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I saw this so tool a look. It's had an exceptional year. Will be trading at a p/e ratio of 13-14 for the year. But a huge amount of this is driven by covid testing. The NHS contract (they only have one other contract) hasn't not been extended and won't be until feb.
They did 1million PBT before covid, looks like they can expect an ongoing boost from covid who knows quite how big, but really, in a years time following full vaccination its going to be back in the ball park of what it did befofe fore. So maybe next year they might do 30/40 mill of profit. Then maybe they do 3 mill profit a year (three times prior year). So unless I'm missing something, this is massively over valued.
Also 2019 was the only year they actually made a profit according to the IPO documentation
SBI have been tipped by Midas in today's Mail on Sunday as one of their "top picks for 2021"......
Https://www.thisismoney.co.uk/money/investing/article-9106741/MIDA-SHARE-TIPS-picks-healthy-wealthy-2021.html
Conclusion:
"Midas verdict: Sourcebio is valued at just over £128million but LeCoque is determined to build the business into a £500million company. He has delivered similar growth at other health firms in the past and there is every reason to believe that he can do it again at Sourcebio. The company is a recognised and valued supplier to the NHS, it is helping in the battle against coronavirus and is well connected across the healthcare industry. At £1.74, the shares are a buy."
Starting to move now - the buying price has suddenly increased to 174p.
SBI have been tipped this morning on i.i.i by Andrew Hore as one of his tips for 2021....
"SourceBio International
SourceBio International (LSE:SBI) is one of the companies that is benefiting from the need for Covid-19 testing. Demand for its laboratory testing services is soaring and it is hugely cash generative. That will not last for long, but it will leave the company with a large cash pile that can be spent on earnings enhancing acquisitions. The core operations have longer-term growth prospects.
Despite the new vaccines, testing will still be important. SourceBio should know how much will be generated from Covid-19 testing when the framework agreements are finalised next February. City broker Liberum expects SourceBio to end 2021 with £47 million in the bank, rising to £73 million at the end of 2022. The broker estimates that £66 million will be generated from Covid-19 testing, although this required initial investment by the company. That cash in the bank covers the majority of the market capitalisation. No Covid-19 testing revenues are in the forecasts after 2022, but they could continue.
The core operations are health diagnostics, genomics and stability storage. These are areas with high barriers to entry for competition. Genomics, which offers DNA sequencing services, is the smallest division, but the market could grow at up to 20% a year. Health diagnostics offers pathology and personalised medicine services, and SourceBio is increasing market share as these services are outsourced. Additional capacity will help stability storage to grow, although it will be more slowly than the other divisions.
The core activities, which have been hit by Covid-19 spending this year, are expected to recommence growth next year, with earnings before interest, tax, depreciation and amortisation (EBITDA) of £3.4 million forecast for 2021 and £4.9 million for 2022. Liberum estimates average annual growth of 22% between 2019 and 2023. Those businesses are cash generative and the cash pile will continue to increase. If the money is not spent on acquisitions, then there could be some significant special dividends.
A placing raised £35 million gross at 162p a share when SourceBio joined AIM in October. That paid off debt and financed investment in the Covid-19 opportunity. Non-exec Christopher Mills has been adding to his shareholding at prices above the current share price. You should buy as well."
For context, even at our target price the shares would trade on just 12.5x
2023E EBITDA, or in-line with its peers despite still having a double digit
growth outlook. Should management deliver our forecasts over the next
12-18 months we believe it could garner a 20-30% premium to peers
which would imply a £2.25 value per share.
Key investment points from Broker's summary:
Well prepared for public market success: SourceBio was taken private
in 2016 with a new management team (experienced in turnarounds)
brought in to simplify the divisional structure, cut duplicate costs and
invest in revenue generating assets. The team duly delivered with excellent
underlying EBITDA growth over the past 3 years and while COVID-19 will
hit 2020, we expect it to deliver >20% p.a. growth to 2025. In addition, the
group has a unique opportunity in COVID-19 testing to generate c. £61m
of FCF over the next 2 years that can turbocharge the platform. To
facilitate this growth it raised £35m in October through an AIM IPO. We
believe that the business is now well positioned to execute on the
exceptional opportunity.
? 27% Base EBITDA CAGR to 2025: We believe SourceBio’s base business
has been successfully restructured, is fully invested and has the right
management team to deliver the 27% EBITDA CAGR that we forecast to
2025. Key to this will be the Healthcare Diagnostics business (c. 40% of
revenues) that has grown by c. 30% in recent years and is set for a
bumper 2021. Meanwhile, the highly resilient Stability Storage Business (c.
40% of revenues) should deliver mid-single digit growth and the smaller
Genomics business (c. 23% of revenues) is set for c. 20% growth having
had significant investment in recent years. This defensive, diversified base
business can more than double EBITDA over the next 5 years.
? COVID-19 revenues are real and durable with scope for diversification:
SourceBio is a leading provider of PCR testing (gold standard) in the UK.
We believe demand will continue to outstrip supply until a vaccine has
been fully deployed – something that is unlikely until the end of 2021.
Under this base case scenario, we forecast £61m of FCF from testing over
the next 2 years but see significant upside if management can expand
capacity beyond our conservative assumptions or a vaccine rollout is
slower than expected. We also understand that management is working to
add additional services to its portfolio with scope to expand into antibody
testing for example.
? Near-term FCF generation leaves base business significantly
undervalued: There are two distinct parts to SourceBio and hence we
believe a sum-of-the-parts is the best way to fully capture the value across
the business. Our DCF value for the base business is £1.21 per share while
our DCF for the Infectious Diseases opportunity is £0.80 per share. The net
result is a fair value and the basis of our Target Price of £2.00 per share.
With 15% upside from the current share price we initiate with a BUY
rating.
? For context, even at our target price the shares would trade on just 12.5x
2023E EBITDA, or in-line with its peers despite still having a double digit
growth outlook. Should management deliver our forecasts over the next
12-18 months we believe it could garner a 20-30% premium to peers
whi
So they have actually released news that they have anticipated £50m in revenue in 2020 (up from £20m in 2019) and looks like they will have revenue of £150-£200m next year according to the Liberum broker's research analysis which i will email to anyone that wants it. That doesn't include any extra sales from any vaccine related freezer sales and it probably underestimates the amount of covid related PCR business. We are looking at a price to next year's revenue ratio of 0.75 with them having cash in the bank of around £50m at the end of 2021.
At the current share price seems way undervalued to me.
Dropped below IPO price - for a quality outfit like this - can not be right!
News today:
Https://www.sourcebioscience.com/news/integrated-storage-and-delivery-solutions-from-source-bioscience-provide-a-reliable-solution-for-distribution-of-the-covid-19-vaccine/
"Integrated storage and delivery solutions from Source BioScience provide a reliable solution for distribution of the COVID 19 vaccine
18 Dec 2020
Establishing safe, secure supply chains for localised delivery of the approved vaccine
Source BioScience UK Ltd (Nottingham, UK), an international supplier of state-of-the-art laboratory services and products, is liaising with agencies across England to support efforts to establish storage and delivery systems to safely distribute the recently approved COVID 19 vaccine. The Pfizer BioNTech COVID 19 mRNA vaccine which was temporarily authorised for use in the UK on the 2nd December is supplied frozen and must be stored at -70oC +/-10oC prior to thawing and use*. Source BioScience is a leading supplier of outsourced stability storage with an established track record of working with the NHS and top pharmaceutical companies. The company has the capability and expertise to rapidly deliver both off-the-shelf and bespoke solutions to get the vaccine safely to patients.
“The approval of a vaccine is excellent news,” said Russell Wheatcroft, Chief Operating Director at Source BioScience, “but the logistics of delivery are daunting. We have proven expertise and solutions for the storage and delivery of life science/pharmaceutical products and can efficiently establish the required supply chains. Reliability, security, and safety are crucial, but timescales are very tight. I’m confident our experience and proven technology can make a major difference in meeting this demanding challenge.”
Source BioScience is one of the UK’s leading supplier of off-site stability storage with the capability to store samples at precisely controlled temperatures ranging from 40oC down to -196oC. The company’s state-of-the-art storage facility in Rochdale offers 21 CFR part11 compliant data logging, an independent power supply, established quality systems and controlled access. Home Office approved for the storage of schedule 1 to 5 drugs it is ISO:9001:2015, cGMP/HPRA/FDA** compliant and regularly audited. Beyond storage, Source BioScience works with an established network of couriers to ship samples throughout the country and the world. As a manufacturer of environmental and refrigerated storage units the company is also well-positioned to put in place the facilities that will be needed at the point of vaccine distribution, at each vaccination centre.
“We’ve been successfully delivering reverse transcription polymerase chain reaction (rRT-PCR) COVID19 testing since April,” said Russell Wheatcroft, “for the Dept of Health and Social Care, to support the NHS and the Lighthouse Laboratories, for private healthcare, and for private clients both for employee and Fit to Fly certification (for overseas travel). Now we can make a furthe
Hi GW2014, w.r.t freezers - I've been following with an avid interest. So far, it seems that the freezers are TwinGuard Series Ultra-Low Freezers which I believe are from another vendor. I say so far because this is based on the photos from the recent publicity in preparation for V-day.
This should get the market going nicely - a commercial agreement for a COVID-19 testing service in conjunction with Oxford Nanopore, which is already being marketed:
Https://uk.advfn.com/stock-market/london/sourcebio-SBI/share-news/SourceBio-International-PLC-Commercial-agreement-f/83900684
"Commercial agreement for COVID-19 testing service
Oxford Nanopore's rapid LamPORE COVID-19 test to be made available via SourceBio accredited lab facilities
SourceBio International plc (AIM:SBI), an international provider of integrated state of the art laboratory services and products, announces that it has entered into a strategic commercial partnership with Oxford Nanopore Technologies Limited ("Oxford Nanopore"), a leading next generation DNA/RNA sequencing technology company, to offer a commercially available COVID-19 testing solution to corporate customers at scale. The test will also be offered to consumers.
Oxford Nanopore's, CE-marked LamPORE COVID-19 assay, for the detection of SARS-CoV-2, will be used at SourceBio's state-of-the-art ISO15189 accredited laboratory facility in Nottingham to offer a large-scale COVID-19 diagnostic testing service.
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.
2/2:
In addition, the Company announces that it has been accepted into the Increasing Capacity Framework Agreement for cancer testing services to NHS England. This Framework is designed to reduce the significant backlog of elective surgeries impacting the NHS due to the COVID pandemic and is expected to support the continued growth of the Healthcare Diagnostics business unit in 2021.
Due to the considerable ramp-up in COVID-19 testing revenues delivered in the second half of the year SourceBio expects to report total revenue of approximately £50.0m (2019: £21.2m) and EBITDA of approximately £14.0m (2019: £3.0m) for the year ending 31 December 2020, with the vast majority of this increase in expected earnings driven by the contribution of COVID-19 testing revenues.
Jay LeCoque, Executive Chairman, said: "A key part of our investment case has always been our positioning to deliver against an unprecedented COVID-19 testing opportunity. The funds from our IPO are enabling us to further scale our COVID-19 testing services, to successfully deliver against expected increases in future testing. We believe we are in a very strong position for the Lot4 bid, and when awards are made in the New Year we have the potential to increase our testing volumes over the course of this framework."
So here is the trading update from end of November. I got this from research-tree.com who cover SourceBio:
1/2
SourceBio International plc (AIM: SBI), a leading international provider of integrated state-of-the-art laboratory services and products, provides the following update on its testing contracts, its capacity for COVID-19 antigen RT-PCR testing services and an update on trading for its current financial year, ending 31 December 2020.
Highlights
Renewal of testing services contract with Spire Healthcare Limited ("Spire") · Over 330,000 COVID-19 tests provided under existing Department of Health and Social Care ("DHSC") contract · Public Health England's ("PHE") National Microbiology Framework now expected to be awarded to successful applicants from February 2021 · SourceBio continues to build capacity for COVID-19 testing services to support expected further demand into 2021 · Application for National Microbiology Framework has been submitted on the basis of building testing volume capacity above management's earlier expectation of 10,500 tests per day · Award of NHS England framework for cancer testing services · The Group now expects to report revenue of approximately £50.0m (2019: £21.2m) and EBITDA of approximately £14.0m (2019: £3.0m) for the year ending 31 December 2020.
Since May 2020, SourceBio has provided COVID-19 testing services as part of its newly formed Infectious Disease Testing business unit. These services passed all of the auditing requirements of the NHS and the DHSC in April 2020.
Two key customers for the Company's COVID-19 testing services are the DHSC, under which SourceBio has been contracted to contribute to the critical national COVID-19 testing requirement, and the private healthcare group, Spire. The Spire contract was renewed in early November, as expected, and under the DHSC contract, which is set to expire on 12 December 2020, the Company has successfully processed over 330,000 COVID-19 PCR antigen tests. The DHSC contract is expected to be extended through Public Health England's ("PHE") National Microbiology Framework Lot 4 - Clinical Laboratory Diagnostic Testing Services ("Lot4"), however this framework is now not expected to be awarded until February 2021, although this may be subject to further change, having originally been expected to be awarded in November 2020. This delay is expected to impact testing volumes into Q1 2021 but the Board remains confident in its financial outlook for FY21 as a whole.
Following the Company's Admission to AIM in October 2020, funds have underpinned further scale-up plans for COVID-19 testing and as a result the Company has submitted an updated Lot 4 application based on Directors' assumption of increased testing capacity beyond their original target of 10,500 tests per day. The Directors believe that the Company is well placed to bid for this framework given its capability, track record and high level of accreditation.
This seems very cheap at 160. Particularly with that price target of 200p just coming out. Also, does anyone know as to whether SBI will be selling their pharmaceutical freezers for the vaccines? That's one of their 3 core businesses.
Good to see the initiation note out now, with a 200p target - an initiation target is usually reasonably conservative, allowing for upgrades later:
LIBERUM INITIATES SOURCEBIO WITH 'BUY' - TARGET 200 PENCE
I am still wondering how the government will measure the
1. efficacy of the vaccines for each and every one of us
2. when we need a booster for our 2nd and subsequent vaccinations (after all - our antibody immunity level are all different so whilst a young sporty bloke can get away with 6 months booster, an 80 yr women may require a boost every 3 months.
What I mean is that there is no quantifiable way to measure the immunity to covid. The best alternative that we have got is - to measure the antibodies. The ONLY available antibody kit which can do this at present is the Kantaro antibody kit to measure https://edition.cnn.com/2020/11/25/health/covid-19-antibody-test-kantaro-fda-authorization-bn/index.html
which is a JV between Mt Sinai Hospital of New York and RENX (LSE).
Lecoque, chairman of SBI alluded to this test during the IMC presentation (or could it have been with the video meeting with Paul Hill of Vox) but at the time of the discussion / meeting - the Kantaro kit had not received FDA emergency use authorisation. Now the kit has. The Kantaro kit is in-vitro - i.e. requires drawing blood and specifically requires a clinic / lab to do the bloodworks. What this infers to SBI is another potentially lucrative revenue stream. So far silence...I suppose kantaro kit has just received FDA 1-2 weeks ago and their distributors (EKF exclusive distributor in UK + Germany + non exclusive in rest of Europe) + BIO-TECHNE Corp (Nasdaq) in the US will need to do the sales rounds.
Seems strange Rivaldo that the market hasn't cotton on to SBI's potential. Mind u, nothing's concrete with SBI's potential involvement in the storage of the distribution. Good to see how entrenched SBI is in the big pharma / bioscience space - being a corporate sponsor of the Big Pharma Awards 2020 - https://twitter.com/SourceBio/status/1334551547078995970?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Etweet
Sadly for UK public, the lateral flows used in trials on Liverpuddians do not appear to be effective. Means that the PCR test - the gold standard appears to continue its reign for now, as the dominant anitgen test - good for SBI - would help them achieve that 10k a day target
Agreed Scoobydoo321. The InvestorMeet presentation specifically mentioned that SBI were talking to Pfizer and others from memory about storage for vaccines from memory, with SBI being one of the few UK companies capable of doing this.
With Pfizer's vaccine about to start distribution imminently, perhaps there might be news soon. Let's hope so!
I recall during one of their presentations (or both for that matter with Paul Hill - Vox + investormeetcompany presentation for IPO) they mentioned their vaccine storage facilities and that they could play a role in storing / transporting vaccine. Thus, just bought another tranche. Given pfizer vaccine is to be rolled out - if SBI are selected by the NHS as a storage / facilities partner, I'd imagine this would be a real shot in the arm for them given the mass demand.
I'm not surprised that the PHE framework is late... I'm working on another DHSC sponsored framework at the moment and that's running late as well. Frankly, the people they have doing their tenders couldn't organise the proverbial is a brewery - despite this being a straightforward and simple process.
Not sure, but a bit disappointing for sure. I suspect it's this delay below, which will have an impact on the anticipated volume of tests from December until February/March next year. Still, great figures to begin building up an M&A warchest for the future.
"The DHSC contract is expected to be extended through Public Health England's ("PHE") National Microbiology Framework Lot 4 - Clinical Laboratory Diagnostic Testing Services ("Lot4"), however this framework is now not expected to be awarded until February 2021, although this may be subject to further change, having originally been expected to be awarded in November 2020. This delay is expected to impact testing volumes into Q1 2021 but the Board remains confident in its financial outlook for FY21 as a whole."
Does anyone know why the SP fell after the release of this TU? Rather strange. It sounded rather positive to me.
I'm working on the assumption that it will be in late Jan or early Feb, but hoping for a first update before Christmas to build interest and momentum.
Does anyone have any idea when SBI reports earnings? Will it be in January?