The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
@brochrock - you're welcome. Sharing useful information is what this bb is about.
I sincerely hope you make a fortune with your investment.
You are right in not calling the bottom, as every time it feels like the bottom, it seems to give a little more. With the AGM and DA's arrival imminent, I'm hoping to see an immanent turning point.
I am looking forward to the new CEO leading us on the long and winding climb out of this dark and dismal valley we have had the misfortune to drop into and onto sunnier times ahead. Patience still required though, as the path is may appear interminable to the less-resilient.
GLA
Thank you for all the responses regarding these latter resolutions (19-23 &25). The bottom line, as I suspected, is that it is a matter of trust. We need to trust the company to do the right thing and,as McCarthy made clear in his prestation, they are only interested in spending money if it supports their growth strategy. If we cannot trust them we should not be invested full stop.
We need to give them enough room to manoeuvre or, to put it another way, we need to give them back the agility which gave them the first mover advantage and attracted most of us to Novacyt in the first place.
I shall be giving the chair my proxy (i.e voting 'yes' to all)
The only other thing that is perplexing me was why some investors were questioning the rise this morning - lol. This is so undervalued now, surely there is only one way it can go. It's just a matter of time now.
Tick-tock
*words
@HarChris, than you for your kind works, very much appreciated.
However, you may not have read my post in its entirety. I said I would either give my full support, or vote 'yes' to all except resolutions 19-23 (capital raise) and 25 (increase the discount at which new shares can be offered). I was asking LTH opinion; what is the potential downside of voting 'no' these particularly resolutions? (considering they already have 77m in the bank)
@DuncHallas,
Thank you for your input. I have a large investment and, therefore, will take the time to read and consider any reasoned opinions on this.
Your numerous log posts have pushed my own very recent post to Amers regarding the vote ([Vote 14.47] down the BB somewhat. In that, I was suggestion that I may this time give my vote of proxy to the chair, as we need to trust the company in which we invest, although I did still have reservations on any share dilution, especially at a discount, and particularly when we have £77m of cash.
@all LTH
I'm with Barclays who make it easy to vote 'yes' to all or 'no' to all, but I am inclined to phone them up and say 'yes' to all except:
'no' to resolutions 19-23 (capital raise) and 25 (increase the discount at which new shares can be offered).
I would be interested to hear form LTH what the potential downside of this would be to the company and long term SP. As much as I would like to put my wholehearted trust in the company, IMO a threat of a cheap share offer to ii should be taken seriously even if it is a small possibility. Do they really need more that £77m plus for M&A?
@Amers
I did not vote in the first round as a protest vote. This time round no quorum is required for the AGM, only the EGM requires a quorum. So, not voting would be pointless, particularly for the AGM resolutions (the first ones).
As the date has now been pushed back to 18th October, when the new man starts, I am more inclined to give my support, although I do still have my reservations on resolutions that allow for share dilution, as these are open to abuse. If the capital raised is for M&A activity this could be positive and, in the end, you have to give your trust to the company you are investing in.
They are basically saying they need flexibility, these are standard resolutions and they were tied the last time they were non-quorate and needed to quickly raise funds. Kaeren says she has had reassurances from the company on this aspect. So, I am likely to give my proxy to the chair, i.e vote for on all resolutions, but you need to make up your own mind.
Here is a very brief summary of each.
1-5 These are formalities, agreeing to the accounts etc.
6 This allows the company to buy back its own shares. (This would reduce cash but increase share value.) Cab be used for resolutions 16-17 below , so I am pro this rather than creating new shares.
7-9 Director appointments - there is little information on which to base any decision. (Who has done what for their money?)
10 Auditor appointment (cash saving, fine)
11 BoD Remuneration 2020
12 BoD pay 2021 onwards - does not include any detail. Don't think they would devise such a stupid plan (LTIP) as before. [Tying payouts to the SP at a single point in time was simply ridiculous and completely open to abuse, whether intentional or not. The CEO and other BOD could buy shares in their own company to inflate the SP and then take the bonus (caused by the related rise in SP) that was many multiples of the investment , so it wouldn't matter if the SP then dropped and they then had to write off those shares!]
13 Power for formalities
14-15 Articles of association
16-17 Options for officers/employees (I would prefer it if this were restricted to buy back only, (i.e no option for creation of new shares for this purpose).
18 Limit on options (this, puts a limit on the above, so definitely, yes)
19-32 These allow the company to raise share capital and would be my main concern, especially with so much money already in the bank.
24 Limit on share capital raised (similar to 18 with the options, this puts a limit on the above so definitely, yes)
25 This allows in an increase in the discount at which a share placement could be made/offered - this I'm not keen on this either.
26 Formalities
I hope this is of some help to the uninitiated. But DYOR and make your own mind up.
@Kaeren - I totally agree, so refreshing not to have to wade through so much one-line de-ramping, drivel and distraction!
@HarChris - Indeed, YoY revenue increases is what we are striving for and the key investing metric.
What DRB had set out and I was seeking to corroborate was that this is indeed possible and not pie in the sky thinking. We feel confident regarding the current year hitting £100m (although this is actually a decrease on the previous year) but, is £100m plus revenue possible next year and more than that the following year? We need to consider too that, at the same time, we may be expecting a 50% YoY reduction in covid sales. We feel this is ambitious but entirely feasible and in line with Novacyt strategy.
Yes, you could say some companies would strive for month on month improvements, but as you know, we are unlikely to experience such smooth revenue streams. The sales to the myriad of smaller test private test providers combined are likely to be reasonably smooth, but even they will bump up and down according to government policy changes, and then you we will have large contracts appear (probably when we have just given up hoping), not only from the NHS but from the likes of the UKHSA, UNICEF and/or the WHO.
To me this is not an issue. We just need to prove sustainable yearly revenue increases (or even stability would be good in the first instance). If we can break 110m next year and 120m the year after you will be saying goodbye to the old £15 SP target and Porky's target will not be such a pipedream, IMO. But, we are talking 30 months before we see these audited figures and much can happen between now and then.
I'm looking forward to a, hopefully, more positive week in the meantime!
GLA
#isthependulumabouttoswingtheohterway
@zcec67 - I'm glad you got something from it [The Zulu Principle]. The book may seem a little dated, but it covers a lot and I used it a great deal when I first started investing. I feel the core principles are enduring, so do still go back to it. As you say, a sound investment!
@InvestorSteve - I couldn't agree more on this point.
Some traders may want a speedy negotiated settlement on less favourable terms, but I'm in this for the long haul and would support the BoD going all the way on this. As you say, £73m is over a pound per share, but I would add, we have lost far more in mcap and for this to be returned, the more sizable the payout the better, even if we have to wait a few more months .
You also mentioned earlier that many of the funds that had invested in the company, due to Novacyt being part of small caps, would have had to sell out due to a falling SP (and, therefore, falling mcap) is quite true. But, the converse needs stating. As this winds itself back up and the SP increases, the funds will be 'forced' to buy back in, accelerating the upward trajectory.
#coiledspring
@ DRB; Some very valid points [The Risks 13:49]. As previous posters have mentioned, to sustain a rising share price, investors will be looking for increasing sales year on year. This can be difficult to achieve when you have had a windfall year. Putting 2020 aside (as 2021 full year assumes a drop to a considerably lower and conservative but substantial £100m ), from here on we need to not only maintain current revenues but plausibly be able to increase these sales into the future.
For those that haven't yet done so, and to corroborate DRB's posts, it's worth having a re-listen to the investor presentation meeting again. There's so much in there that I keep going back, particularly to James McCarthy at around 28 minutes in:
https://presentations.investormeetcompany.com/investor-meet-company/NOVACYT-S-A-Investor-Meeting?bmid=a9d61e8a5021
This is where he states that demand for covid related products is likely to fall by 50% year on year but, by their own admission, this a 'working assumption' from the company and is very difficult to predict and they state it is 'prudent'. I agree with DRB here, they are being very cautions considering the current prevalence/infection rates with only three months of 2021 left.
What is important is that it does not mean Novacyt sales will halve, as they are "taking a number of actions to mitigate this underlying trend". With their agility they intent to to "flex their portfolio" to suit market opportunities and this means:
1. Win share of new products
2. Win new customer segments
They intend to "use their core capabilities to expand their test menu beyond covid", supported by an "instrumentation strategy" [Q16, Q32, CoPrep] that "secures repeatable sales through their installed base". They will also expand the currently UK dominated footprint to "focus on opportunities in the US and rest of Europe" [I take this to mean further expand their direct sales teams].
Also of note, is that the R&D investment is now at four times the level it was pre-covid and the sales and marketing spend has also doubled. So, there is no way that revenues are going back to previous levels for Primer Design, Microgen or IT-IS, not forgetting that covid sales will not drop to zero either. On top of all this, they appreciate their will be a squeeze on price but by "using their agility", focussing on "efficacy and their patent folio" they believe they can maintain 75% gross margins, with EBITDA of 40% and, critically, cash conversion of 80% of EBITDA.
So, IMO DRB is not overstating it. It is quite possible that, with some astute acquisitions, the continuous investment in R&D, and the organic growth of their sales and marking teams, it is is quite possible for 2022 to exceed 2021 by some margin and then to continue to grow into 2023, not forgetting we are due some further windfalls in terms of sales of retained inventory, DHSC resolution and tax claw back, including corporation tax and VAT over-payments and the Pate
That's what I was thinking, but not if there is an underlying reason. Perhaps it's just cyclical trading that's pushing this up and down?!
@ troublesome
https://www.youtube.com/watch?v=wbQSAdU4Qb4
@DRB; Great post [Charts 9:29] regarding the benefit of hindsight. I had a very similar conversation in the pub last night. A friend was kicking herself for having bought at £8 when it was on the way down. I explained that, at that point, it could easily have bounced the other way. Had things panned out differently, this could have been well North of £15 now and that was the reason most of us didn't sell at £12. On the way back up, things will be interesting. Those caught out by the unexpected drop last time may be inclined to sell this time and may, unfortunately, miss out on potential further rises, so could end up kicking themselves for doing the exact opposite! Looking at any of the recently-successful, large companies in the making from Apple to Amazon or Tesla, their SP history will depict a similar roller coaster ride. If one timed it just right and sold on all the highs and bought on all the troughs... But in reality, without the benefit of hindsight, it is impossible to judge. News (positive as well as negative) can come left field at any time to precipitate a change in SP direction. And there is more than enough profit to be made from investing in a microcap and staying on all the way to midcap without trading. It's just having the patience, conviction and resilience to ride out the storms that come and go that is required. Of course, you have to bet on the right horse to begin with. I believe this is it.
@Soder; Another good post thank you [Self Help 14:03]. At the risk of sounding like a stuck record, I have often sighted The Zulu Principle, a book whose main proposition is to properly know the company in which you are investing. I agree with you, that in some cases, such as this share, this can backfire. We are using our head's to judge this investment whereas sentiment can rule the day. You are right in asserting that AIM attracts a larger number of RI who often look to see what is moving that morning - this high proportion of momentum investment can massively distort SP reality in either direction (think GameStop Reddit). For similar reasons to the above paragraph, fundamentals will eventually win out. We have a virtually unheard of level of II support (sub 2%) and this will change once longevity is proven. Things have very much lined up against us recently, but I feel the turning point is coming very soon. The pendulum comes to a stand still before swinging in the other direction (things were eerily still on Friday pm, but let's see. News will come at some point or another - patience, patience.
@Kaeren; I found the comment aimed at me illogical, perverse even, rather than offensive. As you say, I'd rather not denigrate other posters, and shan't perpetuate this by arguing the case, it will only cause further distraction. I'm a bit of a pachyderm, anyway, so no harm done. Thank you for your words of support nevertheless.
@troublesome: I am hoping my paragraphs are to your satisfaction!
GLA - Winter's coming
well just bought another 4k - might nudge it it the right direction LOL
Looks like a game of chicken, Kaeren - who's going to move first? I've never seen the SP so stable - 2 hours without moving more than a penny.
I think there are loads waiting on the side lines for this to break but don't want to risk it dropping a few more pence, so are waiting for the move upwards first.
- talk a bout a coiled spring waiting to go!
Is the recent drop due to gas prices and driver shortages? Or have I missed something?
Would think the low pound would make imports even less competitive against homegrown bricks
@Bluelight
every penny drop is £1k to me, I don't take the drops lightly, but short term pain for long term gain.
The short term is panning out longer that expected/desired, product development is a difficult business, especially with all the regulatory hurdles in each nation, but hoping the new CEO has the skill set to move these fantastic products and sell the company to ii.
As I have posted many times, the diagnostics market is irrevocably changing and, IMO, POC in public, private and corporate healthcare is the future - Novacyt is the future.
lo - consternation not constipation!
PI100 - please speak for yourself, not everyone on this BB.
To me the fundamentals continue to be extremely sound by any metrics. Whilst no company is without risk, there could be huge upside gain, whilst the downside is fairly limited, considering the 100m revenue, no debt and cash in bank. I would fill my boots if I hadn't already done so 18 months ago at similar prices.
Please don't confuse recent sentiment regarding poor communication and lack of BoD engagement with shareholders' sentiment on their company's fundamentals. The tow are quite different. The way the board has handled certain decisions, the lack of support for the SP and ineffective broker engagement with II, as well as the LTIP, are causing constipation and we are rightly concerned/protesting about it - that does not mean this is not a strong buy at these levels.
IMO, of course, DYOR, GLA