Welcome to our new product “Friday Takeaway”
This will delve a little deeper on individual companies and focus on non-house stocks under £200m market capitalisation to help raise awareness
Friday Takeaway from UK Small Caps
This will delve a little deeper on individual companies and focus on non-house stocks under £200m market capitalisation to help raise awareness
21st March 2025
Alphabetically arranged
Share prices and market capitalisations taken from the current price on the day of publication
After ‘challenges’ these businesses may emerge with tangible opportunities.
BATM Core Solutions
CYAN Indian H2 roll-out
BATM Advanced Communications Ltd 14.7p £64.4m (BVC.L)
Financial Calendar:
Year End December, results expected in March, Interims June, interim results expected in August
Three Main Shareholders:
Zvi Marom (NED and Founder) 22.19%, Lombard Odier 4.3%, Hargreaves Lansdown 4.35% *
Key Investment Points:
Recovery Underway, Cash Chest, M&A
* taken from Alpha Terminal
A provider to international blue-chip clients of real-time innovative technologies focusing on core activities in Cyber Business, Networking and Diagnostics. The published trading update, with its backdrop of divestment and macroeconomic conditions, paved the way for disappointing finals. These reported a marginal increase in total revenue to $117.3m, with stronger growth in the Cyber and Diagnostics divisions offsetting lower revenues in the Networking division. The Loss Before Tax was $5.4m, which excluding other expenses and the adjusted PBT was $3m, down from last year’s $5.9m. Substantial operational changes have been implemented and businesses discontinued. The cash and short-term investments were $31.6m (30 June 2024: $32.6m).
The ‘reiterated’ strategy is to focus on three core activities. The funds are available to explore for add-on M&A opportunities and organically build capability, while non-core mainly loss-making businesses are closed or sold. BATM reported the disposal of Progenetics, a non-core asset, for approximately $2m in cash for its 51% shareholding. If the eco-med activities are not sold by the end of 2025, they are likely to be closed.
A customised version of the Group's advanced encryption platform was developed during the year and it’s on track to deliver the first units to its partner in the first half of the current year. A new order of over $2.3m was received, including development work, on Quantum computing. After completing a pre-clinical validation process, sales are commencing for its new MDXlab molecular diagnostics instrument, which is a compact, cost-effective solution. Potential customers are hospitals, private clinics and laboratories. The reorganised networking business has launched a new X-series portfolio of a wide range of cost effective fully scalable devices. It has won a three-year agreement with Mexico’s largest telecoms company and so far received orders of $2.4m.
Successful proof of concepts with clients continue worldwide. A recovery for FY December 2025 is forecast, with turnover increasing 11.6% to $131m and with a return to PBT of $4.1m.
Hybridan Comment: The positive effects of the 2024 initiatives, supported by cash of approximately £24.4m (Hybridan forex conversion) which is 38% of the Market Capitalisation, should accelerate the recovery.
Cyanconnode Holdings 12.75p £42.6m (CYAN.L)
Financial Calendar:
Year End March, results expected in July, Interims September, interim results expected in November
Three Main Shareholders:
Axia Investments Ltd 13.01%, Premier Miton Group 9.53%, Herald Investment Management Limited 6.92%
Key Investment Points:
Cash Runway, Stronger H2, Break-even
Funds for working capital were raised in September 2024, primarily to fund the growth of its Indian smart metering market roll-out. In an oversubscribed placing, £5.5m was raised at 9p which can be added to the Interims cash and near cash of £3.3m.
Cyan’s Indian subsidiary, DigiSmart Networks, qualified last year as an Advance Metering Infrastructure Service Provider, so it can bid directly for large-scale smart metering tenders in India.
Cyanconnode has designed and developed Narrowband RF mesh networks that enable Omni Internet of Things (IoT) communications. It is used to provides customers with long-range, low-power, end-to-end networking solutions, and high-performance applications such as Smart Meters that help enhance service delivery, improve business efficiency, and save energy.
The Interims order book doubled to 13.1 million units. The backlog stands at 9.7 million units yet to be deployed, and a significant portion of this is expected for delivery H2 FY March 2025. Historically, the revenue recognition is heavily weighted toward the final quarter as order completions and deployments peak. This seasonal trend is expected to have continued, with a substantial proportion of revenue materialising in Q4. This week its 13% shareholder, Axia Investments Ltd, provided a £5m unsecured loan to support near-term growth opportunities in order to secure these high-value contracts.
The Interim revenue to September 2024 was little changed at £5.6m, with an operating loss of £2.2m, but the expectations have been set for a significant increase in H2 revenue. The gross margins were reported to have improved considerably compared to H1 as a new, lower cost, gateway was developed. After losses of £4.3m for YE March 2024, break-even can possibly be anticipated.
Hybridan Comment: A positive return from the Indian investments will have been a long time coming and we are hoping that FY March 2025 will not be a disappointment when it is reported. A year end trading updated can be expected towards end of April, as it was last year with finals reported in July.
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