AFT Pharmaceuticals — Operating profitability achieved

AFT Pharmaceuticals (ASX: AFT)

Last close As at 28/03/2024

NZD3.05

0.00 (0.00%)

Market capitalisation

NZD320m

More on this equity

Research: Healthcare

AFT Pharmaceuticals — Operating profitability achieved

AFT Pharmaceuticals recently reported its FY19 results; the highlights were improving margins, as well as operating profitability for the year. Revenue grew 4.9% over 2018 while gross profit grew by 15.4% following the divestment of relatively low-margin hospital products in New Zealand and Australia. Lower SG&A and R&D spending allowed the company to report an operating profit of NZ$6.2m and the company is currently targeting an operating profit of between NZ$9m and NZ$12m for FY20.

Analyst avatar placeholder

Written by

Healthcare

AFT Pharmaceuticals

Operating profitability achieved

Financial update

Pharma & biotech

28 May 2019

Price

NZ$2.70

Market cap

NZ$263m

NZ$0.65/US$

Net debt (NZ$m) at 31 March 2019

34.8

Shares in issue

97.3m

Free float

21.6%

Code

AFT

Primary exchange

NZX

Secondary exchange

ASX

Share price performance

%

1m

3m

12m

Abs

51.8

246

32

Rel (local)

479

149

(101

52-week high/low

NZ$2.80

NZ$1.70

Business description

AFT Pharmaceuticals is a specialty pharmaceutical company that operates primarily in Australasia but has product distribution agreements across the globe. The company’s product portfolio includes prescription and over-the-counter drugs to treat a range of conditions and a proprietary nebuliser.

Next events

Additional Maxigesic launches

2019

Analysts

Maxim Jacobs

+1 646 653 7027

Nathaniel Calloway

+1 646 653 7036

AFT Pharmaceuticalsis a research client of Edison Investment Research Limited

AFT Pharmaceuticals recently reported its FY19 results; the highlights were improving margins, as well as operating profitability for the year. Revenue grew 4.9% over 2018 while gross profit grew by 15.4% following the divestment of relatively low-margin hospital products in New Zealand and Australia. Lower SG&A and R&D spending allowed the company to report an operating profit of NZ$6.2m and the company is currently targeting an operating profit of between NZ$9m and NZ$12m for FY20.

Year end

Revenue (NZ$m)

PBT*
(NZ$m)

EPS*
(NZ$)

DPS
(NZ$)

P/E
(x)

Yield
(%)

03/18

81.2

(12.9)

(0.13)

0.0

N/A

N/A

03/19

85.1

(2.5)

(0.03)

0.0

N/A

N/A

03/20e

99.9

6.4

0.07

0.0

38.6

N/A

03/21e

119.5

17.6

0.18

0.0

15.0

N/A

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Profitability and growth return to New Zealand

Although full year revenue in New Zealand fell by 1.1%, it grew by 5.4% after adjusting for the divested products. Also, H219 sales in the region were up 9.6% compared to H218, driven by the OTC segment, especially the allergy, pain and eyecare categories. Additionally, gross profit for the year was up 22% due to the divestment of low-margin hospital products. Operating profit for the full year swung from a loss of NZ$2.7m in FY18 to a profit of $0.5m in FY19.

Maxigesic launched in 20 countries

Rest of world revenues increased by 63.4% due to increased Maxigesic sales worldwide. Maxigesic is now sold and launched in 20 countries, up from 10 the prior year. Recent launches this calendar year include Spain and Portugal (April 2019) with launches pending in several key geographies such as France, Belgium, Eastern Europe and the Nordics.

Australia continues to grow

Revenue in Australia was up 2.3% in 2019 compared to 2018 and was negatively affected by the hospital product divestments as underlying growth when adjusting for this was 12.6%. The OTC channel grew 11%, while the hospital segment fell by 13% due to the divestments. The company expects newly launched hospital products to replace the lost revenue in FY20 but at higher margins.

Valuation: NZ$495m or NZ$5.09 per share

We are increasing our valuation to NZ$495m or NZ$5.09 per share, from NZ$478m or NZ$4.91 per share, mainly due to improved cost controls across the business and rolling forward our NPV. This was mitigated by slightly lower revenue estimates, mainly due to a more conservative view of Maxigesic launch timing in new markets as well as slightly lower Australia estimates.

2019 results

AFT recently reported revenue of NZ$85.1m for FY19, ending 31 March 2019. This represents a 4.9% increase over FY18 and would have been larger had it not been for the divestment of relatively low-margin hospital products that were being sold in Australia and New Zealand. Importantly, gross profit grew 15.4% as gross margins improved to 47.8% from 43.5% a year ago thanks to reduced exposure to lower-margin products as well as high growth in the higher-margin over-the-counter (OTC) segment. What seems especially noteworthy is that while revenues increased by NZ$4.0m compared to 2018, cost of goods actually fell by NZ$1.5m over the same period. Also, in total, SG&A and R&D expenditures fell by 19.4% to NZ$36.3m mainly due to lower R&D spending following the completion of the pivotal trial of Maxigesic IV. These across the board cost controls greatly improved profitability as the company swung from a reported operating loss of NZ$10.1m to a profit of NZ$6.2. The company is currently targeting an operating profit of between NZ$9m and NZ$12m for FY20.

Exhibit 1: 2019 results by segment

NZ$000s

Revenues (2019)

Revenues (2018)

Loss before tax (2019)

Loss before tax (2018)

Australia

50,304

49,193

5,321

1,253

New Zealand

26,796

27,096

537

(2,693)

Asia

2,142

1,286

(343)

(792)

Rest of World

5,885

3,601

601

(7,907)

Total

85,127

81,176

6,116

(10,139)

Source: AFT Pharmaceuticals

Revenue in Australia was up 2.3% in 2019 compared to 2018 and was negatively affected by the hospital product divestments as underlying growth when adjusting for this was 12.6%. The OTC channel grew 11%, which may be undercounting the organic growth rate as there was stocking at pharmacies at the end of FY18 ahead of the rescheduling of codeine products. The hospital segment fell by 13% due to the divestments but the company expects newly launched hospital products (such as the antibiotic Piptaz (Piperacillin/tazobactam)) to replace the lost revenue in FY20 but at higher margins.

Full year revenue in New Zealand fell by 1.1% though it grew by 5.4% after adjusting for the divested hospital products. Additionally, H219 sales were strong in the region as they increased 9.6% compared to H218. This growth was driven by the OTC segment, especially the allergy, pain and eyecare categories. Gross profit for the year was up 22% due to the divestment of low-margin hospital products. All of these factors combined led operating profit for the area to swing from a loss of NZ$2.7m in FY18 to a profit of $0.5m in FY19.

Maxigesic launch and pipeline update

Maxigesic is now sold and launched in 20 countries, up from 10 the prior year. Recent launches this calendar year include Spain and Portugal (April 2019) with launches pending in several key geographies such as France, Belgium, Eastern Europe and the Nordics. There are distribution agreements in place in over 125 (Switzerland and Cyprus are recent additions) with a key focus on signing distribution agreements in the US, Canada, Germany and parts of South America, such as Brazil, with discussions beginning or already underway in those countries.

Exhibit 2: Maxigesic product country totals by status

Maxigesic tablets

Maxigesic IV

Maxigesic oral solution

2019

2018

% Change

2019

2018

% Change

2019

2018

% Change

Licensed

125+

125

-

68

62

10%

122

118

4%

Registered

42

32

28%

Sold in

20

10

100%

Source: AFT

Maxigesic IV is progressing with licensing agreements in 68 countries. The first approval is expected in FY20. In the US, Maxigesic IV is moving closer to filing. Following a pre-NDA meeting with the FDA, the company believes it needs to do some additional clinical work on the product although it expects to complete this relatively quickly. We expect a filing in H120 (previously, our expectation was for a filing in 2019). The company has also submitted the data from the Maxigesic IV pivotal study to a major journal for publication, which should help increase its profile. We continue to view IV Maxigesic as a big opportunity as Mallinckrodt sells an IV formulation of paracetamol/acetaminophen (just one component of the paracetamol/acetaminophen and ibuprofen combination that is Maxigesic) in the US which had $341.9m in sales in 2018. Hence there is potential for meaningful upfront payments from a licensing agreement with a US partner.

With regards to NasoSURF, human factor studies for the product have largely been completed following some device redesign. Clinical trial work is expected to start at the end of FY20. On Pascomer, initiation of a Phase II/III study is being planned and partnership discussions are underway to help fund development.

Valuation

We are increasing our valuation to NZ$495m or NZ$5.09 per share, from NZ$478m or NZ$4.91 per share, mainly due to improved cost controls across the business and rolling forward our NPV. This was mitigated by slightly lower revenue estimates, mainly due to a more conservative view of Maxigesic launch timing as well as slightly lower Australia estimates.

Exhibit 3: DCF sensitivity table (NZ$/share)

Terminal EBIT Margin

Terminal Revenue Growth

30.00%

34.00%

36.0%

40.0%

45.0%

-2%

3.42

3.71

3.85

4.14

4.50

-1%

3.60

3.92

4.08

4.39

4.79

0%

3.83

4.17

4.35

4.69

5.13

1%

4.10

4.48

4.68

5.06

5.54

2%

4.44

4.87

5.09

5.52

6.06

3%

4.87

5.37

5.62

6.11

6.73

4%

5.45

6.03

6.32

6.90

7.62

5%

6.27

6.96

7.30

8.00

8.86

Source: Edison Investment Research

Financials

We have decreased our revenue estimates to NZ$99.9m from NZ$109.5m for FY20, driven mainly by lower Australia and rest of world estimates as both came in a bit lower than expected (though still grew 64.4%). We have also decreased our SG&A expense estimates for FY20 by NZ$4.9m due to a lower than expected run rate. Additionally, we have reduced our R&D expense estimates by NZ$0.9m for FY20 as R&D expenses have fallen faster than expected. Our FY20 EBITDA estimate is down NZ$1.6m and our estimate for profit before tax has been reduced by NZ$3.6m mainly due to higher than expected finance costs. We are introducing FY21 estimates, which include revenues of NZ$119.5m, 19.6% growth over our FY20 estimate (coming mainly from Australia and rest of world). Also note that due to the new IFRS reporting requirement, licensing income is now included in revenue and 2018 has been restated to account for this.

The company reported a cash position of NZ$6.9m at the end of 2019 after drawing down an additional NZ$7.4m from the Capital Royalty Group (CRG) facility over the course of the year and now owes NZ$41.7m in the US-denominated debt (which grew by NZ$1.9m due to US dollar strength during 2019), that is due 31 March 2020. CRG has offered to extend the loan but the company has decided to pursue a long-term facility from New Zealand commercial banks to repay CRG. To that end it has established a NZ$15m interim banking facility with the Bank of New Zealand, which it will use to repay part of the CRG facility, starting with a US$9.5m payment over the next few days. Although the interim facility also expires on 31 March 2020, it carries a lower interest rate compared to the 13.5% for the CRG facility so should help the company save some financing costs as the company negotiates a longer-term financing deal.

Exhibit 4: Edison forecast changes

NZ$m

2020e

2021e

Old

New

New

Revenue

109.5

99.9

119.5

PBT, normalised (NZ$)

10.0

6.4

17.6

EPS, normalised (NZ$)

0.10

0.07

0.18

Source: Edison Investment Research

Exhibit 5: Financial summary

NZ$000

2018

2019

2020e

2021e

March

NZ GAAP

NZ GAAP

NZ GAAP

NZ GAAP

PROFIT & LOSS

Revenue

 

 

 

81,176

85,127

99,947

119,505

Cost of Sales

(45,880)

(44,397)

(51,547)

(56,407)

Gross Profit

35,296

40,730

48,400

63,098

EBITDA

 

 

 

(10,479)

5,797

10,288

21,447

Operating Profit (before amort. and except.)

 

(10,353)

5,912

10,403

21,562

Intangible Amortisation

214

204

204

204

Exceptionals

0

0

0

0

Other

(364)

1,716

1,802

1,892

Operating Profit

(10,503)

7,832

12,409

23,658

Net Interest

(2,527)

(8,375)

(4,000)

(4,000)

Profit Before Tax (norm)

 

 

 

(12,880)

(2,463)

6,403

17,562

Profit Before Tax (reported)

 

 

 

(12,666)

(2,259)

8,409

19,658

Tax

(58)

(168)

0

0

Profit After Tax (norm)

(12,938)

(2,631)

6,403

17,562

Profit After Tax (reported)

(12,724)

(2,427)

8,409

19,658

Average Number of Shares Outstanding (m)

97.2

97.3

97.3

97.3

EPS - normalised (NZ$)

 

 

 

(0.13)

(0.03)

0.07

0.18

EPS - (reported) (NZ$)

 

 

 

(0.14)

(0.03)

0.09

0.20

Dividend per share (c)

0.00

0.00

0.00

0.00

Gross Margin (%)

43.5

47.8

48.4

52.8

EBITDA Margin (%)

N/A

6.8

10.3

17.9

Operating Margin (before GW and except.) (%)

N/A

6.9

10.4

18.0

BALANCE SHEET

Fixed Assets

 

 

 

8,291

12,334

15,540

18,785

Intangible Assets

5,118

8,239

11,245

14,366

Tangible Assets

330

357

557

681

Investments

2,843

3,738

3,738

3,738

Current Assets

 

 

 

48,312

51,261

53,543

69,382

Stocks

24,412

25,158

27,958

30,594

Debtors

16,954

19,187

17,474

19,121

Cash

6,946

6,916

8,112

19,667

Other

0

0

0

0

Current Liabilities

 

 

 

(18,607)

(58,504)

(15,249)

(16,567)

Creditors

(18,489)

(16,368)

(15,249)

(16,567)

Short term borrowings

0

(41,750)

0

0

Long Term Liabilities

 

 

 

(30,654)

0

(41,750)

(41,750)

Long term borrowings

(30,654)

0

(41,750)

(41,750)

Other long term liabilities

0

0

0

0

Net Assets

 

 

 

7,342

5,091

12,084

29,850

CASH FLOW

Operating Cash Flow

 

 

 

(6,582)

9,610

8,721

19,120

Net Interest

(4,264)

(8,375)

(4,000)

(4,000)

Tax

(58)

(168)

0

0

Capex

(2,853)

(3,465)

(3,525)

(3,564)

Acquisitions/disposals

(3,002)

(1,419)

0

0

Financing

877

0

0

0

Dividends

(412)

(134)

0

0

Net Cash Flow

(16,294)

(3,951)

1,196

11,556

Opening net debt/(cash)

 

 

 

7,446

23,708

34,834

33,638

HP finance leases initiated

0

0

0

0

Other

32

(7,175)

(0)

0

Closing net debt/(cash)

 

 

 

23,708

34,834

33,638

22,083

Source: Edison Investment Research, company accounts


General disclaimer and copyright

This report has been commissioned by AFT Pharmaceuticals and prepared and issued by Edison, in consideration of a fee payable by AFT Pharmaceuticals. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd who holds an Australian Financial Services Licence (Number: 427484). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by AFT Pharmaceuticals and prepared and issued by Edison, in consideration of a fee payable by AFT Pharmaceuticals. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd who holds an Australian Financial Services Licence (Number: 427484). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

More on AFT Pharmaceuticals

View All

Latest from the Healthcare sector

View All Healthcare content

Research: TMT

Beta Systems — Guidance upgraded on German DCI activities

Beta Systems has been performing well, largely due to a strong performance from its core DCI mainframe software business. Consequently, in April, management upgraded FY19 guidance (revenue was upgraded by 4% and EBITDA by 27% at the mid-points) ahead of the interim results. While there has been a surprisingly strong level of orders in the group’s core DCI business in Germany, the IAM business has been performing in line. In our view, the shares are attractive, noting the potential sub 6x FY20 EV/EBITDA ratio, given the strong cash generation and high level of recurring revenues (we estimate 80%+).

Continue Reading

Subscribe to Edison

Get access to the very latest content matched to your personal investment style.

Sign up for free