Protecting the US public against the 'dirty bombs'
​Kromek is pioneering digital colour imaging for x- and gamma rays, using cadmium zinc telluride crystals. Key markets include: medical imaging, homeland security and nuclear detection.
'Dirty bombs'are a terrifying prospect that, if detonated, would wreak havoc in large cities like New York. Not only causing death and destruction at the blast zone, but also widespread contamination of public areas potentially to be cordoned off for weeks or months.
This is why the US Department and Defense (DoD), via its DARPA division (Defense Advanced Research Projects Agency), has just placed two landmark orders with Kromek worth $6.75m in total, to help safeguard the nation from such bombs.
DARPA's long term vision is to establish a comprehensive security blanket across large swathes of the country - meaning that this contract could ultimately be expanded to cover literally 100ks (if not millions) of government employees under one huge integrated network. Better still, the $500/unit price point is a global first, and we understand active discussions are already in motion with at least 2-3 other major customers to deploy this patented technology.
When this is added to the $7m of deals secured in H1, and January's $1m bone mineral densitometry contract, we estimate that total FY16 order intake will be >$15m - representing a book:bill ratio of at least 125%, based on turnover of £8.4m. Demand also shows that the adoption of truly disruptive technologies is likely to occur even in the face of macro-economic headwinds.
Our estimates suggest that Kromek should become EBITDA and cashflow positive on annualised revenues of circa £11.5m and £14.5m. No changes are made to our 42p/share price target.
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.
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