Member Info for Pharmhall

Today's interims were somewhat disappointing. Sales were a little below my expectation (128.8m vs £130m fcast), but I was caught out by the lower margin. Also, while I had not realised that there are an extra 10% of shares in issue, I still cannot reconcile the fall in EPS, given the lower than expected tax rate (I will do more research).

Having said that, full year expectations remain unchanged, which is roughly: Sales approaching £300m, adj EBIT £34m (vs £27.5m), and adj EPS of 59p (vs 53.5p), which leaves the shares trading on a P/E of 17.0x, which is not expensive for a quality company.

Results today were in-line with market expectations. Actually, given the tough market conditions, sales at £44.8m (+7.9%) were good; and although EBIT margins are still low, mgmt is investing for the future and to improve commercial prospects. But I really want to focus on cashflow and valuation. OMG ended fiscal 2024 with £50.7m cash, after acquisitions (-£4.2m), Dividends (-£4.2m) and share buy-backs (-£8.2m), it still has £37.3m cash , so OMG has generated £3.2m from operations (versus £2.2m adjusted EBIT) in fiscal 2025. Mkt Cap @ 42.5p is £48.8m, less cash gives an EV of £11.5m i.e. it is trading on EV/sales 0.25x, EV/EBITDA of 2.7x and EV/EBIT of 5.1x. IMHO this is extremely low for a high tech company. Time to follow the Chairman who has just invested £47.5k in the shares.

See my post at 13:59 on 1st Dec (a little bit further down this page), which highlighted the low valuation relative to Cavendish's forecasts, which have been set a comfortable level likely to be beaten. Already a 1x bagger and loads more to go (IMHO). Very happy holder.

Bridgepoint would be the second PE group to cast a slide rule over AMS, after Montagu last year. Timing is interesting...does it want to get a deal agreed before AMS tells the market what underlying growth is like and how Peters Surgical is having a beneficial impact on the group. If Peters is going well, then any bid would need to be well in excess of 300p to reflect the strong growth prospects. If the BoD were to "recommend" anything lower than this, it would imply that the outlook is tough. IMHO, I think things are going reasonably well, and with 2H'25 expected to be much better than 1H'25, which was more than adequate, I think BoD should hold out for a high level. The next scheduled trading update is 2nd week of January. I am certainly not selling at this level, its worth far more.

JL, RM...Just a quick reminder that interims from one of my old favourites (CHRT) are due on Wednesday. Directors were selling (1743p) at 32x prospective P/E after FY results in July, since when shares have retrenched. Paid 1070p this afternoon as I think results will be good and with the stock trading on about 19x for 25% EPS growth (my estimate). Any profit and I might be putting it into MSI !

I like CHRT and have done well out of it. Following the last set of final results in July, the stock raced up to nearly 1800p, which I believe was about 32x prospective earnings, which I thought was too high, so I sold along with several directors and PDMRs. I have been watching it fall back ever since. But interim results are next week and, given the sales and profit momentum, inorganic growth (EM Solutions), record order book, defence industry, and shortage of news flow (updates) over recent months, I think they might beat expectations (whatever they are, as I cannot find much research) and reverse the recent share price trend. For what its worth, I am looking for sales of about £330m (+22%) and EPS of 25p (+25%). For the full year to April, EPS of 56p would leave the stock trading on 19x EPS, well down from the valuation in July.

For full transparency, I bought the shares this afternoon at 1070p in anticipated of good numbers.

Following today's order announcement, Cavendish has increased EPS for the current year by 76% to 1.5p. Even after today's rise in share price, it is trading on a Sept 2026 P/E of just 6.8x, EV/sales of 0.95x and EV/EBITDA of 3.7x . Net cash of £0.3m (excl leases at 30 Sept 25) rising to £1.8m by end of fiscal 2026. Good trading statement in October, with full year results due end Jan.

Here you go: "...Allenby is forecasting 10% annual growth in pre-tax profit to $5.3mn and $5.8mn for fiscal 2025 and 2026, implying that the shares are rated on forward P/E ratios of 11.5 and 10.7, respectively. Cash is building, too, and the board anticipates raising the dividend in the first quarter of 2026. The shares offer a prospective dividend yield of 6 per cent for 2026.

So, although the share price has flatlined since the interim results, the earnings risk has been materially de-risked and the improving outlook supports a rating far higher than an enterprise valuation to operating profit multiple of eight times. Buy."

I agree with him and, as mentioned in a previous post, I think Allenby's numbers are way too low, as they imply a deterioration in 4Q'25, so its even cheaper that IC reports.

IMHO, I don't think AOP would want it, not their remit to own and run companies. Much more likely to be a pharma (probably generic) company , but this would only likely happen when there is clear evidence of sales traction (next two quarters should start give comfort) and that product has become profitable (Shield, as a whole, expected to reach cashflow break-even by end of this quarter).

Meanwhile, it is the Rx growth coupled with higher prices (lower discounts), increased likelihood of hitting EDITDA breakeven, recent progress of ACCRUFeR/Feraccru in non-US territories and the recent voluntary share subscription reducing chance of a cash call further that are driving the share price movement. Cavendish has a current target of 23p and even getting 70% of the way there would be great.

With quite a large spread, trading BPM is quite difficult. At the current level, I think it is a bargain. The last NAV was 800p. As I think I have mentioned previously, I do not understand insurance, it is a closed shop in my view, so the way I get exposure is through the experts: BPM (Brian Marsh) and Helios Underwriting (Lloyds market). I simply have these tucked away in SIPP and rely on dividends and capital growth.

Oohh...the good old days! Three companies that immediately spring to mind for goody bags and lunches in top hotels (Savoy, Grosvenor, Connaught etc) were Reckitt & Colman (mustard, strepsils, air freshener, brasso), Glaxo (Macleans toothpaste, lucozade, horlicks) and London International (condoms !!). The beverage companies were all good as well. Also, the updated trading statement by the Chairman was not put out via the stock exchange, so if you didn't attend the AGM, you didn't get the update. I remember seeing analysts rushing out of meetings with those incredible bulky mobile phones to send messages back of market makers and traders.

Hi RM...Glutton for punishment, I'm still in RCFX. I really did not see the enormous deterioration in business coming. In order to protect my position, I trebled up at 5.8p last week, taking the view that it should recover over the next 12 months now that the balance sheet has been strengthened and cash calls are out of the way. My average in price is 11.27p. Fingers crossed...but helped a little by today's RNS.

RM50....thanks for tip on MWE. Excellent 9M/3Q numbers today. Stock very cheap with 6% yield. Thanks again. I've posted on MWE page.

In return, take a look at SNX....it is looking very cheap...however, be patient, it is up today following announcement.

After today's excellent 9M results, Allenby numbers look far too low, implying a big fall-off in 4Q performance, which is contrary to the management statement in the RNS. On (my forecast) EPS of 6.0c (Allenby 5.25c), shares are trading on 10x multiple for 20% growth and a 6% yield. Tuck away.

Hi JL....While I think that you might well be correct, last week's announcement of delay to results suggests to me that any deal would be difficult to close before the first couple of weeks of December. But the speculation and share price movement is fascinating.

JL...TY for pointing this out, I had completely missed it. IMHO the reason given for the delay is total bulls**t. It is very easy to calculate a growth rate between two numbers and interims are not even audited! I believe that there is some corporate action about to happen, and the company needs more time to close that deal(s) rather than having it all bound up with and confusing 1H numbers. The share price reaction to such news, usually negative, is in the opposite direction in the case of MSI. Watch out for more RNSs in December /early January.

ENSI has secured a £5m UK govt contract, phased as £1.5m then £3.5m using its quantum computing for a chip to target defence, industrial, automotive and aerospace markets. More support for future forecasts.

www.investegate.co.uk/announcement/rns/ensilica--ensi/ensilica-to-develop-critical-infrastructure-chip/9232364

JL...I will do my usual update nearer the time....but happy to see it above 1500p!

IC used to be referred to as "Chronic Investors" in the investment community, as it was really bad and so far behind the curve. However, as access to broker research has significantly tightened, coupled with IC being bought out by the FT, I think that it has improved a lot and is often the only source of information on many companies outside RNS releases. I, too, have access to the online version and you can pick up articles much earlier than the printed version, or the Saturday FT highlighted companies., so I do scan it almost daily.

RM...very positive 3Q trading update from TKO? I've posted comment on the TKO board.