Advanced Medical Solutions Share Discussion Threads

[redartbmud] 11/9/2019 11:24

wetdream

Thanks. Very good article.
It gives a very downbeat view of management and the success of the business model, over the medium term.
I certainly do not like the comment that it has been beaten out of the US market, by a competitor. That begs the question of their expansion, into other countries where AMS operates.

Maybe a 10%/11% share price fall isn't big enough to reflect the gravity of the situation.
Overall, I took a view and bought 1k at £2.535p
Fingers, and the rest crossed.

Just edited price above. Fat finger syndrome!!!!

[wetdream] 11/9/2019 11:08

The following was posted earlier by 'anghardy1976' on LSE and is a much more detailed analysis than I could make. Certainly not positive, but hughlights the issues the managementve to address to get investors' confidence back.

--------------

Interims...11 Sep 2019 07:44
Key takeaways:

- With exeption of revenue, every single metric down(!!) - most of them substantially, even if you discount adjustments.
- Almost no overall growth - revenue will be practically flat (1%).
- Profit margin down 210bps(!) - 28.8% to 26.7%
- Realigned business units again. You can always find merit in such moves if you want to. "Clarity" being one that's often quoted. With this, what immediately stands out, is that they're now hiding Activeheal numbers (now included in Exudate Management). This points to what we've seen in Activeheal in last 12-24 months. It was slowing down, now stopped being significant enough to report separately and no longer a highlight. Who would want to highlight what's now a negative? Further, are they now in trouble re NHS Supply Chain?
- Liquiband 27% YOY decline in US(!!) - their key growth driver (and biggest revenue contributor) product range has finally hit the wall. They said previously it was PREDOMINANTY destocking (Brexit) and competitor supply issues. Now there is also delayed product launches competitor activity (aka - AMS can't compete at the moment) which also wasn't mentioned in trading update. Quote: "Competitor gains at two GPO" - i.e. now someone is gaining market share, we're losing it.
This also hints that Liquiband US has now peaked and is being outcompeted by other brands. Big time. 27% down YoY is massive, and immediately begs a question whether this is really temporary, how long is a "temporary" period, and are they doing enough to counter it. This is even further confirmed by their statement, that they lack competing product for closing large wounds (re Liquiband XL further down).
- In trading update they've said that Liquiband slowdown has been offset by strong growth in other areas. The results now state that areas other than Liquiband have shown 10% growth. Whether 10% is strong, it's highly debatable, considering they are expected to have 10% overall growth YoY. Furthermore, looking at bigger picture and all metrics, it definitely hasn't offset the slowdown in Liquiband portfolio, like they've indicated in trading update.
- Delayed product launches - this still seems to be the case, and now it seems to have material impact. There are no new innovative, "game changer" products in sight (next 12 months) - only minor additions to the existing portfolio. That is, if they are launched in 2019.
- Liquiband XL - delayed again. Now Q3 2020 vs H1 2020 in trading update. This is the large wound closure dressing and, the one (and currently only) big launch, which could theoretically save Liquiband portfolio over time. If everything goes as planned expect tiny sales in Q4 2020. This is not "returning to growth in 2020" and will make recovery from slowdown even more challenging. Furthermore, it seems that a LOT is depending on this specific product at least from competition perspective. If anything goes sideways (further delays etc) they are in deeper.
....continued from last post.

- Sealantis - there is that, but 2 years away at least so a known unknown. Literally anything can happen in that time. On the face of it, they paid a lot of money for high risk technology potential. Probably was due to shareholder pressure to be seen as innovative / or at least investing in innovations. It's going to be either money well spent, or completely down the drain (if clinical trials fail). Jury'll be out on this one for a long time.
- Bright side - they have lots of cash and are cash generative. They can go on acquisition spree, but finding suitable targets seems a big challenge, considering they have been indicating acquisitive growth for at least 2 years now (maybe 3), and so far, only been able to buy a small, high risk R&D facility in Israel for a lot of money. They might eventually make big accretive acquistion, but it's hopes and dreams for now.

Overall the results are really bad and they will hurt - no discussion about it. Worse than expected, when one considers carefully balanced "slowdown vs offset" statement in the trading update. Statement re full year being "within board's expectations" is especially frustrating and borderline disingenous. It shows that boards expectations are flexible, and are not reflective of good performance in objective terms, but that's about every company on AIM.
Seems pretty certain, that they will be well below all MARKET expectations in most, if not all metrics. Coupled with messages focusing on returning to growth in 2020 (2nd half at the earliest), it seems they've conceded that 2019 battle is already lost.
It looks that good run for AMS has ended, at least for now. In 2019 they have entered, what is probably a most challengin period in their recent history, in regard to maintaining shareholder expectations, value and trust. Issuing statements that indicate hoping for the best, then revising them downwards as time progresses, is not really a good start.
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[redartbmud] 11/9/2019 09:01

wet, you weren't dreaming, when you said 260p Now 255-257.5p

The fall off the US cliff for US LiquiBand® has really unsettled the market. The solution looks to be a long way off. The first concern is whether they can recover the situation. It certainly looks more like a fundamental change, for them, in the US market.
I think there is a case to run the forward numbers to see the long term impact should the loss of business prove to be permanent.

[mammyoko] 11/9/2019 08:50

US LiquiBand® is expected to return to growth in 2020 due to an expanded product portfolio and the stabilisation of customer inventories. We expect to obtain US approval before the end of the year for the newly developed accelerated drying device and to launch with a major partner. In addition, the LiquiBand® XL device for closing larger wounds will significantly augment our portfolio and open new markets and customer opportunities.

However....

The LiquiBand® XL regulatory process is progressing slower than anticipated with US approval now expected in Q3 2020.

[wetdream] 11/9/2019 08:03

Well, now we know what 'Board Expectations' were...a 27% drop in Liquiband sales in the US!
260p here we come?

[cgequityinvest] 11/9/2019 07:57

The reasons for the drop in profits are explained and the management have restated they remain comfortable with the full year forecasts (latest forecasts suggest eps of 10.4 - which is a 3% fall from last year).My take is that this is a temporary slowdown in profit growth and the long term health of the business remains robust. They appear to have a lot of new product development and product launches in the pipeline.I have been a shareholder for 12 years plus and am content to hold these for a further period - at some point I still believe they are likely to attract a bid from a large US pharmaceutical co.

[winnings1] 11/9/2019 07:42

H1 - First time I see profits down. Somewhat worrying that US sales of one of the most promising products are substantially down, would it be possible that Trump's 'America First' plays a role in that?

[dealit] 11/9/2019 07:31

Dividend up and Group revenue up, let us hope that the US drop in sales is just a blip as do the Board. Sales Worldwide doing ok I feel that the share price will go south today hopefully climbing back before the dividend date IMHO.

[dealit] 10/9/2019 15:58

Fingers crossed for tomorrow, the trading statement was positive last June. The lower the share price drops IMHO the more attractive AMS will look to a predator.

[wetdream] 10/9/2019 14:19

In the absence of any RNSs, it seems their major shareholders-who account for half their shares-remain very loyal in spite of the 20% drop in the share price over the last 3 months.
But I do wish the management wouldn't hide behind 'board expectations'. Who knows what they are?!

[buywell3] 10/9/2019 11:04

It has had a very good run but lower chart highs since sept 2018 and a lower low since the low of 2017 indicate some weakness


A bottom trade channel line now is in place which IMO algorithmic trading platforms will have programmed that could see 240p hit by end of this year.


You can see it on this chart better





dyor

[wetdream] 10/9/2019 10:55

All the optimists have left the building by the look of it.

[wetdream] 06/9/2019 14:15

Hmm...doesn't look too good then.

[dealit] 04/9/2019 15:00

I would feel that the share price will be closely connected to the results announcement this time next week IMHO.

[buywell3] 04/9/2019 12:29

the worst thing for this chart is if a rhs shoulder forms at about 225p

the chart is not looking too good at the moment with what could be another lower top just put in ---- time will tell

[wetdream] 29/8/2019 12:08

Not a very active stock, is it?!
Struggling to reach 0.1% of shares in issue on a daily basis.
Presumably that means everybody's happy.

[winnings1] 12/8/2019 08:49

AMS is a excellent company and the share price deserves to be high, but as indeed is shown on the graph above, the shares did go somewhat frothy, hence the pull back which may go further yet. I would not be surprised to see a gradual fall to 260p or thereabouts - when the PE-ratio will look less toppy.

[buywell3] 12/8/2019 07:33

IMO selling has been caused due to this:

[cgequityinvest] 11/8/2019 09:06

very quiet here.

The share price has stabilised over the past week or so and given its track record/strong IPR and growing presence in the US i cant help think that a few of the bigger US pharma groups are not running the numbers on a bid for AMS.

At the peak share price a year ago of circa £3.60 and an exchange rate of 1.30 this was valued at $1bn. Now at £2.86 and an exchange rate of 1.2 it has a market cap of $750m and in the interim has acquired Sealantis which strengthens its presence in the US.

I have no knowledge of any bid and would expect a big premium but definitely an opportune time for an American "invader"?

The forecasts for 2019 are for small fall in EPS - partly due to Sealantis which is slightly dilutive and the slower first half - would be good if the interims suggest they can improve upon that.

[willir20] 02/8/2019 22:23

Hi Dealit:

FDA approval for two new AMS wound care products--which testify to the company's continuing desire to innovate and grow revenues organically--was announced, as you point out, on July 30th. I agree that it is disappointing and somewhat puzzling that the share price did not turn sharply upwards at this very welcome development, though I wonder whether it may have taken a day or so for investors to catch up with the news. If you look at the trajectory of the share price from July 31st to today, it is easy to spot a clear, albeit modest, upward trend (delineated by higher highs and higher lows). Just where this upswing will end is a matter of guesswork in a market that is so badly depressed by global events that have most investors rattled.

In my view, AMS is a world class company, whose success in the future promises to be every bit as exciting as it has been over past years. It fits Jim Slater's celebrated Zulu principle perfectly. I still hold all of the shares I bought years ago (for an average in single digits) and, as long as the stellar performance is repeated, year in, year out, I cannot imagine wanting to sell them. A take over would obviously force my hand but I would strongly resist surrendering my holding at less than £5.00 a share.

[dealit] 30/7/2019 20:32

FDA approval for 2 AMS products today and the share price drops out of favour indeed.

[wetdream] 04/7/2019 15:28

Sellers > £3 & buyers sub-£3.

[dealit] 25/6/2019 20:49

Wetdream, AMS are a solid Company and the announcement was not a profits warning. Historically the share price bounces for no reason other than MM`s trying to loosen shares IMHO. Have a read of the Chairmans statement;

"I am pleased to report that overall the Group continues to perform well and we are trading in line with the Board's expectations for the full year. Looking ahead, we are excited about the growth prospects for the business, the integration of Sealantis and the expected impact from new product launches. AMS is in a robust position and we are confident on delivering our stated growth strategy."

[wetdream] 25/6/2019 18:21

Hi dealit,
Agreed. But c.200k sold earlier (11.45-13.50) in five-figure blocks.
Probably just me getting a bit p!ssed off with the co. And its updates!