Novacyt SA 

Novacyt SA (LON: NCYT) is a France-based Clinical Diagnostics Company. The Company deals in diversified diagnostic products used in oncology, haematology, microbiology, LBC, and serology testing.

The Company will release full-year 2020 results in April 2021.

Investment Highlights - Novacyt SA – Hold at GBX 750.00

• The Company has delivered a strong financial performance in FY2020, driven by strong demand for covid-19 products. The Company expects strong performance to continue in FY2021.
• As per valuation metrics, EV/Sales and Price/Earnings multiples of Novacyt SA are currently lower as compared to the corresponding multiples of the Biotechnology & Medical Research industry. It reflects, shares are undervalued as compared to the industry.
• In the last one year, the Company delivered a significant return of ~541.03% and delivered higher returns compared to the benchmark Index (FTSE-all Share Index).
• From the technical standpoint, 90-day RSI is currently supporting upward movement (around 49 level), which means the stock price could increase in the short term.

Key Risks

• The pace of development in the healthcare industry and competitive pressure may impact business operations.
• Brexit, customer credit risk and foreign exchange fluctuations can also hamper the business.

Recent News

On 17 March 2021, Novacyt announced the expansion of VersaLab™ service with the launch of MPL (mobile processing laboratories) to provide rapid turnaround PCR (polymerase chain reaction) testing on-site.

Trading Update for FY2020 (31 December 2020) (released on 29 January 2021)

• For the full year of 2020, the revenue surged by more than 20x to €311.6 million as compared with the previous year, with a gross margin of above 80%.
• The Company delivered a strong performance in the second half of the financial year 2020, with revenue of €239.2 million (H1 FY2020: €72.4 million), and EBITDA of above €161 million (H1 FY2020: €49.4 million).
• The Company has a strong cash position with €101 million as on 31 December 2020 (30 June 2020: €19.7 million and 31 December 2019: €1.8 million).
• The Company continue to make an investment in the pipeline of new covid-19 tests to meet evolving clinical needs.
• The Company acquired a diagnostic instrument development and manufacturing company, IT-IS International, in accordance with the strategy.

One Year Share Price Chart

(Source: Refinitiv, chart created by Kalkine Group)

Conclusion

The Company has delivered a significant performance in the second half of the financial year 2020 and expects strong momentum in the financial year 2021, with robust demand for the COVID-19 product portfolio. The Company has signed significant contracts with national governments in 2020 and will launch several products in 2021 and expand the Company's VersaLab™ service. Recently, the Company launched PCR (polymerase chain reaction) genotyping assay portfolio to detect Covid-19 variants. NCYT has further strengthened its cash position and will continue to make an investment in organic expansion, external business development and innovation. Overall, it seems to be well-positioned to deliver on the vision of becoming a market leader in respiratory and transplant clinical diagnostics. The stock made a 52-week low and high of GBX 80.10 and GBX 1,276.00, respectively.

Considering the uncertainties and market dynamics, we are currently maintaining the “Hold” recommendation for Novacyt SA at the closing price of GBX 750.00 (as on 18 March 2021) and will recommend fresh buying at the right time.

Supply@Me Capital Plc

Supply@Me Capital Plc (LON: SYME) is a FinTech Company, which has an innovative proprietary inventory platform to provide monetisation services to European Manufacturing and Trading Companies.

The Company will release a trading update before end of March 2021.

Investment Highlights - Supply@Me Capital Plc – Avoid at GBX 0.562

• Despite the improved performance, the Company is dependent on external funding to meet working capital requirements and can increase liquidity risk in future.
• As per valuation metrics, EV/sales and Price/Earnings multiples of the Supply@Me Capital Plc are currently higher as compared to the corresponding multiples of the Professional & Commercial Services industry, reflecting overstretched valuations.
• In the last three months, the Company delivered a negative return of ~2.26% and delivered lower returns compared to the benchmark Index (FTSE-all Share Index).
• From the technical standpoint, 14-day RSI is currently supporting downward movement (around 64 level), which means the stock price could decline further in the short term.

Key Risks

• The Covid-19 pandemic presents heightened operational risks for the Company.
• The increased usage of remote services has escalated the threat of external fraud and cyber-attack.

Recent News

On 17 March 2021, Supply@Me Capital announced the signing of HoT (Heads of Terms) to acquire Singapore based leading FinTech-powered commodities trade enabler with focus on SMEs.

On 9 March 2021, the SYME received confirmation from FCA for restoration of shares on LSE for which the request was made on 4 February 2021. On 16 February 2021, the Company addressed technical DTR breach related to timing of the financial statements publication.

Financial Highlights – H1 FY2020 (30 June 2020) (released on 29 January 2021)

(Source: Interim Report, Company Website) 

• In the first half of the financial year 2020, driven by higher service revenue, the revenue for the period increased to £368 thousand.
• Due to higher exceptional costs and administrative expenses, the profitability margins for the period declined significantly.
• The cash balance as on 30 June 2020 stood at £892 thousand (30 June 2019: £2 thousand.

Six Months Share Price Chart

(Source: Refinitiv, chart created by Kalkine Group)

Conclusion

The Company has shown a decline in financial performance in the first half of the financial year 2020. Despite the higher revenue, the bottom-line performance declined, while profitability remained in the negative zone. The Company has made decent progress in trading performance in recent period along with progress in all funding channels. SYME is working in sync with global asset management industry and the Captive Bank project will provide growth opportunities to the business. Despite the progress in trading, the Company is not able to provide any meaningful update on inventory funding market due to the impact of the covid-19 pandemic. The investors have negative sentiments toward the Company’s shares based on recent share suspension. The stock made a 52-week low and high of GBX 0.0413 and GBX 1.10, respectively.

Therefore, based on the overstrained prices, and declined financial performance, we have given an “Avoid” recommendation on Supply@Me Capital Plc at the closing price of GBX 0.562 (as on 18 March 2021), while we will watch how strategic initiatives will gain traction in the near term. 

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