Japan expands unilateral sanctions against North Korea

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Today’s edition features:

  • Concepta (CPT.L)
  • Hummingbird Resources (HUM.L)
  • Evgen Pharma (EVG.L)

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Markets

Europe
The FTSE-100 finished yesterday’s session 0.65% lower at 7,448.12, whilst the FTSE AIM All-Share index was down 0.18% at 1,014.79. In continental Europe, the CAC-40 finished 0.78% lower at 5,357.14 whilst the DAX was down 0.44% at 13,068.08.

Wall Street
Last night in New York, the Dow Jones closed 0.31% lower at 24,508.66, the S&P 500 fell 0.41% to end at 2,652.01 and the Nasdaq slipped 0.28% to 6,856.53.

Asia
In Asian markets this morning, the Nikkei 225 was down 0.62% at 22,553.22 and the Hang Seng was 1.19% lower at 28,819.52.

Oil
In early trade today, WTI crude was 0.19% higher at $57.15 per barrel, while Brent was flat at $63.31 per barrel.


Headlines

Japan expands unilateral sanctions against North Korea
Japan has imposed fresh sanctions against North Korea as it seeks to ramp up pressure on Pyongyang over its nuclear and missile programmes. Chief cabinet secretary Yoshihide Suga said the assets of another 19 entities and individuals would be frozen. More than 210 organisations and people from countries including China and Russia will now be targeted. Businesses on the blacklist include banks, coal and minerals traders, and transport firms. The widening of sanctions comes ahead of a meeting of the UN Security Council to be held on Friday.

Source: BBC News


Company news

Concepta (CPT.L, 6.75p) – Speculative Buy
Concepta, yesterday announced that its management alongside Chinese hospital partners have held its inaugural meeting on 22 November 2017 to present the company and its myLotus fertility product (myLotus meter, testing strips and app) to potential distributors in Shanghai. Leading doctors from two hospitals (Changhai and HuaShan) also presented results of a hospital evaluation that the LH and hCG2 measurements registered by myLotus achieved approximately 100% correlation with those of hospital laboratory tests carried out on blood samples. Such outcome demonstrates strong evidence of the product’s effectiveness. There were 31 potential distributors attended the meeting, covering 14 important cities (over 800 million population) with an estimated reach of 2.8 million women with unexplained infertility.

Our view: myLotus is created to help women conceive naturally by uniquely allowing both quantitative and qualitative measurements of a woman’s personal LH and hCG hormone levels in a home test, facilitating higher conception rates and early diagnosis of issues with fertility hormones. The CEO of Concepta noted that the product launch meeting saw excellent reception from potential distributors and expect distributor network in China to “grow significantly” next year. Looking ahead, in 2018, myLotus is expected to receive its CE Marking for European distribution during the first half of next year, while also making its initial testing for online distribution. Beaufort forecasts a revenue of £4.65m and a first net profit of £0.72m next year (FY18E) with substantial growth the year after. With the company successfully raised £2m before expenses through an oversubscribed placing on 13 November 2017, the near-term funding needs are satisfied. Beaufort reiterating its Speculative Buy rating on the share with a target price of 17.5p.

Beaufort Securities acts as corporate broker to Concepta plc

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Hummingbird Resources (HUM.L, 36.00p) – Speculative Buy
Hummingbird Resources announced today that ore commissioning has commenced at its Yanfolila gold project in Mali ahead of the first gold pour by end of 2017. Introduction of stock piled ore to the mill and CIL (Carbon-in-leach) processing plant has commenced. Commercial ramp up is expected during Q1 2018 with a target of delivering approximately 130,000oz of gold during the first full year of production, which could generate US$70m of free cash flow based on a US$1,250/oz gold price.

Our view: The above announcement represents the final step before gold production and is transitional for the Company as it graduates from developer to producer. We continue to be impressed with the progress being made at Yanfolila and now eagerly anticipate the first gold pour by year end. With the commencement of commissioning, the first gold pour is not far off. In the meantime, we maintain a Speculative Buy rating on the stock.

Beaufort Securities acts as a corporate broker to Hummingbird Resources plc

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Evgen Pharma (EVG.L, 15.38p) – Speculative Buy
Evgen Pharma, on Wednesday announced a collaboration with King’s College London (‘KCL’) to advance its lead product candidate, SFX-01, for the treatment of ischaemic stroke. The initial aim of the collaboration is to test SFX-01 at various doses with a view to building a clinical-trial enabling data package. This programme will take approximately 9 months to complete and is seed-funded by Evgen. If the data is supportive, Evgen will provide quantities of SFX-01 to support a potential grant-funded clinical trial to be led by KCL. Under the terms of the collaboration agreement, Evgen will have first refusal to an exclusive licence to all data and new intellectual property from such a trial on fair commercial terms to be negotiated and duly recognising the respective investments of all parties. In a programme of work funded by the British Heart Foundation, scientists at KCL have previously found the potential of sulforaphane (the active principle in SFX-01) to minimise brain injury and subsequent motor deficits in highly reproducible models of ischaemic stroke. KCL’s Professor of Vascular Physiology, Giovanni Mann, commented “We are delighted to be collaborating with Evgen Pharma on this exciting project. We have previously had grant support from the British Heart Foundation to test sulforaphane in laboratory models of ischaemic stroke and produced compelling data. However, sulforaphane is not a practical pharmaceutical product as it is highly unstable. With SFX-01, a stable pharmaceutical version of sulforaphane, we are now able to consider a clinical trial which could start in early 2019”.

Our view: Though early stage, the news highlights interest from research institution for SFX-01, while broadening its application potential. Exploring potential for ischaemic stroke is a good strategic fit for Evgen as it is already conducting Phase II clinical trials of SFX-01 for subarachnoid haemorrhage stroke (‘SAS’), which is scheduled for the data read-out before the end of calendar year 2018. KCL is well-known University with world-renowned research and clinical capabilities in stroke. KCL’s relationship with major charities such as British Heart Foundation is also attractive for the potential grant funding purposes. Beside SAS, Evgen is also progressing Phase II clinical trials for metastatic breast cancer (‘STEM’), which is scheduled to release an interim data analysis in the first half of calendar year 2018, and the data read-out in the second half of calendar year 2018. In light of positive news, Beaufort reiterates its Speculative Buy rating on the shares.

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To read Beaufort’s full research archive click here

Compiled by:
Charles Long, Ben Maitland, Sheldon Modeland & Kazunaga Senga
(t) +44 (0) 207 382 8384
(e) info@beaufortsecurities.com


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Recommendations
During the three months to end-November 2017, the number of stocks on which Beaufort Securities published recommendations was 237, and the recommendations were as follows: Buy – 37; Speculative Buy – 187; Hold – 11; Sell – 2.

Full definitions of the recommendations used by Beaufort Securities in its publications and their respective meanings can be found on our website here.

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