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Northland Capital Partners View on the City ValiRx, Craneware, Action Hotels

Northland Capital Partners View on the City ValiRx, Craneware, Action Hotels

ValiRx Plc (LON:VAL) – CORP: VAL 401 update
Market Cap: £10.9m; Current Price: 36p

ValiRx initiates preparations for Phase 2b clinical trial of VAL401
ValiRx announced that it has initiated preparations for a Phase 2b clinical trial of its lung cancer drug, VAL401—the company’s second clinical candidate.
 A clinical trial contract has been established between ValiSeek and Clinical Accelerator, a UK-based clinical trial management organisation, to manage and execute a Phase 2b Clinical Trial in patients with non-small-cell lung adenocarcinoma.
 The trial will be designed to assess the treatment’s:
1. effectiveness (as observed by measurements of disease progression, quality of life and survival);
2. pharmacokinetics; and
3. safety and tolerability.

NORTHLAND CAPITAL PARTNERS VIEW: ValiRx’s appointment of Clinical Accelerator is instrumental in seeking a fast-track of VAL401 into Phase 2b trials. VAL401 is a novel reformulation of a generic drug which has over twenty years of clinical use in the treatment of mental disorders. As such, the drug’s safety profile is well established. ValiRx is now reformulating the drug for the treatment of lung cancer, given strong pre-clinical data supporting this new indication. 

Vadim Alexandre +44 (0)20 7382 1134
[email protected]

Craneware (LON:CRW): FY pre-close
Market Cap: £175.7m; Current Price: 655p

Further growth in revenue visibility
 Total value of contracts signed of $72.5m (FY14: $71.0m) but given the company’s revenue recognition policy, the bulk of the revenue of these sales has not been recognised and FY revenue is expected to be between $44.5m and $45m (consensus $48m), representing 4.5% to 5.6% growth. Adj. EBITDA expected to be between $14.0m and $14.5m, up 6.9% to 10.7% (consensus $13.8m).
 Renewals in the year above 100% with strong cash generation resulting in year-end cash above $40m (FY14: $32.6m).
 FY results due 8th September.
NORTHLAND CAPITAL PARTNERS VIEW: Slightly pedestrian pre-close with 2% growth in total contracts signed and c. 5% growth in reported revenue reflecting the company’s conservative revenue recognition policy. This means that the company has good revenue visibility over a three year period – at the interim stage this stood at $119.9m with $98.0m ‘Revenue under Contract’, $20.1m ‘Renewal Revenue’ and $1.8m of ‘Other Recurring Revenue’. Renewal rates remain strong with customers expanding their deployments and the company remains well capitalised. The US healthcare market also looks more stable following the recent Supreme Court ruling in favour of Obamacare. Shares continue to trade at the upper of the sector at 26.8x FY15 and 23.3x FY16.

David Johnson +44 (0)20 7382 1130
[email protected]

Action Hotels (LON:AHCG): TRADING
Market Cap: £83m; Current Price: 56.5p

On track to meet expectations
 Revenue was +11% YoY to $22m in 1H FY15 on the back of the group delivering occupancy levels above 80%. The ibis Salmiya Kuwait and ibis Sharq Kuwait performed particularly strongly with occupancy levels of 88% and 90% respectively. As a result, EBITDA was +14% to $8.7m YoY.
 The outlook looks positive. In addition to recently announcing the acquisition of the 73 room ibis hotel near Melbourne airport in Australia establishes the ninth hotel and 1,561 rooms. The development pipeline is on track to deliver a further three hotels before the end of 2015.
 In May management alluded to a positive start to the new year where 1Q15 started well and where ADR was +3% YoY to $111, revenue was +22% compared to the same period in the prior year. Consensus is looking for c. $15m of EBITDA for FY15 so given the $8.7m of EBITDA produced in the 1H15 forecasts look well underpinned in our view.

NORTHLAND CAPITAL PARTNERS VIEW: The business is trading well and with the hotel portfolio expanding and key partnerships in place, management appears on track to deliver on its goal of 16 hotels and 2,820 rooms by 2017. The stock currently trades on at a c. 49% discount to Adj. NAV per share of 84p and offers a dividend yield of c. 3.2% to investors.

1. Northland Capital Partners Limited (“Northland”) acts as Nominated Advisor and/or Broker to the company.

2. Northland) and/or its affiliates companies do beneficially own 1% or more of any class of the issuer’s equity securities, as of the end of the month immediately preceding the date of issuance of the research report or the end of the second most recent month if the issue date is less than 10 calendar days after the end of the most recent month. 

3. The authoring analyst or any associate of the authoring analyst does maintain a long or short position in any of the issuer’s securities directly or through derivatives, including options or futures positions.

4. Northland, its affiliated companies, partners, officers, directors or any authoring analyst of Northland has provided services to the issuer for remuneration during the preceding 12 months other than investment advisory or trading services.

5. Northland or any of its affiliated companies has performed investment banking services for the issuer during the 12 months preceding the date of issuance of the report.  

6. A partner, director, officer, employee or agent of Northland or any of its affiliated companies is an officer, director, employee or advisor of the issuer.  Disclosures are applicable for all companies

7. The authoring analyst, or any associate of the authoring analyst, has viewed the material operations of the issuer. 

8. The authoring analyst, or any associate of the authoring analyst, received reimbursement for travel expenses.

9. Northland makes a market in the securities of this company.

 

 

DISCLAIMER

This document is provided solely to enable clients to make their own investment decisions. It may therefore not be suitable for all recipients and does not constitute a personal recommendation to invest. It does not constitute an offer or solicitation to buy or sell securities or instruments of any kind. If you have any doubts about the suitability of this service, you should seek advice from your investment adviser. This document is produced in accordance with UK laws and regulations. It is not intended for any person whose nationality or residential circumstances may render its receipt unlawful.

The past is not necessarily a guide to future performance. The value of shares and the income arising from them can fall as well as rise and investors may get back less than they originally invested. The information contained in this document has been obtained from sources which Northland Capital Partners Limited believes to be re¬li¬able. The Com¬pany does not warrant that such information is accurate or complete. All estimates and prospective figures quoted in this report are forecasts and not guaranteed. Opinions included in this report reflect the Company’s judgement at the date of publication and are subject to change without notice. If the investment(s) mentioned in this report are denominated in a currency different from the currency of the country in which the recipient is a resident, the recipient should be aware that fluctuations in exchange rates may have an adverse effect on the value of the investment(s). The listing requirements for securities listed on AIM or PLUS markets are less demanding, also trading in them may be less liquid than main markets.

Northland Capital Partners Limited and/or its officers, as¬sociated entities or clients may have a position, or other material interest, in any securities men¬tioned in this report. Northland Capital Partners Limited does not provide recommendations on securities of firms with which it has a corporate relationship. More information about our management of Conflicts of Interest, Investment Research Methodology & Definition of Recommendations can be found at www.northlandcp.co.uk 

Northland Capital Partners Limited is authorised and regulated by the Financial Conduct Authority and a Member of the London Stock Exchange.

Published by/copyright: Northland Capital Partners Limited, 2013. All rights reserved

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