Kromek Share Discussion Threads

[trotterstrading] 10/1/2017 16:36

Topped up sub 20p happy with that. Patience all that is needed

[quepassa] 07/1/2017 03:45

Beware of falling in love with a share.

It may not love you back.

QP

[trotterstrading] 06/1/2017 23:44

Ali, I agree KMK has not been a great investment till now but there is a bottom. The double bounce off the 20p support leads me to think we have now seen it.The share price has been dragged down on thin volume and AMP selling shares to finance their own ongoing legal battle. Conversely KMK sales value, client and product mix has been increasing YoY, with a very healthy $30m+ order book giving good visibility through to 2019. The D3S continues to impress, with the largest test to date completed successfully in Washington at the end of 2016. KMK and DARPA have confirmed their intention to roll-out the D3S to cover several US cities during 2017, and countywide through 2018 and beyond. Let's be clear, if the roll-outs go ahead as planned (Trumps presidency makes it more likely than ever IMO) KMK are line for 00's $m in revenuesAnother exciting development is the new $1.6m ruggedised radiation detector contract with the US DTRA agency, which has the potential to become DARPA mkII.All of this without even talking about KMK progress with Spect or BMD.I really can't think of another AIM company with world leading technology, growing sales, rock solid IP, tier1 clients and such a broad product mix showing growth in all areas? All of this and a Mcap of less than £33m.. it's crazy cheap IMHOIm building a large position over coming weeks because I believe we are close to the tipping point, the next decent size contract will be the trigger for a significant share price re-rating. Load up now while the share price is low and it's quiet. When the herd arrives it's going to go crazy, quickly IMO.

[ali47fish] 06/1/2017 19:51

how can you beadding on no news - i am 60 pc down and the share price is for ever falling!

[shrewdmole] 06/1/2017 19:25

From a technical perspective that intraday drop to a double bottom at 20p was a huge buy signal so I added a couple of times today.

Delayed 80k buy showing too.

Sm

[trotterstrading] 06/1/2017 16:10

Added more today on the drop. Crazy cheap for world class disruptive tech. When the market finally wakes up to KMK the re-rate will be dramatic imo

[chrisdgb] 06/1/2017 08:08

Would surely be an obvious takeover for Smiths Group..........no brainer!?

[trotterstrading] 04/1/2017 17:30

Added a few more on the dip. Patience will be richly rewarded imo.

[chrisdgb] 29/12/2016 09:01

A classic stock to appear in some New Year buy lists..........

[culford] 22/12/2016 12:13

QP,
Its very quiet so fun to debate a stock. To respond on some of your points:

KMK is a spin out from Durham University that only started selling products a few years ago. Sales trebled in three years to April 2016. It has gone from start up to a significant player in three markets which is some achievement. The progression is never a straight line but their portion of revenues that is product sales rather than R&D undertaken for customers is steadily rising which is also a good indicator.

The DARPA system uses all those suppliers as it is a software and hardware monitoring system. KMK are sole provider of the handheld devices.

KMK have commercial relationships with US and UK governments and many of the leading medical OEMs. Its a fabulous achievement from a start up 10 years ago and its revenue growth in the past few years has been very high. Its partly because expectations have been so high that the market has been disappointed - however - it will get there as the products are world leading in huge areas, particularly nuclear detection and medical screening.

I agree that market will take some convincing but have bought some more today and am happy to be able to accumulate when there is so much evidence of the upside to come.

[quepassa] 22/12/2016 11:37

Culford,

Thank you for your response and I appreciate your points and detailed argument.

It's great that occasionally on advfn you can get proper debate without the normal rancour.

I still see big question marks over orders. And selling a line of handhelds doesn't for me translate into "world leading in huge global markets; nuclear, medical and security. Global medical OEMs are also using it increasingly."

The way you describe it makes Kromek sound like a truly global technology leader with $$billions in annual sales.

Let's please be realistic, it had a t/o of a microscopic £3.8m for six months. Your description of KMK and the cold reality of their sales figures don't sit well alongside one another.

I also note from your earlier link that DARPA were evaluating equipment not just from Kromek but also from

" Invincea Labs with 3Pillar Global, Eucleo, and Berkeley Applied Analytics; Kromek Group plc; TRX Systems Inc; Physical Sciences Inc. with Lawrence Berkeley National Laboratory; and Lawrence Livermore National Laboratory ".

So it would be fair to say that there is significant competition and that Kromek is not the only company capable of designing radiation detection equipment.


In my opinion, I think think there is still a long way to go before Kromek convinces that it can grow. The glossy story says one thing, the hard reality of actual sales and ongoing losses tell a different tale.


ALL IMO. DYOR.
QP

[culford] 22/12/2016 11:04

Bapodra,
Valuation of loss making companies is difficult. You suggest £20m maximum and I would be interested in why? Is that a suitable discount to the net assets of £24m? Or is it 2.5x historic sales?

The market is always right on any day and my interest is whether its worth buying or selling on a longer term view. My thought process is as follows. With KMK, there is enough evidence to show that sales will grow substantially, probably to >$100m per annum in due course. A company trades at a multiple of sales according to its margin and growth rate. A mature company with 10% margin will trade at c1x sales. KMK is fast growing and has high margins and I believe should trade on c5x sales - this would be 5x £9m this year and 5x £12m next year taking the consensus forecasts. That would be market cap of £45m rising to £60m or 29p share price rising to 38p. At any stage in this next 18 months it could get an order worth >£12m per annum, which would at least double that 38p to 76p. Thus in my view, buying KMK is at a 45% discount to next year's fundamental value on basis of no big contracts coming in. If and when they come in, I will at least triple my money.

[culford] 22/12/2016 10:39

QP,
Only firm orders are those announced of $30m, spread over up to 5 years as Bapodra notes. Darpa issued a sole supplier notice a year ago and we know that KMK are only supplier capable of producing the D3S portable nuclear detectors for $400 each, which is why it got 100% of that order. We know that 8 tests by Darpa went well in 2016 and that larger scale tests are scheduled for 2017 before roll out in 2018. We know that this roll out will be worth c$150m for KMK if it happens. We know military orders are following this. The scale of the business and thus the valuation could be at a much higher level in two years. However, The stock market is a weighing machine of opinion and in the small cap space there is very little credence given to hope for the future. For Warren Buffet that would be an opportunity to keep buying. KMK has technology that is world leading in that the the US, UK and Japanese governments have all used it. It is world leading in huge global markets; nuclear, medical and security. Global medical OEMs are also using it increasingly. The treat of dirty bombs is not reducing and I would be very surprised if their D3S technology was not be sold around the world in 3 years time.

[quepassa] 22/12/2016 10:20

Hi Culford,

I can open the link now and read it very carefully. Thanks

I note that the link about the October equipment evaluation test related not just to Kromek but to multiple suppliers.

Do you have a link to any third party sources referencing firm future orders for Kromek please - not just potential sales.

Many thanks.

ALL IMO. DYOR.
QP

[trotterstrading] 22/12/2016 10:10

Even if they need further finance, which is questionable, with their orderbook and sales pipeline it would be very straightforward and on good terms for KMK.

[culford] 22/12/2016 09:56

QP,
You have every reason for caution after their profit warning. They had to bring in a new Chairman, Sir Peter Williams who has a very good reputation spanning science and business. He said said this in the last annual report:

"Visibility of Revenues
In 2014 our full year revenues were £5.9m, so this year’s reported gure of £8.3m represents a growth of over 40% in two years. Over the past three years, dealing with government agencies and major international OEMs had made it dif cult to predict the exact timing and magnitude of some contracts. However, this year we are pleased that our revenues were in line with market expectations. Recent contract wins and a strong pipeline provide improved visibility going forward, with signi cant order cover already in hand for projected revenues in 2016/2017."

My take on it all is that the management were guilty of over optimism on the likely timing of revenues but that the underlying progress has been very good indeed. The shares can be driven down as there is no short term catalyst, but if you can take a two year view they should perform v well. The key downside risk remains the balance sheet and whether the company will need further finance.

[quepassa] 22/12/2016 09:27

Hi Culford,
Our posts crossed.

Unfortunately your link won't open.

I am wary about announcements as the performance of the $159million 4/4/14 RNS contract remains wholly unclear.

ALL IMO. DYOR.
QP

[quepassa] 22/12/2016 09:22

I am not challenging their technology. You misunderstand.

I am just wondering to myself why, with such technology, their sales are just £3.8million for the last half year.

Can anyone kindly update on the status and sales of Kromek security scanners in airports please?

As I said before, I keep many small companies on my watch-list for potential investment.

Thanks and Merry Christmas.

ALL IMO. DYOR.
QP

[culford] 22/12/2016 09:19

QP
KMK has disappointed the markets and its share price is languishing accordingly. In year to April 13 its revenues were £2.7m and in year to April 16 its revenues were £8.3m - a growth of threefold over three years. In the last year, when it attracted Sir Peter Williams to become its Chairman, its orders received were $30m, or c£24m, but these will be received over multiple years. In the current year, sales will be marginally higher at c£9m.

In the past year it has become sole supplier to Darpa, the US agency to which it has supplied >$6m of sales. Darpa has said that it will increase the size of its nuclear detection tests (which need KMK's devices) in 2017 before rolling this out to c15 US cities in 2018. See last news:
KMK will receive orders of c$10m for each city so that is orders of c$150m to be received from end of 2017 for 2018 and beyond. In October it received orders for a military solution for the US and UK military, which will be of similar scale and slightly later timing.

Thus whilst i share your disappointment on the share performance, you cannot say that there is a diminutive growth in sales and the potential growth can be checked from third party sources.

[trotterstrading] 22/12/2016 08:55

QP, not sure why you hang around this BB? How on earth can you challenge KMK's tech when arguably , the worlds most advanced defence technology team - DARPA - have made KMK SOLE source provider? Perhaps you know more they do about radiation detention?

[quepassa] 22/12/2016 08:09

Loss-making companies are not always as sought after as all that.

Certainly their " world leading tech" doesn't yet appear to have gained much traction judging by the diminutive growth in their sales.

Good luck to all but when you cut it down to the cold figures, after two and a half years since flotation, the figures tell their own story.

ALL IMO. DYOR.
QP

[escapetohome] 22/12/2016 08:00

Some one surely will snap them up if the price keeps going down?

World leading tech with sales to follow.

Yummie.

[quepassa] 22/12/2016 06:15

Personally, I do not think this has huge potential.

When you say "the big contracts" - could you kindly give precise amounts and exact dates please. Thanks.

ALL IMO. DYOR.
QP

[culford] 21/12/2016 21:44

Isa

This one has huge potential but may be 12 months from take off. The big contracts are scheduled for back end of 2017.