30/07/2007
Recommended by Growth Company Investor at 147.5p in April, diagnostic test kits expert BBI remains good value following a radiant set of results and a raft of new developments.
A volley of acquisitions, added to potent organic growth, helped drive pre-tax profits up by 86% to £1.8m for the year to March, on turnover up 53.2% at £9.7m. Improvements came from all quarters of the group, with the test kit manufacturing section of the diagnostics arm providing the biggest rise, of 96%.
The healthcare division, which distributes products for diabetics, launched two new products in the year. Looking forward, two developments should provide further boosts: the first is to put its hypoglycaemic tablets on the shelves of Boots chemists from September; and the second is an agreement with the NHS for an October launch of a standardised set of diabetic products, incorporating two of BBI’s.
Having completed four smaller acquisitions during the year, BBI then purchased Theratase post year-end for £24.1m in cash and shares. This acquisition created a new enzyme division forecast to contribute £10.7m of revenue this year and take BBI into laboratory testing, as well as expand its sales to the top ten global diagnostics companies. Chief executive Julian Baines said this new division not only possesses a strong bottom line but will offer ‘quite big growth as we invest in it’. Negotiations are in full swing to win significant new contracts and product developments are being stepped up.
House broker Teather and Greenwood predicts £6.4m and £9m profits in 2008 and 2009, with upgrades likely as three products are now with the FDA, including a blood platelet test for Abbott ‘in the final stages [before approval]’ that could be very big.
Trading on around 15 times next year’s earnings and on PEG ratios of sub one times, with earnings growth of 56% and 35% predicted for the next two years, the shares look good value. Buy.
| Market cap: | £71.05m |
| PE Forecast: | 15.2 |
| Share price: | 167p |
| AIM | 0pm |
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| Other company articles: |
| 29/10/2007 |
| 30/07/2007 |
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