QuickView |
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| Feb 26 2010 |
Uranium in Chile Despite terminating the option to purchase agreement with Entropy Resources, the outlook for U3O8 Holdings remains positive as it continues to advance two uranium exploration projects. The company is also considering a move from PLUS to AIM which should improve its visibility and liquidity. As the world grapples with the reality of a low-carbon future, the outlook for uranium remains bullish while comments by Chile’s energy minister confirm the country’s plans for the development of a local nuclear sector. All this bodes well for the future of U3O8, which is also examining other uranium opportunities in Chile and the region. Research type: Update |
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| Feb 26 2010 |
Post hoc data in stroke Post hoc analysis of the desmoteplase DIAS-2 trial confirms previous findings of a treatment benefit in ischaemic stroke patients with cerebral blood clots, and supports the design of ongoing Phase III trials. Execution of a licensing deal on short-acting sedative CNS 7056 this year should secure Paion’s funding position beyond the read out of Phase III desmoteplase studies in mid-2011, an event which, if successful, will also trigger milestone payments. Paion is therefore, in our view, at a significant value-inflection point. FY09 results will be released 16 March. Research type: Update |
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| Feb 26 2010 |
Well set for FY10 growth We publish this short note to accompany PHP’s FY09 results; a more detailed review will follow during March. The results were characteristically, reliably in line with expectations. There was strong growth in underlying profitability, net of revaluations and gains on derivatives, both of which were positive for the period. The year-end portfolio appraisal benefited from a modest decline in mid-year investment yields and rental growth on review, with the revenue outlook supported by £40m of recent acquisitions at 6.25-6.50% initial yields. Those, plus others in the pipeline, should provide full dividend cover. The shares’ attractions include a 6% yield and discount to our end FY09 329p/share DCF appraisal of long-term, government-backed revenues. Research type: Update |
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| Feb 26 2010 |
Geared to Mesupron deal Wilex’s investment case is heavily dependent on its ability to secure an economically attractive licensing deal for its mid-stage anti-cancer drug Mesupron. This should be possible given the product’s attractive profile, but a deal has to be concluded soon in order to bolster Wilex’s lean cash position. However, if financing uncertainty is assumed to be reflected in the share price, any deal that removes this should have a geared upside. Wilex may also reach the trigger point for the interim analysis in its ARISER Phase III trial of Rencarex, another key stock price catalyst, late this year. Research type: Review |
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| Feb 26 2010 |
Restructured and ready The swift, decisive action undertaken during 2009 has positioned GKN not only to manage current difficult trading conditions, but also for the future recovery in its end markets. With the group’s plans based on more bearish assumptions than industry forecasts, we feel that GKN has the potential to steadily outperform consensus estimates throughout the year. If such assumptions do prove to be correct, the cost base is now at a level to manage those issues without a severe impact on forecasts. As a result, we feel that the current rating of 12.2x CY10 EPS, falling to 7.8x CY11 EPS does not fully reflect the competitive position and upgrade potential of the stock. Research type: QuickView |
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| Feb 26 2010 |
On the hunt Oil service company shares broadly correlate with oil and US natural gas prices. Hunting has a good global competitive position, but that is more than reflected in its rich valuation, which has benefited from industry consolidation. Research type: QuickView |
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| Feb 26 2010 |
Aurizon reconsidered Since our note of November 2009, Aurizon has provided the market with its fourth quarter production numbers and details of the Joanna pre-feasibility study, conducted by BBA. Of the two, the release of the Joanna PFS is of greater long-term significance to shareholders. At this stage, the study envisages a 3.1Mtpa operation, producing 127,000oz gold per annum at an average operating cost of US$482/oz and a capital cost of US$1,520 per annual ounce, or US$215 per mined ounce. Research type: Review |
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| Feb 25 2010 |
Medicine begins to work Pendragon has emerged from two tough years, having returned to profit and restructured its borrowings. The terms for a fund-raising were deemed unattractive and management chose not to issue equity to strengthen its balance sheet last year; consequently the group has higher gearing than its immediate competitors. With the UK automotive market to remain subdued for at least the next two years, the recovery indicated by the City needs to be achieved from existing resources. Research type: QuickView |
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| Feb 25 2010 |
Disappointing Avivi-1 well Tower Resources, a frontier exploration junior, has indicated that its Avivi-1 exploration well in Block 5 of Uganda’s Albertine Basin failed to strike oil after reaching the target depth of 742m. At this stage, no further details are available but a more detailed statement is expected next week. In interpreting the admittedly disappointing results it should be noted that Block 5 covers a large acreage in a very sizeable basin. A dry well does not necessarily provide definitive evidence of an absence of oil in Block 5. Research type: Flash note |
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| Feb 25 2010 |
Quality all round Croda produced a good set of results, featuring a stronger Q3 trend accelerating into Q4 with a return to volume growth and a markedly improved balance sheet. An increased dividend was accompanied by a positive outlook statement. Croda’s gearing to cyclical recovery, its strategy to focus on specialties, combined with cost restructuring and cash flow focus has driven shares to recent highs, albeit still undervaluing earnings prospects. Research type: QuickView |
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| Feb 24 2010 |
BHP Billiton backs Mumbwa In late January 2010 BHP Billiton elected to progress to Phase 4 of the Mumbwa copper and gold project in Zambia. The decision endorses the potential of this area, where an inferred mineral resource has already been defined by Blackthorn Resources. BHP Billiton will fully fund Phase 4 which, once successfully completed, will allow it to increase its share of the project from 40% to 60% subject to a back-in payment to Blackthorn Resources estimated to be US$11.5m (A$12.5m). This is not reflected in our financials pending further information on the outcome of Phase 4. Research type: Update |
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| Feb 24 2010 |
Steadier FY10 outlook The results showed asset value recovery in line with UK commercial property generally. Perhaps more interesting is the grip that new management has taken on the portfolio as it seeks to identify where it can bring its skills and capital to bear in the next few years. Asset sales increased retail property weighting to 88%, but there is geographical balance via a 66:34 UK to France split. FY09 was erratic, with all the good news in H2, ie occupancy up by two percentage points to 95% and a 6% increase in property values, which pushed NAV up by 13% to 421p/share. The market backdrop is buoyed by investment demand, but bank attitudes to new lending may still constrain growth for the next few years. Research type: QuickView |
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| Feb 24 2010 |
Spotty The market’s response was surprisingly enthusiastic, given M&C’s continued lack of earnings visibility. Maybe it was more relief that 2009 results were better than expected (albeit only slightly and against a fragile consensus) and confirmed strong finances. The CEO was hired to fire-fight in unprecedented conditions, and that he has done well. The market may now want more but must be patient as there is no quick trading fix and asset prices are unattractive for M&C, both as buyer and seller. Research type: QuickView |
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| Feb 24 2010 |
Geared upside The investment case for Addex effectively centres on a potential licensing deal for the lead compound ADX48621, an mGluR5 NAM that is due to enter Phase II trials for Parkinson’s disease-levadopa induced dyskinesia (PD-LID) in Q4 this year. A deal should remove most or all of the funding uncertainty post 2012. The shares have traded at around the CHF77m cash value since the discontinuation of ASDX10059 last year, offering a geared upside if Addex can establish a partnership. Research type: QuickView |
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| Feb 24 2010 |
Exploration not priced in Gulfsands’ production at Khurbet East continues to run at 17,300bopd (gross) and we expect it to increase to an average 24,000bopd (gross) next year. KHE-14 well results indicated oil deeper than previously expected, pointing to a potential reserves upgrade. Catalysts to watch for this year are three fully funded exploration wells targeting 17mmboe of mean gross resources. We re-rate our RENAV to 301p. Research type: Update |
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| Feb 23 2010 |
VDA development plan The investment case for Bionomics centres on its two lead candidates, BNC105, a vascular disrupting agent in Phase II studies for mesothelioma and kidney cancer, and BNC210, an anxiolytic/antidepressant compound in Phase Ib studies. Licensing deals for both compounds are possible on completion of the current studies and a deal for either or both – possible by 2012 – should generate Bionomics a significant economic return. Bionomics is funded to complete these studies and may seek to engage with potential partners based on interim data, due later this year. Research type: Outlook |
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| Feb 23 2010 |
Success breeds success E1 is the new kid on the block in filmed entertainment. In less than three years it has successfully built a large entertainment content and distribution business. The recent high level of investment in film and television content is paying off with an increasing number of releases and a growing library (valued at US$220m in 2009) available for long-term exploitation. Expansion is underpinned by strong operational cash flows but the share rating does not yet seem to reflect E1’s considerable progress. Research type: Outlook |
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| Feb 23 2010 |
First well in the Falklands has spudded Following the arrival of the ‘Ocean Guardian’ rig to the North Falklands, Rockhopper Exploration announced that the Liz 14/19-A Exploration well (WI 7.5%) has been spudded on 22 February 2010. Desire Petroleum, operator of the prospect, is drilling the well to an estimated depth of c 3,500 metres, targeting mean gross unrisked resources of 391mmboe. The estimated duration is around 30 days and once the Liz well is completed, Rockhopper will spud the Sea Lion 14/10-B exploration well (WI 100%). The commencement of high-impact exploration drilling in the Falklands has been long awaited and is a clear milestone, providing investors with exposure to frontier exploration. Research type: Flash note |
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| Feb 23 2010 |
Jolly Ranch update Nighthawk’s operational update announced on 23 February points to very encouraging progress in de-risking the Jolly Ranch shale oil project in eastern Colorado. In our view, the evidence is growing that Jolly Ranch is evolving as a major shale oil play broadly analogous to the Bakken plays in North Dakota and Montana. We see excellent scope for positive news flow in the coming months stemming from rising production and continuing development activity. The February cash balance at $18.3m is higher than expected and should be adequate for the current development programme. Research type: Flash note |
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| Feb 23 2010 |
On the case Devro has delivered a second good year of recovery, with further growth forecast for 2010. The positive outlook is supported by secular trends of increasing meat consumption in developing markets and by substitution of collagen for gut in established markets. The dividend was increased 12% (the first step up since 2006), indicative of management confidence. The shares have outperformed over the last six months but we regard the rating as justified by the investment case. Research type: QuickView |
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| Feb 23 2010 |
One-stop shop Patsystems has announced a respectable set of results, given the weak economic backdrop and the turbulence that has shaken the global financial services industry. Revenue growth was a healthy 12.6%, driven by the two new exchanges deals and a better-than-expected performance from the Trading Systems division. Asian revenues soared by 53% and now represent 37% of the group total. Research type: Outlook |
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| Feb 22 2010 |
H209 trading in line The trading update confirmed PSPI’s investment portfolio was fully let at the end of FY09, primarily on long-term leases to nursing home operators in the UK, Germany and Switzerland. Valuations were steady in FY09, despite a tough period for commercial property, with an H209 portfolio decline of just 0.5% (constant currency) and 0.9% for FY09 overall. The UK properties (68% of the total) actually increased by 3.6%, reflecting extensions and refurbishment of existing properties. A marginal reduction in FY09 NAV forecasts does not detract from the shares’ attractions, ie an 8.4% covered yield and 65% NAV discount, out of sync with fundamentals. Research type: Update |
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| Feb 22 2010 |
Tail wind abating Shire’s FY09 results showed the strength of its young portfolio and the benefits from Genzyme’s contamination problems. Its lead drug Adderall XR went generic in April, but total sales were still flat year-on-year; and the prospects of Replagal and Vpriv have been boosted by Genzyme’s issues. Shire’s shares have already risen 66% since July, reflecting these events and the company’s growth potential. Research type: QuickView |
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| Feb 22 2010 |
Earnings Power XP Power reported robust FY09 results, growing earnings 17% y-o-y and beating our forecast by 11%. Strong cash management reduced net debt by 33% and a 12p final dividend was announced (vs our 11p). The ramp of in-house manufacturing continues, and is helping XP win business in the Technology and Healthcare markets. Trading at 9.2x our FY10 EPS forecast, in our view, does not reflect the potential earnings growth and dividend yield offered by this stock. Research type: Outlook |
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| Feb 22 2010 |
An orthopaedic bull Medcomtech is a rapidly growing orthopaedic device distributor in Iberia, with revenues increasing at a CAGR of 49% since 2003. The Spanish orthopaedic market is estimated to be growing at 5%, and the company is expanding geographically and has a young and broad portfolio of novel products. Medcomtech has a lean operational structure enabling it to bring products to the market quickly and compete against the major orthopaedic companies. It is seeking to raise €10-15m in equity. Research type: Outlook |
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| Feb 22 2010 |
Opportunities identified The new generic veterinary pharmaceutical products launched over the last 18 months are starting to deliver good returns. The cash generative characteristics of the livestock business, despite the diminution in national herd and flock, means that the group is in a strong position to build a medicine portfolio without onerous funding concerns. The liquidity discount has now been eliminated. Research type: Outlook |
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| Feb 19 2010 |
The devil's in the data At first glance, Actelion’s development pipeline is impressive, with five Phase III programmes supplementing the solid performance of its three marketed products. However, significant uncertainty remains ahead of potentially transformative, albeit risky, clinical catalysts: BUILD-3 results for Tracleer in idiopathic pulmonary fibrosis in Q1, followed by CONSCIOUS-2 clazosentan data in aneurysmal subarachnoid haemorrhage in H2. Research type: QuickView |
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| Feb 19 2010 |
Risk/reward improving Antisoma offers one of the most attractive biotech investments in the UK, but it remains heavily geared to the success of three ongoing Phase III studies: the two ATTRACT studies of ASA404 and the ACCEDE study of AS1413. Its £50m of cash should last to late 2011 when regulatory filings of ASA404 by Novartis should trigger substantial milestones. Partnering AS1413 could bring in a substantial sum, but Antisoma may wait for results of ACCEDE to capture the value uplift. An oncology company acquisition, with a concurrent fund-raising, is a possibility. Research type: Review |
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| Feb 19 2010 |
Strength in depth BAE Systems announced a resilient set of results demonstrating its ability to deliver against plan even in a challenging environment. The underlying performance of the group was slightly ahead of consensus and we do not believe that there were any significant surprises. With the DoJ/SFO global settlement now firmly behind BAE, focus has turned solely to the outlook and forthcoming budgetary pressures. In our view, BAE has a robust spread across platforms, sub-sectors and technologies with established programmes generating cash and newer businesses focused on areas of future growth. With a strong balance sheet allowing a £500m share buyback and room for acquisitions, we feel the current rating of 8.5x CY10 EPS is undemanding. Research type: QuickView |
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| Feb 18 2010 |
Samsung ups 3D lines Following last Friday’s positive trading statement, DDD announced this week that it has restructured its five-year Samsung licence agreement, which allows Samsung to use DDD’s automatic 2D to 3D conversion technology. While the per-unit royalty has been reduced, the number of LED and LCD 3D TV models incorporating DDD’s technology is likely to increase significantly. As a result, DDD is now expecting to receive royalty revenue from Samsung in the range of $1.1m to $1.5m during 2010. This move gives us added confidence (and visibility) that DDD can achieve another year of strong revenue growth. DDD’s FY09 results are due to be released during the week beginning 19 April 2010. Research type: Flash note |
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| Feb 17 2010 |
Maiden divident beckons We have revised our valuation of Red Rock Resources in the wake of our analysis of the gold sector expounded in our research note entitled Gold – Valuation benchmarks are obsolete, published last month. In addition, the company has raised £240,000 (before expenses) via the issue of 16.8m shares in two tranches at varying prices. Finally, the company announced the termination of its joint venture with Pallinghurst in respect of the two companies’ shareholdings in ASX-listed Jupiter Mines Ltd, raising the possibility that Red Rock could part liquidate its stake in JMS. Research type: Update |
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| Feb 17 2010 |
Tables turned With Babcock’s announcement of a rejected approach for VT at 633p/share, attention has swiftly moved from VT’s own bid for Mouchel to what would be required for Babcock to seal a deal. Our analysis suggests a bid of 700p/share would be needed to give VT shareholders comfort that a reasonable price could be achieved and for pressure to be applied on the board to enter into discussions. What is on offer is the creation of a FTSE 100 Support Service company that would be a powerhouse in the UK, with a particularly strong focus on defence outsourcing. The combined offering would position it to capitalise on the opportunities the forthcoming Strategic Defence Review may well produce and the scale to take on increasingly large contracts. We believe that this bid has thrust VT into the spotlight and could well flush out other bidders that may see this combination as a threat. Research type: QuickView |
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| Feb 17 2010 |
Quietly confident Today’s update is yet further evidence of the strength of the HRG business case. The fee-based model continues to withstand a tough (if recovering) market while costs are being managed effectively in line with changes in demand. Recent weather disruption was not a spoilsport, rather a reminder to clients of HRG’s travel expertise. The company is on course to meet full-year expectations. Research type: Flash note |
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| Feb 17 2010 |
Enhanced standing The shares have been treading water over the last few months due to persisting economic uncertainty. Low & Bonar’s positive actions to enhance its competitive standing and a compelling valuation bode well for when greater risk appetite returns to the market. Research type: QuickView |
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| Feb 16 2010 |
Initiatives continuing A positive message in today’s Interim Management Statement will further help to restore confidence in the group and its ability to sign new licensing agreements. Risks for the group remain, in particular the funding of its largest counterparty Diamond Wood, but the group is starting to see improvements in its trading environment and recent operational improvements are beginning to bear fruit. Our preliminary valuation, highly sensitive to licence wins, suggests a €0.7-3.66 per share range. Research type: Flash note |
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| Feb 16 2010 |
Consumer adoption For H110, Monitise reported 57% y-o-y revenue growth, with the decision to buy 50% of Monilink driving higher-than-expected operating and net loss. Registered customer growth is accelerating and mobile apps are driving users to higher value services. Monitise is making good progress with recently announced JVs, and the recent/imminent share issues provide the company with capital to support plans to build out the Mobile Money Manager network beyond the UK. Research type: Outlook |
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| Feb 16 2010 |
Refocus on valuation Operational initiatives continue to enhance revenues and portfolio values. However, CREO has also revealed plans designed directly to tackle the current NAV discount. Its first proposal is to apply up to £15m of the sales proceeds of the recent disposal of Tangdao Bay towards a buy-back of a material stock overhang. The second is a switch to the Singapore Stock Exchange, closer to a local investor base familiar with the dynamics of PRC commercial property. It expects this to help the valuation trend towards the underlying assets. Research type: Update |
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| Feb 15 2010 |
Fundraising and deal Vernalis announced the placing of £30m in new shares to fund the reacquisition of EU frovatriptan royalties from Paul Capital, and to progress its development pipeline. This placing and transaction substantially strengthen Vernalis’s cash position, ahead of IN STEP trial data in March, enabling the company to become debt free and to extend its cash runway beyond 2012. Research type: Update |
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| Feb 15 2010 |
US mid-tier E&P potential US-focused Nighthawk has the potential to evolve from E&P junior to mid-tier status over the next two or three years. In 2009 Nighthawk made considerable progress in de-risking its key Jolly Ranch and Revere projects. Visibility on a sizeable reserve position should improve radically in the coming months. There is scope for a sharp upturn in the stock if, as we suspect, the development related news flow is positive in the coming months. Research type: Outlook |
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| Feb 15 2010 |
Good health Allocate Software posted strong H1 results, with revenues from the healthcare sector growing particularly well. There is still plenty to shoot for in the UK, with additional products and greater penetration of NHS Trusts. December’s acquisition of Swedish company Time Care, funded by an oversubscribed placing, has continued the international expansion of the business. The valuation ignores the inherent value of the installed base and our DCF indicates a price of 100p. Research type: Review |
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| Feb 12 2010 |
Ramping up In its fourth quarter update, Gold One announced an operating performance very much in line with expectations. Assuming that the company is able to maintain momentum at its flagship Modder East mine in the East Rand basin and ramp up production at a rate of c 50,000t per quarter, it will achieve production of 180,000oz in FY11 at a cost of US$277/oz (cf a life of mine target cost of US$250/oz). On this basis, we estimate that Gold One is capable of paying a flat dividend of 7.2Acps over the official seven year life of operations at Modder East or one of 13.8Acps from 2013, once its convertible bond has been redeemed, or one of 8.6Acps from 2011 in the event that the convertible bond is ‘put’ back on the company (see page five). Research type: Update |
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| Feb 12 2010 |
DSS energised Seeing Machines has announced it has concluded a deal with Freeport McMoRan Copper and Gold Inc, which enables the group’s DSS product to be deployed at Freeport on a mine-by-mine basis. We highlighted last year that Seeing Machines has been in discussions with c 10 large prospective DSS customers and converting any one of these could potentially transform this small company. Therefore this news is encouraging and could provide an impetus for further deals. Research type: Update |
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| Feb 12 2010 |
Best in class The results were towards the higher end of consensus and another special dividend was welcome news. The group’s unique division Vantage (69% of total revenues) grew assets under administration (AUA) by 60% y-o-y from £9bn to £14.4bn; it recruited 18,000 new clients and revenue in the division increased 22%. The group’s strategy looks very credible, and it should continue to benefit from significant inflows as demand for tax wrapper products gathers momentum. Research type: QuickView |
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| Feb 12 2010 |
Strong cancer play SuperGen is a US biotech firm with a pipeline of late-preclinical/early clinical projects targeting novel cancer mechanisms. Profitable and well financed, with c $94m in cash and some $41m/year in royalty revenue, SuperGen is able to self fund its R&D activities. Royalties are received on Dacogen, which is sold by Eisai and J&J. The outcome of a key clinical study of Dacogen in elderly AML, due in March/April, should, if successful, allow label expansion in the US (and filing in the EU) and significantly boost royalty revenue from 2011. GSK has the option to license up to four early stage products after proof of concept studies under a recent $375m deal. Research type: Outlook |
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| Feb 12 2010 |
Long-term opportunity Avingtrans’ interim results and guidance for lower full-year expectations highlighted the issues that suppliers to the wider industrial market are facing with lower revenues and strict cost-control significantly impacting margins and earnings. While demand signals are improving and the longer-term strategy of the group is creating new opportunities, we believe further evidence of a sustained recovery is necessary before a re-rating of the stock is likely to occur. Research type: QuickView |
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| Feb 12 2010 |
Limited upside Smith & Nephew has delivered strong earnings improvement in 2009 with adjusted EPS increasing 18%. This was largely because of efficiency gains from its Earnings Improvement Programme and the absence of expenses specific to 2008. The comparison will be more challenging this year and longer-term revenue growth will be hindered by price pressure. The shares are fully valued with more downside risk. Research type: QuickView |
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| Feb 12 2010 |
Resilience proved Rolls-Royce produced an impressive set of results, beating forecasts despite the backdrop of a weakened economic climate, programme delays and continued volatility throughout 2009. With the balance of the business becoming ever clearer and several new products due to enter service shortly, we feel that the Rolls-Royce strategy will continue to deliver growth and make management’s stated target of doubling revenues over the next decade achievable. For the short term, management’s guidance for 2010 remains cautious given the uncertain pace of demand recovery. However, we believe that the long-term outlook for the company is among the most promising in the sector. Research type: QuickView |
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| Feb 12 2010 |
Prospect of partnership Oxford BioMedica offers an attractive recovery play; its current market cap suggests little value is attributed to TroVax and the upside potential in the stock. The company has a good chance of partnering ProSavin and re-partnering TroVax in 2010. 2010 should also bring clinical catalysts, including further ProSavin Phase I/II data and initiation of Phase I/IIa trials for one or more of the ocular programmes. Research type: Outlook |
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| Feb 12 2010 |
3D a go-go In today’s trading update from DDD, expected FY09 revenue of £1.4m shows a continuation of the first half’s strong growth over the prior year. Better than we estimated are both gross profit margin (higher) and operating expenses (lower). The 2009 highlight is the impressive over 50,000 shipments in two months of Acer’s first 3D notebook, which incorporates DDD’s software. Consumer Electronics Show (CES) 2010 followers will have noted the plethora of 3D products exhibited, and 3D services soon to be launched. This bodes well for consumer acceptance of 3D in the home and DDD’s growth potential. Research type: Update |
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| Feb 11 2010 |
Boost in 2P reserves Mediterranean Oil & Gas has reported a doubling of 2P reserves to 40mmboe in the Ombrina Mare field (WI 100%). The company was recently awarded the production concession for the Guendalina gas field (operated by ENI), which is expected to come on-stream mid 2011, lifting MOG’s production. Ombrina Mare is potentially a value-transforming asset, hence news on project financing or farming-out will be a fundamental catalyst for the stock. Research type: Update |
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| Feb 10 2010 |
Weighted to H2 The pre-close trading update for the half year gave no cause to adjust full year expectations, but indicated that timing of business flows will mean stronger H2 than H1 revenues and profits. Industry comments are also that trading conditions are starting a tentative recovery. After a realignment of major shareholders, the share price should now revert to reflecting trading rather than technical issues. Research type: Update |
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| Feb 10 2010 |
Approaching big bang We look for three key attributes for companies in a development or cash consumptive stage: a clear route to commercialisation, healthy finances, and demonstration sites, which provide comfort that the technology is maturing. OC gets ticks in the boxes on all three accounts. The licensing and royalty model for microchannel reactors and catalysts creates upfront fees from the deployment of the hardware followed by recurring revenues from the catalysts. OC has secured a number of grants that supplement a healthy balance sheet, while partners such as Toyo Engineering, Modec and PTT help finance demonstration facilities. In addition to the demonstration facility in Gussing, the announcement of a joint development and test agreement with Petrobras provides further confidence that the technology is approaching commercialisation and that a significant industry player in the natural resources space is committing time and resources to evaluate it. Research type: Outlook |
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| Feb 09 2010 |
Global transformation Globo has released an encouraging trading statement with revenue growth of 31%, which is comfortably ahead of our forecasts. Operating cash flow was also ahead of our projections, as was the investment spend. Management remains firmly optimistic, in spite of the challenges in Greece, given the strong interest from mobile network operators around the world in the group’s technology. In addition, Globo is working on projects across the Mediterranean and the Middle East to drive growth. Research type: Update |
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| Feb 09 2010 |
On the right track Sarantel has successfully widened its customer base to include the high-value, performance-critical military and satellite phone markets. The combination of higher volumes and strict cost control has reduced losses and cash outflows this year, and capital raised in December gives the company breathing space until well into FY11. Steady growth from the wider customer base should provide the foundations to the business until Sarantel’s solutions are designed into higher volume applications. Research type: Outlook |
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| Feb 09 2010 |
Diabetes, moles and folds FY09 showed sales of £26.6m, up 48%, with revenue guidance of £28-32m for FY10. Bead sales grew strongly to £12m. The CM3 diabetes product with AstraZeneca is now in Phase I and adds 120p to the indicative value. In addition, Biocompatibles has acquired a handheld GP device to diagnose melanoma, while Novabel cosmetic filler beads with Merz may start to show some sales in 2010. We expect stronger growth from 2011 onwards as trial data is reported. Research type: Update |
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| Feb 09 2010 |
Belinostat deal TopoTarget’s co-development deal with Spectrum Pharmaceuticals for its HDAC inhibitor belinostat, signed last week, looks to be a transformative event for the Danish biotech company. The $30m upfront should provide at least two years’ cash, taking it comfortably beyond the potential approval in PTCL (where filing is expected in 2011). Spectrum will pay up to $350m in milestones (mostly sales-related), double-digit royalties and fund 70% of future development costs in exchange for US and Indian rights. Research type: QuickView |
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| Feb 08 2010 |
Es ist zu hell A possible cause for the variable PRESEPT laboratory data was identified as too much background fluorescence in a PCR system. Reanalysis of samples should give a more consistent picture. The main implication might be for 2010 sales, but peer review of PRESEPT data, due Q2, and Abbott results on its m2000 platform in H111 should put Epi proColon back on its commercial track. There are no regulatory implications as this does not affect the CE mark and Abbott will file a separate PMA. Research type: QuickView |
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| Feb 05 2010 |
Reserves upgrade Ithaca has announced a substantial increase in its 2P reserves of c 115% to 37.2mmboe. Jacky is providing good news with production slightly ahead of expectations and is generating solid cash. Increasing its stake in the Stella field was a key milestone for Ithaca, potentially unlocking a new development hub in conjunction with its two developed assets Harrier and Hurricane. We increase our Core NAV to 114p. Catalysts to watch are the appraisal of Stella and launch of Athena in Q110. Research type: Update |
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| Feb 05 2010 |
Beyond the cliff GlaxoSmithKline’s transformation under CEO Andrew Witty continues, with clear evidence of the changes, especially in emerging markets. In addition, it is now targeting an extra £500m in cost savings. The company is largely through its patent cliff, and with 20 products launched in the last three years it should enter a sustained revenue growth phase. The shares trade at a discount to global peers (FY10 P/E of 10.6 vs 11.0) and are supported by a yield of 5.3%. Research type: QuickView |
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| Feb 05 2010 |
So near and so far Full year results plus a trading update were published on 30 December 2009. FY09 was stronger than expected with H2 sales of £1.2m (H1 £0.9m) and 14 lasers sold in the year. CustomVis raised £300k in October 2009, strengthening the £300k June position, but a bad debt provision of £404k was made in the second half of FY09. Meanwhile, the Pulzar has been further validated and the new presbyopia indication has EU and Australian approval. The retinal camera will be sold from H2 FY10. Research type: Outlook |
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| Feb 05 2010 |
Pre-election contract delays H1 growth was broadly in line with expectations, but the short-term outlook has been affected by delays in conversion of the construction pipeline. That reflects client concern regarding future public sector budgets and their investment commitments. Thus far schemes are delayed not cancelled, but a lack of detail on future NHS funding may have a bearing on decisions until after the general election. We have cut our revenue forecasts for this year and next to reflect this. The investment case is solid, as is the argument for primary care as a proven, efficient use of NHS budgets. However, for now uncertainty means slower conversion of the pipeline. AH has cut £1m pa from overheads and prioritised development of recurring revenue streams. Research type: Update |
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| Feb 04 2010 |
MermaiHD positive NeuroSearch yesterday reported a positive outcome to the MermaiHD trial of Huntexil for Huntington’s disease. The study showed a statistically significant improvement in voluntary and involuntary motor function versus placebo for the higher dose group (45mg bid) and certain trends for the lower dose (45mg qd). Results from a second pivotal study of Huntexil, HART, are expected in H2 and should allow a US/EU filing shortly thereafter. Meanwhile, the company continues with plans to initiate a Phase III study with tesofensine for obesity. Research type: Update |
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Peter Knowles
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