IC TIP UPDATES:
Polar Capital (POLR) gained £0.9bn in net inflows during the first half, which together with £1.8bn in market returns, pushed assets under management up more than a fifth to £14.7bn. However, a downturn in equity markets since the end of September meant assets had fallen to £13.6bn by the end of October. The interim dividend was raised by 2p a share to 8p. Buy for income.
Since it listed in London, Yellow Cake (YCA) has had an “incredibly rewarding” time on public markets, according to Andre Liebenberg, chief executive of the uranium investment vehicle. Since its purchase of uranium, an improving spot price has pushed the value of the group’s inventory by 38 per cent, and more is expected. That thesis is driven by reduced global output from uranium mines, and increasing demand from markets including China and Japan. We remain buyers.
Kainos’s (KNOS) revenues rose 62 per cent to £67.2m for the half year to September, buoyed by a 75 per cent improvement to £57.3m within its digital services business. Pre-tax profits rose 28 per cent to £8.7m. And the group’s sales orders climbed by 42 per cent to £90.2m, notwithstanding a single-digit reduction within the digital platforms business because of ongoing NHS funding challenges impacting demand for Kainos’s Evolve healthcare offering. Within September’s full-year trading update, management had said it expected full-year results to exceed market expectations. It remains confident that the company is on track to achieve “a ninth consecutive year of growth”. Buy.
Hotel Chocolat (HOTC) has opened its first store in Japan, at the Aeon Lake Town shopping mall in Tokyo – the largest shopping mall in the country. Chief executive Angus Thirlwell described the first day of trading last week as “hugely encouraging”, with a sales performance “well ahead of expectations”. According to Mr Thirlwell, the products have “landed with aplomb”. We remain buyers.
It seems bad news follows good. Just a matter of weeks after announcing a new development deal with generics giant Hikma (HIK), respiratory specialist Vectura (VEC) has revealed one of its own drugs – known as VR475 – has failed in a third stage clinical trial. The drug failed to make any meaningful difference in a study with patients suffering from severe uncontrolled asthma and, based on these results, Vectura won’t pursue further development or partnering of VR475. It’s disappointing, but we’re keeping the faith in Vectura’s long-term potential. Buy.
KEY STORIES:
As many in the market expected, DNO has made a bid for the 72 per cent of Faroe Petroleum (FPM) it doesn’t already own, in an all-cash offer which values the company at £608m, or 152p a share. According to Faroe, which will meet together with its advisors to consider the offer, the Norwegian firm did not engage with it prior to the bid. In expectation that this initial offer will be re-buffed, the market has already bid up Faroe’s shares to 158p. That’s short of the group’s 12-month high of 170p, however, though DNO notes that “the price of Brent crude has dropped 13 percent and oil and equity markets have entered a period of great uncertainty” since it first started to build a stake in Faroe.
OTHER COMPANY NEWS:
Rio Tinto (RIO) is to sell its entire 69 per cent stake in the Rössing uranium mine in Namibia to China National Uranium Corporation, for up to $106.5m. Of that sum, $100m is linked to uranium spot prices and Rössing's net income during the next seven calendar years.
US regulators have awarded Fasnera, one of AstraZeneca’s (AZN) drugs, ‘orphan drug designation’ (ODD) for the treatment of Eosinophilic Granulomatosis with Polyangiitis (EGPA), a rare autoimmune disease that can cause damage to multiple organs and tissues. Fasnera is currently approved as an add-on treatment for severe asthma in the US, EU, Japan and several other jurisdictions. But it is hoped that Fasnera will now move into late stage clinical trials for EGPA. The ODD status earmarks Fasnera as a potential treatment for a rare disease affecting a patient population of 200,000 people or less in the US.
Oxford Instruments (OXIG) has announced the appointment of Neil Carson as non-executive chairman. The current chairman of TT Electronics (TTG) and deputy chairman at TI Fluid Systems (TIFS) will take up his new role on 1 December 2018. Mr Carson succeeds former chair Alan Thomson, who passed away in July 2018.
