As you say IR/PR still needs a good deal of work. They always try to fit too much in to the headlines nevertheless a huge amount to like with a bit of unpicking and rereading.
If I was IR I think I would be highlighting the following 3 points as the key takeaway and I would pound away at these every time I spoke to the market.
1) Core business is profitable and cash flow generative, even after accounting for investment in innovations. On a stand alone basis the core business (assuming highlighted 2H improvement) will generate an EBITDA of @6.2 million and a similar level of operating cash flow. This is versus our current market cap of less than 60 million. So if we were not investing in the medical innovations portfolio we would be on a P/EBITDA and P/OCF of less than 10x. Furthermore we can expect to see decent growth in the core business, from MEG sales, new product launches and ongoing expansion of the CNS research and diagnostics market.
2) The Medical Innovation portfolio contains a number of sleep monitoring and related products that are in the final stages of validation/commercialisation. These products will enter in to a fast growing and high TAM market. I would also highlight in the sleep market we are not a start up looking to gain attention/penetration but that we are a market leader, it is a market we understand well and where we have considerable credibility.
3) Over the next 2 years if we were to see 12%pa growth in our core business business and reach 1 million of positive EBITDA from the Medical Innovations portfolio. We will be looking at EBITDA and OCF of @8 million pa for the whole business with plenty of growth to come for the next decade at least. I would be pointing out that this is only a P/EBITDA of less than 8x, that this is all self funded and does not require any external capital. Finally, I would point out that these forecast are not aggressive, that the downside to them is limited and that substantial upside could be seen with additional MEG sales and Somfit partnerships/deals.
That would be my key message and only after that would I focus on the products and achievements of the business operations.
On a slightly different note, have we had this insight in to the medical innovations portfolio before "and less-developed technologies for depth of anesthesia monitoring " ?
Very happy here, continue to nibble away as and when I am able.
CMP Price at posting:
33.0¢ Sentiment: Buy Disclosure: Held
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