Today's edition features:
• Amryt Pharma (LON:AMYT)
• Savannah Resources (LON:SAV)
• Inspired Energy (LON:INSE)
"That’s eight consecutive days of declines for the Dow Jones – the index’s longest losing streak since 2011. Not that yesterday evening’s moves by the three principal US indices were anything like as shocking as might have been expected following the White House’s withdrawal of its Healthcare-reform Bill. Ending mixed, with the NASDAQ even managing to tick into the positive, equities rallied sharply from opening losses of around 0.8% that had been set by the futures, to close with just fractional movements across the board. Investors appear surprising forgiving in fact, given the steepening of the path toward tax overhaul and infrastructure spending now presented by President Trump’s seemingly unruly GOP membership. All the more so, given the Fed’s Charles Evans suggestion that 2017 could see as many as four rate hikes should inflation be seen to spike. Falls were led by Banks, Miners and Oils, some of the best ‘Trump-trade’ performers, as investors pondered whether that they might be waiting rather longer than hoped for delivery of meaningful financial deregulation and US$-denominated risk in commodity/base metal prices was also lightened. Iron ore in particular was hurt by new financing curbs designed to burst the Chinese housing bubble, while Gold, the default trade during times of uncertainty, bounced to a one-month high. Winners, on the other hand, included healthcare stocks as it became clear that Obamacare would be in place for rather longer than expected. Oil failed to react to OPEC’s warning to its members who may be cheating on agreed production cuts, with WTI futures trading down 0.6% yesterday as traders concluded higher US production volumes should more than take up any slack unless, that is, the cartel can do convincingly more than just roll-over current actions; a final decision is due to be taken on May 25th. The US$ itself, perhaps the most direct barometer of Trump’s administration similarly recovered from lows touched during the European session. 10-year Treasury yields bottomed at 2.367% from 2.396% on Friday before recovering half of their losses while, elsewhere their German counterparts fell more sharply to 0.384% from 0.429%, even as Germany's Ifo business sentiment index hit its highest since July 2011. This helped limit the STOXX Europe 600’s fall-out yesterday, while London hurt rather more, falling to a 1-month low, with a broad sell-off of miners saw them take the largest hits. Relief was tangible across Asia this morning, helped by oil recovering partially during the session, with the ASX putting in a good gain, while Japan and Hang Seng recovered most of yesterday’s losses, leaving just the Shanghai Composite nursing a modest fall. The UK is not scheduled to release any significant macroeconomics today, nor is the EU, although the US provides a flood of data, rangings from February Wholesale Inventories, Goods Trade Balance, Richmond Fed Manufacturing Index plus March Consumer Confidence and the weekly Redbook numbers. There are numerous speeches also scheduled from Fed and FOMC Members, including from Ester George, Robert Kaplan and Jerome Powell, with the Fed Chair herself scheduled to speak at 16:50hrs GMT. There is a long list of UK corporates due to release earnings or trading updates this morning, including Wolseley (WOS.L), Carnival (CCL.L), United Utilities (UU..L), AA (AA..L), Ladbrokes (LCL.L), Thomas Cook Group (TCG.L), and Time Out (TMO.L). Taking its opening hint from the overnight markets London is also expected to participate in the relief rally this morning despite the imminence of Theresa May invoking Article 50. The FTSE-100 is seen rising around 28 points in early business. "
- Barry Gibb, Research Analyst
Markets
Europe
The FTSE-100 finished testerday's session 0.59% lower at 7,293.50, whilst the FTSE AIM All-Share index lost 0.10% to stand at 916.95. In continental Europe, the CAC-40 finished down 0.07% at 5,017.43 whilst the DAX was 0.57% lower at 11,996.07.
Wall Street
In New York last night, the Dow Jones fell 0.22% to 20,550.98, the S&P 500 slipped 0.1% to 2341.59 and the Nasdaq gained 0.2% to 5840.38.
Asia
In Asian markets this morning, the Nikkei 225 had risen 1.01% to 19,177.3, while the Hang Seng rose 0.53% to 24,321.66.
Oil
In early trade today, WTI crude was up 0.57% to $48.00/bbl and Brent was up 0.45% to $50.98/bbl.
Headlines
Tesco fined £129m for overstating profits
Tesco has agreed to pay a fine of £129m to avoid prosecution for overstating its profits in 2014. The supermarket giant has reached a deferred prosecution agreement with the Serious Fraud Office (SFO) after a two-year investigation. The SFO said Tesco had co-operated with the investigation and had undergone an "extensive" period of change. Tesco also said it had accepted a finding of "market abuse" from the Financial Conduct Authority. It says it will compensate investors who bought shares or bonds between 29 August and 19 September, which Tesco estimates will cost it about £85m.
Source: BBC News
Company news
Amryt Pharma (LON:AMYT, 19.23p) – Speculative Buy
Amryt Pharma (‘Amryt’), the pharmaceutical company focused on best-in-class treatments for rare and orphan diseases, yesterday announced the appointment of new Chief Commercial Officer (non-board), David Allmond, effective from 3 April 2017. Mr. Allmond has over 20 years' experience in the pharmaceutical industry in commercial roles. He joins the Company from Aegerion Pharmaceuticals (subsidiary of Novelion Therapeutics) where he was President of EMEA and, in particular, involved in the commercialisation of Lojuxta (lomitapide), the drug used to treat Homozygous Familial Hypercholesterolemia (‘HoFH’), approved in the EU since 2013. Amryt acquired the exclusive rights to sell Lojuxta across the EU, MENA (Middle East and North Africa), Turkey and Israel in December 2016. Prior to Aegerion, Mr. Allmond was Corporate Vice President of Global Marketing for Celgene Corporation where he was responsible for EMEA marketing and market access within Celgene. Prior to Celgene, he was Director of Sales and Marketing Effectiveness at Amgen Ltd. Amryt’s CEO, Joe Wiley, commented “We are pleased to welcome David to Amryt. David will resume control of the Lojuxta team and is the ideal person to take on responsibility for the commercial development of this business. We remain very excited about the potential to increase the numbers of patients on treatment in existing markets and also to open new markets within our territories”. Amryt is expected to announce its full year result on 30 March 2017.
Our view: Building out the key management team to meet its commercial opportunities. This is a key appointment, as the new CCO was involved in the commercialisation of Lojuxta at Aegerion. Mr. Allmond, together with Amryt’s Chief Medical Officer, Dr. Mark Sumeray (previously a Chief Medical Officer at Aegerion led the clinical development and regulatory approval of the drug), will significantly boost the knowledge and accelerate commercial development of Lojuxta through building further commercial, medical and regulatory infrastructure necessary to support sales expansion. HoFH is a very rare, genetic disorder which starts in utero and causes premature cardiovascular disease. Historically, HoFH was estimated to occur in about 1 in 1 million people worldwide, but more recent studies suggest it may affect up to 1 in 300,000 people. The Group’s total licensed market for Lojuxta for HoFH indication is estimated at €50m and in Q3 2016, Aegerion generated US$22m in net product sales of lomitapide, of which, 15% was from prescriptions written outside of the US. Of this, 30% comes from Brazil and 70% was from the territories now being licensed to Amryt. With currently available treatment showing limited efficacy for some patients in controlling their LDL cholesterol (“bad” cholesterol) levels, there is significant potential for the Lojuxta to become a mainstay treatment for patients, having showed a 40-50% reduction in LDL cholesterol at 26 weeks after dosage during Phase 3 clinical trial, following which it remained stable at 126 weeks. Successful commercialisation Lojuxta will enables Amryt to generate material cash flows, while completing a further step toward its transformation into a fully-integrated sustainable and, commercial pharmaceutical Company. Beaufort considers Amryt to be significantly undervalued on the basis of commercial opportunity, prospective cashflow and peer group comparison and retains a Speculative Buy rating on the shares.
Beaufort Securities provides Investor Relations services to Amryt Pharma plc
Savannah Resources (LON:SAV, 5.25p) – Speculative Buy
Yesterday, Savannah released its maiden resource estimate for the Ravene deposit in Mozambique, which forms part of the Mutamba mineral sands project being explored by Savannah and Rio Tinto through the Consortium Agreement signed on 11 October 2016. The Group reported an Inferred resource category of 900Mt grading 4.1% total heavy minerals (THM, comprising ilmenite and zircon but excluding rutile), including a high grade portion containing 92Mt grading 6.2% THM. As a result, the total resource for Mutamba project now stands at 4.4Bt grading 3.9% THM, representing a 26% increase in the total resource and an 8% increase in the grade.
Our view: We are encouraged with the maiden resource from Ravene especially the high-grade portion containing 92Mt grading up to 6.2% THM. This has helped push up the overall grade by 8% and will be the primary focus within the scoping study which is currently underway and is expected to be completed in the coming weeks. The new resource will be incorporated the scoping study which is currently underway. On aggregate, the Mutamba resource compares favourably with other major African based mineral sand deposits. We look forward to completion of the scoping study, in the meantime we maintain a Speculative Buy rating on the stock.
Beaufort Securities acts as Corporate Broker to Savannah Resources Plc
Inspired Energy (LON:INSE, 16.75p) – Speculative Buy
Inspired Energy, a leading energy procurement consultant to UK corporates, yesterday announced results for the 12 months ended 31 December 2016 (‘FY2016’). During the period, revenue surged +42% y-o-y to £21.5m and gross profit increased +50% y-o-y to £17.3m. Pre-tax profit gained +15% to £4.0m, resulting in basic EPS of 0.73p, up +9%. On an adjusted basis, EBITDA rose +45% to £8.26m and adjusted pre-tax profit soared +38% to £7.0m, leading EPS to grew by +27% to 1.27p. Cash generated from operations increased +83% to £5.0m, while net debt widened by 21% to £10.8m. On the operational front, Inspired Energy acquired Informed Business Solutions Limited in September 2016, which is now fully integrated. Inspired Energy’s CEO, Janet Thornton, commented “The investment we have made in people, acquisitions and technology over the past years has allowed us to develop into a market leader in our industry and to provide best in class services to our customers. Our model of strong organic growth with selected, complimentary acquisitions is proven and we look forward to 2017 with confidence”. The Group declared a final dividend of 0.32p, bringing full year dividend to 0.45p per share, up +29%, to be paid on 13 July 2017.
Our view: Inspired Energy performed strongly during the FY2016, delivering its 6th consecutive year of record revenue and profits. The Group’s Corporate division achieved number of new business wins and renewals (renewals at 85%) in both commercial and public sectors, with key client including; Victrex Plc, Travis Perkins Plc, Westminster CC and Metropolitan Housing Trust. This has supported strong organic growth with a record procurement corporate order book of £28.0m at the period end, up 14% year-to-date. The Group’s SME division continues to provide material cash generation, delivering strong and consistent performance within the Group. Management noted it is now seeking to modestly increase headcount in the division to drive further growth in the short to medium term, following a year in which the strategic decision had been taken to maintain, rather than increase, headcount. Post period, the Group confirms that current trading has been positive with momentum seen in 2016 continuing into the current year. The Group’s record procurement corporate order book, together with encouraging client retention means organic growth remain strong, while further selective acquisition will boost the Group's customer base and broaden its presence across the different markets. The shares are currently valued at FY2017E and FY2018E P/E multiple of 12.1x and 11.3x, along with dividend yield of 2.9% and 3.5%, respectively. In light of the positive progress, Beaufort reiterate its Speculative Buy rating on the shares.