Member Info for Jatw

The market is clearly expecting a bumper set of results in a couple of weeks……as the shares are closing in on all time highs.
Dividend increase and further buy backs to be expected……although I would rather they reinvest for growth rather than buy back shares.

The changes are to integrate the Takeda presentation, some additional clarity on the pipeline.
They tend to put a yellow ribbon over the additional pipeline commentary.

Next one will be the FY financial results on 28 Feb.

The orpathys h1 revenue stated by HCM is 23m….so 33m for the full year by azn would be something of a disappointment….and could indicate revenue at the bottom end of guidance ….which they have not restated even post ye. This makes me think AZ and HCM revenues are not the same thing.

Compounding…the AZ results for Q4 were % of total sales and Orpathys is negligible overall….I am not sure what the AZ number represents (could be gross sales or their share net of HCM manufacturing and royalties) anyway what does matter is that the sales are double 2021. HCM Orpathys revenues should also be double 2021…..
AZ seems to be using Savolitinib as a second patent….to extend their other drugs from generics as they expire……patents lapse from first registration in US, so AZ is in no rush to bring it to market there quickly.

Morgan Stanley follows Schroders in getting approval to own 100% of its JV.
Hopefully Pru gets an agreement with CITIC to own the asset management JV shortly.

Thanks to tonight’s Apprentice i now know what a cafe racer is……..davey is no apprentice

On….
The covid bonanza is over for others which has upset some large players but never was for AZN. The hard work in oncology is paying off and it seems alexion was not a bad deal either from a pipeline perspective.

Damofarl, I too am a Pru and now JXN holder. I cant believe how cheaply it was valued when it was demerger from Pru. I was expecting USD50 on day one not 25, but the timing was poor…I think US regulators stiffed the Pru by insisting on capital being retained in the business (pru was expecting a $2bn dividend and had to do a fund raise)…strangely some of this capital is now being paid out in buy backs…..
It will be interesting what effect IFRS17 has in smoothing the profits…..this might be a catalyst to reassure markets and allow a re-rating.

There is generally little knowledge of the US retail market in the UK, so we just look at how it goes in the US markets….
A buy under $50 for me….

I see the market makers have marked up by 10% to get the market noticing

Almost all trading updates are so glowing that you need to look hard at why they are saying what they say and what numbers they are not disclosing.
Sales growth actually moderated a little in H2 (H1 36% up), working capital on the balance sheet likely to be higher hence the net debt and cash collection comments…
Hope they do have some pricing power and are not being bullied by their distributors……their cash receipts need to exceed replacement costs of the next batch in this inflationary environment otherwise their cash will turn to debt….as it appears it might be..

Overall they must be happy with 17% sales growth and an increase in gross margin…..cheap at these levels…..I suspect the market will wait for the accounts before making a large move.

They paid a 1p divi in May last year.
I expect there will be one announced with the FY results, question is how big? 1p=£10m approx
they want to retain funds to support new business 2% of 2.5bn is £50m.
Last year the dividend was said to be based on a 2021 pro-forma of 1.5p ie in interim of 0.5p.
The interim was paid.
Also expected to grow profits at 15%, this would imply a total divi of 1.725p, so i expect a final divi of about 1.225p…..lets see what is delivered.

suggesting there will be war with China by 2025…..i despair with some of the human race.

https://www.pv-magazine.com/2022/11/02/uk-battery-energy-storage-acquisitions-heating-up/
BESST - you are right to say there has been huge expansion of BESSs. The above article suggests a relatively low installed base of 1.6Gw, pipeline up to 30Gw in various stages of planning/development. The article does suggest 50Gw maybe needed in the long run…..my guess is more renewables will mean more capacity will be needed and advances in battery design will drive down costs.
SMS is a small operator…which is a risk in itself….with the current cost pressures….we will all need to keep our positions under review.

1pencil….I dont mean to comment on others trading…..and my feelings do change as does the market…as has Davey over the years.
this is a large % holding for my portfolio and probably should be trimmed from a risk perspective. I have only ever bought over time and almost all on the way up but I did stop at £5 because HCM was getting dominant in my portfolio. Traders would say I am too invested in the story and anchored in the past, I have found buy and hold in companies with a clear vision to generally work for me. If I highlight some negatives it is because I am cautious and to convince myself that I should not buy more…which is tempting with the maturing pipeline.

FYI and context re dilution
At March 2021 there were nearly 60m shares in issue. This would have led to a mcap of about £700m at peak equivalent $900m
There are now 75m shares in issue so a mcap of 700 would be about £9.30.

The valuation in peak covid was with hindsight excessive at the time…but the 2020 share price was about 40% of the peak..a £300m valuation would give a SP of £4.
So there is still along way to go to get back to pre-pandemic values….there is still a lot of hope and guesswork in the valuation but it is moving forward with real world evidence and building sales……this is still speculative in my opinion and not one to bet the house on….as the terms of future fund raising may be punitive for shareholders. (about 1% in my portfolio - I hope it grows to be 5%).

Speculative buy.

Having acquired shares at prices from 130-480 I am relieved to be back at break even having been well ahead and then well down.
The future has always looked promising for HCM and it still does, so I will be sticking with them for sometime to come. The change from a science project to a commercial enterprise is most welcome, I am sure that is the influence of the external Board members and desires of the investors who bought in at 30USD.
I hope the immediate future is relatively boring with a steady increase in the SP….

The trading update highlighted the business is robust…..i would like to see some operational metrics (routine appts, operations, % of pets using regular medicines /treatments)
Inflation adjusted sales would appear to be flatish rather than up 7.5%

The lockdown pets will need increasingly expensive treatment in 6-10 years from now….the current financial issues are going to drag on that but this is a business that can plan for a 10 year customer….

HK market had a positive start…bodes well for more gains in the short term…..does seem to be heading back to the equity raise price and £15.

Is the corollary to buy? In the recent past the US seems to have anticipated news (or got wind of news before the announcement) and the AIM margin means buyers are paying full price?
The spread of about 10p has been a hindrance to quick profits recently - although if news is good recent buys are in the money.

It seems that news is greeted with optimism at the moment….and the momentum looks to be up…..I have been buying in recently which has averaged my price down so I am now close to breakeven…..I do have lingering doubts that a fund raising will be necessary late 23 / early 24 and this remains risky until the path to profitability is more certain…but I will continue to add as I think the proposition is a good one.

The update as usual is pretty upbeat….the battery business seems to be doing well….and when all current build is installed will be generating £45m EBITDA…..although quite a bit of DA I would expect….
Dividend +10% for 2023
One concerning note is the cash position…..not unexpected that they need to invest in the business infrastructure….but it looks like they have burnt through £100m in 2022….the assets they have built are valuable so they can always securitise future cash flows or sell them if needed….will read the FY Results and cash flows with interest….
Broker price targets still well ahead of current price….but shares are vulnerable to a cash raise.