Utilico Insights - Jacqueline Broers assesses why Vietnam could be the darling of Asia for investors. Watch the full video here.
Not exactly the upbeat set of results I was expecting (although I do recognise the current macro environment stills weighs heavily) . Biggest negative for me was the significant 4.1% NAV reduction (c.£120m) - despite being advised we were due a modest increase. The two reasons given don't add up imo - dividends are covered by 1.1x earnings and why if we have inflation linked higher cash flows is the investment adviser increasing discount rates? Positives are the debt free position, further 3% increase to the dividend next year, plenty cash still earmarked for a share buyback and strong cash realised from existing investments (OFTO). However, imo INPP need to start navigating the path from being valued on discounted cash flows into asset valuations - cadent, angel trains, thames tideway. Despite repaying the CDF we have lost value and trade at a 20% discount to NAV - that's £500m, without the large unrealised value on the balance sheet from cadent etc. SB
I think that was the previous position prior to the fund raise - and was issued as a statutory update resulting from the updated 119m shares in circulation. NR holdings appear to have subscribed for a further 1.7m shares as part of the 20p placing - taking their total holding to 4.7% (5.7m shares) - that said 8.3 takeover code reporting forms have various interpretations....SB
What the results do show is the impressive impact the senior management team have had in the last 3+ years to get the business to this strong and growing position. It does look like there may be a changing of the guard - Michael Roller is going part time; and you wonder if Ian Johnson is considering how long he will remain with the business (he is 70). AstraZeneca remain a major shareholder - and active investor Richard Griffiths still retains a 24% holding. SB
*oogle.....
Morning ooggle - decent position when you compare the company to where it was a few years ago. At a market cap of c.£270m this looks fully valued for me at present based on operating profit (£4.6m). What is starting to make a major impact is the tax credit - which contributed more profit (£5.4m) than actual trading operations - and there's a lot more to come from that source - and that's an area where potential suitors may look to take advantage of. SB
Really useful post MSA - thanks. I have another theory to throw into the mix. Given the pre-existing relationship that exists between RENX and AZN - I do not believe AZN would have made an unsolicited approach for RENX and would not class them as a strategic diagnostics company either. What I think may have happened is an approach was made from the unnamed potential acquirer looking to access the growing CKD market and which was pitched at a level which interested major shareholders or you imagine it would have been dismissed outright. The formal sale process was introduced to allow others - and lets assume in particular AZN - the opportunity to consider making on offer bearing in mind the potential offer from the original acquirer. Also bearing in mind the extended timescales for such activity, and the reality of the existing cash position, a fund raise was carried out to ensure sufficient funding to see this process through to conclusion. The fund raise was well supported by all major shareholders (with the exception of JRC) who would have been aware of the likely level at which the original offer was made - or at least ball park. Sinai and Harwood both put money into the first fund raise closing, with additional monies already committed to the second closing. Other shareholders have updated their holdings via form 8.3 notifications based on the first closing 119m shares now in circulation; with a further 26m shares to be issued as part of the second closing which will require to be approved at the next AGM taking shares in circulation up to c.145m. Sinai, Harwood and RENX directors (McCullough, Sterling, Fleming), acting in concert, hold close to 30% of the issued shares. Other major holders who all took up the fund raise included Polar Capital (13.8m); Penwater (8.5m); Rothschild 5.7m); Lombard (4m) and GGH (1.5m). JRC retain their previous 8.5m holding. I think something in the region of 70% of RENX is now owned by these combined parties. Interesting times...SB
Disappointing...that's an understatement. Todays lacklustre, late issue RNS is completely symptomatic of why the shares have tanked to their lowest level in years. The life sciences business is meant to be an exciting, dynamic and innovative space where companies develop new products alongside market and end consumer demand with a skilled management team driving shareholder value and navigating the companies place in the bio-tech sector. EKF appears to be limping in completely the opposite direction of where it needs to be in just about every category where I would measure success, pushing out growth into another meaningless time period where it now looks there is yet another failed investment - if this is what the business is aspiring to, they really should just put the business up far sale. SB
Can't say I was expecting much and the company didn't disappoint - market clearly know hence the share price performance of late. Fed up with the ongoing pre-covid stories - its 2024 and yet they are still harking on with 2019 comparisons to compare growth - none of which are particularly impressive anyway. Life sciences in decline - with limited income from a significant investment which has blown all cash to the point they have to cancel the dividend - although I think we saw this coming with Baines back at the helm. Even POC growth is grinding to a halt. Overheads reduced - but still way too high. Wonder what share options packages will be forthcoming at these depressed valuation levels. Painful yet again....and the thought there is any consideration for acquisitions sends a shiver....SB
*interest rate decreases….doh……SB
I expect a solid earnings report as well oldbut - slight increase to NAV; growing dividend; no debt; cash on balance sheet for buyback programme and future investments; and latent value in the portfolio which has not been reflected in the current NAV calculations - but the infra market remains a very much unloved sector, although at some point (no doubt linked to interest rate increases later in the year) funds will start to move back in...….lets hope. SB
More and more interesting as we get to further clarity on investors in the placing. In addition to Harwood, Sinai, Penwater and Polar - Lombard Odier took 1.7m shares and billionaire financier Nathanial Rothschilds investments holdings business picking up a similar amount - taking his total holding to 4.7%. Updated list of significant shareholders holding 3%+ is going to be very interesting. SB
In addition to Harwood picking up 4m shares in the placing and Sinai 9.3m; Polar picked up 9.7m and Penwater 4.7m (although they did initially note they had taken 2.6m). Not 100% sure how these shares are split over the 'first close' issue (19m shares) and the total placing of 46.8m shares (which might might explain Penwater's updates). Positive imo - can't imagine Polar and Penwater throwing in further cash without a strong internal case on likely return and challenging Renx on progress. Wonder if Jefferson picked up a slice. SB
Actually - Citadel went below 0.5% in Feb - it was Alvar who were most recently at 0.6% and have similarly moved below 0.5%. Apologies - but good to see short position reducing nonetheless. SB
Citadel appear to have moved below the 0.5% declaring threshold from their previous 0.6% short position. SB
In the absence of an offer (sale) looks like its an orderly wind down of the business. Assume this means the £7m buyback programme is now cancelled. First £55m cash distribution following the AGM in May 2024 equates to about 13p per share; and from previous guidance there is about another £170m loan payments due to repaid in next 12 months (£18m already received this year) - c.40p per share available for further capital distributions. If they can sustain the 2024 dividend at 6p - we could see in the region of 60p per share paid out this year - leaving the business valued at £175m year end (40p share) - although this assumes no bad debts. Dividends would obviously fall pro-rata fall as loan repayments are distributed and not reinvested. All imo etc. Sister company GCP still active but looking at £50m capital return this year. SB
If RENX was to go into administration - it would be a pre-pack deal and my money would be on Sinai and Harwood taking it private. They have sunk a lot of cash into the business and would not just walk away and let someone buy all their investment for a fraction of what they would value it. They both pumped further cash in today. So if there is a purchaser - they need to pay what Sinai and Harwood value the business imo. I took up some VRCI retail placing at 9p; and bought some more at 11p; hold a decent slug of EFK; and still hold some NIOX although have been selling at 60p+. Don't have any trellus. Not unsurprisingly I would like the bio tech sector to come back onto the radar for II's......SB
I'm the same oldbut - picking up some here and there - I have a long term target holding in mind and am about 65% of the way there. In the next six years the dividend should hit c.10p a share based on current growth - which they have stated is covered for the next 20 years. Had a quick look at Angel Trains - in 2008 INPP bought 5% for £25m; in 2021 they bought another 5% for £100m - 4x multiple. I believe there are many similar investments where the value of the equity is considerably higher now than the original purchase price (especially in the regulated asset, transport sectors). I do not believe these are reflected in the current NAV. A number of concessions will come to and end in the next 10 years - which will throw off cash. Its a good sized fund, but not beyond possibility one of the big asset managers cast an eye here. At some point value will return, but in the meantime - load up. SB
Morning oogle - I think there may be some contagion here with another of Harwoods stable - RENX - fund raising this morning at a steep discount. VRCI down as well. I don't think EKF needs to raise money.........but some clarity in next weeks results would be good. Its burned through its £20m cash pile at an alarming rate and there is no confirmation on any commercial fermentation deals of scale to date post investment. SB
ART123 - the company has a dual listing on AIM and Nasdaq via American Depositary Shares (ADS) representing two UK AIM shares. Given Nasdaq listing the company is bound by dual listing codes.SB
Sharebel - just a point of clarification - the placing is taking place on AIM. US participants can request shares - but not in the form of Nasdaq ADS shares.
MAJW - my point was to do with a closed placing as opposed to an open retail offering. We have a difference of opinion on the rationale but that's the nature of investing. In the short term the company needed cash and we shall see if this approach works and if there is an appetite to invest at 20p/share. SB