Rivaldo great post I agree 100 percent |
With an enterprise value of a little over £3mn one would think that RUA is vulnerable to a takeout or some sort of VC funded MBO. Net profits (my estimate) of the core underlying business must be running at £2mn minimum and are set to grow with new contracts in the pipeline (viz 29 Jan RNS).
This has to be one of the cheapest, profitable (at the underlying level) shares on the market and yet people have been selling it. Go figure. |
thanks Rivaldo |
 IMO the trading update was good and I'm perfectly happy with the progress RUA is now making (having invested relatively recently compared to most here!).
RUA is now an EBITDA-profitable company with a £3.7m cash pile against a £7m m/cap.
There are a number of ways in which the company can grow, and costs are finally being controlled. The ElastEon opportunity sounds particularly exciting but will be a bonus if it happens.
I liked this commentary from IntraVnus elsewhere:
"The existing Scottish contract manufacturing business is progressing nicely. They are aiming to add to this with a development of the vascular material for a global player (“…. most excitingly, the Group is actively pursuing an opportunity to combine our textiles expertise with ElastEon to create a novel device for a global device company…”;).
The ABISS business had an initial bulge in back orders to fulfil (already known about) so the rate of sales was always expected to slow after that. Competitors (at least one is a US major MedTech) in their field have pulled out of the European market so ABISS should be well placed to win more European business. Maybe some skittish investors/traders sold because of the temporary destocking reduction in orders but that’s not expected to cause an issue due to the expected increase in market share. ABISS was acquired for virtually nothing.
Biomaterials royalties continue to grow steadily. That’s a dollar business so it will jump around depending on US currency moves.
Flyinghigher said RUA was a “low margin” business, I guess because of the low ebitda number. That’s not right at all. Contract manufacturing and royalties are both very high margin and are contributing good profits. Separately to those, RUA has always had a R&D cost centre which was its major activity before they bought RUA Medical (contract manufacturing). That obviously impacts overall group income but the R&D department is the reason that RUA has its unique textile/Elasteon material that could play a big part in future business. The bigger CM gets, the quicker profits grow.
The statement that they are not looking for finance for the vascular graft is no surprise and has definitely been the assumption for a long time. The material is being developed in other ways now. Far from being a “massive money spinner”, vascular was responsible for almost sinking the group with the bulk of the Dec 20 raise at 120p being sunk into its development. Continuing to fund its trials would have finished RUA off. It was never a money spinner except in theory. Rua wasn’t big enough for it in the same way it was not big enough to fund heart valve development in the old days.
As I said on 18th March, the share price does not allow for any success in the heart valve material. Previous sell offs seem to have been because people assumed the hoped for heart valve material deal with a major was off. In reality, it’s being looked at by several companies but for various possible uses including HV. That’s not a dead duck but the share price won’t reflect that in a non-bull market. It will need an actual announcement of some kind of agreement. Day traders here will have to wait longer." |
Clear the sellers and we should rebound, bottom of the channel on the chart looks to be a tad over 11p, given the robust financials I think we should see a strong bounce of those levels |
Not sure, the outlook for vascular and heart stuff seems a bit downbeat. Surely if that was going to succeed it would have done by now, twenty plus years on. |
slightly mixed update........ |
Or be bid for, the market cap of £7.68m partly covered by cash of £3.7m !! |
Should rerate on that RNS IMO |
Great RNS !! one way or another it seems that their tech is going to be used in additional products. This to help expand the business which is now profitable. |
Interesting 50k buy suddenly popped up today. Someone speculating? I did earlier in the week with a modest little nibble. Does Mr/Ms 50k know something? -:) GLA! |
The end of March sees the completion of the 12 months period that used to be RUA’s year end but will now be the second interim period for the 18 months to the new accounting date of 30 September.
I would hope to see a business update in April as I’m sure there must be plenty to report.
From previous updates, I envisage there might be an ABISS trading profit of £500k - £750k for the 7 months of ownership to date. There could also be a one off net asset revaluation of £1.5M - £2M being the difference between net asset fair values and the acquisition cost of the company. I would hope the board will confirm that Abiss continues to look good going forward.
The Scottish Contract Manufacturing business should also have made between £500k and £1M profit and that division announced a new long term contract with a global player recently.
Biomaterials division should have chipped in its usual £500k in fees and royalties for the year.
The question then is what control has been achieved in containing the overheads including R&D? Excluding Abiss, will they be kept under £3M? It was £4M+ in the previous year but only £1.7M in the half year to Sep 24. Whatever, let’s hope they can demonstrate continued cost discipline there.
I’m assuming nothing but costs (in the overheads mentioned) for the Vascular and Heart Valve departments. Any news on discussions with third parties will always be welcome but I don’t assume that. These are strictly bonus balls.
Overall, with the ABISS one off uplift and hopefully good trading profits there, the headline “group profits” could be impactful.
I don’t believe the current share price discounts any of this upside. If they can achieve these numbers and issue a positive trading outlook, that might change. |
buywell13 thanks !!! that says it all really. I have built up a big holding here particularly since the recent acquisition which was a steal !!
I believe that they must eventually do a deal re the heart valve and the vascular products which would really power the shares upwards. They are now approaching break-even which means cash should not be an issue. The main problem is that investors have not forgiven Bill Brown for the terrible way that funds were raised following RNS's which were misleading to say the least. I feel that he will be replaced at some point so the company can really move ahead, here's hoping !!GLA |
Does that chart not suggest its presently banging along the bottom (again), with a rise to around 80p on the cards? |
free stock charts from uk.advfn.com
well there is 30 years
Is that ok ? |
buywell3 sometimes you have to be very very long time !!! |
bones has been wrong on Zytronic as he has been on RUA --- for years
bones are best buried |
Thanks for that. Useful in seeing where the business sits in this market. There remains a decent sized seller so will take some shifting out of this range. |
Quick history visit:
RUA (then called Aortech) acquired RUA Medical Devices Ltd in April 2020 from David Richmond (still a 1.5M shareholder). Richmond himself acquired this contract manufacturing business from Lombard Medical in 2013. The “post balance sheet events” note in the 2013 accounts of RUA Medical Devices said (and I paraphrase):
“ 20/12/13 - RUA Medical Devices purchased the assets and goodwill from Lombard Medical (Scotland) Ltd. These comprised the medical device subcontracts manufacturing division of Lombard Medical Technologies PLC. Following this date, RUA Medical secured a 5 year contract to supply implantable medical devices to Coloplast A/S.”
As far as I can see, this is the only time Coloplast’s name was mentioned in published accounts until it got a mention in the Abiss acquisition RNS last September.
The RUA Medical income to date has mainly been from a US based customer (which has since renewed its supply contract more than once and currently runs to 2027 I think). The customer must therefore be Coloplast’s US subsidiary.
Now that RUA has acquired ABISS, which supplies Coloplast in European markets, you get a picture of that relationship.
The latest RNS that referred to a new 5 year deal is however (I think) with a different “global customer” as that “existing business” had only done circa £500k of business with RUA before (one sixth of the size of the new contract). |
Some musings on contract manufacturing and ABISS after the two recent updates…..
It seems clear to me that RUA are running an operation with Coloplast uppermost in mind. Not only because of the change of accounting date to match theirs (Sept) but also the phrase used in the RNS:
“The objective for the enlarged business unit and Abiss specifically is to grow revenues through broadening the product range offered to the division's largest customer.“
That being said, it was interesting that the ABISS update ended with this:
“Budgets and business planning are currently being undertaken with expectations for further revenue growth driven by increasing demand in Europe for ABISS's Cyrene product range.”
Note the emphasis on “Cyrene”. If you go back to the original acquisition RNS last September, it said:
“Abiss owns the IP and has CE Mark approval for three products in the SUI field, Aris, Supris and Cyrene which are marketed in Europe by distributors (including an Abiss 60% subsidiary in Poland). The Aris and Supris products are licensed to and manufactured for Coloplast who hold FDA approval for these products in the US.”
Therefore, by deduction, Coloplast doesn’t have rights to Cyrene. That is going well and maybe that’s big in Poland where they have the best product. I don’t know if it is but with the emphasis on looking to broaden product ranges for the “largest customer” (assumed to be Coloplast), it begs the question whether Coloplast would like some of that Cyrene action too.
Just speculating based on things in the many RNS’s! |
Good to see the CEO buying almost another £9k of shares. He has a decent holding now, and the latest options were only exerciseable at 11p, so there's plenty of incentive to get the share price up. |
That must have been the last 10k on offer
Gla |
A director buy always a good sign, little stock on offer today, only 5k at offer available,
Can sell for 13ptoo
😁 |
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