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ASX:IDT
IDT Australia Ltd
Investment Summary
The fund managers believe that IDT Australia Ltd is positioned for significant growth following several positive developments in its contracts and operational performance. After signing a Master Service Agreement with Sanofi, which encompasses a contract valued between $3m and $3.5m, IDT’s revenue for FY24 reached $13.5m, up 92%. The company also secured a follow-on contract with Sanofi worth $2.5m to $4m, reinforcing its growth trajectory. Additionally, the recent non-binding takeover bid from Mynd Biotech at $0.15/share, amidst operational enhancements, suggests a strategic interest in IDT's GMP-certified facility and capabilities. The managers note that IDT's loan facility of $20m strengthens its financial position, facilitating continued expansion. IDT's advanced therapies pipeline, valued at $24.7m, coupled with a forecast for sustainable profitability by FY25, further supports the assertion of its positive outlook. Overall, the company remains a viable investment opportunity.
Commentary From The Managers
Saville Capital
31 Jan 2025
$0.12
- IDT’s 2Q FY25 revenue of $5.3m increased by 97.7% year-on-year, marking the highest revenue since the strategic transformation program began.
- Significant revenue boost and new contracts stemmed from growth in the Advanced Therapies vertical, which offers higher margins due to complex manufacturing needs and high barriers to entry.
- A substantial portion of demand arises from repeat business and US-based customers, enhancing geographic diversity.
- Australia is increasingly attractive for clinical trials due to its cost-effectiveness, high regulatory standards, and tax incentives, benefiting IDT.
- IDT’s independence and strong reputation in drug development position it as a key beneficiary of the trend.
- In the quarter, IDT submitted 20 customer proposals valued at $17.8 million, indicating a robust pipeline.
- This strong pipeline and IDT’s history of securing contracts suggest expectations that FY25 results will exceed the prior year.
Saville Capital
31 Dec 2024
$0.11
- Saville Capital recognizes the significant development of IDT Australia Limited (IDT) with a new three-year $20m loan facility.
- This facility offers financial flexibility essential for supporting IDT's growing sales pipeline.
- IDT's strategic move replaces the existing $4.7m facility with NAB, emphasizing their commitment to scaling operations.
- The loan enables IDT to capitalize on contract wins and expanding market opportunities both domestically and internationally.
- With an interest rate of 10.60% pa, the facility is secured against IDT's asset portfolio.
- Similar to developments with MCA, this financing moves IDT towards being cash flow positive, relieving pressure on shareholders to provide further equity.
- Saville Capital continues to hold a positive outlook on IDT, anticipating continued growth and stability.
Saville Capital
30 Nov 2024
$0.10
- Saville Capital updates its investment thesis on IDT Australia Ltd amid recent developments.
- IDT received a non-binding proposal from Myndbio Pty Ltd for the potential acquisition at an indicative price of up to A$0.15 per share.
- Mynd has not provided an updated proposal in a timely manner post-due diligence, leading the IDT Board to terminate discussions.
- The Board is open to revisiting discussions with Mynd if a new proposal is presented but is currently focusing on maximizing shareholder value.
- IDT's growth strategy aims to achieve a sustainable level of profitability by FY25.
- Saville Capital believes the bid has distracted from IDT's strong operational performance.
- Short-term reactions may result in some holders selling, but this could allow for a more efficient response to future positive updates.
- Saville Capital continues to hold its investment in IDT, emphasizing ongoing positive momentum towards sustainable profitability.
Saville Capital
31 Oct 2024
$0.13
- IDT reported unaudited revenue of $5.2m in lQ FY24, marking a significant increase of 70% on the previous period.
- This revenue is the highest since the start of its strategic transformation program.
- IDT secured $6.8m in new contracts for the quarter, all from returning customers.
- This repeat business typically yields improved profitability as customers shift from development work to higher-margin manufacturing contracts.
- The Company submitted 37 new customer proposals valued at $24.7m, with about 60% directed at existing customers.
- The growing pipeline and IDT's strong track record of converting proposals into contracts support expectations for FY25 results to exceed prior year.
- All factors suggest that IDT is moving towards a sustainable profitability position.
Saville Capital
31 Aug 2024
$0.12
- Saville Capital continues to hold IDT Australia Ltd as it secured a follow-on contract with Sanofi.
- The contract is valued between $2.5m and $4m for preclinical formulation, development, and manufacturing of Sanofi’s mRNA technology.
- This follows the Master Service Agreement (MSA) with Sanofi, announced in April 2024, which provides flexibility for additional services.
- IDT generated $13.5m in revenue for FY24, with an annualised run-rate of $18.4m.
- This new contract is expected to support the forecast growth to over $20m in revenue for FY25.
- The anticipated revenue growth is aligned with achieving profitability in the near future.
Saville Capital
31 July 2024
$0.13
- IDT had a very strong finish to FY24, with 4Q revenue up +87% on pcp.
- FY24 revenue came in at $13.5m, up +92% on pcp and ahead of guidance.
- Growth in 4Q largely came from higher margin divisions, notably Advanced Therapies.
- Advanced Therapies is aligned with rapidly growing areas in medical technology, specifically Antibody-Drug Conjugates (ADC) and mRNA.
- The Company is confident in generating strong revenue growth into FY25.
- IDT’s pipeline is robust, with $24.7m worth of proposals under active consideration, mostly for Advanced Therapies.
- There was a significant surge in the number of sales leads in June 2024, increasing to 114 leads compared with 29 in April and May combined.
- No update on the non-binding indicative proposal from Myndbio to acquire IDT for $0.15/share, but further news is expected soon.
Saville Capital
31 May 2024
Unknown
- Non-binding takeover bid for IDT at $0.15/share from Mynd Biotech.
- Bid coupled with a $7m capital raising at $0.09/share for equipment upgrades and working capital.
- IDT was trading at $0.10 at the end of May, indicating a potential mispricing in the micro-cap segment.
- Strong possibility of strategic interest from multiple parties due to ownership of a GMP-certified and TGA licensed facility.
- IDT has a Net Tangible Asset (NTA) of ~$0.08/share and a replacement value of $0.24/share.
- Saville Capital continues to hold and has increased their position in IDT, which is ~10% of their portfolio.
- IDT is viewed as a potential strong contributor to performance as developments unfold.
Saville Capital
30 Apr 2024
$0.09
- IDT signed a Master Service Agreement with Sanofi Australia for cGMP manufacture of global mRNA assets.
- Collaboration focuses on mRNA-based vaccine formulation and clinical trial material, targeting various indications.
- The agreement provides flexibility for Sanofi to select services and includes follow-on work packages.
- The initial order's value is estimated at $3m to $3.5m, over 25% of IDT’s current annual revenue run-rate.
- Significant ongoing work expected annually from the contract.
- This revenue falls under IDT’s Advanced Therapies AT vertical, aligning with their strategic vision for higher-value contracts.
- IDT has a unique aseptic sterile fill facility for mRNA downstream processing in the Asia Pacific.
- The 3Q FY24 update shows continued strong growth with revenue of $3.2m, up 48% on pcp.
- IDT also secured $4.9m in new contracts, including the Sanofi contract.
- Total current client proposals increased by 17% to $26.6m by the end of the quarter.
- With current growth trajectory and sales pipeline, IDT remains on track to become profitable in FY25.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
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