ValiRx Plc (LON:VAL) Company profile
Market Cap: £10.2m; Current Price: 26.5p
Lower risk drug development model
- ValiRx takes a lower-risk/high-return approach to cancer drug development. The company specialises in targeted oncology therapeutics and diagnostics, creating value by out-licensing drug candidates early in the development process. By this strategy, the company sidesteps the risk of costly failures in late-stage clinical trials. Outsourcing much of its drug development work to contract research organisations also gives the company flexibility, allowing for the quick termination of any struggling research programmes.
- We expect ValiRx to deliver its first clinical trial readout in Q1-2016: namely that of the company’s most advanced development product, VAL201, for the treatment of prostate cancer. VAL201 is currently undergoing clinical testing in a Phase 1/2 study to assess the safety and tolerability of the treatment in patients with locally advanced or metastatic prostate cancer. Prostate cancer remains a major unmet medical need. VAL201 has been shown pre-clinically to treat hormone-dependant and refractory prostate cancer. Positive data from this flagship clinical trial would likely result in a significant re-rating of the company’s share price.
NORTHLAND CAPITAL PARTNERS VIEW: With a strategy of outsourcing research and out-licensing drug candidates early, ValiRx aims to sidestep potential costly clinical trial failures. We expect ValiRx to deliver its first clinical trial readout in Q1-2016.
Savannah Resources (LON:SAV) – CORP*: Oman update
Market Cap: £5m; Current Price: 2p
Drilling commences at Block 4
- Savannah Resources has commenced a 10 holes (965m) reverse circulation drill programme to test VTEM and historical copper occurrences at the Aarja, Gaddamah prospects and VTEM Targets #4 and #13 in the Block 4 permit area in Oman.
NORTHLAND CAPITAL PARTNERS VIEW: The drill programme at Block 4 holds much promise for Savannah Resources. The Company has defined a series of greenfield targets based on VTEM anomalies, as well as a series of brownfield targets where evidence of mineralisation has historically been demonstrated. If positive, the brownfield drilling could rapidly lead to a compliant mineral resource. While a greenfield discovery would not only validate Savannah’s exploration methods, boding well for the testing of other greenfield targets, but also give the Company the opportunity to expand on its initial mineral resource estimate with further work.
Galasys (LON:GLS): Contract wins
Market Cap: £21.8m; Current Price: 28.5p
Further contract wins
- Two new contract wins in China with a total value of c. £505k.
- MT. Yandang, Zhejiang – contract with Zhejiang Shurong Travel Cultural Co for the provision of Galasys’s e-ticketing platform and membership module with a total contract value of RMB2.9m and 1-year after-sale services.
- Aerospace Theme Park – Galasys will provide its e-ticketing platform and membership module with a total accumulative contract value of c. RMB2m.
NORTHLAND CAPITAL PARTNERS VIEW: Steady flow of contract newsflow during 2015 as Galasys expands its presence in China and Southeast Asia, with September’s multi-year deal with Shanghai International Theme Park Company Limited and Shanghai International Theme Park Associated Facilities Company Limited the stand out feature. Disney is a shareholder in these companies (43% and 70% respectively) that are constructing the Shanghai Disney Resort, due for opening in 2016. Disney typically develops its own systems and the contract demonstrated the value of Galasys’s local knowledge and expertise.
Vertu Motors PLC (LON:VTU): Interims
Market Cap: £228m; Current Price: 67p
FY16 ahead of expectations
- As per the pre-close update in early September revenue was +14% to £1.2bn, though on a l-f-l basis +5.2% - a reflection of increases in vehicle sales and aftersales revenues. Volumes in commercial new vehicle sales were particularly strong at +24% YoY though from a lower base compared to other revenue streams, such as new vehicle and used vehicle sales and aftersales.
- The growth in revenue combined with a reduction in operating costs as a % of revenue and a reduction in corporation tax help boost after tax profits by c. 29% to £13m in the 1H16 and EPS followed suit +28% to 3.82p. Furthermore, cash generation in the 1H was strong and as a result the interim dividend has increased by 29% to 0.45p, ex-dividend on 24 December 2015.
- The outlook statement reads well in terms of the consumer backdrop and the business reports that private new vehicle sales were -3.3% YoY in September however new car profitability in September was a record month combined with a healthy performance in used vehicle sales and aftersales where l-f-l volumes were +5.4% YoY. The Board anticipates that results for the full year to February 2016 will be ahead of market forecasts. Consensus was looking for 5.5p of EPS for FY16 and given the strong 1H16 performance this looks very well underpinned.
NORTHLAND CAPITAL PARTNERS VIEW: We expect the shares to trade well today on the back of the positive news and outlook statement. The stock trades on c. 12x FY16 current consensus earnings falling to 11.2x FY17 earnings, however we expect forecasts for the business to increase which implies a lower entry multiple. The forecast dividend of 1.23p, which implies a yield of just below 2%, doesn’t appear overly attractive, however again given the strong 1H performance a final dividend of 0.78p for the 2H looks more than achievable in our view.