Member Info for ShearClass

Thought the same thing, CTL looks like the perfect Santa run stock due to low liquidity & a crazy high broker price target of 290p from Cannacord. There is now a clear catalyst a couple of weeks away and shares are sitting 15% below the recent placing and nearly 50% below the 60p levels seen in September & November. Risk vs reward appears very favourable to me…

I'd 100% agree that there is currently a false market in shares of TNT, the share price movement on Friday says it all. I've never seen a company announce a 'subscription' via a yet to be formed SPV at £11.78 and then issue a second RNS 30 mins later for an initial $3m subscription at £5.04 followed by the potential of $7m in death spiral financing with a 'floor price' of £1.10.

The market makers were very kind indeed to open shares at £4, I guess the only reason being the initial subscription for $3m at £5.04, I'm not surprised it's plunged since and suspect it'll be sub £1.50 pretty soon.

PI's simply can't have a chance of knowing how to value this entity right now, so IMO it should be suspended pending clarification before any more suckers are roped in.

Agree that’s a really good summary of where things stand, I thought the below bits were especially important to the discussion today on funding;

“6/
The timing and make up of the payments for the £77m of Capex is therefore an important element and shouldn't be underestimated.

My assumption is that the majority of this will be spent over the next two years (2023/24) in preparation for the first ship build in 2025.

7/
More detail is required but (in simple terms) I expect elements of this money will go towards staff investment and so operating costs. This should assist HARL further with balancing the books but also recouping upfront Capex outlay and maintaining working capital levels.”

The share price definitely hasn’t accounted for £77m of incoming investment to up skill / expand the workforce, it’s hugely valuable.

Yep, just added another 2x 50k at 22.2399, it’s utterly ridiculous that the share price is still more than 5p below the 28p high it reached a few weeks back. IMO it’s a combination of risk averse market makers and rank amateur traders who don’t have a clue what they are invested in / what the potential upside is here.

Tried to add another 50k on open and got timed out at 18.15 and 18.5 despite confirming immediately, very pleased to have added on the MM’s naked shorting this to shake out weak holders, there are hardly any shares available here and I suspect we’ll be at >25p on Monday. Never seen a PM name check a £35m AIM tiddler before!

Gspanner, anyone who's been around aim for a few years will run a mile when they see a CLN from YA / Riverfort / any other bucketshop provider. Deepverge were the last company I recall going down this route - see their RNS from the 17th March this year, announced at 14p and they now trade at 1.6p.

Their M.O. is basically to short or forward sell shares in advance of exercising the CLN's at the 10 day VWAP, so they will sell on any rise and then pocket the difference on the shares they exercise.

Hemogenyx also went down this route in November 2020 with 'Mint capital' and ended up needing to cancel the facility after it almost sunk the company, with the share price going from 8p to 1.7p in a few months.

The key point is the lower the share price at exercise the more shares are issued, which means more dilution. It doesn't matter a jot to YA though as they get their money back + a likely 10%+ gain.

Wow. Never mind shooting yourself in the foot, the IES team went and blew their whole leg off… who on earth is advising them to lend from YA? Just as the placing market was opening up again too. Such a shame.

@Shandypants, I'm curious as to what you thought Viatris were getting out of the deal if you initially thought it was royalty payments only? Did you think STX had outlicenced Accrufer to them as they did in the Norgine deal? Or did you think STX were going to keep selling the product and Viatris were going to do their own thing on the side and pay STX if they were succesful?

Either way, STX have shown how much can be achieved on a small budget, I'd imagine Viatris will be keen to maximise sales revenue and ROI as quickly as possible. This is a company that is forecast to make free cash flow of $2-3b in 2022 and is in the midst of paying down $18b of debt left over from the Pfizer spin off, they wouldn't be wasting their time & $5m up front to take it slow / need to make as much cash as possible.

If they can help STX get to $500m sales by say 2027 then their share would be $225m of which they would likely book a profit of ~$150m per annum, which will help get their debt paid off quicker. Win win for everyone.



Basically, the prize is big enough to get their interest, so I don't know why you think they'd mess about.

"Viatris seems a good partnership but the royalty payments at less than 10% are low"

Just to be clear there are no royalty payments involved here.

STX get milestone payments at $100/150/200/250m sales levels of $7.5m per level.

All revenue is shared on a 55/45 basis with STX keeping the 55% (Finncap note confirms this), so $100m revenue will mean $55m for STX and $45m for Viatris, plus STX would get $7.5m

It's also worth noting that as per Finncap STX will book all of the revenues and the 45% owed to Viatris will be deducted from cost of sales, so it's effectively a reduction in gross margin.

I've not seen a deal like it before, my suspicion is that it's been worked on for some time and was conditional on STX achieving certain prescription targets.

Pfizer Chairman and Chief Executive Officer Dr. Albert Bourla said, “We are proud to have completed the combination of Upjohn and Mylan to create Viatris and pleased to have delivered value to our shareholders through this transaction. I want to express my gratitude to our Upjohn colleagues for their dedication in helping us achieve this milestone. Looking ahead at the new Pfizer, we believe our pipeline has never been stronger, and we are energized and inspired to continue developing breakthrough treatments and delivering innovative, life-changing medicines to patients around the world.”

I was critical of the chance of successful rollout but have to say they've pulled off something of a miracle deal + have really started to scale their prescription orders (9700 for Q4 = 38800 PA run rate at ~$260 = $10m run rate).

Viatris = a $13.5b market cap listed on NASDAQ, they were a 2020 Pfizer spin off ; https://www.pfizer.com/news/press-release/press-release-detail/pfizer-completes-transaction-combine-its-upjohn-business

Bottom line is they were valued at £75m in the March 21 placing at 30p, at the current 7p the post placing market cap will be £40m... and of course they were valued at >£200m on the day they received FDA approval. Multi bagger upside possible here IMO.

Reading between the lines I've come to the conclusion that today's very downcast tone of cutting costs with no mention of future revenue growth comes as a result of being unable to raise growth capital at the £35-40m valuation EXR has traded at over the last few months. Maybe investors are interested but only at the right price point and so the only way of getting them on board is to crash the share price to 5p or something similar?

Either way, to announce cost cuts to preserve the balance sheet just 5 weeks after launching LINK and stating you want to be partner of choice to 100 fortune 500 co's in 18 months is utterly diabolical. They should have been raising capital to landgrab as rapidly as possible right now and this backward step will likely prove damaging to such ambitions. Very disappointed to say I'm now out until they are appropriately capitalised and can offer a path to profitability.

Very good investor meets company presentation earlier this week, well worth watching, especially the last 15 minutes from the CFO. I thought the most interesting bit was about their 'programmatic' M&A strategy where they are aiming to execute 1-2 deals per year for a total value of 20-30% of market cap. This makes complete sense to me & means a material addition to annual EPS + a material portion of the consideration being share based not wasting management time integrating a minimally accretive deal. This is all funded via a mix of FCF and earn out shares, and the CFO was clear that he believes no consultancy should ever be in debt (something that I'm sure TPX wish they'd followed).

It means we can assume that they are looking at deploying £45-70m on their one to two 2023 deals, this would be funded by the ~£20m cash on hand + ~£15m in 2023 FCF + the rest in share based earn outs. Given the current environment they should be able to negotiate some good terms, (better than iOLAP), but it's impossible to say how much these deals will add to EPS. Even assuming 10p per annum (~£5m incremental PAT) it's easy to see FY24 EPS reaching 50p+, versus the current 33p forecast. Simple multiple expansion on 17x would see ELIX trade at 850p, however given this was trading at 20-25x for most of this year you'd have think a share price in excess of £10 would be readily attainable if they execute well.

Beyond FY24, where will this be trading in 5-7 years if they continue such a strategy? The CEO emphasised they want to emulate Accenture so the ambition is huge and they've arguably done the hardest part in reaching significant FCF generation with no debt. I've added an initial position today and will increase further if this does fall back, however I'd be surprised if it goes much lower given the fundamentals + quality management.

I use 10 because of the excessive number of acquisitions here & the inability for investors to know what the true growth rate of the underlying business is, they stated 8% in the interims but how much of this is generated by acquisitions made in 2020 etc? It's impossible to know. To get a PE of 16-20 in this environment I think you need predictable and consistent EPS growth + a financially well managed company with a strong balance sheet. MARL's debt + highly acquisitive nature deserves a significant discount IMO, and that's what the market appears to be applying to the share price over the last few weeks.

Pre 2021 this wasn't the case here, with acquisitions being funded by either FCF or equity placings, there was some debt used but it was small scale and normally repaid with an equity placing, the switch to being £176m in debt in a high rate environment is crazy. With SONIA at 3% and MARL paying a premium of 1.55-2.8% above that, they are paying between £8-10m in interest per annum, that's ~9p per annum of EPS going on interest payments. And SONIA is set to rise significantly into 2023...

Having listened to the same presentation my conclusion is that they are simply addicted to making acquisitions. They talk about keeping leverage at a conservative level, if they are conservative then why did net debt increase from £41.2m at the end of HY22 to £156m a year later? There is nothing conservative about adding £115m net debt in 12 months and that's after taking into account operating FCF generation.

They talk about using the ~£40m FCF generated next year for more bolt on acquisitions, well if they do that then they can't reduce net debt... and then beyond that they want to potentially return to larger acquisitions via what sounds like equity placings... It sounds like a nightmare in the current environment and the enterprise value of £590m at £4.55 still looks far too high for what is a very risky investment strategy.

Ultimately it grew 8% organically in the last HY, at a PE of 10 the company would be valued at £4.60 / £437m, however you've then got to deduct the £156m debt, leaving a valuation of £281m / £2.92.

If / when they reduce the debt, start paying a dividend and making acquisitions out of the remaining FCF this will be a good buy, however from what I heard today that's very unlikely to ever happen.

Feels primed to move higher this afternoon - very hard to buy shares and currently NT to buy more than £1k's worth at 7.7p. Intriguing that the two big guns decided to join the board ahead of schedule, got to think there is something significant going on in the background here or they simply wouldn't be getting involved.

Even at half the current valuation this would look expensive based on those results & the rising debt pile. They've increased gross profit by £8m to £77m but that's cost them an extra £16m in SG&A...so ironically they would have been better doing nothing at all. Operating profit was therefore almost cut in half with finance costs on the rising debt pile taking another £5.85m...

Market cap of £433m at 127p + net debt of £208m = EV of £641m vs HY Profit before tax of £9m... and a business that is showing zero operating leverage (in fact it's showing operating deleverage...) you can see why the hedge fund shorts have been increasing.

Volume is around 670k shares if you include the 170k through Aquis, which is just shy of 0.4% of shares in issue - lower than recent days but certainly not quiet.

Market makers are 100% trying to hold the share price down to con those who are either impatient, unknowledgeable or overexposed out of their shares. Buy and hold for a few months and 50p+ looks fairly likely, possibly more if surprises land.

On the official signing of the contract + revelation of commercial details I suspect this will do 100%+, there just aren't enough shares to go around... 173m / say 2000 shareholders = just 86500 shares each, and there are likely significantly more than 2000 shareholders after the recent newsflow.

Low share supply + low market cap + a transformational contract = huge rerate potential.

Have been watching this very closely today. Lots of buying first thing got the price moving up (likely those who read the Twitter official signing info over the weekend). The share price reached 21-5-22 before the market makers shut up shop and refused to offer anything to buy for 10-15 mins (winterfloods were the last on the book at 22p). At the same time they walked the bid up until the spread was 21-9-22, knowing they would get traders to sell who assumed it had peaked at 22p... this worked and the share price was walked back down to 20-21 around 30 mins ago.

The reason they shut up shop became clear when the delayed 200k buy at 22p from 8.34 was printed - this was executed when the spread was 21-22 and wiped the MM's out. They had 2 options - increase the share price and deal with the buying frenzy that would have ensued, or refuse to sell any shares and walk the price back down to fill the order... Unsurprisingly they chose the latter option!

It's now NT to buy at 21p for even 1000 shares, they seem exceptionally keen to keep the price down and draw out sellers, presumably because they are either short of stock or need to fill orders. I suspect they'll have to let it go before long...

Need to spend some time this weekend having another look around LINK, I saw they released an update to V3.1.1 this afternoon so lots going on in the background as always. The Chivas whiskey event sounds pretty cool, would be a nice income stream if they can attract enough viewers + I'm sure other brands will quickly sit up and take notice. As for the Victory XR stuff, sounds great as always - I must admit to being a bit frustrated the DW hasn't mentioned it's success at all bar repeated references to the initial 10 meta funded unis that the RNS'd in April, without Steve Grubbs we would be none the wiser as to the huge progress that's been made... oh and thanks as always for posting the updates OT.