Pallet maker set for growth as blue chip companies sign on
Upgrades are expected at speciality pharmaceutical and services specialist Clinigen (CLIN:AIM) when it marks its first anniversary as a public company with consensus-beating results.
On the year to the day it joined Aim (25 Sept) the group will report sales and gross profits that could well exceed expectations, owing to robust organic growth and lower-than-expected costs. The market is looking for sales of £120.6 million and a £20.8 million pre-tax profit, double that achieved last year.
The Burton-on-Trent-based group, which has offices in the US and Japan, is also set to declare its maiden dividend of 1.8p per share, equivalent to a 0.5% yield. Consensus believes this precious shareholder distribution will rise to 2.4p per share in 2014. The payment will be 10.3 times covered this year and 8.3 times for next.
Management indicates the clinical trials supply business, which sources commercial medical products for clinical studies, is the company’s main revenue generator. Sales at its global access programme division - a consultancy for biotech and pharmaceutical groups - are six times higher than they were in 2012.
Clinigen bought two new products for its specialty pharmaceuticals business last year. Vibativ treats hospital-acquired pneumonia caused by MRSA while Cardioxane minimises any heart damage that results from the use of anthracycline chemotherapy drugs.
The financial benefits of both deals should be felt from 2014 onwards. Clinigen is already looking at opportunities to buy more approved hospital-only products that are no longer produced by large pharmaceutical companies so it can expand its portfolio.
The £303 million cap has performed strongly since it joined Aim. Even after a pause for breath in the past month, the shares have risen by 108.8% to 369.5p since their flotation. A forward price/earnings ratio of 19.7 times is more than justified by the growth although shrewd market players may want to hold fire before they commit capital. The lock-up on management stock expires this month and any director sales could provide a helpful entry point.
SWOT ANALYSIS
STRENGTHS
• Net cash balance sheet
• Strong profit momentum
• Global network
WEAKNESSES
• Competitive market
• Lumpy clinical supplies sales
• Acquisition risk
OPPORTUNITIES
• Product purchases
• New contract wins
• Additional global programmes
THREATS
• Regulation
• Forex movements
• Operational gearing at trials arm
