finnCap Research Company Notes - 18 April 2019
Apr 18, 2019 / News
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Sector: Life Sciences
Evgen Pharma (EVG) : Corp
£5m placing
Key data
- Share price (p) 19.5
- Target price (p) 35.0
- Market cap (£m) 25.8
- Enterprise value (£m) 20.1
Evgen Pharma has raised £5.0m by way of an oversubscribed placing of 33.3m shares at 15p, a 7% discount to the prevailing share price. The funds will be used to strengthen the balance sheet for partnering discussions as well as enabling additional formulation and toxicology work for SFX-01 to be completed. This follows positive Phase II data from an open label study released on 25 March. These funds, together with existing cash, should provide a cash runway to mid-2021, which is beyond the next key valuation milestone: the readout of the Phase IIb subarachnoid haemorrhage study in Q3 2019. A positive outcome is expected to result in a significant uplift in the company’s valuation. Our new forecasts and near-term target price reflect the dilutive impact of the new shares to be issued. We retain a target EV of £45m, which implies a target price of 35p. Our risk-adjusted target valuation, however, would rise to c.£110m upon a successful Phase IIb readout for SAH, implying an increase in the target price to c.85p.
Mark Brewer mbrewer@finncap.com
Sector: Life Sciences
ANGLE (AGL) : Corp
External endorsement of Parsortix
Key data
- Share price (p) 68.5
- Target price (p) 110.0
- Market cap (£m) 98.3
- Enterprise value (£m) 83.4
A peer-reviewed publication in the journal Nature from one of ANGLE’s customers – the prestigious US cancer centre, the University of Texas MD Anderson Cancer Center – provides further independent endorsement of the utility of Parsortix. In this case, the MD Anderson has developed a new technique for assessing cancer and potentially monitoring the transition of metastasis, using ANGLE’s ParsortixTM system. The MD Anderson was also the principal investigator site in the recently completed 400-subject FDA clinical study. This illustrates the potential incremental value that FDA clearance will bring; not just the value to ANGLE’s two current clinical applications (metastatic breast cancer and ovarian cancer) but the potential to be used by laboratories for multiple other applications, which will generate recurring revenues. We reiterate our 110p price target and eagerly await headline results from this study, which completed enrolment in March and is expected to be submitted to the FDA in mid-2019.
Mark Brewer mbrewer@finncap.com
Sector: Technology & Telecoms
SimiGon (SIM) : Corp
US government agreement should drive sales
Key data
- Share price (p) 9.5
- Target price (p) U/R
- Market cap (£m) 4.9
- Enterprise value (£m) -0.5
The global leader in simulation training solutions has signed a Blanket Purchase Agreement (BPA) with the U.S. DoD Enterprise Software Initiative (ESI). This BPA establishes agreed pricing and processes to make it easier and swifter for US government to purchase SimiGon products and services. This is a strong validation of SimiGon’s offering and should encourage further US sales of the leading-edge SIMbox solution for the various branches of the US military and intelligence communities.
Lorne Daniel ldaniel@finncap.com
Sector: Technology & Telecoms
D4T4 Solutions (D4T4) : Corp
FY 2019 ahead of expectations
Key data
- Share price (p) 278.0
- Target price (p) 300.0
- Market cap (£m) 110.4
- Enterprise value (£m) 99.4
The post YE trading update revealed that a strong Q4 performance meant that the company’s FY March 2019 revenue and earnings will be ahead of expectations and we raise our forecasts accordingly. We expect this strong demand for data solutions to continue and cautiously ease forward FY 2020 forecasts too. However, we note that IFRS 15 adoption saw £1.7m of revenue brought forward from FY 2018 (now restated) into FY 2019, skewing organic growth comparisons. Furthermore, EPS will also be skewed; not only by IFRS 15 adoption but also by an exceptionally low FY 2019 tax rate, due to relief on management options. Thus adj. FD EPS appears to fluctuate unpredictably when actually, underlying these headline numbers, the D4T4 business is steadily growing and maintaining margins while also increasing investment in the US operations. This is another year of excellent performance and we lift our TP to 300p in response.
Lorne Daniel ldaniel@finncap.com
Sector: Industrials
Trifast (TRI) : Corp
Encouraging year-end trading update, slight EPS boost
Key data
- Share price (p) 215.0
- Target price (p) 270.0
- Market cap (£m) 258.7
- Enterprise value (£m) 273.7
An encouraging year-end update, with profits slightly ahead of expectations, although signalling that the trading environment has become more challenging. Revenue growth has been achieved across all regions. New banking facilities have been announced, providing firepower for future acquisitions. We slightly upgrade 2019 expectations, with a 1.5% EPS increase. Momentum is returning to the shares but they still look attractive at these levels, with 26% upside to our maintained 270p price target.
David Buxton dbuxton@finncap.com
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