AT1 FY21 - General Discussion + FA, page-1966

Hi buildabridge,

Always appreciate reading your posts, and how you reason everything out with examples.

For me this has always been an innovation company building better diagnostics, covid disrupted many companies profitability and the fact that Atomo has pivoted to address a new market was a positive (to the extent that it has been able to do so) we're really just waiting to see the figures from that in the next two quarters. The saturation/commoditisation of the covid market doesn't change its core; designing and manufacturing tests that are simpler/innovative. Atomo's ambition seems to become a provider of platforms that all tests operate on/from. Assuming they can deliver a differentiated platform (matter of opinion to be borne out in future sales) that adds value, their problem is that to become a significant platform provider they need recognition + significant manufacturing capability + cost viability.

They have been scaling up manufacturing capability, and are about to deliver significant numbers of low cost HIV tests to LMIC - this endeavour will address all those points. Cheap HIV tests to LMIC may/may not generate huge profits however Atomo will have shown it can deliver tests on mass and cheaply, help a significant number of people, build its reputation/brand, and have expanded its manufacturing capability. HIV may or may not be a great market for this company in terms of profit (figures by end of year should show this one way or another) but it is a foundation upon which Atomo can build profitability. Management has indicated in the last few presentations that they will be addressing new conditions/markets and add new capabilities within the foreseeable future.

One possible problem I have seen for awhile is that while this company has been fairly good at navigating B2B sales and innovation they may be underinvesting in marketing to everyday consumers of self tests (not even talking about TGA here), and this may well be a deliberate strategy to reduce marketing and staff overheads. I see their focus as appealing to businesses, and seeking partnerships that offer scale sales without the risk and cost of scaling manufacturing and marketing without guaranteed customers. The addition/expansion of a communication/customer focus team and an actual marketing budget might be beneficial (on current figures from the last report it is negligible v overall costs) if for nothing else than to create brand recognition although again this may be very deliberate/phase strategy.

The next two quarters should give a better sense of direction.











These are my views and opinions only and do not constitute financial advice, please do your own research