Australian Small Caps Small Cap

MYX’s NEXTSTELLIS launch momentum accelerating – Affordable Care Act to be a tailwind over the medium-term

Investment Thesis:

  • Any stabilization (competition or price) in the generic segment will be viewed as a positive.
  • New product launches and healthy development pipeline.
  • While generic brands are going through a tough trading environment at the moment, the long-term outlook remains positive given consumers and regulators need a healthy generics market to keep the price of medication down.
  • Positioning the product portfolio to higher margin products. 
  • Potential industry consolidation on lower growth outlook.
  • Leveraged to a falling AUD/USD.

Key Risks:

  • Intense competition from new products.
  • Lower demand. 
  • New product launches fail to deliver the growth expected by the market.
  • Regulatory changes.
  • Litigation.
  • Adverse currency movement.

Key Highlights:

  • Reported revenues of $196.4m, declined -6%, with +180% increase in BPD, +19.5% increase in MCS and +29.6% increase in MPI more than offset by -19.6% decline in PPD as retail generics business segment continued to erode due to sustained competitive pricing environment.
  • Expenses excluding NEXTSTELLIS launch investment declined -12%.
  • Reported EBITDA of $48.8m, was up +20%, affected by the non-cash NEXTSTELLIS deferred consideration reassessment due to Covid-19 and associated longer time period for physician and patient activation and higher cost of payer coverage and reimbursement (underlying EBITDA was down -38% to $23.7m and underlying EBITDA excluding NEXTSTELLIS launch investment was up +11% to $44.4m).
  • Reported net loss after tax was down -74% to $50.4m despite intangible asset impairment associated with the generic business. 
  • Net debt increased +10% over 2H21 and the Company remained compliant within all bank covenants with a leverage ratio 3.2x (covenant <4.25x), interest cover 7.7x (covenant >3x) and shareholders’ funds of $754m (covenant >$600m).
  • The launch of NEXTSTELLIS continues to gather momentum despite the headwinds of Covid-19 with 2,100 healthcare professionals (HCPs) have now written the product since launch (bulk of which came in the 2Q22) with the aided awareness of NEXTSTELLIS amongst target HCPs grown to 79%, and the Company approaching to acquiring 100 new writers.

Company Description:

Mayne Pharma Group (MYX) Mayne Pharma is a specialty pharmaceutical company focused on applying its drug delivery expertise to commercialize branded and generic pharmaceuticals. Mayne Pharma provides contract development and manufacturing services to more than 100 clients worldwide. Mayne Pharma has an extensive portfolio of branded and generic drugs in multiple therapeutic areas, including women’s health, oncology, dermatology and cardiology.

(Source: Banyantree)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Australian Small Caps Sectors Small Cap

Nufarm Ltd board declared an unfranked dividend of 4cps

Investment Thesis

  • Currents earnings headwinds are seasonal rather than structural. 
  • Recent acquisitions of European products provide growth options.
  • Ongoing focus on operational efficiency to support earnings.  
  • Undemanding valuation relative to domestic chemicals’ peer group and international players. 
  • Launch of Omega-3 canola business. 
  • Sale of its South American crop protection and seed treatment businesses to simplify business model and reduce working capital volatility.  
  • Sector consolidation could see NUF potentially engaged in corporate activity. 

Key Risks 

  • Integration risk associated with recent acquisitions.
  • Adverse movements in commodities prices. 
  • Unfavorable seasonal impacts. 
  • Competitive pressures.
  • Adverse currency movements. 
  • Regulatory / litigation risks. 
  • South America transaction fails to proceed. 

FY21 Results Key Highlights

  • Revenues of $3.2bn, was up +10%.
  • Underlying EBITDA of $370m, was up +51%, driven by improved seasonal conditions, soft commodity prices and tight supply. NUF saw growth in all business segments and especially strong demand for NUF’s crop protection and seeds products. Segment earnings breakdown are as follows: APAC AU$112m, up +47%; North America US$79m, up +25%; Europe EUR€108m, up +80%, and Seed Technologies AU$46m, up 57%.
  • Underlying NPAT was $61m versus pro-forma loss of -$73m in FY20.
  • Management highlighted NUF’s performance improvement program achieved $20m in FY21, and $25m since inception.
  • FY21 saw NUF see significantly improve net working capital and cash generation, with $257m in free cash flow at 30 September 2021 (versus -$151m in FY20).
  • NUF’s balance sheet is now in a much stronger position, with leverage(net debt/EBITDA) to 0.9x from 2.5x in FY20.
  • The Board Declared an Unfranked dividend of 4cps (versus zero payment in FY20.)

Company Profile 

Nufarm Ltd (NUF) is one of the world’s leading crop protection and specialist seeds companies. The Company produces products to assist farmers in protecting their crops against damage caused by weeds, pests and disease. The Company has manufacturing and marketing operations in Australia, New Zealand, Asia, Europe and the Americas.  

(Source: BanyanTree)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Global Markets

Global Market Outlook

Global equity markets retraced, 2020 continues to surprise the market with pandemic, the shutdown of the global economy, the deepest recession since the 1930s, and global equity market collapse. Tighter valuations increase the risk of further market volatility, particularly ahead of the divisive U.S. elections.

Technology and Healthcare stocks valuations are elevated, and the U.S. federal elections create uncertainty around tax changes, government regulations and the re-escalation of China/U.S. trade tensions. Beyond this, the market looks set for a rotation away from technology/growth leadership toward cyclical/value stocks. This also implies a rotation toward non-U.S. stocks with Europe and emerging markets the main beneficiaries.

The unemployment rate continues to decline and fell by more than expected in coming months. However, the weekly series of payrolls indicated that job losses had actually increased over the month.

Index Performance

S&P 500NasdaqRussell 100010-Year Treasury
M (%)M (%)M (%)M (%)
Yahoo Finance, (As of September 30, 2020)
Global IndexSeptemberYTD
Hang Seng (China)-6.82-16.78
Kospi (Korea)0.075.93
Nikkei (Japan)9.68-1.99
Sensex (India)-1.45-16.84
Jakarta Composite (Indonesia)-7.03-22.69
Bovespa (Brazil)-4.8-18.42
IPC All-Share (Mexico)1.68-13.97
Merval (Argentina)-11.9-0.99
ASX 200 (Australia)-4.04-12.99
DAX (Germany)-1.43-3.69
CAC 40 (France)-2.91-19.65
Dow Jones Russia Index (Russia)-6.14-23.73
FTSE 100 (United Kingdom)-1.68-22.25
Yahoo Finance, (As of September 30, 2020)


The November election brings more volatility in the stock market. A Biden victory with Democrats sweeping both chambers of Congress would likely generate the most short-term volatility coupled with US – China trade war.  Strong Recovery is expected as a result of economic re-opening, fiscal- monetary support.


The Europe direct fiscal policy boosted by state guarantees for corporate debt and the European Central Bank’s support for bank lending through the TLTRO3 program. The most significant action has been the European Recovery Plan, a €750 billion (6% of GDP) package of loans and grants that will be financed by the issuance of bonds jointly guaranteed by all 27 members of the European Union. Europe’s recovery should continue over coming quarters. A hard Brexit on World Trade Organization terms is likely impact on market.


The economic recovery has been steady in country, but much of this has been easy lifting and some caution about the outlook is warranted given stretched household budgets and limited inbound tourism.  Domestic economy being cushioned to some degree by recent monetary and fiscal policy actions.. The Australian government is set to announce new measures in the October budget. Low demand from Asian market especially from China is the concerning issue for many sectors.

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