Bought a tiny bit of this…
It is a tiny (£2.1m) investment trust.
It has $1.4m (£1.1m) in cash (30/6/2016 HY report) – this doesnt screen well as it is held via a subsidiary….
The rest is a 24% stake in Stopharm and a 16.35% stake held via a convertible bridge loan. This is valued at $6m (£4.8m) in the books based on an indicative offer. In total this gives an upside of over 150%. IF we get to NAV.
Stolfarm is a Khazakhstan pharmacy plausibly forecast to make $1.9m in 2016 – so the total valuation of Stopharm gives a PE of about 8. Kazakhstan’s economy and exchange rate has been erratic – going from 185 per USD to 335! Apparently the economy has stabilised.
Costs are $500-600k per year. This gives probably about 3 years to sell Stopharm until the company is in trouble…
The offer which hasn’t actually materialised is from an insider – Capital Gate holding – originally announced 29th Sep 2014 – subject to monopolies approval. On 30 June 2016 there was another expression of interest. They are continuing to try and sell the stake.
The company also potentially has value as a cash shell / vehicle for something else.
Upside case is there is an offer for Stolpharm and the company distributes the money to shareholders and winds itself up – ideally at a large profit.
Downside is the asset is stolen in some way or the company delists and its a slow journey to getting the money back.
Shareholders are reasonably dispersed – largest is Richard Horlick – former director / founder.
Only have a small weight here – 2% portfolio weight – but I will add on weakness…