Member Info for PeterS23

Not surprised CF has elected to appear at the Mello event on February 22nd. Their online discussion last Monday where ORPH was discussed by four guests was a smorgasbord of ill informed and poorly researched ‘expert’ opinion, relying in the main of a Stockopedia screenshot of financial information as their main source of reference. Worst £12.00 I’ve spent this year and won’t be spending again with Mello after CF has appeared. GLA

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

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

Markshares, I’m not being critical of your post but there’s an alternative scenario to consider if CF hadn’t been so confident and enthusiastic about the timelines for the deals. His confidence has helped to drive the share price up to where we are now. Yes the timelines have slipped, but these are large and complex deals. Had he not been so vocal and enthusiastic we might well only have a share price of circa 15p. At this point in time, the vast majority of shareholders would be poorer. At 15p, I think every investor knows that we would, as of today, be massively undervalued. A lot of posters would then be saying CF needs to promote or ramp up the pending good news stories. Then our frustration levels would only be heightened. I think therefore we are therefore better off in the current circumstances. GLA

Further to ‘The Naked truths’ earlier post of today I have now updated my post of 6-1-21;

There are now 8 recommendations for 2021 that I’ve seen in the last 4 weeks in respect of ORPH from ‘professional’ investors/bloggers;

- Techinvest. One of their 12 tips for 2021. They also think ORPH will make further acquisitions.

-Value the markets (fantastic write up, as posted by Whouse on this forum on 5-1-21)

-Finncap (rated ORPH at £0.28p but this valuation did NOT include profits from 3rd (or 4th ) facilities, data for wearables, Imutex, or PRep Biopharm.

-Share talk

-Total Market Solutions

-Share soc’s ‘Donald and Dave’ (where Donald recommended ORPH, and Donald is a Footsie 250 Company Director)

- Datadriveninvestor (as Trader 3 post)

- Motley Fool (as today’s post by ‘Naked Trader’)

GLA

Chas - anymore information on that? TIA

M5 on A-d-v-f-n is a reliable and sensible poster there so no reason to doubt him. It makes good reading what he’s posted. GLA

Markshares - Totally agree with your comments from your earlier post.

ORPH represents more than half of my total investments in stocks. I think the core business, if isolated, is valued about right at the moment, or slightly undervalued. Therefore the wearables, Imutex and other parts represent a free carry to me and they look very likely to be worth more than the core business.

The high level of my investment here is therefore underpinned by the non core assets and the free carry these probably represent. By “probably” I deem this to be 80% certain that the non core assets will be worth more than the core business, and hence why I’m loaded up here.

If they cannot be monetised, or only monetised for a relatively small amount, then the I fully expect the share price of ORPH will fall until such time that the core business reveals its hand to the market by way of profitability on the core business. Then the share price would recover in line with normal market multiples for this sector.

On that basis ORPH is a therefore an extremely safe investment from where I sit and why I’m very happy to hold given the 300% plus upside which I firmly believe will be achieved within the next year or so.

GLA

Furthermore, whilst this is frustrating for existing shareholders to see the share price stagnate because of Invesco’s selling, nevertheless I think we have to put ourselves in CF’s shoes.

If we exclude all the non core assets then there is a good case to argue that ORPH is presently approximately fairly valued. To use an accounting term, it is prudently valued.

CF has guided us all in online presentations as to the value he is seeking for the non core assets based upon discussions he’s had. However no RNS’s have been issued at the moment as they are still being negotiated. These non core assets therefore remain potential value only.

If CF had not “suppressed” the share price by moderating near term expectations, then we could now be up to circa 40p. All shareholders would then become very anxious to see that the non core deals are quickly delivered. If there was any delay in timescales (which there already has been) CF would come under an immense amount of shareholder pressure to deliver quickly. This scenario is not ideal for CF, nor for shareholders, as it more likely to lead to a pressurised and hurried deal, particularly if the share price started retreating. The assets could feasibly be monetised at a lesser price in these circumstances.

All things considered, I think the guidance CF has given, in not letting the share price get ahead of itself, is the prudent and sensible thing to do. He’s guided us in the online presentations as to the likely value of non core assets, and has guided us that ORPH is heading towards being a “billion dollar company”. He’s delivered 460% growth in the share price last year and is promising to do the same for the future, albeit it’ll take longer than another year to achieve this.

No doubt all will hopefully be clearer next week when CF makes his next eagerly awaited presentation.

GLA

Markshares and Rusky , further to your earlier posts and the two reports from ORPH’s brokers;

Both brokers, Arden and Finncap are corporate brokers to ORPH so both will have been in dialogue with CF prior to the reports being issued. We assume therefore CF has been happy with what’s been presented and has no doubt “guided” these reports.

The first report was on 5/11/20 from Arden and had a buy recommendation of 32p. The report made no mention of wearables or imutex assets, or other than to say “we anticipate more news flow over the coming months which enhances the earnings power of the business and more than supports our buy recommendation”.

The report had an estimated sales projection for 2021 of £53.2m and pre tax profits of £9m.

This report was a little over two weeks after the share price had peaked at circa 30p on 19/10/20 before falling to 22p on 28/10/10 after the Covid vaccine news hit the markets. I believe CF asked the brokers to prepare the report to steady the ship and give comfort to shareholders.

Ordinarily, we might have expected the share price to climb back to somewhere near its peak given the good news RNS’s that were released in the intervening period, but the selling from Invesco in the last few months has negated this. CF will have been aware of Invesco selling and hence I think he’s put out a few more RNS’s than expected prior to Xmas merely to support the share price.

The second broker report was issued by Finncap on 6/1/21, and stated “we leave forecasts unchanged but with significant room for upside and we reiterate our target price of 28p”.

The report had an estimated sales projection for 2021 of £43.9m and pre tax profits of £6.6m. However the report did say “we have excluded potential revenues from a new quarantine facility, non core assets, monetisation of infectious disease data, development of new challenge models, and potential for licensing challenge agents”.

Therefore both reports are assigning, at present, no value to the non core assets and potential of other deals.

I’m a little puzzled, however, as to why Finncaps reported just two months after Ardens report was issued. And moreover why this report is more negative in its share price/sales/profit forecasts than Ardens. I can only think that CF, knowing Invesco are unloading their shares, has reasoned that keeping the share price temporarily suppressed will attract more purchases of its stock than a higher share price. Ergo, Investco will get cleared out more quickly at a “low” price that they’re obviously happy to sell at, before the big news flow resumes and the share price kicks on. Just my opinion, and aware that the report also may suppress demand from some buyers for the stock.

Continued....

I suspect somebody in the “know” has made that purchase. Oil rig employees are very well paid and how hard can it be to send a message to anywhere in the world? GLA

Thanks Jolly & Mickey for your responses yesterday to my query. GLA

Hi Jolly, doing a bit of research and thinking of investing here. You mention IAMGOLD have an option for 70% for $8m. What does that mean exactly as I’m reading it that IAMGOLD can purchase 70% of a potentially very valuable asset for a relatively small sum. Am I misinterpreting this? TIA

Thanks Trek, great to see a reasoned post highlighting the risks involved in an investment, and such a post being taken by other investors as being beneficial. Too many other boards are just a forum for mutual back clapping where any reasoned negativity is at best completely ignored or at worst is treated as opportunity for some posters to vent unwarranted anger and personal abuse. Keep up the good and ‘bad’ work! GLA

Extrader - I’d agree with that. Selling off the individual assets separately is more likely to raise more monies that collecting all these assets together and selling them as one. It is also cleaner in that the value of each asset is verified by what the market pays when it is sold. I think it’s likely that Flu-V will be sold/floated first given it looks the only one to have passed stage 2. Unlikely any assets that OO have in this will be brought to stage 3 stage by ConserVbio, given its very expensive to do so, and runs the risk of failure where no value would be realised. A bird in the bush..... GLA

Further to the ‘Trader 3’ earlier post of today I have now updated my post of 6-1-21;

There are now 7 recommendations for 2021 that I’ve seen in the last three weeks in respect of ORPH from ‘professional’ investors/bloggers;

- Techinvest. One of their 12 tips for 2021. They also think ORPH will make further acquisitions.

-Value the markets (fantastic write up, as posted by Whouse 5-1-21)

-Finncap (rated ORPH at £0.28p but this valuation did NOT include profits from 3rd (or 4th ) facilities, data for wearables, Imutex, or PRep Biopharm.

-Share talk

-Total Market Solutions

-Share soc’s ‘Donald and Dave’ (where Donald recommended ORPH, and Donald is a Footsie 250 Company Director)

- Datadriveninvestor (as per Trader 3 earlier post today)

GLA

G100 - my understand of the potential wearables deal is that data already accumulated over many years will be monetised, as well as new data being gathered on an ongoing basis. I therefore don’t think any MHRA approval is necessary in order for the sale of existing data to be made. Happy to be corrected. GLA

Whilst it’s true that it’s almost certainly is Invesco who’ve been selling off recently, I don’t believe they’re a distressed seller, and therefore I don’t think they’ll aggressively sell if it causes too much downward pressure on the share price. To do so hurts themselves also.

They may have even finished selling though this is unlikely as it appears it’s Invesco's policy to rid themselves of any old ‘Woodford’ tainted shareholdings. They’ve been selling aggressively elsewhere too (e.g. IP Group)

Without news, I expect this to trundle along at approximately where we are now as any boost given in the coming weeks by the SPAC rumours will then be sold into by Invesco, and the share price will stagnate.

Of course at some point in the near future, within circa 4 weeks in my opinion, CF should release official RNS news regarding wearables or Imutex. Either of these should provide enough upward momentum to push the share price above and beyond its previous high, though it may be tempered by Invesco then renewing their share sales.

DYOR & GLA

Thanks ST