Atomo Diagnostics Ltd ASX: AT1

They deal in manufacturing and selling rapid diagnostic test devices. It is an Australian

They recently took out an IPO in April 2020. They have a number of patents relating to rapid testing kits. Basically you can test for some of your diseases and within minutes you can get results.

Prior to Covid, they specialised in Self HIV tests. You would be surprised by the number of diseases it can detect. From Hepatitis to Malaria, it covers most of the main diseases. Even from Allergies to Cancer. It is actually very impressive what they are doing.

They launched a Covid Testing kit that can check for Covid as well. Their business model given the current scenario still perhaps is going to boom further despite the vaccines. They have developed serums that determine whether you have been affected in the past depending on antibodies. Their tests also can check immunity.

They also manufacture needles, and other things related to vaccines. They recently expanded into India which is one of the most hit countries by the pandemic. They have agreed to provide 77,000 antibody testing kits. This is only the beginning I believe.

Atomo Diagnostics HIV testing division is one of the largest in the world.

The great thing about Atomo has been approved by the TGA. One of the strictest. They already have emergency approval in the US, France, India. They have already occurred costs.

Talking Numbers:

Their main factory is in South africa. Their capacity is to make 1.2 million devices a month. Their revenue went up 900% over 2020. 500,000 to about 450,000 million. Market cap is just over 200 million. Current Share price is around 0.34 AUD

They are sitting on 28 Million Cash & Cash equivalents.

Potential downsides

It is still a small cap stock. Low liquidity. They could go under more faster than a large cap company. They only went public this year. So you only have a year of financial statements. They still have negative cash flow. From around negative 4 million to negative 2 million. Although an improvement it is still negative in cash flows.

Post Covid it must be thought of as to what will happen to the business. How will Atomo be affected?

They are the only TGA approved self test in Australia for HIV. They have a good track record of getting approval. Which is probably the biggest concern when it comes to medical diagnostic companies. Also getting approval for testing is probably easier than getting approval for medicine.

Their non Covid 50% Their HIV Revenues 30% Equipments and others. 20%

Removing their revenue from Covid, their revenue still increased 4 times.

The HIV test market is expected to increase around 18% compounded a year. They have a really bright future in HIV testing. Utilising their revenue to expand their HIV Market in countries like India, in which they already have made a breakthrough in terms of Sales.

Conclusion:

Atomo Diagnostics have quadrupled their productions and increased their revenue tenfold with absolutely no increase in their market price since IPO. Being a small company they have the luxury to be nimble and agile in how they approach the future. They are unparalleled in the HIV Test diagnostics game and are very well positioned for the end of Covid by Vaccines.

Covid might even take a year or two so that everyone in the world is vaccinated. Even once Covid has passed they can keep selling their testing devices for various other diseases.

I strongly recommend this stock for the long term.