Main menu
Edison Group
  • Home
  • Equities

    Equities

    View All Equities

    Equities by Sector

    Dar Global

    MCap

    USD1,486m

    Last close

    USD8.25

    ▲ −0.25 (−2.94%)

    Theon International

    MCap

    EUR875m

    Last close

    EUR12.50

    ▲ 1.44 (13.02%)

    Metals One

    MCap

    GBP2m

    Last close

    GBP0.00

    ▲ 0.04 (8.89%)

  • Sectors

    Sectors

  • Thematics

    Thematics

    View All Thematics

    Latest

  • Audiovisual

    Audiovisual

    View All Audiovisual

    Latest

BONESUPPORT — US sales rebound and new clinical study

BONESUPPORT — US sales rebound and new clinical study

Recent updates indicate Bonesupport has been making progress in all key strategic directions. Sales have started to rebound in the US since the company started commercialising its CERAMENT bone void filler in Q418. The top-line results from the clinical CERTiFy study released in Q418 are also helping to increase awareness. CERAMENT G/V will be included in a new, large investigator-led SOLARIS study, which could potentially change the standard of care in osteomyelitis treatment. Our valuation is largely unchanged at SEK1.73bn or SEK33.1/share (vs SEK33.5/share).

Analyst avatar placeholder

Written by

BONESUPPORT

US sales rebound and new clinical study

Company update

Pharma & biotech

14 June 2019

Price

SEK28.8

Market cap

SEK1506m

Net cash (SEKm) at end-Q119

206.0

Shares in issue

52.3m

Free float

51.4%

Code

BONEX

Primary exchange

Nasdaq Stockholm

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

15.7

37.1

175.3

Rel (local)

12.2

32.3

162.8

52-week high/low

SEK29.5

SEK9.4

Business description

Bonesupport is an orthobiologics company that has four marketed bone graft substitutes and several other projects in R&D. The lead products CERAMENT BVF, CERAMENT G (gentamicin) and CERAMENT V (vancomycin) are intended to help orthopaedic surgeons manage bone voids and defects after injuries or diseases affecting bones.

Next events

CERTiFy study results published

H219

Q219 financial results

25 July 2019

Health economics data published

Q319

FORTIFY study data

2020

Analysts

Jonas Peciulis

+44 (0)20 3077 5728

Alice Nettleton

+44 (0)20 3077 5700

BONESUPPORT is a research client of Edison Investment Research Limited

Recent updates indicate Bonesupport has been making progress in all key strategic directions. Sales have started to rebound in the US since the company started commercialising its CERAMENT bone void filler in Q418. The top-line results from the clinical CERTiFy study released in Q418 are also helping to increase awareness. CERAMENT G/V will be included in a new, large investigator-led SOLARIS study, which could potentially change the standard of care in osteomyelitis treatment. Our valuation is largely unchanged at SEK1.73bn or SEK33.1/share (vs SEK33.5/share).

Year end

Revenue (SEKm)

PBT*
(SEKm)

EPS*
(SEK)

DPS
(SEK)

P/E
(x)

Yield
(%)

12/17

129.3

(127.1)

(3.22)

0.0

N/A

N/A

12/18

96.6

(174.1)

(3.45)

0.0

N/A

N/A

12/19e

199.9

(142.9)

(2.75)

0.0

N/A

N/A

12/20e

298.9

(81.2)

(1.53)

0.0

N/A

N/A

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles and exceptional items.

Gathering clinical evidence

A retrospective case study supporting the use of CERAMENT G was published by surgeons at the Oxford Bone Infection Unit in March 2019. The study demonstrated bone remodelling with CERAMENT G for the first time through radiology and histology in patients with chronic osteomyelitis (level IV evidence). This is one of many case studies published by various key opinion leaders (KOLs) indicating interest in Bonesupport’s products.

Large investigator-led trial to include CERAMENT

A new, large investigator-led study SOLARIO has been initiated (n=500) in Europe. The study aims to show that the use of local antibiotics plus a short course of systemic antibiotics (<1 week) is as good as the current standard of care, which is local antibiotics plus >4 weeks of systemic antibiotics. Although the results are not expected until 2022, if successful this study could lead to a treatment paradigm shift and show that local antibiotics play more of a role in managing bone infections than previously thought.

US sales rebound

Q119 US sales through Bonesupport’s distributor network grew by 174% q-o-q to SEK11.5m, through a mixture of new and old accounts. The network includes 40 distributors totalling over 500 sales reps and a new group purchasing organisation (GPO) contract has been secured with Ascension (150 hospitals) in Q119, which should lead to sales in Q319. We leave our medium- to long-term projections unchanged because we see the initial US sales rebound as a good start.

Valuation: SEK1.73bn or SEK33.1/share

We value Bonesupport at SEK1.73bn or SEK33.1/share vs SEK1.74bn or SEK33.5/share previously, due to lower net cash partially offset by rolling our model forward. Key near-term catalysts include updated US sales figures in the Q219 financial results, publication of the full CERTiFy results and health economics data in Q319.

US sales rebound looks promising

Q119 sales of CERAMENT BVF in the US were SEK11.5m. This represents growth from SEK4.2m in Q418, which was the first quarter that Bonesupport’s own distributor network started promoting CERAMENT in the US. US sales were down 28% y-o-y, but in Q118 US distribution was managed solely by Zimmer Biomet. After Bonesupport terminated the agreement it booked no sales in Q318 because Zimmer had exclusivity until 23 October 2018. Over the last two quarters Bonesupport’s sales have been via its newly established network of independent distributors, including 40 distributors totalling over 500 sales reps. In its Q119 call, Bonesupport explained there was a ‘good mix of new and legacy accounts’ and the top-line CERTiFy study results are helping increase awareness of CERAMENT.

Bonesupport has secured a new GPO contract with Ascension (150 hospitals) and management expects to start generating sales from end of Q219/start of Q319. This is in line with Bonesupport’s previous guidance for all GPO contracts (see our previous note). We expect additional GPO contracts to be added gradually.

Exhibit 1: Bonesupport’s US quarterly sales (LHS) and 12-month rolling sales per segment (RHS)

Source: Bonesupport

Sales of CERAMENT products in Europe grew 41% to SEK21.3m y-o-y. The main contributors to this were the antibiotic-eluting CERAMENT G/V, which saw sales increase by 54% y-o-y. This increased traction is due to the expansion of the sales team in 2018 starting to have an impact and due to the CERTIFY top-line results being promoted.

The total operating loss for Q119 was SEK39.0m (vs SEK33.1m in Q118) largely due to higher selling expenses. Bonesupport is implementing cost-control measures to ensure it remains funded to profitability (2021) with existing resources, as previously guided. Administrative costs will reduce, whereas investments in the commercial side will continue to increase following the change in the distribution model. We reflected the shift in our model previously. Given that Bonesupport’s investment case is still in a turnaround phase, our estimates are subject to revision once more performance data points are announced. For now, we leave our medium- to long-term projections unchanged since we see initial US sales rebound as a good start.

KOL relationships underpin CERAMENT G/V acceptance

In the field of orthopaedics, we believe building and maintaining relationships with surgeons is essential for commercial success. The continued growth in CERAMENT G/V sales is underpinned by strong KOL engagement and multiple case studies now published by surgeons using the antibiotic-eluting CERAMENT G/V in Europe help increase awareness of the product.

We attended the Oxford Bone Infection Conference in March 2019. Bonesupport has a strong relationship with the Oxford Bone Infection Unit, one of the most important centres for treating bone infection in Europe. KOL Martin McNally is head of this unit and has influence across Europe in this field, especially because he is the president of the European Bone and Joint Infection Society (EBJIS). McNally and colleagues presented several patient case studies at the conference, where CERAMENT G was showcased. In addition, they have published several articles about CERAMENT G, including patient case studies.

Bone remodelling shown for the first time with CERAMENT G

The most recent case study was published in March 2019 by the Oxford Bone Infection Unit supporting the use of CERAMENT G. This was a retrospective study in patients with chronic osteomyelitis having a single-stage procedure. The study found that using CERAMENT G resulted in an infection recurrence of just 4.3% and mean void filling was 73.8% at final follow-up. For the first time in humans, bone remodelling with CERAMENT G was demonstrated by radiology and histology.

Case studies are a type of observational study providing level IV evidence (whereas the FORTIFY study will provide level I clinical evidence in bone infection). They are not randomised or controlled, so results should be interpreted with care. However, they are peer reviewed and published in journals so they are still an important way for orthopaedics companies to build evidence and promote their products to surgeons. Several case studies have now been conducted with CERAMENT G across Europe, which we believe is evidence that Bonesupport is successfully establishing relationships with European KOLs.

New, large investigator-led SOLARIO study

A new, large randomised trial has been initiated by the Oxford University Hospital’s NHS Foundation Trust in collaboration with the EBJIS: Systemic Or Local Antibiotic Regimes In Orthopaedics (SOLARIO) (NCT03806166). Bonesupport is not directly sponsoring the trial (the company only donated a research grant to the EBJIS), so it will not be able to influence the design. However, the potential benefit for Bonesupport could be substantial. The study aims to show that the use of local antibiotics plus a short course of systemic antibiotics (<1 week) is as good as the current standard of care, which is local antibiotics plus >4 weeks of systemic antibiotics.

Traditional understanding in treating osteomyelitis is that long-term systemic antibiotic therapy (oral or intravenous) is the mainstay approach, while local antibiotics were perceived as more of a supportive therapy. The SOLARIO study investigates whether using local antibiotics allows shorter courses of systemic antibiotics to limit antibiotic resistance, side effects and cost. The rationale of the study is that locally delivered antibiotics can achieve much higher concentrations than those administered systemically due to poor bone tissue perfusion. Although the results are not expected to be released until 2022, if successful this study could lead to a treatment paradigm shift and show that local antibiotics play more of a role in managing bone infection than previously thought. A positive study outcome could also support the premium pricing of CERAMENT, because a shorter-duration antibiotic therapy should save costs and help combat antimicrobial resistance.

The study (n=500) is designed as non-inferiority, randomised, controlled trial comparing the two treatment regimens. Products from different manufacturers are allowed, but they must contain an antibiotic and be approved by the regulatory authorities. This limits the product selection to PMMA beads, Collagen fleeces plus antibiotics, CERAMENT G/V, Herafil G (Heraeus) and Osteoset T (Wright Medical). We discussed how these products differ in our previous reports (most details in the initiation report), but we view CERAMENT G/V at the top in terms of innovation.

Exhibit 2: Overview of the SOLARIO study (NCT03806166)

Aim

To determine whether treatment with local antibiotics can allow for shorter courses of oral or intravenous antibiotics following surgery for bone or joint infection to limit antibiotic resistance, side effects and cost.

Summary design

SOLARIO: a randomised open-label multi-centre clinical trial

No. of patients

500

Key inclusion criteria

Orthopaedic infection, undergoing surgical treatment for the infection, locally administered antibiotics at the site of orthopaedic infection, would ordinarily be managed with a prolonged course (>=4 weeks) of systemic antibiotics

Endpoints

Primary endpoint: Definitive treatment failure (infection recurrence)

Secondary endpoints: Possible or probable treatment failure, serious adverse events, antibiotic side effects, quality of life measures

Sites

UK: Wrightington Hospital, Royal National Orthopaedic Hospital, Bone Infection Unit Nuffield Orthopaedic Centre, Royal Liverpool Hospitals

Completion date

March 2022

Source: BONESUPPORT, clinicaltrials.gov

Valuation

We value Bonesupport at SEK1.73bn or SEK33.1/share versus SEK1.74bn or SEK33.5/share previously, due to lower net cash partially offset by rolling our model forward. Our DCF model uses a 10% discount rate and includes a forecast period until 2028. The terminal value assumes a long-term 2.0% growth rate.

Bonesupport has changed the way it accounts for leases under the new IFRS 16 rules. It now records remaining financial leases in the balance sheet as short- and long-term liabilities of SEK5.2m and SEK8.0m respectively. This was balanced with a corresponding increase in tangible long-term assets. The net effect on P&L was minor. Bonesupport had cash of SEK219.1m at end-Q119 and, according to our model, this is sufficient to finance the company to break even in 2021.

The main near-term catalysts for the share price include publication of the full results of the CERTiFy study expected in H219, publication of the health economics study data in Q319 and an update on sales under the independent distributor network in the US at the Q219 results in July 2019. Results of the FORTIFY trial are expected in 2020.

Exhibit 3: Assumptions, projected cash flow and DCF valuation, SEKm

2019e

2020e

2021e

2022e

2023e

2024e

2025e

2026e

2027e

2028e

EBIT* (risk adjusted)

(143.9)

(82.1)

30.7

165.7

223.9

258.7

267.8

273.2

276.0

277.4

Tax**

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

D&A

1.8

5.7

5.0

4.5

4.1

3.9

3.7

3.6

3.5

3.4

Change in WC

(17.9)

(9.4)

(12.8)

(33.3)

(14.4)

(10.2)

(2.8)

(1.8)

(1.3)

(0.9)

Capex

(2.3)

(2.0)

(2.1)

(2.1)

(2.1)

(2.1)

(2.1)

(2.1)

(2.1)

(2.0)

Operating FCF

(162.3)

(87.8)

20.7

134.8

211.5

250.4

266.6

272.8

276.2

277.9

NPV (SEKm)

Free cash flows FY19-28e

677.7

Terminal value (2.0% growth rate assumed)

848.1

Total NPV

1,525.8

Net cash (last reported)

206.0

Valuation

1,732

Valuation/share (SEK)

33.1

Discount rate

10.0%

Tax rate (long term)

22%

Source: Edison Investment Research. *EBIT here includes risk-adjusted cash flows associated with CERAMENT G launch in the US in 2021. **Tax loss carry forwards (SEK604m as end-2017) offset taxes during our forecast period.

Exhibit 4: Financial summary

SEK'000s

 

2016

2017

2018

2019e

2020e

December

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

104,599

129,301

96,623

199,935

298,891

Cost of Sales

(16,312)

(16,871)

(15,157)

(29,990)

(44,834)

Gross Profit

88,287

112,430

81,466

169,945

254,057

Research and development

(38,233)

(60,636)

(66,064)

(66,064)

(66,064)

EBITDA

 

 

(87,399)

(98,116)

(172,847)

(142,088)

(76,454)

Operating Profit (before amort. and except.)

(87,601)

(98,486)

(173,664)

(143,112)

(81,284)

Intangible Amortisation

(1,144)

(799)

(740)

(778)

(849)

Exceptionals

0

0

0

0

0

Other

0

0

0

0

0

Operating Profit

(88,745)

(99,285)

(174,404)

(143,890)

(82,133)

Net Interest

(20,821)

(28,600)

(465)

196

56

Profit Before Tax (norm)

 

 

(108,422)

(127,086)

(174,129)

(142,917)

(81,228)

Profit Before Tax (reported)

 

 

(109,566)

(127,885)

(174,869)

(143,694)

(82,077)

Tax

(625)

(1,007)

(1,536)

(1,536)

(1,536)

Profit After Tax (norm)

(109,047)

(128,093)

(175,665)

(144,453)

(82,764)

Profit After Tax (reported)

(110,191)

(128,892)

(176,405)

(145,230)

(83,613)

Average Number of Shares Outstanding (m)

25.8

39.8

51.0

52.6

54.1

EPS - normalised (SEK)

 

 

(4.22)

(3.22)

(3.45)

(2.75)

(1.53)

EPS - normalised and fully diluted (SEK)

 

(4.22)

(3.22)

(3.45)

(2.75)

(1.53)

EPS - reported (SEK)

 

 

(4.26)

(3.24)

(3.46)

(2.76)

(1.55)

Dividend per share (SEK)

0.0

0.0

0.0

0.0

0.0

Gross Margin (%)

84.4

87.0

84.3

85.0

85.0

EBITDA Margin (%)

N/A

N/A

N/A

N/A

N/A

Operating Margin (before GW and except.) (%)

N/A

N/A

N/A

N/A

N/A

BALANCE SHEET

Fixed Assets

 

 

5,091

8,591

9,771

24,716

22,143

Intangible Assets

4,469

5,244

5,511

6,019

6,311

Tangible Assets

442

3,099

3,885

18,322

15,458

Investments

180

248

375

375

375

Current Assets

 

 

183,718

588,093

316,370

173,525

96,677

Stocks

14,489

22,079

23,681

32,866

36,850

Debtors

20,242

20,678

18,683

27,388

32,755

Cash

141,501

533,367

261,468

100,733

14,534

Other

7,486

11,969

12,538

12,538

12,538

Current Liabilities

 

 

(69,742)

(145,725)

(47,321)

(52,499)

(52,499)

Creditors

(44,639)

(47,105)

(47,321)

(47,321)

(47,321)

Short term borrowings

(25,103)

(98,620)

0

(5,178)

(5,178)

Long Term Liabilities

 

 

(84,763)

(173)

(289)

(8,249)

(8,249)

Long term borrowings

(84,599)

0

0

(7,960)

(7,960)

Other long term liabilities

(164)

(173)

(289)

(289)

(289)

Net Assets

 

 

34,304

450,786

278,531

137,493

58,072

CASH FLOW

Operating Cash Flow

 

 

(70,184)

(95,060)

(168,652)

(155,786)

(81,612)

Net Interest

(11,640)

(11,737)

(822)

196

56

Tax

(109)

(737)

(2,151)

(1,536)

(1,536)

Capex

(67)

(3,037)

(1,609)

(2,323)

(1,966)

Acquisitions/disposals

0

0

0

0

0

Financing

103,714

504,833

0

0

0

Other

4,091

8,686

(45)

(1,286)

(1,141)

Dividends

0

0

0

0

0

Net Cash Flow

25,805

402,948

(173,279)

(160,735)

(86,199)

Opening net debt/(cash)

 

 

(5,994)

(31,799)

(434,747)

(261,468)

(87,595)

HP finance leases initiated

0

0

0

0

0

Other

0

0

0

(13,138)

0

Closing net debt/(cash)

 

 

(31,799)

(434,747)

(261,468)

(87,595)

(1,396)

Source: Bonesupport, Edison Investment Research

General disclaimer and copyright

This report has been commissioned by BONESUPPORT and prepared and issued by Edison, in consideration of a fee payable by BONESUPPORT. 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 Edison analyst 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.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

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 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd who holds an Australian Financial Services Licence (Number: 427484). 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

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. 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

1,185 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

General disclaimer and copyright

This report has been commissioned by BONESUPPORT and prepared and issued by Edison, in consideration of a fee payable by BONESUPPORT. 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 Edison analyst 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.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

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 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd who holds an Australian Financial Services Licence (Number: 427484). 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

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. 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

1,185 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

Low & Bonar — Slow trading start to FY19, disposals underway

May trading newsflow causes us to lower earnings estimates significantly. Improvements to operational performance and further de-leveraging are firmly on management’s agenda and the disposal of the construction fibres operation will help in the latter regard. Metrics point to attractions for deep-value investors.

Continue Reading

Subscribe to Edison

Get access to the very latest content matched to your personal investment style.

Sign up for free