Sector: Health Care & biotechnology

Market Cap: US$ 26.5 m

Bloomberg: BMX PW

Av. daily turnover: US$ 0.03 m

Price: PLN 26.50

12M range: PLN 18.14-31.05

12M EFV: PLN 36.40 (→)

Free float: 73%

Recent events

1. The Company’s financial results: April
2. Funding for a production line: January
3. Dividend proposal (DPS at PLN 0.50): April

Upcoming events

1. Release of consolidated 1Q23 financial results: May 30
2. Dividend payment: June
3. Completion of the production capacities expansion: 3Q22

Guide to adjusted profits

No factors necessitating adjustments.

Stock performance

4Q22 financial results review

4Q22 revenues/ EBITDA/ EBIT/ NI reached PLN 13.4/ 0.7/ 0.2/ 0.3 million. The Group’s revenues were in line with our expectations, while the profitability was materially lower than we expected and EBIT reached merely PLN 170,000 which implies the EBIT margin at 1.3% vs 4.1% expected by us. We would like to note that the profit on sales was negative and stood at PLN 509,000 in 4Q22. 4Q22 low profitability stemmed from an inflationary growth of costs which was not incorporated in BioMaxima’s price lists (the management claims this will be done in a few months). 4Q22 NI at PLN 311,000 was higher than EBIT due to high revenues on the financial activity. However, 4Q22 financials affected the record high FY22 results to a limited extent with FY22 revenues/ EBITDA/ EBIT/ NI at PLN 143.9/ 36.9/ 34.9/ 28.9 million.

Production capacity expansion

In the financial statement for FY22 BioMaxima informed about the completion of a new production facility and warehouse and office adaptation. At the moment, the Company awaits the final occupancy permit. Finally, in 3Q23 the expansion of production capacities in the existing building should be finished. We expect new production capacities to have a material impact on BioMaxima’s financial results BioMaxima starting from 4Q23. Net cash at 2022-end reached PLN 7.1 million which is below our expectations at PLN 11.9 million, albeit this results from booking of a major part of capex related to the expansion in 2022.

Financial forecasts

Nominal differences between actual and expected 4Q22 results are relatively small, therefore we do not modify our financial forecasts.

Valuation

Our 12M EFV at PLN 36.40 per share stays intact.

Catalysts

1. Increase in demand for the Group’s products unrelated to the pandemic
2. Increasing patients awareness
3. Production capacity expansion
4. Successful launch of new products
5. Exports development
6. Sale of drug tests related to new regulations
7. Acquisitions of companies compatible with the Company’s operations
8. A potential takeover target
9. Successful restructuring of the Romanian subsidiary
10. Moderate efficacy of vaccines and drugs for Covid-19
11. Presence in all the fast growing IVD segments
12. Increasing recognition of the Company in Poland and abroad
13. High efficiency of tests
14. Spreading over time the changes in law (IVDR)

Risk factors

1. Dwindling demand related to the economic deterioration
2. Continuous inflationary pressure on margins
3. The SARS-CoV-2 pandemic development
4. Change in the health care systems priorities
5. Change in reimbursement policies and IVD funding
6. Change in cooperation terms with public bodies
7. Change in law (IVDR) (postponed for 3 years)
8. Entry of new solutions to the market
9. Growing competition
10. Intellectual property breach
11. Deterioration of products quality
12. Loss of key employees
13. Lack of qualified staff
14. FX rates

Competitive advantages

1. European brand (vital for exports)
2. Attractive products prices as compared to global players
3. Well established market position in Poland
4. Important sales relationships outside Poland
5. Broad product offer (over 3,000 indexes)
6. Own production technologies
7. Focus on globally known and implemented technologies

Analysts: Sylwia Jaśkiewicz, CFA Mikołaj Stępień

GPW’s Analytical Coverage Support Programme 3.0