On track and materially undervalued
Occasionally on the FTSE, there can be such a wide disconnect between price & value that it is possible to buy £1 stocks for 50p. Sure these festive bargains are rare, but when they occur, we think canny investors should take note, especially in quality names like Kromek, a leader in next generation radiation detectors.Its world-beating technology is already disrupting 3 major verticals - Medical Imaging (eg BMD & SPECT), Nuclear Detection (D3S) and Security Screening (Airport baggage/bottles) – each worth >$100m pa. Plus over the past 3 years, the firm has won almost £100m worth of orders, built two state-of-art manufacturing facilities in Durham (UK) & Pittsburgh (US), and is selling its proprietary products to numerous blue chip OEMs globally.
With regards to today’s H1’20 results, turnover jumped 44.7% LFL to £5.33m (vs £3.69m LY), driving a 0.8% increase in gross margin to 58.0% (vs FY19), with adjusted EBITDA (pre SBPs) steady at -£611k (vs -£553k LY). Additionally momentum has accelerated since the period close, with H2’19 EBITDA on track to hit £3.3m (vs £2.5m) on sales of £13.2m (£10.m LY)…and thus achieve our FY20 expectations.
Moreover, irrespective of any future economic slowdown, the business is supported by numerous secular trends – not least, improved patient outcomes, homeland security, regulatory requirements, etc. Meaning that at 17.5p, the stock trades at a material discount to other ‘hi-tech disruptive’ peers – and offers 100% potential upside vs our 35p/share valuation. Equally, if the firm can secure any new largescale D3S deployments (say covering cities, military sites, border regions, etc), then this would also significantly enhance our projections.
Kromek Group is a developer of radiation detectors based on cadmium zinc telluride, providing detection and characterization capabilities within the medical imaging, nuclear detection and security screening markets. Co. designs, develops and produces x-ray and gamma-ray imaging and radiation detection products.
Equity Development enables companies to become better understood and supported by investors. Since our launch in 1996 we have consistently focused on helping our clients improve their communication and relationships with both existing and potential shareholders. Our clients have come from a wide variety of sectors and domiciles, are both private and quoted and range in size from micro-cap to $multi-billions. We offer free access to company research notes written by experienced analysts. These notes include detailed forecasts, financial models and a fair value. We host regular Private Investor Forums at which investors have the opportunity to hear company directors present, and to ask questions. These are free to attend. We broadcast live Webinars with company management that include active Q&A. We also make the recordings available online. We arrange face to face meetings between private investors and company management. We are active users of Twitter, commenting daily on company news, share price moves, Directors’ Dealings, Equity Development Research Notes & Events.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.