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Tuesday, 25 December 2018

Biolidics Limited


This is purely for information only as the Company is already listed. I will not do much analysis on it. Apologies for missing this as i was busy traveling this month.

Biolidics Limited ("Biolidics" or the "Company") placed out 27.5m shares at $0.28 each for a listing on Catalist and a market cap of $67.9m. The Company was listed on 19 Dec (and closed at $0.235, down 16%).

Principal Business

The Company is a medical technology company focused on the development of cell enrichment systems, which when combined with other analytical tests, have a wide range of applications for cancer diagnosis, prognosis, treatment selection and monitoring.

Biolidics has developed a fully automated IVD medical device which relies on a novel patented technology to separate and enrich cancer cells from blood as illustrated below. 


Business Model

The business model of the Company comprised of sale of the ClearCell FX1 System, the accompanying biochip and other consumables to academic and research institutions, hospitals and laboratories, which use their medical devices.

Financials

As you can tell from the table above, the Company is loss making and incurred a loss of $4.23m for FY2017 (pro forma). Given that Biolidics is a pre-revenue stage, it will be likely continue incurring losses in the next few years and there is a high chance that the Company will need to raise money again in future, thereby causing dilution to existing investors.

In addition, the Company's NAV is around 4.07c and the share price is issued at a huge premium to its NAV of 4.07 cents (pro forma). If the Company continue to burn cash, it will need to raise money again shortly and investors will be further diluted if they do not participate in future fund raise.

Prospects

Frankly, i know nuts about medical technology but here is what the prospectus has to say about its own prospects.


Conclusion

I didn't spend much time thinking about what i like about the Company and the concerns which i may have. My own view (even without the benefit of hindsight) would be that local investors are not able to appreciate biotech companies and with the poor sentiments currently, it will be challenging for unprofitable companies to sustain its share price post listing. Perhaps it is a blessing in disguise that there are no public tranche!

I have taken the Christmas break to catch up on my IPO and blog posts. Here's wishing all readers a Merry Christmas!

Cheers, πŸŒ²πŸŽΆπŸŽ‰
Mr. IPO

Wednesday, 5 December 2018

Medinex Limited


MediNex Limited ("Medinex" or the "Company") is offering 30m Placement Shares comprising 26m New Shares and 4m Vendor Shares at $0.25 each for a listing on Catalist. Since there is no public offering, i am not going to spend too much time and effort on this... as i am on holidays. πŸ˜‹ The IPO has closed and will be listed on 7 Dec with a market cap of $32.80m. 

Principal Business

The Company is a Singapore-based medical support services provider, specialising in providing professional support services to medical clinics. Services include setting up of clinics, facilitating applications of licenses and business support services such as account and tax agent services, etc. 


Financial Highlights


The beauty of this IPO is at least the Company is profitable. Based on the adjusted EPS of 1 Singapore cents, the PE is around 25x (29x if the service agreement is in place). 

Assuming EPS grow to 1.7 to 1.8 Singapore cents for FY2018, the PER will be between  around 13.8x to 14.7x.

The Company intends to distribute no less than 70% of its net profit after tax for FY2018, FY2019 and FY2020.

What I like about the Company
  • Company is profitable and likely to pay dividends - One good thing about this IPO is that at least it is profitable and the revenue and profitability is on an uptrend. Doctors are probably bad book keepers, so with IRAS cracking down on doctors evading or under-reporting their income, there will be an increase in demand for their services over the longer term. The Company also intends to pay 70% of its profits as dividends.
  • Healthcare sector is more resilient to a downturn - You need to see a doctor in good time and bad and doctors need such support services as well. The support services are usually quite sticky and recurring in nature
Some of my concerns
  • HC Surgical selling vendor shares sends a wrong signal - The IPO is via placement and i am not sure why HC surgical is "cashing" out at this point in time when sentiment is not exactly strong. While the amount is not really significant, it sends a wrong signal to the market
  • Poor market sentiments - The Company is listing at a terrible time where market sentiments is bad and prices are volatile globally. This would have a negative impact on the share trading post listing
  • Ease of competitors entering the market and the scalability - It is not difficult for someone to replicate the services to be provided and the Singapore market is limited in size. 
Chilli Ratings

Since there is no public tranche, there is really no motivation here for a chilli rating. The Company is either courageous or desperate to list under current market sentiments and HCS is probably "desperate" to be selling some vendor shares. The valuation is fairly priced at around low teens PER (it is not a true healthcare company per se) and the intent to pay out 75% of its profits as dividend will probably help "support" the price.. I would probably have given it a one chilli rating (or better) during better times but it is hands off the IPO market for me for now... 



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