Alliance Pharma Share Discussion Threads

[melody9999] 09/3/2010 22:37

expect increased voltaility then as MMs play games and RHPS muppets buying in at 33p ish get cold feet or have no patience.

[malcolmmm] 09/3/2010 18:44

Bought these on a 'The Momentun Investor' tip at 21p a few months ago so am well pleased. RHPS also recommended Chraarat Gold which is also roaring ahead.

[mazarin] 08/3/2010 17:00

Fully accept I could well be wrong about RHPS, but every day we see 'buy' recommendations banded about where the share may move moderately, if not at all upwards, as a result. It is unusual (albeit very welcome) for APH, without any apparent news to see such daily activity. Closed with 1,476,445 shares traded - 7.94% up on the day

[stegrego] 08/3/2010 13:14

I think you underestimate the power of RHPS....
Nearly always gets a 10-20% rise

[melody9999] 08/3/2010 13:10

yeah silverfern - think it got a leg up from The Momentum Investor and maybe elsewhere. I added a few more back at 29.25 and may consider a 3rd and final tranche shortly.

[mazarin] 08/3/2010 13:07

A Strong moves 'north' today, surely cannot only be related RHPS tip. Must be more to it, I see there are understandably some 'profit-takers', but still see several large 'buy's' going through. I'm sure I wouldn't want sell out of APH at present, this is quite an unusual level of action and interest on this one so far.

[handykart] 08/3/2010 08:10

Managed to mspot a winner early, sold early as well :0(

[silverfern] 08/3/2010 08:08

melody- I've been buying since it hit the high 20s so not everyone spots a winner early! The company has said the acquisition is earnings enhancing per share for 2010 - you can say incresed profits/t'over etc but enhancement is per share! Going for it today!

[malcolmmm] 07/3/2010 11:11

RHP shares and momentum investor both recommend these

[stegrego] 06/3/2010 17:53

Just in case this goes bonkers on Monday morning, dont think its a takeover or something, as it isnt.

Its a RHPS tip.

I tend to agree with the tip and 60p target. At current rate of climb that will happen in about 12 months time.

[silverfern] 05/3/2010 09:06

Thanks - bought again twice this week.

[stegrego] 04/3/2010 12:58

From I I I

Alliance Pharma (APH) is listed on AIM, but looks to have a sounder risk/reward profile than the more speculative drugs development companies. Founded in 1998, its strategy is to acquire rights to established niche brands, for example in prescription medicines and treatments, which big companies are prone to divest if they cannot be sold globally.

APH listed in 2003 although profits were small until the 2008 financial year produced £2.4 million pre-tax at the headline level or £1.9 million normalised. After an acquisition earlier this month, analysts now project normalised pre-tax profit of about £13.5 million and earnings per share (EPS) of 4.5p - in which scenario the price-earnings (P/E) ratio is just over six times.

The medium-term chart shows why investors may be cautious of chasing APH above a £65 million market value with the shares currently at 29.3p. From 2006 to the end-2008 stockmarket low, APH slumped from about 20p to 2.5p then soared to 26p over 2009 as a series of acquisitions transformed prospects.

On the face of it, the chart flags "wait" although ongoing acquisitions have radically altered prospects. This situation will be an interesting test whether to emphasise fundamentals above charts; or if charts can still be useful for investment timing.

Corporate momentum appears to justify the market value. First half 2009 profits well exceeded 2008 as a whole if benefiting from acquisitions: pre-tax profit rose nearly three-fold to £2.9 million on half-year sales up 34% to £13.2 million. Adjusted earnings per share doubled to 1.28p and there was a maiden interim dividend of 0.07p a share.

Following two acquisitions last August, part-funded by a £3.9 million share placing, the company was able to announce last 6 January that amid strong trading it had achieved a 42% increase in turnover for 2009, to £31 million. While impressive you are quite left wondering what that implies for value when organic growth is not specified.

A near £3 million impairment charge is likely in relation to discontinuing one development otherwise management's expectation in the New Year was for 2009 underlying pre-tax profit of no less than £8.5 million.

The latest boost to earning power is the 8 February acquisition of Cambridge Laboratories for about £15 million (according to earn-out). Located in Dublin and Newcastle this company has 18 products addressing various health issues, which takes the total group brands to 56, you can learn more by visiting alliancepharma.co.uk.

Last year's group sales for the Cambridge companies were £10.6 million and from October 2009 to January 2011 it is benefiting from a £5.6 million toxicology product order from the government, placed on a two- to three-year cycle. Hence analysts' upgrades to about £13.5 million normalised pre-tax profit on £44.4 million sales, for earnings per share of 4.5p.

The main risk would appear to be these forecasts likely relying on management's guidance until such acquisitions are integrated and show a proven accounted record. Even if given with the best integrity there is a risk in budgeting on acquisitions. Perhaps the investors backing APH's latest £7.5 million share placing expressed such a doubt and pointed to the sharp rise in market price when negotiating the 26p placing price, even though it looks cheap.

Debt may also explain the apparent low rating. With last September's interims, management said it had reduced debt by £2.1 million and the ratio of debt to operating profit had improved from 3.9 times to three times at end-June, however it remains high if structured long-term: £19 million in long-term liabilities and about £4 million short-term.

This meant a near £1.2 million net finance cost against £4.1 million interim operating profit - justified in the short term if the acquisitions deliver long-term value. The acquisition of Cambridge Laboratories has implicitly increased debt to about £27 million given a new £4 million term loan.

It looks nominally high but at least group earnings and cash flow appear to support it. Management is restricting investment in development projects to "very modest levels" and assuming they can sustain competitiveness even so then their debt-for-acquisitions strategy could pay off.

The end-June 2009 balance sheet had total liabilities of £38.0 million relative to total assets near £49 million, hence net assets just under £11 million. Most of the capitalised assets represented product licences, £37.2 million, also £2.8 million development costs, whereas tangible fixed assets were just £135,000. It is typical of such a business though.

End-June cash was just £203,000, which is initially less encouraging until you consider the funds flow statement which showed £3.7 million cash flow from operations against £1.5 million interest paid and £1.1 million repayment of borrowings, leaving £1 million generated.

So the board was justified in commencing a dividend policy even if modest as yet. A planned final dividend of 0.23p a share will make 0.3p in total, a prospective yield only of about 1%. This share is about capital growth anyway; the payout mainly affirms financial discipline.

The main negative in the story currently is the company not proceeding with clinical trials of Isprelor (for induction of labour) which has had £2.8 million development costs capitalised; hence the balance sheet is exposed to an impairment charge.

As is typical of owner-managed businesses, chief executive John Dawson (previously with a long-term career at Novartis) retains a substantial shareholding, 32.2%, which at least aligns his interests with outside investors.

Prelims are due on 24 March and future updates will certainly be worth examining as pivots to improve the P/E multiple.

Overall, APH conveys a well-run operation of sound strategy and impressive financial progress when few other businesses will be so capable. Understandably, the market has paused for breath, with the shares testing 30p, but the latent potential of recent acquisitions could put APH among the stockmarket winners of recessionary years

[matt] 02/3/2010 20:09

And this year's forevast I believe is in the region of 4.7p eps!

[mazarin] 02/3/2010 17:09

Have to admit I'm a bit puzzled by today's rather rapid and unprecedented 8 tier decline (-2.25p), I can only assume that once APH reached 31p, the sellers decided it was time for them to take profits after a good, albeit very short-lived run. I was more expecting a steady rising trend towards results day on the 24th March that has already been well 'trailered' by the Company that its likely to report 'better than expected' profits. However, there is still plenty of time for this to re-build before then. Needless to say I was not one of those selling today, as I believe there's much more to come, particularly at these levels.

[melody9999] 02/3/2010 16:51

and a nice fall! Who pulled the plug?!! Onwards and upwards though I suspect!

[rogerbridge] 01/3/2010 21:45

Nice rise.

[mazarin] 01/3/2010 11:13

Looks like a familiar pattern is arising again this week with further buys during today's early trading that sets the trend.

[matt] 01/3/2010 09:18

Off it goes :) This year's new forecast is great.

[mazarin] 26/2/2010 15:56

Something's stirring at last, after a few weeks of lying dormant, we now see the first glimmer of the next 'predictable' rise ahead of APH results announcement on 24th March. This previously has started to move 'north' during late trading at the end of the week and continued higher the following week. Time will tell.

[investinggarden] 24/2/2010 10:09

Hold recommendation from Growth Company Investor

[vandyke2] 22/2/2010 17:54

Nigel has been buying again. `something going on?

[mazarin] 22/2/2010 13:08

The completion of Cambridge Labs acquisition was confirmed at 0825hrs today and also, in my view significantly, Nigel WRAY and nominees have just announced an increased holding of APH to above 10.95% @ 24,319,995. Many regard him as a shrewd investor, so as a result, you could expect this news to give the 'sp' a little nudge 'north' at some point soon.

Commenting on their acquisition, APH expect it to significantly contibute to earnings in the financial year ending 31 December 2010.

[silverfern] 22/2/2010 08:10

Completion of the Acquisition is expected on 22 February 2010
("Completion"). I expect an announcement tomorrow