Award of new tender.

lse:demg

#1

As there are often 2 ways to look at news, I am going to pick out the main bits of this news release and see how others read it, IE good or not so good.

A new tender that replaces the one between 2011 and 2014, anyone have any idea why there is a gap of 4 years, this might of applied to the monitors with the probes still being bought during those 4 years.

The tender is for a total of not less than 34,000 disposable probes and has a minimum value of over ?4m over the eight year tender, is this a decent value over 8 years at 500,000 euro per year.
Presumably the value is net profit to Deltex or is it the value of the gross to be paid.

Deltex is supporting this requirement by supplying the monitors at very low margin, as the previous tender was for 3 years does anyone wonder why they monitors are being supplied at a ‘very low margin’. Whilst appreciating it is the probes that will be making the money, why can’t Deltex attract customers at higher margins.

Deltex market cap is £6,530,000 so is the figure of 4 million euro over 8 years comparable to make even this low mc company worth that valuation.

No doubt the sp today will tell us what the market thinks.


#2

pond1,

This is not a new customer but only extends an existing supply agreement. One wonders how profitable this supply agreement was previously - maybe not so positive given DEMG’s continuous decline. One should also not low margin on new monitors - not quite freebies but loss leaders?

It’s not bad news but its impact n future profitability is unclear. Only time will tell. As to SP there could be a minor, temporary uplift.

Cheers, RAC


#3

Hi RAC,

I know its not a new customer as my post made clear, just wondering why the 4 year gap.

As you say, the future impact on probability is unclear as are most figures/details from Deltex.

Market quite likes it (sp up 9% on opening), it’s the closing price that will tell.