Myhealthchecked PLC

Myhealthchecked PLC (LON: MHC) is a FTSE AIM All-Share listed UK based health care entity that provides healthcare and wellness tests.

Rationale for Valuation – SELL at GBX 3.30

• Book Profit: MHC’s stock price has grown around 74% in the past month and has breached our previously recommended target price. Therefore, investors can liquidate the position as per the risk-return profile.
• Macroeconomic Uncertainties: The prolonged inflationary pressure, persistent supply chain concerns, and new coronavirus variant in South Africa can create operational difficulties for the Company.
• Weak Fundamentals: MHC continued to report significant losses, and thus, all profitability margins are in the negative territory. However, industry median for all key profitability margins is in decent positive range.
• Technical Indicator: From a technical standpoint, Bollinger Bands suggests that the price is hovering close to the upper Bollinger Band, while the 14-day RSI (~85.15) is also in the overbought position.

Key Risks

• Liquidity Risk: MHC is yet to generate any revenue and has a history of operating losses. Its growth prospects are dependent upon external financial resources.
• Supply Chain and Inflation Concerns: There has been facing significant supply chain inflationary pressures, high material, and freight costs.
  

Recent News

Test Launch: On 24 November 2021, MHC launched two home testing services for travellers entering and departing the UK.

Financial Highlights (for the six months ended 30 June 2021, as on 29 September 2021)

 (Source: Company Website)

• Commercial Highlights: During H1 FY21, it signed two commercial agreements with Boots UK Limited for supply of COVID-19 PCR test kits and related services.
• Financials: It generated revenue of £3,274,145 in H1 FY21 and reported adjusted EBITDA loss of £199,670.
• Liquidity: At the end of H1 FY21, the Company held the cash balance of £2,214,496 (H1 FY20: £1,351,745).

One Year Share Price Chart

 (Data Source: Refinitiv, Analysis done by Kalkine Group)

Conclusion

MHC is loss making entity and it is trading as penny stock, which is exposed to the market volatilities and can face liquidity crunch. Its growth trajectory depends upon its ability to raise external funds. The risk appetite of investors can remain dented with resurgence in Covid-19 cases in Europe and Africa, decades high inflationary conditions globally, fluctuating US Dollar, soaring energy prices, among others. As the stock has given a decent return, it is prudent to exit the prevailing market uncertainties, and book profit. The stock made a 52-week high and low of GBX 7.45 and GBX 1.21, respectively.

Based on the continued losses, decent gains, macroeconomic volatilities, and global equity market sell-off, we have given a “SELL” recommendation on Myhealthchecked PLC at the current market price of GBX 3.30 (as on 26 November 2021, at 9:40 AM GMT), while we look forward to reinvesting when the short-term economic turbulence subsides.

*The reference data in this report has been partly sourced from REFINITIV.

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