Mereo Biopharma Share Discussion Threads

[martinc] 29/6/2007 12:50

..in which case the creative accounting was probably required to avoid having to give a profits warning. Hmm.. I still think I might buy some more.

[yortis] 29/6/2007 12:31

Concerning Marben question on:

" 1. What makes you think broker forecast of 20p didn't allow for the fair value adjustment? Whilst I agree that the true figure is 15p, I have no reason to believe it is below market expectations. "

Hardmans forecasted profits 8.05m in their buy recommendation dated 5th October 2006. This would not include fair value adjustment of 2.1M profit as the Greenmark acquistion took place on the 14th February 2007.

Taking this into consideration, the results are below market expectations which probably explain the falls of the last 2days.

[lex1000] 29/6/2007 12:29

Here's chart for MPH.Lows of 140p-150p are possible.Given responce to results and what is happening in the general market peeps sitting on the sidelines.Shares bought and paid for can afford to hold.Anyone over leveraged ends up as forced sellers.MPH should come good medium to long term.Short term anything can happen.Negative signal given bt share breakouts banking profits on general market fears.Market run on fear and greed as most will know.fwiw Hardman's last target price 175p.Good luck.aimvho.dyor.



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[lex1000] 29/6/2007 12:22

In an ideal world things would be different.The market is a money making machine which is not fair,and definitely not to private investors.Sometimes it is financially beneficial to be an investor who trades banking profits and buy back cheaper.What I used to do.Imho there is value in both CCT & MPH but in a nervous market down to supply and demand.In these market conditions value reduced to wishful thinking,can't fight against market selling off.MPH have disappointed.Either join in selling or wait for market return bullish and values out.aimvho.


Chart for CCT.Doesn't show intra highs of 217p or intra lows circa 145p.Share price does not reflect value arguably 240p-325p or bid premium.Charles Stanley reliable broker when comes to CCT set target price of 240p.



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[deucetoace] 29/6/2007 11:51

Marben100

I agree it's not expensive but am unclear what will move it up in price in the short term. Using TA for timing of purchases would suggest waiting at present. I agree the market is nervy & am hoping there will be more bargains around as the summer goes on. I would like a lot more clarity on the impact of losing YSL.

Re the broker forecasts I have no idea if they included the fair value adjustment or not but the market action would suggest that they didn't to me otherwise why would people be selling.

Last year was good anyway I agree I just have more questions than I like to have & they are obvious ones that the company should be giving guidance on.

Of course at 140p (probably would need a general market fall) It would be rude not to buy (once it stops falling) failing that I look for more info at the moment.

[sensei10] 29/6/2007 11:40

No. It will settle down soon.

[corrientes] 29/6/2007 11:38

Did the papers give the share a drubbing ?

[marben100] 29/6/2007 11:30

I am hoping that 166p will act as support.

I'm not. I'd like to buy some more and they'll need to be a bit cheaper than that for me to do so :0).

[marben100] 29/6/2007 11:27

Deucetoace,

Couple of things:

1. What makes you think broker forecast of 20p didn't allow for the fair value adjustment? Whilst I agree that the true figure is 15p, I have no reason to believe it is below market expectations.

2. 05/06 results also included a fair value adjustment. If you take that out you get 05/06 EPS of 9.9p, so REAL EPS has grown by over 50%.. yet we're sitting on a P/E of 11. I expect EPS growth to continue this year, with improved margins on new product lines.

Oooh... and just look at that cashflow ;0).

Still seems pretty cheap to me. Providing growth expectations are justified (and confirmed in analyst notes) I see no reason why this shouldn't trade on a P/E of 15 - still a hefty discount to its larger peers in the luxury goods sector. That's an share price of 225p if we take the 15p EPS figure as a basis, or 315p if we use the current 07/08 forecast of 21p.

Cheers,

Mark

[sensei10] 29/6/2007 11:22

I am hoping that 166p will act as support. It is bang on the trend line on my chart. Well said cosnova.

[cosnova] 29/6/2007 11:21

I agree with Mark.

Definately over selling going on and mm's happy to oblige
lets see if there are any large trades at the end of the today.

Hardmans were happy to maintain their positive view and nothing else in the public domain to indicate any major problems.

Marchpole are very proactive on the licencing and acquition trail and this is always going to effect the figures.

[jason8466] 29/6/2007 11:19

clarity, that is what we all wanted...and M morris would have known that. These figures should have been broken down to show where the profits and sales are biggest ect ect.
Because if most of the profit and sales are down to pile 'em high sell em' cheap YSL then we are in trouble. There is no mention of the effect to the bottom line of Moda et al.
If we had more clarity maybe all this interpretation and squabbling about EPS ect would not be happening.

Lets hope M morris bought into companies that can make a profit so enhancing mph as a whole. But the cynic in me is now crying out that maybe mph has bought into companies to increase turnover so he can collect all his bonus shares, with very little contribution to profits.

I raise this point for open discussion. Any views ?

[marben100] 29/6/2007 11:16

Seems that Mr Market has an aversion to smallcap value shares at the moment, to me. Also bought back into CCT recently in the the 150s and 160s (having sold out last year & missed a lot of the action :0)). TSE also preoduced so-so but not bad results (EPS in line with forecasts but margins down & caution on 1H outlook) & share price got hammered by ~30%, now trading on historic P/E ~10 (pre amortisation) after growing EPS by 15% & T/O by 30%, with more likely to come.

I think we're in the silly season here and am watching for buying opps. Value of my MPH holding is still too big (relative to the rest of my porty) for me to add yet but if the share price falls much further I will be doing so.

All it needs is, say, Hardman, confirming their forecasts of 21p for 07/08 and coming in-line with Shore on 30p for 08/09, and a newspaper or tipsheet pointing out the value and the share price could get a hefty boost. There are lots of things in the pipeline that could provide comfort for shareholders and a boost to the SP:

1. Revised broker notes
2. Publication of annual report, with more detail than prelims (mandatory under IFRS)
3. AGM and opportunity to ask questions
4. Trading statement as we near end September
5. Earnings enhancing acquisition announcement
6. Publication of interims in November

Of course, there is also a risk that any one of these could prove my optimism misplaced. But with all the new brands, new channels and Greenmark kicking in (and a bouyant global market for luxury goods), I somehow doubt it.

Cheers,

Mark

[sensei10] 29/6/2007 11:06

Not disagreeing with you, but it will not reduce the EPS to 15p. BTW - looks very oversold on the charts especially RSI.

[deucetoace] 29/6/2007 11:04

23p x (6227-2124)/6227 = 15.15p

Looks close enough to me.

[deucetoace] 29/6/2007 11:02

I agree it's a one off but it's not in my view income.

[meadow50] 29/6/2007 11:01

Its a one-off.If they buy the menswear group at below asset value it would be another one off!

[sensei10] 29/6/2007 11:01

Even if you you discount that you won't get 15p EPS

[deucetoace] 29/6/2007 10:59

Can you explain to me why the fair value of of net assets acquired in excess of fair value of purchase consideration is income? Even if you believe to be so it is clearly not repeatable income.

[sensei10] 29/6/2007 10:55

CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 MARCH 2007

Unaudited Unaudited
31-Mar-07 31-Mar-06
Restated
Note #'000 #'000

Continuing Operations
Revenue 90,534 38,370
Cost of sales (63,470) (22,472)
--------- ----------

Gross profit 27,064 15,898

Distribution costs (4,229) (2,230)
Administration expenses (14,906) (9,092)
Fair value of net assets acquired
in
excess of fair value of purchase
consideration 5 2,124 418
--------- ----------
Operating profit 10,053 4,994

Finance costs (1,730) (541)
--------- ----------

Profit before tax 8,323 4,453

Tax 2 (2,096) (1,399)
--------- ----------
Profit attributable to the equity
shareholders 6,227 3,054
========= ==========

Earnings per share
Basic 3 23p 11p
--------- ----------

Diluted 23p 11p
--------- ----------

[sensei10] 29/6/2007 10:53

It is not 15p EPS

[deucetoace] 29/6/2007 10:52

As a non holder who has been thinking about buying & is still waiting I don't see the results as excellent. 15p EPS when the market were expecting over 20p, no clarity about how much the loss of YSL will impact future earnings makes the results ok but no more. With retail stocks generally in the doldrums why buy now.

I'm impressed by the acquisitions in recent years & feel the management is good (apart from adding in a notional amount of asset increase as income which seems surprising to me) but I fail to see what is going to move this stock up between now and the next trading statement.

[sensei10] 29/6/2007 10:40

Very odd reaction to excellent results.

[lex1000] 29/6/2007 10:31

Dan,as I say same thing with CCT despite cautious brokers (Charles Stanley) forecast target price of 240p! Down on thinest of volumes.Lowest point on paper losing 57% of me profits. Summer and reality how market is at this moment in time.Whether Man Group or others shorting is another question?

[dan de lion] 29/6/2007 10:27

Only 90,000 traded? not all sells either.