I Read The News Today Oh Boy! 14-Aug-2017

14th Aug '17 by matylda

21 comments 10167 reads

Hope you all had a great weekend!

Decided to change the title - Did want to use this title originally but thought it wouldn't be understood or go down well, didn't even know if I would continue with the report - But, there was some discussion on the title the other day so now it will be "I Read The News Today Oh Boy!" ripped off from the Beatles A Day In The Life - Thanks guys!

Anyway, had a nightmare here this morning, Investegate (my main go to news feed) was not working for me (still isn’t) – The main London Stock Exchange site is working but I cannot find news for some of the companies I was expecting to find news for – (Also checked lse.co.uk to no avail).

So, here’s my hand cuffed comment for the day, including those companies I could find no news for...

ECSC (ECSC) – (Couldn’t find any news) - Slightly under my usual £20m Mkt Cap limit, this one is currently £17.5m but was double (almost treble) that a few months ago. It’s a loss making Cyber security company which does however seem to have enough cash (about £5m) to operate for some time, projected -£1.8m loss for the current year. Estimated to make a profit in 2018 – If it does, I may miss some of the move but the risk will be much less than it is now, should I then decide to take part. Actually quite strange as all I could find, at a quick glance, relating to the price fall is some options scheme (319,758 shares, less than a 3% dilution) – A strange one for me, maybe the more educated have a comment here!

Real Good Food (RGD) – (Couldn’t find any news) - Last week this food manufacturing and distribution company would have been under my radar. The rise last week means the current Mkt Cap is £21.6m. Another kind of Stock Report I don’t particularly like – No consistency in Profits, poor ROCE, no Dividend and debt about 50% of Mkt Cap. Surely, I can find better shares than this to invest in! Stockopedia classes this a Speculative Contrarian play, that looks appropriate. I was going to comment here, on the assumption good news was announced today – Is there some insider dealing going…

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Ramridge

14th Aug '17

Hi matylda,

Continuing with the Telit Communications (LON:TCM) saga, today's RNS is trying to put a finger in the dyke.

Having been caught napping, the Board has now appointed Yosi Fait as interim CEO. They also say that
Yosi Fait will be conducting a preliminary review of the Group's activities and cost base.

Well, Mr Fait has been with Telit for over 10 years, in various senior posts. You could say he was Oozi Cats's right hand man.
So, what credibility would you attach to Fait's findings?

I have traded Telit several times over the past years, but never felt comfortable enough to be a medium or long term investor.

This stock is just too toxic to bother with now.

.

stockpot

The title's phrase is from 'A Day in the Life' - on Sergeant Pepper.

doug2500

Is there any news on Bioventix (LON:BVXP)

I can't see any but it's on a bit of a roll for the last few days. Up 4% today.

There was a trading update on the 22nd August last year so assuming there's one on the way, is there good news leaking out? Or just speculation?

matylda

I knew something was wrong there - Now corrected :)

Brilliant Leader

Doug Re: Bioventix (LON:BVXP) - there was an article last week with a "name" (except I have forgotten the "name" and the publication) describing it as "as close to bombproof as is possible" (I paraphrase). That, combined with a likely trading update has brought in some buys (volumes are still quite thin) - I don't think anything has leaked.

EDIT - RNS just notified a slight reduction from the Miton Group.

BVXP does seem a little strange to me - 2016 EPS 81.8, 2017 to be 78.7 and 2018 to be 77.7 - I just don't see how that justifies a PER of 26 - Am I being thick here!

JohnEustace

Re Bioventix (LON:BVXP), the quote was from Keith Ashworth-Lloyd who runs the Buffetology fund.
"His largest holding is in biotech firm Bioventix, which he describes as the ‘nearest thing to being bomb-proof’. It generates significant cashflow through its low-cost antibodies, which have a very strong market position, and it is also bringing through a new heart drug.
‘It has written down all of its research and development, is so cash-generative and is a very pure business.’

The bit about the heart drug must be a mis quotation. They do antibodies that are used in blood tests to help diagnosis. Their product will improve the detection of heart attacks at an early stage.

http://citywire.co.uk/money/ho...

Edit- I hold both Bioventix and Buffetology.

Not thick matylda but it is an unusual business to understand and in my opinion, not best valued on a PER basis.

Bioventix (LON:BVXP) has long-term revenue streams, a big defensive moat, very high margins, very strong FCF - and there's some decent growth too. I think Leon Boros describes it as Quality at a Reasonable Price (QARP) which I think is spot on.

Disclosure - it's my third largest individual holding

stepone

matylda - if Troponin sales take off this year as they are planned to, then those forecasts will be upgraded.

iwright7

Bioventix (LON:BVXP) - With Trump's warmongering ‘nearest thing to being bomb-proof’, is a nice place to be - My biggest holding. Ian

Thanks for the education guys, much appreciated.

DWit199

ECSC (LON:ECSC) - The price rocketed ahead following the Wannacry ransomware attack in May, hyped by the press.
The company then issued a trading update (profit warning) on 30 June and the price has been falling since then.

mpjubb

15th Aug '17

Re ECSC (LON:ECSC), David Withers is correct that the price shot up on Wannacry (the big cyber attack). It then dived when the CEO's partner sold her entire holding, effectively cutting half of the CEO's share of the business in half. It dived again when a trading report said they would make a loss in 2017 but expected 2018 to be profitable.

I think I understand where this company is going, but it really is just my personal opinion. They've been trading for approx. 15 years and have got by. Last year, either they decided it was time to float or communications started with a 3rd party that is aiming to sell them. They floated and Steve Vaughn was appointed as a NED. Steve Vaughn's MO is to go into a business and turn it around to either make them profitable or get them ready to be sold. From what I understand he is well respected in "The City".

We can already see this in progress as they have a massive drive to recruit sales people. This is exactly the same process that Phoenix IT went through before they were sold to Daisy Group.

For me, it will be interesting to see if they release any trading updates before they have to. If they don't, I would take that as a sign that there is nothing positive to report.

Thanks as always to all for the input, I am getting as much out of this as I am putting in, hope its proving useful to others too.

ECSC (LON:ECSC) - According to the RNS it was the partner of the Chairman Nigel Payne who sold her holding. This amounted to less than 0.2% of the company. The CEO Ian Mann continues to hold just under 19% of the company as does Ravinder Mann, to whom he is married. There are no dealings reported for them. If Ravinder Mann had sold their entire holding I would view the transaction rather differently.

I stand corrected :) None the less, it wasn't well received. I am very tempted to invest in ECSC (LON:ECSC) but it is purely based on I strongly believe Steve Vaughn's purpose. This makes the investment highly speculative, of course.

Interestingly, Steve has also recently joined Redcentric (LON:RCN). From his linkedin profile:

"I have joined the board of Redcentric plc to bring my experience of IT Managed Services to the existing board and help them develop their strategy for growth and value creation."

He also bought 20000 shares when he joined Redcentric (LON:RCN).

Redcentric (LON:RCN) share price dived last year due to accounting irregularities but they do have a good reputation within Managed Services. I work in IT Managed Services so have a good understanding of this industry.

I notice that their is a news announcement today that the CEO has resigned but will be in post until December.

For me, both ECSC (LON:ECSC) and Redcentric (LON:RCN) are jam tomorrow shares but I can see them both being swallowed up by competitors.

Cheers

Boros10

16th Aug '17

Stockopedia's 2016 numbers are wrong. Undiluted EPS was 69p and diluted EPS 68p. My own estimates has EPS for 2017 beating the finnCap numbers at around 81p. If I am right the P/E is a little lower than you have mentioned above. FY 2018 will include a full twelve months of Troponin royalties from its customer Siemens (in Europe) but balanced against this is the loss of NP ProBNP royalties (11 months). FinnCap's forecasts assume FY 2018 will be a standstill year but it all depends on Troponin royalties.

FinnCap previously wrote. "The worldwide market for cardiac troponin testing is estimated to be worth US$1.3bn, growing at a CAGR of 12%. Siemens is estimated to have c.10-15% share of the IVD market by dint of the number of IVD analysers placed in laboratories and hospitals. We estimate therefore that its global troponin revenues could be as high as $200m, of which perhaps 40% or $80m is in Europe." Bioventix is entitled to a royalty of 2%, suggesting annualised revenues as high as $4m once Siemens gains FDA clearance and launches globally, which is expected by mid 2018, and it fully transitions from the current generation of tests to the new high sensitive tests.

$4m of Troponin royalties equates to extra post tax profits of £2.5m or about 50p of EPS. Lost NP ProBNP will offset around 14p of this. That nets out at an extra 36p of earnings from Troponin. If you add that to my current FY 17 forecast of 81p gives you EPS of around 117p by FY 2019 or FY 2020. On top of this are its VitD royalties which continue to grow. Many of its public company partners continue to report robust growth from this diagnostic. If we say EPS of 125p by the end of the decade then this puts the shares on a forward P/E of around 16.8x with scope to fall further if the 12% p.a. forecast growth in the Troponin market proves correct.

As Bioventix is so cash generative I'd expect it to be be able to pay out up to 80% of its earnings as dividends or £1 per share, putting the company on a prospective dividend yield of 4.76%.

So in my view Bioventix is still good value although much will depend on the size of the Troponin market, its growth rate and Siemen's share of the market.

Much appreciated, great data, I'm tempted on an entry here at some point.

VegPatch

Matlyda
I wrote a pretty comprehensive report on Bioventix (LON:BVXP) a while a ago. Most is very much still valid.
http://www.stockopedia.com/content/bioventix-wide-moat-strong-growth-high-roce-excellent-cashflow-and-reasonable-valuation-159160/
The shares were cheaper then, but good companies tend to find good luck...

As to why they have risen - well it appears Keith A-L has been buying recently and the shares are illiquid, so that may have pushed the price up. Also there is some EUR exposure in the royalties and the EUR has been v strong of late, so that may have helped.

Wol

17th Aug '17

Bomb-proof only in the investing sense. There aren't many investments that would be safe if Trump and Kim Jon Ung start dropping the bombs they seem to want to drop. Maybe Northrop Grumman and a concrete bunker.
I have held BVXP since hearing Leon Boros giving a talk on Quality at a Reasonable Price (QARP) at a Sharesoc / Mello event a few years ago. Thank you Leon. And I've seen BVXP present at another Sharesoc event. In an investing land full of salesmen and hype the BVXP directors seem remarkably straight forward and down to earth. They tend to do that great thing of under-promising and then over-delivering. So they may well exceed the profits forecasts in the stock report.
BVXP is one of my biggest holdings, one of only two five star holdings (with ACSO) thanks to a good business moat, secure income, excellent free cash flow, good return on investments...

I Read The News Today Oh Boy! 14-Aug-2017

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Matylda

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