Excellent progress - Finncap raise revenue forecasts14 Sep 2022 10:19
Terrific increase in revenues in the half year. Recurring revenues are rising fast, and margins should also rise as production scales up.
Loking very promising now with forecast revenues expected to be ahead of expectations. Not bothered about a small rise in overall losses as ITX are investing for the future:
"The immediate and long-term prospects for Itaconix are progressing very well as existing customers expand into more retailers, new customers bring new formulations to market, and potential major new customer projects advance in our pipeline. We expect to see at least one new EU detergent product on the market this year, a new hair care ingredient launched in the coming months, and major new potential in hygiene applications."
As posted previously, FinnCap have reiterated their 12p target.
They've also increased their revenue targets for this year and next year to £5.2m, then rising 54% to £8m. They've also retained their EBITDA break-even forecast for next year.
In summary they say:
"Interims saw a record level of revenue, with strong growth of 124% from new customer programmes and additional volume growth for existing customers. Sales growth in the Cleaning segment was 212%. Three price rises have also assisted revenue, which has partly recouped direct cost increases, though with a slight lag resulting in lower than target gross margins. Management indicates a much stronger H2 margin performance and the expectation of fewer supply chain challenges. We raise revenue forecasts for the next two years, with higher opex costs increasing
the loss in the current year, but conservatively holding profit forecasts in FY23. We maintain our 12.0p price target, which illustrates our future optimism for this disruptive, fast-growing, plantbased polymers business."
There's also a succinct summary of the operational progress:
"Operations. The Cleaning segment remains the bulk of group sales and saw a 212% step change to $2.7m. Itaconix TSI 322 continues to gain traction with new customers and growth from existing customers in the dishwashing detergent market. Direct sales into EU customers accelerated, with additional finished product stocks in Europe to help fulfil customer deliveries. Hygiene sales were a little softer, but post pandemic, there has been an increase in customer development activity.
The new SAP80 super absorbent for nappies and feminine hygiene applications is progressing well, its development could be a huge application for the Group. The relationship with Croda was recently renewed and extended. In Beauty, sales of Nouryon’s Amaze and VELASOFT were broadly flat. A new VELASOFT product is expected for release this autumn, that acts as a bond restorer for damaged hair. Other developments of Itaconix technology for use with a pulp paper company for an odour control application and also a composite material application continue to progress towards medium-term commercialisation. "
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