Earlier on Friday, 29 May, I shared with you news of the above mentioned collaboration but what is the significance of it?
A poster on ihub who works in the pharmaceutical industry, shared with the readers his insights:
1) MSK has deep ties with Bristol Myers Squibb (BMY) that goes beyond the normal clinical trial management and execution. It has access to top management level with regards to product development strategy and opportunities.
2) MSK has deep knowledge of BMY products.
3) MSK has been building a Cancer Immunology "Dream Team" since 2012.
4) MSK has been on the lookout for products can could create multiple pathways for the treatment of cancer
My opinion? Normally a reputed research centre such as MSK works behind the scenes and very seldomly would make an announcement identifying other parties or their drugs unless they are of major significance. Therefore Bavituximab and PS-targeting must be of great importance to MSK in their continual search for the best cancer immunotherapy treatment which can align with BMY objectives.
This invariably puts the pressure on the other Big Pharma like Pfizer, Roche, Abbvie, Merck etc, on the defensive and makes them wonder if PPHM could provide what they desperate need to improve their own drugs efficacy and safety.
Definitely, PPHM is on the threshold of something big. At US$1.41 it is a screaming BUY.
My disclosure: I am long PPHM.
Still, always do your own research and investing is a pharma start up carries with it some high risks. It is up to you to determine the risk to reward ratio.
Saturday, May 30, 2015
Friday, May 29, 2015
US OIL RIGS COUNT DROPPED 13 FOR THE WEEK
Read it all here:
US oil rigs count dropped another 13 for the week. Read it all here:
http://www.reuters.com/article/2015/05/29/energy-oil-rigs-baker-hughes-idUSL1N0YK13K20150529
US oil rigs count dropped another 13 for the week. Read it all here:
http://www.reuters.com/article/2015/05/29/energy-oil-rigs-baker-hughes-idUSL1N0YK13K20150529
PPHM AND MEMORIAL SLOAN KETTERING TO LAUNCH CANCER COLLABORATION
After some months of little news, Peregrine Pharmaceuticals(PPHM) announced a collaboration with Memorial Sloan Kettering to collaborate on cancer research.
They will explore cancer-fighting treatments that combine PPHM's PS targeting agents - including its lead drug candidate, Bavituximab - with other checkpoint inhibitors or immune stimulating agents.
Note the comment by MSK:
"This collaboration will allow us to focus on the role and contribution of PS blockade therapy in determining which combination of the current and next generation of immune modulators is likely to increase the extent and amplitude of anti-tumour response," Taha Merghoub, Ph.D., associate attending biologist with MSK's melanoma and immunotherapeutics service, Ludwig Collaborative and Swim Across America laboratories, said in a statement.
"This important preclinical and translational work will potentially guide the design of the next generation of clinical studies with Bavituximab," added Dr Merghoub, who will direct the collaboration's studies in MSK.
I view this as extremely positive as MSK is a reputed cancer research centre with a proud history. I can only see this as potentially opening more doors to combine bavituximab and PS-targeting agents with various form of cancer treatments, including immunotherapy.
Learn more about MSK here:
https://mskcc.org/about
And more about the news here:
http://www.genengnews.com/gen-news-highlights/peregrine-memorial-sloan-kettering-launch-cancer-collaboration/81251330/
My disclosure: I am long PPHM.
Thursday, May 28, 2015
Sunday, May 24, 2015
CHINA'S PMI FELL BELOW 50 IN APRIL. WHAT ARE THE IMPLICATIONS
China's April PMI fell below 50 for the third straight month. A reading below 50 indicates a contraction.
In the last six months, China had reduced interest rates three times. China had also lowered the banks' required reserved ratio in April. All this points to adding more liquidity into the market. Buy why? China is facing economic slowdown. All these actions are intended to spur the economy to grow more robustly.
But China is already facing a tremendous debt burden with many state owned firms owing the banks trillions of dollars, with much of the money going into building the infrastructure and providing financing to developers to build luxurious properties. Several luxurious projects had later become ghost towns. A number of developers are now on the verge of defaulting on their debts. Only as recently, the public listed Kaisa Group defaulted on its debt.
Will adding more liquidity in the system helps the economy or delaying the inevitable fact that a bubble is coming, and by virtue of pumping more liquidity into the market serves only to enlarge the bubble.
The major worrying factor in China is the shadow banking which economists predicted at roughly 3 - 4 times the banks' loans.
A recent study by McKinsey Global Institute estimated that China's total debt has grown from US$7.4 trillion to US$28.2 trillion in the period from 2007 - 2014. This is akin of the debt growing from 158% of GDP to 282% of GDP in the same period of time.
China slowdown will impact many Asian economies. A spate of interest rates reduction have been triggered across Asia in the past one year. When a Central Bank decides to lower interest rates, it is a sign that the country's economy is not performing to expectations.
There is no denying that Asia is facing increasing headwinds. Incidentally, many Asian economies like China have been racking up debts due to the cheap credit available.
It is therefore prudent for investors to assess the risk levels in all type of investments.
One investment option is to invest in financially sound companies with consistent dividend payouts and a yield which is superior to the current Fixed Deposit Rate.
Another option, is to park some amount of money (5% - 10%) of your portfolio into financially sound gold mining companies. These companies have seen their market cap fallen by more than 70% due to the decline in Gold price. In times of crisis, Gold will be in demand and this could potentially result in capital appreciation in these companies.
I use the term financially sound because these companies must have the financial muscle to weather through critical times.
Also set aside cash for future purchases in the event an economic slowdown materialised.
The above are my own opinion. But please do your own research always.
In the last six months, China had reduced interest rates three times. China had also lowered the banks' required reserved ratio in April. All this points to adding more liquidity into the market. Buy why? China is facing economic slowdown. All these actions are intended to spur the economy to grow more robustly.
But China is already facing a tremendous debt burden with many state owned firms owing the banks trillions of dollars, with much of the money going into building the infrastructure and providing financing to developers to build luxurious properties. Several luxurious projects had later become ghost towns. A number of developers are now on the verge of defaulting on their debts. Only as recently, the public listed Kaisa Group defaulted on its debt.
Will adding more liquidity in the system helps the economy or delaying the inevitable fact that a bubble is coming, and by virtue of pumping more liquidity into the market serves only to enlarge the bubble.
The major worrying factor in China is the shadow banking which economists predicted at roughly 3 - 4 times the banks' loans.
A recent study by McKinsey Global Institute estimated that China's total debt has grown from US$7.4 trillion to US$28.2 trillion in the period from 2007 - 2014. This is akin of the debt growing from 158% of GDP to 282% of GDP in the same period of time.
China slowdown will impact many Asian economies. A spate of interest rates reduction have been triggered across Asia in the past one year. When a Central Bank decides to lower interest rates, it is a sign that the country's economy is not performing to expectations.
There is no denying that Asia is facing increasing headwinds. Incidentally, many Asian economies like China have been racking up debts due to the cheap credit available.
It is therefore prudent for investors to assess the risk levels in all type of investments.
One investment option is to invest in financially sound companies with consistent dividend payouts and a yield which is superior to the current Fixed Deposit Rate.
Another option, is to park some amount of money (5% - 10%) of your portfolio into financially sound gold mining companies. These companies have seen their market cap fallen by more than 70% due to the decline in Gold price. In times of crisis, Gold will be in demand and this could potentially result in capital appreciation in these companies.
I use the term financially sound because these companies must have the financial muscle to weather through critical times.
Also set aside cash for future purchases in the event an economic slowdown materialised.
The above are my own opinion. But please do your own research always.
Saturday, May 23, 2015
Friday, May 22, 2015
WHY IGB REIT COULD BE A GOOD LONG TERM INVESTMENT
Due to many requests from the audience, I will occasionally feature some good Malaysian stocks for long term investment. With Bursa trading at multi year highs, finding a company that is undervalued with growth potential is becoming increasingly difficult. But some gems do exist. I'll start with IGB REIT.
Q1 2015 Result
Revenue Growth 9.9%
Profit Growth 21.1%
EPS Growth 20.1%
Current Ratio 1.97
Gearing Ratio 0.28
SP/NAVPS 1.23x
Distribution Yield (2014) 5.8%
IGB REIT had a roaring start in Q1 2015. Should the trend continue, we could see a further increase in the Income Distribution. Last year, the Income Distribution increased by 10.8% vs 2013.
Looking at the Current Ratio and Gearing Ratio, IGB REIT seems to be managing its debts rather well too.
With the Bursa trading at multi year highs, investors should reduce their expectations for capital appreciation, but rather look at stocks with long term growth in its dividend.
I have a BUY recommendation for IGB REIT as long as it remains below RM1.40. Any price above RM1.40 will see its yield falling below 5.5%. which will render it less attractive to hold for long term investment. But because our risk tolerance differs, it is important that you do your own research as well.
Q1 2015 Result
Revenue Growth 9.9%
Profit Growth 21.1%
EPS Growth 20.1%
Current Ratio 1.97
Gearing Ratio 0.28
SP/NAVPS 1.23x
Distribution Yield (2014) 5.8%
IGB REIT had a roaring start in Q1 2015. Should the trend continue, we could see a further increase in the Income Distribution. Last year, the Income Distribution increased by 10.8% vs 2013.
Looking at the Current Ratio and Gearing Ratio, IGB REIT seems to be managing its debts rather well too.
With the Bursa trading at multi year highs, investors should reduce their expectations for capital appreciation, but rather look at stocks with long term growth in its dividend.
I have a BUY recommendation for IGB REIT as long as it remains below RM1.40. Any price above RM1.40 will see its yield falling below 5.5%. which will render it less attractive to hold for long term investment. But because our risk tolerance differs, it is important that you do your own research as well.
Thursday, May 21, 2015
LGO UPDATE
LGO today announced that that Well GY673 discovered a total net oil pay of 794 ft with 657 ft being in the Goudron Sands and 140 ft in the lower C-Sands.
LGO also announced that the company has submitted to the environmental authority an application to increase the current drilling of 30 wells to at least 60 wells. Note the word AT LEAST.
All, in all, an awesome result.
My disclosure: I am long LGO.
LGO also announced that the company has submitted to the environmental authority an application to increase the current drilling of 30 wells to at least 60 wells. Note the word AT LEAST.
All, in all, an awesome result.
My disclosure: I am long LGO.
Wednesday, May 20, 2015
BONUS SHARE AND STOCK SPLIT
Bonus shares increase a company's market cap. When a company's market cap increases it could deter institutional investors from buying the company's shares as the company's new market cap may reflect it as fully valued. These investors value the company based on its market cap, not based on the share price of the share. Bonus share help to improve the liquidity to make the shares more affordable to the retail investors.
In a stock split the market cap remains the same.
In bonus shares, the EPS is adjusted post issue according to the number of bonus shares issued. However, the percentage of the EPS against the par value of the share is reduced. Always remember that institutional investors value a company based on its EPS as well.
In a stock split, the EPS is adjusted post split but its percentage against the par value of the stock remains unchanged.
It sometimes baffles me that after a bonus issue, a company announces a share buy back. Then why issue the bonus shares in the first place?
There must be a reason why in the US, there are no bonus shares, only stock split and reverse split.
Just my two cents worth.
In a stock split the market cap remains the same.
In bonus shares, the EPS is adjusted post issue according to the number of bonus shares issued. However, the percentage of the EPS against the par value of the share is reduced. Always remember that institutional investors value a company based on its EPS as well.
In a stock split, the EPS is adjusted post split but its percentage against the par value of the stock remains unchanged.
It sometimes baffles me that after a bonus issue, a company announces a share buy back. Then why issue the bonus shares in the first place?
There must be a reason why in the US, there are no bonus shares, only stock split and reverse split.
Just my two cents worth.
Tuesday, May 19, 2015
UK GOVT SUPPORTS FRACKING
Although UKOG has denied that there will be fracking at the Horse Hill site, the notion that the UK Government supports this is good for the oil industry in UK. This is because convention recovery of the estimated potential oil in place for Horse Hill's 8.7 billion barrels is circa 3% - 15% but with fracking it could be a high 30% - 40%.
This bodes well for UKOG, and we can only await the flow test which will be carried in the later half of the year.There are a lot of possibilities. To name a few:
1) A buyout by Big Oil of UKOG's asset(s)
2) A potential farm in with a partner
3) UKOG to go at it alone to develop and produce though this will likely require further dilution as the amount of capital investment is high.
My belief, 1) or 2) could happen. My disclosure: I am long UKOG.
You can read the report here:
http://www.lse.co.uk/AllNews.asp?code=kvglbm0h&headline=UK_Conservative_Government_Vows_To_Support_Shale_Gas_Fracking
This bodes well for UKOG, and we can only await the flow test which will be carried in the later half of the year.There are a lot of possibilities. To name a few:
1) A buyout by Big Oil of UKOG's asset(s)
2) A potential farm in with a partner
3) UKOG to go at it alone to develop and produce though this will likely require further dilution as the amount of capital investment is high.
My belief, 1) or 2) could happen. My disclosure: I am long UKOG.
You can read the report here:
http://www.lse.co.uk/AllNews.asp?code=kvglbm0h&headline=UK_Conservative_Government_Vows_To_Support_Shale_Gas_Fracking
Monday, May 18, 2015
KEPPEL INFRASTRUCTURE TRUST UPDATE
Keppel Infrastructure Trust (KIT) recently announced the winding up of KIT and the acquisition of all assets and liabilities of KIT by City Spring Trust (CIT). In return, KIT Unitholders will receive the following:
1) A Distribution of of S$0.0293 for the period from 1 January, 2015 to 17 May, 2015
2) 2.106 Units of CIT for every 1 Unit of KIT held
Upon the completion of the acquisition, the new entity will be named Crystal Trust.
My disclosure: I am long KIT
1) A Distribution of of S$0.0293 for the period from 1 January, 2015 to 17 May, 2015
2) 2.106 Units of CIT for every 1 Unit of KIT held
Upon the completion of the acquisition, the new entity will be named Crystal Trust.
My disclosure: I am long KIT
Saturday, May 16, 2015
WHY LGO SHARE PRICE COULD RISE 200% IN THE NEXT 18 MONTHS
LGO is currently drilling the second well GY-673 on Pad 4 and is expected to reach TD by next week. LGO is expected to drill 12 new wells this year with the remaining 10 wells in 2016.
The wells drilled this year will be more productive than those drilled in 2014. On top of that the cost of drilling the wells have also fallen significantly due to the following factors:
1) The use of a triple casing which will help to maintain the integrity of the well and stabilise the production
2) The use of a smaller rig which improve the turn around time of the rig. This has resulted in cutting the cost per drill
The wells drilled this year will be more productive than those drilled in 2014. On top of that the cost of drilling the wells have also fallen significantly due to the following factors:
1) The use of a triple casing which will help to maintain the integrity of the well and stabilise the production
2) The use of a smaller rig which improve the turn around time of the rig. This has resulted in cutting the cost per drill
3) The wells are drilled during the dry season, therefore improving the efficiency per drill
In fact 2) and 3) have resulted in cutting down the cost per drill by almost 40%. LGO's drilling campaign for 2015 - 2016 is also fully funded by BNP. You have to ask yourself this question, why a renowned bank would back a small company like LGO unless they see a similar potential.
LGO has applied for 30 new wells to be drilled in the Goudron Field. In the event this is approved, will see total new wells in the field increase to 60. Using a conservative assumption that the remaining 22 wells will produce 150 bopd on the average, we would have 3,300 bopd + current production of 1,550 bopd = 4,850 bopd towards the end of next year. That is more than double the current production. At today's price of 3.28 pence at 1,550 bopd, you can see how much the potential rise can be. On top of that we may have a few wells which may surprise on the upside, similar to GY670 which produced more than 1,000 bopd after completion.
Add in the potential of another 30 new wells which upon approval, will add at least another 4,500 bopd to the count, and you will see that LGO has a bright future ahead.
There must be reason why Petrotrin is building a new pipeline to Goudron, and LGO purchasing a LACT meter and new 5,000 barrels storage capacity at Goudron.
There is also a CPR to look forward to in the next 8 - 12 weeks which could potentially increase LGO's reserves by a big amount (several hundred percentage points).
Then there are the Spain oil field which LGO has submitted an application to renew the licence for exploration, and the Cedros Peninsula which sits right in the middle of the rich east Venezuelan Basin.
Also, there is the next round of bidding for E & P licence in the Trinidad which I think LGO has the advantage having partially sponsored an airborne survey whereas other competing companies had not the resources to do so. Any acquisition of new assets could also see LGO price gaining ground.
In 18 months I believe LGO could easily gain 200% (baring any disaster caused by nature). But if you are in for the long term, with Spain and Cedros becoming prolific producing assets in 2- 3 years time, you could see LGO gaining in higher multiples from the current share price.
My disclosure: I am long LGO. However, always do your own research as our risk appetite varies.
UKOG UPDATE
After a nine day absence, I am now back to post some updates for several stocks which I have been following:
UKOG just announced that its exploration licence of Horse Hill Development which is due to expire in September 2015, has been renewed for another year. The expiry date of the licence is now 30 September 2016.
In addition to that, subject to the approval of relevant authorities, Horse Hill Development will have a potential production period of 19 years.
UKOG has also revealed that the Oil In Place at the Portland Sandstones has now increased to 21 million barrels from 20 million barrels.
It is expected that a flow test will be done in the later half of the year.
These are excellent news. Further news which will have an impact on UKOG include:
1)The Kimmeridge Clay structure at the Isles of Wight which NUTECH is presently analysing.
2) The estimate of the Oxford and Lias structures at Horse Hill which NUTECH is also presently assessing.
These two factors could provide further boost to the share price if it is revealed that these structures carry significant Oil In Place.
My disclosure: I am Long UKOG
UKOG just announced that its exploration licence of Horse Hill Development which is due to expire in September 2015, has been renewed for another year. The expiry date of the licence is now 30 September 2016.
In addition to that, subject to the approval of relevant authorities, Horse Hill Development will have a potential production period of 19 years.
UKOG has also revealed that the Oil In Place at the Portland Sandstones has now increased to 21 million barrels from 20 million barrels.
It is expected that a flow test will be done in the later half of the year.
These are excellent news. Further news which will have an impact on UKOG include:
1)The Kimmeridge Clay structure at the Isles of Wight which NUTECH is presently analysing.
2) The estimate of the Oxford and Lias structures at Horse Hill which NUTECH is also presently assessing.
These two factors could provide further boost to the share price if it is revealed that these structures carry significant Oil In Place.
My disclosure: I am Long UKOG
Tuesday, May 5, 2015
WHY YOU SHOULD NEVER EVER USE DEBT TO EBITDA WHEN ASSESSING A COMPANY
Although many analysts use Debt to EBITDA when assessing a company, I strongly discourage you NOT to use this benchmark. Many companies use this measurement when they prepare their Summary Report for the quarter to paint a rosy picture. It DOES NOT.
EBITDA is Earnings Before Interest, Taxes, Depreciation and Amortisation.
So you have to ask yourself these questions:
1) If a company borrows money form the banks, it must service the interest payment right? Well EBITDA does not take into consideration of this cost. Isn't it precarious that analysts completely ignore this when assessing the worthiness of a company to invest?
2) All companies have to pay taxes. There are various form of taxes not just the tax which a company has to pay when it makes a profit.
3) When you make a capital investment normal accounting practice dictates that you need to depreciate the asset over the lifespan of the asset. Not all assets will appreciate in price. Perhaps the only asset which does is property. So when a company makes investment in plant and equipment, these assets cost needs to be depreciated over a period of time because they lose their value as time moves on. To not include depreciation in assessing a company is like indulging in a self fulfilling lie.
Can you imagine many analysts use EBITDA to measure the earnings of many shale oil companies in the US? Oil companies invest the most in plant and equipment, to simply ignore this fact is at one's own folly.
Warren Buffet said it better, "Does management think the tooth fairy pays for capital expenditures?"
4) Amortisation is the same as depreciation, but it is used on intangible assets instead, such as goodwill or patents.
So because Debt to EBITDA = Total Liabilities/EBITDA,
The higher the EBITDA, the lower the ratio, so it masks many potential problems within a company, such as when a company is operating at a loss or when it has negative cash flow from the business. When this occurs, how do you think the company can afford to pay for the interest on debts? They borrow again, each time inflating their debts.
I always use the PAYBACK PERIOD when assessing a company. It measures the number of years a company needs to completely pay off its entire debts were the profit be used to fulfill that function. It should NEVER be more than 5 years.
Many analysts who adopt Debt to EBITDA as a form of measurement are often cheating themselves or worse, the unknowing investors who rely on their expertise to guide them in their investments.
EBITDA is Earnings Before Interest, Taxes, Depreciation and Amortisation.
So you have to ask yourself these questions:
1) If a company borrows money form the banks, it must service the interest payment right? Well EBITDA does not take into consideration of this cost. Isn't it precarious that analysts completely ignore this when assessing the worthiness of a company to invest?
2) All companies have to pay taxes. There are various form of taxes not just the tax which a company has to pay when it makes a profit.
3) When you make a capital investment normal accounting practice dictates that you need to depreciate the asset over the lifespan of the asset. Not all assets will appreciate in price. Perhaps the only asset which does is property. So when a company makes investment in plant and equipment, these assets cost needs to be depreciated over a period of time because they lose their value as time moves on. To not include depreciation in assessing a company is like indulging in a self fulfilling lie.
Can you imagine many analysts use EBITDA to measure the earnings of many shale oil companies in the US? Oil companies invest the most in plant and equipment, to simply ignore this fact is at one's own folly.
Warren Buffet said it better, "Does management think the tooth fairy pays for capital expenditures?"
4) Amortisation is the same as depreciation, but it is used on intangible assets instead, such as goodwill or patents.
So because Debt to EBITDA = Total Liabilities/EBITDA,
The higher the EBITDA, the lower the ratio, so it masks many potential problems within a company, such as when a company is operating at a loss or when it has negative cash flow from the business. When this occurs, how do you think the company can afford to pay for the interest on debts? They borrow again, each time inflating their debts.
I always use the PAYBACK PERIOD when assessing a company. It measures the number of years a company needs to completely pay off its entire debts were the profit be used to fulfill that function. It should NEVER be more than 5 years.
Many analysts who adopt Debt to EBITDA as a form of measurement are often cheating themselves or worse, the unknowing investors who rely on their expertise to guide them in their investments.
Sunday, May 3, 2015
US RIGS COUNT DROPPED AGAIN FOR THE 21ST WEEK
Read it here:
US oil rigs count declines again for 21st week. read it here:
http://www.reuters.com/article/2015/05/01/energy-oil-rigs-baker-hughes-idUSL1N0XS1CO20150501
US oil rigs count declines again for 21st week. read it here:
http://www.reuters.com/article/2015/05/01/energy-oil-rigs-baker-hughes-idUSL1N0XS1CO20150501
Friday, May 1, 2015
MEDIA INTERVIEW WITH LGO'S CEO, NEIL RITSON
Here are a few key points which I picked up in the interview:
1) Drilling at the Goudron Field will be continuous and will carry on into 2016.
2) Current drilling is on Pad 4 with 3 wells. Pad 5 has already been constructed.
3) Pads 6 and 7 will be constructed.
4) Hint of a second rig to hasten drilling.
5) More than 30% savings in turn around time, therefore drilling cost has been lowered significantly.
http://www.proactiveinvestors.co.uk/companies/stocktube/3724/lgo-energy-ceo-hints-at-continuous-drilling-campaign-3724.html
1) Drilling at the Goudron Field will be continuous and will carry on into 2016.
2) Current drilling is on Pad 4 with 3 wells. Pad 5 has already been constructed.
3) Pads 6 and 7 will be constructed.
4) Hint of a second rig to hasten drilling.
5) More than 30% savings in turn around time, therefore drilling cost has been lowered significantly.
http://www.proactiveinvestors.co.uk/companies/stocktube/3724/lgo-energy-ceo-hints-at-continuous-drilling-campaign-3724.html
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