Clinigen Group: Continuing Progress Across All 3 Divisions
Edison | Mar 04, 2015 01:29AM ET
Continuing progress across all three divisions
Clinigen Group Plc (LONDON:CLINC) has reported solid H115 results that confirm progress is being maintained as expected. All three divisions are now well placed to maintain attractive organic growth rates over the medium term, while acquisitions to bolster the geographic footprint and add new products should provide periodic boosts. Our valuation uses a combination of earnings metrics and a DCF model, resulting in a range of £479-550m (580-666p a share).
H115 results demonstrate strength of business model
Group revenues grew by 17% to £72.6m (+21% CER), with gross profit up 11% to £22.0m. Non-recurring new product integration costs (c £0.3m) limited underlying EBITDA growth to 8%, to £13.5m. Underlying operating and pre-tax profit grew by 2% to £11.2m and £11.1m respectively. Adjusted underlying EPS rose by 13% to 12.5p and the interim dividend was increased by 10% to 1.1p. The cash conversion remained strong, with net cash up from £5.3m at Jun 2014 to £12.9m at Dec 2014.
CTS is largest revenue and profit contributor
Clinigen's CTS sales grew by 28% to £50.5m (+£11.0m); with gross profit down 2% to £6.4m (12.7% margin) due to the higher US contribution, which tends to have a lower margin. US sourced products represent 44% of CTS sales in H115 (26% in H114) as a number of new larger US contracts generated revenues of £16.8m (£2.6m H114). The CTS pipeline remains strong and plans to optimize sourcing and supply systems means gross margin of c 15% is achievable over the longer term.
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