Allium Medical Solutions
Written by
Allium Medical Solutions |
Revenues continue to grow in key markets |
Q3 and 9M16 update |
Medical devices |
24 November 2016 |
Share price performance
Business description
Next events
Analysts
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Allium Medical Solutions’ Q316 and 9M16 results are encouraging. Revenues in Q316 were NIS1.6m, up 46% vs Q315, while 9M16 revenues were NIS5.5m, up 54% vs 9M15. This increase has mainly been driven by Allium Stents in South Korea, which is a new and significant market for the company; and IBI Medical in Europe. These results reinforce our revenue CAGR forecast of 41% in 2015-20e. We reiterate our DCF valuation of NIS1.95-2.08/share.
Year |
Revenue (NISm) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/14 |
4.9 |
(20.1) |
(1.09) |
0.0 |
N/A |
N/A |
12/15 |
5.2 |
(18.5) |
(0.65) |
0.0 |
N/A |
N/A |
12/16e |
7.4 |
(18.1) |
(0.40) |
0.0 |
N/A |
N/A |
12/17e |
11.2 |
(15.0) |
(0.28) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Growth continues in current and new markets
Allium has announced Q3 and 9M results for 2016. Revenues increased 46% and 54% respectively vs the same periods in 2015. However, we note that on a quarter-on-quarter basis, revenues in Q3 decreased by 20% but this was mainly because sales tend to decline during the summer period. Revenue growth was generated in South Korea and existing markets, mainly Europe, Australia and South Africa, as well as its home market of Israel. As described in our initiation report, Allium has signed distribution agreements worth c NIS185m for its peripheral stents and IBI EndoFast urogynecology products. The main opportunity of c NIS132m is concentrated in China, Mexico and Russia. We believe it is important that the company continues to execute on its expansion strategy, which could generate a double-digit increase in revenues.
Rest of business lines progressing
Allium’s plans regarding Gardia Medical remain intact and the company continues to pursue business development opportunities to engage a partner for a potential transaction. Design freeze for Allevetix’s gastroduodenal sleeve remains on track for Q416 and a clinical trial will begin in 2017 in collaboration with the National University of Singapore (NUS). A new patent application has been granted for BMV (now rebranded as TruLeaf) in the US beyond the already granted US patent; the patent titled “Method for implanting prosthetic valve” covers the procedure to implant a prosthetic mitral valve device to replace a diseased or dysfunctional mitral valve and strengthens Allium’s IP into 2030.
Valuation unchanged at NIS1.95-2.08/share
We maintain our DCF valuation of NIS1.95-2.08 per share, which is based on a 12.5% discount rate (10% for terminal value), explicit free cash flow forecast to 2026 and a 2% terminal growth rate. After raising c NIS14m in Q316, cash equivalents and short-term deposits at end Q316 were NIS28.3m with a NIS4.3m burn rate, in line with previous quarters.
Exhibit 1: Financial summary
NIS'000 |
2014 |
2015 |
2016e |
2017e |
2018e |
||
Year end 31 December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
|||||||
Revenue |
|
|
4,916 |
5,178 |
7,420 |
11,196 |
17,470 |
Cost of Sales |
(4,407) |
(4,421) |
(5,453) |
(7,069) |
(9,471) |
||
Gross Profit |
509 |
757 |
1,967 |
4,127 |
7,999 |
||
EBITDA |
|
|
(19,080) |
(16,333) |
(16,887) |
(14,223) |
(5,835) |
Operating Profit (before GW and except.) |
(19,465) |
(16,759) |
(17,278) |
(14,585) |
(6,167) |
||
Intangible Amortisation |
(2,032) |
(1,705) |
(1,564) |
(1,450) |
(1,328) |
||
Exceptionals |
(2,554) |
(720) |
0 |
0 |
0 |
||
Operating Profit |
(24,051) |
(19,184) |
(18,842) |
(16,034) |
(7,495) |
||
Net Interest |
(592) |
(1,748) |
(850) |
(449) |
(239) |
||
Exceptionals |
0 |
0 |
0 |
0 |
0 |
||
Other |
0 |
0 |
0 |
0 |
0 |
||
Profit Before Tax (norm) |
|
|
(20,057) |
(18,507) |
(18,128) |
(15,033) |
(6,407) |
Profit Before Tax (IFRS) |
|
|
(24,643) |
(20,932) |
(19,692) |
(16,483) |
(7,735) |
Tax |
0 |
0 |
0 |
0 |
0 |
||
Profit After Tax (norm) |
(20,057) |
(18,507) |
(18,128) |
(15,033) |
(6,407) |
||
Profit After Tax (IFRS) |
(24,643) |
(20,932) |
(19,692) |
(16,483) |
(7,735) |
||
Average Number of Shares Outstanding (m) |
18.43 |
28.53 |
44.97 |
52.94 |
52.94 |
||
EPS - normalised (NIS) |
|
|
(1.09) |
(0.65) |
(0.40) |
(0.28) |
(0.12) |
EPS - IFRS (NIS) |
|
|
(1.34) |
(0.73) |
(0.44) |
(0.31) |
(0.15) |
Dividend per share (NIS) |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
||
Gross Margin (%) |
10% |
15% |
27% |
37% |
46% |
||
EBITDA Margin (%) |
N/A |
N/A |
N/A |
N/A |
N/A |
||
Operating Margin (before GW and except.) (%) |
N/A |
N/A |
N/A |
N/A |
N/A |
||
BALANCE SHEET |
|||||||
Fixed Assets |
|
|
28,218 |
46,619 |
28,764 |
27,052 |
25,492 |
Intangible Assets |
26,438 |
24,059 |
22,495 |
21,045 |
19,717 |
||
Tangible Assets |
1,780 |
1,472 |
1,181 |
919 |
687 |
||
Other |
0 |
21,088 |
5,088 |
5,088 |
5,088 |
||
Current Assets |
|
|
16,631 |
31,344 |
28,323 |
13,749 |
8,004 |
Stocks |
2,330 |
2,277 |
2,215 |
2,527 |
2,834 |
||
Debtors |
686 |
889 |
1,220 |
1,534 |
1,914 |
||
Cash |
12,942 |
27,055 |
23,765 |
8,566 |
2,133 |
||
Other |
673 |
1,123 |
1,123 |
1,123 |
1,123 |
||
Current Liabilities |
|
|
(5,560) |
(5,620) |
(5,536) |
(5,833) |
(6,363) |
Creditors |
(1,516) |
(1,524) |
(1,440) |
(1,737) |
(2,267) |
||
Deferred revenues |
(1,820) |
(1,895) |
(1,895) |
(1,895) |
(1,895) |
||
Other short term liabilities |
(2,224) |
(2,201) |
(2,201) |
(2,201) |
(2,201) |
||
Long Term Liabilities |
|
|
(8,947) |
(8,102) |
(8,002) |
(7,902) |
(7,802) |
Long term borrowings |
0 |
0 |
0 |
0 |
0 |
||
Deferred revenues |
(1,820) |
(1,895) |
(1,895) |
(1,895) |
(1,895) |
||
Other long term liabilities |
(7,127) |
(6,207) |
(6,107) |
(6,007) |
(5,907) |
||
Net Assets |
|
|
30,342 |
64,241 |
43,549 |
27,066 |
19,332 |
CASH FLOW |
|||||||
Operating Cash Flow |
|
|
(19,024) |
(15,874) |
(18,090) |
(14,999) |
(6,233) |
Net Interest |
0 |
0 |
0 |
0 |
0 |
||
Tax |
0 |
0 |
0 |
0 |
0 |
||
Capex |
(349) |
(164) |
(100) |
(100) |
(100) |
||
Acquisitions/disposals |
0 |
0 |
0 |
0 |
0 |
||
Financing |
25,191 |
31,992 |
15,000 |
0 |
0 |
||
Dividends |
0 |
0 |
0 |
0 |
0 |
||
Other |
(41) |
(1,841) |
(100) |
(100) |
(100) |
||
Net Cash Flow |
5,777 |
14,113 |
(3,290) |
(15,199) |
(6,433) |
||
Opening net debt/(cash) |
|
|
(7,165) |
(12,942) |
(27,055) |
(23,765) |
(8,566) |
HP finance leases initiated |
0 |
0 |
0 |
0 |
0 |
||
Other |
0 |
0 |
0 |
0 |
0 |
||
Closing net debt/(cash) |
|
|
(12,942) |
(27,055) |
(23,765) |
(8,566) |
(2,133) |
Source: Edison Investment Research, Allium Medical Solutions accounts.
|
|