Stockopedia/PIWORLD StockSlam January 2022

21st Jan '22 by TamzinPiworld

8 comments 1310 reads

Here is the seventh Stockopedia / PIWORLD StockSlam hosted by Damian Cannon. The format, each ‘slammer’ has 3 minutes to ‘slam’ their stock followed by 3 minutes of audience questions. All are really great pitches, which shows the variety of private investor styles. We are really grateful to all the ‘slammers’. This event only happens because of them and the fabulous community we all enjoy. If you’d like to ‘slam’ at a future StockSlam, please contact us via the PIWORLD contact page.

Remember, these are just ideas, the presenter is probably talking their own book. Please do your own research!

The next Stockopedia/PIWORLD StockSlam is Wednesday 6th April, 6pm. Register to attend via the events page. Email via the contact page to take part.

00:18 Introduction by Damian with a review of the performance of previous slams.
03:00 Damian Cannon: Henderson Smaller Companies Investment Trust (LON:HSL)
09:45 Rebecca Stewart: Frasers (LON:FRAS)
16:30 Martin Flitton: Getbusy (LON:GETB)
24:35 Dave Sullivan: Shield Therapeutics (LON:STX)
33:30 Robert Corden: Jade Road Investments (LON:JADE)
40:45 Vivek Sharma: Premier Foods (LON:PFD) This was recorded 19.1.22 prior to the earnings upgrade the following day. Good call!
48:40 Michael Tuckman: Bango (LON:BGO)
55:37 James Tapp: Time Finance (LON:TIME)
01:03:39 Ben Miller: Beazley (LON:BEZ)
01:11:12 Jack Brumby: Centralnic (LON:CNIC)

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Tortoise investor

29th Jan '22

Thanks for another really good Stockslam!

Sully8786

17th Feb '22

Not a great update from Shield Therapeutics (LON:STX) - Revenue way behind the £3.37E on Stockopedia and way, way behind Finncaps forecasts, though company says that it was in line - bit like applying lipstick to a pig.

Thought sales in EU were disappointing again @ £0.9m.

There were positive notes from the company regarding trials in the UK / US and China but suspect that this will not impact till latter half of FY22 or into FY23, but will hopefully avoid the need to a further raise of capital.

All depends on execution in US now, where there seems to be better awareness, but this needs to be translated into sales.

Not surprised shares have dropped today and wouldn't be surprised to see them drift lower until better news flow presents, which may present a buying opportunity as Finncaps PT (freely available) remains @250p.

Time will tell whether we get there.

johnmhughes

Yes, I read this today, after previously buying and selling out of these.

Maybe a good buying opportunity now?

18th Feb '22

Maybe John, it is a small position for me currently, which I would add to if and possibly when I saw the positivity turning into results.

I've asked about the cash burn after getting some twaddle back about the revenue (miss in my view) being well below what Finncap had expected - hopefully we'll get some more colour with the results as there are multiple areas where the company could do well, but as is often the case, it is taking longer than expected.....

illiswilgig

STX (I hold)

Not the type of share I normally buy. The highest risk share in my portfolio by a long way - and don't I know it!

I think the IP, the value of the treatment and the EU/USA approvals are very undervalued. But I can understand why. There is plenty of history here and it's always been likely that they will need more cash before the good times roll in the US. If they do. The company said it had enough cash and they will raise more without futher dilution (debt).

The figures in the trading update were disappointing but should not have been a big surprise once it became clear that the launch in July would not allow listing with insurers until Q4 and reimbursement could not start until December. Analysts revenue figures were outdated - but with nothing to replace them with were left to stand. The cash burn of 10m in 6 months might well be less than the broker expected - but its focused the market on the £12m remaining and the 6months they have to ramp up sales rapidly, raise fresh cash - or more likely a little of both.

I can't do the kind of detailed spreadsheet I prefer for my 'value with growth on top' investments so I took a simple approach.

I bought on the basis of a 15m cash equity issue at 17p ( - being 50% of the then 34p price). Which would be a 30% dilution.

I took the brokers target figure of 240p with a pinch of salt and halved it. 120p. The dilution reduces that to 84p. That's 2.5x the 34p price at the time - based upon half the brokers target and an assumption of a capital raise at a distressed share price - and I have to say that today that looks a bit more likely than it did then - say more like 60% to 75% than the 50% I assumed when I bought.

At today's 25p my 84p target is 3.4x the current 25p bid - and that assumes a 15m equity issue at 17p and under-rates the brokers target sp by 50%. It assumes that they can't or don't want to use debt - and they don't sign another licence deal with a useful upfront payment in the next few months. It also assumes that growth in cashflow from sales is not enough to prevent them from needing more cash.

How likely is it that they could grow cashflow fast enough to prevent them needing to issue fresh equity? I put that at 25% to 33%. Which I think the market is pretty much putting at zero today. I rate the progress the new team has made in the US very highly - having been from a standing start in just a few months. 2500 prescriptions is very good newsfinncap have this as 560 in Q3 and 1844 in Q4 a very fast ramp up. Of course the $100k revenue is not such good news - and indications are that they have primarily been at nominal value through their assistance hub. Though reimbursements only started in December and I guess there could be a considerable number from december that didn't get paid up by the end of year. If they can convert that 2500 prescriptions to full cost by the end of H1 they will reduce cash burn significantly - a doubling of prescriptions to 5000 by the end of H2 would bring them to cashflow neutral just in time. So my assumptions may prove to be conservative. I hope so.

Unfortunately - I think it's going to be an uncomfortable few months before we get to find out which way this is going to go. I knew that when I bought, but it's always a much worse thing to experience. Another reminder - in case I needed one - that playing with loss-making shares is never a good idea! Still, the fat lady is only warming up still - and its certainly going to be an interesting few months as well as uncomfortable.

I may well buy a few more – but still high risk and I have enough - plenty of time for that in the next month or two once the price settles. In the meantime I'll be looking at any scraps of data on prescriptions and reception by patients coming out of the US,

cheers

Mark

Yes, massively down again also, since I last posted.

Same here! My bad!

But I hear that TW has tweeted today that its the new big short and has a price target of 5.5p on it.

I don't know why its attracted his attention - other than he seems to have had success with a diagnostic company. I've not seen his shareprophets article I am not a subscriber so I don't know what he's based it on. I am not aware of any new data available on sales or prescriptions other than that supplied by the company - so my target has not changed.

Clearly that would change my dilution calculations if he's right :-(

I upgrade my expectation from an uncomfortable few months to a 'very uncomfortable few months'

cheers

Mark

19th Feb '22

Hi Mark,

It is rarely good news when TW is sniffing around companies, but last time I looked he was looking at resources, which can often leave investors with a substantial loss.

I'm guessing it was Omega Diagnostics that he had his teeth sunk into, but as you say I've not paid too much attention to him as I'm not usually investing in that sort of area, and like you, I normally invest in GARP / QARP shares, though I am factoring inflation into my portfolio at the moment so the only other position that is not profitable is £PXC.

Thank you for your thoughts above, which is similar to my thinking - I've pasted my notes below.

Looks like a Revenue miss to me and though there are positive undertones to the announcement it isn't a great result - cash is of concern now with £12.1m remaining - will they be able to make it through without another raise?

Stockopedia shows estimated rev @£3.37m- Finncap expected double that causing them to push all expectations one year to the right, which is not good IMO.

Expect that shares will slide until there is some more positive news.

There are some positive noises re phase 3 trials which could trigger further milestone payments towards end of FY22 / 23, which would mean that cash would be less of an issue.

I do wonder whether Norgine are dragging their feet a little with this product, in the knowledge that there is a great product that could help so many people, but the company is likely to be looking for cash in H2, which could present them with an opportunity to acquire the IP if institutions are unsupportive of a raise.

I have asked for the expected cash burn over the next 12 months but doubt I'll get anything other than the twaddle I got back the other day, but as you highlight above, the likelihood is that a cash injection will be required - I hope that comes in the form of a new licensing deal or milestone payment, but suspect it will be a placing, given the last one was at a deep discount, I wouldn't expect any different here.

Shame that I pitched it when I did, but there were signs that the new leadership were starting to execute on past promises when the payer coverage announcement was made in December, and as Finncap point out there have been further payers added to the list.

As you say, a few uncomfortable months till we get (hopefully) more detail on the cash position in May.

Kind Regards,

Dave.

Stockopedia/PIWORLD StockSlam January 2022

Remember, these are just ideas, the presenter is probably talking their own book. Please do your own research!

The next Stockopedia/PIWORLD StockSlam is Wednesday 6th April, 6pm. Register to attend via the events page. Email via the contact page to take part.

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TamzinPiworld

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