Steinhoff’s former chair Christo Wiese in the spotlight

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Today’s edition features:

  • Prospex Oil & Gas (PXOG.L)
  • Tiziana Life Sciences (TILS.L)
  • ValiRx (VAL.L)

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Markets

Europe
The FTSE-100 finished yesterday’s session 0.62% higher at 7,537.01, whilst the FTSE AIM All-Share index was up 0.47% at 1,019.65. In continental Europe, the CAC-40 finished 1.33% higher at 5,420.58 whilst the DAX was up 1.59% at 13,312.30.

Wall Street
Last night in New York, the Dow Jones closed 0.57% higher at 24,792.2, the S&P 500 added 0.54% to end at 2,690.16 and the Nasdaq gained 0.84% to reach 6,994.76.

Asia
In Asian markets this morning, the Nikkei 225 was slightly lower at 22,875.44 but the Hang Seng was 0.89% higher at 29,310.07.

Oil
In early trade today, WTI crude was 0.3% higher at $57.33 per barrel and Brent was up 0.14% at $63.5 per barrel.


Headlines

Steinhoff’s former chair Christo Wiese in the spotlight
Investors are meeting in London on Tuesday to decide the fate of household goods giant Steinhoff. The firm owns 6,500 retail outlets in 30 countries, including the UK’s Poundland and furniture chains Bensons and Harveys. After revelations of accounting irregularities, Steinhoff’s shares collapsed and executives resigned. Now, shareholders must decide whether to keep Steinhoff afloat or sell off assets to recoup some money. One person in the spotlight is Christo Wiese – Steinhoff’s former chair and its largest shareholder. He’s one of South Africa’s richest businessmen – and one of its most respected, with a reputation for having something of a Midas touch. Mr Wiese holds a stake in investment firm Brait SE, which is a majority shareholder in several other UK businesses including Virgin Active and fashion retailer New Look. But since the scandal emerged earlier this month, the fall in the value of his investments has wiped out a large chunk of his net worth.

Source: BBC News


Company news

Prospex Oil & Gas (PXOG.L, 0.52p) – Speculative Buy
Prospex has announced the acquisition of up to 49% in a gas project in Spain (Tesorillo) through circa €2m in staged payments. Gas was discovered at Tesorillo in 1956 with the Almarchal-1 well, drilled by Spanish company Valdebro. The well intersected a thick section of “possible gas pay” with some zones that flowed gas to surface. The discovery well is only 3.9km from the major North African Maghreb gas pipeline providing easy access to the high price European gas market. It is a large area (2 licenses) covering 38,000ha with a closure area defined by seismic of 70km2.
Netherland Sewell independently calculates an unrisked Prospective Resource of 0.83 BCF and up to 2.3 TCF.

Our view: This is a very interesting project. In Europe, with huge multi TCF potential and adjacent to a gas pipeline. The acquisition cost of up to €2.05m for 49% seems very reasonable for a potentially company making investment. There are 3 payments, €48,750 now, stage 2 is €280,000, and stage 3 is €1,725,000 which will fund drilling – assuming a drill plan has been agreed and permitted. We regard permitting as the most likely source of frustration but note that permitting in Spain is a much improved process. Also important is the remoteness of the licenses and minimal environmental impact. An excellent acquisition and we reiterate our Speculative Buy recommendation.

Beaufort Securities acts as a corporate broker to Prospex Oil and Gas plc

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Tiziana Life Sciences (TILS.L, 144.50p) – Speculative Buy
Tiziana on Friday announced that it has raised £200,000 through the issue of 133,333 new ordinary shares at a price of 150p, with a warrant attached on a 1-1 basis exercisable at 160p until 15 December 2022. Admission of the shares to trading on AIM is expected to occur on 20 December 2017 with enlarged share capital of the company of 125,054,805 ordinary shares (including outstanding loan note shares). Fees in connection with the Placing are to be satisfied through the issue of an additional 31,667 warrants. The fully diluted issued share capital of the company is 140,460,120 ordinary shares (assuming all options and warrants, vested and unvested, exercised and exercisable, were converted). The proceeds will be used to support the clinical trial of milciclib and the development of foralumab, the anti-CD3 antibody.

Our view: Earlier this month, independent data monitor committee has recommended continuation of the Phase IIa clinical trials of milciclib in HCC (unresectable or metastatic hepatocellular carcinoma). HCC, an aggressive type of liver cancer, is the 5th most common cancer and the 3rd cause of cancer mortality worldwide with no satisfactory treatment currently available. The interim data showed the molecule was safe and well-tolerated with no drug-related serious adverse events, and the company is scheduled to progress into Phase IIb trials in Q2 2018. In parallel to HCC, milciclib is also being evaluated in two separate Phase II clinical trials in patients with thymic carcinoma and thymoma, which recently announced that it has successfully met both primary (progression free survival) and secondary (overall survival) endpoints. Beyond this, the company is also preparing to advance its foralumab into Phase IIa clinical trials in non-alcoholic steatohepatitis (‘NASH’), a severe type of non-alcoholic fatty liver disease (‘NAFLD’). Such extensive pipeline of drug development means Tiziana will remain a cash consumer, part of which was facilitated by recent fundraisings, its several US$ billion global market opportunities should be fairly considered. In light of this continued progress, Beaufort reiterates its Speculative Buy rating on the shares with a target price of 400p.

Beaufort Securities acts as a corporate broker to Tiziana Life Sciences plc

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ValiRx (VAL.L, 6.75p) – Speculative Buy
ValiRx yesterday announced that it has been approved by the UK Medicines and Healthcare Products Regulatory Agency and the Research Ethics Committee to expand its VAL201 trial for the Phase I/II dose escalation study in patients with locally advanced or metastatic prostate cancer and other advanced solid tumours. The approval follows the successful completion of stage one of clinical study, where VAL201 demonstrated consistently high safety and tolerability, as well as preliminary effectiveness. ValiRx’s CEO, Dr Satu Vainikka, commented “Since VAL201 has demonstrated disease stabilisation, with a lower dose than was predicted, we anticipate that by increasing the dosage we will be able to see further anti-cancer activity”.

Our view: This is a positive news for ValiRx. The approval permits ValiRx to substantially increase the dose of VAL201 in patients to observe its full therapeutic potential. VAL201 treatment does not including complete and general androgen hormone deprivation, thereby uniquely differentiate itself from current advanced prostate cancer therapies with fewer side effects. According to GlobalData, the market value for prostate cancer is growing and expected to reach US$8.2bn in 2023. Given positive progress, Beaufort reiterates its Speculative Buy rating on the shares.

Beaufort Securities acts as corporate broker to ValiRx plc

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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


Weekly diary


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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.

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