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The US economic signals remain mixed as unemployment is at a 16-year low, and inflation remains well beneath their 2 per cent target but there are increasing upside risk. US Personal Income and Expenditure figures are announced on Thursday and could be a pointer to a December Interest raise. The decision, however maybe a political one more than reflecting changing economic expectations. There is the backdrop of Trumps lighter financial deregulation and tax reform bills going through congress. The Fed under Janet Yellen has stated a policy for gradual tightening. Janet’s successor is to be confirmed this week, it may ‘good’ timing to sneak a raise in before the New Year and the new Fed Chair’s appointed in February, the decision is due on the 12th of December.
Preview
COS 3.375p – Anticipating news
SYS 36.25p – WIP wait
Collagen Solutions (LSE: COS)
3.375p (3.25p-3.5p)
Mkt Cap: £11m
Next Results: Interims Tuesday 5th Dec
Collagen Solutions is a biomaterials company developing and manufacturing medical grade collagen components for use in medical devices, research, and regenerative medicine. The Trading update for the six months to September reported at the end of October set expectations for slightly lower revenue to £1.86m although the pipeline is reported to be strong and revenue growth is anticipated in the second half.
The Company’s products have a wide variety of applications including orthopaedics, cardiovascular, dental, plastic surgery, wound healing, neurology and urology. There is net cash of £9m to fuel the growth initiatives in the product development and manufacturing and to achieve the vision of becoming the pharma industry’s first choice in regenerative biomaterials. The provisional patent for a bone graft substitute was filed and an Australian patent for sourcing ultra-thin processed pericardium was granted. There are nine new commercial agreements and an online sales launch will provide additional access to the US research market. There will be continued investment in the proprietary product pipeline and an exciting cartilage repair technology has a trial underway.
Financials
In February around £10.8m was raised, which included a £4m loan at 10% with warrants at 6p the rest was equity at 5p a share. There are around six institutional investors including Legal & General, Livingbridge, Rathbones and Calculus.
Trading Strategy
We anticipate a bullish report but the hard evidence is more likely to be hopefully before the financial Year/End March. A speculative buy
Original OMG! Price 4.62p
Sysgroup (LSE:SYS)
36.5p (35p/38p)
Mkt Cap: £8.4m
Next Results: Delayed Interims Wed December 6th
When the Finals to March 2017 were reported it seemed that the transformation had been completed from a consumer internet service to a B2B provider of a broad range of cloud hosting, managed services and security solutions. November’s trading update for the six months to September showed that due to the change in revenue recognition that for the full year that the Board therefore expects that EBITDA and Adjusted PBT for the full year will be significantly below market expectations.
At the full year revenue from continuing operations rose by 186% to £7.2m, the Managed Services revenue of £5.40m was in-line with expectation, the Value-Added Reseller (VAR) division was slightly better at £1.80m. The business acquired in July for £4m, Systems Professional, however did not meet its earn-out targets. Managed service offerings include all forms of Cloud hosting (private, public and hybrid) but also outsourced service desk and various IT consulting services including public cloud (Azure and AWS services). The market for managed and cloud services is large and long term, driven by the structural move to cloud delivered solutions and IT outsourcing in general.
SYS’s substantially increased investment in infrastructure and the portfolio of services to £571k into such things as the use of ‘hyper-scale’ technologies and a data centre in Manchester which will assist in the rapid provisioning of technical resources for customers. The company’s high accreditation was also increased by becoming the first VEEAM accredited service partner in the UK. VEEAM is fast growing data centre backup and recovery software provider that is viewed as a leader in the industry.
Financials
The net cash is around £3.0m.
Trading Strategy
An attractive sector but maybe not all the reduced trading news is in the price. Wait
Last OMG! Price 43.5p
