Tekcapital – Full Year Update
Full year results highlight value creation and growth in services – shares now trade at a discount to NAV and the UK IP sector
AIM listed Tekcapital is an international provider of technology and intellectual property investment services. The company’s objective is to create value from investing in new, university-developed intellectual properties and to produce returns through capital appreciation.
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FY2017 results show good progress and value creation
For the year to 30th November 2017 Tekcapital grew total revenues to $7,263,048. Combined with administration costs falling by 16% to $2,417,284, this resulted in a pre-tax profit of $4,153,154 compared to loss of $2,558,198 in 2016. On the balance sheet, net assets were up 240% over the year to $10,675,961, with NAV per share up from 9 cents to 25 cents.
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Upward revaluation of two companies drives NAV
Tekcapital’s investment portfolio was valued at $7,307,696 at the period end following rises in the value of medical device business Belluscura and smartglasses company Lucyd. Belluscura’s value was up from $731,930 to $981,762 despite an aborted IPO and the fair value of Lucyd was increased by $5,833,393 to just over $6 million after an external valuation of the company following a successful token generation event.
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Shares now trade at a modest discount to NAV and more substantial discount to the UK IP sector average
Following the rise in NAV, combined with a modest slip in the share price, Tekcapital now trades at a discount of 2% to net assets as at 30th November 2017 and at a 30% discount to the sector’s average price to book value. A 40% premium to NAV, in line with the sector, implies a share price of 25.84p, implying 44% upside from the current price. We therefore move our stance from Speculative Buy to Conviction Buy.
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RISK WARNING & DISCLAIMER
Tekcapital is a research client of Align Research. For full disclaimer information please refer to the last page of the full document. This investment may not be suitable for your personal circumstances. If you are in any doubt as to its suitability you should seek professional advice. This note does not constitute advice and your capital is at risk. This is a marketing communication and cannot be considered independent research.
| Year to Nov | 2014A | 2015A | 2016A | 2017A |
|---|---|---|---|---|
| Revenue ($m) | 0.21 | 0.41 | 0.76 | 7.26 |
| Pre-tax ($m) | (0.99) | (1.46) | (2.56) | 4.15 |
| EPC (c) | (5.0) | (4.9) | (6.3) | 10.8 |