Promoters milking the Cash cow by way of 100%(10 Rs) dividend while holding company KILPEST declared only 7%(70 paisa). Sill in cash flow statement Net Cash equivalents have become 4.5 times approx 9.4 crores Which makes company in comfortable position to meet liabilities. Considering Covid-19 is once in a lifetime opportunity How do they intend to grow and use this Cash in normal scenario
New rate for covid test is now capped at rs 2500.
I think this will affect margin of kilpest
June quarter sales update from 3B BlackBio. 44 cr booked for Covid-19 tests. Overall realisation better than expected, and already 1.5x of FY20 total Kilpest revenue.
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This new kit will have cost competitive advantage over kilpest?
Coronavirus test update: IIT Delhi develops extremely affordable COVID-19 test kit; Price range around Rs 650
https://timesofindia.indiatimes.com/life-style/health-fitness/health-news/coronavirus-test-update-iit-delhi-develops-extremely-affordable-covid-19-test-kit-price-range-around-rs-650/articleshow/76979641.cms
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-Testing capacity has also increased substantially from around 1.5 lakh samples per day on May 25 to nearly four lakh per day now. (16.7.2020)
-According to the document, WHO recommends 140 tests per day per million population as “comprehensive” testing.
-In India, as many as 22 states are doing more than 140 Covid-19 tests per day per million in line with WHO guidance.
Disc…invested
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From where can we see this graph ?
In june quarter, total 886000 tests done@rs 500@44.33cr revenue
If per test their net profit is Rs 200,then their june quarter pat from covid kits may be round 18 cr
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Net profit would be near 10% for tender orfers as discussed with insiders earlier…
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There r 3 types of testing for covid at present
1…RT PCR
It is gold standard test ,only test approved by ICMR all over india
Highest sensitivity
Costly test@Rs 2500
2…Antigen test
As this test does not amplify virus genetic material,sensitivity is from 70 to 85%
Means out of 100 tests done,15 to 30% cases may be having result negative but actually they r positive
Cost only Rs400
3…Antibody test
It has failed for mass screening as in some patients have antibody disappeared
So at present,rt pcr testing is most accepted
But due to cost factor,we have to see weather antigen testing is applicable for mass screening or not in near future
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For details of each test please check above article.
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Genophyll is proud to partner with 3B Blackbio Biotech, the manufacturer of FDA EUA authorized TRUPCR SARS-CoV-2 Kit, to broaden its ability to serve the Western hemisphere. The TRUPCR SARS-CoV-2 Kit is a highly-sensitive, comprehensive three gene detection assay (includes the E, RdRp, and N gene). In addition to its FDA Emergency Use Authorization, the kit has also been validated by the National Institute of Virology in Pune, a World Health Organization site.
This validation involved third party testing of the sensitivity and specificity of the kit before it was authorized for use. The CEO, Aditi Luthra said, “Our manufacturing partner in India, which currently holds the only Indian-made FDA EUA authorization for an RT-PCR kit for the novel coronavirus, has a capacity of 100,000 reactions a day. That, coupled with on-the-ground technical customer service support in the US and lower supply costs in India, uniquely positions Genophyll to offer a high-quality, easy to use, cost-effective solution.”
With cases spiking in the US and states reopening, we need to be prepared for any eventualities and decisive response. Bettermeant Health continues to serve all healthcare stakeholders for a healthier America.
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Link to the news item posted above:
Some more news, Mylan Antigen now around same price as RT-PCR of 3B Blackbio.
Disc: Invested, buyer beware etc.
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Not that familiar but yes, you seem to be correct, the electronics is about the machine/device required to do the processing and Kilpest/3BB are into making the sampling kit/chemicals. So these could be different domains, or there could be need for some adaptation/specialized kits which are used with an ultra-small machine like this TrueNat.
Googling “portable RT-PCR” etc. does show up many such device ideas since some years. I would guess the machine and the kit are two different things.
Also several machines do not look that big, around toaster size. A pocket-size makes not much diff here, except if the price falls dramatically, quality of testing is more important criteria.
PS: was invested in this before for a year, did not think such a small company could have specialized tech to beat biggies, have re-entered yesterday. Buyer beware etc.!
I guess exports are banned for foreseable future. can anyone confirm this?
Very rough and conservative figures,
Rs 250, sale price per kit
8% margin
20,000 kits sold per day
= Rs 1.2 Cr incremental EBIT per month = Rs. 3.6 Cr per Quarter
Conservative 100%/200% jump in EBIT, QoQ/YoY basis. (ignoring the normal strong growth anyway)
PE 20, 5 year average, exceptionally high for a micro cap but results have been good!
Current PE shows 50% jump to 30, higher levels might be unsustainable, since elevated sales might last only about a year.
Assumptions:
- Sales price taken from tender documents posted in this thread. (non-govt sales might be a decent percent of overall volumes)
- Tender margins can be low.
- Antibody test is only for serological survey kind of activities, Antigen is useful for normal testing (faster, more convenient) but Every ‘negative’ has to be cleared by RT-PCR, which means every cured person must be OK’ed by it also, maybe twice, and some ~30% which are non-‘positive’ in first place.
I calculated based on current growth rate and past trend, to reach a figure which might be true for 2 quarters (past+future), 60k tests per day.
Assuming 3BB gets, 30% of overall orders.
Other factors:
Vaccine sufficient (40% of population roughly) coverage delay may last till mid next year. Also, Vaccine might have a temporary effect only like a flu vaccine taken every year.
Till that time, 3BB has opportunity to take advantage of exports, if allowed, starting maybe by end of year!
nCoV-19 has maximum survival time @ 6 deg celsius. After next 2-3 months most of northern hemisphere is going to see big dip in temperatures, basically we will be back to the same time period when the outbreak first started. Waves might become stronger due to this.
This is a chance for 3BB to make a name for itself, globally! That should be the expectation from this, to stay invested.
Disc: invested, this is not an advice, please make your own investment decision.
PS: A big point missed in the analysis is the strength of moat of 3BB, to sustain the margins and volumes. I expect no great change from current status.
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Covid
Looking at the current Covid charts, the Covid situation is likely to peak not before September in India, with each month experiencing double the number of daily cases. Furthermore, given the high accuracy provided by PCR kits, these kits may be required even after peak and even after vaccines, particularly in the corporate sector. This situation may last many months. Therefore, the opportunities during Covid itself seems quite large.
There are threats of competition from other PCR testing companies and new, lower-cost, high accuracy technologies.
Post Covid
Long-term investors will be primarily concerned with the post-Covid prospects. Towards this, they will hope that the company emphasises forming business relationships during Covid rather than merely short-term profits. They would also like capital infusion and demerger to happen soon.
Demerger of the diagnostic business having 50% growth, great prospects and 50% operating profit should re-rate the 3B Blackbio stock to 30-40 PE for the long term. Since more than 90% of the profit comes from 3B Blackbio, it means there is still upside left, purely considering the non-Covid business. The assumption is that the demerger will happen before end of Q4 FY21 as announced by the company.
Disclaimer: I am invested with a significant percent of my portfolio with average at around 200 levels.
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Vikas your estimated price for a kit is very low as compared to the quotation given to ICMR for bulk tender it is coming around Rs 430+ per test that may include GST as it is not clear to me that the price of contract is inclusive or exclusive of GST. Cant comment on margin because we dont have any idea about margin on this specific COVID related product which is going to be the main revenue. Also pricing would be totally different for small orders from private labs. One thing is sure that Raw Material cost and employee does not constituent much to the expenses if the revenue grows with high rate and i have reached to this conclusion after going through their expense profile for last few quarters.
We should not ignore their normal business which is growing with 30+% and also expanding margin. Just add that normal business coupled with COVID business this year and for next year normal business with 30% growth and some UK and US biz ( UK biz is confirmed by management also). I dont know how to value it with PE as volatility in biz growth and profit will be very high.
As per my earlier post i m just repeating that in my understanding the real moat of this type of Biz is Its Employee and their long standing association with it. It’s manpower is highly qualified and has very low attrition rate that can be verified by looking at their profiles on professional platforms. U cant have a product without a team of experience Scientists.
Disc: Holding and invested for long term.
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Yes, thanks for the correction, tender has two different items, RNA extraction and PCR kits, the PCR testing kit is indeed Rs 450 approx.
So, my calculations should be 2x.
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Covid-19: High percentage of false negatives seeds suspicions about rapid antigen tests
https://timesofindia.indiatimes.com/india/covid-19-high-percentage-of-false-negatives-seeds-suspicions-about-rapid-antigen-tests/articleshow/77176233.cms
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Hopefully this means better order-wins for Kilpest, likely Chinese imports would now be banned, unless they are quickly certified for govt tender process.
Disc: Invested