Mayne Pharma Group Limited

MYX Details

Launch of New Oral Contraceptive: Mayne Pharma Group Limited (ASX: MYX) is engaged in the development of branded and generic medicines and is a specialty pharmaceutical player. As on 15^th February 2021, the market capitalisation of the company stood at ~$545.69 million. On 7^th January 2021, MYX announced commercial roll out of new tablet Microgestin®24 FE to US customers, complementing its current women branded generic contraceptives health portfolio. 

MYX Extends Debt Facility: The company sought a 3-year extension on its bullet facility till November 2024 on improved covenant terms. MYX’s net financial debt under the new terms is reduced to $208 million at the end of November 2020 as compared to 30 June 2020 gaining from free cash flows and FX. The management addressed FY20 performance, as the US business impacted by COVID-19 and less patient traffic. MYX reduced op-ex by $16 million YoY, $15 million in R&D and restructured sales force in dermatology business during FY20. The company held $137.8 million cash as on 30 June 2020. 

Income Statement, FY20 (Source: Company Reports)

Outlook: MYX is expected to launch up to 7 new contraceptive products over FY21 inclusive of the novel oral contraceptive NEXTSTELLIS™ (E4/DRSP), a generic version of NUVARING® and a further 5 generic products. NUVARING and number of complex products are pending at the FDA for approval.

Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation (Illustrative)

Data Source: Refinitiv, Thomson Reuters, Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation: The stock of MYX gave a negative return of 7.24% in the past three months and a negative return of 11.11% in the past six months. The stock is currently trading below the average of its 52-weeks’ high and high trading level. The stock of MYX has a support level of ~$0.26 and a resistance level of ~$0.432. We have valued the stock using an Enterprise Value to EBITDA based illustrative relative valuation method and have arrived at a target price of low double-digit upside (in % terms). For the purpose, we have taken peers like Japara Healthcare Limited (ASX: JHC), Virtus Health Limited (ASX: VRT), Probiotec Limited (ASX: PBP), to name a few. We believe that the company can trade at a slight discount as compared to its peer median, considering its lower revenue and EBITDA for FY20, and the risks associated with the pandemic enforcing restructuring and cost control for the company. Considering the current trading levels, decent liquidity position, robust product pipeline, decent outlook, valuation, and associated risks to the business along with approvals pending at the FDA, we give a ‘Speculative Buy’ rating on the stock at the current market price of $0.320, down by 1.539% on 15^th February 2021.

MYX Daily Technical Chart (Source: Refinitiv, Thomson Reuters) 

Uscom Limited

UCM Details

Q2FY21 Results: Uscom Limited (ASX: UCM) is a medical technology firm specialising in marketing and development of premium non-invasive pulmonary and cardiovascular medical devices. As on 15^th February 2021, the market capitalisation of the company stood at ~$26.14 million. During Q2FY21, the company earned sales revenue of $0.98 million, an increase by 125% YoY from $0.44 million. The company reported net operating cash flows of$0.29 million for the quarter, up from pcp loss of $0.28 million. Its cash receipts rose to $1.91 million, up 149% on pcp basis. UCM held cash balance of $2.28 million at the end of the quarter, an increase of 54% YoY.

Q2FY21 Financial Highlights (Source: Company Reports)

Outlook: The company anticipates growth throughout FY21, as the approvals for its BP+ and SpiroSonic devices is received in South East Asia, China, the US, and Europe. The company also expects to continue its new product development in the days ahead.

Stock Recommendation: The management confirms UCM’s record of 8-years growth as it continues to build cash and invest in global expansion. It also affirmed that both Uscom Europe and Uscom China entities have turned profitable despite economic uncertainty due to COVID-19 scenario. The stock of UCM gave a negative return of 18.07% in the past six months and a negative return of 19.04% in the past nine months. The stock is currently trading towards its 52-weeks’ low level of $0.14. The stock of UCM has a support level of ~$0.142 and a resistance level of ~$0.193. On TTM basis, the stock of UCM is valued using an EV/Sales multiple of ~6.5x as compared to Industry Median (Healthcare Equipment & Supplies) of 14.2x and is thus seems undervalued. Considering the current trading levels, decent results for Q2FY21, encouraging long-term outlook, and valuation on TTM basis, we give a ‘Hold’ rating on the stock at the current market price of $0.170 on 15^th February 2021.

UCM Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

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