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loads has been priced in, the core of the business is still going well. EKF trading at a deep discount to peer group: fwd P/S 2.5x vs 5.8x; fwd P/E 14.7x vs 39x ; EV/EBITDA 8.5 vs 15x STRONG BUY
Good time to buy shares back....
I am also accumulating today.
Clearly the buy back kicked in this morning and my only comment is that its very coincidental that the drop in price today coincided with share buy back.
Singer issued a note to day with a 12 month target of 62 with a +_ 0f 21.6% . I think the margin tells us they haven't got a clue :)
I am looking fwd to the Investor meet call later,
Great year in 2021 - and good progress to create growth offsetting decline in covid testing. 2024 mentioned a few times - coincides with new fermentation operations at south bend fully operational and a planned increase in non covid diagnostic testing including ADL which should add decent revenue moving forward. Lots of cash, lots of cash generation, few decent investments which will grow in time. Buyback intent was great - but to declare a sum of money - £4m, and a total number of shares which can be purchased - 9m - and its little wonder we start the day at 45p given that's the implied price the business places on its shares. Talk about shooting yourself in the foot. SB
Hi Silver,
Totally agree with with your comment below, which is what I alluded to in my post.
The market makers had set the price long before the markets opened based on the buy-back.
Can the price be clawed back, of course but this was un-necessary and may spook private investors who perhaps don't get into the detail as they probably should.
Cheers Vig - will be interesting to see if the company reports any share purchases made this morning/today. Cant imagine II's will be overly happy with todays events so far. I hope the investor call is helpful - I cant make it unfortunately but I think there is a replay function. No idea what Singers are playing at - total waste of time - and again not helpful in the current context. This is a core bio-tech holding of Christopher Mills (OIG and NAS) alongside CIR and RENX - and its been a shocking six months for all three in market valuation. SB
I asked the question about the share price drop today after the buy-back RNS. They only answered in part saying that they were taking 9 million shares out of circulation as they had issued 9 million for the ADL deal. Also as that deal was done at 80p + per share they said if they could buy back at something like todays price it would be a good result for the company.
They didn't comment on the share price drop triggered by the announcement, which was the point I wanted to make.
I have left feedback post meeting on this point and I will share the response when I get it.
Suprise suprise.... guess who will be filling thier boots at these levels and i think it might rise after tgey are finished. Dig in..GL
Good point to raise vig - the response to me doesn't make any sense. Would be interested to see if you get a further response. The guys at ADL must be wondering what happened to their deal - taking an all share purchase at double the current share price looks like a very costly bit of business. Their earn out provisions were capped at a huge number - will be very interesting to see how they perform in year one which triggers the first tranche of earn out provisions. SB
On investor meet, I see they are still working through comments and Questions, so I might get an answer via that route.
As I have a fair investment in EKF I was trying to rationalise my thoughts yesterday evening. (main points only)
As far as competence in their field I got a warm feeling and also their CEO although a Brit clearly has a lot of contacts in the US an knowledge of their market.
They said Q1 2022 Revenue was running at same rate as 2021 and that 2021 should be seen as a spike in revenue due to Covid, so I am looking at 2020 as a benchmark to measure progress. Note Covid work was high revenue but low margin.
The Covid effect they think will tail off from Q2 onwards and their efforts now are to switch the testing to non Covid (and there are plenty of opportunities), which they are already pursuing. I think this will ramp up as the year goes by. In the US this means leveraging on ADL.
The other area they rely on for growth is via the investment they made in bio culture production. This would seem to have significant potential in the US and although they are marketing this capacity now to secure contracts. The new capacity will not be in place until 2023 Q1 and so sales will ramp up from there and thru 2024.
They were clearly conscious that investors may measure them based on 2021 spike and see any revenue reduction as a negative. I don't see this as an issue as what 2021 has done is allowed the to develop new areas that build the future.
I think 2022 is the challenge and it will be interesting to see how quickly they transition to the future business model.
As with most AIM companies, they rely heavily on advice especially on governance and Shareholder engagement.
I await clarification on my question on the share buy-back and this will shine a light on this.
Good points vig - thanks for sharing your thoughts. I've got a decent holding here bought pre recent decline - so not great - but I am hopeful value will return here over next 6-12 months. In basic terms - the market has reset the company's valuation to its 2019 levels with an uplift for decent growth in its core business. Key to unlocking future value as you note is the fermentation business and non covid testing - and the company has been clear on its strategy for both including financing. A bit of director buying at these levels and higher would provide some further comfort. SB