Kromek Groupwww.kromek.com TICKER: KMK EXCHANGE: AIM
Kromek listed on the AIM market in October, 2013 and is a UK company pioneering digital colour imaging for x-rays using cadmium zinc telluride crystals.
Kromek is pioneering digital colour imaging for x- and gamma rays, using cadmium zinc telluride crystals. Key markets include medical imaging security screening, and nuclear detection.
As so often occurs when commercialising 'break-through' technologies, adoption of the products can take longer than originally expected due to events sometimes totally outside of an organisation's control. This has been the case for Kromek in H2 with the company announcing this morning that turnover will be "significantly below current market expectations".
We estimate (as a worst case) that up to £3m of deliveries could slip into FY15, on top of a £2.5m shortfall in new orders. Consequently we have cut our FY14 turnover, EBITDA and cash forecasts to £5.8m (-49%), -£2.5m (from +£1.3m) and £6.0m (from £10.0m) respectively. Going forward, the lower H2 run-rate also feeds through into FY15 (again worst case scenario) and so our target price falls from 100p to 52p/share.
The proposition remains robust and there were significant positives from the trading update regarding commercial progress and the order pipeline. Importantly, the group is fully funded (est. April '14 net cash of £6m) to a point well beyond when we anticipate it will become cashflow positive.