Source Bioscience PLC (SBI)

[WickedLester]

Here's an interesting company which I recently bought some shares in.

https://www.sourcebioscience.com/

They look to be one of the real winners from the COVID pandemic and I think if PCR testing continues for another 18 months at scale then most of the market cap will be backed up by cash with the business thrown in for pretty well nothing.

The shares are tightly held with Chris Mills holding 30% and some other institutions also own large stakes. I don't expect Chris Mills to bid though as he only recently brought the company back to market. I wouldn't think he'll be a seller either once his lock in ends as the price doesn't look at all full to me.

There was a half year trading update out recently and the first half looks to have been excellent. EBITDA was £11.2m against a market cap of around £120m.

https://www.investegate.co.uk/sourcebio ... 00035193G/

Cash was up to £17.2m

On the outlook for the second half they say:

As previously reported, the Company anticipates a strong second half bias to revenues, earnings and cash generation, largely driven by the phasing of COVID-19 testing revenues generated through its newest business unit, Infectious Disease Testing.

I think I saw a forecast somewhere that they could finish the year with net cash of £50m. If PCR testing continues throughout the next financial year at a similar pace then I think they could have close to £100m in cash.

This is not a one trick pony either, they also do cellular pathology for cancer and the like and this business unit is expected to have a strong period due to surgery being put back by the pandemic.

All in all I reckon this is one of the better COVID punts which has value even if testing ceases due to their other business units which should also do well in the coming months.

Anyone have a view?