9 months 2018 sales: a tick better, from a low basis though
9 months 2018 sales: a tick better, from a low basis thoughEARNINGS/SALES RELEASES
FACT
DMS released 9 months 18 sales which reached €16.9m (-12%), including a 15% fall in the historic Imaging business to €16.2m and an increase in Wellness and Biotech (from €0.4m to €0.7m).
ANALYSIS
As usual (see our comments for Q1 and H1 18), new segments are growing from a very low basis while the historic Imaging business is still decreasing, albeit at a slower pace in Q3 (-15% in 9 months vs -19% in H1). It is also worth noting that the comparison basis is getting easier (Q3 17 was actually down 6% and sales over 9 months in FY17 down 5%). In Q3 18, new segments were up 51% (DMS Biotech) but again on a very small number (€0.5m so far this year and the simple rounding of small numbers does not allow us to confirm this is really +51%!), with DMS Wellness up to €0.2m from scratch. We also note that the group has postponed the results initially expected in H2 for the first clinical studies of its arthrosis treatment solution to H1 19, which is not exactly good news. As a reminder, last full-year sales reached on a comparable perimeter €27.1m. In other words, it would take a strong €10m sales level in Q4 to reach flat sales. This is unlikely, despite the fact a table for Egypt may be booked at last, as announced earlier. This suggests our numbers are probably (again) too high. No word either on the new factory (initially planned to be built before year-end 2018).
IMPACT
While the share price has been under strong pressure as of late, we believe the market will wait for better signs of a real pick-up in sales before having a closer look at the group. On a fundamental basis, it does look cheap, but management has to convince it can really improve the momentum of sales and profits, which is not obvious at this stage.
DIAGNOSTIC MEDICAL SYSTEMS SA, (formerly known as DMS), is a France-based company, which together with its subsidiaries, designs, produces and markets medical imagery devices dedicated to conventional and digital radiology as well as bone densitometry. The Company manufactures a range of products for bone densitometry examination, including the ultrasound imaging system UBIS 5000, Challenger Envision, Stratos dR and Stratos. In the radiology sector, its products include Baccara dRF 43, EOL, Platinum and Da Vinci solutions, among others. In addition, it offers such products as scanners, transcranial Doppler, and Giotto Image mammography system. The Company operates several direct subsidiaries, AXS Medical, Apelem SAS, which manufactures radiology equipment, Medilink SARL, which produces Doppler and bone densitometry devices, Apelem SA, based in Spain, Alpha MOS based in France and one indirect subsidiary, SA Apelem and one indirect affiliated company, Spectrap.
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