Carclo Share Discussion Threads

[michaelfenton] 12/4/2016 15:59

queeny2 - a bit dull maybe but full of promise for the future which is all I was looking for at this stage.

[rivaldo] 12/4/2016 15:55

As I said before, historic underlying EPS should be around 9.5p, up from 7.9p last year and 6.1p the year before. CAR's business is growing at an extremely fast rate.

For the current year 11.5p EPS is forecast - another 21% growth.

That would be an almost doubling of EPS in just 3 years. If that's dull then give me much more of it :o))

Such growth would warrant a P/E of 17 or 18 in another company. The memory of CIT has hindered this to date, but as this fades and the impressive track record continues in the core business then a premium rating might be achieved pretty quickly.

[queeny2] 12/4/2016 15:08

Looks fine. Possible to argue a bit dull if you're feeling argumentative, but dull is fine. Pension fund out of the way.

[boadicea] 12/4/2016 14:53

An in-line statement with expectations generously fulfilled will have come as no surprise to regular readers and contributors to this thread.
Which is why I have been adding significantly on the recent lows (in the mid 120's). Another dip?... probably not, but it would provide a very welcome opportunity!
Today is a good start towards a better rating but I see no reason to be thinking about taking a profit as there looks to be plenty more to come from continuing steady progress over a period of time.
Equally I don't see any fears arising from Brexit - rather the opposite if it leads to a more competitive rating for sterling and given the international spread of CTP's manufacturing and markets. On top of that in the medical device market is the moat created by long lead time required for regulatory approval of any potentially competing product.

[andrewbaker] 12/4/2016 11:05

My "buy the dips" comment in February (no. 10775) was prescient, I'm pleased to say, and unreservedly take all the credit! lol. :)

As an investor, as opposed to trader, this is one business that deserves attention, and will reward over a number of years. In my humble view, this company would be one that Warren Buffett would have considered and perhaps bought when executing his 50% per year returns strategy by investing in exceptional small companies, which he did many years ago, as has been reported recently.

Disclosure: long, and staying so.

[rivaldo] 12/4/2016 11:00

Finncap retain their Buy and 170p target today.

Illis, no chance - it's only upwards from here now until the results on 7th June :o))

[illiswilgig] 12/4/2016 10:48

Yes, a bit too much that the market managed to overlook the 'in line' statement given how undervaled the share price is at the moment.

Still, I wouldn't rule out the price slipping back prior to the results and yielding another buying opportunity. I can hope!

cheers

[courant] 12/4/2016 10:18

I bought back into CAR in a reasonably significant way a few days ago, having had a holding here in the past. Looks extremely good value going forward given the strong trading statement - I think the previous CIT issues (and subsequent share price gyrations) have clouded what's essentially a solid growth story coupled with a very low share price. Looking forward to how this will progress!

[rivaldo] 12/4/2016 09:12

Looking extremely good online now. I can only buy 6k maximum at 138.35p, whilst I can sell 25,000 at 131.39p.

[illiswilgig] 12/4/2016 07:26

Yes - even the engineering business appears to be cautiously optimistic.

I particularly liked the statements regarding CDS

'In order to determine the optimal way to develop this opportunity for shareholders, we commenced discussions with potential commercial partners'

Fair enough. Then this......

'and appointed advisors to engage with more strategic collaborators. The Board believes that the feedback from these will be pivotal in concluding the appropriate strategy for the business.'

Possible translation? We're sorry we did not take the cash for CIT when we had the opportunity and we don't want to make the same mistake again. Especially when growth in CTP and LED is a better bet. So if anyone offers us good money we'll be happy to get shot of this one :-)

cheers

[rivaldo] 12/4/2016 07:20

Indeed - great stuff.

Underlying EPS should be around 9.5p, up from 7.9p last year and 6.1p the year before. CAR's business is growing at an extremely fast rate.

For the current year 11.5p EPS is forecast - another 21% growth.

And usually management expectations are a touch higher than market expectations, so we may find that current forecasts are too low.

A P/E of 11 is far too low for a business showing such growth, and with global expansion going on in the USA, India and China.

[michaelfenton] 12/4/2016 07:14

Excellent RNS. All areas expanding and the future looks rosy?

[illiswilgig] 08/4/2016 12:57

I expect that the answer will lie somewhere in the middle as usual. Steady growth is much preferable to overnight success in my book.

CTP has built new facilities to ramp up production of its products - but even if it wanted to do it can't increase production overnight and a serious increase would need more investment in new facilities.

I'm looking for consistent 20% growth year on year and this product should contribute well to that growth,

cheers

[re1dy] 08/4/2016 12:27

I work in this field, it's not usually as simple to switch as it appears Rivaldo. We are having difficulties instituting a switch for the metered dose generic because there are new combinations which clinical claim superiority. Originator companies also have a tendency to drop prices if an alternative gains momentum which somewhat pulls the rug from the switch. Switching patients from one product to another is not simple or easy and takes a lot of effort across primary and secondary care. There are a lot of 'stakeholders' in the process.

[rivaldo] 08/4/2016 12:10

Indeed Boadicea. I already have more than enough CAR, but have bought a few more VEC too.

Useful commentary on FT Alphaville today on VEC's RNS - with forecast peak $320m sales, and potentially a lot more, you can imagine that this would be a moneyspinner for CAR too.

"RBC

The FDA has accepted Vectura and commercial partner Hikma’s filing of AB-rated Advair in the US with a goal GDUFA date of 10 May; whilst the acceptance date has come within our timeline expectations the potential approval date is slightly (1 -2 months) earlier than we had anticipated. We had already assumed a Q3 launch and, with the timeline now set by the FDA, there is a risk to the upside that the launch comes earlier than we had original anticipated (we prefer to leave some headroom in our estimates, for now).

Vectura is eligible for a $10m milestone payment from Hikma (1p per share on a FD basis post the merger with Skye) and a further $11m upon approval but, whilst this is only a token value to the company we see greater meaning to Vectura shareholders from the acceptance and, hopefully, approval.

Vectura is set to earn a 15% royalty on sales from a product that is directly substitutable with the gold standard ICS/LABA drug (Advair) for asthma/COPD in the US which is still generating $3bn of revenues and with only 1 -2 other generic competitors likely. It is not unreasonable to assume the product could generate $300m within 24 months of launch, and continuing for c.10 years (providing a healthy £30m p.a. revenue stream at 100% gross margin). As a reminder Vec’s current Mcap is £650m pre the merger

No change to forecasts; we had already assumed this event. As a reminder pre-merger FY16E/17E/18E revenue, EBITDA and EPS of £69.8m/£77.4m/£106.5m, £23.9m/£25.8m/£51.7m and 4.35p/5.10p/10.64p respectively. Post-merger FY16E/17E/18E revenue, EBITDA and EPS of £69.8m/£132.7m/£239.9m, £23.9m/£42.m/£100.6m and 4.35p/6.37p/12.33p respectively.

Valuation: Once the product launches we think it adds c25p to the share price (we had already assumed the acceptance) and, if the company begins to be valued as a fast growing company (with a FCF yield of +8% by that point also) post the merger with Skye then we see upwards of 300p as possible (basic 20x multiple against FY18E Mar-YE EPS of the combined group plus the cash position (up to £150m by that point, c10% of combined Mcap). We suggest buying now.

Numis

In our view, Vectura/Hikma is one of only a few credible contenders targeting the c.$3bn US market for Advair. We are bullish on the prospects and assign 75% chance of success, which reflects our confidence in the product following the update on clinical in January, which we believe indicated that the 1,430
patient trial had been successful in meeting the FDA definition of clinical bioequivalance (90% confidence intervals of test/reference ratio of endpoints within 80-125%).

$320m of peak sales: We forecast $320m of peak sales for VR315 in the US, reflecting payer-led substitution of GSK's Advair, and therapeutic substitution from other ICS/ LABA brands (ie Symbicort, Dulera and Breo). If we assume that only 50% of Advair is substituted, together with 25% of Symbicort and Dulera and 10% of Breo, we derive a $1.2bn market opportunity if priced at a 33% discount to the brand. With 3-4 players in the market we see VR315 gaining 25% of this opportunity driving peak sales of $320m and greater than $45m of potential royalty payments to Vectura that we value at 43p/share
(at 75% risk adjustment) and increasing to 57p/share unrisked. For now, we make no changes to these assumptions, but this is a key derisking step that should give the market increased confidence in our growth forecasts for VR315, that underpin our 264p target price.

Additional catalysts expected in the coming 12 months: In addition to the
anticipated completion of the merger, 2016 should provide numerous additional
catalysts. With regulatory / commercial updates we are focused on Flutiform and
Novartis' EU/RoW sales of Seebri and Ultibro and US progress with Seebri / Utibron.

We also anticipate the first EU approval of the FOX handheld nebuliser, which could open up new opportunities. Clinical data should start to impact again and here we focus on the Belgian partners UCB and Ablynx both set to deliver proof of concept data on delivery of biologics to the lung using Vectura technology. If proven, this could open up a large market opportunity."

[boadicea] 08/4/2016 11:33

It's often (usually?) difficult to tell whether unexplained weakness in a share price is due to purely technical factors or a privileged few having superior information.

A possible technical factor is general selling of holdings in unit trusts and oeics which may consequently have to liquidate some of their portfolio (unlike closed end investment companies). They then become a forced seller of something and it is merely a question of what they choose to sell. Particularly in the case of trusts specialising in small companies (like CAR) this can present problems of stock liquidity and a question of choosing the least illiquid in order to cause least damage to the fund value.

I'm hoping something of that sort applies here as, on what we officially know, there is little reason for share price weakness, in fact rather the opposite. Anyway, it has provided me with an opportunity to restore my holding to a useful level as well as getting some SKP as a cheap (160p) prospective entry to VEC. That's most of my 2015/16 ISA sub accounted for.

[michaelfenton] 08/4/2016 10:46

Thanks rivaldo. Glad to have confirmation so this could lead to a huge increase in sales from maybe 2017 onwards? Sounds like really good news - strange so few buyers - I have added a few more and await RNS next week hopefully with strong figures.

[rivaldo] 08/4/2016 10:36

Mf, I saw an article recently state that "Vectura’s most promising treatment is a generic version of GlaxoSmithkline̵7;s blockbuster asthma drug Advair, which may be approved next year."

This summary was posted elsewhere as follows for VR315, which is now known as AirFluSal Forspiro.....

"This is an inhaled combination therapy for asthma and COPD which is delivered by the GyroHaler dry powder inhaler... which is manufactured by Carclo. GyroHaler is an award winning device which came out of a joint CAR/VEC collaboration... with Carclo having sole manufacturing rights to the device. The device is the only generic replacement to win approval for one the top selling drugs in the world... Advair!

It has already been launched on the market in several European countries as well as Korea and Latin America and it was recently announced that it has successfully completed all clinical trials in the USA... it is now under consideration for release to the market. This latest win in the USA has been several years in the making and opens up a huge market."

[michaelfenton] 08/4/2016 08:42

rivaldo - can you please explain the exact relationship between vectura and carclo I know it is longstanding (more than 10 years. The 10 mil goes to vectura and am right to assume that carclo plastics will benefit when production is ramped out?

[rivaldo] 08/4/2016 07:31

Great news from CAR's VR315 partner VEC this morning - FDA acceptance of the ANDA filing is a big step forward, signified by a $10m milestone payment:

[illiswilgig] 07/4/2016 13:35

First time for ages I've been buying more CAR shares. At 126p.

Not easy to do - given my failure to call it right on the long journey down. But it is by far and away the most undervalued of my shares at the moment - the news and forecasts are all good but it's hard to shake off that irrational fear that they will disappoint once more.

cheers

[illiswilgig] 07/4/2016 13:31

Dontay - ta for putting me right wrt to Diamond thingy versus Gorilla glass!

Totally agree it's a distraction - though it's a great illustration of why CAR's share price is languishing far below it's peers - it will take time for them to regain trust,

cheers

[dontay] 07/4/2016 12:38

illiswilgig... The only segment where UNXL might have some sales is the very low end. Diamond Hard has the advantage of being less shatter proof than the more normal Gorilla glass... and I would expect also quite a bit cheaper.. but it is LESS scratch resistant and most importantly lets LESS light through to the display... probably actually fine for military use... but in these days of high quality-high def screen displays... it's not good enough for the demanding high end market. The problem with touch sensors is the likes of Samsung and LG now make their own in-cell and on-cell versions, Apple's sensors are also in-cell and in the the main supplied by JDI (Japan Display Industries). Virtually all high end device makers, including Microsoft, now fuse the top cover glass to the display cover glass... no longer a need for a separate sensor to be glued and sandwiched in between... the result is thinner, lighter devices such as the recently announced HP "thinnest lap top in the world." with, as you rightly said, less production processes involved. But as rivaldo also rightly said... UNXL are a distraction... Carclo should be doing very well indeed and are well off out of it! Looks like we might have to wait till next week for the end of yr news!

[rivaldo] 07/4/2016 08:56

The overriding point here is that CAR's trading update is due any day and that CAR are extremely cheap (imo!) assuming trading is continuing to go well.

Everyone knows that the UNXL agreement is highly unlikely to produce material revenues. I've only posted their bigger news for interest's sake, but I won't bother posting UNXL news in future unless it's pretty serious stuff as it seems to be a distraction and a hindrance to moving forward discussion-wise.

[dontay] 06/4/2016 23:37

The recently announced design wins, including the military one are thought to be from Dell. HP have not renewed their interest since the Atmel contract (which was taken over by UNXL) ended last October. The only revenues UNXL had for 2015/16 were from that existing HP contract. Due to the Xsense debacle we all know... 'design wins' mean nothing... Atmel had 'design wins' falling out of their backside! Atmel received 3 purchase orders (for 3 separate devices) from HP but it was loss making. Since then the touch sensor industry has changed dramatically with around 40% of the larger screen devices now being produced with in-cell or on-cell embedded sensors... the onset of embedded sensors is what did for Xsense! These are wired into the device at source by the OEM. In other words touch sensors... are now built into the larger form devices free of charge! There is simply no longer any technical need for expensive discreet type touch sensors with another inefficient link (sensor module assemblers) in the supply chain. Particularly where UNXL are concerned... with their long history of scams and only last month found guilty by SEC of conning their shareholders... these announcements should be treated with a great deal of suspicion. To date UNXL have not sold one single sensor from their own production line other than around $70k worth of engineering samples. If they ever do it will be for peanuts!