Ekf Diagnostics Share Discussion Threads

[cambridgedon] 14/7/2020 13:00

A PE of 20 for a stock growing this quickly (assuming most of it can be maintained) would seem to be cheap.
CD

[nfs] 14/7/2020 12:51

I simply doubled the adjusted EBITDA for H1, looked at those costs including tax deducted in the last 2 years (6.8,8.4 thus 10 forecast)This gives post tax 8m on 456m shares or 1.76p of EPS this year

[btgman] 14/7/2020 12:46

I cam across this a couple of months ago and have been watching things closely since.

What is very interesting is they turned over £44m in 2019 and in the first half of 2020 £26.3m.

For the second half of the year they already have booked circa £11.2m of sales in relation safe COVID-19 sample collection. I would expect that the second half sales from this alone would equal the first 6 months turnover alone at which point sales for second half wiould be over £40m and a p/e of 10 is quite likely.

I would expect a p/e of 17-20 as being reasonable.

All in my humble opinion
GLA
BTG

[pldazzle] 14/7/2020 12:30

Personally I'd have thought a PE of 20 would be about right: although wan and others may think that's way too low. In the end, I suggest, it's a case of wetting one's thumb and sticking it in the air. Coupled with what view one takes about the longer-term growth prospects for the PrimeStore sample collection device.
But in any case, a PE in isolation is meaningless. First you have to (a) quantify the after-tax earnings, and (b) show that they're at the very least maintainable longer term. Maintainable profits of, say, £10m after tax etc etc (and that's just my arbitrary figure), on a PER of 20, would justify a market cap of c£200m. Add in cash and RENX and you get to £230m, which is not much upside from where we are now.

Nonetheless, a comfortable place to be an investor, with what looks like not much downside and a lot safer than many other stocks either in the UK or internationally.

[cambridgedon] 14/7/2020 11:34

pldazzle.
Thanks. Yes, a good point!
Given today's TU what do you think would be a reasonable forward PE?
CD

[pldazzle] 14/7/2020 11:19

cambridgedon - P/E ratios are based on profits AFTER depreciation, amortisation, interest and tax. EBITDA is BEFORE all these.
In EKF's case depreciation and amortisation is quite high, because they amortise intangible assets such as goodwill. To quote the 2019/20 chairman's statement, "The charge for depreciation of fixed assets and amortisation of intangible assets increased to £4.4m (2018: £4.0m)."

[wan] 14/7/2020 10:16

Dibs....I agree that it obviously cannot last, and it will thus be interesting see what happens when it is eliminated, presumably this may happen long before 6th November (record date for the inaugural dividend).

[dibs61] 14/7/2020 10:08

Hi wan - this stock has been on my watchlist for a loooong time and I have held briefly on a couple of occasions. I bought some yesterday which was good timing. I had an idea a trading update was due. I've added substantially this morning around the 47/48p area. I agree with you that there does seem to be either an overhang or a seller which has, indeed, presented an excellent buying opportunity. That selling/overhang situation cannot continue forever. I am prepared to suggest that we will see a further rerating here in the 2nd half of the year. I can't say how further it may go. That will depend on the amount of further sales they make and the markets confidence in the longevity of this new highly positive circumstances that the company finds itself in. I am very confident though in the future. This is an excellent company.

[wan] 14/7/2020 09:56

I don't comment much on actual share price or buying opportunities etc, preferring others to make up their own mind based on reasonable evidence/research etc. But I do think that there is (and has been for some time) an overhang of stock that's keeping the share price in check and possibly creating opportunity. It's only my perception so I could be wrong, how long it will last I have no idea, but if I am right, then there is possibly further upside over and above that indicated by EKF's continued excellent performance and positive outlook.

Please conduct your own research when making investment decisions, as the originator, or any of the threads contributors, including me, could be either wrong or inaccurate.

[cambridgedon] 14/7/2020 09:53

EBITDA around £20m. Mcap £220 less cash and RENX shares makes PE about 9.5. Is this right?

CD

[mad foetus] 14/7/2020 08:58

Now looks a good time to buy imo

[malcolmmm] 14/7/2020 08:50

Nice start

[imjustdandy] 14/7/2020 07:50

I reckon we will open 52-53p

[imjustdandy] 14/7/2020 07:48

14 million dollar orders just for July , Aug and September. Incredible

[wan] 14/7/2020 07:43

It's an excellent Trading update, but (unfortunately) the high demand is not static, and as highlighted previously, it is increasing!

The excellent performance is based on manufacturing capacity that has only 'recently been doubled' in Texas, with further expansion confirmed in the US and imminent commencement of manufacturing in Germany -

"Given the continued increase in manufacturing demand, the Company has now expanded its PrimeStore MTM manufacturing capacity in the US with an additional production line now established at its Indiana facility, to complement the existing manufacturing site in Boerne, Texas, the capacity of which has been doubled recently. In addition, EKF expects to start manufacturing PrimeStore MTM in Germany by the end of July, in expectation of additional orders across Europe."

In short, I expect this out-performance to be a continuing theme!

[imjustdandy] 14/7/2020 07:39

Cash of £16m net of borrowings and £14m worth of shares in AI medical plc. We are underpinned by realisable assets to the tune of £30m and have trading business thats rocketing. 80p seems like fair value to me .

[pugugly] 14/7/2020 07:27

Champage and Smoked Salmon for breakfast - Only still in lockdown - so will have to be baked beans on stale toast and put the Cand SS on th back burner until allowed out to the shops!!

[tallprawn] 14/7/2020 07:17

'Due to the continued demand for PrimeStore MTM, full year performance is likely to exceed and possibly significantly exceed previously revised management expectations'Anything sub 50p after that update will be a bargain now - Excellent update with a likely re-rate on the cards now.

[imjustdandy] 14/7/2020 07:03

What an incredible update.

[pastybap] 13/7/2020 16:34

Err £10k shares is only £4500ish?

[bunz3] 13/7/2020 16:30

10000 share sell ,some one looks to be clearing shares

[melody9999] 11/7/2020 13:14

Thank you Wan - fantastic research as always. Kudos!

[wan] 11/7/2020 08:55

To underscore the demand and the need for effective manufacturing and an efficient and effective supply chain, the following makes for an instructive read -

10th July 2020
Lab groups ask Trump admin for more transparency into COVID-19 testing supply allocation

Dive Brief:
Eight organizations representing U.S. laboratory professionals sent a letter on Wednesday to Vice President Mike Pence, who leads the White House Coronavirus Task Force, urging him to address ongoing supply chain obstacles to their performing COVID-19 diagnostic and antibody tests.

The lab stakeholder groups, including the American Association for Clinical Chemistry, the Association of Public Health Laboratories, and the Association for Molecular Pathology, called on the Trump administration to better manage the supply chain as labs are continuing to experience difficulty obtaining testing supplies.

"As the virus surges, states and localities need to increase their testing capacity," the groups wrote to Pence. However, without adequate supplies such as test kits, swabs, transport media and personal protective equipment (PPE), their members "on the front lines" of the public health crisis will continue to struggle to meet the increasing demand for COVID-19 testing and to track its spread nationwide.

Dive Insight:
Now, with the increased demand for molecular diagnostics amid a surge in coronavirus cases, AMP and the other seven lab organizations are requesting the federal government take immediate action to address the supply chain issues which are hamstringing efforts to ramp up testing.
Full story -

Despite the limitations referenced above, diagnostic companies are already reporting that the huge demand and resulting massive increase in COVID-19 testing is resulting in much stronger than expected COVID-related revenues. Importantly, more than offsetting temporary disruption elsewhere within diagnostic portfolios (see post 185).

Key takeaway (for me at least) is that there will be further significant increases in testing demand, and that a high level of testing will be sustained.

Future epidemic and pandemic preparedness is also something on my radar.

[wan] 11/7/2020 07:01

For more on PrimeStore MTM and more on EKF -

10th July 2020
Life sciences sector can have bigger impact on Welsh economy says EKF Diagnostics boss

He is upbeat on the outlook for EKF. Mr Baines said: “We did a trading update recently and we were quite cautious with that, but I think that EKF is in an incredibly strong position to help the country.

“We just happened to be a company where we have never had to worry about furloughing and we haven’t had to worry about staff cuts, and in fact we are increasing staff.

“That is just partly luck as if I had 25 bars or restaurants I would have been impacted, but I happen to be in the right industry and we have the right products.

“So EKF is getting stronger and this year will probably be a record year for us.”

The vast majority of tests produced by EKF are for diabetes and haemoglobin. Mr Baines said: “People with diabetes are at high risk of catching Covid-19.

“So it is kind of defensive on one side and growing on the other with Covid.

“Our balance sheet shows we have £14m in cash “We were in a position where that isn’t luck and if we hadn’t had this great upside we would have been in a position to be fine anyway.

“That’s because we have a strong balance sheet and we put a lot in place after what happened to us in 2015 [a proposed takeover that didn’t materialise and tough trading conditions] to safeguard the business and employees and everything going forward.

“But yes we are in a very extremely strong position at the moment.”

It is scheduled to pay its first dividend in December.

He said: “We were going to pay it earlier, but we are in a strong enough financial position to pay that. So we are a dividend paying business.”

For diagnostics he said there has never been a better time. Mr Baines said: “I think the world has changed on diagnostics. All of a sudden where it was the poor man’s pharmaceutical, and nobody talked about diagnostics, that is no longer the case.

“So the whole trajectory of diagnostics has changed and this is probably over the last two to three years so it pre-dates Covid.

“So the whole world is sitting up and paying attention to diagnostics all of a sudden. If you can identify, using Renalytix’s technology, one patient who is going to crash into to kidney dialysis, that is not only saving a £100,000 a year it is also saving a patient from being in a chronic position with a shortened life span.

“I think [diagnostics] is going to be one of the premier life sciences businesses going forward globally, and I think everyone is waking up to that.”

Full story -