SUNDAY NEWSPAPER SHARE TIPS: James Halstead, Bodycote and Bovis
This Is Money Reporter
13:28 GMT, 10 March 2019
We round up the Sunday newspaper share tips. This week, Midas looks at the soon to be listed US Solar Fund, while the Sunday Times assesses the prospects of health data firm Sensyne and the Telegraph mulls the future for medical devices company ConvaTec.
MAIL ON SUNDAY
To the outside world, the US may seem an unlikely place to bang the drum for renewable energy these days.
President Trump is a well-known climate-change sceptic, a keen supporter of the oil and gas industry and publicly opposed to any greenhouse gas-curbing policies that jeopardise US jobs.
But most US states have clean energy targets and even those which do not are increasingly interested in renewable power, particularly solar.
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Their enthusiasm reflects a dramatic change in the economics around this energy source. Building and operating solar plants used to be exceptionally expensive but prices have tumbled over past decade, making solar one of the cheapest sources of power in the US.
US Solar Fund intends to tap into this trend. The company expects to list on the Stock Exchange next week and investors can apply for shares until Wednesday. Shares will be priced at $1 (76p) each but investors can subscribe in pounds or dollars and the minimum application is $1,000 or £1,000.
The flotation looks appealing, with chief executive John Martin targeting a 5.5 per cent dividend yield from 2020, rising steadily in subsequent years.
Midas verdict: The US Solar Fund offers UK investors access to a fast-growing renewable energy market, with a robust long-term outlook. An attractive investment, despite President Trump’s antipathy.
>>>Read the full Midas column here
THE SUNDAY TELEGRAPH
The medical devices group ConvaTec has so far made money only for its former private equity backers and recovery looks far off, writes James Ashton.
It was London’s largest listing of 2016, and Questor initially liked the healthcare group, he says.
It’s a ‘maker of colostomy bags, catheters and complicated wound dressings’ that was a former division of Bristol-Myers Squibb.
‘Buoyed by stories of boosting margins and impressive cash conversion, the stock duly peaked 44pc above our tip price. Thereafter, the investment outlook has been like a gory trip to A&E,’ says Ashton.
‘Today the shares trade at two thirds of the offer price, an acute embarrassment for a stellar board led by former Vodafone grandee Sir Christopher Gent. Much has gone wrong, including a botched margin improvement programme, a manufacturing relocation that disrupted production and leadership upheaval.
‘The business is hunting for a new chief executive after the hapless Paul Moraviec left last autumn.’
Ashton says the question for investors is whether to hold on for recovery, and he concludes it is a tough road ahead.
‘The shares are trading at 13 times this year’s forecast earnings, a discount to the wider medical sector. Even though the current management have injected a healthy dose of realism into the story, it’s time to stomach the loss and move on.’
THE SUNDAY TIMES
The NHS holds the medical records of 65m patients, data that could be priceless to drug manufacturers. writes Sabah Meddings.
‘One company hoping to put a price on the data — and reap rewards — is Sensyne Health, led by former science minister Paul Drayson, who is also co-founder of the vaccine maker PowderJect (and an amateur racing driver).
‘Sensyne floated on London’s junior AIM market last August at 175p a share, valuing it at £225m. As part of the listing, NHS trusts were handed shares. Lord Drayson — who owns £70.9m of shares with his wife Elspeth — has promised to sign three more deals with NHS trusts before the end of next year.’
Meddings notes that analysts forecast revenues of just £230,000 for this year, and unadjusted losses are expected to be £12.1m.
‘The shares have had a rocky ride, falling to a low of 155.5p in January, although they closed on Friday at 190p, valuing it at £244.3m.
‘Those looking for long-term investments should take a closer look. For a quick return, however, place your bets elsewhere.’