Microsaic Systems (LSE: MSYS) 0.24p, Mkt Cap: £15m
Microsaic have just reported very historic Finals to December 2020. These did not contain the recent significant events, such as the ‘rescue fund raising and new management. Msys already marked the potential change in fortunes by signing a global sales supply agreement for regulatory approved, CE mark, miniaturised mass spectrometry equipment and service on a non-exclusive basis with DeepVerge. Aim listed DeepVerge has a £60 mkt cap and will market and will distribute Msys’s portable solutions for healthcare diagnostic evaluation and environmental contamination detection. There is an initial order book of £100k.
Msys moved further into the future with the announcement of a JV with a Chinese marketing partner. The deal is a couple of years from producing cash flow but it is a large attractive market. The terms have yet to be finalised for the proposed assembly and sale of the monitoring equipment. This is subject to securing a medical device licence in 2022, although Microsaic’s technology is expected to have production capability in China later this year. In 2019, there were 33,000 hospitals registered in China, with 7.9 million beds.
Microsaic floated on AIM in 2011 to develop and commercialise micro-engineering chip-based mass spectrometry equipment. Having invested around £30m over 20 years of development, Microsaic do have an innovative patent portfolio of cutting-edge technology. Microsaic serves markets in Human Health, Environmental Health and Diversified Industries. The commercialisation strategy is via co-development technology JV and Partnerships with leading global businesses. These Covid ravaged finals showed revenue down to £0.2m from last year’s £0.9m with a reduced Loss before Tax of £2.6m.
After the year end to January it raised £5.5m at a deeply discounted but oversubscribed placing at 0.1p and around 60% of the shares now held with Institutions such as Unicorn Asset Management with 12%, IS Partners 9.6% and Hargreaves 9.5%. Also, two NEDs were appointed to the Board; Gerard Brandon and Dr. Nigel Burton and are clearly making a positive impact.
As Gerard is the CEO of both DeepVerge and Cellulac and has robust track record in the sector as in 1996 as he built Alltracel Pharmaceuticals with numerous patents granted on refined cellulose. In March 2020, he was appointed as a Non-executive Chairman to Modern Water plc, which was subsequently acquired by DeepVerge(formerly Integumen). Dr. Nigel Burton, is the second NED and spent over 14 years as an investment banker at leading City institutions including UBS Warburg and Deutsche Bank, including as the Managing Director responsible for the energy and utilities industries. Nigel spent 15 years as Chief Financial Officer or Chief Executive Officer of several private and public companies. Nigel is currently a Non-executive Director of LSE Main Market listed BlackRock Throgmorton Trust.
We estimate that net cash is around £3.5m which is sufficient fund for further distribution agreements to signed. After the rescue, the shares are at a year’s high as the brighter prospects seem worth backing but speculative.