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Vascular,
yes, I was reading the June 2020 RNS (cos that's the crazy lockdown rock'n'roll lifestyle I like to lead) which mentioned Omegas involvement with the African Society for Laboratory Medicine in February 2020.
At the time it was estimated that global demand for CD4 tests in 2023 would be 10 million tests per annum and then we were waiting for news on inclusion in the national HIV algorithm in Nigeria (which I think has now happened?)
£2.7m from the rights issue was to develop a test for Cryptococcal meningitis and a TB-LAM test to diagnose T.B. in people living with HIV.
I think some people are fixated with daily SP movements and a perceived reliance on Omegas involvement with Covid tests, but the finnCap note values the non Covid part of the business at a minimum of £135m.
DM83
yes even at 50p profit per test and full capacity (which I think can reasonably be expected) for months rather than years the company is undervalued at its current share price according to the finnCap note.
I agree, we need order confirmation and detail but I don't think the share price has got any Covid test profits realistically factored into it.
I expect the first orders to be disappointing if we expect to have a years supply ordered in one go but even if it's an order for, say, 4 months supply (32m tests) of a test which gives 50p profit (very pessimistic) it should have a positive effect on the company evaluation. FinnCap estimate c.£150-200m of revenues from the least profitable test only being cassetted and pouched, not packaged.
I expect that there's a fair chance that packaging equipment has been loaned to the company so that when whichever tests are produced under a government order they are not packaged in commercial livery and packaging is uniform across all producers.
Again, I know a lot less about this than some on here.
Good Luck!
DM83,
The FinnCap valuation goes as follows:
"The existing Food Intolerance business......could command a valuation of c.£60m (15xEV/EBITDA, given 40%+ EBITDA margin)"
"Chinese NMPA approval for the Food Detective self-test in November 2020 is expected to drive long-term revenues..... this could be valued at £40-80m, with a value today of £30-60m"
"VISITECT CD4 is potentially capable of generating substantial revenues.....We believe that this could be valued at £55-85m, a value today of £45-70m."
So without any mention of Covid they value the company somewhere between (£60m+£30m+£45m) or £135m (75p per share) and (£60m +£80m+£85m) or £225m (£1.25 per share)
That's what finnCap value this company at without any Covid sales. 75p-£1.25 per share.
Good Luck!
Yes, it's difficult to know how much of the drop is due to Covid and I agree, there's possibly an element of it being a convenient excuse. I don't think ELISA testing is obsolete quite yet though, but I'm aware there a re a lot of people on here who are far better informed than me (and far more sick of discussing it ;-))
Computer909,
"...after investing £1.1M on this stream, and some people ask why we question the activity over the last 9 months"
If I could invest £1.1m in a revenue stream that gave me £0.5m every year and it only took me 9 months, I (no disrespect) wouldn't be wasting my time on a LSE BB on a cold Saturday morning and I don't expect you would be either.
Twatcher,
I don't agree. The FinnCap valuation goes as follows:
"The existing Food Intolerance business......could command a valuation of c.£60m (15xEV/EBITDA, given 40%+ EBITDA margin)"
"Chinese NMPA approval for the Food Detective self-test in November 2020 is expected to drive long-term revenues..... this could be valued at £40-80m, with a value today of £30-60m"
"VISITECT CD4 is potentially capable of generating substantial revenues.....We believe that this could be valued at £55-85m, a value today of £45-70m."
So without any mention of Covid they value the company somewhere between (£60m+£30m+£45m) or £135m (75p per share) and (£60m +£80m+£85m) or £225m (£1.25 per share)
That's what finnCap value this company at without any Covid sales. 75p-£1.25 per share.
The valuation for what you say, "...full capacity next year, with most of that capacity filled with UK antigen testing." is probably a bit more don't you think?
Good Luck!
Computer909
If you read the FinnCap Company note it's not "banging on about capacity" and it actually does "report on actual production or sales".
..."other (ELISA and labs-based) sales to have fallen 45% to c.£0.5m" for example.
I share your frustration at not having news about rapid tests which will enable us to get back to a more normal life but I'm sure that they are on their way from domestic manufacturers and in great quantities. We've been told at work this week that the intention is to test everyone twice a week for the foreseeable future. I work in a fairly large organisation. which at those rates would use up much more than 10% of Omegas production in itself.
Good Luck!
Benyon, hello,
"There we go. The supply of 200m is over 4 months for urgent supply. At 2m a week we’d be circa 36/40m tests ."
Sorry if I've missed something important (it's entirely possible) but where does the figure of 200m over 4 months come from? Has there been an order announced?
Hello again Computer909.
I think that there will always be some degree of speculation in this share, perhaps though, not as much as at present.
That will depend on orders which seem to be quite close to being finalised. I'd expect to hear about a Govt. order long before the end of April.
It looks to me that the FinnCap note values all non covid related business at a minimum of about 75p per share with the current potential to increase by up to 100% (Existing food intolerance, 2.5-3.8m CD4 tests per year and 0.5-1m Food Detective tests, both increasing into 2022).
I expect a contract announcement to affect the price, increasing the market cap accordingly. At the current SP it doesn't look to me that any expectation of a significant contract is factored in, however , I also expect that the share price will be subject to fairly large fluctuations as the information is analysed and manipulated, so I don't expect an accurate rerate to necessarily happen immediately.
Turbulent but interesting few months ahead!
Good Luck!
"Omega expects to be able to produce c.2m lateral flow tests per week by 30 April, implying c.100m tests per annum. This capacity theoretically could generate c.£150-200m of revenues, assuming a price per test similar to that which Omega receives from the UK-RTC for producing (cassetting and pouching) its AbC-19 COVID-19 Rapid test. Arguably, the revenue per test could be higher, depending on whether Omega does both the primary manufacture and packaging of the tests. We are not suggesting that the government will utilise Omega’s full capacity as there are likely to be other contract manufacturers, but given that it has already spent c.£1.5bn to buy lateral flow tests and that it has publicly referred to the need for c.2m test per day (ie 700m tests per annum), the opportunity remains very substantial"
So the c.£150m-£200m revenue is just based on cassetting and pouching ABC-19 which was expected to be sold to govt. for £1.50 per test. Is any of the loaned equipment for packaging does anyone know?
Beachball,
I think as we were told in the presentation on 5th October last year that production would be ramping up to 2m tests per week in April, the fact that the equipment is being loaned is not price sensitive.
I'm sure that loaned equipment was not publicly discussed until this year.
As far as I understand it and according to the most recent FinnCap note, capacity will be 2m tests in total per week by the end of April.
Good Luck!
Vascular, yes, you have correctly identified that I haven't really factored that in, that is pessimistic of me. That sort of money pays for a lot of R&D /expansion/acquisition. A divi in the next year would be great but I don't expect one, I'd rather they use the cash to sustainably expand and diversify.
Aberdeenman, thanks, I think that's a realistic figure if everything goes to plan and there's no new unforeseen negative developments, we seem to have been somewhat beset by them in the last year. By May June time if it is all going as expected with c.2m tests being produced and orders to fill with no end in testing requirement in sight I'll probably reassess much closer to your prediction. Exciting times!
Vascular, good to hear from you, I think you're right, in the next year I think it will reach new highs but that emerging competitors will adversely affect it. Pessimistically I think that the news flow will be good for the "end of Covid/ opening up " and therefore bad for the requirement for testing globally- demand will potentially be curtailed by over optimism. I think I've become pessimistic over the last 9 months but not because of the fundamentals, more because of the behaviour of the market and the media. I'm fairly sure a TR1 would cause an immediate rise too and half expect (half only due to pessimism) to see one quite soon, I'm amazed that there's not been more interest from institutional investors or larger companies (microcap stock possibly the cause)
Jdam, yes, pessimistically I don't expect it to be below £1.00 in a years time, I'd like it to be over £2 but I'm pessimistically assuming that the COVID test market has been taken from us by then and our production of CD4, food detective, lab services and allergens is increased along with FinnCap expectations using the increased capacity. I've not really done any serious calculations yet. What do you think?
Vascular, having been in this share long enough to know that I know nothing about it's valuation, I would expect it to be at least £1 this time next year, provided no unforeseen catastrophe's occur. I'm not prepared to speculate more than that even though I'd like it to be over £2 by that time. I'm still here because i don't think it will drop permanently from this level. How about you, what do you think?
Highlights for me:
"Given the operational gearing and additional production staff costs taken on before the additional lateral
flow production capacity comes on stream, an EBITDA loss of £2.1-2.3m (FC £1.6m) is expected. Year-end cash is expected to be in the £5.5-6.0m range (FC £7.3m)."
"We estimate that the net debt at year-end should be c.£4.8m, which compares with our previous forecast of £7.1m."
So absolutely no evidence of a requirement to raise cash for running costs or expansion to c.2m/wk. and plenty there for further expansion if required before COVID revenues arrive.
"This supply contract should lead to significant volumes of antigen tests being delivered in FY 2022 and consequently have a material impact on the business"
It then goes on to say :
"c.£150-200m of annual revenues, assuming a price per test similar to that which Omega receives from the UK-RTC for its
AbC-19 COVID-19 Rapid test"
So worst case scenario now is that the sole Covid test production (£1.50 revenue/test) will provide c.£150-£200m. That means that they've calculated the LEAST profitable tests with the LEAST expected demand/output expected is c.100m-1.33m tests. That's over 1 years production at full capacity. They haven't factored a single Antigen test (over 3 times as profitable) into their calculations for expected revenues or projected past April of next year but they expect max output until at least April next year.
The report values the current business at £135m at it's most pessimistic without any value added for the COVID production.
That's 75p per share value before factoring in COVID Tests which they expect will add £150m-£200m revenue as a minimum.
Good Luck all!
GreggsStottie, I don't agree with your numbers.
"Turnover 2m x £1.50 x 52= £156m"
If you're saying that we'll produce 2m tests per week (don't see why we won't) for a year then say 80% are Mologic Antigen, 10% are UK RTC Antibody and 10% are existing CD$/Allergy/ Food Detective.
80% of 2m/ week = 1.6m Mologic Antigen tests at a profit of £2.50 per test = £4m profit per week say 50 weeks (they like Christmas don't they) that's £200m profit on the Antigen test alone.
It looks lvery much like 2M tests per week will be now be being ordered unless the FT, Walbrook and Omega have all published mistakenly. This will continue indefinitely, we just don't know how long for but I'm not prepared to bet against this level of production reducing before 2022 and would realistically expect it to carry on past next April.
For the remainder of the capacity say 10% UK RTC or 200k/wk @ 75p profit each = £600k profit per month then 10% split between CD4 tests (100k/wk @ £2.20 profit per test= £220k profit per month) and Food detective tests (100k/wk @ £8 profit per test = £2.4m profit per month)
This gives another roughly £35m profit annually.
I'm no expert on valuations and wouldn't know staff costs but by your calculations substituting even half of £235m profit doubles your share price predictions or supports them at half of your multiplier.
I absolutely agree, it will be great to see how this unfolds. For anyone who wants to know where I get the figures for profit per test, they're all freely available on the FinnCap note of November 30th 2020 and mentioned in the presentation of the same date available on the Omega Diagnostics Website.
Please feel free to correct me if I'm wrong and Good Luck, we seem to have a bit more of that now than we have had recently
Nskno1, Jam, Scottish Raspberry, Galloons. What's your guess?
Computer909, I'm glad that they are rolling out tests which have already been procured and would encourage them to do so. I would be reluctant to agree to taxpayers money being spent on more of the Innova test when more accurate tests are now available. No, I'm not suggesting that nothing is done until ODX have a test. What do you think?
Alright Vinegar tits, I haven't addressed trolls before but since you're a persistent weeping sore on this board I'll attempt to communicate with you. You ask if we are all super confident. I don't know if anyone else is, it's none of my business. My time is spent doing several other more worthwhile things than Emailing MPs, however, since the devolved assembly of my country has begun to roll out Innova tests i expect them to account for their actions, having constantly criticised this Government for the handling of the pandemic and having prided itself on some degree of human rights observance.
Why do I feel the need to Email my MP about Omega? Because for a political party that prides itself on the argument that Scotland could be an internationally recognised country independent of Westminster rule they seem to have happily rolled over and accepted Westminster's procurement decisions without question, and certainly without offering any alternatives, alternatives which exist in their own country and which they presumably expect will contribute to the tax burden of a future independent Scotland.
What have you done BlubD to further the exposure or success of your investment? Annoyed a few conscientious investors who take the time to share useful information on a public forum?. That's all. You are just an annoyance. You've had your thread"Gotta ask" now and a few have posted on it and they've had a few recommends. How proud are you? How proud are you of being the poor sad hurt child that comes on here looking for reactions to justify your constant attention seeking under the guise of just asking questions? How lucky you are to be able to be here conducting yourself in such a manner and how sorry I am to the others on this board whom you have tormented and spoiled this forum for. You are a mystery to me and I am sure a great many others on this board feel the same way, what can you possibly see in your actions that has any benefit to anyone other than causing annoyance? Please do not waste your time answering any of the questions I have asked you in your halting unchecked text speak I will find it just as boring as I find your existence. You are Grim.
If you're an Ochil and Perthshire (Clackmannanin in old money) constituent it might pay off to ask John if he's aware of Omega and what help his Government expect to offer them during this crisis. I imagine there's some prime photo opportunities to be had on roll out.