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Shaun, I saw your very impressive spreadsheet on Novacyt (I have quite a large position in that!). Have you done any similar research in SBI? Seems undervalued. I have the IPO liberum floatation document if you want me to email it to you.
Sorry about late night scrambled previous post:
GW2014, ShaunP - Been reworking possible Covid-testing predictions after presentation on Thursday. The one hard figure was that an average of 5,150 tests/day carried out in September, for income of £6.9m. Suggests average revenue per test of about £44.50 - think it was said that average is about £40 but with some customers paying substantially more. The below uses the £44.50 as a guide and the given income figures for May (the beginning of testing) to September and the target of 10,500 by the end of year/beginning 2021.
May 2020, 750 tests/day, £1m
June, 900 tests/day, £1.189m
July, 2100 tests/day, £2.8m
Aug, 2400 tests/day, £3.2m
Sept, 5150 tests/day, £6.9m
Oct, 7200 tests/day, £9.6m
Nov, 8500 tests/day, £11.35m
Dec, 9500 tests/day, £12.7m
Total testing income, May-Dec 2020, circa £48.7m.
This could be conservative, if the ave cost has been higher in some months and if the 10,500 tests/day target is met in December.
Looking ahead to 2021, SBI says that the “IPO funds and Covid-19 testing cash generation to allow faster ramp-up of Covid-19 testing” and also “IPO proceeds to further accelerate capacity expansion”. Could the 10,500/day be exceeded? The co talked about expansion into a new lab in August on an upper floor, but I’m not clear whether the ground floor lab is still operational, which was capable of 2k tests. So, I’ve put the upper limit at 12500, which may be generous. SBI have also said that they believe testing will begin to slowly fall away from the middle of 2021. As I’ve already posted, think this may be cautious, but they know the situation better than me, so gone with a steady decline from possible peak in June 2021.
Jan 2021 , 10500 tests/day, £14m
Feb, 12500 tests/day, £16.7m
Mar, 12500 tests/day, £16.7m
Apr, 12500 tests/day, £16.7m
May, 12500 tests/day, £16.7m
June, 12500 tests/day, £16.7m
July, 12000 tests/day, £16m
Aug, 11500 tests/day, £15.3m
Sept, 11000 tests/day, £14.7m
Oct, 10500 tests/day, £14m
Nov, 10000 tests/day, £13.3
Dec, 9500 tests/day, £12.7m
Total testing income, 2021, circa £183.5m.
Alternatively could be a low of £140m on the basis of a peak of 10.5k tests/per day and a progressive reduction of 1k tests/per day every month after June.
H1 core business revenue (Healthcare diagnostics, genomics and stability storage) was £10.186m in H1. On the basis of improved figures for H2 2020, suggest circa £21m in 2020, up from £19.75m in 2019. With improved conditions, suggest 2021 revenue from core businesses could be a low of £23m and a high of £29m.
Healthcare diagnostics, £7.293m in 2019, £7m in 2020
Genomics, £4.523 in 2019, £5m in 2020
Stability storage, £7.934m in 2019, £9m in 2020
Which could mean:
Total revenue 2020, circa £70m
Total revenue 2021, low £163m and a high of £212m.
Would welcome any thoughts/corrections/additions.
Will have a go at EBITDA in a future post, but can’t promise to compete with ShaunP (
May June July Aug Sept Oct Nov Dec Total
750900 2100 2400 5150 7200 8500 9500
1000 1189 2800 3200 6900 9612 11347.5 12682.5 48731
GW, caught some of the presentation whilst working, but need to listen through the recording again.
As you say, revenue looks healthy and good margins across the business (diagnostics 40%, stability storage 80%, testing 40%, not sure about Genomics). Didn't pick up any mention of expanding testing capacity further(?) beyond what they are able to do on the 2nd floor of the lab, but that's not the plan medium to long term. Personally quite liked the approach - no R&D, no patents, just good at what we do - which differs to some other shares I'm in. Like the plan to use the testing warchest for careful acquisitions.
They're the experts of course, but I think their forecast that testing will peak in mid-21 before a slow decline is cautious. You've probably seen the figures posted on other BBs this evening - fear of side effects will limit vaccines uptake unfortunately, immunity may not last, regular testing of front-line medical staff estimated at 60 million globally by WHO, ongoing testing for a fraction of the 4.1 billion air passengers each year etc.
yes you are right about the revenues on Covid testing. My numbers were wrong. They had about £7m in revenue in September from Covid testing in September and averaged 5,150 tests per day. They aim to be testing 10,500 per day by turn of year. That equates to over £14m revenue per month. They also think that testing will peak mid 2021 - so lets say they only do £14m per month on average (probably would be significantly higher if it increases into the middle of the year), that's about £170m revenue on Covid alone with about £20 to £30m revenue from their other businesses. We are probably looking at over £200m in revenue in 2021. The company's market cap is currently about £120m so seems like a bargain to me.
Here is the link to the presentation. Having listened to this the more I realise this is extremely undervalued:
You may have to register with InvestorMeetCompany.com to listen to the presentation and see the slides. I did this retrospectively and got through to the meeting no problem;
https://www.investormeetcompany.com/investor/meeting/investor-presentation-14
Tzarr68 and ShaunP -
I got shares in the IPO and this was in the Liberum document -
Whilst COVID-19 has impacted the business, particularly the Healthcare Diagnostics and Genomics
business units, there has been significant growth in capacity and associated revenues generated by
the Infectious Disease Testing business unit.
Infectious Disease Testing revenues totalled £15.2 million in the five month period ended
30 September 2020 and has accelerated as COVID-19 testing capacity has grown month-on-month
since launch in May 2020, as shown below:
(there is a bar chart i can't cut and paste showing Covid revenue ramping up from May to September with £7,000,000 in revenue from Covid testing in September - I also know that they are were doing 7,500 Covid tests per day in September and are now doing over 8,000 per day because the CEO said he projected over 10,000 per day by December)
11. CURRENT TRADING AND PROSPECTS
The Company’s unaudited results for the six months ended 30 June 2020 show revenue of
£10.6 million (which included £2.2 million of revenues from COVID-19 testing services) and EBITDA
of £1.7 million.
Trading in the period from 30 June 2020 to the date of this document has been consistent with
the Board’s expectations, with revenues from Infectious Disease Testing rising strongly
month-on-month through the second half of the year so far. The Company has continued to build
COVID-19 testing capacity, from approximately 1,250 tests per day as at 30 June 2020, to
approximately 6,000 tests per day at 30 September. Trading in the other three business units
continues to be impacted by COVID-19, mostly within Healthcare Diagnostics, where Cellular
Pathology grew strongly in the first quarter of the year but volumes have not yet returned to
pre-COVID-19 levels.
In the near term, the Company anticipates that the financial results will be dominated by the scale
of Infectious Disease Testing revenues, earnings and cash generation.
The Directors believe that the net proceeds of the Placing and Admission will help accelerate the
growth of the business, including a further scaling-up of COVID-19 testing capacity in response to
current exceptionally high market demand.
As at 30 June 2020 the Company’s net debt was £28.7 million, comprising cash of £1.5 million, bank
borrowings of £4.4 million and outstanding shareholder loans of £25.8 million.
If either of you want the Liberum floatation document I can send to you.
Was there a presentation today? Do either of you have the link?
GW2014 - I see that this Sky piece has an "insider" suggesting £42 per test, so possibly over £13m/month revenue (40%ish margin) by the start of 2021 if 10.5k per day tests 7/7 operation, which presumably it is at the moment. It will be interesting to know whether the company has the potential/aim of increasing capacity even further. I'm sure we'll find out more at the presentation on Thursday (12 Nov).
https://news.sky.com/story/covid-19-tester-sourcebio-to-unveil-130m-london-float-12103099
Absolutely the same analysis as me. I have it on good authority that they are currently doing 8,000 per day and think they will be doing 10,000 COVID pcr cases per day by December. That means that they will likely be doing 10,500 cases per day by January quite easily. The CEO says in this interview that they are looking to “ramp up COVID testing capacity” with the proceeds of the IPO. Could they do more than 10,500 per day? I know that at 7,500 tests per day they were generating £7m per month from the covid business. At 10,500 per day they would be generating about £10m per month from COVID alone. Surely they will be testing for the other viruses as well? Surely each different viral tests adds revenue with little increase in costs? They do all the Covid testing for Spire Hospital group and have several other testing contracts with NHS trusts. The debt is to be paid off with the IPO proceeds so they will be debt free with revenues in 2021 of covid (likely £120m at least) plus their other businesses. Plus viral testing is here to stay. It won’t go away even after the pandemic.
Each COVID pcr test costs £40 to £45 and they have a 40% profit margin on those tests. Can’t see the down side at this level? Normally stocks like this trade at 2 to 3 times revenue if they are growth plays. The only question is whether testing revenues are here to stay - I recon they are. This pandemic has changed viral testing volumes for good
£120m in 2021. Doh!
My first post on here, but coming in at the start of a new ride seemed appropriate.
Spot on GW2014 - having gone through the figures myself in the Offer document, absolutely agree with your calculations. Around £40m revenue likely from testing in 2020. Very roughly it looks as if 1k tests per day equates to around £1m/month revenue, so operating at full capacity of 10,500 tests per day might mean upwards of £120m in 2022. Plus the anticipated £20-30m from the core business, means that revenue will exceed current market cap next year. Having cleared its debts of £31m with the IPO proceeds, international expansion plans, cash rich for future acquisitions in its already profitable core divisions and a small pool of shares on the market, this could be an exciting opportunity over the next few years.
I'm in first thing on Monday morning.
This is a hidden gem. I've got shares in this company. I've been looking at the numbers and doing a bit of research. The Liberum floatation document shows that they had around £20m in revenue last year with their cancer, pathology and diagnostics and pharmaceutical freezer storage business with a growth rate of around 15 to 20%. The started doing Covid PCR in May since it took about 2 months to get all the regulatory approval. They did £2.5m in revenue from Covid testing from May till end of June. They are now doing 8,000 PCR tests per day which gives them about £7.5m in revenue per month and they will be at 10,500 test per day by the end of the year. That means that this year's revenue will be up from £20m last year to £60m this year and their covid revenue for 2021 will likely by around £120 to 140m - add to that their other business about £160m total revenue next year. The current market cap is about £130m after this floatation so they are trading at less than next year's revenue. Seems like a bargain to me. Even if there is a vaccine, then viral testing is here to stay so i would think that that revenue would continue into 2022 and beyond. Novacyt expect the viral testing market to level off at a new much higher level than pre-covid so this company will be cashed up next year and most likely go on an acquisition spree with the money.