The health care sector is facing a myriad of challenges, and some of them are related to the escalating number of infections, changing patient demographics, evolving consumer expectations, the increasing prices, new market players and complex health & technology ecosystems.
The recent challenge many of the industries, including the healthcare industry, are confronting is the coronavirus pandemic which is now affecting people across the world with mainland China, Italy and Iran being the worst-hit countries.
However, in the event of current COVID-19, the demand for medical devices and sanitizers has been on the rise. Besides, several biotech companies are also focused on developing laboratories for detecting and diagnosing the deadly virus.
Considering the severity of the disease, the World Health Organization (WHO) provided interim guidance, on 12 February 2020, to stakeholders as well as laboratories involved in COVID-19 virus detection. The WHO also provided guidance for laboratory biosafety associated with the coronavirus.
Interesting Read: Coronavirus Blackswan Turns 3 Healthcare Stocks to Multibaggers
In this article, we are highlighting an ASX-listed healthcare stock whose share price soared by more than 92% at the close of trading on 17 March 2020.
Let us zoom lens on TDL:
TBG Diagnostics Limited (ASX:TDL)
On 17 March 2020, stock of TDL closed the day’s trade at $0.270, a massive increase of 92.857% compared to its previous closing price. The Company had a market capitalisation of nearly $30.46 million, and ~217.59 million shares outstanding. TDL’s 52 weeks low and high prices were noted at $0.018 and $ 0.300, respectively. TDL had a P/E ratio of 40.000x.
The Company has delivered substantial returns of 366.67% on a YTD basis, and 677.78% in the last three months.
Also Read: Stocks Benefited from COVID-19 Outbreak
About the Company
An ASX-listed health care sector player, TBG Diagnostics Limited is engaged in the development, manufacturing as well as the marketing of nucleic acid test kits and also offers related services. The Company serves the molecular diagnostic industry around the world. TBG Diagnostics operates through three subsidiaries - Texas BioGene Inc., TBG Biotechnology Corp., and TBG Biotechnology (Xiamen) Inc., and has several R&D centres located in the US, Taiwan, and China.
In May 2019, TBG Diagnostics acquired Zhangsha ZhangYe Medical Laboratory Corp through its subsidiary TBG Biotechnology Xiamen.
TDL is also engaged in developing immune function related genetic marker, Killer Cell Inhibitor Receptor for assessment and monitoring of the efficacy of adoptive Natural Killer by using multiple diagnostic platforms such as real-time PCR, SSP, SBT and NGS.
Let us assess the potential reasons for the spontaneous growth of TBG Diagnostics Limited:
ZhangYe approved as a designated testing lab for 2019-nCov
On 27 February 2020, the Company stated that the Zhangsha ZhangYe Medical Lab Corp., TBG Biotechnology Xiamen’s subsidiary, has been approved for a designated testing laboratory for coronavirus, among other labs. TBG Biotechnology Xiamen is a subsidiary of TBG Diagnostics.
As a designated laboratory, presently the considerable test samples from all over Hunan, China are being sent to ZhangYe Medical Laboratories mainly from hospitals and corporate clients whose employees need to be screened for analysis service.
Moreover, the Company revealed that it holds 46.65% stake in TBG Xiamen and TBG Xiamen holds a 100% stake in ZhangYe (a wholly-owned subsidiary). Thus, TBG Diagnostics implicitly has a stake of 46.65% in ZhangYe.
Pause in Trading:
On 17 March 2020, the Company informed the market that there would be a temporary pause in trading of its securities, pending a further announcement.
As the share price of the Company soared over 90% after the trading halt, the investors are expecting brighter prospects from TDL in the upcoming days.
Preliminary Final Report highlights:
On 28 February 2020, TBG Diagnostics revealed its Preliminary Final Report for the period of 01 January 2019 to 31 December 2019. Below are the key takeaways:
- The Company generated revenue from continuing operations of approximately $3,346,000, an increase of 6.1% compared to the previous corresponding period (pcp)/
- The net profit attributable to members was reported to be nearly $765,000, up by 118.4% compared to pcp.
- TDL disclosed that during the year ended 31 December 2019, research and development expenditure decreased to $2,060,896, down by 1.6%.
Outlook and Projections for 2020:
- The Company has plans to provide solutions for transplantation, blood screening, detection of infectious disease, hereditary genetic disease monitoring as well as for cancer therapeutics.
- TBG Diagnostics will continue to look for opportunities for expansion of its core technology via merger and acquisition.
- The Company is proactively increasing its presence in the broader Asian market through various partnerships and collaborations as well as via licensing.
- Further, TDL is also focusing upon the ongoing provision of necessary assistance to associates in China for promoting its products.
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With the pandemic continuing to affect the globe, healthcare companies are evaluating their lead compounds for COVID-19 treatment. Future revenue for these stocks depends on the probability of launching an approved treatment in the market.