Tekcapital - Update
Placing funds further development and shares continue to trade at a substantial discount to NAV
AIM listed Tekcapital is an international provider of technology and intellectual property investment services. The company’s objective is to create value from investing in new, university-developed intellectual properties and to produce returns through capital appreciation. Since our last update in August Tekcapital has announced interim results, a placing of $1.15 million and positive updates across certain investee companies.
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Interims show increased service revenues and rise in NAV
Numbers for the six months to 31st May 2018 showed another profitable period of trading, with total revenues of $1.28 million and a pre-tax profit of $105,996. Revenues from services were up by 29% at $0.64 million reflecting continued growth of technology transfer services, particularly in Latin America. Net assets were up by 35% over 12 months at $10.75 million, with NAV per share up by 32% at 25 cents.
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Placing raises $1.15 million to invest in portfolio company expansion
Tekcapital has raised $1.15 million by issuing 11,698,335 new shares at a price of 7.5p each. The proceeds will be used to fund investment in key activities, to further develop and progress with the commercialisation of its portfolio of IP technologies and for working capital.
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Investee companies report further progress
Autonomous vehicle technology developer Guident Ltd has appointed Harald Braun, an experienced telecoms industry executive, as Chairman. Also, medical device business Belluscura, along with research partner Separation Design Group, has filed three patent applications & received a Notice of Allowance of a fourth application in the fields of respiratory, postoperative recovery, sedation/sleep monitoring and artificial intelligence. This enhances the IP position of its forthcoming portable oxygen concentrator & other products under development.
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Shares trade at a large discount to NAV and the IP sector average
Tekcapital shares currently trade at a c.50% discount to NAV (accounting for the placing) and at a 54% discount to the wider UK IP sector average price-to-book value ratio. This, combined with additional value creation opportunities, leads us to retain our stance of Conviction Buy.
TekCapital is a holding management company. Through its subsidiaries, Co. provides universities and corporate clients with a range of technology transfer services. Co. has three segments: professional services, including the provision of recruitment services via Vortechs Group, and the provision of reports and services provided to locate and transfer technologies to customers; licensing activities, including acquiring licenses for technologies and their subsequent out licensing; and product sales.
Align Research is a commissioned research company founded in November 2015 in order to provide the under-served smaller company space with high quality analysis. We have an initial focus on the natural resources sector, in which we see significant opportunities given the current once in a generation bear market, however all undervalued small caps (sub £100m) are considered by our team. Align was founded by industry professionals with decades of experience in the stock markets, headed up by highly qualified individuals from both fund management and analytical backgrounds.
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