Mayne Pharma Group Limited

Trading Update: Mayne Pharma Group Limited (ASX: MYX) is a small-cap specialty pharmaceutical companywith themarket capitalization of ~$894.36 Mn as of 15 May 2019. The company strengthened its dermatology offering with the acquisition of LEXETTE™ (halobetasol) foamand multi-source EFUDEX™ (fluorouracil) cream. The company received FDA approval for TOLSURA™ (SUBA®-itraconazole)antifungal capsule and established a new hospital based field team to promote.
Recently, the company, by issuing a release, updated the market about its trading performance for the ten months ended 30th April 2019.Mayne Pharma mentioned that specialty brands and metrics contract services witnessed the growth of 53% and 21%, respectively in the first four months of the half.

The company mentioned that its sales for 2HFY19 have been impacted by additional competition on key generic products and generic market trading pressures.The company reported revenue of A$274.4Mn in 1HFY19 which reflects growth of 13% from A$243.2Mn in 1HFY18.

MYX also reported its gross profit of A$160.4Mn in 1HFY19 as compared to A$95.9 Mn in 1HFY18 which witnessed a rise of 67% on PCP basis. MYX is expecting stronger FY20 results which would be driven by recent specialty brand launches of TOLSURA® and LEXETTE™. Also, the growth of generic and proprietary dermatology as well as women’s health portfolios, potential market supply disruptions and pipeline of committed Metrics Contract Services business might also support the company.


Trading Update for 1HFY19 (Source: Company Reports)

What to Expect From MYX: SUBA®–itraconazole in BCCNS and Trifarotene in rare skin disease might leverage the company’s dermatology capabilities and raise profile in serious disease states and would offer global expansion opportunity.The company is planning to develop, and source products aligned to key therapeutic categories. MYX would be maximizing the value of existing on the market portfolio and would be working to develop the commercial infrastructure in order to support women’s health.

Stock Recommendation: In the US pharma industry, new pharmacy distribution channels are evolving and, considering the scenario, the company is looking for new partnership with innovative technology providers.In the span of the previous one month, the stock has delivered a return of -16.30% and in the past three months, the returns -32.74%. Based on the foregoing and current trading level, we have a wait and watch view on the stock at the current market price of A$0.555 per share (down 1.77% on 15 May 2019).
 

Domain Holdings Australia Limited

Macquarie Australia Conference 2019: Domain Holdings Australia Limited (ASX: DHG) is a real estate media and technology services business focused on the Australian property market. DHG published a presentation at Macquarie Australia conference which includes its trading update for March quarter FY19 stating that digital revenue was in line with prior corresponding period and total revenue witnessed a fall of around 6%.

The company continued to deliver double digit growth in residential digital yield. DHG is expected to be focused on growing the core listings business and growing new revenue in consumer solutions.  Additionally, the company is focused on simplifying and optimizing its business.    

Rise in Key Financial Metrics: Domain Holding Group Limited reported pro forma revenue growth of 11.5% to A$357.3 Mn in FY18. This represents the strong performance of digital, somewhat offset by ongoing challenges in print.The company witnessed increase in pro forma expenses of 11.1% to A$240.2Mn. This reflects that the company’s investment in staff, property and new transactions businesses. It delivered increase in pro forma EBITDA reflecting growth of 12.5% to A$115.7 Mn and EBIT growth (Pro forma) was 3.9% to A$89.5 Mn. Domain delivered higher pro forma net profit after tax of A$52.9Mn which reflects the growth of 7.7% and a statutory net loss of A$6.2Mn. The company maintains a strong balance sheet with net debt of $126.5Mn which represents the leverage ratio of 1.1x pro forma EBITDA.     


Financial Metrics FY18 (Source: Company Reports)

What to Expect From DHG: The company stated that investments in the growth initiatives is being helped by the ongoing cost discipline. For FY19, there are expectations that its underlying costs (excluding investment in the new Consumer Solutions businesses) might be down low to mid-single digit against the proforma FY18. However, total costs are anticipated to witness a rise of low single digit against the proforma FY18.

Stock Recommendation: The company’s revenue witnessed a rise of 0.3% on YoY basis and stood at 183.9 million in 1H FY 2019 while its expenses rose by 3.9% and stood at 130.8 million. Domain is having robust fundamentals and great competitive strength as a leading Australian property technology and services business.In the past one month, the stock posted a return of 7.14% while, in the span of 5 days, its return was -1.64%. Thus, the stock seems to be quite volatile.

Considering the above factors, we advise the market players to have a close watch on the stock at the current market price of 3.000 per share and suggest to investors that they should wait for growth catalysts that can mitigate the prevailing volatility.

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