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European leader in stem-cell banking

Polski Bank Komórek Macierzystych 8 November 2021 QuickView
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Polski Bank Komórek Macierzystych (FamiCord)

European leader in stem-cell banking

Pharma & biotech

Deutsches Eigenkapitalforum 2021

8 November 2021

Price

PLN94.0

Market cap

PLN878m

Share price graph

Share details

Code

BKM

Shares in issue

9.2m

Net cash at 30 June 2021

PLN72.3m

Business description

Polski Bank Komórek Macierzystych (PBKM) operates a group of stem cell banks under the FamiCord Group brand. The company is the largest industry player in Europe, operating in 16 European countries and further c 15 regions are serviced through partnership agreements – including Middle East, Hong Kong and the US. It develops stem cell therapy for the treatment of numerous diseases, including amyotrophic lateral sclerosis.

Bull

Clear sector leader.

Business model based on subscriptions securing stable cashflow generation.

Ongoing R&D projects are potential value catalysts.

Bear

The reduced client trust following the default of one of the market leaders persists in some target markets.

Offline selling and marketing channels disrupted due to COVID-19 pandemic.

Rapid inorganic growth and integration costs affecting short-term profitability.

Analysts

Michal Mordel

+44 (0)20 3077 5700

Milosz Papst

+44 (0)20 3077 5700

Polski Bank Komórek Macierzystych (PBKM) continues its consolidation efforts in the cord-blood banking in Europe. It holds a c 40% share of the European stem-cell banking market in terms of processed cord blood samples. The market is expected to grow at a double-digit rate globally (Grand View Research) through increased penetration of the service. PBKM has been also involved in 10 clinical trials in stem-cell research, acts as a contract manufacturing organisation and runs a one-day clinic.

Merger with Vita 34

PBKM is merging with Vita 34, the leader in stem-cell banking in Germany. The transaction is performed through an exchange offer that values PBKM’s shares at €22.48 (a 23% premium to the current share price). PBKM’s majority shareholder (AOC Health, 62.4%) also holds a significant stake in Vita 34 (36%) and Vita 34 is technically acquiring PBKM. Importantly, both companies have similar business models and the overlap in the respective European markets is limited. The combined entity will store biological material belonging to over 650k families and will have over 45% market share in newly acquired samples in Europe, which places it among the top three players in the industry globally. PBKM intends to continue its international expansion through acquisitions.

Double digit top-line growth continues

PBKM’s revenues grew at a 16% CAGR in 2014–2020, predominantly driven by acquisitions, reaching €40.1m in FY20 (and €60.2m pro forma for the merged entity). PBKM’s bottom line continues to be affected by acquisition and integration costs, which dampens its margins. In H121 PBKM reported an EBITDA loss (FY20: 10% profit margin) and adjusted EBITDA profit margin of 12% (FY20: 14%), whereas Vita 34’s adjusted margin was 29% (FY20: 29%). According to PBKM, the merger should also allow for cost synergies, which are estimated at c €3.1m pa.

Growth prospects and strategy

PBKM focuses on a subscription-based sales model that generates recurring income, whereas most acquisition targets (including Vita 34) operate on an upfront payments model. The business model adjustment in acquired companies, together with integration costs, creates short-term pressure on margins, but translates into more stable cashflow generation in the long run. PBKM intends to continue its stem-cell R&D endeavours, as the clinical expertise and ability to support its customers in need is an important competitive advantage. The R&D projects (including CAR-T) may also act as value catalyst if any products are approved.

Consensus estimates*

Year
end

Revenue
(PLNm)

EBITDA
(PLNm)

EPS
(PLN)

DPS
(PLN)

P/E
(x)

Yield
(%)

12/19

188.0

28.2

2.66

0.00

32.3

0.0

12/20

211.3

22.0

0.26

0.00

323.1

0.0

12/21e

235.5

29.5

0.72

0.00

116.7

0.0

12/22e

259.0

39.9

1.58

0.00

53.2

0.0

Source: Refinitiv. Note: *Forecasts of one analyst from Trigon DM.

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Schumannstrasse 34b

60325 Frankfurt

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280 High Holborn

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United Kingdom

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United States of America

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NSW 2000, Australia

General disclaimer and copyright

This report has been prepared and issued by Edison. Edison Investment Research standard fees are £60,000 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: 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). 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

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

1185 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

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