...as virus test firm thrives
ENSURING that tests are safe, fast and accurate is core in the fight against Covid-19. But the UK is falling short. EKF Diagnostics, a medical devices firm based just outside Cardiff, could almost certainly help.
More than a decade ago, the group devised a way of transporting swabs for highly infectious diseases in a way that killed the virus while keeping the molecular markers alive.
Created in preparation for a worldwide pandemic, t he equipment has been used for years to test for diseases such as TB and HIV, with manufacturing centred in America.
In March, chief executive Julian Baines saw a need for his kit closer to home. The Cardiff offices, largely used for administration, were turned into laboratories, new staff were brought in and the company swiftly began to make its devices for the UK.
Most Covid-19 tests done in the UK today have to be transported in refrigerated containers to laboratories that are specialise in handling highly infectious viruses. Using EKF equipment, however, swabs do not need to be kept cold, can be kept for months and, because they are not infectious, they can be tested in most laboratories around the country.
Companies, schools and universities have adopted EKF’s technology, turnover has soared and the group is moving to a new site to increase capacity.
Take-up has also been widespread overseas, especially in t he US, where customers include the Department of Homeland Security and the Centers for Disease Control and Prevention. The NHS has been slow to engage with EKF. Now however, there are signs of change. NHS Wales is not a customer but Public Health England recently endorsed EKF’s kit, acknowledging that it is both safe and effective. That should drive sales in coming months.
Even without widespread NHS adoption, EKF’s testing division has had a significant impact on group sales and profits.
Revenues are well ahead and brokers forecast that profits will more t han double to £20.2 million this year. EKF is also paying a maiden dividend of 1p in December to all shareholders on the register by November 5.
The company is not just a fleeting beneficiary of Covid19. A leading manufacturer of specialised medical diagnostic equipment, EKF is known for making sophisticated gadgets used in surgeries worldwide, t hat show within minutes whether people are anaemic or have diabetes.
Its high- speed diagnostic tools lead the way globally and have maintained a strong position throughout the months of lockdown.
Midas recommended EKF in 2012, when they were 28.5p. By 2016, the shares had s l umped to l ess t han 7p, following a disastrous US acquisition.
Veteran investor Christopher Mills has since stepped in as chairman, the business has regained its focus and the stock is now 59p.
EKF has delivered other benefits to shareholders. The group spawned kidney disease specialist Renalytix AI, recommended by Midas in June 2019 at £2.40 and now £4.38.
Shareholders in EKF received shares pro rata in Renalytix and they will soon be offered shares in other spin-offs, Verici Dx coming to AIM this month, and Trellus Health, floating next year.
Traded on: AIM Ticker: EKF Contact: ekfdiagnostics.com or 029 2071 0570
MIDAS VERDICT: EKF has benefited from its swift response to the pandemic but the company has longterm potential too. At 59p, the shares remain a buy.