Member Info for BetterX

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.

Sunak was out of his depth & Javid has form for walking the plank. Could be beneficial for Boris.

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.

to look forward to. This will take us to about November during which time the US listing will (in my opinion) have been approved. This period also covers half-year results in July and 3rd Q results in October. Given the shocking rise in deaths due to opioids in the USA there is an obvious ongoing & urgent demand for INDV's products & that will be reflected in the figures.
Recent news article (May 2022) excerpt: "US overdose deaths in 2021, a record year for such fatalities with an estimated 107,622, the US Centers for Disease Control and Prevention (CDC) said on Wednesday. It was an increase of 15% from the previous year, which was also a record. The US has now passed 1m overdose deaths since the CDC began collecting data about two decades ago. The surge in deaths in 2021 was fueled primarily by fentanyl, a highly dangerous synthetic opioid that accounted for about 70% of fatalities." Fentanyl, according to the Centers for Disease Control and Prevention, is up to 100 times more potent than morphine and many times that of heroin.
But now a new product is being pushed on US streets using Carfentanil. Carfentanil is a synthetic opioid approximately 10,000 times more potent than morphine and 100 times more potent than fentanyl...
Biden is strongly supporting measures to battle the opioid epidemic and that will mean that INDV's slow release treatment SUBLOCADE will increasingly be in demand to manage the addiction.

Webcast included date when share buyback starts which is 3 May (next Tuesday). At current SP this will equate to approx. 25M shares being purchased although will be much less than this as the SP moves North.
Well worth listening to webcast which is on the INDV website. The management team are very bullish & see significant growth over the coming periods and refer to new product development as well as M&A activity to broaden product range next year (possibly 2023).

I calculated a forecast SP based on the following approximates: Earnings £180M, shares in issue (following imminent buyback) 685M and a multiple of 25 (average sector multiple is high teens, my view is that a higher rating is applicable to INDV due to its position in the market & growth potential) gives a price of £6.57.
Net cash is about £600m which translates into £0.88 / share based on 685M shares.
Given the webcast & if earnings are going to be nearer £200M+ then forecast SP is £7.30. We also have a very possible US listing later this year.
Any potential big PHARMA interest will only add further momentum to the SP.
SP currently £3.29.

Crossley comments that changes to BMAT (SUBLOCADE's market) access in USA are giving much greater opportunities for SUBLOCADE:
"As a result, there is increasing patient access to BMAT. Indivior supports efforts to encourage more eligible healthcare practitioners (HCPs) to provide BMAT, and the Group continues to resource its compliance capabilities for the growing number of BMAT prescribers and patients.
The Group's focus is to continue to expand access to SUBLOCADE amongst OHS and core HCPs to ensure availability of this potentially important treatment option to the estimated 1 million+ patients per month who are prescribed BMAT by HCP."
The opioid epidemic is getting worse in the US and INDV's leading position in the market gives it a tremendous opportunity to continue to make SUBLOCADE the premier weapon to fight opioid addiction.
This will both underpin & expand sales growth & profit for INDV.
The Buyback will motor the SP North over the coming weeks & months & US listing (which I believe will go ahead) will also fuel the rise.

Q1 results show strong start to year. SUBLOCADE sales +98% compared to Q1 2001. $100M share buyback.
$1,024M in cash & investments at end Q1.

Whilst PFC is so grossly under-valued it will always be at risk to a take-over. It would make perfect sense for Wood to be interested. However, given the number & size of new contracts about to drop I don't think Asfari would be interested. For him to even countenance an approach at this stage of PFC's return to a SP that reflects "true" value it would need to be well North of £5 (& rightly so in my opinion). Meanwhile Asfari will be happy seeing the SP continue to climb in leaps & bounds. As LTH's will know, PFC's SP can move very rapidly at the best of times when news drops. Given its starting from a very low point, this will be even more so.

Crossley's comments in July 2021 when initiating $100m share buy-back programme & commitment to returning capital to shareholders :
"In light of Indivior's business outlook in 2021 and beyond, and supported by our strong balance sheet, we will be initiating a $100m share buyback programme," he confirmed.
"This programme underscores our disciplined approach to capital allocation and appropriately balances returning capital to shareholders with maintaining our ability to execute our patient-focused strategy."
Results due for Q1 on April 25th, US listing and possibility of another $100m share buyback or re-commencing dividend payments would all be reasons why the SP would be gaining traction. I think the results will be very good. But I also think that cannot rule out big pharma interest.

The SP is beginning to firm higher now. Broker upgrades always welcome. The major catalyst will be news of a large contract win(s). These will come through in due course.