I also have to admit that I was extremely disappointed when the share price moved back to the levels prior to the release of the half-yearly. Particularly, when it was preempted by the release of the Veritas Securities broker report and followed by the contract extension announcement. It made me questioned what exactly is the market telling me that I am missing. It then made me to review my previous notes on Alcidion, particularly those taken at the EGM last year to approve the MKM Health acquisition.
For any new investors, these are the posts that I am referring to:
Investor relationsCorporate strategyMKM Health acquisitionFinancialProduct and salesAgeing demographics, lifestyle and status of healthcare systemReviewing those notes (plus information kindly shared by other posters) just reinforces (again!) in my mind why I invested in Alcidion since day 1 of the RTO, why I have continued to accumulate over the journey and, more importantly, why I need to adopt a minimum 5-year investment horizon for my Alcidion investment.
The current share price sure is a disappointment being dragged back to lower levels by low volume trading and bot activities. Given that most of the top holders are sticky, I can only think of Nathan Buzza selling down his remaining holdings as the reason why Alcidion's share price can't seem to generate any upwards momentum. The low retail float composition of Alcidion is a double edge sword. It can either put a rocket under the share price riding the momentum of positive news or it can put relentless downward pressure on the share price when a large holder wants to sell out. I believe this is what we are seeing now. I am happy to be corrected.
Reviewing all my Alcidion notes and comparing it to the 4C and half-yearly just confirms to me that significant progress has been made and the board and management has pretty much delivered on what they said they would do. In the absence of any adverse fundamental developments, I should have faith in my investment thesis and hold on strong.
Moving forward, I do expect the management to deliver on what they set out to do (e.g. building sustainable profitability, improve gross margins, extract synergies and efficiencies, not neglecting R&D and etc). Even so, there are always room for further improvements in how they communicate to the market, engage institutional investors and etc).
In addition to providing financial key points in their corporate announcements (e.g. 4C), they should provide additional business development highlights and outlooks. For example, this could take the form of:
- penetration of key markets
- no. of beds using Alcidion products and generating revenues
- validation of Alcidion's products via sales to new markets and/or customers
- increased roll-out of new/upgraded products
- forecast reduced cash burns for upcoming periods based on achievement of sales targets
- commentary on R&D and their international expansion plans (whether via tapping into existing customer base or joint ventures with hospital operators in other geographical regions).
Sometimes I really think Alcidion is underselling itself. I do not expect fluffy motherhood statements but I expect them to be factual and market themselves in a positive light. It should be going all out on emphasising its strengths. Things that come straight to my mind include:
- strong balance sheet with a capacity to consider debt funding to accelerate its expansion plans
- the business has expanded geographically and costs have now stabilised
- financialperformance reflects the investments Alcidion have made in people, processes and systems tocapitalise on its significant market growth opportunities
- growing revenues are quickly reducing net monthly cashburn and extending the business’ runway to sustained positive cashflow and EBITDA
- with a strong balance sheet and solid revenue growth, Alcidion is well positioned forcontinued growth without adding significant overheads
