Member Info for Pharmhall

JL79...the report seems fairly standard to me. Admittedly it did not quite fit on the line using Investegate, but was perfectly OK on the LSE site. Also the pdf on company website is fine. Most important, the information is consistent each six months and directly comparable without "restatements".

The shortfall in sales compared with my, admittedly, high expectations was entirely due to Defence & Security (+5.2% vs +50% fcast). The declines in all the other divisions were bang in line with forecasts. Timing of revenue recognition also has an effect on the gross margin which fell 2.2pp to 66.1% (forecast was 68%). SG&A costs are rising each consecutive half year, but bigger than predicted. Market will be disappointed, but any falls towards 900p is a good long-term buying opportunity. Glad to see the management changes starting.

Sorry for delay...you made me go back and look up D&A. 2024 EBITDA was £16.96m; my forecast for 2025 is £22m. So with the share price at 970p (offered), the EV is £115m....EV/EBITDA is 5.2x (2025E) and 6.8x (2024A). Very cheap.

I sold SIPP holding at exactly 1100p after the 2024 results, but retained my much larger ISA holding. Looking to get back in before 1H, but patiently waiting for a "bad day" in the market!

John, I totally get your preference to take a more pessimistic view. As I said, and you are wholly aware, our work is total guesswork given the lack of information flow from the company. I understand your sales guestimate versus my own, but I do not understand why you think the EBIT margin will crash back to ca.10% from 13.5%. Even on your number (£60m), the increased sales should have a leverage effect as costs (particularly administrative) are unlikely to be rising at the same rate.

I have also gone back and looked at net cash/(debt). At end of fiscal 2024, MSI had £42m net cash, or 27% of current market cap, leaving an EV of only ca.£110m – cheap as chips!

On your next post, I agree with the 20x forward P/E for defence companies, but you are applying it to a half-year only. On a full year (EPS 85-950p), the share price should be well above 1500p.

Its only been announced because LO has breached the 5.0% level for a declaration. It does not necessarily mean that LO has bought all 90m shares recently; it may just have topped up from, say 4.5%, triggering the announcement. Only you thing you can read is that it has bought shares recently, which is still a positive institutional signal.

My general feeling is that 1H'25 will be good. First, for the past two years 1H has been stronger than 2H and, given that the US defence work had only just begun in 2H'24, I expect a good contribution in 1H'25. Secondly, the defence work carries better margins (as evidenced from the past two years) while SG&A costs are reasonably stable in absolute terms, so reducing as a % of sales. Consequently profits should rise faster than sales – typical leverage effect.

For what its worth, taking these points through my mini P&L, I get sales of £69-70m (+21-22%); EBIT £10.5m (+38% (leverage effect of increased sales)); EPS 51p (+42%). At least it gives us something to compare against when they are announced.

Unknowns are pension costs (-£0.2m), but have offset by conservative view on interest income on cash pile (£0.8m); and tax – MSI has an unusually high tax rate (27-29%) for a small company. I've used 26%, but as a guide each increase of 1% reduces EPS by 0.25p.

Hope this helps and that company beats my forecast !!!

I missed those two....but have other skeletons in the cupboard!! None of us are immune to being caught out. However, I do think we have an enormous advantage today compared with 20+ years' ago, with far better and faster communications and the ability to trade instantly (I have direct market access as well). Both of these give us chance to limit losses

John & Roger, you ask about other defence alternatives. I was in Cohort (CHRT mkt cap £400m) for about 15 months and, while I still like the company, took my money off the table at 950p having trebled. Maybe I sold a bit soon as it continues to perform well. Trading at 22.5x 2025 forecasts.

Another alternative is Concurrent Technologies (CNC mkt cap £125m). Has recently had two strong contract wins. Seems really well positioned and its acquisition in LA is now looking very cheap and really opening some serious doors. P/E is again 22.5x 2025, but I think that EPS forecasts are conservative and being held back until 2024 results are published (May 2025). Long-term holder despite 100% rise since I bought them earlier in 2024.

CH usually takes up to 4 working days before data is updated...be patient

Anyone starting from scratch from here, even with understanding of the know-how, would take years to generate the clinical data to support the FDA approval process. Even if marketing exclusivity ends in 2028, this whole space is tightly regulated and there is significant know-how regarding distribution and commercial relationships with the clinics/hospitals. It would not be worth it and much easier to simply buy POLX....at the right price of course.

I've been watching your discussion with JL79. A good starting point for the global defence industry is SIPRI: https://www.sipri.org/databases/armsindustry

Clearly MSI is much smaller, but it would fit in somewhere and everything has a price. This is where investment banking M&A teams earn their keep. There will always be takers for the defence business at the right price.

As far as valuation is concerned, MSI should be trading much higher than it is, but poor communication with shareholders and potential investors, lack of newsflow, no investment research even from its NOMAD and broker, means it is off everybody's radar until about 1 month before and after each set of results. In a previous chat I gave my estimates for 1H'25 due early December.

States in outlook summary that: "Whilst the Board is confident of the short-term revenue pipeline, additional external financing may be required should the Company experience further delays in contracted customer receipts." If it were not for this slight sting, shares would be higher today.

Despite the rise this year, Costain has further to go. Well run company with solid long-term contracts. Positioned to gain from Labour's infrastructure projects, particularly in water, road and rail construction. Trading on less than 10x P/E, cash generative and just returned to dividend list. Only thing holding back is the low margin, but trend is modestly upward.

Forget the very old (>20years ago) history, this is a very different beast today. Much prefer it on every metric to Balfour Beatty.

Given the quality and growth of this company, it is hardly surprising that institutions want some of the action. However, with a limited free float and strong shareholdings by Directors, PDMRs and all staff, the only way they were going to get stock was through a capital increase (not needed) or getting existing holders to sell. With the secondary placing, my guess is that shareholders are nervous about the potential budget changes next week and have decided to take some money off the table. £25m sold to institutions very quickly.

Release of 3Q'24 Accrufer sales and Rx data is due any day.

Today's acquisition of Hypothesis Group seems strategically sound and a company that ELIX has been working with already, so obvious cross-selling opportunities. Hypothesis is working with five of the Magnificent Severn, so no problem with debtors!

ELIX retains its staff by encouraging them all to have skin-in-the -game and be part of the whole story. Likewise, the CEO of Hypothesis, who is buying £0.5m of ELIX stock to become a Partner. Contracts are with quality multinational partners. Medium-term I can see the big players fighting over this quality company.

I came to exactly the same conclusion at 7am this morning when the RNS came out...it has to be Rolls Royce. As stated earlier, the good news just keeps coming. Market seems to have forgotten the deal with Microsoft announced a couple of months ago. These contracts are all with quality partners. Expect a good update with results in November, but key point is what management says about how 1H'25 has been doing, many of these recent contracts will only boost 2H'25 and fiscal 2026, but that's no bad thing. Very happy shareholder at Placing level.

Deep in statement you will see that IPF is locked-in for 12 months.

John, I have been off air on this one since the AGM for the very reason that MSI simply goes quiet after results in the absence of any major contracts. But, as we approach the six-month period end, I start to look afresh and get ready for the interims in December.

My first cut is as follows:

Sales £69.0m (+21%), driven by Defence (+50%) with all other divisions down

EBIT £10.5m (+38%), largely benefiting from marketing costs reducing as a proportion of sales

PBT £11.2m (+45%), interest income was much higher in 2H'24 and this should be the same in 1H'25

EPS 51.0p (+42%), despite higher tax charge

DPS 5.0p

Admittedly, as you already know, its all a bit of a punt, but I have been looking at MSI for 15+ years and it is a good starting point for discussion.

While most messages here are about funding and management, nobody is asking whether b-interferon (active in SNG001) is any good and worthy of support? It is now a very old drug, generically available, originally sold by Bayer for multiple sclerosis (MS). Even though it was a drug with poor efficacy, sales peaked at $1.7bn in 2009, largely because there was nothing else for MS patients. As soon as alternatives hit the market, sales declined.

With this background and profile, institutional investors will run a mile rather than fund a Phase II trial for a weak, generic drug with an alternative administration technique. Results from trials of SNG001 to date have been really disappointing (my opinion); ignore the rose-tinted gloss from management and Holgate (totally biased) and look at the data. Investing in this phase II trial would be throwing good money away. Listed companies offering reformulations of drugs have not been successful at all. For all the same reasons, this is not going to attract a larger pharma.

Management can say all it likes, but investors/potential investors must challenge them about whether b-interferon is any good. All the evidence says: NO.

Synairgen has frittered away all the cash that it had, so there is nothing left for a private company seeking a listing to reverse into.