Small Cap Feast

Small Cap Feast – 17 December 2018

Set Menu AIM:

Total number of AIM Companies (Incl Susp): 921

Total number of AIM Companies trading: 851*
* As at 06 December 2018

Set Menu NEX Growth:

Total number of NEX Growth Market Companies (Incl Susp): 89*

Total number of NEX Growth Market Companies trading: 87*
* As at 06 December 2018

Set Menu Standard List:

Total number of Standard List Companies (Incl Susp): 139*

Total number of Standard List Companies trading: 130*
* As at 06 December 2018

Dish of the Day:

No Joiners Today

Off the Menu:

No Leavers Today

Dish of the Day:

No Joiners Today

Off the Menu:

No Leavers Today

What’s Cooking in the IPO Kitchen?

Main Market (Specialist Funds)

The Global Sustainability Trust -aiming for attractive risk-adjusted returns by investing primarily in private market investments that are expected to have a positive environmental and social impact raising c.£200m. Due 31 Jan 2019.

AIM

PetroTal Corp is an oil and gas company whose shares are currently admitted to trading on the TSXV. The Company is focused on development of oil and gas assets in Peru and it currently has controlling interests in three onshore Peru license blocks. No new funds being raised.  Due 21 Dec.  Mkt cap c.£80m

Litigation Capital Management—provider of litigation financing and ancillary services, moving from ASX (ASX:LCA) to AIM. Offer raising £20m at 52p.  Due 19 Dec. Mkt Cap £56.5m.

Greenfields Petroleum (TSX-V:GNF)  production focused company with operated assets in Azerbaijan seeking AIM dual listing including $60m private placement. Mkt cap $12.6m CAD. Expected mid December.

 

Breakfast Buffet

PureTech Health (PRTC.L) 178p £502m

The “advanced biopharmaceutical company developing novel medicines for dysfunctions of the Brain-Immune-Gut (BIG) Axis, is pleased to note that Vedanta Biosciences announced the initiation of a Phase 2 study of VE303, the Company’s lead, orally-administered, live biotherapeutic product (LBP) candidate for recurrent Clostridium difficile infection (rCDI). Vedanta Biosciences’ pipeline comprises two clinical-stage programmes, including the recently announced Phase 1 study of VE202 with Janssen Biotech, Inc. for inflammatory bowel disease (IBD), and the Company expects to initiate two additional studies in 2019.

“We are pleased with the progress Vedanta Biosciences has made across its pipeline of microbiome-derived live biotherapeutic product candidates, and we look forward to the initiation of two additional clinical trials in the coming months.”

 

Georgia Healthcare (GHG.L) 224p £289m

Completion of the construction of Mega Laboratory (“Mega Lab”), the largest diagnostics laboratory in Georgia as well as in the entire Caucasus region. Mega Lab will be formally opened today. 

The multi-disciplinary laboratory, equipped with the most up-to-date infrastructure and state-of-the-art equipment, covers 7,500 square metres. High-capacity automated systems will enable GHG to provide accurate, high quality results for the country’s whole population. The laboratory will cover a full set of clinical and pathology tests, some of which are being introduced in the region for the first time.

The high technology unified laboratory will collect samples, initially from the Group’s hospitals and polyclinics throughout Georgia. The test results will be distributed automatically to each hospital and polyclinic within the Group, through internal Laboratory Information Management System (LIMS), enabling us to be significantly more efficient and provide a reliable service to our patients.”

 

Physiomics* (PYC.L) 4.15p £2.98m

“Physiomics announced that, following a successful collaboration this year and pursuant to the Master Services Agreement signed with Merck, a leading science and technology company, in Nov 2017, it has agreed with its client a program of work for the next calendar year.  Physiomics and Merck have entered into contracts with a total value of £435,000 for projects that are envisaged to be completed during calendar 2019, and which will span a range of drug targets and treatment types in both pre-clinical and clinical settings.

In its 2018 program of work with Merck, Physiomics believes it has developed genuinely ground-breaking predictive models that will add significant value to drug development programmes. The two companies have provisionally agreed that they will aim to publish selected elements of their work at one or more major conferences in 2019.”

 

Verona Pharma (VRP.L) 97.5p £102.6m

The “clinical stage biopharmaceutical company focused on developing and commercialising innovative therapies for respiratory diseases, announced the initiation of a Phase 2 clinical trial to evaluate the pharmacokinetic (“PK”) profile, efficacy and safety of a dry powder inhaler (“DPI”) formulation of RPL554 in patients with moderate to severe chronic obstructive pulmonary disease (“COPD”).

RPL554 is a first-in-class, inhaled, dual inhibitor of the enzymes phosphodiesterase 3 and 4 designed to have bronchodilator as well as anti-inflammatory properties, and is currently in development for the maintenance treatment of COPD, cystic fibrosis (“CF”) and asthma.

This randomized, double-blind, placebo-controlled, two-part study with the DPI formulation, being conducted at one site in the US, will enrol approximately 36 patients with COPD. The primary objective of the first part of the study is to evaluate the PK profile following a single dose of RPL554 when administered by DPI.”

 

Plexus Holdings (POS.L) 48.5p £51.1m

Investment of £735,000 in cash to acquire a 49% interest in Kincardine Manufacturing Services Limited (‘KMS’), a specialist precision engineering business with a blue-chip customer base, producing a variety of parts for the oil and gas sectors

KMS provides Plexus with future access to machining capability which can support R&D development projects to provide potential licensees with alternative applications of POS-GRIP® technology.

In the year to 31 Dec 2017, KMS generated revenues of £3.4m (2016:  £2.6m) and profit before tax of £323k (2016: loss £185k).  As at 31 Dec 2017, KMS had gross assets of £1.6m (2016: £1.4m)

 

Total Produce (TOT.L) 125p £484.79m

Total Produce announced that Dole Food Company has entered into an agreement to sell Saba Fresh Cuts AB and Saba Fresh Cuts OY to BAMA International which is headquartered in Oslo, Norway.

The sale of Saba Fresh Cuts AB was a condition of the European Commission’s approval of the acquisition by Total Produce of a 45% equity stake in Dole in July 2018.

Saba Fresh Cuts AB, with a production facility in Helsingborg Sweden and Saba Fresh Cuts OY, with a production facility in Espoo Finland are producers of washed and ready-to-eat salads.

 

K3 Business technology (KBT.L) 223p £97m

K3, which provides mission‐critical business software, cloud solutions and managed services to the retail, manufacturing and distribution sectors, provided an update on trading for the financial year to 30 Nov 2018.

The benefits of the changes made to reposition the Group for a return to profitable growth continue to flow through. Trading in the second half of the financial year has been encouraging and the Board expects to report full year results that are slightly ahead of market expectations. This includes a reduction in the Group’s net debt position at the year end to approximately £0.7m (30 Nov 2017: net debt of £4.3m). This improvement reflects the reduced cost base and better working capital management.

Consensus forecasts for FY2018E shows revs of £86m and EBITDA of £7.9m.

 

AppScatter (APPS.L) 19.5p £17.42m

“The intelligent app management platform, announced that it has signed an agreement to acquire 100% of the share capital of Abilott Limited for an initial consideration of £1.245m, and a potential further consideration of up to £1m”.

Abilott provides digital security solutions, specialising in companies who are launching new products or seeking to become a gaming operator or expanding into new global territories. Customers include Gamesys, Paddy Power, Betfair, Virgin Games, Bodog.

Abilott has been working closely with appScatter for the last two years providing Security & Regulatory Compliance for the Group and supporting appScatter threat analysis products for appScatter customers.

For the year ending 30 Sept 2017, Abilott generated revenue of £1.5m and a loss before tax of £170,998. Abilott had net liabilities at 30 Sept 2017 of £217,544.

 

Asos (ASC.L) 2,486p £3,510m

ASOS announced a trading update for the first three months of the financial year. Although we delivered solid growth in sales of 14%, we experienced a significant deterioration in the important trading month of November and conditions remain challenging. As a result, we have reduced our expectations for the current financial year. 

Revised guidance for the current financial year to August 2019:

Sales growth: c.15% (previously +20-25%)

Retail gross margin: c.-150bps (previously flat at 49.9%)

EBIT margin: c.2% (previously c.4%)

Capital expenditure re-phased down to c.£200m

 

Horizon Discovery (HZD.L) 168.5p £253m

Horizon Discovery Group, a global leader in the application of gene editing and gene modulation technologies, announced that it has entered into an exclusive target discovery partnership with C4X Discovery Holdings plc (AIM: C4XD), a pioneering drug discovery company. The partnership aims to validate the novel synthetic lethal oncology targets that Horizon has identified using its cutting-edge CRISPR-Cas9 technology, with C4XD then using its proprietary 4D shape-based chemistry technology (Conformetrix) to discover pre-clinical drug candidates. The partnership has been formed to deliver potential new drugs for patients with limited effective treatments such as colorectal and lung cancer.

 

Head Chef:

Derren Nathan
0203 764 2344
derren.nathan@hybridan.com

*A corporate client of Hybridan LLP

Disclaimer

This document, which does not constitute research, has been issued by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to any such action. This document has no regard for the specific investment objectives, financial situation or needs of any specific person or entity and is not a personal recommendation to any such person or entity. Recipients should reach an individual investment decision, based upon their respective financial objectives and financial resources and, if any doubt, should seek advice from an investment advisor.

The information contained in this document is based on materials and sources that are believed to be reliable; however, such information has not been independently verified and therefore it is not possible to confirm such information as being accurate. This document is not intended to be a complete statement or summary of any securities, markets, reports or developments referred to herein. No representation or warranty, either express or implied, is made or accepted by Hybridan LLP, its members, officers, employees, agents or associated undertakings in relation to the accuracy, completeness or reliability of the information contained in this document, nor should it be relied upon as such.

The content of this document includes market commentary and other information which we have prepared in relation to the company referred to in this document, which is our broking client. The provision of this document to you constitutes a minor non-monetary benefit which is capable of enhancing the quality of service provided by Hybridan LLP and which is of a scale and nature which could not be judged to impair the duty of Hybridan LLP to act in the best interest of its client falling within article 24(7)(b) of Regulation 600/2014/EU (MIFID II Regulation).

Any and all opinions expressed are current as of the date appearing on this face of this document only. Any and all opinions expressed are subject to change without notice and Hybridan LLP is under no obligation to update the information contained herein. To the fullest extent permitted by law, none of Hybridan LLP, its members, officers, employees, agents or associated undertakings shall have any liability whatsoever for any direct or indirect or consequential loss or damage (including lost profits) arising in any way from use of all or any part of the information in this document.

This document should not be relied upon as being an independent or impartial view of the subject matter and, for the avoidance of doubt, constitutes non-independent research (as such term is defined in the Financial Conduct Authority’s Conduct of Business Sourcebook to reflect the requirements of the MIFID II Regulation and Directive 2014/65/EU (known as MIFID II)). The individuals who prepared this document may be interested in shares in the company concerned and/or other companies within its sector, may be involved in providing other financial services to the company or companies referenced in this document or to other companies who might be said to be competitors of the company or companies referenced in this document. As a result both Hybridan LLP and the individual members, officers and/or employees who prepared this document may have responsibilities that conflict with the interests of the persons who receive this document. Hybridan LLP and/or connected persons may, from time to time, have positions in, make a market in and/or effect transactions in any investment or related investment mentioned herein and may provide financial services to the issuers of such investments.

In the United Kingdom, this document is directed at and is for distribution only to persons who (i) fall within article 19(5) (persons who have professional experience in matters relating to investments) or article 49(2) (a) to (d) (high net worth companies, unincorporated associations, etc.) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (SI 2005/1529) (as amended) or (ii) persons who are each a professional client or eligible counterparty (as those terms are defined in the Financial Conduct Authority’s Conduct of Business Sourcebook) of Hybridan LLP (all such persons referred to in (i) and (ii) together being referred to as relevant persons). This document must not be acted on or relied up on by persons who are not relevant persons. For the purposes of clarity, this document is not intended for and should not be relied upon by any person who would be classified as a retail client under the Financial Conduct Authority’s Conduct of Business Sourcebook.

Neither this document, nor any copy of part thereof may be distributed in any other jurisdictions where its distribution may be restricted by law and persons into whose possession this document comes should inform themselves about, and observe, any such restrictions. Distribution of this report in any such other jurisdictions may constitute a violation of territorial and/or extra-territorial securities laws, whether in the United Kingdom, the United States or any other jurisdiction in any part of the world.

Where possible this document is made available to all relevant recipients at the same time. Dissemination of research by Hybridan LLP is monitored to ensure that it is only provided to relevant persons. Research prepared by Hybridan LLP is not intended to be received and/or used by any person who is a retail client.

Hybridan LLP and/or its associated undertakings may from time-to-time provide investment advice or other services to, or solicit such business from, any of the companies referred to in this document. Accordingly, information may be available to Hybridan LLP that is not reflected in this material and Hybridan LLP may have acted upon or used the information prior to or immediately following its publication. In addition, Hybridan LLP, the members, officers and/or employees thereof and/or any connected persons may have an interest in the securities, warrants, futures, options, derivatives or other financial instrument of any of the companies referred to in this document and may from time-to-time add or dispose of such interests.

This document may not be copied, redistributed, resent, forwarded, disclosed or duplicated in any form or by any means, whether in whole or in part other than with the prior written consent of Hybridan LLP.

MIFID II status of Hybridan LLP research
The cost of production of our corporate research is met by retainers from our corporate broking clients. In addition, from time to time we issue further communications as market commentary (such as our daily newsletter, Small Cap Breakfast), which we consider to constitute a minor non-monetary benefit which is capable of enhancing the quality of service provided by Hybridan LLP and which is of a scale and nature which could not be judged to impair the duty of Hybridan LLP to act in the best interest of its client falling within article 24(7)(b) of the MIFID II Regulation.

Hybridan LLP is a limited liability partnership registered in England and Wales, registered number OC325178, and is authorised and regulated by the Financial Conduct Authority and is a member of the London Stock Exchange. Any reference to a partner in relation to Hybridan LLP is to a member of Hybridan LLP or an employee with equivalent standing and qualifications. A list of the members of Hybridan LLP is available for inspection at the registered office, 2 Jardine House, The Harrovian Business Village, Bessborough Road, Harrow, Middlesex HA1 3EX.

If you would like to unsubscribe, please email enquiries@hybridan.com with “unsubscribe me”.