Charles Jillings, CEO of Utilico, energized by strong economic momentum across Latin America. Watch the video here.
Not much of a reaction at all really. Appreciate the price is almost 10% down today but that’s not a big move in this share, it looks to have shown resistance at 26p which it was at a few weeks back and I wouldn’t say volume is particularly high on todays selling and that’s probably Because at the current price it represents good value.
Growing revenue, growing profits, growing dividend yet the PE is at an all time low.
At 26p it’s now the same value as in 2019 when it only had £5mill cash, paid 0.5pence per share divi, and had op of 3 million.
It’s now got almost 5 times the cash, pays 3.5 times the dividend and approx 3-4 times the op. Yet pe ranged between 6-12 during 2019 and now it’s at 5.6.
Clearly we’re in a bear market at the moment but there’s plenty of upside here now
Valju and I know a few directors, sales managers and marketing managers who can’t sell for toffee. It’s amazing how good at NOT selling product most sales people are. Majority are very good at selling themselves, dodging bullets and climbing the ladder. Very easy to hide behind Covid figures and look busy over the last year. To be great at sales, experience helps but attitude, grit and determination are way more important. You either have those qualities or you don’t .
Does Sam smiths SIPP arrangements suggest she sees long term value here? Obviously transferring to SIPP probably provides some form of tax break for her? Don’t fully understand as I don’t have a SIPP myself. Is it as easy to sell your assets as normal shares if you need too or is it a sign that she intends to hold those as a long term retirement pot type investment ?
£30 million ebitda stable earnings growing at 20% plus per annum….. 0.5 eps on a pe of 20 gives £10 share price.
So it’s really not far fetched given than we’re estimating it potentially stabilising at 10-20 ebitda this year. Make one aquisition and your at the 30 mill ebitda.
Directors bonus pot ( not exact estimated about 1000000 shares)December 24 average price. Bonus pot shared between board.
To qualify 10% pa share price £4.71. ( £1,177,500)
At 20% pa share price £6.11. ( £3,513,250)
At 30% pa share price £7.77 (7,770,000)
Share price £15. (£15,000,000)
Share price £54. (£54,000,000) just for porky
They can’t sell for a year once awarded shares so they are going to be looking for sustainable rise. No good spiking it in December 24 for it to fall back.
Nobody’s going to be able to retire unless they are targeting £15 share prices £7.7 provides a very nice bonus for them but split between them that’s not going to go very far.. I’d be drawing that as my minimum expectations.
So what does a £7.7 - £15 stable Novacyt look like ?
I think £7.7 upper target makes it hard for the board. They are going to be faced with resistance all the way up to that target as LTH sell out for what they bought. Whats the upside if it gets back to £4-5. I think I’d be selling up and reallocating cash elsewhere. Think they needed a stretch target £15-£20 for if they absolutely smashed it and to encourage lth to stay the course.
Even the lower level of ltip requires them to get back to £4.70. Great news for those holding at £1.60
(Management clearly know it’s worth more than that) to be fair it’s a pretty low target considering many holders were buying at £8. Mr mullis included. So I think they’ll walk this target. Should have been a £8- £15 quid target though
So how does one play it if you are a director. Sort the dispute, then buy in big the same day you drop the RNS, in the knowledge that not only is the share price at all time lows and undervalued but the biggest uncertainties are resolved.
Does anyone have a view on the levels of goodwill and intangible assets on the balance sheet?
£337 million between them
Total assets 509 - liabilities 243= £266 million equity
But £337 million of those assets are goodwill or intangible assets. So could be a lot lower .
Unlike shareholders most CEO’s and businesses work to a long term plan… most business I’ve worked for set a 5 year plan. The share price is not of a concern over the short term. It’s just noise. DA can’t just join a firm and start ramping it. Any share price rise would be unsustainable unless the right infrastructure is put in place first to back the rise. Right now we have a dwindling Covid market so my five year plan would be to capture as much of that as possible whilst making plans for non Covid revenues. His comments on the recent RNS and video acknowledge just that. New products coming on line in Q4. Once dispute is resolved we might see some aquisition moves too. Plenty of Covid stocks are cheap at the moment. Once revenues are stabilised and future forecasts clearer then this can grow rapidly
Nothing to talk about that’s not been said. It remains incredibly undervalued in a sector that has been battered by poor sentiment since the emergence of vaccines. The sector will dwindle and what will be left will be the cash rich companies and those that can or have pivoted into other revenue streams. Eventually poor sentiment will turn. Likely to be a lot of consolidation in the sector, lots of loss making companies finding it harder to raise cash now and are ideal take over opportunities at the right price. Wouldn’t want to be holding anything but NCYT in the Covid sector.
I’m assuming the dispute has put a temporary halt to proceedings with regards to M & A activity? It would massively effect the cash position whether good or bad, so one might want to have it settled before deciding what to buy.
Can’t also really expect a buyer for us either when there’s £40 million of revenues in limbo.
I’m not sure regarding buy back as I think the money better spent on acquiring non Covid revenues.
However this is a good example of the value. With 100million NCYT could buy back almost 60 million shares. Which would leave it with ten million shares. No cash, no debt. But a business expected to generate 20 million ebitda. 20million / 10 million shares = 2 * a pe of 10 and you have £20 a share. Even a pe of 5 is £10 a share.
Around 45 million revenues looks like break even point where at the current cost base they would start making a loss. So given that we have expanded that cost base significantly ( spend on sales and r and d has doubled in a year) one would want to see evidence of it paying for itself . From operating sales team myself I know it can take 6 months to start getting traction. So expecting big things this year and there should be some evidence starting to show in non Covid revenues. The sales team can’t hide behind Covid revenues forever. Yesterday’s news. What’s next
Hi DRB,
I’ve rechecked my numbers and I wasn’t reducing COst of sales in line with revenue reduction. So I have my worst case as £54 mill revenue, 38 mill gross profit delivering about £8 million OP after paying for sales. ( not accounting for anything from dispute. Non Covid growth seems critical to me.
Ok next question. The trading statement refers to a shift in product sales from Covid products (95% in 2020 to 86% in 2021)
Total rev 277 m 2020
Total Rev 95.8m (+ 40.8m inc dispute) = £136.6m 2021
Do we include the dispute revenue or not?
If we don’t it suggest non Covid tests went backwards. That can’t be true can it ? If we include the dispute revenue then non Covid tests delivered 20 million revenues this year which would be sterling growth at more than 50%.
If we factor that growth to continue alongside a drop of 50% in Covid products then I end up at around £85mill revenue for the year and ebitda of about £25 million.
Mind if they’ve used the 95.8 as the base for the calculation then my forecast looks bleaker at about £54 million revs and a small ebitda loss. ( not including anything we get from the dispute in those figures)