Polski Bank Komorek Macierzystych — European leader in stem cell banking

Polski Bank Komórek Macierzystych (BKM)

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Research: Healthcare

Polski Bank Komorek Macierzystych — European leader in stem cell banking

Polski Bank Komórek Macierzystych (PBKM) continues its consolidation efforts in the cord blood banking services market in Europe. It operates 15 stem cell banks under the FamiCord brand, covering approximately 37% of the European market for newly acquired samples, seeing space for further growth in Western Europe. PBKM is present in 11 European countries, with partners in a further 13 regions. Recent steady growth (2015–19 revenue CAGR of 16%) has been fuelled by both organic development and M&A.

Written by

Michal Mordel

Analyst, Investment trusts

Healthcare

PBKM (FamiCord)

European leader in stem cell banking

Pharma & biotech

Deutsches Eigenkapitalforum 2020

21 October 2020

Price

PLN77.0

Market cap

PLN708m

Share price graph

Share details

Code

BKM

Listing

Warsaw

Shares in issue

9.2m

Business description

Polski Bank Komórek Macierzystych (PBKM) operates a group of stem cell banks under the FamiCord Group brand. The company is the largest industry player in Europe, operating mainly in Poland, Germany, Spain, Turkey, Hungary and Portugal. With 500k stored biological samples, it is the largest European player. It develops stem cell therapy for the treatment of a number of diseases, including amyotrophic lateral sclerosis.

Bull

Clear sector leader.

Business model based on subscriptions securing stable cash flow generation.

Ongoing R&D projects are a potential value kicker.

Bear

The reduced client trust following the default of CryoSave may persist.

Reduction of off-line selling and marketing channels due to COVID-19 pandemic.

Rapid inorganic growth and integration costs affecting short-term profitability.

Analyst

Michal Mordel

+44 (0) 20 3077 5700

Milosz Papst

+44 (0) 20 3077 5700

Polski Bank Komórek Macierzystych (PBKM) continues its consolidation efforts in the cord blood banking services market in Europe. It operates 15 stem cell banks under the FamiCord brand, covering approximately 37% of the European market for newly acquired samples, seeing space for further growth in Western Europe. PBKM is present in 11 European countries, with partners in a further 13 regions. Recent steady growth (2015–19 revenue CAGR of 16%) has been fuelled by both organic development and M&A.

Continued inorganic expansion

PBKM recently acquired a 70% stake in a Turkish stem cell bank for €2.8m, took full control over German eticur for €2m and acquired 53% of shares in Italian Sorgente for €420k. These acquisitions should add a c 3% to PBKM’s market share in Europe. The transactions were financed by last year’s c €51m private placement taken up by AOC Health, now a majority shareholder (62.4% stake). PBKM seeks further M&A deals, with an acquisition value over c €70m on its priority list. PBKM is also involved in three R&D consortia clinical trials with a 10–38% share in IP rights, as well as the fully-owned ALSTEM project, which has started enrolment in a clinical trial. In Q120, the company signed a contract for the use of CAR-T technology in Europe, currently the most innovative therapy in blood cancer treatment. PBKM plans to spend c PLN15m on CAR-T development in 2020–24 (it is expecting additional funds from grants as part of public programmes).

COVID-19 pandemic impact on sales

PBKM’s H120 adjusted net income was €1.4m (H119: €2.2m). Net revenue improved 8% y-o-y to €22m, driven mostly by M&A. The adjusted EBITDA margin of 13.7% declined 5pp y-o-y due to higher management costs (due to acquisitions), increased operational costs (affected by the pandemic), as well as increased headcount (for further expansion). Many of the off-line selling channels were closed due to COVID-19 and new contracts declined by 15–20% y-o-y at group level. Meanwhile, recurring subscription revenues were €5.8m (+6% y-o-y) in H120.

Valuation

PBKM does not provide any financial guidance for FY20 and there are no consensus estimates. Based on a last 12 months adjusted P/E ratio (47.9x) and adjusted EV/EBITDA (22.6x), it trades at 63% and 69% premiums to medical services peers. This may reflect expectations of continued rapid inorganic growth. Additionally, PBKM has a leading market position and high proportion of predictable cash flows in its subscription-based model.

Historical financials

Year
end

Revenue
(PLNm)

EBITDA
(PLNm)

EPS
(PLN)

DPS
(PLN)

P/E
(x)

Yield
(%)

12/16

128.8

35.2

4.61

1.80

16.7

2.3

12/17

148.9

46.0

6.20

0.89

12.4

1.2

12/18

161.6

50.2

7.32

0.00

10.5

N/A

12/19

188.0

28.2

2.66

0.00

28.9

N/A

Source: PBKM, Refinitiv.

EDISON QUICKVIEWS ARE NORMALLY ONE-OFF PUBLICATIONS WITH NO COMMITMENT TO WRITING ANY FOLLOW UP. QUICKVIEW NOTES USE CONSENSUS EARNINGS ESTIMATES.

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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This report has been prepared and issued by Edison as part of a roadshow package for companies attending the Deutsches Eigenkapitalforum. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

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Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2020 Edison Investment Research Limited (Edison).

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Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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