Newsflash for the Snoozers - Part 14

Monday, 23rd May 2016 09:35 - by Moosh

Cyprotex (CRX) Updated the market with a snippet of a trading update which stated that the first quarter trading was ahead of generally all expectations. That bodes well given the current strategic review which the company is currently undertaking, which may or may not result in a takeover of the company.

I have previously suggested a reasonable takeover price for CRX to be in the 150-200p range based on ~10x EBITDA or 3x annual revenue as of the latest full year results, but if trading is ahead of expectations already this year then perhaps these takeover prices may be conservative! CRX also informed the market of an enhanced version of their chemPK^TM workflow solution which aids the prediction of human pharmacokinetics from chemical structure. I feel this to be a hold until a resolution (hopefully a complete takeover!) of the strategic review which I anticipate could take up to 6 months, maybe longer.

Empyrean Energy (EME)

It appears that Mr Kight and Mr Appleby timed their increases in holds of EME very well recently – EME updated the market this week with news that the tax situation relating to the sale of their Sugarloaf asset earlier this year will start to be dealt with soon over the coming months. Investors have been sitting on the sidelines for further developments of this and the market welcomed the news positively and I daresay momentum may set in as a resolution to this situation comes to fruition. Following this, there remains the prospect of a special dividend. It is also interesting to monitor the price of crude oil, and also not to forget the contingency payments that may be due to EME if the conditions of these payments are met. In the short term to the end of 2016 it will be worth watching the price of crude oil since if EME can manage to satisfy the conditions of the first contingency payment on the back of a possible rising crude oil price, then I speculate the prospect of a second special dividend. I’m obviously running away with myself here and this is pure speculation but it would be great if EME shareholders could be rewarded with not just one, but two special dividends if the conditions are satisfied, especially for those patient shareholders of many years!

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The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.