Good afternoon!
I spent yesterday afternoon catching up on the backlog from Friday, and ended up digging into an AIM-listed Barbados hotel chain called Elegant Hotels (LON:EHG) . What an interesting company. I was tempted at one point to buy a few shares in it, but overall was put off by 2 specific factors - click here for that report. It's one for the watch list anyway, but I'm expecting profit warnings to come in 2017.
Bioventix (LON:BVXP)
Share price: 1485p (up 2.4% today)
No. shares: 5.1m
Market cap: £75.7m
Results, y/e 30 Jun 2016 - this is a terrific set of results. The headlines section is most impressive;
This company operates in an astonishingly profitable niche, with one of the highest net profit margins we'll ever see - profit before tax is 76.5% of turnover. I've wondered in the past if that would be sustainable, but so far, so good.
The barriers to entry seem to be that each new product takes years to develop & test. Also, the volumes are possibly too small to attract any serious competitors. Although such high profit margins do make me nervous, hence why I don't hold this share.
Well done to people that do, as its track record is absolutely superb, and shareholders must be delighted with today's figures. It's good to see some surplus cash being paid out in divis too.
Diluted EPS has risen strongly from just under 50p, to just under 68p - again, tremendously impressive. That gives a PER of 21.8 - a rich rating, but fully justified by these numbers I feel.
Balance sheet - is very strong. Although debtors looks too high at £2.7m. Considering the full year's turnover was only £5.5m, its customers seem to be very slow in paying.
I've just found an explanation for the large debtor balance in the narrative;
Approximately three quarters of Bioventix sales are generated from customer royalties. These are based on our customers’ global sales which are then factored by a royalty percentage and then sent to Bioventix around 2 months after the end of each half year.
In the first half of 2016, this mechanism resulted in $ based and Euro based royalties being converted into sterling around August at post Brexit exchange rates of…
