Caretech Holdings Plc

Caretech Holdings Plc (CTH) is a Health Care Equipment & Services company that provides stable, reliable and safe social care. The company’s management team includes professionals having experience in commercial, charities, health and social services sectors. The company provide services ranging from specialised residential care to high quality fostering agencies for young people and children.The company’s operations are divided into 4 reportable segments being Foster Care and Family Services, Mental Health, Young People Residential Services and Adult Learning Disabilities.

Trading Update
On 24^th October 2019, Caretech Holdings announced its full-year trading update ending 30^th September 2019. The company’s trading performance remained in line with expectations. The company’s acquisition of Cambian is on track and will bring synergies and operational improvements. Under CareTech's ownership, Cambian’s OFSTED quality ratings had improved. Overall CareTech business on all key metrics is performing well for the period.

Financial Highlights – H1 Financial Year 2019 (31^st March 2019, £, million)

(Source: Interim Report, Company Website)
 
In the first half of the financial year 2019, driven by a significant performance from the recently acquired Cambian business, the company's revenue increased by 120 per cent and stood at £192.5 million from £87.6 million in H1 FY2018. Driven by sales growth, its underlying EBITDA increased by 71 per cent to £33.3 million in H1 FY2019 from £19.5 million in H1 FY2018. The company’s underlying PBT (Profit before tax) surged by 50 per cent to £20.7 million in H1 FY2019 from £13.8 million in H1 FY2018. The company’s PBT declined by 19 per cent to £6.9 million in H1 FY2019 from £8.5 million in H1 FY2018. The underlying basic earnings per share were up by 7 per cent from 14.86 pence in H1 FY2018 to 15.82 pence in H1 FY2019. The earnings per share were down by 33 per cent from 8.62 pence in H1 FY2018 to 5.77 pence in H1 FY2019. An interim dividend in H1 FY2019 was at 3.75 pence versus 3.50 pence in H1 FY2018,an increase of 7 per cent.

Share Price Performance

Daily Chart as at October-25-19, before the market closed (Source: Thomson Reuters)

On 25th October 2019, Caretech Holdings Plc shares were trading at GBX 390.00 at the time of writing before the market close (at 9:49 AM GMT), down by 1.76 per cent against the previous day closing price. Stock's 52 weeks High and Low are GBX 410.00/GBX 309.00.

Valuation Methodology
 
*Peers: Medica Group Plc, MD Medical Group Investments Plc, Totally Plc, Caretech Holdings Plc and Mediclinic International Plc.

Conclusion
In the first half of the financial year 2019, the company’s financial performance has declined on a reported basis. Although the top-line performance has improved significantlyfor the period, the profitability margins on reported basis have declined significantly.

The company’s supply chain is impacted negatively by the uncertainty created due to an ongoing Brexit. The company operates in a challenging environment which requires continuous investment, sometimes at the cost of profitability, to stay ahead of competitors. Moreover,the company is trading near 52-week high, raising doubts at its upside potential at current prices.

The company’s acquisition of Cambian will bring synergies and operational improvements and will improve the revenue generation for the group. With improved bank facilities and cash from rent transactions will allow the company to be well-positioned to take advantage of opportunities.

Based on the above rationale, we recommend investors to keep a "Watch" on the stock at the closing price of GBX 397 (as on 24 October 2019), with support from few catalysts needs to be evaluated at a later stage.
 

Motif Bio Plc

Motif Bio PLC (MTFB) is a clinical-stage biopharmaceutical company. The company is focused on the development of antibiotics; its lead product candidate is iclaprim, which has a Qualified Infectious Disease Product (QIDP) designation from the FDA. The company advances in the drugs development which are designed for infections treatment caused due to multi-drug resistant bacteria.

Recent News
On 24th October 2019, Motif Bio announced the signing of an agreement with WRAIR (Walter Reed Army Institute of Research). As per the agreement, both will conduct pre-clinical testing to novel combinations evaluation.

Financial Highlights – H1 Financial Year 2019 (June 30, 2019, US$ thousands)

(Source: Interim Report, Company Website)
 
In the first half of the financial year 2019, the operating loss stood at US$11.02 million against the operating loss of US$11.01 million in H1 FY2018. The LBT (loss before tax) stood at US$6.2 million in H1 FY2019 against the LBT (loss before tax) of US$7.76 million in H1 FY2018. The net loss stood at US$6.2 million in H1 FY2019 against the net loss of US$7.8 million in H1 FY2018. This led to a basic loss per share of $0.02, while diluted loss per share was $0.02.

Share Price Performance

Daily Chart as at October-25-19, before the market closed (Source: Thomson Reuters)

On 25th October 2019, Motif Bio Plc shares were trading at GBX 0.58 at the time of writing before the market close (at 11:52 AM GMT), down by 1.69 per cent against the previous day closing price. Stock's 52 weeks High and Low are GBX 44.90/GBX 0.45.

Conclusion
There remains an urgent need for new antibiotics that can overcome resistant bacteria and is a critical healthcare issue that is recognized around the globe. The company is in a great position to capitalise on the opportunity presented by this pressing medical need as with the targeted Gram-positive spectrum of activity, and iclaprim has the potential to help address the problem.

While preparations for the European regulatory process are underway, securing approval for iclaprim in the U.S. remains the highest priority for the company. The company remained careful in managing its costs and continues to manage its resources to improve profitability aggressively.

Based on the above rationale, we have given a “SPECULATIVE BUY” recommendation at the current price of GBX 0.56 (as on 25th October 2019, before the market close, GMT 12:25 PM). 
 
 
*All forecasted data and peer information have been taken from Thomson Reuters.

Disclaimer

PLEASE BE ADVISED THAT YOUR CONTINUED USE OF THIS SITE OR THE INFORMATION PROVIDED HEREIN SHALL INDICATE YOUR CONSENT AND AGREEMENT TO THESE TERMS.
References to ‘Kalkine’, ‘we’, ‘our’ and ‘us’ refer to Kalkine Limited.
This website is a service of Kalkine Limited. Kalkine Limited is a private limited company, incorporated in England and Wales with registration number 07903332.
The article has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. Kalkine is not responsible for material posted on this website and does not guarantee the content, accuracy, or use of the content in this site. No advice or information, whether oral or written, obtained by you from Kalkine or through or from the service shall create any warranty not expressly stated.
Kalkine do not offer financial advice based upon your personal financial situation or goals, and we shall NOT be held liable for any investment or trading losses you may incur by using the opinions expressed in our publications, market updates, news alerts and corporate profiles. Kalkine does not in any way endorse or recommend individuals, products or services that may be discussed on this site. You should discuss your portfolios and the risk tolerance level appropriate for your personal financial situation, with a professional licensed financial planner and adviser.