Severfield – 66p

21 April 2020 – trading update

The market leading structural steel group has issued a trading update for the financial year ended 31 March 2020, ahead of the release of results which is currently scheduled for 17 June.  The overall impact of Covid-19 remains uncertain and there has been some disruption to operations, both on sites and within factories, as a result of the outbreak.  The UK and Europe order book at 1 April 2020 stood at £293m (1 November 2019: £323m), providing a strong future workload during this unprecedented period of uncertainty, and the level of tendering and pipeline activity remains good.  Covid-19 will not have had a material impact on results for the year ended 31 March 2020.  Year-end net funds (excluding IFRS 16 lease liabilities) were approximately £16m (31 March 2019: net funds of £25m).  Net funds as at 31 March 2020 comprised cash of £44m offset by borrowings under a revolving credit facility of £15m and an outstanding term loan of £13m for the Harry Peers acquisition.  There is considerable uncertainty at the current time but we believe that a LONG TERM BUY rating is appropriate.

Flowtech Fluidpower – 68p

21 April 2020 – trading update

Prior to the Covid-19 lockdown performance in the first quarter was in line with expectations.  However, the situation became worse in the last few weeks of the period and this continued into the start of the second quarter.  Many of the company’s suppliers and customers suspended operations, although some have either already reopened or are planning to reopen in May, generally with reduced capacity.  it is believed that the group has traded in line with the sector during the period but this is difficult to determine.  Net debt at 31 March 2020 was £15.6m, a £1m reduction from the position at 31 December 2019 and within aggregate banking facilities of £25m.  Net cash flow is still due to be broadly as was anticipated.  Four warehousing facilities are currently being closed in the UK, the annualised savings from which are estimated to be £1.6m.  The cash cost of this restructuring is estimated at £1.8m, of which £0.5m was incurred in 2019.  A significant part of sales depend on the manufacturing and construction sectors so the company will be following developments closely and adjusting plans accordingly.  We keep our BUY rating.

Clinigen – 617.5p

16 April 2020 – licensing agreement and trading update

The global pharmaceutical and services company has signed an exclusive licensing and distribution agreement with Porton Biopharma Limited to commercialise Erwinase.  Erwinase is approved for patients with Acute Lymphoblastic Leukaemia who have developed hypersensitivity to E. coli-derived asparaginase in 19 countries, including the US, Europe and Japan.  Clinigen will look to expand the market opportunity for Erwinase by driving awareness of the product’s availability, ensuring uninterrupted patient access, launching in select new countries and increasing the global supply of the product into unlicensed markets utilising its global infrastructure through a global access program.  Erwinase will be the Group’s third biologic and fits well within Clinigen’s existing haematology and oncology product portfolio and customer base.  In the year to 31 December 2019, net sales of Erwinase were US$177m.  Although the agreement will start on 1 January 2021, it is anticipated that net sales for Clinigen will begin in the second half of 2021.  Trading for the year to 30 June 2020 continues to be in line with expectations and the business had a strong first nine months of the year with organic gross profit growth of over 10% to the end of March 2020.  To date disruption from Covid-19 has been marginal.  With this in mind we keep our BUY rating.

Carr’s Group – 112p

15 April 2020 – interim results

In the 26 weeks ended 29 February 2020 revenues were £200.0m, slightly down on the prior year (2019: £206.2m).  Adjusted operating profit was £10.3m (2019: £11.9m) and adjusted profit before tax decreased by 16.0% to £9.6m (2019: £11.4m).  Reported profit before tax after amortisation and non-recurring items was £10.5m (2019: £10.3m).  On an adjusted basis, earnings per share were 8.0p (2019: 9.4p) but basic earnings per share increased by 12.0% from 8.3p to 9.3p.  The company is relatively well placed to ride out disruption from Covid-19.  Net debt, excluding leases, was £25.4m at the period end, representing 1.2 times adjusted EBITDA.  Undrawn facilities at the period end were £22.4m, with main banking facilities maturing between 2021 and 2023.  We rate the shares as a BUY.

Pressure Technologies – 99p

14 April 2020 – director share purchase

Chief Executive Chris Walters has purchased 18,000 shares in the company at 90p.  Although the immediate outlook is uncertain this is a positive sign and we therefore upgrade our recommendation to SPECULATIVE BUY.

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