The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
Just to annoy And - look at the price diff of 0.85p for those two 10k trades. 1411/1412.
Earache, what do you reckon?
Deepjoy, you seem to change your mind like the weather. I'm all for debate and listening to both bear and bull arguments, and you "could well be wrong" but you stated when you bought back in after our rise the last time that you felt we were at fair value (at the time I think we were circa 25p). However, now after some deep analysis you believe we're a buy at 12p (tongue in cheek), so you're saying the broker notes have way overvalued the company? You could well be wrong or you could well be right, who knows, no one does, we all do our research and put our money where our mouth is and stick by it, I've did so since last May and added as the company has "grown" to what I believe is quite a large holding for me (probably way overweight imo) but I'm sitting on a healthy profit from my discipline and research. You sold out the last time prior to our big rise, so I'm hoping its a good omen. As far as I'm concerned the story hasn't changed, in fact, if anything the story has got better. No one here knows anymore than anyone else, we're all trying to make our own way and at times we will get it right and other times we will fall either through luck or analysis but as yet I've not seen any official RNS's or any macro economic reason why my opinion needs to change on Open Orphan, CF has delivered time and time again, all we get is good news from the company. He has a loose tongue and he can get ahead of himself at times but I've yet to meet the perfect leader. I wish you well and I hope you come back once again to invest (hopefully not at 12p though :-)). By the way, the main reason why I'm invested is not for HCS's growth, I believe we can grow this incrementally but my excitement for Orph surrounds the health data. Interesting and lets hope positively exciting times ahead. We shall see. Good luck.
Furthermore, I’ve checked back on ERGO’s historical financials in order to map the correlation between profitability and its effect of its share price, and the results are illuminating IMO.
In January 2016 ERGO’s share price was 170p. In April 2019, over three years later, it was 167p. No profits were made (declared) in this three year period hence the share price barely moved.
However in 2019, after three years of losses, ERGO achieved profitability. It issued an RNS in May 2019 and stated it “expects revenue and EBITDA to be materially above current market expectations” The Exec Chairman said “we continue to see the benefits of our focus on improved financial performance and profitability”.
Then in July 2019 it issued another RNS fleshing out progress with some figures, and stating “we have delivered growth as a profitable and cash generative business”. In September 2019 it issued an RNS which detailed half year EBITDA of £6.5m.
As a result of the above, starting from a share price at April 2019 of 167p, the share price rose steadily through 2019 and finished at 393p at the end of 2019, all driven by RNS news about profitability.
The share price then dipped steadily over three months down to a low of 280p on the 17th March 2020.
On the 25th March 2020 the Company then issued an RNS detailing Audited full year profits of £12.5m. From this point the shares began a steep climb. In July 2020 another RNS was issued with a trading statement showing “profits would be ahead of expectations”. In September another RNS stated profits for the half year would be £9.1m.
ERGO issued another RNS just a couple of days ago on 26/1/21 stating it expected “profitability to be ahead of current market expectations”. (It’s share price has risen 17.3% in a few days on the back of this RNS announcement)
Thus from March 2020 onwards the share price climbed from 280p to 1150p (as of today). All this was RNS news driven, and the news related to profitability. That link is crystal clear I think.
The good news for ORPH share holders is that we shouldn’t have to wait for trading profits to fully feed through in order to see a decent increase in the share price. News on a wearables deal and Imutex should do that, hopefully in the next one to three months. Then from mid year, RNS news about profitability should then do the heavy lifting of the share price, IMO.
Throughout this year I expect CF will issue trading updates and interims, and I further expect each update will be more positive than the previous (just as ERGO’s were) thus ensuring the share price maintains its upward momentum over the year and into 2022.
Now that we’re profitable, the race is on to catch up ERGO and be the first to reach “a billion dollar Company”. I wouldn’t bet against it being ORPH. GLA
Furthermore , according to another one of Stockopedia’s analysis tools, ORPH’s PEG (price to earnings growth ratio) is 0.1
ERGO’s PEG is 2.2
Stockopedia states “a PEG ratio of 1 is supposed to indicate that the stock is fairly priced. A ratio of between 0.5 and less than 1 is considered good. A ratio of less than 0.5 is considered excellent”. It goes on to state “The theory of PEG investing is that you should aim to buy Companies on low PEG’s of less than 1 so that you should get more growth for your buck”
Therefore ORPH’s PEG at 0.1 falls into the ‘excellent’ band, and is in fact the most ‘excellent’ that can be achieved within this band.
GLA
CF intention is to add value and monetise in readiness to sell to max shareholder value. He has stated this openly. This is the strategy. The latter can change or be re-shaped or timescales can change. At the moment its a 2 yr timeframe max if its the sell strategy.
Been reading the comments on here about a 12p valuation. Sometime ago I posted on the above subject of ORPH and ERGO (Ergomed plc). I thought now would be a good time to revisit this to remind us all what we are currently sitting on.
On the Mello presenton on Monday ORPH was put through the rinser by 4 ‘experts’ and one of the experts referred to a document back in January 2020. I therefore looked back at CF’s online presentation from then, and noticed for the first time that the ORPH January 2020 presentation document had a note about ERGO at the very bottom of page 13, for comparison purposes. (NB I made my previous Orph v Ergo comparison posts in mid 2020, and I only made the comparison after discovering ERGO around this time from an online Aim tipping service)
CF has therefore compared ORPH to ERGO, so I’ll do the same again as they are operating in the same space, albeit there are operational differences between them. However they are also of a comparatively similar size at the moment, with both growing rapidly and both achieving profitability fairly recently (though ERGO achieved this in 2019)
All the financial information for both Companies has been taken from Stockopedia.
ERGO’s Sales for 2017, 2018, 2019 was £47.6m, £54.1m & £68.3m.
Its estimated sales for 2020 and 2021 are £86.3m & £120m.
ERGO’s Net Profit for 2017, 2018, 2019 was -£4.50m loss, -£8.9m loss and +£5.57m profit . It’s estimated net profit for 2020 and 2021 is +£12.9m profit and +£13.8m profit.
ORPH’s Sales for 2017, 2018, 2019 was £15.3m, £12.3m & £3.54m. Its estimated sales for 2020 and 2021 are £22.8m and £37.2m.
ORPH’s Net Profit for 2017, 2018, 2019 was ; -£1.47m loss, -£4.22m loss & -£5.74m loss. Its estimated net profit for 2020 and 2021 is -£6.27m loss & +£7.06m profit.
ERGO currently has a Market Cap of £536m and is currently trading with a PE ratio of 43.2 for 2020, and 36.1 on a 12 month Forecast Rolling PE ratio for 2021, according to Stockopedia’s analysis.
Here’s the interesting bit : ORPH currently has a Market Cap of £164m and is trading on a 12 month Forecast Rolling PE ratio of ONLY 5.4 for 2021 according to Stockopedia’s analysis.
NB The Stockopedia median statistics in respect of the PE ratio for the whole ‘Bio & Medical Research Sector’ is 32.6. Both ORPH and ERGO are in this sector according to Stockopedia.
Thus according to this data, ORPH could have a market cap of £230.6m (32.6 x £7.06m). Or 34.5p per share. If we use the profit forecast of £9m from ORPH’s broker Arden issued in November 2020, then we get to a market cap of £293.40m. Or 44p per share.
*And these valuations DO NOT INCLUDE potential revenues from a 3rd or 4th quarantine facility, sale of Imutex and prEP Bio assets, monetisation of infectious disease data (wearables), development of new challenge models, and potential for licensing challenge agents. (CF has guided us so far that Imutex and wearables could be worth circa £300m, possibly more). GL
thank you Jimzi. I'll say no more on this thread but good luck to everyone.
DJ
That all you have? Any time someone pulls you up on anything you crawl back in your shell. Was a simple question for you, why does it take an idiot to create an idiots guide?
Of course Deeps post is balanced but its unknowns - investing in PLCs means we are not privy to what is happening until RNS'd
Half or more of investing is investing in the management. [ track record, comms as far as it can and skin].
I'm more than happy on this score.
Milkshake, markshares - whatever you call yourself.
Really?
Get a grip.
The fact you lack the knowledge to immediately refute an 'opinion' that is so based in fallacy is the worry.
As an aside, I'd love you to explain why you think "it takes an idiot to give an idiots guide", its a wonderfully punchy sentence but clearly utter b*llocks. How else do you explain simple things to cretins, without dumbing down?
Flip me is the kindest words I can use. The SP is where it is because of the Invesco selling down ex Woodford holdings otherwise this would have been c30p+. As for the last 24 hours take a look across the whole market. The short squeeze in the US caused hedge funds to have to liquidate other positions & panic in some other as they could be targeted by Reddit. Add to that schooldsnot re-opening & the spectre of a longer lockdown (even a 2 yr old could have worked that out at xmas) plus vaccine supply issues as well new Covid variants on the latter plus etc etc.
The drop here is not specific and is effectively the City Boyo's doing their over reaction as to a few sells here & there & off we go. Basically, covid stocks or those loosely associated should be level or up based on mayhem but no down as it an opportunity for the MM's to create volume for............................. themselves luvvly jubbly.
As for 12 p ........................................ flip me!
No, i am Sparticus! :)
I don't agree with all that DJ says.
But, unlike the pre-pubic so-called investors that litter this [and other] forums - i am open to alternative opinion.
Yes it was me.. I am sparticus!!
Although 12p was a little tongue in cheek there are, in my view, a number of risks in this company despite the very capable CEO. A lot of investors work on big assumptions and that is fine, but one also has to question the narrative of the past few months whereby the accelerated SP activity was down to some serious marketing which, in turn, paid off handsomely for a number of 'Institutional' ( I use that word cautiously) and retail early investors.
Orph have pivoted from orphan drug date, to testing (we heard no numbers on that) and to HCS model for covid at a cost of of several million if I recall for them to announce that covid was a small part of their business. So what is the big part is the logical question to underpin valuations.
The market driver for the SP was the rush to develop a vaccine and that (for now) has been achieved. Now you could all argue quite rightly that the current vaccines may fail in the end to cope with the virus mutations. If that is the case then there has to be proper consideration to the validity of the orph HCS model also in that scenario? So the investment case for me is binary; either the HCS stands up to new variants or becomes redundant or the vaccines being rolled out will be effective and the demand for HCS may fall.
Each HCS developed needs investment and time. If Cathal pays out dividends then where is that future capex coming from? Either the revenues fund growth in which case the CEO should be clear about it or it stays as contingency for future investment.
As for valuation, the balance sheet reflects 10-12m of non returnable revenue from work yet to be done does it not. Therefore future revenues are delayed until the work is actually done which won't be easy if the virus continually mutates and the company HCS plays catch up.
My point about the chicken is simple... the growth of the company is more than facilities for HCS, for CS companies it has to be investment in future capacity to develop support services outside of HCS and this, concerned me.
Lets be honest, institutions have been selling for three months or so and not once have I seen a post on here questioning anything other than them profit taking. The risk of being blinded here is high as if the CS business area is going to be in demand for the next decade why aren't II's sticking with it, or even investing more?
None of you know their motivations but are free to exercise free will and judgement. I sold out in the end as that was my decision and for the record I could be wrong. The reason for this post is simply to explain a logic. Whether to agree with it or not is not the point of it. Examining both sides it.
regards to all, even to Andino who drew me out skillfully. DJ
Regardless of ORPH's prospects and potential [which for the record i don't require your oversight]
Allow me to make something clear to you in particular:
It takes an idiot to give an idiots guide.
Andinio, how can you purport to know about ORPH then post that utter drivel, regardless if you were the source or not. How can you (or your friend without you questioning it) claim in all good faith that ORPH is not growing and looking at further growth plans?
Does you nor he not understand the difference between core and non-core business? Im very happy to give an idiots guide as it's becoming clear that is what we're dealing with here.
Listen, if nothing else, it caused you all to start talking about the business rather than the immediate SP.
It's the business of the Company that matters: not the immediate SP
...and that was my point.
As for the PI comment [which for the record is not me] no doubt he will be reading.
He's free to respond.
Some great comments.
Excuse the taunt.
Although, i'll happily do it again.
12p would give a market cap of £80m, for a company with revenues in excess of £100m pa, and a low cost base. Even without growth as mentioned in previous posts, this would be very cheap. I would take the valuation with a large pinch or salt.
Sorry, said I wouldn't post until the Podcast but couldn't let this go.
Andineo,
Can you ask your serious investor friend what revenue has he projected into those numbers?
Didn't Cathal Friel say the reason why they weren't profitable in the third 1/4 was because of Investment they made in Challenge Studies in the first half of 2020..
Andinio - I would have said your friend wrote this message based on SOLG pre-Govt contract - the cash in the bank is an asset for growth, the additional sites yet to be anounced are asstes for growth - new contracts in the pipeline are assets for growth, the two assets for sale have alsways been for sale as they are no core asstes - you're friend I'm afraid hasn't reearched enough!
I would counter Orph's strategy is one of growth (now, probably not the case 12 months ago).
The growth in beds, and future leases gives an increasing ongoing revenue stream from increased capacity, and the Venn piece follows suit. The wearables element I personally doubt will be as sizeable as has been discussed, but again should be long term run rate business rather than one off sales.
There will be costs for maintaining assets, primarily Whitechapel site, and I would assume fitting out any new locations ( to some degree), but my personal view is completely different to 6 months ago in terms of scope of growth potential...
Key risks for me is CF staying fit and well, it feels too dependent on him, and then ability to win new contracts 2-3 years down the line, which by their nature are short term deals, but would expect it to have been sold by then...
Just my thoughts...
Hey Adino
I wonder what sort of growth your PI thinks is missing?
The main part of the business is the testing of vaccines. So far CF has filled the existing facility, secured a government facility and is in the process of securing a 3rd (and possibly 4th facility).
He has also scaled up recruitment with 2 new shopfront operations.
The job vacancies on the Hvivo website speak for themselves (currently over 20 positions)
CF has indicated that all this is at minimal cost.
For me this is all positive growth.
What is the alternative - buying / building a very costly quarantine facility? What do you think that would do to the share price...?
Additionally ORPH is written in to the Government's Vaccine Taskforce plan and has also leading the HIC VAC, Welcome Trust Consortium - further positioning them as the absolute leaders in the field.
Then there are the future challenge agents in currently in development.
There is plenty of growth here if you look for it and don't try and judge ORPH by the same criteria as a firm that makes pipes.
Asset sales and growth are not mutually exclusive .
He's right to monetise non core assets and right to get recurring high margin income from core assets whilst growing the CRS business..
DesertStar:
Agreed.
There's plenty of meat on this chicken andinio - very tasty, very sweet!