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Concepta - £2 million placing at 4p. Suck up justifiable anger and BUY

By HotStockRockets | Saturday 4 August 2018

Disclosure: Financial Investigative Media Limited, which is not owned by Tom Winnifrith but by a trust for his dependants, owns shares in companies mentioned in this article. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Tom Winnifrith was an insider on this one but opted not to participate in the placing after all the grief he got for taking part on the Premaitha (NIPT) placing at 4.5p a couple of months ago. Premaitha shares are now 9.9p and that is what you may wish to consider.

Both placings annoyed some investors who had called for an open offer allowing every Tom. Dick & Harry to get in. But Tom (not TW), Dick and Harry  would have flipped their shares into any share price rise so slowing it down when good news came out. The speed at which Premaitha has bounced, causing real happiness to we long suffering holders and to anyone who averaged down as this site advocated, is because that placing was “tight”. We expect the same again with Concepta (CPT).

On Premaitha, BTW, we hear trading is strong and that will drive a re-rate. If there can be some settlement with Illumina that re-rate will be massive. We continue to rate the shares as a buy at up to 12p with a target to sell post any Illumina deal of at least 25p.

Back to Concepta. It is annoying that there is another placing as the company has missed targets and we share the anger of many of you about that.

£2 million is 27% of the enlarged equity. The company has clearly not delivered in China as it has promised. But new chairman Matthew Walls is a very heavy hitter. He took a few shares the rest are in safe hands. Broker Novum is a bucket shop but it is described as a “placing agent” in the RNS. It placed not a single share with its spivvy clients it just handled the paperwork. This placing was tight.

The cash will be used to accelerate the expansion of the myLotus fertility product in China targeting an estimated market of 2.3 million women per year across Hebei, Shanghai, Beijing, Shandong, Henan and Liaoning through its initial distributor agreements. The Company plans to further expand its reach to other target hospitals via new Chinese distribution partners. But the funds will also be used to advance the Company's launch of myLotus in the European marketplace where it has progressed its application for CE Marking with approval expected in H2 2018. Funds will be deployed to market myLotus to be sold through online channels direct to consumers, initially in the UK and Germany.

We trust Walls to deliver and as Concepta rolls out in Europe and announces more Chinese deals this stock will re-rate quickly.

This company RTO’d at 7.5p and this tip has not covered us in glory. But looking forward we expect material profits by calendar 2019, the market cap today is a mere £8.4 million.

On that basis the stance is STRONG BUY at 4.6p and at up to 7p with a target to sell well into the teens.

This article first appeared on HotStockRockets - to catch the next red hot share tip from the HotStockRockets team for just £5 click HERE

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