finnCap Research Company Notes - 11 May 2020
May 11, 2020 / News
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Sector: Life Sciences
Avacta (AVCT) : Corp
COVID-19 rapid antigen test – update
Key data
- Share price (p) 113.0
- Target price (p) U/R
- Market cap (£m) 235.0
- Enterprise value (£m) 224.5
Avacta confirmed that it is shipping Affimers to Cytiva and Adeptrix today with the intention of developing a COVID-19 rapid antigen test for mass population screening with Cytiva and a laboratory-based test to run on hospital mass spectrometers with Adeptrix. The development programme for a point-of-care rapid antigen test for COVID-19 is ahead of schedule, with the aim remaining to have a validated and CE marked test in the summer.
Mark Brewer
020 7220 0556
Sector: Technology & Telecoms
KRM22 (KRM) : Corp
Positive funding progress
Key data
- Share price (p) 23.5
- Target price (p) 75.0
- Market cap (£m) 4.9
- Enterprise value (£m) 6.1
KRM22 has announced the firm commitment for equity investment of £1m at a minimum of 30p per share, a 28% premium to Friday’s close – and ongoing dialogue with existing and new potential investors for further funds. In addition, the group may draw down a further £0.5m debt conditional on completion of the fundraise, providing reassuring headroom that we do not expect will be required. The announcement also provides an update on the imminent release of FY19 results reiterating performance in line with expectations, including £4.3m of ARR, and ongoing negotiation which, on completion, would contribute a further £0.6m ARR. Certain items of deferred conditional consideration will not now be paid, and we adjust our forecast net debt position to show £0.3m net debt at FY20 (formerly £1.2m net debt) and £0.2m net cash into FY21 (formerly £0.8m net debt), alongside unchanged expectations for EBITDA breakeven by December 2020. We look forward to final results for FY19, scheduled for the week beginning 18 May.
Andrew Darley
020 7220 0547
Sector: Technology & Telecoms
Elecosoft (ELCO) : Corp
2019 saw continued growth but COVID clouds 2020
Key data
- Share price (p) 74.0
- Target price (p) U/R
- Market cap (£m) 60.9
- Enterprise value (£m) 59.8
As confirmed in the last month’s update, FY 2019 showed good growth in turnover, profit and cash generation. The cashflow swung ELCO from opening net debt of £1.8m to net cash of £1.1m at the December YE, despite paying an interim dividend. Sensibly, there will be no final dividend in order to conserve cash. FY 2020 is an unknown; ELCO traded well in Q1 but is seeing disruption from Q2. Management has swiftly taken mitigating steps (WFH and providing services online) and costs are being reviewed and controlled. Given the obvious uncertainty, management withdrew guidance and we placed forecasts under review. However, with a large existing user-base paying substantial recurring support & maintenance, a portfolio of offerings diversified by recent acquisitions, and cash in the bank, ELCO is in good shape to manage the COVID-19 issues.
Lorne Daniel
020 7220 0545
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