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Seen a few comments about #AVCT being the most expensive of the #COVID19 diagnostics stocks.
Many investors seem only to look at the £460m mkt cap and lack of current sales. This is basic in the extreme.
I'll explain why I think AVCT is the cheapest by far out of the group 1/n
Many investors seem only to look at the £460m mkt cap and lack of current sales. This is basic in the extreme.
I'll explain why I think AVCT is the cheapest by far out of the group 1/n
#AVCT has implied, through a combo of info provided in RNSs and presentations, that it is targeting sales for its LFT of over £1bn per month in just the UK market - by early next year. (£10 per test, 120m tests pm).
Through broker notes and public comps analysis, we can... 2/n
Through broker notes and public comps analysis, we can... 2/n
...assume that a PAT margin of ~25% will be attainable.
That amounts to a PAT of £300m per month, from say March. To reiterate, that is JUST the UK market.
As covered in my last note, I think #AVCT will shortly announce a tie up with international LFT producers, as an... 3/n
That amounts to a PAT of £300m per month, from say March. To reiterate, that is JUST the UK market.
As covered in my last note, I think #AVCT will shortly announce a tie up with international LFT producers, as an... 3/n
..entry into international markets (US partner will be first, IMO). I assume a royalty of £1 per unit sale.
The global market for a high quality LFT, that can detect asymptomatic cases, is likely to be in the many hundreds of millions of units per month.
So here's the crux: 4/n
The global market for a high quality LFT, that can detect asymptomatic cases, is likely to be in the many hundreds of millions of units per month.
So here's the crux: 4/n
#AVCT has essentially implied that it believes it could generate in excess of £10bn in revenue next year.
Needless to say, a great many circumstances must all come to pass, together, for that figure to be achieved.
BUT - I believe the market is pricing in far too great...5/n
Needless to say, a great many circumstances must all come to pass, together, for that figure to be achieved.
BUT - I believe the market is pricing in far too great...5/n
..a probability of that NOT happening.
Many seem to think that successful tech transfer is a 50/50. My conversations and research lead me to believe that it's more like 95/5 (and that's being conservative).
Once TT is complete with BBI, a blueprint will exist to be rolled...6/n
Many seem to think that successful tech transfer is a 50/50. My conversations and research lead me to believe that it's more like 95/5 (and that's being conservative).
Once TT is complete with BBI, a blueprint will exist to be rolled...6/n
...out to the other UK-RTC members, and perhaps more importantly, to international manufacturers (SE Asia).
If mass-scale manufacturers have the blueprint, then 100m+ tests pm suddenly isn't just a fantasy.
The issue is, is that these numbers seem so absurd in comparison...7/n
If mass-scale manufacturers have the blueprint, then 100m+ tests pm suddenly isn't just a fantasy.
The issue is, is that these numbers seem so absurd in comparison...7/n
...to #AVCT's mkt cap (esp. its cap of only 6 months ago!) that many don't seem to be able to get their heads around what's unfolding.
An example. After #NCYT went up 10x, from 10p to 100p, many wouldn't have considered that it could go on to do a further 10x from 100p. Yet..8/n
An example. After #NCYT went up 10x, from 10p to 100p, many wouldn't have considered that it could go on to do a further 10x from 100p. Yet..8/n
...here it is. Two recent broker initiations on NCYT suggest 2021 revenue of €290m and €305m. Their TPs are 1,463p and 1,365p.
That's a mean £268m 2021 revenue, and a mean TP of 1,414p. Given the current TVR of 70.6m, the brokers' mean target mkt cap for #NCYT is £999m. 9/n
That's a mean £268m 2021 revenue, and a mean TP of 1,414p. Given the current TVR of 70.6m, the brokers' mean target mkt cap for #NCYT is £999m. 9/n
That equates to a mean 2021 PSR of 3.73x.
Clearly, it doesn't work precisely like this, as there are other aspects of both Cos to consider; plus enterprise value, and not equity value, would usually be used in these calcs.
But the simple point is: what's £10bn x 3.73?
10/n
Clearly, it doesn't work precisely like this, as there are other aspects of both Cos to consider; plus enterprise value, and not equity value, would usually be used in these calcs.
But the simple point is: what's £10bn x 3.73?
10/n
Even if #AVCT were to achieve sales of only a quarter of its target for the domestic market ALONE next year, it's looking at £3.6bn in revenue.
Assume those same brokers suggest that it should only be trading on half the PSR that #NCYT should be, due to lower margins, then..11/n
Assume those same brokers suggest that it should only be trading on half the PSR that #NCYT should be, due to lower margins, then..11/n
...we're looking at a mkt cap of £6.7bn (being 3.6bn x 1.87).
Again - this is JUST the UK market.
Then account for #AVCT's other #COVID19 products, its other diagnostics products, and its entire Therapeutics division.
The point I am trying to make is that there is a...12/n
Again - this is JUST the UK market.
Then account for #AVCT's other #COVID19 products, its other diagnostics products, and its entire Therapeutics division.
The point I am trying to make is that there is a...12/n
...clear path for #AVCT to a valuation of many billions of pounds within the next 12 months.
Yet the market is presently giving it odds of that happening of ~5%.
There are many who think a vaccine will be the silver bullet, which will eradicate #COVID19 rapidly. I won't..13/n
Yet the market is presently giving it odds of that happening of ~5%.
There are many who think a vaccine will be the silver bullet, which will eradicate #COVID19 rapidly. I won't..13/n
...even try to change their minds.
Those still with me: the other arguments are firstly, will #AVCT's LFT work; and secondly, will it be beaten by competing LFTs?
As I covered in my last note, the market is so vast that comp is not a concern. As for the Affimers, I also... 14/n
Those still with me: the other arguments are firstly, will #AVCT's LFT work; and secondly, will it be beaten by competing LFTs?
As I covered in my last note, the market is so vast that comp is not a concern. As for the Affimers, I also... 14/n
...explained how the ELISA and BAMS data have been published to reassure the market of just how good #AVCT's LFT will be.
So we're essentially left with the market right now pricing in a probability of the tech transfer - a "business-as-usual" process - failing.
15/n
So we're essentially left with the market right now pricing in a probability of the tech transfer - a "business-as-usual" process - failing.
15/n
