TPI provides its latest research note on DeepVerge plc (DVRG.L)

DeepVerge has announced its unaudited interim results for the six months ended 30 June 2021. Once again delivering on best financial expectations, H1 2021 revenues expanded by 231% to £3.319m (H1 2020: £1.004m) in tandem with gross margins rising to over 52% (H1 2020: 41%).

EBITDA losses crept up by only 26% as a result, despite a 172% hike in administration costs in anticipation of sharply higher levels of activity again being seen in the second half. With over £9m finance available at period end to support not only a production ramp-up of Modern Water’s Microtox® PD wastewater SARS-CoV-2 detection systems, high volume processing capacity for the Skin Trust Club’s home test kits and ongoing joint venture negotiations with China Resources, the Board’s overall revenue guidance presently remains unchanged at £10 million given that it is still too early to provide an accurate prediction of their impact on year end numbers.

Recognising the scale of the opportunities being presented and in expectation of further significant news releases between now and the year end, however, on 3 August 2021 TPI updated its forecasts and financial model for DeepVerge, resulting in an increased price target of 94.7p for the shares (up from 84.8p that was previously).

(Please note that TPI’s valuation is based on financial modelling and there is no guarantee that such a valuation will ever be realised, therefore please do not base investment decisions on this valuation alone. Also please note that past performance is not a reliable indicator of future results.)

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We would draw your attention to the various disclaimers in the document both at the beginning and at the end of the note. Retail clients (as defined by the rules of the FCA) must not rely on the research document. In particular you should note that the research document is a non-independent marketing communication. The analyst who has prepared the research is aware that TPI provides research to DeepVerge plc. Accordingly the research has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibitions on dealing ahead of its dissemination.

The information in the document is published solely for information purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. The material contained in the document is general information intended for recipients who understand the risks associated with equity investment in smaller companies. It does not constitute a personal recommendation as defined by the FCA or take into account the particular investment objectives, financial situation or needs of individual investors nor provide any indication as to whether an investment, a course of action or the associated risks are suitable for the recipient

Copyright © 2021 Turner Pope Investments (TPI) Limited, all rights reserved.

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