£21m to fund unprecedented demand

There are a multitude of reasons why companies tap investors for money. However, to us the most productive use of fresh capital is to enable businesses to satisfy unprecedented demand in their core areas of expertise. Exactly the situation that Kromek finds itself. 

Here, the D3S is already the de facto standard for ‘dirty bomb’ detection, whilst in medical imaging, a secular upgrade cycle (re CZT replacing scintillated materials) has already kicked off, augmented by the need for OEMs to respond to GE’s first mover advantage. 

Hence at today’s General Meeting, Kromek concluded its (previously announced) £20m placing & £1m open offer - issuing 84.0m new shares at 25p, and enlarging the equity base by 24.7% to 344.6m.

The funds will be invested in tried & tested technology, underpinned by multi-year contracts and an approx. $100m orderbook. Most of these deals were secured thanks to its proprietary technology, strong customer-centric ethos and long term commitment. A marvelous position to be in. The only slight headache ongoing forward, being able to simply make enough of these innovative products to meet requirements. 

That said, largely because of the higher sharecount, our valuation declines from 50p to 35p/share - albeit still >25% above today’s price. At 27.5p the stock trades on a CY EV/sales multiple of 5.0x, which is in broadly line with peers, yet does not reflect KMK’s faster growth.