Is it wise to “Hold” Cardno, MGC Pharmaceuticals and Nanosonics?Team Veye | 01 May 2018 ASX - NAN, CDD, MXC
Cardno Ltd (ASX:CDD)
The company declared its H1 FY2018 results on 19th Feb’18 highlighting that the company has put its past performance behind and is focused on growth with H1 FY18 the first “clean” result in four years. With $30.2m underlying EBITDA in H1 FY18, Cardno is on track to meet FY18 guidance of $55M-$60M. Their Fee Revenue in H1 has reduced, showing an 11.5% decrease on prior year and 12.7% decrease on H2 FY17. The EBITDA from continuing operations was $30.2m, an increase of 30.2% from $23.2m EBITDA in H1 FY17 and a 45.2% increase on H2 FY17. Their Net Operating Profit after Tax was $13.9m. Net Loss after Tax was $21.9m that includes $32.9m charge to reduce tax assets associated with the change in US federal corporate income tax rate from 35% to 21%.
Their New CEO Mr Andrew (Andy) Goodwin who was recruited in Nov’17 and started his role on 1st Mar’18 was terminated on 13th Apr’18, in relation to his failure to follow the lawful directions of the Board in respect of the recent issues relating to SMEC (his previous company where he was CEO and Managing Director). The Board commenced the search for a new Chief Executive Officer and Managing Director. Until then Cardno’s Chairman Mr Michael Alscher will be responsible for the day-to-day operations (Data Source – Company Reports).
The company’s EPS stands at 7.00 and EBITDA margin is 4.09. The company has a market cap of 565.92m and a Share Volume of 479.59m. The Debt-to-Equity ratio is 15.44 against the sector average of 96.98. The stock price of the company has slipped 14.78% during the last 15 days as a negative effect of the termination of the CEO but is likely to stabilize and recover on the back of strong fundamentals (Data Source – Reuters.com).
We give a hold to “Cardno Ltd” at the current price of $1.21
MGC Pharmaceuticals Ltd (ASX:MXC)
The company declared its H1 FY2018 results on 26th Feb’18 portraying a weak performance across all key metrics. The company’s Revenue dropped 13.6% and Net Losses surged 132%. On 25th Jan’18, the company was formally granted interim GMP certification for its European medicinal cannabis manufacturing facility. On 5th Mar’18, as part of the operational and strategy update, the company announced that the production of first CannEpilTM batch remains on track for completion in March, with grant of full GMP Certification of MXC’s European laboratory and compounding facility expected soon after this final compliance stage. On 13th Mar’18, MGC Pharma launched MGC Nutraceuticals, a new product line of CBD and hemp-enhanced nutraceutical products for retail customers. On 29th Mar’18, the company announced production of first CannEpilTM batch at European manufacturing facility. On 11th Apr’18, the Maltese government agency awarded a contract to MXC to construct a 4,000m2 state-of-the-art fully licensed medical cannabis production and cultivation facility. Subsequent to quarter-end, MGC Pharmaceuticals successfully completed a $5.0 million capital raising via a share placement at $0.07 per share. As at 31st Mar’18, MXC had cash of ~$7 million. The company holds a very positive outlook for 2018(Data Source – Company Reports).
The company’s Debt-to-Equity ratio is 0 against the sector average of 14.14. The company has a market cap of 91.41m and a Share Volume of 1.2b. The EBITD margin is -3035.54. Although, the stock price of the company has slipped 41% during the last 4 months but it still has a strong upside potential and is very likely to recover from here (Data Source – Reuters.com).
We give “MGC Pharmaceuticals Ltd” a “Hold” at the current price of $0.077
Nanosonics Ltd (ASX:NAN)
On 5th Apr’18, the company highlighted that the German Society of Ultrasound in Medicine (DEGUM) has released guidance requiring High Level Disinfection for all semi critical ultrasound probes. The guidelines state that all semi-critical ultrasound probes need to undergo disinfection with disinfectants that are proven bactericidal (including mycobacteria), fungicidal and importantly, virucidal. Virucidal activity needs to be established based on the strict requirements of the German Society for Virology (DVV). The trophon® EPR device has been shown to meet all these requirements.
On 27th Apr’18, Nanosonics received US FDA clearance for the latest generation of trophon – trophon® 2. The trophon2 device includes new functionality designed to meet specific European market requirements including the ability to monitor in real time and report on all the process parameters (dosage, temperature, time) for each disinfection cycle. This provides the customer confidence that the device is operating within all the operating specifications automatically in real time. Together with the full feature set of trophon2, this new functionality helps pave the way to establish trophon2 as the new standard of care in Europe as new country specific guidelines requiring HLD for all semi-critical ultrasound probes are introduced. The regulatory submission for Europe is currently under review. It is anticipated that the commercial release of the new trophon2 in the USA will take place during the first quarter of the 2019 financial year. The product is currently being introduced into manufacturing with a ramp up in production expected to take place over the next 3 months (Data Source – Company Reports).
The company’s EPS stands at 1.00 and EBITD margin is 11.84. The company’s P/E ratio stands at 115.51 against a sector average of only 32.09. The stock has a Market cap of 733.37m & a Share Volume of 299.34m. The Debt-to-Equity ratio is only 1.27 against a sector average of 14.14. The stock price of the company has slipped 19 % in the last 2.5 months but we still see an upside potential on the back of US FDA and DEGUM, Germany clearance to their products recently. (Data Source – Reuters.com)
We maintain a “Hold” on “Nanosonics Ltd” at the current price of $2.41
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