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Current SP of approx £16.54 represents £3.30 per share pre-consolidation. Given today's results and with US listing and (my hunch) a return to dividends being announced shortly the post-consolidation SP should be well North of £20. A £20 SP would only be £4 per share pre-consolidation.
Strong Q3 and YTD 2022 results; Raised guidance for FY net revenue, adjusted operating profit and mid-point of SUBLOCADE net revenue.
A major move up in SP this am (up 6% as I write). Is it results on Thursday, the RNS last Friday advising that Soc Gen have >5% holding, buying ahead of US listing or combination of all 3? This indicates just how quickly the SP can motor now there are less than 140m shares in issue.
This is a "no-brainer", "steal", "absolute bargain" and every other positive description an LTH would use to describe the current SP. News of large contract wins will be released in due course but in the meantime just load up and await the inevitable re-rate and later move to dividends being re-instated. Asfari still owns 16% whilst IIs own 39% of the shares. IIs will start loading up once news of large contract wins start to drop and the SP will move North very quickly.
Only 138m shares now in issue following the share consolidation. I believe that the share buyback program is still underway so this number will be further reduced. My expectation is that with 3rd Quarter results there will be news of dividend payments being commenced. This will make INDV attractive to a whole new raft of income requiring institutions and further underpin the share's listing in the USA. If the value of the current buy-back ($100m) is used to pay a dividend this will equate to approx. GB£ 0.66 / share.
Given that the opioid epidemic is mainly a US phenomenon the demand for the market leader's shares in the USA should be substantial.
I will make mention again (please note this is only my opinion) that I do not expect INDV to be independent for that much longer. It cannot be too long until big PHARMA comes along with a knock-out offer for this market leading, cash generator.
Usual caveats DYOR etc
Any whiff of actual news of large contract wins will have the shorts rushing for the exit. This together with IIs taking/increasing positions will catapult the SP northwards. Sami Iskander's "really exciting" comments on recent webcast will have been noted by interested parties. Not a question of if but when the SP re-rates & the "when" is getting nearer by the day.
The catalyst to get the SP into orbit is news of a big contract win. It is only a matter of time when this happens for PFC. So whether it lands this week or next investors need to decide when to load up. The SP has been firming over recent weeks and news cannot be far away. Today's rise suggests that it may be imminent.
Everything is relative, multi-billion $ contracts are in the offing for PFC and these are the game changers. Enormous upside potential for SP which is currently still reflective of where the company was before the SFO investigation was completed.
A steady flow of smaller contract wins over last few months & only a matter of time before the big ones start to drop. The half yearly results should show good progress & will underpin a long overdue move back towards £2 in the near term. When a large contract win drops the SP will motor.
The decline in operating profit is due to a planned investment in growing SUBLOCADE & PERSERIS in the key US health care sector. Once firmly established as THE products of choice in treating these chronic conditions INDV's view is that take-up within the sector will more than justify the investment.
"Declines in both reported and adjusted operating profit in each period reflect the impact of an expected increase in operating expenses, mainly SG&A investments to grow SUBLOCADE and PERSERIS."
A combination of the share buy-back (should be ongoing until November/December 2022), the US listing (USA is the prime market for INDV & the opioid epidemic is a US national emergency), increasing market share and potential take-over speculation (given INDV's relative small size & market leading position) will continue to drive INDV's SP.
Confirmation that US listing going ahead will be a major factor pushing SP North.
2022 results announced; Increases SUBLOCADE NR guidance for FY 2022;
Pursuing shareholder approval for US listing.
Scopia are a hedge fund so their investment in INDV will be dependent upon what other opportunities are currently available to them. This link to the FT gives recent ownership of INDV by IIs. https://markets.ft.com/data/equities/tearsheet/profile?s=INDV:LSE
So new IIs have been attracted, other IIs have increased whilst Scopia has decreased. If Scopia are comparing (for eg) a 100% gain from now in INDV on a 12 months timescale ie £3 to £6 to a 200% gain in 6 months in another situation then their rational response (other things being equal) would be to switch from INDV to the situation giving the better return. It is all about timing, knowledge, risk & return. It is interesting that Scopia have been timing their reduction in INDV to largely correlate with buy-backs. I view this as positive & expect Scopia to retain a significant %'age holding in INDV presumably because they continue to see the potential in SP appreciation and dividends, not to mention take-over potential. But whether they do or not does not diminish the compelling investment case in INDV. Without Scopia's reduction in their holding, INDV's SP would be well over £4 now. Once they stop reducing and given buy-backs until December & probable US listing the SP will motor.
Scopia's reduction in their holding has been a dampener on the SP which in terms of the buyback has allowed INDV to buy-back "cheap" shares. This together with sterling's weakness against the dollar has meant that the $100m buy-back will buy more shares than would otherwise have been the case. This buy-back will go on until about December. We have Q2 results next Thursday (28th July) and no doubt an update on US listing. Given the continuing scale of the US opioid crisis the results should reflect the increased demand for INDV's products and a US listing a virtually nailed-on certainty IMO.
PFC continues to win contracts and every day that passes brings nearer the news of the big contract wins that will drive the SP upwards. The retrace in the SP over the past few weeks has been disappointing for LTH but the core value potential of the share still very much remains.
Summary: "Trading and expectations in line with guidance provided in the AGM statement Given the improved macro environment, E&C is expected to secure strong order intake in the second half and deliver backlog growth year on year Continued robust performance and order intake in Asset Solutions; on track to deliver full year EBIT margin of 5-6%, in line with guidance Strong IES performance driven by higher production and stronger oil price Well positioned with a healthy Group pipeline scheduled for award in the next 18 months " Note the words, Strong, Robust, Well positioned... PFC has turned the corner and is set on a growth path.
Given the SP's movements yesterday it is obvious that news leaked about "short term headwinds". However, I think that this has largely been taken as an opportunity to short-term trade on that aspect and to buy-back into PFC for the long-term. This is born out by the SP movement this am. LTH's know that this has a very long way to go North and will be propelled by contract win news that could land at any time.
Iskander states: "The outlook for new awards in E&C is robust, supported by high energy prices and increased focus on energy security. Bidding activity is high, and we expect that the second half of 2022 will mark an inflexion point for a sustained period of growth in the E&C backlog.
Asset Solutions has performed well in the year to date and full year EBIT margins are expected to be in line with the 5% to 6% guidance range. Order intake has been strong, with significant awards in the Wells & Decommissioning service line in Australia, the Gulf of Mexico and Mauritania as well awards for Asset Operations and Asset Developments in the UK and India. In New Energy Services, the strong momentum in 2021 has continued to increase in 2022.
IES is performing well, with the high oil price having a positive impact on earnings."
PFC SP is currently reflecting the historic narrative which includes costs relating to completion of mature projects. Iskander's update is mainly pointing towards a strong turn-around in PFC's position which has yet to feed through to the SP. It won't be long before news of large new contracts will drop which will drive the SP North.