The latest Investing Matters Podcast episode with multi-award-winning fund manager and international bestselling author Lee Freeman-Shor has just been released. Listen here.
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Walbrook have just issued the updated consensus broker figures from Stifel & N+1 for the financial year ending 2021:
Previous (£M)
Revenue £22.3
EBITDA 2.8
PBT 0.2
Revised
Revenue 25.3
EBITDA 4.6
PBT 2.1
This is a very nice starting point but clearly these figures could be substantially more and no doubt will be with everything lined up so nicely.
yes smithy, agreed! I think rev will be nearer £30m than £25m. Who knows could well be much more too if the govt work comes off.
Agree that the uplift looks extremely modest compared to the opportunity ahead, but for the first time these figures demonstrate how the operational gearing is starting to kick in. As we move past break-even, with the fixed overheads covered, every additional £1m in additional revenue flows through to £633k in PBT.
So if each 10k package of monthly C19 tests is genuinely worth £5m in annual revenues, that means that each 10k tranche of tests is worth something like £3m in PBT, or roughly 0.44p per share (on a 12 month basis with no multiplier). OK, so 0.44p per share isn't very much, but the Govt is looking to increase it's capacity from 250,000 tests per day currently to 500,000 per day by October and on towards millions in the future. That's another 7.5m tests per month from October's uplift alone - 7.5m tests is 750 'packages' of 10,000 tests, so the opportunity is absolutely enormous. If we got just 5% of those additional tests, it would equate to something like 16p per share in additional profits over 12 months.
Lyn is playing it cool, but any significant Govt contract will be completely transformational for short/medium-term revenues and profits - and we already know that Yourgene's test is a gold standard test, so any update on Moonshot is going to be very interesting indeed.
Sorcerer
Lyn Rees mentioned today that Covid testing is only to be done to fill spare capacity while NIPT, reproductive health etc is the core business and will be prioritised. Covid testing will be good for cash but at what levels will these Covid gets last for? 12 months ?
In my experience these short term ‘bonuses’ don’t effect the share price.
Nasdaq listing would be interesting but I’ve heard all this before. These can be a long term dangling carrot....
Regards
GennyPrinceJnr
500k capacity for clarigene covid tests between now and xmas is not a bonus. It's massive and will continue in to next year!
Genny,
You say ... “In my experience these short term ‘bonuses’ don’t effect the share price.”
... but the short term covid bonus hasn’t done much harm to the Novacyt share price has it?
To name but one.
It would make a big difference, as Lyn would use the money to grow the company.
No doubts LR is a charismatic, dynamic leader. Amazing how another of his inputs gets the juices flowing yet again.
For me, though, a couple of observations.
The idea of a Nasdaq listing which will instantly sprinkle its magic dust on our SP is tempting. But, what a cack-handed way of announcing such an intention, the throwaway 'yes' response being missed by many listeners. Accompanied by no rationale, no costings and most noticeably no time-scale or desire to elaborate. A slippery fish thrown to the seals eager to snap up any morcel to satisfy one's appetite?
Secondly, it can reasonably be concluded now that LR failed to make any sales inroads with Covid-testing and the NHS first-time around. Certainly, absolutely no contracts or numbers have been disclosed.
So why is he now chasing the Moonshot pipe-dream of that serial underachiever Hat Man****, in an ever increasingly over-crowded and dynamically changing testing market?
I fully understand his decision to re-position and aim for the corporate market where margins are far more generous. However, with the continual decimation of the economy and travel and leisure in particular, just how many corporates will survive and still be able to afford the quoted prices here for tests?
Now, wash your hands or them military chaps will pay a visit.
Natdan, I think the lack of detail on the Nasdaq listing indicates it is an aspiration and not in the next few months!
The NHS is a tricky one ... contracts seem to be slow unless you went to school with one of Boris' mates, so I think he did the right thing to mop up as much high margin testing as he could, an I still believe that is his priority. However, given the scale of testing mooted for moonshot, he has to go for a piece of that pie. IMO, he sounded very optimistic so maybe that's closer than we think!
I don't think there is any question that the demand will be there for the Covid-19 testing - either from the NHS, other public bodies or the private sector. If you think about the scale of the Government's ambitions (500k tests per day by end of October, millions per day by early next year), 10,000 tests PER MONTH is such a small number that it will get swallowed up without touching the sides. 10,000 tests per month equates to 300-350 tests per day. 350 tests out of a nationwide daily testing volume of 500,000 is 0.07%.
The question for me isn't so much whether we can be of use to the NHS - we obviously can - but more about how much we can offer. In other words, what challenges do we face in scaling up to 50,000, 100,000, 150,000 tests? Costs, people, space? Is it even feasible without impacting the NIPT business? Could the NHS be one of the 10 institutions evaluating our Clarigene test and so would be taking a chunk of the 500k extra tests mentioned?
I think that existing Clarigene is still a manual assay (?).
We are still waiting for a high throughput automated version of Clarigene to hit the shelves.
I would have expected that once the HV version lands it will go a long way towards increasing test capacity ...
"The test will initially be a manual assay and development has commenced with a fully automated version aimed at high throughput laboratories to follow in the coming months."
https://www.investegate.co.uk/yourgene-health-plc--ygen-/rns/covid-19-testing-service-launch--business-update/202005260700138400N/
Which is exactly why I asked the question about whether CG technolgy applied to PCR (ie Clarigene) thinking that it would help to increase the workflow as per NGS, but answer was no, it would not provide enough benefit ...
yes P3T, good point. I wonder how many more tests a day can be done with the auto version. As you say that will certainly bump up volume when it's ready.