finnCap Research Company Notes - 18 February 2019

Feb 18, 2019 / News

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Sector: Energy

Anglo African Oil & Gas (AAOG) : Corp

SNPC payment received

Key data                              

  • Share price (p)                  9.7
  • Target price (p)                52.0
  • Market cap (£m)                              23.1
  • Enterprise value (£m)                    16.3       

The Congolese state-owned oil company, SNPC, has made an initial payment on the $10m it owes AAOG for the work programme on the Tilapia field. AAOG would have preferred the transfer of a substantial portion of SNPC’s licence interest instead. However, this is still welcome as it provides further confidence that AAOG is fully funded to complete the TLP-103C well and suggests SNPC sees considerable value in the field and are not willing to be diluted.

Jonathan Wright


Sector: Life Sciences

Yourgene Health (YGEN) : Corp

Debt restructuring – room to grow

Key data                              

  • Share price (p)                  13.0
  • Target price (p)                18.0
  • Market cap (£m)                              59.7
  • Enterprise value (£m)                    58.4

Yourgene Health announced that it has reached an agreement with Thermo Fisher’s Life Technologies division (TF), whereby: i) TF will convert 41.4m warrants into a c.9% shareholding; (ii) proceeds of £3.8m to be assigned to reducing TF loans outstanding; (iii) TF will write-off the remaining £12.7m loans and accrued interest. Taken with warrant exercise, this reduces liabilities by c.£13.0m and leaves the business essentially debt free. TF will enter into a new commercial agreement obtaining a 3-year period of exclusivity for Yourgene’s NIPT products in Southeast Asia. We raise our target price to 18p to reflect the loan write-off, which implies FY 2020 EV/Sales of 6.9x falling to 5.4x in FY 2021 – justified in our view given the strong (3-year CAGR 35%) revenue momentum and clear progress towards profitability that the debt write-off enables.

Mark Brewer


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