Member Info for IntrepidInvestor

Hi wavecrest.

I may have got the 79% fig wrong because I scan-read the RNS (bit busy elsewhere). Others are saying 72% - that implies improving gross margins - I suspect BIDS and their competitors are all pushing that figure to their advantage (at cost of the title owners) because they need to.

Regards ‘what next?’:

Assuming most of that £1.7m was in the last two months, that implies revs now c. £9m pa so earnings c. £2.5m. So with no further growth in revs month-on-month, they will require further funds soon.

However, assuming the revs are ‘genuine’ this time (and not still ‘test’) I cannot see the figs standing still; my gut feeling is that many more organisations will engage with this type of advertising. I think a 300%-400% increase on monthly revs to c. £2.5m per month is really possible by the end of 2021. Average that out and my back of envelope estimate is 2021 revs of c. £20m (earnings therefore c. £5.75m - not quite enough to keep the lights on so more funds required mid yr).

If, of course, Dramper and co are somehow twisting things to the light and it’s actually darker than being portrayed, (and the growth does not continue) then BIDS won’t survive the year.

So my take on it is simple; do you believe the revenues in the last two months are genuine and do you think that growth will continue because advertiser like the feedback on effectiveness of their spend (this is the main ‘risk’ now - advertisers try it and think money was wasted).

If the answers are ‘yes’ then stay invested, if there is a no to either question then sell.

Me? I’m in for free and have mentally written off what’s left on the table so am staying invested purely in the basis that Draper & Co may yet pull this off. And being a serial entrepreneur myself, I really want them to. I know from experience the massive effort they will have put into getting the business to where it is now, and it’s that requirement of ‘mammoth effort’ that makes setting up a serious business a rare thing; with lots failing and only a handful succeeding. I hope they are in the latter group.

So; H1 2021 could look like revs growing well (200% at a guess- main growth factored towards H2 again) but another call for £5m at hopefully higher levels.

Cheers
Intrepid.

Hi all,
I am completely unsurprised and unfazed by the slight tick-down in the SP; ‘buy the rumour, sell the news’ antics, methinks.

I think the update is tremendous; GFIN has been haemorrhaging cash since conception until the new CEO arrived and he’s delivered exactly what he stated he was setting out to do. What’s not to like about that?

Of course there are risks, and there will be for years to come but the constant cash-burn rate is no longer the existential risk it was. The growth figures were great and I suspect one or two more quarters like that and we are home and dry.

My biggest fear now is someone snapping up GFIN on the cheap. We should be 8p or higher now so I might buy some more if these dip down further.

All the best
Intrepid.

Hi Bottmzup

Re your earlier post;
“How can you possibly read across the same cost of sales % to the full year when a lot of those costs would not be repeated? ie some costs of building the platform, tech updates etc would only need to be done once!
My point is that you can`t just apply the same % across the full year...its not knowable until the full year end report comes out.“

‘Cost of Sales’ is simply the variable known upfronts and does not include any other business costs (whether fixed or variable).

In manufacturing its limited to ‘raw materials’ that are turned into the end product; in retail it’s only the purchase price paid to the manufacturer for the item to sell retail; for BIDS its limited to the % of revenues they have to contractually hand to the platform/game owner.

What’s left over is ‘gross profit’ (or ‘earnings’, from which all other costs are paid from, so, salaries, rents, prof lessional service fees, office setup costs, advertising/marketing (that infamous deal with the Canaries, JDs fav team) etc etc.

‘Cost of Sales’ have seemingly increased from 76% (2019 figs) to 79%, if I am not mistaken; that’s not great news; if they keep that up, it’s like cycling into the wind -more sales effort required to stand still.

My view is the update was so-so; it shows they can deliver some meaningful revs but I estimate they will need to increase the monthly sales (generated in NOV-DEC) by about 300% to 400%. That’s eminently do-able in my mind; seems they need another 25-35 clients and they are there.

I think the sell-off was inevitable and so many PIs are just in this for a quick buck so are now selling - because they know both time and cash are required.

But I think the sell-off is overdone and view this level 6p-7p as a potential floor and a point to re-invest. I still don’t trust JD, of course, but don’t believe he should be replaced; this is the very start of the cash flows so now is the time to raise funds and keep up the land grab. They could be profitable in 18 months if they manage to secure enough ‘land’ (ie exclusivity to Game titles).

I note with irony that I am in the minority as a bit bullish. Whatever next?

All the best
Intrepid.

Just realised that the £500k is apparently not part of 2020 figs but they are flagging it up as JAN21 receipt. All very curious.
Maybe put it down as another Draytonism
Intrepid.

Hi waddaweknow.

Re; Derek Wise left because he couldn't get on with JD, which means people left are JD people, which means...?

I think you first point & last point are connected. Derek Wise was on the audit & remuneration committee. As the NED, he would be responsible for ensuring the accounts are kosher.

I also think there is more to the poorly explained £500k seemingly dropped in last minute. ‘Profits’ are a moveable feast and it’s quite plausible that Wise, as ‘audit’ NED left because he was not happy with the reasoning behind the appearance of the £500k in the 2020 H2 figs.

My guess is the £500k is pre-booked payments for something like IP licensing and probably should not have been entered into the 2020 figures, but was, so as to boost 2020 figs above brokers forecast; I theorise that Wise knew this so resigned. It’s all a theory based on nothing more than ‘worldly experience’ and a dash of an understanding of the culture at BIDS, and a knowing that this sort of thing does go on occasionally.

If true, would this materially matter? In terms of the ‘rules’, yes. In terms of the end result (BIDS delivering) I doubt such actions, theoretical or otherwise, would alter the end result; BIDS is starting to generate revenues and should grow at a decent clip now (albeit with more cash injections).

I suspect someone will want to remove this post; but I’ve said nothing defamatory; just highlighting my thoughts on the possibilities surrounding the mysterious half-a-bar and the audit NEDs resignation.

cheers
Intrepid.

Hi Woodaldo.

With respect, NCYT shouldn’t currently be valued on P/E basis because there is clearly a large risk to its actual earnings, post Covid. If it’s profits collapse to, say, £10m in 2022, then its value is that P/E. plus the cash in bank.

However, I hope the BoD will spend that cash wisely on new revenue streams; but they will be likely paying 15-30 P/E for each acquisition, because, as you point out, that’s the ‘going rate’ for ‘cash flow’ currently. So they will most likely migrate to a ‘bought in’ P/E of, say, 15-30 on ‘proven, stable’ earnings of est. £30m to £50m. (That’s the likely earnings they can expect to acquire with their cash).

The averages in the above suggest a SP of c. £12.50 in 2023. That’s 2 years away and a great amount of hoops to jump thru (in terms of acquisitions) before we get there. The current SP is simply reflecting that and will only recover as RNSs flow on BIG orders (NHS extension) and deals completed on decent P/Es.

In the meantime, I predict a drifting SP as there is an inevitable ‘churn’ of PIs selling to collect profits and IIs buying stakes.

All the best.
Intrepid.

Hi ShaunP,
I assume you've read my thoughts on the RNS - have you reached your own conclusions yet? If 'yes', are you willing to share them?
kindest regards
intrepid.

Hi all.
Well, I was way off at £416m. My figures were based on the declared 10m pm production capacity and 78% efficiency at the factory and assumed pricing of £8 per test.

My take on the figures is they are not producing at anywhere near full capacity; the question is, why?

Can it be teething issues with the new production lines (which may or may not be resolved) or is it that the orders are just not there to fill up the capacity.

I believe the BoD would be under an obligation to RNS any significant production issues, particularly having stated “10 million”. Therefore I think orders are the issue. I guess an alternative is that they have produced tests at full capacity for the NHS contract but that extra order is yet to be announced, so they are sitting on unsold stock. It’s possible but a bit irrational.

One final option is that the price being achieved is not £8 per test but £4; however, why is the margin still at 80%; they would have to halve production costs which I suspect is impossible given likely pricing demands on raw ingredients (everyone wants more, prices go up).

I am now concerned because I believe COVID will be all but over by this autumn in developed countries because of the ongoing vaccination plans and most third world nations won’t have the resources to bother.

Maybe testing will continue for some time after that, but it will be at collapsing rates.

I suspect the BoD now need to utilise that grown cash pile PDQ or they are a sitting target for a cheap takeover at these prices.

I’ve sold enough to use up a CGT allowance and a few in an ISA to reduce my holding by 30%. Means all money out and a decent profit locked in. I am now a ‘hold’.

But the DB11 will have to wait for now.
Cheers
Intrepid.

Hi Kaeran

I will go for £416m sales in 2020 at 79% margin.

I will also punt for an announcement on another acquisition.

I will also be looking for forward guidance of c. £797m for 2021 (all organic).

Anything less than that and I’m cancelling the DB11.

Cheers
Intrepid

Hi all,

Been holding over a year now. Topped up on a couple of dips (but not the last one - doh!).

This is still a ‘candidate’ share of my portfolio; it’s a candidate to become a significant shareholding (above 5%).

I see the latest RNSs as confirmation of two things:

1. TILS is ambitious and feels it has products in development with the potential to become market-leaders or has identified off-market targets with the same.

2. TILS is shifting its liquidity focus wholly to the USA. This move is designed to tap into the massively liquid US money markets right at the time a new president is re-starting the printing press. TILS have recognised and acted on the fact that firms listed and raising capital in the USA have much higher P/E ratios than here in the UK (on average). That basic fact means finance in the USA is much cheaper for existing shareholders (much less dilution for the same $ raise). This is a massive plus point, from an overall returns perspective to LTHs.

I have topped up at 160 this morning, still nowhere near 5% so will keep topping up on dips.

All the best
Intrepid.

Hi all,
I am in no way a chartist (of the investing kind, not the 18th C suffrage movement) but I do 'get' trends. This SP is now on an upward trend, which I believe is due to the new CEO sorting out profitability. Given the already massive and rapidly growing sector, I think GFIN now has legs to deliver. There should no longer be a constant 'cash-burn' that kills SP growth via repetitive dilution. The team can now focus on deals that add to the bottom line, knowing that, eventually, that will filter through to the SP.

It will also be interesting what the current strategic review throws up. I suspect a bid or a merger is in the off-ing. Why not tie up with David Beckham's operation, for example? Anyone have any thoughts on deals?

Whatever happens, it's clear that the efforts over the last year are paying off. We have been told GFIN is now profitable, and we know this is a great sector for future growth. I am decidedly NOT likely to ever be a customer of GFIN, but I see the investment potential here.

cheers
intrepid.

Hi The_Lockie

The old adage is “Buy the rumour, sell the news”. It’s wholeheartedly rooted in ‘insider dealing” activity that used y to o be ubiquitous across trading markets. Not so much goes on now but it’s clear it’s still around.
Theory is that the price move on the insider trading only to yank back when the RNS hits, as those ID positions are closed for a fast turn.
MMs know this and push prices aggressively against those trades, if they are lucky.

Btw, anyone think £14.41 achievable by Friday. I think that’s the £1b status from memory.
Cheers
Intrepid.

Hi Petethepost

As far as I know there are really two reasons for a suspension of a share listing;

1. Exchange led, such as a breach of listing rules, which is not rectified in the specified time.

2. Company-led such a request by the listed company, pending a market sensitive announcement (such as a takeover announcement, or major problem/lawsuit/incident).

In the company-led types, what often happens first is a large SP movement because of insider dealing; if this is materially evident, then the company should request a suspension on trading. For example, should a member of the accounting team have a laptop stolen which has the latest, unpublished results on it, the Company Secretary could request a suspension and then use the time to get the RNS out. Once the RNS is issued, the shares would be re-listed.
But I don’t think a company would request a suspension because of SP movement alone; instead they would issue a statement saying “we know of no reason for the SP movement” or similar.

Once suspended, your position is locked in until it’s lifted. Can be a few days, can be much longer.

Cheers
Intrepid.

Hi all,
I note that BIDS is also moving up. The fact that both GFIN and BIDS are moving up suggests that their collaboration is paying off. That's my take on it, anyway.
I guess the next updates might surprise on the upside.
cheers
intrepid

Hi Saintsmith
How many ‘wives’ do you have?
;-)
Intrepid

hi all,
my view is that the current SP reflects the main ('only'?) negative I can find re NCYT; which is that it is a 'one trick pony' in the eyes of some. I feel that some sellers are cashing in on the back of this perception 'in case' it's true. And some potential buyers are put off by it as well. This keeps the SP from really taking off from this level (of course, it's taken off from 6p to 1100p in 12 months, but my point is, I feel, valid).

Their mistake is two-fold:

1. The cash pile is likely approaching value of the company. others have pontificated that a fair value would be 1.5 to 3 times cash pile, ergo the SP has 50% to 200% uplift from here, just on those basics.

2. That cash pile will be converted into revenue streams - BoD have confirmed this. Lets assume they don't buy junk, then the valuation becomes fixed to the new revenue streams. Current valuations in this industry for 'guaranteed revenues' are strong so any purchases should push the SP up considerably (again, assuming not junk or overpaid).

If NCYT is a 'one trick pony', my view is it's one hell of a trick.

intrepid

Hi tiptree,

I got a strong sense from the article that in the USA, each ‘county’ makes its own decisions but that it is mandatory to only purchase products which have FDA approval. The FDA stopped short of changing its approval but highlighted the inaccuracy issues of LFTs and the inevitable consequences of relying on them for large scale testing.

I think the answer to what happens next in the USA is likely a political one; and that wind changes direction on Wednesday!

I suspect politicians will be forced to make testing more accurate by a worried plebiscite. But one can never tell with Americans. It’s never a money issue; it’s always a philosophical one; think of debates framed around ‘buy USA‘ or ‘non-intrusive only’.

But the numbers are such that some big customers will undoubtably switch to PCR so demand must increase, protecting margins.

Intrepid.

Hi all,
Has there been any commentary re the ST article about Curative’s COVID tests being dropped by big customers in the USA after the FDA poured cold water on their accuracy.
No specifics given but apparently there are far to many “false negatives” so customers like L.A. City authority have cancelled their contracts with Curative and have sought new suppliers. Curative produces a saliva rapid test.

I think this story will prove to have legs State-side, and there might be many similar organisations that alter focus from these to our more accurate ones. I’m not suggesting NCYT will be the sole beneficiary but I suspect the numbers will be so significant that it’ll help absorb any spare capacity in the PCR supply chain.

Methinks this could be part of the reason for the recent breakout by the SP. £15 by end of Jan looking very promising.

All the best
Intrepid.

Hi all.
Just my tuppence-worth on the bragging / price discussions.
This is supposed to be a friendly community forum - I think the acid test is “would you chat about these same things amongst your own friends who are also interested in investing”.
Most of us would discuss price and volume with that circle of friends - but some of us might be so ‘middle-class’ indoctrinated tgat we think talking about money is somehow crass. I say, get over it. This is an investment forum and trade examples are as valid as any other topic to a share BB. It’s also one of the best ways to convey ones own mindset - those in profit having a different mindset to those deep under water.
Cheers
Intrepid.

Hi troublesome.
Re truck drivers leading solitary lives; Shapps also didn’t mention any risk associated with their community propensity for a bit of dogging during their travels. I hope they all keep to the 2m rule!

More seriously, has there been any info on which PCRs the french govt will be using at the borders?

Cheers
Intrepid.