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.’