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@earth
I appreciate how frustrating it must be for you watching tour friend's stocks rise whilst you wait, especially at your age where time appears to move far more slowly. And as a student, you really don't want your money tied in for too long.
But remember this. We are likely turning over a minimum of 10m per month in sales now with the uptick in travel and continuing requirement for testing. With gross earnings of 80% and net earnings at approximately 40%, this means each week that goes by we have another 1m of cash ( yes after tax) in the bank. The company is therefore worth an extra million each week or has an extra million to play with, whichever way you want to look at it. Each week an extra 1m - phenomenal for a company this size.
The SP cannot defy gravity for ever and will need to rerate at some point to reflect this reality. This could be a gradual rise in confidence and drift back up in the SP or some catalyst will trigger a more immediate. rise, or a combination of the two.
But, I think you already know you are doing the right thing. As frustrating as it may be, your patience will be rewarded.
GL
It had been raining for some time, the climber lost his footing and slipped suddenly a few feet. He gasped. But then he felt the sudden jolt on the harness as the rope pulled tight. It held; he was OK.
I must admit that when I initially saw the RNS yesterday my heart sank. Much of any investment decision should be based on a sound knowledge, conviction and trust in the management team and especially the CEO. And here was our GM suddenly being replaced by someone we didn't know from Adam.
To me GM made a couple of very strong decisions:
1. He was quick to react at a time of year when everyone else was thinking of downing tools and partying. Being first to market was key and his rapid action set us up well for 2020. This showed a level of foresight, nimbleness and hunger much lacking in some.
2. He was quick to use the cash to purchase IT-IS. This masterstroke allowed vertical integration at a very competitive rate and showed great strategic thinking. Further foresight was also shown with the bulk purchase of reagents and outsourcing of manufacturing which enabled rapid up-scaling, whilst minimising risk and capital outlay.
I was also impressed with the early vision and determination to take the company to midcap level. Hence my initial shock and disappointment when we're only half way there.
However, having had some time to reflect and do a little research on the new man, I am feeling far more positive. He looks like a sound communicator and his marketing experience will be key to the next stage of the company's development. We have so many fine products, but that's no good if they are not flying off the shelves. Novacyt needs to go global and the USA in particular has been a hard nut to crack . Other members of the new team add further experienced and will also be critical in this respect.
Like others on this board, I was also fearful of traders taking advantage of the shock news to add further selling pressure yesterday morning. The fact that this has not transpired reassures me that we have finally bottomed out at 325 with no one else prepared to sell at this rock bottom SP. I too was initially disappointed at no update, but then again, I agree with others that June figures will add little that we don't already know. It is Q3 where we will, hopefully, see the uptick.
So, back to being sanguine and looking forward to all the new developments as they arise. I'm still convinced we are well on the way to being a multibillion, multinational company. Keep hold of your golden tickets.
The rain cleared, and as he regained his footing, the intrepid climber looked up once more towards the huge climb ahead.
GLA
Agreed, Bluelight - and why would anyone sell with good news likely tomorrow. They're always going to give the bad (if you can call it that) news first. They will want to give the new guy a boost.
Is this a typo? 2022?
David's position on the board of Novacyt will be proposed for ratification by shareholders at the Company's 2022 Annual General Meeting.
Thanks for the clarification, Kitzie and sorry for my earlier misunderstanding.
But it was reassuring to go through the figures once more anyway, if only to clarify in my own mind but, hopefully, useful to others too.
It's great to see that we are all singing from the same hymn-sheet regarding potential revenues. And I concur regarding the end of year end mcap - I'd see 500m+ very likely, i.e. £7 to £8 minimum (five months is a very long time in terms of this pandemic and Novacyt's rapid development) and two to three times this figure by the end of 2022 when we are fully imbedded and the market beginning to see the longevity of all of this.
1 of 2
@Kitzie (ref. your 9:06 post)
I am all for positivity regarding this super company, but from where do you get these figures (500m+ full year)? Are you including DHSC?
The company has already announced first five months of H1 (only June remains undeclared), so we are pretty certain that H1 will be around the 50m mark. I cannot, therefore, see where you get 100m for H1, unless you are including some DHSC. And then, you quadruple the figure for H2 to give you an incredible total for the year of 500m. So, your H2 prediction is five times more than Novacyt's own forecast revenues!
It is important we stay realistic and to not artificially raise expectations, but if I am mistaken and you have something solid to back up your assertions, please do share these.
The company is saying 50 m for H1 based on 10m per month first three months (including the 10m UNICEF/Ukraine contract) and 7 m for the next three. They then assume H2 to be the same as H1. This forecast was made before the uptick in July infection rates, but Novacyt are discounting any DHSC/NHS sales anyway. One would have expected an upsurge in travel, however, but I suspect the company was being cautious at the time in assuming there could have been ongoing restrictions to travel over the summer. So, I think, it would be fair to guess that the 50m for H2 is overcautious.
We should break down H2 into Q3 and Q4
Q3 includes the summer travel (July-Sept) - the company is predicting approximately 8m per month - I think we could possibly see up to double this due to travel alone. The unknown is how much we are selling overseas (especially our biggest markets in the US and Germany) and to the NHS via the framework. (Perhaps this is what you are including Kitzie?)
Q4 IMO we will see revenues continue to beat forecast, as travel continues to open up for business, and then we go into the ski-season. The big danger is that the UK Gov no longer requires testing on entry to the country and relies on double vaccinations instead, but they would be fools to do so. [Remember, this time last year we had not even heard of the Alpha/Kent virus let alone the Delta/India variant.]
I believe the full year 100m revenue predicted by Novacyt will, therefore, be overshot on private sales alone by between 20m and 50m.
2 of 2
What is unknown is the NHS/DHSC sales that could add substantially. Starting with the NHS, through the framework agreement. It is quite likely that Promate is running out far sooner than expected, so we could assume (with 300 of our Q16/32 out there) that substantial additional revenues could ensue, but this is anyone’s guess really, as we simply do not know. Equally, the DHSC dispute resolution could add substantially. If this is, indeed, limited to the 20m replacement costs, or less, tens of millions will be added to our war chest, but again this is a complete unknown.
We also have the Saliva test coming out later in Q3 which could see substantial sales if adopted in September for schools, but again, revenues for this should not be counted as in the bag, despite a predicted manufacturing capacity of 1m units per week. Ditto the LFT for antibody differentiation; significant revenues for vaccine effectiveness/herd immunity monitoring motoring could ensue, but are a complete guess for the time being. Revenues from SNPsig are also unknown at this stage, and very difficult to predict depending on national and international policies – I suspect that these will be more significant in 2022-23, once global surveillance begins to properly take shape, so I would not include in Q4 at this stage. [Novacyt is so ahead of the curve on this.] Finally, in Q4, we could see substantial Winterplex sales – including in the US. Just be cautious that these tests may not be easily transferable to our Q machines, due to more complex pipetting stages required, unless a Promate version is released they are likely to be restricted to full lab use rather than POC.
So, my bottom line for the year is 100m plus a very vague 20-50m additional travel, plus NHS framework (significant unknown), plus DHSC resolution (significant unknown). In the end it could reach as much as Kitzie’s 500m, but a lot of ducks would have to align for this to happen, and I suspect, Novacyt themselves do not know at this stage how things will pan out. They are simply getting all their ducks in line to take advantage of opportunities as they arise whilst maximising current revenues and building a sales force and management structure for a multibillion-pound, international, growth company of the future.
Sorry, if I have not added much. 100m is the only certainty, and not to be sniffed at. The rest is all upside, but unknown.
We patiently look forward to H1 results and possible updates on H2 predictions.
GLA
I can tell you who is not running out of Promate, or anything else for that matter. With Novayct's healthy cash balance they can build up stocks.
Most businesses these days work on a 'just-in-time' basis where they order materials and parts in from their suppliers on receipt of customer orders. That way, they do not have money tied up in materials and they do not have to pay for additional warehousing. As soon as the parts arrive, they are put together and are then moved on to the customer. This is extremely efficient and works very well, until that is, either:
1. There is a disruption to your supply chain [e.g., border disputes (think Brexit) or transport difficulties (think Suez / the Ever-Given blockage)].
Result: Production stops.
2. Your supplier gives your materials to a higher bidder, this may happen in cases of extreme demand.
Result: Production stops.
3. There is a spike in demand - supply cannot keep up with demand (your supplier‘s supplier can’t keep up).
Result: Potential sales may be lost to competitors who have the product ready to ship.
As I pointed out in my last post - end of year 2020 inventory stood at an incredible £29m (it’s actually closer to £30m).
“Increased inventory levels are supporting the Group’s revenue growth, with significant finished goods being held in stock ready for immediate dispatch, as demand remains high. The lead time for obtaining some raw materials is significant, so bulk orders have been placed to ensure there are no supply chain issues; these contribute to the higher raw materials balance in 2020. The closing inventory balance is assessed every year and a stock provision is made for stock at risk of not being sold.”
At the end of 2020, we had £14.4m of materials in stock, £9m worth of work in progress and £9.5m of finished goods ready for sale. [Against this there is a £3m negative stock provision – money owed for stock or goods already paid for, which brings the accounted total to £30m.]
This stockpiling may have been partly by accident, as GM was gearing up to complete DHSC contract, or it may be that he is simply are smart cookie and was preparing for the massive spike that is now happening. Either way, we are in a great position to take advantage of this huge upsurge in demand. [Everyone else will be scrambling around for much sought after reagents.] And remember, these figures represent the cost to Novacyt, not what the products/materials would be sold for (multiply by approx. eight to ten-fold for that!)
Throughout 2020 the Novacyt SP was linked to the number of new Covid cases – but it has got stuck and needs to be released. There is only so far they can stretch the elastic - the trebuchet has been wound so far; I can’t wait for the trigger that will release our SP like a projectile…
Patience still required, GLA
Oh - sorry, I forgot to mention, the original reason for me posting - no one has mentioned the phenomenal £29m of stock that had been built up by the 2020 year end!
There has been some interesting discussion ref cash on books. I would be surprised if there is much of an increase from the £92m year end (2020) to end of H1 (2021) - possibly around the 100m mark. As others have already suggested, without an injection from the DHSC (following any dispute resolution), making a profit and adding to your cash pile when 50% of your sales in Q1 are not being paid for is difficult. With a resolution to the dispute, and any payment, things will obviously change significantly.
However, as others have also said, this discussion could be considered immaterial and we need instead to be more forward looking, as this is where the market will be.
Q1 We know was £30m, but this included £10m of UNISEF/Ukraine sales.
Q2 Was subdued (£21m) as testing receded and we lost the DHSC as a major customer (but net of Ukraine and DHSC was actually an increase in private/international sales). [The June component is the only unknown at this stage, but I would suggest it is not far off the £7m forecast, as a director buy in the interim would not have been possible if it differed greatly from this figure.]
Q3 [This is where we are now.] Any upward update on forward guidance will be good - we should be looking for a huge uptick in private sales (travel) and possibly international sales (possibly a bit too soon for this as we are only just properly starting with a direct sales force in the US and Germany - but infection rates, and ergo testing, is increasing in both countries, so we should see a percentage increase through retailers) plus, hopefully, sales through the nhs framework to hospitals.
Q4 As John Snow says: "WinterPlex is coming!"
- not to mention LFT clinical, LFT saliva for school children, SNPsig VOC surveillance (national and international, through the newly formed UK Health Security Agency), antibody detection (pioneering tests to detect between natural antibodies from having the illness and vaccine produced from vaccines), any further R&D, M&A or non-covid activity...
I'm exhausted just thinking about it all!
- GLA
PS - I'm a 'D' by the way, in case you couldn't guess.
Thank you, Chris. Your kind words are much appreciated. It is at times hard to keep spirits up when the onslaught seems so relentless, so I am glad if I am able to shed a little light and return an element of confidence by zooming out
to see the bigger picture.
The diagnostics landscape is changing and we are well placed to capitalise on this. We have chosen the right company with an astute and nimble leadership team and the fundamentals will eventually win out. It is frustrating at times to see unwarranted slides in the SP and seemingly long periods without news, but in reality this is just the very beginning and we are fortunate to be in so early. Patience is all that is needed - doing nothing can be far harder than one thinks, however!
@Covidopportuinis
Thank you for your reply, and I accept your point that you may have been referring to the rise on the day being 30%, with which I concur. But, your last sentence is what I am talking about and more. It needs to not only regain the £7.25 pre-dispute price but also the pre-vaccine price. We are now seeing, clear as day, that the vaccine isn't stopping testing, far from it. Testing is becoming the new normal.
[And when Covid does eventually subside, we will see a burgeoning diagnostics industry from oncology and diabetes to transplant surgery and general screening, not just in the nhs, but throughout PLCs too. Bupa membership for the top echelons will no longer be enough, ESG (Environmental, Social and Governance) is becoming a key priority for companies and proper care of all workers will be the new thing to do. This will require regular testing. IMO, of course.]
So, apologies if you felt misquoted, but I did not want potential (or current) investors to be thinking that the resolution of the dispute would lead to a mere 30% rise. I believe there are many, many investors waiting on the side-lines, including ii who want that certainly, and are willing to pay a premium for it. They are not all going to get in on day one. Once that news drops, we are going to see several days of steep climbing - inevitably profit will be taken at various points, but a re-rate is a re-rate and this one needs multiples to get to where it should be, it is currently so out of kilter with reality.
It will also be a dangerous business taking your money out too early. It's been held down too far and for too long and, just because someone called tails last time, and it landed heads does not mean the same will happen next time. I predict this will go well beyond £12 this time round as investors realise that Novacyt is not a flash-in-the-pan punt but a pioneering and market leading diagnostics company that is here for the long term. I think some of us may have said before, it's a multi-billion pound enterprise in the making!
This is not a ramp. This is my vision of how Covid is playing out and where the long term market for diagnostics is developing and my interpretation of the role NCYT will play. There is risk involved with any investment (as we have already seen, anything can come left-field), but I have staked much on this investment and my trust for GM and his chosen team to deliver.
With little downside left to squeeze, I believe the weighting is hugely in our favour now; there is huge upside potential from here. IMO. This is not investment advice. DYOR
GLA
@Covidopportunist
– I cannot agree with your assessment this morning regarding the dispute resolution resulting in a mere 20% to 30% price rise. This has dropped at least 50% on the dispute and then more (so at least 100% required to reverse that) and that was after already having dropped massively on vaccine news, which we now know does not mean an end of testing. In fact, there’re is no end of testing in sight, it is going to be the burgeoning market of the future.
Talk about kicking a share when it is down, this has had the living daylights stamped out of it and then it's been put through a mangle to squeeze out every last ounce.
This share is undervalued by three- to four-fold and has potential to be at £15 by the year end, longer term it is anyone’s’ guess how high this can go and the main reason why most LTHs didn’t sell a d wont sell at £12. Work out your multi-billion projection and divide by 71m to get your own SP forecast! [Porky may be not so far out in three or four years.]
A news trigger will propel this, but even without one, test numbers are already the catalyst to change sentiment, but to help it along a little further here is a small montage from some of my more recent post to help it on its way:
We have waited long enough, all coming good now. STEEP CLIMB AHEAD
It is like trying to push a float underwater - at some point it is going to resurface at speed.
This is a great company doing great things.
This week could finally be the turning point we have all been waiting for.
This is not a flash-in-the pan product; this is the future of responsible workplace healthcare. And, we are at the forefront of it all. Novacyt is the future.
It will just take time to all pan out - so patience required... tick tock as you say [Kaeren]
Continue with your patience; a multi-billion company in the making - enjoy!
GLA!
* couldn't agree more (obviously)
@ Butchers.bike - I could agree more.
This is what I said the other day on the subject of private firms testing their staff under a different thread, but I posted late a night so many may have missed it - sorry if you have read it before:
It looks like the sensitivity of the NHS Covid app will be tweaked following these headlines:
https://www.independent.co.uk/news/business/muk-covid-app-staff-shortage-b1884505.html?amp
But this will continue to be a problem for the likes of Nissan and Rolls Royce (the BBC reported 10% absence for both companies today) even if the apo is made less sensitive.
Has anyone told them about Versalab?
Let's hope the 50 strong sales team (field officers) are on the case. When I say on the case, I mean the Versalab Portable labs in a carry box.
https://primerdesign.co.uk/versalab/
A very cost effective solution.
This is not a flash-in-the pan product; this is the future of responsible workplace healthcare. And, we are at the forefront of it all. Novacyt is the future.
This week could finally be the turning point we have all been waiting for - GLA!
It looks like the sensitivity of the NHS Covid app will be tweaked following these headlines:
https://www.independent.co.uk/news/business/muk-covid-app-staff-shortage-b1884505.html?amp
But this will continue to be a problem for the likes of Nissan and Rolls Royce (the BBC reported 10% absence for both companies today) even if the apo is made less sensitive.
Has anyone told them about Versalab?
Let's hope the 50 strong sales team (field officers) are on the case. When I say on the case, I mean the Versalab Portable labs in a carry box.
https://primerdesign.co.uk/versalab/
A very cost effective solution.
This is not a flash-in-the pan product; this is the future of responsible workplace healthcare. And, we are at the forefront of it all. Novacyt is the future.
GLA
This is a great company doing great things.
But 50% of share holders are in France and feeling unloved.
UK shareholders are largely holding/adding - French are largely holding/selling. Uncrossed trades balance the books at the end of each day. Traders play on the volatility. Slightly more selling in France than buying in the UK leads to slight downward drift. This is all on very low volumes.
When news drops, this will all be somewhat irrelevant as the re-rate starts. News will be uptick in sales above forecast for H2, news on dispute settlement, news on saliva LFT, news on global surveillance using SNPsig, news on US developments- so much to come, just in Q3.
Then Q4; we will be stepping up another gear.
Continue with your patience; a multi-billion company in the making - enjoy!
thanks, rhinocol - seems subdued for no particular reason when this one should be making steady headway if not flying
If you missed it late last night, excellent Huffington Post article- please forward to your local MP and the press:
https://m.huffingtonpost.co.uk/amp/entry/pm-under-fire-for-empty-promises-made-to-uk-biotech-firms-over-covid-tests_uk_60e553f5e4b099d899a1d4da/?bea=&__twitter_impression=true
Not mentioned in the article is a small company, Novacyt (Southampton), who is now also in dispute with DHSC regarding non-payment of goods received. You may want to add this to any email.
GLA
Thanks, Kaeren, for the link.
People might not realise you have to click twice through to get to the Huffington Post article:
https://m.huffingtonpost.co.uk/amp/entry/pm-under-fire-for-empty-promises-made-to-uk-biotech-firms-over-covid-tests_uk_60e553f5e4b099d899a1d4da/?bea=&__twitter_impression=true
This is brilliant - totally exposed now. (All other media will now pick up on this at last.) The DHSC is on the back foot and claims it will now be diversifying its LFT procurement.
If they are changing testing of nhs staff from Innova (throat and nasal) to Orient (nasal only), just wait until our spit tests come out - especially for schools.
Thanks also to Porky for the Guardian article (I also noticed your shout out to Novacyt in your tweet to Neale Hanvey - well done!) 600k PCR tests per day required - fenominal!
So PCR coverd, and LFT covered and antibody tests and genomic surveillance and Winterplex...
...I'll be the first to say it - I wouldn't want to be out of this over the weekend!
GlA - we have waited long enough, all coming good now. STEEP CLIMB AHEAD