Member Info for Soder

Put out a research note this morning….

Have reiterated an overweight rating with price target of 480p.

“The stock has continued to languish as concerns over fading growth added to ESG issues. We think the current valuation overly captures the risks, and does not give credit for the still strong U.K. growth, traction in the US, and progress on n ESG, and we reiterate OW. “

For h1 22 they are forecasting:
Sales +29% (guidance +25%)
Ebitda 92m

Have lowered overall ebitda for FY 22 by 5% (212m now forecast at 9.5% margin) due to lower sales but still remains a buy for them.

Valuation method is DCF for below estimates for 2022, 2023 and 2024

2022: sales 2243. / ebitda 212
2023: sales 2824 / ebitda 290
2024: sales 3527 / ebitda 363

Harry you do know when hedges roll off as they gave you the hedge book profile in the last presentation. You have the volume hedged and the price.

But, it’s easier to just come on here and talk nonsense, financially illiterate crap than actually look for the info you are talking crap about?!

Your analysis of the debt service need is also ****** FYI. The ave cost of debt is 5 percent. Net debt is what? Do the maths chump. They were doing 100m bottom line FCF Between March and June. Capex is back ended this year so won’t be as great in the second half but with current production, current commodity prices, current hedge book, current capital structure, current capex guidance, current opex per bbl guidance ….there is no way this biz is not hugely FCF positive this. No way. None. Zero. Zilch.

Maybe actually try crunch the numbers: valuation.

But do as many as you feel you need. Better to have your eyes open to give confidence in your investment decisions. The books will pay for themselves in a single trade.

@shelldonald @levincool

If you have no basic accounting knowledge start with crunch the numbers: accounting fundamentals. From that you will learn about the 3 financial statements and how they feed each other: pnl, balance sheet, cashflow.

Then get crunch the numbers: investment bank fundamentals. Teaches valuation based on those financial statements.

Both are 15.99 and will be the best money you even spend. Also get the excel modelling book so you can piece all together.

If anyone leaves university and scores a job at jp Morgan, Goldman, Morgan Stanley, Deutsche, UBS etc AMT and and these exact books are the same books you will be given to learn from.

Welcome to the dark side :)

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Just to add. We currently trade at 5.5x 2021 ebitda ex dhsc. So even without dhsc we are cheap.

The multiple is really like throwing a dart at the moment in this sector. It’s not like an oil company which pretty much all currently trade at 4.5-5.5x EV ebitda at the moment.

Give me some publicly listed comps and I will look up and get that the info.

Some of the bigger names currently trade at:
Abbot 18x
Bio-rad 24.7x
Thermo fisher 16x
Eurofins 15x
Biosynex nm
Avantor 20x
Illumina 57x

Reality…

Below valuation is super high level and excludes ongoing dhsc issue. I have assumed that the starting cash balance is 90m for 2021. Could be lower or higher depending on resolution but can only go on the info we have.

The best way to value a company Is based on the present value of the cashflows that company will produce in the future -a discounted cashflow model (DCF). However, another crude but quick metric the city will use is via a multiple called EV / Ebitda (enterprise value / Ebitda (earnings before interest, tax depreciation and amortisation). Ebitda is essentially a crude proxy for operational cashflow.

Given the uncertainty in predicting covid related revenues (and thus ebitda) beyond the next 6 months it’s very hard to model ncyts future cashflows which is why (combined with the unsophisticated AIM retail investor base) the market struggles to value this business. As such let’s think about it in terms of the EV/EBITDA multiple.

For 2021 we have (ex dhsc)
Sales: 100m guided. It will almost certainly be higher.
Ebitda: 40m (based on margin guidance)
Free cashflow: 32m (based on 80% conversion from ebitda)
As such we can assume that based on a starting cash position of 90m that year end cash for 2021 will be 122m. Obv the dhsc issue could swing this up and down quite considerably. But let’s just deal with what we know.

Based on a valuation multiple of between 10x-15x ev ebitda you get an implied share price of:

At 10x multiple.
Enterprise value = 10x ebitda = 10x40 = 400m
Enterprise value = equity value + net debt
We are net cash so the net debt is -122m at year end.
So implied equity value = enterprise value + cash position = 400+122= 522m

We have 70.6m shares outstanding so 522/70.6= an implied fair value share price of 740p

At 15x ev/ebitda this goes to:
15x40= 600m EV
Equity value = 600 + 122 = 722m
sp = 722/70.6= £10.22 per share.

But the big problem the market has is that it likes to model look forward revenues and ebitda. What is the ebitda for 2022? It genuinely is impossible to say. Could be 90m if covid comes back. Could drop to 20-30m temporarily until new era of diagnostics kicks off if covid retreats.

For 2022, using 10x and 15x multiples again but from a starting cash position of 122m…taking ebitda scenarios of 25m/40m/60m the valuation is as per below.

25m ebitda for 2022 we get a share price valuation of 550p to 732p.

On a flat case of 40m ebitda for 2022 we get 784p-1068p.

An upside case of 60m as per porky for 2022 would see you at 1090p-1515p. But to get to 60m ebitda you have to believe that we go back to covid square one.

Yes it’s cheap. Yes it’s a buy and wait. But short term 18quid a share. Total BS.

I don’t care whether you agree with me or not as I am stating facts whilst you are displaying a total fantasy. At best you are showing you have no clue what you are doing and at worst you are deliberately misleading g people who may not know what they are doing for your on financial gain.

The earnings in PRICE EARNINGS RATIO is not Ebitda. That’s not a discussion point. It’s a fact.

Management have guided you to 100m sales at 40 percent ebitda margin. That’s also not a discussion point. It’s a fact.

This analysis is total nonsense.

1. You just pulled out an ebitda number that is totally made up and has no basis or substance at all. 70m? From where? They have guided you 100m at 40 percent margins ex dhsc. Did you just chose to ignore that? Maybe, just maybe, management guiding the numbers know more than you about their sales numbers and should not be just ignored cos you want to ramp the SP by lying.

2. I have pulled you up in this before. The “E” in EBITDA is the Earnings before interest, tax, depreciation and amortisation. It is NOT the earnings you apply a PE ratio to. The fact that you don’t know this is quite frankly embarrassing and shows you are completely financially illiterate.

Can you just be happy we are on the right path and stop with all this rampy ******. You are embarrassing yourself and more importantly you are misleading those who may not be as clued in with regards to company valuation methodology.

Could Trevor be anymore wooden.

They doing a good job at avoiding answering g questions at moment. Trev needs to get off his auto script and grow a pair.

@brentw1. We f you think any of those people joined Novacyt for the reason they stated I will leave you to finish up drinking your koolaid. Save me the *******s. People join commercial companies for £££. Not because it’s such a great culture that helps people out. It’s cos they get paid more either now or a financial upside in the future. That’s all.

Given the strength of h1 and we know q3 will be better than q2 in privaye then 100m top line is MASSIVELY conservative. But let’s take that.

100m at 40% ebitda margins and 80 percent cash conversion is 32m free cashflow.

Dear ncyt…. I genuinely dont give a **** why anyone of you joined Novacyt. Spare me the generic nonsense spiel.

Oh hello shortie

The jury gave their verdict when the company’s official Twitter sent it around.

Bodes well for resolution but even better it bodes well for winter if when we see cases rise again.

That will be due to dhsc dispute.

They know what the gross margin of those products will be but impact on ebitda more difficult due to fixed cost element of ebitda calculation.

WQ are not short this due to fundamentals. I doubt very much they even know what ncyt do. Models and algorithms.

Market cap is an irrelevant metric as takes no account t of cash.

Use enterprise value. Where EV = mkt cap + net debt (ie in our case net cash)

That makes an even bigger mockery of our share price.

I think there is a very clear update to the dhsc issue….at this SO given that non dhsc performance…the dhsc issue doesn’t matter at all. Sp could bag fro here when with analegative dhsc outcome.