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Not surprised with the potential takeover price!
Going by Iliad's offer, which was rejected, the sum of parts of Vodafone is at least double the equity value today, after stripping out net debt.
Petty cash to the Magnificent 5.
Microsoft will be interesting.......they already are investing in the IOT business which will be a standalone from 1 April - surprised we have not heard more on that.
I would have given TW post more credence if it didn't say ".......in a best case scenario, take the same trip early next year when it runs out of cash.". From that alone, he is clearly scaremongering. At worst, cash burn is £10m, and at best, reduced to £6m. So, with £44m in the bank, I think the company will be fine. And if they deliver growth, can get to cash flow breakeven end next year, all things being equal.
This SP fall is an opportunity for those who believe the litigation will be settled / closed at NIL or above. I do.
I thought it useful to share the details around the Taiwan divestment. I believe today's news is nothing to do with the company, but rather the change in management at INEX.
It's a shame re perception in this BB - in reality, it is not material from a cash consideration perspective (see below), and we still have the lab and options around it.
Key terms of the Divestment include:
-- Upfront payment: US$1m payable on the Closing Date; plus
-- Loan agreement: US$1m payable as a lump sum or via ad hoc instalments within two years of the Closing Date (carrying interest at 7 per cent. above the Bank of England base rate) ("Loan Agreement"); plus
-- Earn-out consideration : up to US$2m potential earnout subject to the achievement of certain profit related milestones, over the next two calendar years post completion.
-- The Loan Agreement is secured against the shares of the subsidiary being sold such that failure to pay will result in ownership returning to Yourgene with no obligation to return previously received funds.
The divestment was meant streamline the Group's operations, enabling Yourgene to focus its strategic efforts on expanding the core Asia-Pacific product-based activities whilst retaining a strong route to market in Taiwan and reduce the Group's ongoing expenditure by approximately GBP 0.5m on an annualised basis. For the year ended 31 March 2023, on a post-restructure pro forma basis, Yourgene Health Taiwan had turnover of circa GBP2.0m and was profit breakeven.
Hope this clarifies.
I note that there is £8.2m of VAT receivable that was paid over to HMRC on invoices billed to DHSC not yet received, and part of the dispute. So, even in the case where DHSC and Novacyt settles at NIL liability on both sides, there will be £8.2m coming back into the company.
Dear all, sharing my thoughts on the trading update and investment case for Novacyt.
The trading update, if I can choose a word to describe it, was uninspiring.
Revenue came in just above mid-range of guidance, with core businesses not growing. Perhaps both impacted by the Q4 combination efforts. Cash at £44m is lower than I expected but can be reconciled as such. £81m - £26m (YGEN shares + SVB + Thermofisher) - £6m (cash burn Novacyt H2) - £3m (legal fees for acquisition both sides) - £2m (restructuring costs / YGEN cash burn). I had expected £48m but didn't account for restructuring costs and lower H2 sales.
What is encouraging, however, is synergistic savings of £5m will be delivered, of which 80% already done. I think more can be achieved. From what I read, the strategy is (a) commercialise via YGEN team - all the clinical products listed, with the Novacyt injected into it, (b) push on instrumentation placements (Ranger and PCR) and (c) re-focusing Novacyt legacy business to what it was good at - ROU. This should deliver further savings.
I was disappointed with no outlook for 2024 but when I looked back at 2023 announcement, it also did not contain it. So, perhaps it is too early to give a guidance, or they are discussing with brokers for an updated report. I still anticipate a £25m business, turning cash flow positive by end 2025. Prior to its acquisition, YGEN was almost at break-even. So, improvement in sales will get it there. Then it's Novacyt's overheads - which from the restructure, should come down.
I am surprised, positively, with foray into the Chinese market. That could be a significant growth driver on both businesses - I think we all know China has its needs in all the areas of diagnostics we provide.
Now, why am I still here and will look to add as and when I can.
Cash balance of £44m + value of a business with £25m TO / 55% margin = £1+
We are clouded by DHSC legal dispute. I fully expect this to be resolved by way of settlement. It's in no one's benefit to go through with full hearing. Any settlement at NIL or above will improve on valuation above.
I would expect director buys by now - and I can only surmise we have not seen any due to ongoing discussions re DHSC legal dispute. Or maybe we will see some now with SP so low.
And btw, the volumes are pittance. Being walked down. Interestingly, if you look at the chart, the up days are high volume, and the downtrend, on low volume.
Good luck all.
When can we expect trading update? Last year, it was released on 26 January 2023.
What I would like to hear:
> FY2023 revenue at the higher end of range provided of £10 - £13m which included just under 4 months of YGEN;
> Continued cost reduction in both businesses;
> Cash balance of circa £48-49m (less as Taiwan disposal not completed);
> A conservative FY2024 outlook of above £25m revenue and EBITDA loss under £7m, with combination update and clear growth strategy;
> Pipeline and business development updates;
> Broker forecasts / updates.
We are currently trading well below cash and NAV. Get DHSC claim out of the way, and we should have a serious re-rating.
Judging from the number of new vacancies in the Yourgene open positions in the right space (ie operations / delivery), it is encouraging. Looking forward to the trading update this month - I hope it will show a transformed business, £25m annualised revenue growing at 20%+ and a clear strategy to drive shareholder value / share price.
Good to read we are in the right space! (November 2023 article)
Not just in UK Naewise, Covid surge in Singapore spreading into South East Asia. India and US also showing upticks and of course, China with the various different respiratory illnesses. I also read bird flu and swine flu east and west of the globe, and dengue + monkeypox etc. So, there is no doubt Novacyt in the right space, with the right products.
The facts are:
- Molecular diagnostics is one of the fastest growing sector, and Novacyt is in it with both its legacy and YGEN portfolio;
- Novacyt is now a c £25m T/O business growing at 20%+;
- YGEN NIPT, DPYD and Ranger tech are differentiated and accelerating now post adoption phase. Particularly excited re Ranger which has now been adopted by megalabs and most recently PacBio;
- Trading below cash value ie no recognition of growth businesses.
DHSC dispute will resolve itself one way or another - 100% sure.
Really looking forward to a strong 2023 finish and 2024........
Based on my own projections, by FY28, on similar growth rate, company will have circa £85m T/O with EBITDA of circa £23m. At that point, and all things being equal, it will be > £6. If they company shows this trend consistently, we could get there earlier and someone buying us out.
Of course, if the world faces increasing infectious disease challenges (likely) and molecular diagnostics becomes even more in focus (ie Ranger adoption) - then anything is possible!
The recent share price action (and trades) suggest some background accumulation, hopefully institutions. Novacyt is a different company today than it was during Covid days, which has given it a strong foundation.
Cash of circa £50m and a circa £25m T/O business, growing at 20%+ and healthy GP% of 60%.
Even on a multiple of 2x sales, we should be at £1.40, and if 3 or 4x which is still conservative, then £1.79 and £2+.
Get the DHSC settlement done, we could spike there.
Notwithstanding that, we have a portfolio addressing infectious diseases (literally getting more and more widespread globally across respiratory, dengue, Zika, etc), NIPT (growing), oncology in DPYD (first of its kind IVDR approved) and Ranger Tech (TAM in the billions).
Looking forward to developments and positive news in the weeks to come.
As illogical / perverse as it may sound, YGEN at that price was probably too small to be considered by the big boys.
But as traction is gained, validation completed and now under a larger umbrella, it gets a rerating!
Didn't think much of it but testing, testing, testing may just come back!
I am not a trader and invested here as I believe it is undervalued - not selling anything below £1.42.
But if you were, I suggest you look at the AT of 2,000 shares each go which started this week's rally on Monday. I suspect there is an order in the background being worked.
The recent upsurge in China, but also globally, of RSV is supporting sentiments. But I think it is simply a re-rating post YGEN acquisition and potential news on settlement, commercial contract, etc
WBAFC, today's rise has nothing to do with swine flu, although it and the China outbreak of RSV, is a reminder of the need for good, easily accessible diagnostics. I think, and am confident, it is one of the three I cited below.