This is the last blog for February as I am off to a family celebration tomorrow for my youngest grandchild. Normally I would have kept some of the results for tomorrow's blog but there won't be one.

It didn't take long for the correction to hit despite a nice 111,000 drop in unemployment last week offset by renewed rises in bond yields, to over 1.5%, reversing yesterday's late rally. The jobless numbers may have been lowered because of winter storms rather than new hires. Both the Fed and the European Central Bank may intervene to hold down bond yields, according to one Japanese brokerage.

But once again we have too many results to write up for me to pontificate about market trends and the ignorance of crowds. Once again the mob are buying into GameStop GME which rose by a third today. One of our shares is affected, Nokia NOK of Finland, which for some reason draws them in. It is up 6% today. And bitcoin is again the flavor of the day. The DJIA is down 400 points.

Hong Kong has raised its fees for trading stocks from 1% to 1.3%, which may hurt our shares there. Tech is dreck again.

image source

But we have much news:

*BAE Systems BAESY, the British maker of military and civilian hardware and software, reported sales of £19.28 bn in 2020, about $27.25 bn, vs a mere £18.31 bn in 2019. Adding in revenue from equity-accounted investments brought the total to £20.86 bn, beating the consensus forecast of £20.19 bn and the corresponding level in 2019 of £20.11. Pre-tax earnings at £2.13 bn beat consensus by 4%. But eps at 40.7 pence/sh missed the forecast of 46.4 pence although net cash flow from operations hit £1.166 bn beating the forecast of £1.597 bn.

However, the arms market profit was lower than expected with pretax profit at £1.6 bn, below the 2019 level of £1.63 bn. In case you are not aware of it, civil aviation has fallen into a slump over the virus and therefore the gains were from military products. It expects commercial aviation to remain weak but defense is hot, and it already has 80% of the orders it expects this year in its backlog. Free cash flow this year is expected at £1 bn, £45.2 bn, slightly lower than last year. It expects the backlog to rise to over £4 bn by 2023. Its largest market is Britain's former colony, the USA, and the Biden Administration is expected to grow its defense spending with about 3-5% rises in the current year, at constant exchange rates. (Sterling is rising.) The ADR rose 0.41% to $28.48-28.65. There are not many other shares doing well.

*Mexican multinational bakery giant Grupo Bimbo reported income of NMP9.11 bn ($443 mn) in 2020. up 13% from 2019. Sales were 331 bn ($16 bn) also up 13%. It upped its profits from outside Mexico to 58% from the prior-year level of 49% and its operating income soared 30% and the margin by 300 basis points. Income in pesos rose 58% and the profit margin by 3.4%. It cut its debt to MXN 2.8 bn to MXN 19.95 bn despite the peso rise. It plans to boost its investments this year for digitization, renewable energy, and electric vehicles by $1 bn in 2021 according to Eduardo Garcia of sentidocomun.mx.co with which we trade news. He doesn't convert earnings into US money, however.

It grew its US sales by over 11% (excluding exchange rate changes) and it won market share in all categories, cakes and cookies, bagels, buns, and rolls, both from retail groceries and e-commerce. However cheaper private label categories are not doing as well because customers want brands they can trust and food service and school customers have cut their orders. This boosted cash flow margins because brands cost more, also helped by lower costs for commodities and productivity, but offset by COVID-19 costs and advertising. Mexico sales were only up 1.6% because there it runs shops and was hit by highter labor, distribution, safety measures and because it made donations. In other Latin America sales were up 6.5%, notably in Chile and Brazil (despite the devaluation of the Brazil real.) Latins bought bread more than cake. In Europe sales rose highest of all, 17.3% from a loweer base, thanks to British buying and its new plant serving Spain and Portugal.

Global cashflow rose 440 basis points. It bought Modern Food in India and will acquire a new
Spanish bakery plant with state of the art technology from Cerealto Siro if regulators approve. The share price of GRBMF rose 2.63% after opening up 2x that.

*Israeli Compugen stressed its cancer-fighting results mainly because its numbers were nothing to write home about. Its PVRIG antibody targeting immune checkpoint, in trials with Bristol-Myers BMY, which I also own, in treating resistant peritoneal and pancreatic cancers with a “control rate” of 66.7%. This means 6.7% had a complete response, the same number a partial responses, and disease stability in 53.3%, all after 62 weeks. Despite this, CGEN stock fell 10.23% after jumping 11% in the pre-market. Its earnings were flat, down 0.1% in 2020 as in 2019, as forecast. Its sales rose sharply by $2 mn from zero last year thanks to milestone payments from Astra Zeneca for bispecific and multi specific antibody research. The Holon Israel firm spent $8.1 mn on R&D in Q4, vs $4.3 mn in the prior Q4 and $22.8 mn in 2020 vs $19.8 mn for the full years, for new phase I trials. Its SG&A expenses in Q4 were $2.7 mn versus $2.2 mn a year before, and those for 2020 overall came to $9.8 mn vs $8.4 mn, blamed on more hiring. It lost $8.6 mn in Q4 or 10¢/sh, up from $6.5 mn a year earlier when there were fewer shares out. Full-year loss was $29.7 mn or 37¢/sh vs $27.3 mn or 43¢/sh in the prior year. Thanks to new issues, CGEN has no debt and cash on hand of $124.4 mn vs only $43.9 mn at the end of 2019. I am up 257%+ on CGEN.

*Israeli-Channel Islands-based NovoCure (NVCR) quarterly earnings of 4 cents/sh missed consensus estimate of 13 cents but matched the prior-year level excluding one offs. This Israeli with an electric system for fighting cancers had sales of $153.95 mn in Q4 2020. Management has not yet done its conference call which may help figure out what is going on. 

*Canadian Zymeworks boasted about its clinical trials because it didn't have good financials. Its Zanidatumab appears to work to stop HER-positive cancers on which it recently presented at the American Society of Clinical Oncology on biliary tract and gastroesophageal cancers. It won a US FDA breakthrough designation for BTC and a biologics license is pending. Its ZW49 bispecific antibody is enrolling patients in a phase I trial to receive the drug every 3 weeks. Its income is from milestones for the drug from Beigene, Merck, and Bristol Meyers, all shares your editor owns. Early in 2020, it did a $320.8 mn public financing for work on these candidates. Its revenues last year were from milestones, upfront fees, options, research, and payments, $15 mn from BGNE; $12 mn from BMS, and $12 mn from others. It spent $168.5 mn last year on R&D, up from $116 mn in 2019. not only for more research but also for more staff and non-cash stock compensation expenses of $12.3 mn.

SG&A hit $57.9 mn down from 2019's $64.2 mn, including non-cash stock-based compensation of $16.1 mn and also higher insurance and professional services for its larger cohort of workers. Net loss in 2020 was $180.6 mn up from $145.4 mn in 2019.despite lower SG&A.

ZYME expects R&D to rise further in the current year offset by strategic partnerships which are not certain. It closed 2020 with $451.6 mn in cash and cash equivalents.

Weyerhaeuser will acquire Timberlands forests in southwest Alabama.

*Cosan, my stock for 2021 fell another 3.09% yesterday and fell 2.61 more on Thursday. CZZ.

*Rida Morva tipped Bermuda-based Hoegh LNG partners preferreds, HMLP, which Joe Shaefer wrote up nearly a year ago triggering our buy. Yes, it yields 8.4% as long as demand for LNG rises. Overnight it reported Q4 results, with earnings before interest, taxes, depreciation, and amortization up to $55.2 mn, and net profit at $800,000. It claimed that operations in 2020 were save and reliable as tanker availability was at 99.7%. It signed new long-term shipping contracts with an Indian LNG importer called Giant, presumably for a reason.

It is now planning to make more use of its green credentials, using LNG to power its vessels rather than icky marine oil, by joining the UN Sustainable Development group this year. It has also ordered 3 new LNG shipment vessels. Last month HMLP issued new preferred shares. CEO Sveinung Stahle says that a goal for 2021 is also to replace short-term contracts with longer-term ones. It set up a new Clean Energy business unit to aid in resolving needs not just for carrier transport but also for storage and distribution of hydrogen and ammonia. It is working on floating carbon capture and storage, whatever that may mean. The Olso parent Hoegh company owns 46% of HMLP.A which operates in Norway, Singapore, Britain, China, Indonesia, Lithuania, Egypt, Colombia, and the Philippines.

*Kirkland Lake Gold, KL, beat on revenue in its Q4, with sales of $691.5 mn (US) up 67.7% from prior Q4, and beating consensus forecast by $5.47 mn. It missed by 2¢ in non-GAAP EPS of 98¢/sh and by 22¢ in GAAP earnings. The shares are up a bit.

*Orbia Advance Corp, MXCHF, reported on 2020 and Q4. Q4 sales rose 6% boosted by demand for its drip feed systems. Earnings before interest, taxes, depreciaition, and amortization at $383 mn was up 30% boosted by construction recovery demand for PVC in Latin America. EBITDA margins hit 22%, up 401 basis points while free cash flow at $304 mn was up 38% thanks to profits and capital optimization.

Full-year sales were only off 8% despite the virus, mainly because of drops in Q2 not being fully offset in the 2^nd half. Fully year EBITDA hit $1.3 bn, down 3% despite losing 30% in Q2, showing that people need to eat. The EBITDA margin for the year was 21%, up 1% from 2019. Net income was off 2% at $319 mn while free cashflow hit $552 mn thanks to capital management and lower capex, with a 41.9% conversion rate. Leverage fell to 2.1x after total debt was reduced by $114 mn.

MXCHF will pay a total dividend of $2301 mn (it did not give the amount per share because it also plans to repurchase $42 mn of its shares out.) It is still not changing its US ticker symbol to its new name.

More drugs below.

Energy and Users

*NIO will report next Monday and the expectation is that while sales are up at China's leading electric vehicle firm, profits will remain elusive. Goehring & Rozencwajc says green energy stock are overpriced--”bordering on mania!” Moreover, the International Energy Association is overly optimistic about how much carbon is being removed, citing BP plc stating that per capita demand for oil hasn't fallen by any year since 2000 by more than 0.1%. G&R has just published its Q4 2020 commentary. CEO Bernard Looney stated that “people don't always want our product, but they need it.”

*Antofagasta, which I am resisting selling, has produced a gain for me of 140.77% according to my broker. It rose another 0.4% today to $26.06% despite the sell notice yesterday. It is my Dr. Copper share, listed in London back in the colony days. It also mines molybdenum and distributes water in Chile. ANFGF.

*Pres Biden signed a 100-day review of US supply chains because of the chip shortage because over-dependence on China.

Drug Dealers

The review will also examine active pharmaceutical ingredient shortages.

*Japan's Takeda (TAK) yields 4.27%, something of an industry record. It only pays out 35% of earnings and has raised its divvie 6.41% over the past 3 years (in dollars, not yen.)

*Glaxo issued results of an investigational monoclonal antibody, Otilimab, an anti-granulocyte macrophage colony-stimulating factor to treat hospitalized COVID-19 patients for 28 days. The trial did not reach statistical significance but did work in patients over 70 years of age who were treated with the drug and standard care, 65.1% of whom were alive and free of symptoms after 28 days while only 45.9% of those who got standard care only were alive and symptom-free. At day 60 40.4% of those on standard of care had died while only 26% of those who received the drug plus standard care survived. This is important because oldies are more at risk from the virus and account for 70% of the deaths from it.

*Johnson & Johnson's virus works with only a single jab. JNJ.

*Roche sub Spark Therapeutics named a woman as chief tech officer, Cynthia Pussinen. 

*Mother India zapped its local drug dealer Dr. Reddy's by demanding more data on its results using the Russian Sputnik V COVID-19 job. RDY.

*TEVA crashed 2.52% from Weds.'s close, back down to $11.04.

Finance

*Banco Santander rose 2.53% in Spain after Telefonica cut its dividend. It hit euros 3.04. SAN.

*Bank of Montreal raised its target price for Scotiabank to C$80 from $75/sh. BMO.