BATM Advanced Communications – strong momentum into 2023 expected to push revenues this year
Ready for a big recovery in sales and profits in 2023 – that is the forecast for this leading provider of real-time technologies for networking solutions and medical laboratory systems.
This group, which in January announced a major $26m cyber security order to add to its fast-growing backlog, on Monday of this week reported group revenues for the year to end December 2022 slightly lower at $116.1m ($132.8m), while its EBITDA fell from $29.6m to $8.0m, reducing its basic earnings from 3.26c to 0.06c per share.
Headquartered in Hod Hasharon, Israel and set up in 1992, the Main Market quoted BATM Advanced Communications (LON:BVC) provides real-time technologies for networking solutions and bio-medical systems in Israel, the United States, and Europe.
The Networking and Cyber division is involved in the research and development, production, and marketing of data communication products, including network function virtualisation, carrier ethernet and MPLS access solutions, and cyber network monitoring.
It also offers software services, such as training and technical support, laboratory service and maintenance, and construction contracts.
The Bio-Medical division engages in the research and development, production, marketing, and distribution of medical products, such as laboratory diagnostics and sterilisation equipment.
This division offers molecular biology diagnostics; provides solutions to treat pathogenic and medical waste in laboratories and hospitals, as well as for pharmaceutical manufacturing plants and agricultural applications; and distributes diagnostic equipment and medical supplies of various brands.
The group has a collaboration with Novamed Ltd for the joint development and marketing of a home-use testing kit for COVID-19.
Networking & Cyber Division – 24% of group revenue
This division provides innovative telecom network solutions, software advanced solutions and cyber-security.
It specialises in Carrier-grade software solutions, products, services and hardware.
Bio-Medical Division – 76% of group revenue
This segment of the group is a leading designer and manufacturer of advanced bio-waste treatment.
It also specialises in the development, production and marketing of ‘in vitro diagnostic’ systems and in addition is involved in medical distribution.
The Eco-Med Unit develops and manufactures biological infectious waste treatment solutions for medical, pharmaceutical and the agriculture industry and steam sterilizers, autoclaves for infection control and decontamination procedures in dental offices, clinics and hospitals.
Outlook – confident of prospects
CEO Moti Nagar stated that:
"Looking ahead, the momentum of the second half of the year has been sustained into 2023 and we expect increased revenue in all our units.
With the solid foundations that we have in place in core technologies that we believe will be market disrupters, the Board remains confident in the prospects of the business and is working hard to demonstrate the substantial value that exists within BATM.”
With 436m shares issued, the group has a market capitalisation of around £107m.
The largest holders include Lombard Odier Asset Management (27.1%), Zvi Marom (22.2%), Herald Investment Management (4.21%), Hargreaves Lansdown Fund Managers (3.95%), Canaccord Genuity Wealth (2.43%), KSM Mutual Funds (1.70%), Migdal Mutual Funds (1.68%), Meitav Mutual Funds (1.40%), Harel Mutual Funds (1.17%) and BlackRock Investment Management (1.02%).
Broker’s View – noting strong progress
Robin Speakman, at the group’s broker Shore Capital, has noted the group’s strong progress across the development of its technologies and its operations.
The estimates from Shore are for the year to end December 2023 are for $132m revenues, $5.8m adjusted pre-tax profits and earnings of 2.4c per share.
My View – appealing cyber backlog
This group is profitable, it has a very strong balance sheet and its cash and assets of over $40m. It also has a very valuable portfolio of property and intellectual property.
The recent $26m cyber contract was really quite significant, giving the group additional visibility over the next five years.
The group’s cyber backlog is growing at quite a pace, while it must not be forgotten that the Covid Pandemic is still prevalent in Asia, giving the group even more business.
The group’s shares have been on a downward drift since July 2020, when they were trading at just under 140p.
They have since more than halved from this time last year, and now trade at 24.5p.