Stocks’ Details

Avita Medical Ltd

Major Uplift in U.S Sales: Avita Medical Ltd (ASX: AVH) is a global regenerative medicine company. AVH recently updated on the open-label feasibility study of its RECELL® System for the treatment of diabetic foot ulcers. The RECELL® System’s clinical performance delivered favourable results upon evaluation. 100% of the patients covered in the study experienced a reduction in diabetic foot ulcer (DFU) wound size and 50% of the patients had their wounds heal completely.

Highlights of Q3FY19: The company recently updated the exchange on the key accomplishments during the quarter ended 31 March 2019. During the quarter, the company was primarily focused on launching the RECELL System in the U.S. market for the treatment of acute thermal burns. The company reported strong product sales of A$2.2 million in the U.S. in the third quarter. In another deal during the three months period, the company collaborated with COSMOTEC for marketing and distribution of the RECELL System Japan.

During the quarter, total cash receipts were reported at A$4,848, which was up 71% on the prior quarter. Operating expenses for the period increased by 7% compared to the previous quarter.

Sales Data (Source: Company Reports)

Stock Recommendation: The stock of the company generated high returns of 600% over a period of 1 year, YTD 431.65%. Currently, the stock is trading slightly towards its 52-week higher level of $0.540. Performance in the March quarter was characterised by significant growth in U.S sales in the previous quarter. During the first half of FY19, the company had a gross margin of 70.2%, which is higher than 59% on the prior corresponding period. Hence, considering the aforesaid facts and current trading level, we give a “Hold” recommendation to the stock at a current market price of $0.440, up 4.762% on 01 July 2019.
 

Sienna Cancer Diagnostics Limited

Striving for Global Expansion: Sienna Cancer Diagnostics Limited (ASX: SDX) is a medical technology company that develops and commercialises cancer-related in-vitro diagnostic tests. The company has been recently granted its first U.S patent covering its in-vitro diagnostic test for hTERT. The U.S., being the largest market for IVD tests, provides a solid foundation for the development of the company’s pipeline of cancer diagnostic tests.

In April 2019, the company signed a binding agreement with California-based Sevident Inc, to acquire its intellectual property assets and certain laboratory equipment assets. The deal was closed for a consideration of US$300,000 in cash and new ordinary shares in Sienna Ltd valued at US$1 million.The agreement will enable Sienna to expand into the rapidly growing liquid biopsy and exosome space, including diagnostic and prognostic tests for a range of cancers.In March 2019, the company appointed Inside Diagnosticos as an exclusive distributor for Brazil. In another attempt to expand its global network, the company signed appointed Mediwell Enterprise Pte Ltd was a distribution partner for Singapore.

Highlights of 1HY19: During the half-year ended 31 December 2018, the company reported a net loss of $0.90 Mn as compared to the loss of $1.38 million in pcp. The company had a cash balance of $6.68 million at the end of the reporting period. During the period, the company received around $5.2 million in capital via a share placement and a rights issue, to help accelerate the evaluation of new technologies for acquisition or in-license.

1HY19 Income Statement (Source: Company Reports)

Stock Recommendation: The stock of the company generated returns of 8.93% and -11.59% over a period of 1 month and 3 months, respectively. The company has accelerated its development as depicted by the agreement signed with Sevident Inc for technology enhancement and distribution agreement with Mediwell Enterprise in Singapore for global expansion. Hence, considering the recent agreements signed and trading level in the past few months, we have a wait and watch stance on the stock at a current market price of $0.068, up 11.475% on 01 July 2019.
 

Capitol Health Limited

High Growth Across Key Metrics: Capitol Health Limited (ASX: CAJ) is a leading provider of diagnostic imaging and related services to the Australian healthcare market. The company updated that Justin Walter became an initial Director in the company. Securities are yet to be issued to the Director. Recently, Andrew Harrison stepped down from the position of Managing Director and CEO and returned to a Non-Executive Director role. He was replaced by Justin Walter, who joined as Chief Operating Officer (COO) of the company.

Highlights of 1HY19: During the period, the company generated revenue amounting to $72.9 million, up 30% on pcp. Operating EBITDA also increased on pcp by 15% to $11.9 million. The company reported continued growth in dividend payments by 25% at 0.05 cps. Net cash from operations increased by 99% to $7.7 million.


Profit and Loss Statement (Source: Company Reports)

Outlook FY20: In the recent market update for the full year FY19, the company updated that trading conditions remained subdued in the second half and resulted in lower than longer term average organic growth in the business. It maintains a positive outlook for FY20 with an additional MRI license granted through the recent license process, full year impact of acquisitions, greenfield and brownfield site developments and moderate organic growth. These factors are expected to contribute a modest growth in earnings.

Stock Recommendation: The company’s shares generated returns of -6.12% and 9.52% over a period of 1 month and 3 months, respectively. During 1HY19, the company reported high growth in key fundamentals including revenue, EBITDA and NPAT. Despite the subdued trading conditions in the second half, the management has a positive outlook for FY20 and expect the earnings to witness a growth owing to the impact of acquisitions and other recent developments quoted above. The company had an EBITDA margin of 15.7% in 1HY19 as compared to the industry median of 7.5%. Net margin for the period was 16.5%, which is higher than the industry median of 2.2%. Based on the foregoing, we give a “Hold” recommendation to the stock at a current market price of $0.230, with no change on the previously traded price.
 

HeraMED Limited

Strong Foundation for Growth: HeraMED Limited (ASX: HMD) is engaged in the development and manufacture of foetal heartbeat monitors and other pregnancy monitoring solutions designed for both home and professional use. The company recently updated that it has successfully integrated its HeraCARE PRO SaaS platform offering into Hapvida’s IT systems to allow physicians and nurses to monitor real time patient data generated from HeraMED’s smart foetal heart rate monitor, the HeraBEAT device. The integration is a significant milestone for the company and provides considerable validation of the company’s software offering and its ability to scale ahead of schedule.

Highlights of Q1FY19: During the period, the company generated receipts from customers amounting to US$88,000. Expenditure for the quarter amounted to $US776,000. As at 31 March 2019, the company had cash at bank amounting to US$3,334 million.

During the period, the company secured a distribution agreement in Australia with Dale Group International for a minimum of 9,000 HeraBEAT units in the next 3 years. It signed another agreement with Hapvida for the deployment of its pregnancy monitoring service, HeraCARE. The period also saw a manufacturing agreement with Quasar to increase HeraBEAT device production at an improved.


Achievements Since Listing (Source: Company Reports)

Stock Recommendation: The company’s shares generated returns of -36.67% and -26.92% over a period of 1 month and 3 months, respectively. The operations of the company have progressed on all business fronts through recent agreements with Dale Group International, Hapvida, Quasar, etc. Subsequent to the end of Q1FY19, the company progressed with its market entries into Australia and the United Kingdom. In light of the above recent developments, we give a “Speculative Buy” recommendation to the stock at a current market price of $0.215, up 13.158% on 01 July 2019.


Comparative Price Chart (Source: Thomson Reuters)  

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