Consort Medical
Written by
Consort Medical |
New impetus for injectables franchise |
Bespak injectables deal |
Healthcare equipment & services |
17 October 2016 |
Share price performance
Business description
Next events
Analysts
Consort Medical is a research client of Edison Investment Research Limited |
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Bespak’s first deal for its proprietary Syrina autoinjector platform is with an undisclosed major global biopharma. Syrina is based on proprietary VapourSoft technology that uses a liquid gas propellant (rather than a conventional spring) to provide the force for drug delivery. Bespak’s ability to customise its devices to the specifications of its biopharma customers provides a significant competitive edge, enabling delivery of higher volumes and a broader range of formulations (including viscous biologics) while reducing the risk of safety hazards for users. This first deal provides technology validation and may catalyse further injectables deals. Bespak has the potential to become the partner of choice in an environment where rising numbers of biologic drugs in development and increased pressure on healthcare costs make self-administration a more attractive option.
Year end |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
04/15 |
184.8 |
22.7 |
47.8 |
18.1 |
24.0 |
1.6 |
04/16 |
276.9 |
32.3 |
57.6 |
19.3 |
19.9 |
1.7 |
04/17e |
281.5 |
33.5 |
55.8 |
19.3 |
20.5 |
1.7 |
04/18e |
298.7 |
36.3 |
60.5 |
19.3 |
18.9 |
1.7 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
First Syrina deal secured
The master development agreement covers the development of a Syrina-delivered formulation of a single biologic through to commercialisation. It also includes key commercial supply terms and allows for deal expansion to include development of additional products. Deal terms and the identity of the partner are undisclosed.
Important validation for Bespak injectables franchise
Ongoing internal development at the Innovation Centre has strengthened Bespak’s injectables capabilities, delivering three injector ranges: Syrina, Lapas (both VapourSoft-based) and Lila. This first Syrina deal represents important external technology validation; additional deals would underpin future franchise growth.
Two injectable devices approved; four in pipeline
The current development pipeline includes three injectable projects; this new Syrina deal will be a fourth. Two injectable devices are also in the commercialisation phase: INJ300, Dr Reddy’s sumatriptan autoinjector (marketed since 2014), and INJ570, UCB’s Cimzia AutoClicks (CHMP positive opinion September 2016). The first commercial launch of Syrina should prompt a step change in Consort revenues and be a further driver for Bespak’s revenue diversification.
Valuation: 1,350-1,403p per share range
The Syrina deal and INJ570 approval will contribute to supporting management’s current financial expectations, thus we make no changes to forecasts or valuation. We value Consort using a combination of peer comparables and a pipeline rNPV. On a calendarised 11.5x FY17e EV/EBITDA, our equity valuation is 1,130p/share. Adding 220-273p for the product pipeline results in a group valuation of 1,350-1,403p/share. On DCF, we value Consort at 1,248p/share.
Exhibit 1: Financial summary
£'000s |
2014 |
2015 |
2016 |
2017e |
2018e |
|
Year ending 30 April |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
|
PROFIT & LOSS |
||||||
Revenue |
|
100,010 |
184,825 |
276,910 |
281,467 |
298,729 |
EBITDA |
|
24,434 |
33,188 |
47,614 |
50,077 |
54,317 |
Operating profit (before special items) |
|
18,793 |
25,055 |
36,975 |
37,277 |
40,017 |
Intangible amortisation |
(983) |
(778) |
(333) |
(800) |
(800) |
|
Exceptionals/Special Items |
(1,387) |
(17,179) |
(21,018) |
(13,400) |
(13,400) |
|
Share-based payment |
(1,821) |
(1,557) |
(1,792) |
(1,828) |
(1,864) |
|
Operating profit |
17,406 |
7,876 |
15,957 |
23,877 |
26,617 |
|
Net interest |
(1,266) |
(2,364) |
(4,716) |
(3,750) |
(3,700) |
|
Profit before tax (norm) |
|
17,527 |
22,691 |
32,259 |
33,527 |
36,317 |
Profit before tax (as reported) |
|
16,544 |
21,913 |
31,926 |
32,727 |
35,517 |
Tax |
(3,611) |
(3,269) |
(4,181) |
(6,035) |
(6,537) |
|
Profit after tax (norm) |
13,916 |
19,422 |
28,078 |
27,492 |
29,780 |
|
Profit after tax (as reported) |
12,968 |
4,948 |
15,968 |
13,495 |
15,784 |
|
Average number of shares outstanding (m) |
32.9 |
40.7 |
48.8 |
49.2 |
49.2 |
|
EPS - normalised (p) |
|
42.3 |
47.8 |
57.6 |
55.8 |
60.5 |
EPS - FRS 3 (p) |
|
39.4 |
12.2 |
32.7 |
27.4 |
32.1 |
Dividend per share (p) |
18.1 |
18.1 |
19.3 |
19.3 |
19.3 |
|
EBITDA margin (%) |
24.4% |
18.0% |
17.2% |
17.8% |
18.2% |
|
Operating margin (before GW and except) (%) |
18.8% |
13.6% |
13.4% |
13.2% |
13.4% |
|
BALANCE SHEET |
||||||
Fixed assets |
|
79,699 |
329,687 |
334,861 |
347,061 |
357,761 |
Intangible assets |
20,835 |
194,350 |
189,938 |
189,138 |
188,338 |
|
Tangible assets |
49,955 |
128,012 |
136,673 |
149,673 |
161,173 |
|
Investment in associates |
4,068 |
6,266 |
8,250 |
8,250 |
8,250 |
|
Trade investment & others |
4,841 |
1,059 |
0 |
0 |
0 |
|
Associated with assets held for sale |
0 |
0 |
0 |
0 |
0 |
|
Current assets |
|
64,028 |
139,075 |
110,899 |
116,819 |
121,267 |
Stocks |
10,203 |
31,344 |
30,725 |
35,183 |
37,341 |
|
Debtors |
27,975 |
60,133 |
54,632 |
64,737 |
68,708 |
|
Cash |
25,843 |
45,201 |
16,258 |
16,898 |
15,218 |
|
Other |
7 |
2,397 |
9,284 |
0 |
0 |
|
Current liabilities |
|
(17,868) |
(222,953) |
(178,780) |
(189,068) |
(186,300) |
Creditors |
(15,479) |
(74,285) |
(61,705) |
(75,202) |
(79,434) |
|
Other creditors |
(1,842) |
0 |
0 |
0 |
0 |
|
Short-term borrowings |
0 |
(144,414) |
(113,209) |
(110,000) |
(103,000) |
|
Provisions and other current liabilities |
(547) |
(4,254) |
(3,866) |
(3,866) |
(3,866) |
|
Associated with assets held for sale |
0 |
0 |
0 |
0 |
0 |
|
Long-term liabilities |
|
(7,335) |
(45,316) |
(57,829) |
(43,522) |
(43,415) |
Long-term borrowings |
0 |
0 |
0 |
0 |
0 |
|
Deferred taxation |
(3,429) |
(22,401) |
(18,571) |
(4,497) |
(4,496) |
|
Other long-term liabilities |
(3,906) |
(22,915) |
(39,258) |
(39,025) |
(38,919) |
|
Net assets |
|
118,524 |
200,493 |
209,151 |
231,291 |
249,313 |
CASH FLOW |
||||||
Operating cash flow |
|
17,978 |
22,040 |
46,752 |
48,210 |
51,621 |
Net interest |
(416) |
(1,304) |
(2,802) |
(3,800) |
(3,700) |
|
Tax |
(3,564) |
(4,503) |
(6,548) |
(6,035) |
(6,537) |
|
Capex |
(16,134) |
(20,500) |
(21,126) |
(25,000) |
(25,000) |
|
Purchase of intangibles |
(158) |
(178) |
(357) |
0 |
0 |
|
Acquisitions/disposals |
(387) |
(202,812) |
1,543 |
0 |
(1,500) |
|
Financing |
(2,598) |
91,918 |
(1,868) |
0 |
0 |
|
Dividends |
(5,780) |
(7,011) |
(8,999) |
(9,526) |
(9,564) |
|
Other |
(64) |
(2,909) |
(1,265) |
0 |
0 |
|
Net cash flow |
(11,123) |
(125,259) |
5,330 |
3,849 |
5,320 |
|
Opening net debt/(cash) |
|
(36,966) |
(25,843) |
99,213 |
96,951 |
93,102 |
HP finance leases initiated |
0 |
0 |
0 |
0 |
0 |
|
Other |
0 |
203 |
(3,068) |
0 |
(0) |
|
Closing net debt/(cash) |
|
(25,843) |
99,213 |
96,951 |
93,102 |
87,782 |
Source: Edison Investment Research, Consort Medical accounts
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