Highlights this month:
- Alliance Pharma (APH) trading update of 13th July was positive and a new FD appointed.
- City of London Investment Group (CLIG) The July trading update was in line with expectations.
- Futura Medical (FUM) Published the outcomes of a Phase II clinical trial last month.
- Lombard Risk Management AGM reiterated positive Q1 trading.
- PHP Interim results are due on 20th August.
- Real Good Food (RGD) results are due at the end of this week.
Companies covered in this report:
Alliance Pharma (APH) City of London Investment Group (CLIG) Empresaria (EMR) Futura Medical (FUM) Grafenia (GRA) Lombard Risk Management (LRM) MedicX Fund (MXF) Murgitroyd (MUR) Primary Health Properties (PHP) PPHE (PPH) REA Holdings (RE.) Real Good Food (RGD) Sanderson (SND) Tethys Oil AB (TETY.ST) United Cacao Limited SEZC (CHOC) Verona Pharma (VRP)
Alliance Pharma Plc (LON:APH)
A specialty pharmaceutical company based on a ‘buy-and-build’ model. Developed since 1998 through a series of 27 deals, it has built up a portfolio in excess of 60 products. APH is profitable, cash generative, has low gearing and progressive dividend policy.
Positive trading update: The trading update for the 6 months ending June 2015, released on 13th July, was in line with our forecasts. Sales are reported to have been c.£22.8m, an increase of 6.6% over H1 2014, which includes 5 month-contribution from MacuShield. Excluding this sales were broadly flat; its key brand, Hydromol rose 10% to £3.3m, offsetting the expected decline in Nu-Seals. No further breakdown was provided.
New Finance Director appointed: Andrew Franklin is to join the Company on 28th September as FD, previously having been GM European tax and planning for Panasonic Europe (2012-15), Finance Director for Genzyme Therapeutics Ltd (2010-12) and various roles at Wyeth (1998-2010).
Outlook: The return of ImmuCyst (bladder cancer treatment) is expected in Q3 2015. The Company remains uncertain of volumes as Sanofi ramps up production but, with supply problems still facing its competitor, the opportunity remains significant for APH as it reenters the c. £7m UK market.
Risks: Although full generic competition to Nu-Seals is factored into our forecasts (-60% in H2 2015), the Irish regulator (HPRA), as of 31 July 2015, has yet to determine whether this is the case.
Investment summary and share performance: The share price has performed very strongly over the past month, rising 36% and underpinned by above-average trading volumes, as the market reflected on the trading statement and future outlook for growth. Trading on FY15 prospective PE of 16.7x with a 2014-2018 EPS CAGR estimate of 10%, EV/EBITDA of 12.1x with a FCF yield of 6.1%. The dividend yield is 1.9% and 3.1x covered. Interim results are due to be released on 9th September.
