BigDish PLC

BigDish PLC (DISH) is a Jersey, United Kingdom-headquartered early-stage technology company that provides yield management platform to the restaurant industry through an online restaurant reservation platform and mobile application which enables users to make restaurant bookings. The company helps restaurants in the country to fill up their spare capacity and optimise their revenues by providing smart and dynamic discounts which depend on the time of day in which the booking is made. The operations of the group are differentiated in four geographical segments, namely Jersey, Hong Kong, Indonesia and the Philippines.

Recent Development
The company on 03 October 2019 announced that it had reached an agreement with NFS Technology Group to integrate the group within its Point of Sale software solution for restaurants, which would enable a restaurant to link BigDish dining activity data with diner spend data and allow operational team of a restaurant to access the BigDish Manager features directly within the POS.

Financial Highlights (FY 2019, in £m)
During the latest reporting period, the year-end for the company changed from 31 December to 31 March, and the functional currency was changed to GBP from USD to reflect re-focus away from South East Asia to the United Kingdom. Income during the period rose substantially to £31,955from £9,341 in FY 17, while the cost of sales declined considerably from £4,760 to £445. This was reflected in a multi-fold rise in gross profit, which rose to £31,510in the current period from £4,581 in the prior financial year. However, the acquisition of Pouncer Media Ltd led to rose in operating costs. Moreover, as the number of users grew, administrative costs also rose to £1.06 millionfrom £0.78 million in FY 2017. Impairment costs, IPO costs and Share based payment charges took a toll on the operating income, which posted a loss of £3.57 millionagainst £0.78 recorded in the last financial year. The loss for the period also surged significantly to £3.63 million versus £0.86 million reported in FY 2017. Cash and cash equivalents held by the company rose to £43,504from £16,077 on 31 December 2017.

Share Price Commentary
 
Daily Chart as at 04-October-19, before the market closed (Source: Thomson Reuters)
 
On 04 October 2019, at the time of writing (before the market closed, GMT 9:05 am), DISH shares were trading at GBX 3.23, down by 0.61 per cent against the previous day closing price. Stock's 52 weeks High and Low are GBX 9.39/GBX 1.41. The outstanding market capitalisation was around £11.32 million.

Conclusion
The company has set ambitious targets for the United Kingdom and believes that the rollout in the country is the growth driver. However, the new business opportunities entail a significant risk, which can severely impact the financials and sustainability of the group. It is highly dependent on the network effect, which characterises the industry of the group, and competition from other companies can hamper the ability of the group to realise it, impacting the financial prospects. Moreover, as it is in the early stage of development, it has not reached breakeven and is under a continuous need for funding from external sources.

Based on the headwinds faced by the group, we have given a "WATCH" recommendation at the closing price of GBX 3.25 (as on 3 October 2019), while we look for any upcoming catalysts in the near term.
 

Genedrive PLC

Genedrive PLC (GDR) is a Manchester, United Kingdom-headquartered molecular diagnostics company which seeks to provide a platform that brings molecular diagnostics to decentralised laboratories through Genedrive®, which is a patented small polymerase chain reaction (PCR) platform. For the identification and treatment selection of infectious diseases, pathogen identification, and other applications, Genedrive® is a rapid and low-cost molecular diagnostics platform, which has been validated through a range of applications and external independent evaluations.

Financial Highlights (FY 2019, in £m)
During the period, the company announced a successful fund-raise of £6.0 million, which was a combination of £3.5 million equity and £2.5 million convertible loan, and revenue and other income for the year rose by 21.6% to £2.4 million (2018: £1.9 million). The operating loss for the year was £4.0 million (2018: £7.4 million) as administration costs were down slightly from the prior year to £1.9 million and research and development costs also declined to £4.9 million (2018: £5.2 million). Loss on ordinary activities before taxation declined significantly to £4.5 million during the period from £7.78 million in the prior year. The loss for the financial year after tax amounted to £3.6 million (2018: £6.0 million), which corresponded to a loss per share from continuing operations of 14 pence, down from a loss of 37.6 pence reported in the prior year. Net cash outflow from operations was £4.6 million (2018: £3.8 million) while net proceeds from financing activities were £5.6 million (2018: £nil).The operating losses were £4.4 million (2018: £4.3 million) and closing cash position was £5.2 million (2018: £3.5 million), indicating that cash rose by £1.7 million.

Share Price Commentary

Daily Chart as at 04-October-19, before the market closed (Source: Thomson Reuters)
 
On 04 October 2019, at the time of writing (before the market closed, GMT 10:20 am), GDR shares were trading at GBX 16.50, remaining flat against the previous day closing price. Stock's 52 weeks High and Low are GBX 30.00/GBX 15.00. The company's stock beta was -0.17, reflecting a weak relationship with the benchmark index. Total outstanding market capitalisation was around £5.60 million.

Conclusion
Though the company is optimistic about the potential of its in-development assaysand the ability of the group to deliver growth from its on-market assays, the process of commercialisation is still in the initial stages and would require time before it can be materialised to generate significant revenues. Even the company expects its strategy to fully generate revenues by the financial year 2022, which is characterised by uncertainties, like failure to implement strategy effectively. Moreover, as the overall level of funding for HCV drugs and diagnostics was lower and anticipated rate of country registrations was slower during the period, commercialisation of the HCV (Hepatitis C) assay lagged its previous expectations, suggesting few of the many challenges faced by the group. There is also the risk of reduction of potential market share and loss of first mover advantageif a new competitor enters the market.

Based on the above rationale, we have given an “AVOID" recommendation at the current price of GBX 16.50 (as on 4 October 2019).

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