Kromek Group
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.

Substantial airborne Covid detector opportunity

Great to see vaccines being rolled out, but countries will also require an early warning system to constantly monitor, respond (eg adjust HVAC) & analyse (using DNA sequencing) any new strains that might compromise a vaccine’s efficacy. The world needs a coronavirus alarm in real time, rather than having to wait until people fall ill. Kromek’s ‘1st-of-its-kind’ Biothreat detector could be the answer. Not surprisingly, this is a huge untapped market and Kromek have announced they will receive Innovate UK funding to advance Biological-Threat Detection solutions.

Meanwhile, opportunities abound at Kromek so staying focused will be key. We sense the Board (including a new Chairman, COO & CFO) now has a renewed spring in its step, and will be carefully juggling all short & long term priorities.

In that context we see today’s H1’21 results as mostly academic since they include a full 6 months’ impact from the pandemic - hitting elective surgeries/operations, airports and social gatherings hard. Yet the numbers weren’t too bad, with turnover only falling by 14.2% LFL to £4.6m (£5.3m LY), gross margins flattish at 54.5% (58.0%) and EBITDA (pre SBPs) coming in at -£873k (-£611k). The Board also confirmed there are sufficient funds for the next 12 months, under almost all scenarios.

The shares at 13p trade on a trailing EV/sales multiple of just 3.6x vs >5x for ‘disruptive’ IPR rich tech peers, whilst ‘the Board continues to look to the future with confidence and optimism.’


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