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Mid-week Tip Wednesday 9th May
The OMG newsletter recommends at least 15 companies each month, using the writers’ experience of small caps to give you a winning edge. Last week they wrote about Cizzle Biotechnology and SysGroup. Read about these Opportunities 4 Material Gains!
Cizzle Biotechnology (LSE:CIZ) is a spin out from the University of York, which still owns 3.14%, and in May it reversed into standard list shell Bould Opportunities. The University of Leeds and University of Sheffield each owns 4.26% of the enlarged company, while Yorkshire Cancer Research owns 12.4% and Finance Yorkshire 9.36%. Cizzle is developing a test that could make diagnosing lung cancer more accurate by preventing false positives. Eliminating these false positives will reduce the worry for patients and save money. There is already a prototype, but there is still work to do on validating the test. The potential is enormous, and the valuation is modest. If the test costs £200, the annual sales potential in the UK would be more than £20m, but that would save more than £60m of NHS spending after paying for the tests. The US market could be worth more than $100m. Prior to the reversal £2.2m was raised and some of that will cover the expenses of the reversal. Pro forma cash was £1.89m at the time of the reversal. There could be around £400,000 left at the end of 2022, but a cash call will probably have happened by then. 6.88p (6.75p/7p) Mkt Cap: £17.4m Long term buy.
Results Preview 14th June
SysGroup (LSE:SYS) 46.5p (45-47p) The Pre- Finals Trading Update reported that Revenue for the year is expected to be approximately 7% lower at £18m but conversely, adjusted EBITDA is expected to be 3% higher a £2.9m which is ahead of earlier expectations. These potentially resilient results reflect acquisition synergies coupled with some tight management cost control. The interims to September 2020 reported increased reoccurring income to 83% of its £9m revenue. Its EBITDA increased 19% to £1.4m with its adjusted PBT increasing 50% to just under £1m. The Board includes Michael Edelson as Chairman, who can help make deals happened. He has been involved in growing several businesses and has been on the Manchester United Board since 1982. There are four decent institutions holding around 60% between them, including Gresham House with 28% and Herald with 7%.The net cash is likely to be around £1.5m. Also undraw loan total facilities of £5.0m are available expiring in 2024 from Santander giving immediate access to draw down against acquisition with a revolving credit facility. A significant acquisition could be funded……
Reviews from 8st June
AVO – 36.5p – Order Pipeline
IRR – 18.9p – Divide and Rule
TGP – 48p – Pass Challenges
RDT – 5.1p- Niche to Bigger
BLV – 246.5p – Nottingham purchase
DEST – 150.5p – Positive test results
CNIC – 84.6p – Organic growth
CRU – 14.25p – Back to profit
RNWH – 641p – Electric acquisition
DNL -69.3p – Milestone payment
Finally
UK Markets should be phlegmatic now the next stage of unlocking is delayed a month.
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