Fundamental Insights of Two FTSE Listed Stocks: Centamin PLC and OptiBiotix Health PLC

European markets surged on Monday (before the market close as on 18^th May 2020) as the gradual revival of economic activities encouraged the investor sentiments. While the energy stocks were the major gainers as oil prices surged with output cuts and gradual recovery in demand. Meanwhile, STOXX 600 has recovered almost 25 per cent from its March lows since Government and Central Banks have provided the unparalleled stimulus, and interest rate cuts to boost the economy.

In light of the current market conditions, we are going to discuss two FTSE listed stocks from diverse industry – a mining stock, Centamin PLC (LON:CEY) and a Pharmaceutical & Biotechnology stock, OptiBiotix Health PLC (LON:OPTI). Today, CEY released its full-year 2019 results, while OPTI announced trading and commercial update.

Following the business updates, the price of both the companies, CEY and OPTI jumped by 1.02 per cent and 7.10 per cent, respectively (at the time of writing, 2.15 PM GMT). It would be interesting to deep drive through their business model, recent updates, current financial and operational position, to understand the magnitude of their latest update over market sentiments.

Centamin PLC (LON:CEY) - Reported a Solid Financial Performance in the First Quarter 2020, while Keeping a Decent Balance Sheet Position.

Centamin PLC is a mining company with dual listing on both Toronto and London Stock Exchange. It is involved in exploration and mining of precious metals. The company’s operating segments are differentiated into three division, two for exploration business and one for mining of precious metals. The Board distinguishes the segments from a geographic perspective, namely Burkina Faso, Côte d’Ivoire Egypt and Corporate (includes Jersey, United Kingdom and Australia). The group’s principal asset Sukari Gold Mine initiated production in 2009. It operates with a total workforce of around 2,500 people.

On 13^th July 2020, the company will announce its second-quarter 2020 report.

(Source: Presentation, Company Website)

Operational Highlights - FY2019 vs FY2018

• Gold production stood at 480,528 ounce (oz) in FY2019 versus 472,418 oz in FY2018.
• Average realised gold price stood at USD 1,399 per oz in FY2019 against USD 1,267 per oz in FY2018.

(Source: Presentation, Company Website)

Significant Actions of 2020

• 21^st April 2020: The Group announced the first interim dividend for 2020 of 6 US cents per share. Further, it confirmed no debt and no hedging position.
• 2^nd April 2020: Martin Horgan was appointed as Chief Executive Officer, effected from 6^th April 2020. Further, the group announced that Ross Jerrard would continue as Chief Financial Officer.

Financial Highlights - Made a Good Start to 2020 with Production and Costs on Track

• On 18^th May 2020, the Company provides audited annual results for the twelve months ended 31^st December 2020, with continued operational improvements at Sukari, excellent exploration target generation, a robust financial performance, substantial progress meeting the ESG (environmental, social and governance) initiatives and a continued focus on delivering returns to all of the stakeholders.
• For the twelve months ending 31 December 2019, the gross revenues increased by 7 per cent to USD 658.1 million as compared with the previous year (2018: USD 614.8 million). Led by the timing of gold shipments, a total of unsold gold bullion of 19,410 ounces was held on-site at year-end. As per the earlier announcement on 21^st April 2020, this has been realized and reflected in Q1 FY20 gold sold numbers.
• Cash costs of production for the financial year 2019 stood at USD 699 per ounce (oz) produced, a growth of 12 per cent, reflecting an increase of 1 per cent in mined and 2 per cent in processed tonnes, offset predominantly by an increase of 3 per cent (excluding Cleopatra) in gold ounces produced. AISC (all-in sustaining costs) rose by 7 per cent to USD 943 per ounce sold in FY19.
• Key financial highlights: EBITDA surged by 10 per cent to USD 284 million; EBITDA margin of 43 per cent; profit after tax improved by 13 per cent to USD 172.9 million; Basic earnings per share rose by 17 per cent to 7.59 US cents; operational cash flow climbed by 11 per cent to USD 249 million; adjusted Group free cash flow increased by 17 per cent to USD 74.3 million.
• The Group has an efficient balance sheet position, with cash and liquid assets of USD 348.9 million as at 31 December 2019 and with no debt, hedging or streaming in place.
• The previously recommended 2019 final dividend per share of 6 US cents was replaced with a 2020 first interim dividend per share of 6 US cents, equating to approximately USD 69.4 million, and paid on 15^th May 2020.

(Source: Annual Results, Company Website)

Share Price Performance

Daily Chart as of May 18th, 2020, before the market close (Source: EODHD/Others, Thomson Reuters)

CEY’s shares were trading at GBX 178.429 on 18^th May 2020 (before the market close at 2:01 PM GMT+1). Stock's 52 weeks High is GBX 192.90 and Low is GBX 83.32.

Outlook

The Board expects the full-year gold production volumes in the range of 510,000-540,000 ounces. The group has recently appointed Martin Horgan, as a CEO, thereby bringing robust strategic and operational experience onboard. The Group is planning to spend USD 150 million to USD 170 million as capital expenditure in FY 2020. AISC to be in the range of USD 870-920 per ounce sold, lower than 2019. Across each section of the mine, a series of independent optimisation studies are underway, with results projected in the second half of 2020, identifying areas of improvement.

OptiBiotix Health PLC (LON:OPTI) - Recently Entered Several Distribution & Commercialization Agreements

OptiBiotix Health PLC is a life sciences company. It is engaged in the R&D (research and development) of microbiome modulators. It develops microbial strains, compounds and formulations, supplements, and active compounds for potential health benefits. The business is split into three screening platforms OptiScreen, OptiBiotics, and OptiBiome. The company was formed in March 2012 and is listed on the London Stock Exchange (LSE) since 5^th August 2014 and presently, it is having the market capitalization of GBP 47.93 million.

(Source: Annual Report, Company Website)

Recent Developments – Reflecting Equity Placing and Distribution & Commercialization Agreement

• 11^th May 2020: The company entered a distribution agreement with MAXCARE Inc for SlimBiome®, to commercialize the technology in Taiwan.
• 5^th May 2020: The OPTI group partnered with Pierce ESIM Pte Limited commercialization and right to import - LPLDL® and SlimBiome®. The contract is restricted to Chinese and Hong Kong market. Previously, on 4^th May 2020, the company also entered a license agreement with Smart For Life, Inc. to commercialize the SlimBiome® technology in North America (USA and Canada).
• 17^th April 2020: The Group announced the issuance of 2,500,000 ordinary shares to raise £1.0 million in gross proceeds (at a price of 40 pence per share).

Trading and Commercial Update –Expanding Geographically with New Partners while Delivering Decent Commercial Progress

• On 18^th May 2020, the Company provided the trading update for the first three months of the financial year. As earlier announced on 23rd March 2020, OPTI had changed its financial year-end to 31 December from 30 November.
• In SlimBiome® and LPLDL® as an ingredient or final product, the total invoiced sales stood at GBP 407,844 (exclude approximately £60,000 worth of LPLDL®), a growth of 928 per cent against the same period last year (£39,645).
• The disposal of SkinBioTherapeutics PLC has realised the gross proceeds of GBP 162,500.
• With a further four deals in the subsequent months, OptiBiotix has signed nine commercial agreements during this period. As per the Year to date, they have made a total count of 13 agreements (including nine for SlimBiome® and four for LPLDL®). From these agreements, its main objective to extent OPTI geographic reach into 119 countries along with the new partners.

Share Price Performance

Daily Chart as of May 18th, 2020, before the market close (Source: EODHD/Others, Thomson Reuters)

OPTI’s shares were trading at GBX 58.095 on 18^th May 2020 (before the market close at 2:10 PM GMT+1). Stock's 52 weeks High is GBX 89.85 and Low is GBX 23.20.

Short Term Scenario

The Group has witnessed a transformational change lately. The Company has seen decent commercial progress in the first three months of this year, with OptiBiotix extending its brand presence and geographic reach into 119 countries. It has a greater number of deals generating income and signed several agreements generating revenue in the first year of the agreement. OPTI also witnessed a massive increase in revenue, albeit against a low base. In the year 2020, OPTI expects further revenue growth. However, any changes in government policy or legislation could impact the operating performance.

From the perspective of the market, players in the biotechnology sector are poised to benefit from the evolving healthcare landscape, adoption of new and innovative business models, a shift in the global market, pursue external partners and collaborators for harmonizing strengths investing in new technologies, and increased investments in personalized medicines.