Batm Advanced Communicat... Share Discussion Threads

[picsous] 31/8/2021 12:48

This could be why:
"In addition to this, the current valuation of 29 times forward earnings does not look especially cheap"

[rawdeal1] 31/8/2021 11:55

Clearly someone is off-loading and someone is picking up.

[doccash] 31/8/2021 11:15

Feels a bit rangebound 80p to £1 but next contract news should break to the upside. Too much positive news including results to hold back in the medium term IMHO. The company could do with arranging publicity on the respiratory near testing kits selling this winter which could be very positive

[paulisi] 31/8/2021 09:43

Marked up at the start, but straight back down to Friday's Close.

[fse] 30/8/2021 21:24

This was highlighted on BATM twitter feed. This appears to me to be another newer developing business tie up on top of what we already knew ? Any thoughts ?

Carrier Ethernet solutions and services

There was a slight increase in revenue from carrier ethernet solutions and services as the Group began to experience a return to normal business practices in the EMEA region following the slowdown as a result of COVID-19. In addition, the Group was selected as the preferred supplier by a tier 1 telecommunications operator in APAC to provide demarcation units for connecting its business and enterprise customers, which contributed to revenue during the period and with a larger order to be delivered in the second half.

[rawdeal1] 29/8/2021 10:06

Very Nice..... Should give a lift on Tuesday.

[james dean] 29/8/2021 08:37

TSMan - Thanks - great item.

[the shuffle man] 29/8/2021 07:58

Tipped in mail on SundayMIDAS SHARE TIPS: Tech firm dubbed Batman gets lift fighting Covid https://mol.im/a/9935519

[fse] 27/8/2021 17:52

Not much mention of this initiative. The ventilator contract proved the depth of engineering expertise along with flexibility and the ability to get the job done.

SP is undemanding and FWIW Range should be in the 120p to 160p range. Ie. I agree with ST sum of the parts

[iamnotanumber6] 27/8/2021 13:57

ST's tip is in today's IC, probably accounts for the spike up.

[doccash] 27/8/2021 13:33

The results had been essentially predicted so the positive results were perhaps priced in to newish investors. A new contract RNS on top could restart significant buys and spike up

[paulisi] 27/8/2021 13:29

Decent volumes and a nice Jump today.

[doccash] 27/8/2021 07:37

Thanks Dibbs but IMHO not useful review "overall it's much to complicated, and difficult for me to analyse," Yet still long ramble about it's an Israeli company mixed success - how relevent is that, and nothing about the NFV business where the potential for very high margin revenue is in the infancy with massive potential

[dibbs] 26/8/2021 23:11

Paul Scott wrote a little about BVC on Stockopedia the other day which I don't think has been posted here.

Pretty positive, even though it's not really his type of company or sector.

What I found interesting was that no comments from subscribers were regarding BVC. For me showing how little following this company currently has in the PI sphere.

Commentary below....

Batm Advanced Communications (LON:BVC)
88.6p (unchanged at 13:41) - mkt cap £387m

This is an Israel-based company with telecoms and medical divisions, which has been listed on the main UK market for about 25 years - impressive staying power. Apart from a brief flurry between 2009-2011, there have not been any divis.

I wouldn’t normally take things any further, as experience has taught me that it’s generally best to avoid overseas small caps that list in the UK. However, the 25 year history of its London listing, and really impressive headline results numbers yesterday have caught my eye.

Interim Results

Revenue of $71.4m in H1 - a meaningful amount, but down 7.7% on H1 LY

Gross margin notably higher, at 36.0% vs 29.7% H1 LY - although still quite low in absolute terms

Humongous increase in adj operating profit from $2.8m to $20.5m - there are clearly some one-offs in that.

Bio-medical division is the main part of the business, with H1 revenues of $55.1m, and an adj operating profit of $9.4m - an exceptional contract for ventilators is mentioned, so I don’t know how sustainable the profits are?

Diagnostic test kits for covid-19 are also mentioned, so that could again be a variable factor.

Disposal of NGSoft (non-core business) generated a one-off profit of $13.0m, so that makes up about two thirds of the reported operating profit.

Outlook/Guidance - more detail is given, but this is the key bit -

As a result, the Group expects revenue for full year 2021 to be approximately 5% ahead of market expectations. With the greater than expected ongoing demand for the Group's COVID-19 diagnostic solutions, which are higher margin products, combined with the capital gain from the sale of NGSoft recognised during H1 2021, the Group anticipates full year EBITDA to be more than 20% ahead of market expectations, reflecting growth in EBITDA of over 40% year-on-year.
Balance sheet - looks very strong on paper, including $62.2m in cash. Receivables of $38.9m, and inventories of $33.8m both look rather high to me.

Dividends - given the strong balance sheet, and cash pile, why isn’t it paying divis? This cropped up in the webinar which I listened into yesterday. Previously the company had indicated its intention to distribute surplus cash to shareholders, which was reiterated in the webinar. When asked about timing, management replied that it needs to be approved at the AGM in Oct 2021, at which time they will also announce the amount of the dividend.

It will be interesting to see how much cash is paid out in due course.

My opinion - neutral. I don’t normally invest in overseas small caps that list in the UK. Too many of them have gone wrong in the past.

That said, Israeli companies listed in the UK have a mixed performance. I did well on a thing called Pilat Media a few years ago, which was taken over at about 3x the previous price. Then Plus500 (LON:PLUS) has been a rollercoaster, and ran into regulatory problems, but survived and prospered. Tremor International (LON:TRMR) has also had a very bumpy journey but seems to be thriving now. Xlmedia (LON:XLM) also went all over the place. So it’s a strange area. Israeli companies seem very good at tech, and innovation, but you don’t always necessarily get what you think you’re buying! Mind you, we can say that about lots of other companies from other countries too, including the UK!

Management did a good presentation on the webinar yesterday, and there certainly seem to be some interesting parts within BATM. It struck me as being mainly an innovation company, which seems to have done well with some covid-related products. Mgt also talked about a new lollipop they are developing which is lemon flavoured, and makes covid testing much more pleasant, e.g. for children, which sounds like a good idea.

Overall, it’s much too complicated, and difficult for me to analyse, so I’ll leave it there. I just review the numbers, and with one-off, exceptional contracts & profit on disposal, trying to work out future profits is too speculative for me to form any view on the shares. Good luck to holders!

[paulisi] 24/8/2021 20:57

I think the NFV business is being significantly undervalued in the share price.It might take 2-3 years to materialise, but in the webinar, he said start with thousands of subscribers and then ten's of thousand building up to hundreds of thousands.I've no idea how much a subscription is, but if I was to guess at $200 per year and 100,000 subscribers at 85% margin, you are talking significant revenue and profit. That's even before the add on packages such as cyber are sold.

[fse] 24/8/2021 19:26

I don't always agree with ST thats for sure but on BATM I feel he has as remarked done his homework and gets the point on this company. Its a fair assessment IMO.

Investors may feel that whilst the Medical division has gone from strength to strength Telco systems have been lagging behind.
ST picked up on the rollout of virtual network solution and bringing computing to the edge and mentioned that there are a lot of late stage POC's going on.

Heres an article on the subject by someone close to the scene from 2020 that is well worth looking at again.



Point of all of this is that we are well past the "will it be a new standard stage" Telecom operators will have to adopt these standards and this new initiative is becoming the new normal.
IOT and SOHO will drive this forwards.

As far as I can gauge Telco are right where they want to be and very much inline with where this article figured the market would be at this point in time.
Initial sales are as predicted a trickle but thats misleading as the work behind the scenes is in place and the game begins.

Covid restrictions notwithstanding I think we will see a lot of action here by the end of the year.
The Edgility OS suite as I remarked earlier looks like a well thought out tidy and operable package.
Telco systems is not even at this stage a drain on BATM, they are holding their own.

[paleje] 24/8/2021 09:05

Fair point Deeker, ST does tend to be a bit selective when he's trumpet blowing but nonetheless he's above the average tipster and provides good research so always worth a look imo.

[deeker] 24/8/2021 08:54

BATM’s share price is up from the 80p level when I suggested buying ahead of the results, taking the total gain to 402 per cent since I included the shares in my 2017 Bargain Shares portfolio. I maintain my 170p sum-of-the-parts valuation (‘Technology winners for the new normal’, 18 January 2021). Strong buy.

Good result of 402% since 2017 but always likes to tell you his tips are up since he suggested a buy but never tells you of the times he suggested buying and they are substantially lower.
And I am an IC subscriber lol

[james dean] 24/8/2021 08:50

reeltime

Thanks.
.

[reeltime] 24/8/2021 08:16

Bargain shares: On the earnings upgrade
Earnings momentum is the key driver of share prices which is why our small-cap stock picking expert targets companies that are likely to overdeliver. Three companies on his active watchlist have done exactly that.
August 23, 2021
By Simon Thompson

Earnings momentum is the key driver of share prices which is why I am always on the look-out for companies that are likely to overdeliver. BATM Advanced Communications (BVC:91p), a provider of medical laboratory systems, diagnostic kits, cyber security and network solutions, has done just that. Buoyed by high single-digit underlying revenue growth on sharply higher profit margins, the board has upgraded annual cash profit guidance by 20 per cent.

House broker Shore Capital raised full-year cash profit estimates from $23.5m to $28.4m, up from $19.9m in 2020, on revenue of $138m (£101m). On this basis, expect 2021 pre-tax profit to rise by 70 per cent to $23m and deliver earnings per share (EPS) of 3c. Admittedly, a non-core business disposal boosts the profit number, but on a like-for-like basis analysts still upgraded their cash profit estimate by 16 per cent to $15.4m.

Moreover, they pushed through high single-digit cash profit upgrades for 2022 (to $18.1m) and 2023 (to $25.9m). Strip out net cash of $59.6m (10p a share), and BATM is rated on 18 times 2023 cash profit estimates even though analysts expect “further upgrade opportunities in coming reporting periods.” The upgrade cycle has further to run. It’s not the only one either.

BATM’s massive earnings upgrades

Cash profit guidance raised by 20 per cent, implying 40 per cent year-on-year growth, leads to major earnings upgrades.
Strong order book with diagnostic division seeing sustained demand for Covid-19 diagnostic kits.
Completion of proof of concept trials of BATM’s new Edgility product suite set to deliver second half orders.
Roll-out of Edgility by Hong Kong based PCCW.

In the first half, BATM’s gross margin surged from 29.7 per cent to 36 per cent, a reflection of a trebling in higher margin diagnostic revenue (from $6m to $17.8m), as the group continues to benefit from strong global demand for its Covid-19 testing kits and instruments. The product suite has been expanded to include a test that uses self-collected saliva samples and a rapid flow test that can deliver results within 8-15 minutes with 95 per cent efficiency.

BATM has also received CE certification ahead of the forthcoming winter flu season for a new molecular PCR diagnostic test that can identify the specific cause (pathogen) of a respiratory illness, enabling the correct treatment or action to be rapidly implemented. It can detect all prominent respiratory viruses as well as the bacteria that cause the serious pulmonary illnesses that are believed to be a secondary infection of Covid-19, such as pneumonia and Legionnaires' disease. It’s likely to be in high demand in the second half, and beyond. BATM is also anticipating “substantial year-on-year growth” from the rest of diagnostics business, too.

BATM’s edge computing and network function virtualisation product suite, Edgility, is gaining momentum, too. That’s because telecom operators and service providers are now deploying their own virtualised software-based networks to leverage the benefits of 5G through Edge computing and are providing differentiated services to their enterprise customers. BATM’s focus on Edge compute (whereby data processing takes place at the network edge, nearer to the end device, to improve response times and save bandwidth) addresses their needs and is fundamental in enabling Internet of Things (IoT) technologies.

Bearing this in mind, chief executive Dr Zvi Marom expects several successful proof-of-concept trials with potential telecom operators and partners to translate into orders in the second half. Partnerships with albis-elcon, the premier brand of UET United Electronic Technology AG (XETRA: UET), a publicly listed German technology group, and Stem Connect, a network provider which services enterprise and telecom customers in France, South Africa and the UK, significantly increase the group’s market presence.

Importantly, Edgility is compatible for use in public cloud environments (Amazon Web Services and Microsoft Azure). In addition, expects revenue to gain traction from BATM’s licensing strategic partnership agreement with Hong-Kong-based PCCW Global, the Asia-based Tier1 group that is present in more than 160 countries and in 3,000 cities in the Americas and EMEA.

The directors point out that Edgility network revenue produces 85 per cent plus gross margin, and is set to become a multi-million dollar revenue business. Growth from Edgility, ongoing demand for BATM’s diagnostic suite and cyber security contracts (two major government contracts wins worth $14.1m during the summer and a planned move to target large corporations in 2022) explain why analysts forecast strong underlying profit growth in the years ahead.

BATM’s share price is up from the 80p level when I suggested buying ahead of the results, taking the total gain to 402 per cent since I included the shares in my 2017 Bargain Shares portfolio. I maintain my 170p sum-of-the-parts valuation (‘Technology winners for the new normal’, 18 January 2021). Strong buy.

[toptomcat] 23/8/2021 22:20

Absolutely SEV22. Always think it's fair to allow subscribers the chance to digest the full analysis ST provides and react if desired before a cut and paste. However, I know he likes this one a hell of a lot hence the STRONG BUY recommendation.

[sev22] 23/8/2021 21:16

Bargain shares: 'On the earnings upgrade.'

Earnings momentum is the key driver of share prices which is why I am always on the look-out for companies that are likely to overdeliver. BATM Advanced Communications (BVC:91p), a provider of medical laboratory systems, diagnostic kits, cyber security and network solutions, has done just that. Buoyed by high single-digit underlying revenue growth on sharply higher profit margins, the board has upgraded annual cash profit guidance by 20 per cent.

Another positive write up in the IC tonight by Simon Thompson.

Maintaining his 170p sum-of-the-parts valuation from earlier this year.

I won't post the article in full until I have had the chance to top up and other IC subscribers have viewed the article.

[fse] 23/8/2021 18:57

Interesting that Shore Capital also carry the expectation of 40% year on year growth.
They would be in a compromised view as house brokers if they did not believe that was the case
Also interesting to calculate the current PER based on these results and their year end expectations.
When it comes to income from licensing products already developed and paid for it adds virtually pure profit to the bottom line.
BATM has a lot of advanced solutions and products that are now being sold. R&D expenses are a fixed expense whether you sell anything or not.
Medical will benefit significantly from the newly certified products as they move from R&D to actual sales.
Its the same story with Telco albeit they have been more hampered in their role out efforts. Nevertheless licensing revenue is after development virtually all profit.

Added link


should hear more from ST after his earlier comments.

[lsoc85] 23/8/2021 16:07

I was waiting for your analysis FSE and you haven't disappointed.

Believe me, I think the dividend money would be better used for growth as well. But once they plastered it all over the AR, it's been the elephant in the room.

Good that they will be making an announcement at the AGM and that the cash pile keeps growing.

Cheers all for the info provided - hopefully we'll each profit from some sustainable growth over the coming years.