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AMS in robust position

Covid-19 restrictions led to a hiatus on elective surgeries and hospital visits
AMS in robust position

Virus-induced lockdowns earlier this year spurred a significant decline in non-virus related hospital visits and procedures. In turn, that slowdown dealt a major blow to Advanced Medical Solution’s (AMS) revenues in the first half, knocking demand for its surgical and wound-care products.

IC TIP: Buy at 240p

Still, the group increased its investment in research and development over the period from £2.9m to £3.8m, with a view to progressing its core projects. On top of the sales contraction, this meant that the operating margin more than halved to 11.3 per cent – though there is an argument that ongoing expenditure will help to position AMS well as markets rebound.

To that point, AMS said that it is seeing signs of recovery in most markets. Bosses are positive about the group’s medium-to-long-term prospects, notwithstanding short-term disruption and uncertainty about the path of the pandemic.  

By division, surgical revenues slipped by almost a fifth to £21.4m, while advanced closure – which largely comprises the ‘LiquiBand’ skin adhesive range – was down by more than a third to £8.9m. That said, efforts to boost US sales of LiquiBand helped it to achieve a 2 per cent market-share gain.

Numis forecasts adjusted EPS of 5.5p for 2020, rising to 10.4p in 2021.

ADVANCED MEDICAL SOLUTIONS (AMS) 
ORD PRICE:240pMARKET VALUE:£ 517m
TOUCH:238-240p12-MONTH HIGH:308pLOW: 192p
DIVIDEND YIELD:0.6%PE RATIO:37
NET ASSET VALUE:92p*NET CASH:£67.9m
Half-year to 30 JunTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201948.711.24.10.50
202039.34.31.70.50
% change-19-62-59-
Ex-div:24 Sep   
Payment:23 Oct   

*Includes intangible assets of £76.3m or 35p a share