Futura Medical PLC

United Kingdom-based Futura Medical PLC (FUM) is a pharmaceutical company that builds products for customer healthcare. The group is involved in the research and development of pharmaceutical drugs. The company specializes in pain relief and sexual health and has four products in its development pipeline, which comprise MED2005, TIB200, CSD500, and TPR100. Currently, the company is a member of the FTSE AIM All-Share index.

Financial Highlights (for the six months ended 30 June 2019, £)

(Source: Interim Report, Company Fillings, LSE)

For the six months ended 30 June 2019, the research and development costs stood at £4.74 millionagainst £1.65 million recorded for the six months ended 30 June 2018.  The surge of £3 million is attributable to the FM57 Phase 3 study, which is running on time, within budget and anticipates delivering headline data in December 2019. Administrative costs stood at £0.53 million in H1 FY19 as compared to £0.86 million in H1 FY18 and were reflective of the group's plan to focus cash resources on providing the R&D programme and keep central costs lean. At the period end, the company held cash of £5.63 million with an additional £1.36 million of R&D tax credit refund received after the period end, on August 2019. Net loss for the current period stood at £4.46 million, an increase from the corresponding period of the last year. In H1 FY19, loss per share stood increased to 2.18 pence as compared with the corresponding period of the last year.

Share Price Performance

Daily Chart as at October-01-19, before the market closed (Source: Thomson Reuters)

On 1st October 2019, Futura Medical PLC shares were trading at GBX 32.90 at the time of writing before the market close (at 8:10 AM GMT), and remained the same against the previous day closing price. Stock's 52 weeks High and Low are GBX 49.20/GBX 5.65. The company’s stock beta was 3.16, reflecting the higher movement of the stock as compared to the benchmark index.

Conclusion
The company’s revenue from contracts with consumers for the six months ended 30 June 2019 remained nil.The profitability margins have remained stagnant or declined. The company’s bottom-line performance has remained in the negative zone for the current period. The company operates in a challenging environment which requires continuous investments, sometimes at the cost of profitability, to stay ahead of the competition. The company has the capability for a substantial value inflection, due to MED2005 late phase clinical development.

Currently, the stock is trading near the 52-week mid, suggesting that the upside potential might be limited, and the company can face stiff resistance at the current level. The company’s P/E, EV/EBITDA and P/CF multiples are in negative zone as compared to the industry multiples.

Therefore, considering the ongoing challenges in the UK’s healthcare market and uncertainties related to the sector in near-term, we have given a “Watch” recommendation at the closing price of GBX 32.90 (as on September 30, 2019), while we look for any upcoming catalysts in the near term.
 

Golden Prospect Precious Metals Ltd

Golden Prospect Precious Metals Ltd. (LSE : GPM), a closed ended investment company primarily invests in precious metal and gold companies. The group's investment main objective is to offer investors with capital appreciation from its investment portfolio strategy. The group also invests in Canada, the United Kingdom, the United States, Russia, and Australia.

Recent News
On 27^th September 2019, the net asset value per share stood at 39.91 pence, a decrease from the previous day (26 September 2019: 40.48 pence).

On 9^th September 2019,the company entered into a new Investment Management Agreement to appoint CQS (UK) LLP Limited as its Investment Manager, and the previous investment advisory agreement with CQS Cayman Limited partnership has been terminated.

Financial Highlights (for the year ended 31^st December 2018)
For the year to 31^st December 2018, the group’s net asset value was down by 37.7 per cent as small-cap gold and silver stocks underwent a torrid period, particularly towards the end of the year. The company’s share price was down by 44.1 per cent over the year. The subscription share price stood at 4.5 pence at the end of December, and the next exercise date is on 29^th November 2019.
In FY2018, the company’s net loss increased to £7.9 millionas compared to the £1.8 million in FY2017. Net loss on ordinary activities before finance costs and taxation stood at £8.4 million, an increase from the previous year same period data. Total comprehensive loss for the period rose to £8.5million as compared with the corresponding period of the previous year. Basic and diluted loss per share climbed to 14.90 pence against the loss of 4.60 pence in FY17.

Share Price Performance

Daily Chart as at October-01-19, before the market closed (Source: Thomson Reuters)

On 1st October 2019, Golden Prospect Precious Metals Ltd shares were trading at GBX 29.412 at the time of writing before the market close (at 8:50 AM GMT), down by 6.03% against the previous day closing price. Stock's 52 weeks High and Low are GBX 38.40/GBX 16.50. The company’s stock beta was 1.07, reflecting the slightly higher movement of the stock as compared to the benchmark index.

 Key Risks
Portfolio risk, portfolio manager risk, Outsourced service provider model risk, and NAV gearing.

Conclusion
The business environment does not augur well for its performance.The geopolitical and economic uncertainties in the United Kingdom as well as abroad has caused significant volatility in the market. The Brexit implication, stiff competition, and operational risks may affect the growth of the company. The company’s operations are impacted by multiple risks and uncertainties, such as the impact of volatility of commodity prices, currency fluctuations, environmental risks, government regulation, etc.

The development made by some of the company’s higher unquoted holdings has resulted, in the decrease in NAV per share (net asset value) during the current period (27^th September 2019) of 39.91 pence. The company operates in a competitive market and is exposed to the UK’s economic performance. The company operates in an industry with low barriers to entry and exit for new competitors, which can disrupt the market locally. The stock is trading near the 52-week high, suggesting that the upside potential might be limited.

Considering the risks associated with the company’s operations and weak financial performance, we believe that investors can “Avoid” the stock at the closing price of GBX 31.30 (as on 30th September 2019).

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