CentralNic Group — A busy end to a momentous year

CentralNic Group (AIM: CNIC)

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Market capitalisation

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Research: TMT

CentralNic Group — A busy end to a momentous year

CentralNic (CNIC) announced on 19 December that it is acquiring a portfolio of niche websites as part of its vertical integration strategy for its Online Marketing segment. The portfolio provides the company with exclusive special internet traffic to monetise and will be immediately earnings accretive. This is the latest in a multi-year series of acquisitions that has been transformative for the business, driving strong free cash flow generation. Combined with recent debt restructuring, CNIC is now in a position to start to return cash to shareholders and expects to launch its first share buyback by the end of FY22. We have upgraded our FY22 and FY23 revenue and profit forecasts to reflect these recent announcements, as well as the group’s strong trading. The acquisition follows the recent announcement of CEO Ben Crawford’s retirement from the CNIC board, with group CFO Michael Riedl appointed as his successor.

Max Hayes

Written by

Max Hayes

Associate Analyst

TMT

CentralNic Group

A busy end to a momentous year

Recent updates

Software and comp services

21 December 2022

Price

146p

Market cap

£421m

$1.22:£1

Net debt (£m) at end Q322

63.4

Shares in issue

288.7m

Free float

73%

Code

CNIC

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

15.0

24.3

4.4

Rel (local)

15.8

21.8

6.0

52-week high/low

146p

111p

Business description

CentralNic Group provides the essential tools for businesses to go online, operating through two divisions: Online Presence (reseller, corporate, and SME) and Online Marketing. Services include domain name reselling, hosting, website building, security certification and website monetisation.

Next events

FY22 trading update

30 January 2023

Analysts

Max Hayes

+44 (0)20 3077 5700

Katherine Thompson

+44 (0)20 3077 5700

CentralNic Group is a research client of Edison Investment Research Limited

CentralNic (CNIC) announced on 19 December that it is acquiring a portfolio of niche websites as part of its vertical integration strategy for its Online Marketing segment. The portfolio provides the company with exclusive special internet traffic to monetise and will be immediately earnings accretive. This is the latest in a multi-year series of acquisitions that has been transformative for the business, driving strong free cash flow generation. Combined with recent debt restructuring, CNIC is now in a position to start to return cash to shareholders and expects to launch its first share buyback by the end of FY22. We have upgraded our FY22 and FY23 revenue and profit forecasts to reflect these recent announcements, as well as the group’s strong trading. The acquisition follows the recent announcement of CEO Ben Crawford’s retirement from the CNIC board, with group CFO Michael Riedl appointed as his successor.

Year end

Revenue
($m)

Adjusted EBITDA* ($m)

PBT*
($m)

Dil. EPS
(c)

EV/EBITDA
(x)

P/E
(x)

12/20

240.0

29.4

17.6

6.9

19.7

26.0

12/21

410.5

46.3

31.9

10.9

12.5

16.3

12/22e

708.2

83.6

69.0

17.9

6.9

10.0

12/23e

811.0

94.4

79.6

19.3

6.1

9.2

Note: *Excludes impact of share-based payments, foreign exchange charges and non-core operating costs.

Upgrades to estimates

CNIC’s trading has been robust through Q422 and it expects a full year outcome at least in line with the upper end of market expectations (revenue $701.0–709.6m, EBITDA $80.0–84.1m). We have upgraded our FY22 revenue and EBITDA forecasts to $708.2m and $83.6m, respectively. In FY23, we have raised our revenue and EBITDA forecasts to $811.0m and $94.4m, respectively, reflecting management’s guidance for its latest website portfolio acquisition. On a standalone basis, management expects the websites to generate annualised revenue and EBITDA of at least $1.9m and $1.4m, respectively, post acquisition. The consideration consists of $5.2m in cash and assumed working capital liabilities in an asset deal from multiple sellers, which will be financed from available liquidity.

Strong trading supports share buyback

With an improved net debt position and major strategic acquisitions completed, the company has decided to allocate some of the strong free cash flow generated to a maiden share buyback by year-end. Management plans to review cash flow deployment within the business and expects to have a greater focus on returns to shareholders versus mergers and acquisitions.

Valuation: Material discount despite upgrades

Relative to its online marketing peers, CNIC has been able to achieve superior revenue and profit growth using lower leverage over FY22. While the discount has slightly reduced since we last wrote, the group still trades at a c 59% discount to peers on FY22 and FY23 EV/EBITDA multiples.

Changes to estimates and management update

On 12 December, CentralNic provided a brief trading update for Q422, confirming that trading has remained robust and that management now expects a full year outcome at least in line with the upper end of market consensus (revenue $701.0–709.6m, EBITDA $80.0–84.1m). We have upgraded our FY22 revenue forecast by 0.8% to $708.2m and EBITDA forecast by 3.1% to $83.6m. We have also revised our year-end net debt figure, reflecting both its balance sheet position at the end of Q322 and the consideration for its latest acquisition ($5.2m cash and assumed working capital liabilities).

For FY23, our expectations for organic growth are unchanged, but we have increased our revenue and profit expectations on the back of the latest acquisition. On a standalone basis, management expects the websites to generate annualised revenue and EBITDA of at least $1.9m and $1.4m, respectively, post acquisition. As CNIC is already monetising part of the websites’ traffic, this translates into c $1.2m of additional revenue, c $0.5m of reduced cost of goods sold and c $1.4m of EBITDA in FY23. This is in line with our updated forecasts.

Exhibit 1: Changes to estimates

US$'000s

2022e

2023e

Old

New

Change (%)

y-o-y (%)

Old

New

Change (%)

y-o-y (%)

Gross revenue

702,681

708,193

0.8

73

809,808

811,022

0.1

15

Net revenue

167,131

172,303

3.1

45

189,831

190,550

0.4

11

Adjusted EBITDA

81,059

83,567

3.1

81

93,017

94,416

1.5

13

Profit Before Tax (normalised)

66,476

68,953

3.7

116

78,182

79,570

1.8

15

Profit Before Tax (reported)

38,485

40,963

6.4

2534

46,641

48,030

3.0

17

Net income (normalised)

47,863

49,646

3.7

94

56,291

57,291

1.8

15

Basic ave. no. of shares outstanding (m)

270

270

-

289

289

-

EPS - basic normalised (c)

17.73

18.39

3.7

64

19.50

19.85

1.8

8

EPS - diluted normalised (c)

17.24

17.88

3.7

64

18.99

19.33

1.8

8

Revenue growth (%)

71.2

72.5

15.2

14.5

Gross margin (%)

23.8

24.3

23.4

23.5

Adjusted EBITDA margin (%)

11.5

11.8

11.5

11.6

Adjusted EBITDA/net revenue (%)

48.5

48.5

49.0

49.5

Capex

(4,238)

(5,416)

27.8

13

(4,453)

(5,622)

26.3

4

Closing net debt/(cash)

37,584

62,655

66.7

(23)

(22,109)

2,846

N/A

(95)

Source: Edison Investment Research

Experienced CFO steps up to CEO role

On 12 December, CNIC announced that group CEO Ben Crawford had retired from the board and group CFO Michael Riedl had been promoted to the role of group CEO with immediate effect. Mr Riedl became group CFO in 2019 following CNIC’s acquisition of KeyDrive, where he had been CFO since 2011. Current group financial director William ‘Billy’ Green has been promoted to the group CFO role, initially in a non-board capacity, but with the expectation that he will join the board in due course

Exhibit 2: Financial summary

$'k

2019

2020

2021

2022e

2023e

31-December

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

109,194

240,012

410,540

708,193

811,022

Cost of Sales

(66,419)

(164,894)

(292,041)

(535,890)

(620,471)

Gross Profit

42,775

75,118

118,499

172,303

190,550

EBITDA

 

 

17,921

29,394

46,251

83,567

94,416

Normalised operating profit

 

 

16,615

27,310

42,737

79,606

89,880

Amortisation of acquired intangibles

(8,299)

(13,747)

(18,291)

(21,035)

(21,035)

Exceptionals

(8,259)

(10,529)

(7,087)

1,000

0

Share-based payments

(2,878)

(5,113)

(5,006)

(5,006)

(5,006)

Reported operating profit

(2,821)

(2,079)

12,353

54,565

63,839

Net Interest

(3,869)

(9,834)

(10,798)

(10,652)

(10,309)

Joint ventures & associates (post tax)

74

79

0

0

0

Exceptionals

0

0

0

(2,950)

(5,500)

Profit Before Tax (norm)

 

 

12,820

17,555

31,939

68,953

79,570

Profit Before Tax (reported)

 

 

(6,616)

(11,834)

1,555

40,963

48,030

Reported tax

39

975

(5,097)

(21,376)

(24,667)

Profit After Tax (norm)

10,256

14,044

25,551

49,646

57,291

Profit After Tax (reported)

(6,577)

(10,859)

(3,542)

19,587

23,363

Minority interests

64

0

0

0

0

Net income (normalised)

10,320

14,044

25,551

49,646

57,291

Net income (reported)

(6,513)

(10,859)

(3,542)

19,587

23,363

Basic average number of shares outstanding (m)

175

175

197

227

270

EPS - basic normalised (c)

 

 

5.89

7.14

11.24

18.39

19.85

EPS - diluted normalised (c)

 

 

5.72

6.86

10.91

17.88

19.33

EPS - basic reported (c)

 

 

(3.72)

(5.52)

(1.56)

7.26

8.09

Dividend (c)

0.00

0.00

0.00

0.00

0.00

Revenue growth (%)

95.0

119.8

71.0

72.5

14.5

Gross Margin (%)

39.2

31.3

28.9

24.3

23.5

EBITDA Margin (%)

16.4

12.2

11.3

11.8

11.6

EBITDA/Net Revenue (%)

41.9

39.1

39.0

48.5

49.5

Normalised Operating Margin

15.2

11.4

10.4

11.2

11.1

BALANCE SHEET

Fixed Assets

 

 

217,544

270,578

271,830

346,945

335,411

Intangible Assets

206,055

255,716

254,169

329,284

317,750

Tangible Assets

6,427

8,677

8,601

8,601

8,601

Investments & other

5,062

6,185

9,060

9,060

9,060

Current Assets

 

 

67,433

77,606

128,391

187,241

261,272

Stocks

491

1,011

895

1,571

1,800

Debtors

40,760

47,941

71,363

119,326

133,319

Cash & cash equivalents

26,182

28,654

56,133

66,345

126,154

Other

0

0

0

0

0

Current Liabilities

 

 

78,767

96,421

137,129

170,656

195,006

Creditors

75,683

89,256

117,016

168,819

193,169

Tax and social security

0

0

0

0

0

Short term borrowings

2,213

5,819

18,276

0

0

Lease liabilities

871

1,346

1,837

1,837

1,837

Long Term Liabilities

 

 

129,206

137,867

149,110

167,536

177,314

Long term borrowings

98,967

107,820

119,251

129,000

129,000

Other long term liabilities

30,239

30,047

29,859

38,536

48,314

Net Assets

 

 

77,004

113,896

113,982

195,994

224,363

Minority interests

(69)

0

0

0

0

Shareholders' equity

 

 

76,935

113,896

113,982

195,994

224,363

CASH FLOW

Op Cash Flow before WC and tax

2,989

3,997

23,360

65,959

73,601

Working capital

8,963

4,129

4,091

3,165

10,128

Exceptional & other

6,673

14,526

15,804

15,658

15,315

Tax

(2,309)

(1,957)

(2,230)

(12,698)

(14,889)

Net operating cash flow

 

 

16,316

20,695

41,025

72,083

84,155

Capex

(15,497)

(4,259)

(4,810)

(5,416)

(5,622)

Acquisitions/disposals

(60,900)

(37,065)

(18,344)

(92,150)

(5,500)

Interest paid

(1,970)

(9,512)

(8,695)

(10,652)

(10,309)

Equity financing

2,133

34,667

0

58,500

0

Change in borrowing

101,047

1,563

24,721

18,892

0

Other

(31,307)

(4,734)

(3,700)

(24,445)

(2,914)

Net Cash Flow

9,822

1,355

30,197

16,812

59,809

Opening net debt/(cash)

 

 

2,115

74,998

84,985

81,394

62,655

FX

(6,730)

1,117

(2,718)

(6,600)

0

Other non-cash movements

(75,975)

(12,459)

(23,888)

8,527

0

Closing net debt/(cash)

 

 

74,998

84,985

81,394

62,655

2,846

Source: CentralNic, Edison Investment Research

General disclaimer and copyright

This report has been commissioned by CentralNic Group and prepared and issued by Edison, in consideration of a fee payable by CentralNic Group. 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: Copyright 2022 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

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

General disclaimer and copyright

This report has been commissioned by CentralNic Group and prepared and issued by Edison, in consideration of a fee payable by CentralNic Group. 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: Copyright 2022 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

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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Research: Healthcare

Basilea Pharmaceutica — Oncology milestone payment triggered

As expected, Basilea continues to derive value from its oncology exit as it has received a transition-related milestone payment of US$4m (CHF3.7m) from its licensing partner SillaJen triggered by the progression of the oncology asset BAL0891 towards Phase I clinical studies. The company had previously received an upfront payment of US$10m (CHF9.3m) following closure of the deal with SillaJen in September 2022. As part of the licensing agreement, Basilea is set to receive potential future performance-based milestone payments of up to c US$320m (c CHF297m) and is also entitled to tiered royalties on net sales, which will range from single- to double-digit percentages. Basilea remains responsible for making milestone and royalty payments to the licensor, NTRC, for BAL0891. We value Basilea at CHF921.7m or CHF77.8/share (previously CHF903.5m or CHF76.3/share).

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