RE: Production30 Aug 2020 14:35
Think this is what i copied from MB post a while ago. But you can add Antigen to this which could be lucrative. Although there is a limit to what can be produced - capacity is huge and with the recent investment is substantially higher than what it was - and of course if needed there is still the ability to expand further if requred -
Sorry to plagurise MB - hope you dont mind
"here's the maths:
So if everything goes to plan, all the tests come to market on time and capacity utilisation is 100%:
£3 average selling price x 2m tests per week x 52 weeks a year = £312m revenues
Add Food tolerance and CD4 = £350m revenues. Average margin of 55% = Gross profit of £192.5m
Lets say admin and selling costs double call it £12.5m = Net Profit £180m.
5 x Earnings would be £900 MCAP. £5.30 per share
Opposite end of the scale, assume the bare minimum happens from what is already promised:
Based On 200k RTC tests, 46k per day Elisa tests and 200k per day Mologic tests by end of Sep, £1.50 average selling price annualised earnings would be £106m revenues at 55% average margin £58.3m gross profit. Say admin and selling up 50% = £9m. Net profit = £49.3m.
At 5 x earnings valuation £246m. £1.44p per share
Low ball is nailed on by the end of Sep in my opinion, and i find it highly unlikely baring a miracle that capacity utilisation wont be nearer the top end rather than the 10% scenario above.
To get to the top end we need the Antigen Elisa tests up and running by Oct and the POC tests by Dec. I prefer to treat these as a bonus at the moment.
My expected scenario:
Assume we will use 80% capacity for Lateral flow antibody test and 50% capacity for Elisa antibody. = £141m revenues @ 55% margin = £77.55m gross profit = £68.55 net profit = £343m @ 5 x earnings. = £2 a share.
This is my minimum expectation by year end. With just antibody tests and no antigen tests. Just an announcement that the lateral flow antigen tests are good to go, then double my valuation in the above scenario.
What do we need for this to happen?
RTC test approval - highly likely given the process and people involved in design and the fact the whole consortium have already move forward with capacity expansion.
Lateral flow utilisation of 80%. Well RTC is 200k minimum. I'll be shocked if they do not want more. Mologic lateral flow tests will come on board shortly, with 75 countries available to distribute. Capacity should achieve 100% but im confident 80% is guaranteed.
50% Elisa tests - Mologic agreement of 46k per day is already 30%
Food tolerance - China self test approval - highly anticipated to come soon
CD4 WHO approval and continued orders - delayed from start of the year due to covid. Highly anticipated.
BTW 5 x earnings is conservative based on the unknown time of this virus and the fact i have ignored tax. A higher multiple is achievable it could be anything from 5 to 30."
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