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Beaufort Securities Breakfast Alert: Amryt Pharmaceuticals, Cyan Holdings PLC, Eurasia Mining plc, Easyjet, Jubilee Platinum PLC, Ryanair

Beaufort Securities Breakfast Alert:  Amryt Pharmaceuticals, Cyan Holdings PLC, Eurasia Mining plc, Easyjet, Jubilee Platinum PLC, Ryanair

Today's edition features:

• CyanConnode Holdings (LON:CYAN)

• Eurasia Mining (LON:EUA)

• Jubilee Platinum (LON:JLP)

• Amryt Pharma (LON:AMYT)

• easyJet (LON:EZJ)

Ryanair Holdings (LON:RYA)

"Seeking a new catalyst. Seemingly tired of waiting for the next policy move from the Republican-controlled White House and Congress, investors have been shifting some of the risk acquired over the past three months, buying back into government bonds and gold. In the wake of initial Trump-inspired market euphoria the President's next steps, presumably in the form of tax cuts and deregulation, are now being called for, particularly given that ex-banks corporate margins are still shrinking and Friday's soft US wage growth continues to hold back inflation while the Fed's Patrick Harker suggests a March rate increase is 'now on the table'. European Central Bank President Mario Draghi yesterday added further to the uncertainty, noting that it was not yet time to withdraw the central bank's stimulus measures, which knocked financials quite hard in the process, even though he clearly pointed to signs of strength in the economy. As a result all three principal US indices closed in the negative, albeit with only fractional moves, leaving corporate earnings the main driver of individual stock prices. Asia ended similarly mixed with modest, featureless movements on light volumes. This sets Europe up for a lacklustre opening this morning, with the FTSE-100 seen just 5 or so points either side of unchanged in early trading. Figures released by the British Retail Consortium first thing, however, make for rather dull reading, with January data suggesting like-for-like sales fell 0.6% while total activity increased by just 0.1%, both of which were significantly weaker than that reported for the previous month and below market consensus. Other UK macro numbers due from the UK today include the Halifax House Price Index, while this afternoon the US is expected to publish its December Trade Balance, which will be followed by release of the Redbook Index. UK corporates due to provide earnings or trading updates include BP (BP..L), Bellway (BWY.L), EasyJet (EZJ.L), First Group (FGP.L), Speedy Hire (SDY.L) and St. Modwen Properties (SMP.L). Investors are also awaiting today's much anticipated Westminster release of the Housing White Paper, which has been championed by the Communities Secretary Sajid Javid with a view to providing a solution that "means building many more houses in places that people want to live". The proposal will likely directly affect sentiment toward both quoted housebuilders and their associated materials and services companies, while also potentially being felt across the wider economy given the influence house pricing has on national consumer confidence."

- Barry Gibb, Research Analyst




The FTSE-100 finished yesterday's session 0.22% lower at 7,172.15, whilst the FTSE AIM All-Share index closed 0.28% better-off at 896.09. In continental Europe, the CAC-40 finished down 0.98% at 4,778.08 whilst the DAX was 1.22% lower at 11,509.84.

Wall Street

In New York last night, the Dow Jones shed 0.09% to stand at 20,052.42, the S&P-500 lost 0.21% to 2,292.56 and the Nasdaq fell 0.06% to 5,663.55.


In Asian markets this morning, the Nikkei 225 had lost 0.35% to 18,910.78, while the Hang Seng dropped 0.04% to stand at 23,339.11.


In early trade today, WTI crude was up 0.21% to $53.12/bbl and Brent was up 0.23% to $55.85/bbl.



Housing market broken, ministers admit ahead of White Paper

Ministers will admit England's housing market is "broken" as they unveil new plans to build more affordable homes. The government says 250,000 new homes are needed each year and has admitted it is lagging behind schedule. The new housing strategy for England includes forcing councils to plan for their local housing needs and giving them powers to pressure developers to start building on land they own. Labour accused the government of "seven years of failure" on housing. Communities Secretary Sajid Javid will set out the details of the housing White Paper in a statement to MPs.

Source: BBC News


Company news

CyanConnode Holdings (LON:CYAN, 0.20p) – Speculative Buy

This world leader in narrowband radio mesh networks, yesterday announced receipt of a purchase order for 100,000 Panmesh software licenses from HM Power Metering AB in Sweden for smart grid and Internet of Things implementations. In April 2016, CyanConnode signed a non-exclusive distribution agreement with HM Power and this purchase order is expected to cover HM Power's initial requirements for Panmesh software licenses and will be invoiced as the licenses are delivered to HM Power's utility customers, as part of the rollout to replace existing smart meters in Sweden. Sweden was the first country to install smart meters for its customers in 2009, with the full-scale installation of Automated Meter Reading/Advanced Metering Infrastructure systems reaching 5.2 million Swedish consumers.

Our view: The market is now implementing next-generation metering technologies. As a Swedish-based system integrator, HM Power, provides smart metering and smart grid solutions to virtually all domestic utilities. It has an established customer base of approximately 650,000 smart meters and 30% of the Ring Main Unit and advanced fault indication equipment market in Sweden. Having integrated CyanConnode's IPv6 standards-based solution, with its smart grid equipment, electricity meters and other IoT products, Panmesh is the obvious 'future-proof' solution. Being a long-term and highly sticky product, which includes not only the sale of software licenses, but also an ongoing recurring revenue stream from annual maintenance charges over a 10-year contract term. This is exactly what CyanConnode has positioned itself to provide, as evidenced by its participation in the world's largest and most sophisticated projects, such as the UK's SMIP project and the National Smart Metering Program of Iran. Having established the scale of the opportunity (see Beaufort's publication 'The Future is Smart!' that was released on 21 September 2016), the coming 24 months will see CyanConnode's branded offering occupy the position of 'industry standard' for the sector. This will enable it to add significantly to the already impressive backlog from India, Iran and the UK both with repeat orders and new large, long-term and exceptionally sticky customers. Despite using a chunk of the £10.1m (gross) raised through last summer's Placing and Subscription to build up working capital, it still holds a significant cash reserve as it progresses into 2017. CyanConnode's business model is maturing while its business opportunity remains in its infancy. Recognising the Group's lead in this giant developing opportunity, Beaufort reiterates its Speculative Buy recommendation and price target of 0.6p/share.

Beaufort Securities acts as corporate broker to CyanConnode Holdings plc


Eurasia Mining (LON:EUA, 0.58p) – Speculative Buy

Eurasia has published two positive updates from its alluvial platinum operation in Russia. The first reports that 11.3 kg of platinum was recovered during the few weeks Eurasia and its JV partner have been mining West Kytlim - mining has now stopped due to the cold. The second describes a new agreement with its JV partner where the partner funds exploration costs of $1m over the next 5 years and Eurasia's contribution is funded by way of an interest free loan. The new agreement also sets out a 17 year mining schedule which includes expansion to 4 wash plants over the next 5 years. One is already commissioned, number 2 will be installed in 2H17. Other significant details include a recovered grade of 449 milligrams of platinum (120% above the resource grade), and a general familiarity with mining conditions, equipment, and the shape and behaviour of the resource itself.

Our view: The alluvial mining season in this part of Russia is from April to November so all being well Eurasia and its partner should see a full season of production in 2017. They are targeting 100 kg of platinum of which 30% is attributable to Eurasia and its shareholders. From 2018 onwards production should ramp up as more plants are installed. All appears to be being going well.

Beaufort Securities acts as corporate broker to Eurasia Mining plc


Jubilee Platinum (LON:JLP, 4.15p) – Speculative Buy

Jubilee has announced its chromite recovery plant is now tied into the Mitsubishi's Hernic operation and is producing chromite. The next stage is to commission Jubilee's Hernic platinum recovery circuit which recovers platinum and other PGM's from the chromite tailings. This should happen in February.

Our view: Jubilee started building its Hernic fine chrome and platinum recovery circuits less than a year ago and has delivered within a few weeks of its target. It is a reasonably complex plant with a 660k tonnes per annum capacity, so it might take some time to ramp up to full capacity. As far as we understand, once commissioned the platinum recovery circuit will be the largest of its kind in South Africa. It's refreshing to see a large project, albeit with no mining involved, delivered with no apparent hiccups. Good news for Jubilee shareholders.

Beaufort Securities acts as corporate broker to Jubilee Platinum PLC


Amryt Pharma (LON:AMYT, 18.00p) – Speculative Buy

The pharmaceutical company focused on best-in-class treatments for rare and orphan diseases, yesterday announces positive results of a newly completed pre-clinical study that compared its drug compound AP102 (a somatostatin analogue therapy with the potential to treat acromegaly) with pasireotide, an approved product for treating patients with resistant acromegaly. Amryt's AP102 did not demonstrate the potential to cause diabetes, an observation which, if replicated in clinical studies, could be clinically beneficial in treating acromegaly. As previously reported, the Company is preparing AP102 for clinical trials in 2017.

Our view: These results are highly encouraging. They further reinforce the view that AP102 has the potential to improve outcomes for patients suffering from acromegaly, a rare and very distressing disorder which leads to excess growth of the body's tissues over time. Amryt's study used a well-established diabetic rat model to examine whether or not AP102 has an effect on glucose levels or on food/water intake compared with controls. The study results showed that AP102 had no effect on either in diabetic rats compared with controls. This indicates no impairment in glucose control in these diabetic animals when treated with AP102. Early in November, the U.S. Food and Drug Administration granted orphan drug designation to AP102 and Amryt is now progressing AP102 towards clinical trials commencing this year. Amryt has an attractive mix of approved, late stage and early stage products focused on rare and orphan conditions where there is significant unmet need. They have made excellent progress in the short time since its Admission through Reverse Takeover of Fastnet Equity plc on 18 April and expect this to continue going forward. Despite making excellent progress over the past 9 months, the shares still to trade below the placing price of 24p and now offer scope for a significant re-rating. Beaufort continues to recommend the shares as a Speculative Buy.


easyJet (LON:EZJ, 932.50p) – Buy

easyJet, a low-cost European short-haul airline company, yesterday provided a traffic update for January 2017. During the month, passenger traffic increased by +11.0% y-o-y to 4.7 million customers, while the load factor improved +1.2% y-o-y to 86.2%. The rolling 12 months traffic to January rose +6.9% to 74.9 million customers. Passenger traffic represents the number of earned seats flown, while load factor represents the number of passengers as a proportion of the number of seats available for passengers.

Our view: easyJet reported strong passenger traffic and load factor data for January, while also benefitting from a relatively weaker comparative (January 2016: Passenger traffic +6.3%, Load Factor -0.1%; January 2015: Passenger traffic +0.0%, Load Factor -0.3%). The January statistic follows last month's strong +15.1% growth in passenger traffic and +3.3% improvement in load factor. At the end of December, easyJet announced resilient results for the Q1 FY2017, in line with guidance, supported by the higher revenue due to currency movements and expanded passenger numbers, although it has warned that the weakness of Sterling is expected to impact easyJet's full year pre-tax profit by around £105m. Looking ahead, subject to normal levels of disruption, the Group reiterated that it planned to grow seat capacity by up to +9% in the FY2017, while it continues to target a -3% decline in total cost per seat at constant currency including fuel for the full year, and a +1% increase in cost per seat excluding fuel at constant foreign exchange rate. The Group said it remains committed to flat cost per seat excluding fuel at constant currency in the FY2019 against FY2015. Revenue per seat for the H1 is expected to decline by "high single digits" due to the timing of Easter and the Berlin terrorist attack. Adjusting for this, underlying revenue per seat decline is expected to improve in the Q2 compared to the Q1, supported by a strong demand across all European markets. Considering the successful lean cost programme, strong forward booking (c.56% of expected bookings in Q2 secured at 24 January 2017), and strong balance sheet, Beaufort retains its Buy rating on the shares based on a FY2017E earnings multiple of 11.8x and 4.2% yield, while keeping one careful eye on the oil price and economic/political uncertainties.


Ryanair Holdings (LON:RYA, EUR14.15) – Buy

Ryanair, a low-cost European short-haul airline company, yesterday provided its results for the 3 months ended 31 December 2016 ('Q3 FY2017'). During the period, passenger traffic advanced by +16% to 29 million customers, while the load factor improved +2% to 95%, against the comparable period (Q3 FY2016). As average fares dropped by -17% to €33, this has resulted revenue only improved by +1% to €1,345m. Although the Group reduced unit costs by -12% (-6% excluding fuel), drop in fares, combined with fall in net margin by -1% to 7%, resulted profit after tax declined by -8% to €95m. Basic earnings per share declined by -2% to 7.60 Euro cent. Net debt at the period end stood at €576.2m (31 March 2016: Net cash €311.5m) due to €984.5m on net capital expenditure, €778.8m on share buybacks and debt repayment of €301.9m. On the operational front, Ryanair opened 5 new bases and 95 new routes and delivered 10 new Boeing aircrafts during the Q3. The Group has also concluded a deal with London Stansted for new routes and more capacity for the next year. As a part of its "Always Getting Better" ('AGB') customer experience programme, the Group in October launched Ryanair Rooms, in November introduced 8 days cyber week promotions, and in December launched Ryanair Holidays. Ryanair's CEO, Michael O'Leary commented "As previously guided, our fares this winter have fallen sharply as Ryanair continues to grow traffic and load factors strongly in many European markets. Ryanair responded to this weaker environment by continuing to improve our "Always Getting Better" (AGB) customer experience, cutting costs, and stimulating demand through lower fares which has seen load factors jump to record levels."

Our view: Ryanair reported a Q3 FY2017 result slightly weaker than expected. Both the revenue (€1,345m) and profit after tax (€95m) came below the consensus analyst's estimate of €1,361m and €99m, respectively. The underperformance came as a result of significant fall in average fares, dropped by -17% against management's previous guidance of -13% to -15% in H2. This disappointed the market slightly yesterday as the H2 average fares guidance was set initially just to take into account the limited Q4 visibility combined with the absence of Easter in Q4. The lower fares were due primary to Ryanair increasing capacity, routes and bases, at a time when its EU rival airlines are also growing theirs. Having suffered with lower than expected fares in Q3, the Group has repeated its "cautious" outlook for the remainder of FY2017, although given it delivered better than expected ex-fuel unit cost saving of -6% (previously guided c.-3%), management reiterated its FY2017 profit after tax guidance of €1.30bn-€1.35bn, subject to normal levels of disruption. On the operational front, the membership of 'My Ryanair' has now became mandatory to all customer bookings in order to tailor services and improve offers. The membership is expected to attract customers dealing directly with Ryanair and drive more traffic. The Group expects membership to increase to 20 million by end FY2017, although this is -5 million below previous guidance. Looking ahead, the Group expect average fare to fall by c.-15% in the Q4 (higher-end of the guidance), full year passenger traffic to 119 million customers (slightly upgraded from "just over" to "over"), and upgraded full year ex-fuel unit cost saving to c.-4% (previously guided c.-3%). For the FY2018, Ryanair stated that the challenging pricing environment is expected to continue, which the Group hopes to tackle by boosting passenger traffic and further reducing unit costs. The management also said at its Analyst's conference call that it expects load factor to stabilise at around 93% to 93.5%, going forward. The Group has hedged over 85% of FY2018 fuel at an average price of US$49bbl which is set to deliver fuel savings of c.€65m in coming year. We are encouraged by the Group's ability offering lower fares while still retaining its net profit guidance. The key differences for Ryanair is its capability to continue lowering its unit costs, while delivering "lowest passenger costs" amongst its EU peers, at the time of +18% traffic growth and when competitors are "forecasting flat or rising" costs. This gap between Ryanair and its rivals will enable Group to maintain momentum and continue winning market share. In view of this, Beaufort retains its Buy rating on Ryanair.

Important Risk Warnings and Disclaimers 

This report is published by Beaufort Securities Ltd ("Beaufort Securities"). Beaufort Securities Ltd is Authorised and Regulated by the Financial Conduct Authority and is a Member of the London Stock Exchange. 


This document is not an offer to buy or sell any security or currency. This document does not provide you with individually tailored investment advice. It has been prepared without regard to the your financial circumstances and objectives The appropriateness of a particular investment or currency will depend on your individual circumstances and objectives. The investments and shares referred to in this document may not be suitable for you. 

This research is non-independent and is classified as a Marketing Communication under FCA rules. As such it has not been prepared in accordance with legal requirements designed to promote independence of investment research and it is not subject to the prohibition on dealing ahead of the dissemination of investment research in COBS 12.2.5. However Beaufort Securities has adopted internal procedures which prohibit analysts from dealing ahead of non-independent research, except for legitimate market making and fulfilling clients' unsolicited orders. 

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