Scapa Group
- Company overview
- Scapa Group manufactures technical tapes and film. Its standard and bespoke products are used in a range of different industries with applications for assembly, insulation, protection, repair and identification.
| Date | Reports available | Download |
|---|---|---|
| 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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| Feb 04 2010 |
Steady as she goes The half year trading update shows performance running along as anticipated and we are not making any substantive change to our numbers. The group’s contractor-led focus and ability to source specialist workers with skill sets that are in short supply has given it a resilience that most others lack. The balance sheet has moved into a net cash position, supporting the premium yield. Research type: Update |
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| Feb 04 2010 |
DS in the driving seat Today’s IMS from GB highlighted a comparative 15% increase in DataSolutions (DS) revenues in the third quarter of FY10. The 16% decrease in revenues from the DataAuthentication (DA) business was expected following the previously reported reduction in volumes from two large clients. Third quarter profitability is up, benefiting from increased gross margins in the DS business and strong cost controls in place. Research type: Update |
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| Feb 04 2010 |
Quality achievement The Walker Greenbank trading statement confirms a high quality performance in the toughest of years for the Household Goods sector. Revenue and profits will be down, but comfortably ahead of earlier outside expectations, while the group has generated significant cash over the year. With the current year likely to see a step-up in capital investment, we look ahead to the medium term with increasing optimism. Research type: Update |
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| Feb 03 2010 |
Breast cancer Phase II Enrolment has started in a Phase II trial of Alpharadin in bone metastases from breast cancer. The study should provide biomarker data that will support a Phase III study starting in 2011. Enrolment in the pivotal ALSYMPCA Phase III study in prostate cancer bone metastases is on track to complete this year, so the study should render results in late 2012. A Phase II study of Alpharadin in combination with docetaxel in prostate cancer should start later this year. Research type: Update |
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| Feb 03 2010 |
Signs of recovery In spite of reporting lower revenues and profits, which were in-line with our expectations, management points to indications that volumes are now increasing (eg 58 new customers, c 40 in H109), with an improved win rate while strong financial management has resulted in a significant decline in debt levels. This makes the stock a particularly interesting investment proposition given the modest rating and the opportunity for management to leverage the business as the economy recovers. Research type: Update |
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| Feb 03 2010 |
Securing the future Hampson has announced it intends to raise £59.5m by way of a placing and open offer of 119m shares at an issue price of 50p to reduce net borrowings. We feel that given the unprecedented issues that have beset Hampson’s end-markets over the last 18-months and the uncertainty this has caused in relation to the company’s increasing debt position, today’s announcement should be welcomed and seen as a signal of cautious confidence in the recovery. Although we estimate the deal to be c 36% dilutive to consensus EPS, the current implied rating of c 7x CY10 EPS (a 40% discount to the sector) looks like an attractive entry point. Research type: QuickView |
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| Feb 01 2010 |
Growth in tough markets Sceptre has released a good set of interims, with normalised PBT doubling to £1.0m despite very tough market conditions. It is exploiting competitor weakness to increase market share, particularly in pubs. Recent expansion has been constrained by a lack of asset finance, and we have reduced our estimates to incorporate a lower assumed rental machine base. However, bank lines have now been successfully renewed and we expect modest organic growth to be augmented by profitable consolidation opportunities such as the recent £1.1m Australian 8 Ball acquisition. Research type: Review |
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| Feb 01 2010 |
Doom & gloom overdone Tribal’s trading update and investor event underlines that while the current trading environment is far from easy, there is still business to be won in the public sector. Purchasers’ emphasis continues to shift to delivering value from existing levels of spend, rather than fighting for increased budget, playing to the group’s strengths. Market sentiment, though, remains fixated with the prospect of substantial budget cuts and uncertainty over the General Election period, already built into forecasts. Research type: Update |
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| Feb 01 2010 |
Maiden dividend ahoy Today, Sigma released a trading update, ahead of its FY09 results release in April, when an un-quantified maiden dividend is to be recommended by the Board. The group’s venture capital fund management activities traded profitably in FY09, though the property investment business is expected to record a moderate loss before a further write-down (to nil) of its most recent property partnership. Due to the latter, we are reducing our FY09 EPS estimate to 3.5p (from 4.3p). Research type: Update |
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| Jan 29 2010 |
Transformation on track The KCOM strategy is clear: to grow its market share within the managed services segment of the telecoms sector, while simultaneously improving the financial health of the group through deleveraging and addressing pension issues. Today’s trading statement provides evidence of KCOM’s progress. Research type: Update |
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| Jan 29 2010 |
Misplaced fears? AstraZeneca’s FY09 operational performance showed it was able to benefit from the opportunities created by the shortage in supply of generic Toprol XL and the swine flu vaccine, while also decreasing its working capital by $1.3bn. However, its shares trade at a considerable discount to its peers (FY09 P/E of 7.4x vs 12.5x) because of exaggerated concerns about the patent cliff. The five-year guidance suggests that revenues could be 15% higher than 2014 consensus forecasts. Research type: QuickView |
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| Jan 29 2010 |
NuCoal completes The completion of the NuCoal acquisition announced earlier this week signals the expansion of Coal of Africa’s thermal coal operations in South Africa. Funded through a ZAR731m placement in October last year, the final acquisition price has come in less than expected (ZAR467m vs ZAR650m) and allows CoAL to apply the remainder (ZAR264m) to its Vele coking coal project as well as general working capital. We have revised our production assumptions and our fully diluted valuation, which falls from 102p to 99p per share for Mooiplaats, NuCoal and Vele. Together with Makhado, we value Coal of Africa at 165p/share (cf 168p previously). Research type: Update |
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| Jan 29 2010 |
Q4 trading update Leisure & Gaming (L&G) has reported 12% growth in Q4 net win with strong growth in poker. Sports volumes were below our expectations, partly due to the weather, and we reduced our 2009 PBT estimate by €0.4m – still a good performance given the recession. L&G is investing in new software and the benefits of this, plus new Italian casino games, will mainly come through in 2011. Meanwhile, any DoJ settlement would be excellent news but the timing remains uncertain. Research type: Update |
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| Jan 28 2010 |
No news is good news The Committee on Human Medicinal Products’ (CHMP) review of the EU Rhucin application has shown no significant issues. Rhucin is a C1-IH inhibitor (C1-INH) for hereditary angioedema. This response may allow prospective partners to evaluate the dossier and commit to a marketing deal for the EU in H1. There is now a ‘clock stop’ of up to three months as Pharming responds to questions. The CHMP opinion could be given on 23 September with 29 November EU approval. Research type: Update |
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| Jan 28 2010 |
Cautious optimism FY09 was a tough year for Nexus, but management has taken aggressive steps to stabilise the business and has reduced costs across the group with the aim of returning to profitability in FY10. The strategy to build a strong recurring managed services revenue stream remains intact. This makes Nexus an interesting IT services investment proposition as the business has significant potential to scale and, in our view, an enterprise valuation of c £6m looks modest given the opportunity. Research type: Review |
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| Jan 28 2010 |
Positive trading update We have upgraded forecasts to reflect a positive trading update and FY10 revenue contribution from Halifax Estate Agencies Ltd (HEAL) branches, whose acquisition was completed on 15 January. The update confirmed that FY09 was significantly ahead of expectations, on stronger-than-anticipated housing transaction levels in H209. With LSL’s business model and cost base rationalised to let it tough-out a depressed market, any underlying market recovery will rapidly help the bottom line. We remain cautious for FY10 so build in only modest growth in housing transactions. However, the current rating does not fully discount further recovery, the potential for which remains while market transaction levels stay well below historic norms. Research type: Update |
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| Jan 28 2010 |
Resource grows The acquisition of 50Mt of direct shipping iron ore from Hollinger North Shore Exploration Inc will increase the estimated resources of Labrador Iron Mines (LIM) by around 50% from 99Mt to 150Mt. It should allow LIM to increase its production rate to 6Mt pa by FY14, three years earlier than planned. It will also allow the company to reorganise its production plan by leaving Astray and Sawyer untouched for longer and by promoting Howse to Phase Two. Research type: Update |
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| Jan 27 2010 |
Operational difficulties Following Valiant’s 25 January operational and exploration update we have reduced our production and earnings estimates. However, a successful exploration campaign targeting the Tybalt, Viola, Ariel and Handcross prospects in 2010 could help unlock risked value. A full update is expected with preliminary results in early Q2. Research type: Update |
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| Jan 27 2010 |
Tried and tested HRG continues to prove the resilience of corporate travel service earnings by delivering broadly unchanged interim PBT and reassurance about full-year expectations. Its fee-based business model has successfully withstood unprecedented market conditions through minimal correlation with premium traffic while effective cost management has largely protected group margin despite revenue pressure. The company remains securely financed. Research type: Outlook |
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| Jan 26 2010 |
AGM update Ahead of today’s AGM, management provided a brief trading update saying that the new fiscal year has seen a steady start, with media sales revenues building on last year’s progress. FY10 results are still substantially dependent on converting discussions with potential banking customers into new atmAd licences. i-design remains the sole provider of turnkey ATM advertising. Research type: Update |
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| Jan 26 2010 |
Margins lift again SciSys has released a positive trading update this morning. The announcement indicates margins are expanding faster than we had expected, in spite of the challenging market conditions. We continue to anticipate further margin expansion over the next three years towards our increased forecast of 5.1% which would, in our view, support a share price nearer 70p. Research type: Update |
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| Jan 26 2010 |
2010 and all is well Today’s trading update released ahead of the company’s AGM suggests all is well in the tech and consumer PR world. The last year’s acquisitions are settling in well. We continue to expect FY10 operating cash flow to outstrip the cost of these acquisitions and end the year with £1.0m plus net cash. We are initiating an FY11 estimate, which shows further growth in revenues, pre-tax and diluted EPS. Research type: Update |
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| Jan 25 2010 |
H2 recovery confirmed K3 announced that 2009 trading was in line with expectations and that new business is showing encouraging signs of recovery, providing support to our FY10 forecast. Year-end net debt has been reduced to below market expectations by tight control of working capital. With H109 marking the trough for K3 in our view, the stock looks undervalued on 5x CY09 and CY10 EPS forecasts. Research type: Update |
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| Jan 25 2010 |
Improving sentiment The trading update has reassured the market, with Empresaria’s preliminary results likely to come in broadly in line with expectations. Although December was ahead of forecast and activity levels in January are good, we are reluctant to extrapolate faster recovery in the more mature markets at this stage. The inherent operational gearing, exaggerated by the lower cost base, should nevertheless give a strong uplift in earnings in the current year. The share price is 50% above the price when the sector bottomed last March, less than the gains of the larger peers. Research type: Update |
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| Jan 22 2010 |
Analyst site visit Having now moved over 90% of European dairy production to the Czech Republic, Avon’s, Melksham (UK) site predominantly manufactures and assembles protection products. Significantly, operations achieve low reject rates, ranging from < 1-2%, for products which require extensive manual labour. Encouragingly, WIP and working capital has been reduced without affecting lead times. As yesterday’s IMS highlighted visibility remains limited beyond the core MoD and DoD contracts; but positively in Dairy, volumes have been steadily increasing to levels management classify as above restocking. Research type: Update |
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| Jan 22 2010 |
Growth steps up in 2011 Stobart continues to deliver on its underlying trading performance despite the recession. Importantly, several of its non-profitmaking assets now look closer to delivering returns and justifying the premium rating. Research type: Update |
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| Jan 22 2010 |
A non-core disposal StatPro has today announced it has effectively relinquished a contract it has with the Johannesburg Stock Exchange for a consideration of $4.08m (£2.5m), enabling the JSE to take its back office systems development project in-house. We view this as a good deal for StatPro, strengthening the group’s balance sheet while losing an asset that has few synergies with the group’s core software businesses. Further, StatPro will receive an attractive payment in exchange for the loss of £1.1m in annual revenues and £0.7m in annual gross contributions up to April 2013 while the intellectual property transferred to the JSE was specific to the project. Research type: Flash note |
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| Jan 21 2010 |
Good news Entertainment One (E1) has released a positive trading update driven by a strong performance in its Film division. E1 has also announced a successful £10.3m placing to fund the repurchase of exchangeable notes at a discount of over 60% to their expected maturity value, significantly strengthening the balance sheet and improving leverage ratios. We have increased our estimates and now expect 30% growth in EBITDA and a 21% increase in EPS in 2009/10 as management’s growth strategy delivers returns. Research type: Update |
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| Jan 21 2010 |
Positive trends for 2010 Deltex continued to see relatively sluggish growth in H209 as capital budget pressures – particularly in its main UK market – made hospitals reluctant to invest in its oesophageal Doppler monitor (ODM) technology, despite strong cost-saving evidence. 2009 revenue should be around £5.7m, slightly below our expectations as a result of a delay in securing a large order in Spain. However, record Q4 probe sales bode well for 2010 and strong probe volume growth (via increased utilisation of the installed base) seems likely. Our revised forecasts still show Deltex on track to reach cash flow break-even this year. Research type: Update |
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| Jan 21 2010 |
Progress continues Several announcements since our last report reinforce the progress being delivered at Vertu Motors. We are comfortable with our upgraded estimates to reflect the new deals and look ahead with confidence to the medium term despite the continuing tough trading climate. While the rating is above that of other motor distributors, it appears more than justified by the potential from gearing up the balance sheet as further earnings and assets enhancing opportunities arise. Research type: Update |
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| Jan 20 2010 |
Solid growth continues Chemring has produced another set of strong results, coupled with a $59m acquisition to bolster its rapidly expanding Energetics business. With future growth prospects and management continuing to demonstrate post-acquisition integration success, we expect 2010/11 consensus forecasts to rise by c 5%. While the shares have performed well over the last six months (+45%), we believe the current valuation remains attractive given the above-average sector growth offered and further acquisition potential provided by the robust balance sheet. Research type: QuickView |
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| Jan 20 2010 |
Probleme in den Daten Initial data from the PRESEPT study on the bowel cancer test, Sept9, were released on 15 January. One laboratory had a lower detection rate than the others but it seems likely that Sept9 will detect 50-62.5% of colon cancer patients including many patients with curable early stage disease. An audit of the laboratories is ongoing and retesting of samples may occur. Final data should be released by late March. However, 96.5% of positive tests will prove negative on colonoscopy examination. Research type: QuickView |
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| Jan 20 2010 |
Positive VAP-1 data Biotie has reported a positive outcome to the first of two Phase I studies of its VAP-1 antibody BTT-1023. The study, in rheumatoid arthritis, showed PK consistent with chronic use and evidence of efficacy at the higher doses. These data, combined with those from a similar ongoing study in psoriasis, due in Q2, provide the trigger point for an option-to-license held by Roche. This option could be exercised in H1 this year and could be a means for Biotie to capture significant economic value. Research type: Update |
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| Jan 19 2010 |
Turning up the juice This morning’s trading update confirmed 2009’s results to be broadly in line with expectations, with healthy year-end cash of £2.3m, despite continued investment in new products and geographies. BrainJuicer’s novel approaches to market research are attracting more than just attention from major consumer corporates, with consistent repeat business testifying to their efficacy. Premium earnings growth has brought the rating back to a near-market level. Finals are scheduled for mid-March. Research type: Update |
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| Jan 19 2010 |
StatPro Revolution StatPro has released an in-line trading update. This business model generates over £28m in contracted revenues and flows through in healthy profits and cash generation, which supports upside in growth and group equity value. However, the most interesting development for shareholders could be the launch of the new SaaS product, StatPro Revolution, which has the potential to transform the business. Research type: Update |
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| Jan 19 2010 |
Perkoa HoA signed Previously AIM Resources, Blackthorn Resources completed a corporate restructuring in early 2009. A fall in the share price from a high in excess of A$4 (adjusted for a 10:1 consolidation) in June 2007 to a low of less than A$0.06 in December 2008 prompted fundamental changes that have seen a steady recovery of the share price. This has been achieved through action by the new management in the form of prudent cash management and a decision to place the development of the Perkoa zinc project onto “care and maintenance”. Management is now focusing on a consolidation of its four assets and securing a partner for Perkoa. Research type: Outlook |
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| Jan 19 2010 |
Placed for further growth FY09 was a buoyant year for Brady, in spite of the weak economic backdrop, with growth driven both organically and via the successful Comsoft acquisition. The pipeline remains strong, both via the sales force and the consultancy channel, and the group is positioned to benefit from the growing quality and scale of customers. The strategy to consolidate the commodity software space remains in place. Research type: Update |
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| Jan 19 2010 |
Strong second half IQE closed the books on 2009 having grown revenues by more than 45% in H209 compared to H1 (in-line with market expectations). This, combined with tight cost control, resulted in EDITDA of c £6m in H209 (vs £2m in H109) and a significant reduction of net debt to c £15m (vs £19m at June). IQE’s wireless end-markets were in strong recovery mode and smartphones were a particularly bright spot. Our positive outlook at this point in the cycle (nine months past the trough) is predicated on continued strong sales of smartphones and IQE’s imminent participation in new markets for solar cells and solid-state lighting. Research type: Update |
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| Jan 18 2010 |
Spreading its wings Earlier today, Angel Mining released an update on progress at its Nalunaq and Black Angel mines. At Nalunaq, the company is moving steadily towards its all-important first gold pour. Although initial recoveries will be c 50% (using the gravity plant currently being installed), we expect these to increase to c 90% by early Q210 once the carbon in pulp plant is permitted and constructed. Meanwhile, the company is also in the process of raising additional funds to further the development of Black Angel. The shares trade at a discount to our fully diluted valuation of 9.5p for both Nalunaq and Black Angel (Phase I and II). Research type: Update |
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| Jan 18 2010 |
Is Secure Power safe? On 14 January TT Electronics hosted an analyst day. In our view, in the short term, the group is ahead of expectations, with financial stability restored and net debt cut in half to below £60m, compared to last year. In the medium term, as the beneficiaries of investment, Components and Sensors will be the drivers of growth, with the group aiming for sustainable returns. We do not believe Secure Power ‘fits’ the core competencies the group is building and would anticipate its disposal when appropriate. Finally, long-term, TT could exploit its competitive advantage to build a global business. Research type: QuickView |
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| Jan 18 2010 |
2010 investment payback Following its early approval, Variquel, used to treat oesophageal bleeding in liver patients, had its launch brought forward. This momentum should give strong sales in FY10. Anti-nausea therapy Aloxi has a strong, five-day action advantage in the £20-25m UK market. Cryogesic, the numbing analgesic spray, grew sales at 33%. The UK licence to Aequasyal, announced 11 January, underpins growth. IS Pharma aims to deliver strong growth led by its acquisition-focused management. Research type: Review |
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| Jan 15 2010 |
Cream of the crop Yesterday, Eastern Platinum reported production of 34,000oz of PGMs for the December quarter. Although marginally lower than our expectations (of 34,336oz), production was up 13% compared to the previous quarter and up 17% compared to the same period the year before. The results are testament to management’s commitment to make the Crocodile River Mine one of the most cost-efficient platinum producers on the Bushveld. Looking ahead, we expect further production increases this year as the Crocette section is reactivated and the full benefits of the newly recommissioned Zandfontein shaft flow through. At current PGM prices, we value CRM alone at 77p per share. Research type: Update |
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| Jan 14 2010 |
Production orders 2010 Protonex is turning a corner this year from being a development company to becoming a production company. The company has a visible schedule for further product roll-out that, if met, offers a firm path to profitability. Research type: Outlook |
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| Jan 13 2010 |
Strong end to 2009 BPI’s year end trading update again pleases. A strong last quarter’s trading and the effect of cost-cutting initiatives means full year results will be “at the top end of market expectations” and encourages us to raise forecasts modestly. We are raising 2009 PBT estimates from £12.0m to £12.5m (£15.5m before £3.0m restructuring costs) and leaving 2010 profit forecasts unchanged, despite extra announced restructuring costs. We assume a no-growth environment in our 2010 forecasts. Higher turnover reflects higher average polymer prices and increased profits derive from lower restructuring costs. Research type: Update |
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| Jan 13 2010 |
Frontier exploration play We see Tower Resources as an interesting Africa-focused frontier oil and gas exploration play. The company has a near-term project in Uganda’s Albertine Basin and a longer-term play offshore Namibia. Both are potential company makers. Tower is planning a new Albertine exploration well in February 2010 with the potential for a 100mm barrel discovery. A 30mm barrel discovery would, however, be commercial. Research type: Outlook |
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| Jan 13 2010 |
A strong performance, a compelling valuation and growth potential Oakley Capital Investments Limited (OCL) has, since its launch in August 2007, outperformed the broader private equity market (as measured by the Datastream Investment Trusts Private Equity Index – Excluding 3i) by 46.3% and 77.1% in terms of share price and NAV total return respectively. The fund has an experienced management team, headed up by Peter Dubens. It looks to purchase majority stakes in companies, in the £20m to £150m range, in non-capital intensive growth industries that are producing consistent and growing cash flows. Unlike many private equity funds, OCL does not rely heavily on leverage (if used it is usually limited to 2-3 times EBITDA), and with only 34.5% of funds raised invested, OCL has plenty of dry powder left for future investment opportunities. Research type: QuickView |
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| Jan 13 2010 |
2009 results in-line, 2010 better KBC has finished the half year strongly and is poised to begin 2010 with healthy momentum. Against the backdrop of a healthy order book and positive fundamentals – particularly in the developing country refining markets – the company should continue to see a gradual improvement in trading as 2010 progresses. The share price has marked time recently, but the valuation remains attractive on a number of levels. Research type: Update |
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| Jan 13 2010 |
Driven by analytics Today, Ebiquity reported its interim results, which were in line with our expectations. The Analytics division continued its strong growth, led by international contract wins, while a softening in demand for advertising monitoring affected the Platform division. Underlying operating profit rose 32%, though reported pre-tax fell by the same percentage. Strong operating cash flow over the half year of £0.9m reduced net external debt to £1.8m. Research type: Outlook |
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| Jan 12 2010 |
To exceed consensus The Lookers share price has responded positively to confirmation of a sound final quarter’s trading, enabling management to indicate that 2009 profits are ahead of City expectations. Both the Motor and Parts divisions appear to have traded to best expectations and we are nudging our full year estimates up to £27m and £30m pre-tax respectively. Current year trading will again be challenging, especially if the government chooses not to extend the vehicle scrappage scheme, but management action over the past year leaves the group well placed to deliver useful progress. Research type: Flash note |
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| Jan 12 2010 |
Pre-close trading update The trading update highlighted a stabilised legal market and encouragingly, further growth in managed service and own IPR revenues. Benefits of cost-cutting in H109 should also be evident in FY10. Larger legal firms show signs that they may soon be ready to reinvest in IT infrastructure after a period of deferral, which supports our £3.6m EBITDA forecast for FY10 and further cash generation. With scope for trading upside in FY10, the shares should be capable of a move back well above 150p. Research type: Update |
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| Jan 12 2010 |
Fresh start Rhucin, Pharming’s recombinant human C1 esterase inhibitor, is now under EU regulatory review and could receive approval in H210. It could be EU partnered in H110; US launch is possible in 2011. Rhucin has potential in transplantation (possible Phase II in 2010 with direct sales possible by 2014-15) and use in cardiac surgery could be a blockbuster indication. In January, €7.5m of convertible bonds plus 15m warrants at €0.5 were issued giving convertible debt of €18.4m. Liquid cash was €12.3m; a €23.4m equity facility underpins the FY10 cash-burn. Research type: Outlook |
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| Jan 12 2010 |
Trading update This morning’s update highlighted that 2009 financial results will be in line with expectations, with revenue of $6.6m, $0.1m ahead of our forecasts. As expected the sales mix was skewed towards lower-priced direct hydrogen systems rather than methanol-water fuel systems. Looking forward we maintain our forecast of relatively flat unit sales (450 in FY10 vs 445 in FY09), while recognising the announcement of a new 108 unit contract award. Research type: Update |
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| Jan 11 2010 |
Steely performance Last week, Ferrexpo released a robust set of December 2009 production figures. In total, pellet production was 4% higher than the 8.4m tonnes we had forecast. Assuming an average pellet price of US$68.1/t for H209, we are revising our FY09 revenue forecast from US$602.3m to US$600.0m, while our EPS estimate remains unchanged at US$0.11. On this basis, Ferrexpo’s P/E of 15x is undemanding relative to its peers, which trade at c 22x FY10 earnings. Meanwhile, the US$230m refinancing concluded in December alleviates any liquidity concerns. Research type: Update |
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| Jan 11 2010 |
Deal with Lucky Cement Oracle Coalfields has signed an MoU with listed Pakistani cement company Lucky. The agreement is intended to set the scene for the establishment of a Coal Supply Agreement between the parties. While Oracle remains focused on supplying coal for domestic power generation, the company’s agreement with Lucky Cement represents an opportunity to secure coal off-take and early cashflows prior to the planned development of a mine mouth power plant. Research type: Update |
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| Jan 08 2010 |
In need of Juvista Renovo is well capitalised and has traded at or below its cash value for the last 18 months. While this would ostensibly suggest an investment opportunity, it has to be tempered by investor concerns regarding Juvista and Renovo’s partnership with Shire. These may be difficult to change until outcome of its EU Phase III trial in the first half of 2011 is known. Positive results and a commitment from Shire to undertake US studies should catalyse a recovery (and could even trigger a takeout offer from Shire), but negative or ambiguous results would raise questions about Renovo’s future. Research type: Outlook |
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| Jan 08 2010 |
Round 3 site award Today, the crown estate announced successful bidders for the UK Round 3 tender for offshore wind projects. SeaEnergy, in partnership with EDP Renovaveis, has been awarded Zone 1 – the Moray Firth in Scotland, which is located alongside SeaEnergy’s existing ‘Beatrice’ site, awarded under the Scottish round. The Zone’s capacity has been announced as 1.3GW, 160% greater than the 500MW originally expected. SeaEnergy now has access to c 3.1 GW of offshore wind sites within the UK alone, or c 6.6% of all current and planned UK offshore wind. Even taking into account SeaEnergy’s 25% stake, it is the UK’s 13th largest offshore wind company, ahead of companies such as EDF and Fred Olsen. Research type: Update |
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| Jan 08 2010 |
Secure-ing the future Secure Trust (Retail Banking) is proving resilient, given the current economic environment. New products, aimed specifically at people in debt management programmes, should continue to gain traction in a period of high unemployment and uncertain property prices. Private Banking’s new structured products will cause a drag in profits during the start-up phase, but these costs will fade during 2010 and we should see positive operational gearing kick in. Reinvigoration of the capital markets is creating greater issue momentum than previously anticipated. Research type: QuickView |
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| Jan 08 2010 |
Liquid coal Altona Energy’s agreement with CNOOC is an important milestone in developing the Arckaringa project in South Australia. With a resource of 7.8bn tonnes of coal (non-JORC), the Arckaringa prospects represent one of the world’s largest undeveloped energy banks, located in a recognised mining jurisdiction with existing infrastructure. Under the agreement, CNOOC will fully fund a bankable feasibility study (BFS) for a 10Mtpa coal mine, providing the raw material for a 10mmbbl pa integrated coal-to-liquids (CTL) operation, in return for a 51% interest in the project (potentially rising to 70%). It will also generate 560MW of exportable power. Research type: Outlook |
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| Jan 06 2010 |
Cerepro appeal Ark Therapeutics has filed a request for re-examination – effectively an appeal – of the recent CHMP negative opinion on Cerepro. The outcome should be known by mid April and could reverse the decision, allowing Cerepro to be launched in late 2010. It is difficult to gauge the likelihood of the appeal’s success, so as a base case we assume Ark will have to re-submit an MAA to gain approval. Ark’s shares have fallen heavily since the negative opinion and are attractive on the base case scenario. There is also significant upside associated with success in reversing the negative opinion, presenting a special situation investment case. Research type: Review |
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| Jan 06 2010 |
A viral attack on cancer Oncolytics is pioneering the development of Reolysin, based on the oncolytic capability of the reovirus, for the treatment of a wide variety of human cancers. Reolysin is about to start a pivotal US Phase III trial for its lead indication, head and neck cancer, and is in Phase II trials for seven additional indications. If the studies are successful, Reolysin should, in our opinion, achieve blockbuster status. In addition, an SPA, recently agreed with the FDA, could attract a major pharmaceutical licensing partner. Research type: Outlook |
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| Jan 06 2010 |
Buy-out by Proximagen Minster Pharmaceuticals has agreed to be acquired by Proximagen, pursuant to a recommended cash offer of 6.0p per share. This values Minster at £4.3m on a fully diluted basis, broadly its net cash. Research type: Flash note |
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| Jan 06 2010 |
Good final quarter Following a better than expected final quarter, H R Owen’s full year loss for 2009 looks like being much less than we had feared. More significantly there is a strong balance sheet and the hope of a small profit in the current year, despite the uncertain trading climate in the luxury segment of the motor market. The share price has rallied following the trading statement and is justified by the group’s unique position in the automotive sector. Research type: Update |
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| Jan 05 2010 |
The future is bright Brightside has completed the raising of £20.0m by issuing 93.3m shares at 22p each. The proceeds will be used to strengthen and expand the existing broking, premium financing and medical reporting businesses as well as investing in technology to broaden the online offering. Of greater long-term significance is the option agreement to purchase further operations from a group of directors at what appear to be advantageous prices. Management’s plans for growth appear well-founded, and are not discounted in the current share price, which has been trickling back on low volume since the placing. Research type: QuickView |
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| Jan 05 2010 |
From Vitoria to London Based on SMMT data, from a standing start in July 2008 to November 2009 Eco City Vehicles (ECV) has captured 18% of the national market share with its Mercedes Vito Taxi. The key to this investment story lies in ECV’s relationship with Mercedes. Short-term, management’s success depends on gaining further market share. Longer-term, it has the backing of Mercedes in its attempts to develop both hybrid and sole electric vehicles. We believe the potential for the Vito taxi is significant and likely to drive the share price in the short term. In London, the mayor’s recently announced environmental standards suggest that the normal 14-year replacement cycle for London taxis may be compressed. There are further upsides from regional and European sales of the Vito, starting with Germany. Research type: Outlook |
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| Dec 29 2009 |
Seasonal cheer K3 has announced a change in its year end from December to June. This does not hide any issues with trading. The group signed 24 new contracts in H1, and this positive momentum has continued into H2, with several new orders closed in recent weeks. We believe the company is on track to meet current forecasts. The change does reflect the marked seasonality of the Syspro business and also aligns the group with the marketing efforts of its partner Microsoft. K3 continues to deliver on its strategic and financial targets leaving the shares looking cheap on all metrics. Research type: Update |
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| Dec 23 2009 |
Global exposure, keen risk controls and a solid long-term performance During the past 12 months, Gartmore Global Trust PLC (GGL) has outperformed its composite benchmark index by 9.3% and 6.6% in terms of share price and NAV total return, respectively. For the year ending 31 January 2009, GGL increased its dividend by 27.3% and currently offers a 2.4% yield. As at 31 July 2009 GGL had consolidated revenue reserves equal to 4.3x the current dividend. GGL is managed using a top-down approach, with a very strong emphasis on risk control, including a 5% tracking error limit set by the board. The Trust remains defensively positioned, and the manager expects the market to continue to offer investment opportunities. Research type: Review |
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| Dec 23 2009 |
Sustainable plastics Driven by regulation and the consumer focus on sustainability, bioplastics offer an alternative to petroleum-based plastics, with double-digit CAGR projected over the next few years. Although Stanelco is in development stage and is cash consumptive, it exhibits all the traits we look for in a successful technology developer. There is a clear route to commercialisation with certain products gaining market traction; healthy finances with £3.7m cash and no major capital expenditure planned; and finally, Stanelco has a JV manufacturing plant which acts as a demonstration site. Research type: Outlook |
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| Dec 21 2009 |
Weathering well Last Friday, Carnival reported its Q4 and FY09 results, which were marginally ahead of consensus estimates. While Q4 diluted EPS of US$0.24 was down on the prior year’s Q4 of US$0.47, the group has remained profitable during a very challenging economic environment. Management is indicating top line growth in FY10 of some 10%, with flat mid-point EPS guidance for FY10 of US$2.20 reflecting higher overall fuel costs versus FY09. We are not currently expecting a resumption in dividend payments short-term, though this is to be discussed at next month’s board meeting. Research type: QuickView |
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| Dec 21 2009 |
More catalysts Following on from securing the 2009 award for the ‘Best New Product’ from the Society of Food Hygiene and Technology earlier this month, Byotrol has now announced US acceptance of patents on its technology (protected until 2022). More importantly, it has announced the entry of the group (in conjunction with its joint venture Byotrol Consumer Products) into a six month option agreement with a ‘Fortune 150’ international corporation. Research type: Flash note |
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| Dec 21 2009 |
Improving FY10 outlook CREO’s latest announcement may focus specifically on new facilities and lettings, but is actually the latest of a series of ongoing initiatives that strengthen the financial outlook and address the main issues of concern at the outset of FY09. During H209 it has revised the management fee structure to preserve cash and sold its stake in a Shanghai development at c 9% above the FY08 valuation (undermining predictions of sharp falls in Shanghai investment property values). By December it had completed lease renewals, extensions and new lettings, without cutting rents, improving the revenue profile. That attests to the stability of the local real estate market, but also the quality of the portfolio and success of asset management initiatives. That the valuation, at 70% below NAV, has yet to respond to these steps may be due to a material stock overhang, solutions for which are also under consideration. Research type: Update |
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| Dec 18 2009 |
Signs of recovery After revenues and profits stalled in FY09 as a result of the recession, Newmark showed signs of recovery during the six months to 31 October. The two divisions – Asset Protection and Electronic – posted y-o-y revenue growth of 7% and 2% respectively. Divisional operating margins also improved slightly, whilst EPS came in at 0.17p (2008: 0.13p). We continue to expect top-line growth during 2010/11. Moreover, the group’s steady if unglamorous financial progress could get a revamp once SATEON access control starts to be rolled out globally within the coming year. Research type: Review |
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| Dec 18 2009 |
Strategic review Over the last few days Gasol has announced a strategic review of its business, several key management changes and interim results. In the strategic review, to be detailed in the first quarter of 2010, management is seeking to optimise its existing focus, which is on monetising stranded gas in West Africa, through simultaneously assessing potential new business activities. Research type: Update |
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| Dec 18 2009 |
Recovery with a pinch of caution The trading update confirmed our expectation, at the time of the interim results, that the overall performance for the current year would exceed our cautious estimates. We have increased our current year PBT to £4m and boosted our 2010 estimate. However, 2010 is flat compared to the current year because, although we expect Lincat Ltd to continue to advance, the other divisions face uncertain markets. Our estimate upgrades make the continuation of the exceptional long-term dividend record yet more comfortable. And group debt has now virtually been eradicated, even without the final tranche from the land sale. Research type: Update |
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| Dec 18 2009 |
Hungarian challenges While Central and Eastern European property markets are subdued management focus is on stabilising finances and bringing the portfolio to a steady state. The group is run by an experienced team, currently tackling such challenges as retaining existing tenants, letting vacant space, controlling overheads and renewing debt facilities. All development is in the final stages, but cash flow will be negative until voids fall and overall performance pivot on market conditions and when banks get back in business. The valuation reflects the task and prices in the risk of mark-downs in asset values at end FY09, but not prospects for modest market revival by 2011. Research type: Outlook |
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| Dec 17 2009 |
Signs MoU with Karachi Electric Supply Company Shares in Oracle Coalfields are up 48% on the news that the company has signed a Memorandum of Understanding with the Karachi Electric Supply Company (KESC) which has a market capitalisation of US$630m. The agreement is transformational for Oracle as it paves the way for a Joint Development Agreement (JDA) to develop a mine-mouth power plant at the company’s flagship Block VI coal project. Both parties expect details of the JDA to be finalised by the middle of next year. As part of this, Oracle will be in a position to enter into a long-term coal supply agreement with KESC which would ensure the viability of the company’s planned coal mine development at Block VI. Research type: Update |
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| Dec 17 2009 |
Junta formalises timelines Following a capital raising of £3.2m earlier this month, EMED Mining announced that the Junta de Andalucía has formally confirmed the permitting process for the restart of the company’s Rio Tinto mine. Although broadly in line with previous guidance, this formal confirmation is important for the company and its shareholders as it provides the framework for the various aspects of the restart to be undertaken in 2010 culminating with production in 2011. Despite this, the shares continue to trade at a discount of 56% to our fully-diluted valuation of 25p/share for the Rio Tinto mine alone. Research type: Update |
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| Dec 17 2009 |
On the growth trail The business model proved resilient to the challenges posed in FY09, with further organic growth and an increase in the rent roll to £11.7m pa. MedicX ended FY09 with a fully let portfolio, finances intact and renewed ambition for more expansive growth in FY10e. The outlook is supported by potential revenue growth on the back of rent reviews and asset management, plus earnings enhancing acquisitions and a 40% cut in overheads. The shares are below all-in FY09 NAV, underpinned by a 7.5% yield and Edison’s 90p DCF value of a secure, visible rental stream. Research type: Outlook |
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| Dec 17 2009 |
Smart testing An acquisition-led strategy over the past two years has transformed Omega into an in vitro diagnostics business with sales of £5.4m in 2009. The food intolerance business, including the Genarrayt array product and the consumer targeted Food Detective, is showing strong growth and accounts for 42% of sales. Underlying sales of older infectious and autoimmune disease tests may be more sluggish. Omega could become a takeover target; the share price has reflected this since October. Research type: Outlook |
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| Dec 17 2009 |
Expanding the ecosystem Monitise has a proven technology based upon 1.3m current users. Today’s announcement of joint ventures and new investments from Asia and The Carphone Warehouse in the UK highlight the ambition of management and major shareholders to rapidly expand the ecosystem and establish the group’s solutions as a standard mobile application globally. As importantly, the structural shift towards consumer purchases of smart phones and downloadable apps should enhance the margin mix for Monitise over the next few quarters. We leave our forecasts unchanged ahead of interims in February. In our view the group still has significant cost requirements in building out the partnership structure, but the combination of user up-take and additional partnerships can support a push towards 20p. Research type: Update |
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| Dec 17 2009 |
Margin momentum SciSys is a well established provider of high value IT solutions into major private and public enterprises. However, its build up of domain expertise in new niche markets has been partly at the expense of profitability over the last few years. The management team has been refreshed, there is an increased focus on value pricing and project management and revenue visibility is improving. These factors should all contribute to an expansion in margins over the next three years towards our forecast of 4.5% and, in our view, support a share price nearer 70p. Research type: Outlook |
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| Dec 16 2009 |
Residential services Despite share price advances during 2009, the current rating is underpinned by a rationalised cost base and business model, plus signs of stability in the UK housing market. A growing proportion of group revenues are contracted ie less geared to house market turnover. Estate agency fees are complemented by less cyclical sources such as lettings, property management/repossession work and surveys. As a result, LSL can trade profitably in a currently depressed UK housing market turnover which, at c 0.5m transactions per annum, is running at 50% of levels previously regarded as the norm for a weak market. There is thus real potential for profitable growth if the UK market progressively starts to track back to ‘normal’, even if full market recovery could be prolonged. Research type: Outlook |
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| Dec 15 2009 |
Ahead of City expectations Fears that the progressive reduction in the rate of sales decline could not be sustained during the second half of the year to January 2010 have not been fulfilled; the key autumn selling period appears to have been up to the best expectations of management. As indicated in this morning’s trading statement, full year profits are expected to be ahead of market expectations. The 10% rise in the share price is more than justified; the continuing recovery potential is far from being reflected in the price. Research type: Flash note |
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| Dec 15 2009 |
Compensating errors With better than expected performances in Tobacco Machinery and Scientific Services, compensating for lower activity and margins in Packaging Machinery, Molins appears still to be on course to deliver to City expectations. However, the share price has eased back in recent months to reflect fears about the actuarial valuation of the pension funds. We feel that the market is overdoing the caution, although the share price may remain subdued until the situation is clarified. Research type: Update |
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| Dec 15 2009 |
Trading on-track The first half trading update highlighted very encouraging order wins in Q2, the swift management of the wind-down of the QAD distribution agreement and stronger cash generation than we had expected. Our forecasts remain unchanged and management is firmly focused on continuing to streamline the strategy of the group and the cost base, while investing in the fastest growing segments. On under 7x earnings this year we believe the shares have the scope to re-rate back up over 100p in the next few months. Research type: Update |
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| Dec 14 2009 |
R&D update Vernalis’s partner Novartis has confirmed plans to progress the HSP90 inhibitor AUY922 into a proof of concept Phase II study in 2010, an event which triggers a milestone payment. Although expected, the confirmation is nonetheless encouraging, particularly as both AUY922 and the earlier stage HSP990 project feature well among a wider investor presentation on Novartis’s oncology programmes. Research type: Review |
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| Dec 14 2009 |
Under the skin RPC’s progress in significantly restructuring the business and protecting margins was evident from its interim results. We believe the diversity of RPC’s end markets has helped balance revenue cyclicality and reduced the impact of volume declines (down c 8%), but likewise will dampen recovery. While management admits reports of re-stocking are premature, any sustained volume recovery should flow through to profits as operational gearing takes effect. We argue RPC’s structural changes will permanently improve margins and that ROCE should rise from c 9% in FY09 to c 11% next year, leaving RPC as a geared play upon sustained volume recovery. Research type: Update |
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| Dec 11 2009 |
Funded to key triggers Biotie is funded to reach several key value inflection points over the next two years, following the completion of a €7.2m private placement. These events include the results of early clinical studies of BTT-1023 in RA and psoriasis, due in H1 next year (that itself could be the trigger for a major licensing deal with Roche), and the potential initial regulatory (filing) milestones for nalmefene from Lundbeck in 2011. Research type: Review |
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| Dec 11 2009 |
Equity fund-raising Over the last week, the group has raised £25.1m gross by placing c 251m shares in two tranches which were over subscribed. As stated, the funds will be used to acquire the remaining stakes in agricultural and building businesses that the group does not wholly own. This would appear in line with the planned pan African expansion strategy of the these divisions. Research type: Update |
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| Dec 11 2009 |
Oral insulin goes clinical Merrion Pharmaceuticals’ value proposition has improved markedly with two recent events. Novo has started Phase I trials of oral insulin. Although these do not report until 2011, a €2m milestone has been paid. Second, Novartis has filed Zometa for breast cancer with the FDA. As the patent expires in 2012-13, Novartis needs to extend Zometa’s life cycle. Orazol, as an oral version, offers a way to exploit the adjuvant breast cancer indication now filed, giving Merrion a very robust position. Research type: Update |
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| Dec 11 2009 |
Firmly boxed Higher than expected interim profits confirm that DS Smith is doing the right things, eg taking market share, growing in converted product, building up Continental Europe and saving costs and cash. More of the same can be expected in the second half despite increasing cost pressures and a continuing lack of visibility. Forecasts, revised after these results, may yet prove cautious. Research type: QuickView |
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| Dec 10 2009 |
Impax strategy stacks up The release of Impax Asset Management’s final results was very timely, coinciding with the COP-15 United Nations climate change conference. The global environmental sector currently generates over $500bn of revenues, which are reporting on average double-digit earnings growth. In addition, momentum in pledged global public spending (already over $500bn) is expected to continue. We believe that IAM is uniquely placed to benefit as its investment team has been operating in this niche sector for over 10 years and the group’s private equity was ranked top quartile by Preqin. The increase in the dividend was also welcomed. Research type: QuickView |
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| Dec 10 2009 |
Funded to study Cogane Phytopharm has raised sufficient funding to complete a planned Phase II proof-of-concept/dose ranging study of Cogane in Parkinson’s disease following its £24.1m placing and open offer. This key study could start in Q2 next year and render headline results around two years later (ie in mid 2012), with full results late 2012/early 2013. As a result of the fund-raising, the investment proposition has become one of capturing the value uplift associated with success in this study and potentially partnering the drug soon thereafter. Research type: Review |
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Edison's research ... is balanced, objective and provides a level of detail not normally associated with smaller companies.
Peter Knowles
Director, Fyshe Horton Finney