RE: Anyone get a quote?27 Jul 2020 10:10
(from the fincapp research note dated 22nd June 2020)
-- Sum-of-the-parts valuation --
We outline below the elements of value within Omega that form the basis of a sum-of-
the-parts valuation that is substantially in excess of the current market capitalisation of
c.£80m.
- The existing Food Intolerance business generated sales and EBITDA in FY 2020 of
£9.2m and £4.2m, respectively, growing at c.14% and driven by a c.£1m order from
China. Stripping c.£0.7m from EBITDA to account for the Chinese contribution, the
underlying non-China business could generate c.£4.0m of EBITDA in two years, which
could command a valuation of c.£60m (15x EV/EBITDA, given 40%+ EBITDA margin).
- Assuming Chinese NMPA approval for the Food Detective self-test in the summer,
revenues could rise to £6-12m (0.5-1.0m tests) in the next couple of years with gross profit of £4.0-8.0m: potentially larger than the current business. Based on an EV/EBITDA
multiple of 10x, this could be valued at £40-80m, with a value today of £30-60m.
- VISITECT CD4 is potentially capable of generating revenues of £8-12m in the next few
years once WHO PQ approval has been received and end users have familiarised
themselves with the test’s utility, which implies test volumes of 2.5-3.8m. This would
generate gross profits of c.£5.5-8.5m, which could be valued at £55-85m, a value today
of £45-70m.
- COVID-19 UK-RTC test is a binary event. If the test is validated and CE-marked, it is
likely that over the next two years Omega will be able to supply the consortium at its
production capacity. Based on cumulative revenues of c.£15m (10m tests), this is
arguably worth up £30-45m or 2-3x sales.
- COVID-19 Mologic tests. Assuming that it utilises c.10% of its annualised capacity for
both LFD and ELISA tests, revenues could amount to c.£22m with a gross profit of
c.£11m. This is arguably worth £45-65m.
Whilst it is not clear how long the global demand for COVID-19 antibody and antigen tests
will last, we believe that it will continue for the next 12-24 months at least, and the capacity
that Omega intends to build into its Alva facility will be replaced in part by new lateral flow
devices that it will develop and that can be marketed alongside VISITECT CD4.
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