Member Info for Soder

Cash will be way way way way way than people think. No one is considering the huge build up in working capital that has been required to create this huge increase in manufacturing and sales. It will eventually be released but prob not until 2022.

Now the stock is covered by institutional research NCYT management would have to give a trading update if they were likely to meaningfully over or undershoot market expectation for the year at this stage. The listing rules state issuers must notify a change in financial performance or expectation if the change would lead to a substantial move in share price.

Current published market consensus from Bloomberg is basically the NUMIS estimates. They are below and absent a trading update v v soon you should assume that for FY20 they will be ballpark. Note: below are in EUROS!!!!!

2020
Sales 305m
Ebitda 230m
FCF 90m (there will be a big 94m outflow for working capital as they have ramped up production. This should normalise in 2021 and be released in 2022)
Cash 93m

2021
Sales 387m
Ebitda 387m
FCF 221m
Cash 314m

2022 (this really is thumb in the air as no one knows what will happen with the biz or the accumulated cash)
Sales 137m
Ebitda 72m
FCF 138m (driven by lower ebitda and large working capital unwind)
Cash 450m

The one thing that sticks out is that cash will be a lot lower than some of this board believe due to the huge build up in working capital in 2020 as a result of rapid growth. It will eventually be released but don’t expect the cash balance to increase inline with ebitda for this year.

On the above we are currently trading at 2.7x ev ebitda for 2020 and 2.2x 2021 which looks v low. we are trading at an EV of 2x 2021 year end cash balance and 1.4x 2022 when cash will be released from the balance sheet working capital position. The question the market struggles with is what this business looks like in 2022 and beyond. What will they do with cash? What new products will they have? What will the wider diagnostics industry and demand look like? This is why the SP trading around here makes sense as so many unknowns. I am long to the nuts but my expectations for 2020 are muted and way below some. I think the SP starts to move only when we get well into 2021 and can see a post covid strategy for the business.

Just my opinion, but FYI.

Would think this is so they can monitor performance of their vaccine. A proportion of vaccinated people will be tested very regularly to ensure its working and also have antibody levels tested.

This RNS helps to alleviate concerns we are a one trick covid 19 pony. We are a innovative, research led, forward thinking, proactive diagnostics company.

Thanks for the reply. Apologies for my scepticism and you are quite right. It’s just hard to sift through the BS on LsE most of the time.

He can put out an RNS to clarify his guidance at any point. If it is not as people are interpreting he has an obligation to do that.

You spoke to the ceo? I will need convincing. But if so tell him to call me and I will help him to understand what’s going on. He gave a great update in late September. His COO sold over £200k of stock in October then issued a profit warning a month later which suggests that revenues next year will be half what people thought they would be for this year. Hie told us his margins are being crushed and as such ebitda will probably be lower than pre covid.

I’m long and wrong and underwater. this is a trust issue given the coo sale and the completely inability to explain in theRNS how they managed to blow the business up during October and November. No one has a clue what to expect for 2021 and during uncertainty.... you sell.

80m contract up date!!?? Literally lol. I’m long but that is absolute nonsense. You do know the diff between contract and a pipeline of biz, right?! Pls tell me you do.

If you are going to ramp at least make it so you don’t look a financially illiterate tool in the process. There can be no news on an £80m contract as it doesn’t exist.

8.3 is a disclosure form. To show takeover panel who owns material interests.

They need pcr as most kids have little to no symptoms. Testing them with LFT would be as useful as a turd flavoured lollipop. It HAS to be PCR. It HAS to be mobile on site. It HAS to be provided by a company with reporting lines back into government sources via centrally managed labs.

And I quote....

On-site COVID-19 testing using Novacyt’s rapid PCR q16 and q32 platforms. For customers needing results quickly, with the ability to run laboratory testing on-site, Novacyt can provide its portable q16 and q32 instruments for use alongside the Company’s PCR tests, designed to deliver an accurate result within an hour. Training is also provided.

Fully managed on-site COVID-19 PCR testing. VersaLabTM can deploy complete testing and processing capacity on-site to meet a customer’s needs, which includes the supply of Novacyt’s PCR tests, trained personnel to manage sample collection and an operational mobile laboratory.

To my Knowledge no one else can do this and still tie back to a centrally managed lab testing and reporting service that already feeds government data.

At 70p...

Mkt cap 39m. Net debt 2m including 11.6m cash.
EV 41m
2020 ebitda “at last” 15m = 2.7x EV / EBITDA
What’s your worst case or even base case 2021 ebitda? Let’s assume they convert nothing from the pipeline. Let’s assume that the remaining 14 % non PS keeps being squashed. As such lets assume the annualised run rate revenue is still under pressure and revs bottom out at 30m. That has to be bottom as only 14 per cent remains non PS and PS is contracted. Let’s assume ebitda margins of 17 per cent versus 38 percent in H1 2020 and implied 15 percent H2 20. This gives 5m ebitda. Assume they burn some cash on capex with zero payback from new contract wins - unlikely. So assume at current share price, with net debt at 4m then EV at 43m.

In this scenario ev ebitda is still only 8.5x. The share price is pricing in all the downside to current operations, no new contract wins or pipeline conversion. It even excludes the private bank trial possibly going through after proof of concept. It is pricing in a serious solvency risk for 2020 which in any scenario i model I can’t see how they could possibly burn through 11m of cash.

IMO, this is a penny stock. Technicals rule over fundamentals. But....mean reversion says fundamentals will eventually come through. If you want to day trade that’s cool but if you can invest and allocate capital to a trade...you are meant to be buying this at 70p, putting in a draw filed under “stocks that may double by this time next year” and ignore it for the next 6 months.

I’m sure if the Eg group brothers were not stuffed full of Asda they would be taking a look. Which PE group own MFG? May also wake them up. This sector is PE bread and butter given its leverage Le and consolidating - lever it up, build it up, lever it up some more, build it up some more. Can create big equity IRRs by pushing the balance sheet which public markets don’t seem to like.

We’re there some suspicious transactions? No doubt will be investigated. I’m in at 3 quid so would accept the offer but the fact the founder is staying in tells you all you need to know. It’s a bargain price. More chance of a competing bid than this falling apart. Check out the recent transaction multiples in the sector. Joke for the supposedly independent board that examined the price to say it’s good value. It isn’t and is below the mkt and they know it.

Blackstone and B&J. If you could take illiquidity this was an absolute no brainier but people just could see the wood for the trees. PE will help the CEO realise value here and for the record it’s worth we’ll more than euro 5.75 a share and when they flip in in a few years they will make 2x that. A nice little Xmas present still for holders.

NCYT next.

Told ya. Booooo ya.

If you are asking that you dont put much value on your own research that you just spent two days doing then.

In a market the price goes down if there are more sellers than buyers. After such a huge move do you think it’s a surprise you get some profit takers.

Also, given the sheer quantity of amateur idiot tourist s h I t the bed type retail investors in this stock it’s an easy one for the MM to push lower which bro ha out silly comments on chat boards and sellers.

ETFs don’t hedge. They track.

Why is an etf involved exciting? They are passive and just track a benchmark or sector. They won’t even know what ncyt do but have to buy it for an aim tracker etf. Most ETFs are managed by computers and algos and give broad exposures not micro company specific investments.

Agree frac. Valuation assumes they burn through all cash by increasing costs and headcount and have not a penny of additional revenue to show for it. Tbh I am well underwater and would have sold if SP was 1.10-20. But a 7 handle gives me an option to dig myself out of a decent sized hole. I’m absolutely raging at the insider share sale and that lack of trust in management is holding me back at moment.