How has Batm Advanced Communications managed to double its Bio-Medical revenue during FY20?

  • February 22, 2021 02:23 PM GMT
  • Team Kalkine
How has Batm Advanced Communications managed to double its Bio-Medical revenue during FY20?

Summary

  • Batm Advanced Communications Ltd had reported a revenue surge of 49% during FY20 ended on 31 December 2020.
  • BVC’s Gross margin had improved by 620 basis points during FY20.
  • The Company had entered into an optional agreement to sell NGSoft for approximately USD 33.0 million to Aztek Technologies.

 

Batm Advanced Communications Ltd (LON: BVC) is the LSE listed technology stock. BVC’s shares have generated a return of approximately 173.81% in the last 12 months. It is listed on the FTSE All-Share Index. The Company was incorporated in 1992.

Business Model

Batm Advanced Communications Ltd is engaged in the research and development of data communication products for medical laboratory systems. It is headquartered in Israel, with offices in North America, Europe and the Far East. The Company had two broader business segments:

  • Bio-Medical Division
  • Networking and Cyber Division

Recent News

On 19 January 2021, BVC had updated that its NFVTime would provide virtual networking solutions through public cloud environments like Microsoft Azure and Amazon Web Services (AWS).

On 12 January 2021, BVC entered into an optional agreement to sell NGSoft for approximately USD 33.0 million to Aztek Technologies.

FY20 Financial Highlights (for twelve months period ended 31 December 2020, as on 22 February 2021)

 (Source: Company result)

  • BVC had reported a 49% surge in its total revenue to around USD 183.6 million during FY20, positively driven by significant growth in the Bio-Medical division. The sales during H2 FY20 remained 37% higher than its H1 FY20.
  • The Company’s Gross margin had improved by 620 basis points to 33.1% during FY20 as compared to FY19 due to a substantial increase in the gross margin of its Bio-Medical division.
  • Sales & Marketing expenses accounted for around 11% of revenue during FY20, while it had represented approximately 13% of revenue in FY19. The R&D expenses had increased to USD 10.3 million due to increasing investment in molecular biology and NFV technology.
  • BVC had increased its cash generated from operating activities to USD 20.1 million during FY20, while it was USD 8.4 million during FY19. The increase was due to an improvement in profitability levels and favourable working capital movement.
  • The Company had sufficient liquidity of USD 53.4 million as of 31 December 2020, while it was USD 44.3 million as of 30 June 2020, driven by an improvement in cash because of efficient working capital management.

 

Divisional Highlights

 

Bio-Medical Division – The revenue for this segment had almost doubled in FY20 due to substantial growth achieved in all units. The gross margin had witnessed an improvement of around 1270 basis points to 36.3% during FY20 due to the higher margin witnessed in new molecular biology.

 

Networking & Cyber Division – The revenue remained slightly lower in FY20 to USD 54.90 million, adversely impacted by the Covid-19 pandemic. Moreover, this segment had reported an FY20 operating loss due to an unfavourable shift in sales mix towards low margin products.

 

Share Price Performance Analysis of Batm Advanced Communications Ltd

(Source: Refinitiv, chart created by Kalkine group)

Shares of Batm Advanced Communications Ltd were trading at GBX 110.87 and were down by close to 3.59% against the previous closing price as on 22 February 2021 (before the market close at 08:51 AM GMT). BVC's 52-week Low and High were GBX 30.00 and GBX 150.50, respectively. Batm Advanced Communications Ltd had a market capitalization of around £506.50 million.

Business Outlook

The Company had kickstarted 2021 on a bright note illustrating rising demand in both business segments. As a result of which, BVC had expected revenue growth from continuing operations in 2021. Moreover, the Company had anticipated a further improvement in FY21 gross margins due to rising contribution from NFV solutions and molecular diagnostics. BATM had also entered into an optional agreement to sell NGSoft Ltd, and it would utilize the net proceeds to accelerate the progress of its core activities like molecular diagnostics and NFV through an acquisition. Furthermore, the order book of its Diagnostics unit is more than the levels at the equivalent period of 2020. Also, BVC anticipated that NFVTime would make a healthy contribution to FY21 Networking & Cyber division revenue. Overall, the Company is well-positioned for sustainable growth of profitability.

 


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