Looks like you were all having a few beers while writing on HC...

Looks like you were all having a few beers while writing on HC fellas. Love Friday nights!

While we all want to see cash receipts grow as fast as possible, it's good to keep in mind where this business sits int he value chain and the nature of their product. 

As someone who spent most of his career in manufacturing, I know that it takes time to adjust production lines for new products and technologies.Specifically to BCT's technology, it's not a case of just sig a contract and let's sell it.

Their technology needs to be incorporated into their own products, production lines have to be adjusted and automation procedures re-calibrated. All of it has to comply with the industry where you operate and pharma/bio-banking has some of the strictest regulations in place.It all requires planning and some period to scale up to optimal levels.

Companies - especially in this sector - do not go through the effort and capital investment that Labcon is taking to change its production lines etc as we speak- unless they are sure this product will be part of their production and product portfolio for 10,15,20 years. Their capital decisions are based on the next decade or decades, not on quarterly numbers. 

For me that's the major attractiveness of BCT and its business model. Sales and orders will be STICKY for the very long haul.

Importantly, once the BCT product is fully integrated into their own products and their automation is complete, volumes will rise quickly.  That means fast growing production and cash receipts. I think we will see that playing out with a bumper rise in sales and cash receipts in the 2H of the financial year.

Im my books, this is one of the most undervalued stocks on the ASX and perhaps its "non viral growth' nature plays a role in terms of how investors look at it. 

That said, the fact that this business will be profitable and cashflow positive with  $8-10m in sales, shows this is a real business - a rarity in micro cal land. 

Have all  a great weekend.