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Small-caps under the radar

Simon Thompson highlights a quartet of materially undervalued small-caps
Small-caps under the radar

Frontier IP (FIPP:59p), a company that provides a range of commercialisation services to university spin-outs in return for ‘free equity’ stakes, has released a raft of bullish announcements since my last update (‘Covid-19: A new frontier for vaccine development’, 30 March 2020).

Investors have yet to cotton onto their importance. When they do, expect a re-rating. That’s because the Aim-traded shares trade on a modest premium to last reported net asset value of £23.6m (46.6p per share) even though annual results for the 12 months to 30 June 2020 will deliver valuation uplifts from several portfolio companies.

Firstly, Frontier IP expects to report a material valuation uplift on the £1.6m carrying value of its 17 per cent equity stake in The Vaccine Group (TVG), a spin-out from University of Plymouth. Backed by £9m of grant funding from the Chinese, UK and US governments, TVG is using its novel vaccine technology to develop animal vaccines to tackle COVID-19. Vaccinating animals offers potential to eliminate SARS-CoV-2 in existing animal sources and prevent new reservoirs developing that may lead to future spill-overs into humans and a re-emergence of COVID-19.

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