Compumedics Limited (ASX: CMP) shares an update regarding the contract negotiations with the Somfit technology which is China’s leading health-check organization, Meinian Onehealth Healthcare Holdings Co., Ltd. There was an announcement made in the month of May 2018 where the company has shared its contract negotiations with these two companies. However, now the company advises its customer about the delay in the contract negotiation due to some key issues which remains unresolved. These include that the interest of the Compumedics shareholder interests around the scope of intellectual property (“IP”) rights is not hampered and also their control and protection. These issues also consider the commercial conflicts of interest with a third party which in introduced in the joint venture discussions and were introduced at late stage in the in the process of negotiation and completion process.
These issues, including commercial conflicts of interest with a third party introduced to the JV discussions, arose and/or were introduced at a late stage in the negotiation and completion process and no resolutions is expected to approach. In Spite of the complexities of the proposed investment transaction senior Health 100 executives have confirmed that still want to proceed with a Somfit trade. Compumedics is no longer able to conclude a date in order to finalize JV with Health 100. As a result, Compumedics will be now be focusing on other trade and investment opportunities for the Somfit technology in China as well as other key international markets.
As per the FY18 performance review, the company generated revenue worth $37 million as a result of sales growth in international market for the core business. The company reported an EBITDA of $4.2 million as a result of profit generated through sales and also the operational improvement and efficiency gain. There was a strong growth in the NPAT despite of $0.7 million charged as tax. The core business grew by 8% only which was slower than what it was expected. The net cash position of the company is maintained. The net asset of the company is $23.2 million.
The current market price of the company is A$0.370 (AEST 4pm) with market capitalization of A$60.24 million and PE ratio 21.25x. As per the chart, the moving average convergence and divergence line is moving below the signal line but very near to each other.
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