Welcome to our new product “Friday Takeaway”
This will delve a little deeper on individual companies and focus on non-house stocks under £200m market capitalisation to help raise awareness
| Index | Thurs 31st Oct 2024 | Weeks change % |
|---|---|---|
| FTSE 100 | 8,110 | -1.9% |
| FTSE Small Cap | 6,836 | -0.9% |
| AIM All Share | 738 | +1.8% |
FDNK: Bleepa Funded
NEXS: Building up
ONC: Steady drugs
| Price | Results | Largest Shareholders | Value |
| 43/44p | Y/E: May | T Charlton 23% | Trade funding available |
| Spread: 2.3% | Report: Nov | Unicorn Am 18% | GP Margins 93% |
| 52 week High/Low: 150p/35.5p | Report Interims Feb | Octopus 13% | Net Cash c.£3m |
This loss-making medical infrastructure specialist is due to report finals its finals to May 2024 but since the year end, there has been a material improvement in its prospects. The significant new factor is that its Bleepa platform is eligible for reimbursement under the Diagnostic Enhanced Advice and Guidance (DEAG) Fund. Therefore, any of the 42 Integrated Care Boards (ICBs) or 219 Hospital Trusts in England will, with immediate effect, be able to use this funding to pay for Bleepa. This technology drives material efficiencies in service delivery and also has benefits to patients, who are spared multiple hospital attendances and an estimated 63% reduction in wait times.
This is a stepped change in FDBK’s commercial prospects as there is potential funding for all NHS patients, however the NHS procurement processes are protracted for novel technologies. The Trading Update for Y/E May expects turnover to be 15% higher at around £1.2m and the EBITDA loss to improve, after an increased Interim loss to £1.6m, and its gross profit margins are around 90%. FDBK believes that the Bleepa service could achieve up to 90% referrals using the DEAG approach, which would result in a significant revenue uplift. To accelerate the solutions delivery and increase scale, a strategic partnership has been formed with Moorhouse Consulting, which has 300 staff and was founded in 2004. Feedback estimates each ICB contract could generate over c. £2m per annum. A few ICBs are said to have already expressed interest in this Bleepa/ DEAG approach and this could start converting into contracts. The net cash at April 2024 was £4.3m out of the £11.2m funding in November 2021 at 140p share and while there is a case for further funding, it may not be needed.
Comment: After an initial rally to 64p, the shares have slipped back and seem good value at this level.
| Price | Results | Largest Shareholders | Value |
| 130/140p | Y/E: Sept | P Gyllenhammar 28% | EV/ EBITDA 2.3x |
| Spread: 7.7% | Report March | T Morris 19% | Yield 2.3% |
| 52 week High/Low:155p/67p | Report Interims May | Otus Capital 13% | Net Cash £9.2m |
Nexus provides essential infrastructure solutions such as earthworks, civil engineering and installing sustainable drainage systems to the UK housing sector. The recent trading update for the Y/E September 2024 expects to report a 23% increase in revenue to £56.7m, which is after a slower H2 than hoped, but reduced losses to £2.3m are in line with expectations.
Last year the group was restructured after and selling off two subsidiaries and returning £60m to shareholders. Management introduced improvements to processes and reduced costs in the ongoing business, Tamdown. Since the Y/E24, it has won new contracts worth around £15.9m and management is confident there will be a significant housing sector recovery. Also contributing to the Y/E25, will the recent acquisition of Coleman Construction & Utilities Ltd, a business founded in 2000. It will cost up to £5.38m and is expected to be immediately earnings enhancing. The initial payment is £3.1m and further payments are triggered by finalising accounts and performance related.
Coleman Construction & Utilities is experienced in key sectors not currently covered by Nexus, including water, rail, highways, and rivers & marine and makes a compelling strategic fit. It brings highly complementary services with the benefit of longer-term contracts, so will be less vulnerable to short-term fluctuations and delays. Nexus are continuing to review acquisition opportunities in key national infrastructure sectors. The balance sheet remains strong after the acquisition with cash and cash equivalents of c. £9.8m and it expects to pay a final dividend of 3p for a 2.3% yield. The EBITDA/EV is a lowly 2.3x.
Comment: There is political support to address the UK's housing shortage and the acquisitive NEXS seem well placed to benefit.
| Price | Results | Largest Shareholders | Value |
| 14.6-16.4p | Y/E: August | Balderton Capital 8.5% | Revenue Growth |
| Spread: 12.3% | Report Feb | RS Sharp 7.1% | Loss decreasing |
| 52 week High/Low: 30p/9.35p | Report Interims May | Credit Suisse 5.7% | Net Cash c. £2m |
Oncimmune made a second trading update in two months on the commercial progress from this autoantibody profiling and research services to the pharmaceutical and biotechnology industries. The senior management team have been in place for over a year and the Interims to February reported £1.19m revenue, which was more than the previous full year. It is evidence of the benefits from the reset strategy made last October, after it sold-off a division for £13m. It has become a precision medicine company, specialising in analysing immune interactions through the autoantibody profile and expects to deliver around £3m of revenue for August FY24. The service helps its partners to discover novel biomarker drug targets and to predict efficacy by using the platform, so reducing the cost of discovering new drugs.
The second Trading update reported three new contracts for a total value of £0.34m, which is a continuation of the positive traction previously announced when contracts worth £2.14m were signed. Two of the newest contracts are in a new area with an existing Top 10 pharma client. The third contract utilises a technological breakthrough, announced on 9 August 2024, and is also with a Top 10 Pharma company. This is validating the strategy to focus on the autoantibody profiling platform. In October 2024, £2.15m was raised at 15p to support development. These new contracts do not change expectations for FY2025, but also give visibility of over 40% of the £6.9m
Comment: The heavy lifting seems to be done and the price is set for a steady recovery.
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