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BATM Advanced Communications Ltd: DEEP DIVE
OVERVIEW

BATM tipped for stronger revenue trends bolstered by growth themes in network technology

The group's networking and cyber division has helped improve networks for multiple entities, most recently the Kenya Education Network which provides internet and e-learning to the country's universities
Network cables
OVERVIEW: BVC The Big Picture
BATM's house broker says it is exposed to positive trends including the adoption of 5G infrastructure

• Divisional spread across telecoms, cybersecurity, and bio-medical sectors
• Exposure to “growth trends” in virtual network management and medical equipment
• Swing to positive earnings in latest half year

What BATM Advanced Communications does

BATM Advanced Communications Ltd (LON:BVC) provides solutions for networking and cyber security as well as for bio-medical and bio-waste treatment through its two operating divisions.

The networking and cyber division offers telecoms and network solutions, focusing on advanced software and cybersecurity, to tier 1 businesses and governments worldwide.

The bio-medical division focuses on the development and provision of diagnostic lab equipment as well as products to treat biological waste products from the medical, agricultural, and pharmaceutical sectors.

The group is listed on the main board of the London Stock Exchange and is headquartered in Israel with offices in North America, Europe, and the Far East.

What it owns

In the networking and cyber division, BATM owns three entities;

• Telco Systems – focuses on high-performance telecom networks and communications systems

• NGsoft – develops and maintains digital systems such as websites and mobile apps as well as expertise on cloud solutions and other technology areas

• CELARE – The cyber arm of BATM which focuses on digital security and threat detection

Inflection points

• In January, Telco Systems completed an upgrade of the Kenya Education Network (KENET), which provides internet and e-learning to the country's universities, from a 10-gigabit ethernet (GE) to a 100 GE

• In December, BATM said it would become part of the Arm Neoverse ecosystem, which serves the global internet infrastructure market

• In its first half results in August, the company notched up underlying earnings (EBITDA) of US$500,000 versus a loss the year before of US$300,000 while the adjusted operating loss more than halved to US$0.6mln from US$1.4mln on revenue that rose 16.9% to US$58.2mln from US$49.8mln

Blue Sky

In a note following BATM’s results in August, analysts at broker Shore Capital tweaked their full-year revenue forecasts for the group.

“With a stronger revenue performance than our trend expectation for H1, we are increasing our FY estimate by US$2mln to US$114mln, but retaining EBITDA, PBT and EPS estimates for the moment, reflecting the continuing operational investment focus of management,” Shore said.

“The second half promises further strong development; we look for the emergence of positive operational leverage, returning BATM to profitability and good free cash generation over our forecast horizon. BATM, in our view, continues to transition its technology platforms to next-generation infrastructures across group activities; underlying operational strength is yet to show in financial results, but we note underlying momentum,” the broker added.

Shore said the group is exposed to a number of “growth themes” across medical equipment, testing & diagnostics and virtual network management (5G infrastructures), network software and cyber skills & technologies within networks.

With shares trading around 45.9p as of 23 January, BATM carries a market cap of £185.2mln.

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BATM Advanced Communications Ltd Timeline

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Network cables
January 23 2019
The group's networking and cyber division has helped improve networks for multiple entities, most recently the Kenya Education Network which provides internet and e-learning to the country's universities

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