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I watched the presentation, all of it, I also looked at the companies fundamentals for the last 5 years. The way they aired caution over the 75 million unit deal as an option and not a guarantee made me uneasy. The fact they have demonstarated how they would cope with a large order also concerned me as that would have a potential to increase the cost to manufacture. In order to build a £260 million war chest were talking about selling 200 million rapid test kits. And so far they have sold 1 million. Testing is huge I cannot deny that but for how long? How many orders, stock piles and agreements do these countries already have? Yes we could sell to organisations once stock piles are depleted provided all parties are in agreement but there are some huge leaps to get there. £.120 was based on a 75 million order of the rapid test kits. And its not there.
Salvadori you need to get some sleep pal
Perhaps watch the presentation.
The last time a virus was eradicated was smallpox. It took 2 years after the last case to declare it defeated.l We will have similar here, testing will go on long after we get on top of this. Vaccines may be required for a number of years which means antibody tests are required for a number of years. If immunity occurs, it wont happen simultaneously across the globe. Many countries will be lagging a long time behind. Low income countries are likely to be years behind, and we have products and distribution networks to target those markets.
Food tolerance test is awaiting china self test approval and we are targeting the US market where we need to find a new distributor. High margin products with high potential millions of units per year once self test approval is achieved and breading the US market.
CD4 test. The only point of care test of its kind. WHO approval, and has the backing and interest of several world aid organisations that are starting to include it in their budget next year.
2 new development tests already on the horizon to be worked over the next 24 months. Ties in with existing portfolio and distribution network.
The simple fact that Covid has exposed the shortfalls in diagnostics and will change the world with a clear shift to point of care testing.
In terms of valuation on an earnings multiplier, you don't have to have a 10 year order book to value a company 9/10 earnings. 1 years earnings at full capacity puts £260m free cash flows in the bank with no debt. Imagine 2/3 years of that. Even on 1 year, the company can invest in new products, new acquisitions, dividends or share buy backs or a number of other things. That free cash flow in reality if they generate it the way the business plan suggests will be worth more than 9x earnings on a company with zero debt and high free cash.
There is no magic calculator, it's just understanding of the commercials and what that profit generation is worth with free cash flow. It';s actually quite simple to substantiate if you think about it logically. This is how many businesses that have gone from small niche business to large substantial companies have achieved it over the years. Generate profit, reinvest and continue to grow. The Covid opportunity is vast in the short to medium term, but the longer term need for dsiagnostics is more evident than ever.
I am happy right here Tony, will continue to ask the questions people cannot answer :)
Salvador - PMA applies to you, Please Move Along!!!
Without significant orders the SP will be returning to 10p just consider that.
What information leads you to believe that ODX will experience significant growth post Covid? A good few years of profit from Covid? What happens once immunity occurs? Plenty of talk without details but mention 10 bags like its a certainty. Please can I have you magic calculator?
Salvatori, very astute of you to work out that I want the share price to move up as that’s why I’m invested!!!
Lol
Salvadori - There will be a good few years income from covid. Omega are already looking ahead post covid to ensure that capacity is used by next generation tests. This is an industrial shift in the UK diagnostics industry. There will be substantial growth well beyond covid. But i have been using 5x earnings in my calculations just to be prudent which is reasonable and still offers 10 bags from here and that is a calculation that can be substantiated from the information publicly available.
Sounds like you need the price to move up Tony, I feel your pain, I hope it does move up for your sake. I am just asking why after all this time it has dropped so far. I brought at 100p after all the hype and watched it slip to 90p and got out. And I am glad I did to be honest, the planet is racing for a vaccine, corners have been cut with testing to get it done fast. Countries have pursued a herd immunity approach and economies are on the brink of destruction. All I am saying is do not be surprised if the SP does not fly through the roof. Ill wait for MHRA approval or some big orders and reconsider my position. GLA DYOR
9 x times earnings based on the tests being used at the same volume for 9 years. Currently sitting on a 1 million unit deal they would have to restock already. Typical ramping
Current MCAP is 50% of what the FY net profit will be with 2.5m tests per week. Let that sink in. Finncap report says peers trade at average 9x earnings.
Correct Tony,
We have the two most in demand products in the Covid testing space with the right technology.
Antigen and Antibody LFT. One test is already known to be the best in the business, the other test is being developed by one of the best in the business (Mologic).
You wouldnt hire 60 staff if you knew you weren't going to sell a bean or just break even. Just remember whether we sell or not, the people still need to be paid. Avg payout on salary every month will now be over 200k, and the total cost of getting these people on boarded, insurance etc it'll be well north of 200k all things considered.
TonyHX, well said. Patience is the name of the game.
Dear All LTH’s,
Let’s keep the board positive and not give oxygen to the de-rampers. I too am heavily invested and topped up another £24k yesterday because I believe that the only way forward is testing regardless of the success of a vaccine.
The presentation confirmed that all our capacity is already committed and we are ramping up without need for further funds and we are the only company globally going through the final stages of MRHA approval.
ODX did not have the product or the infrastructure for the current covid climate and that got reflected it the results for the last 6 months but we are now in a fantastic position to smash our targets for the next 6 months and beyond.
Positive mental attitude (PMA)!!