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Tekcapital creates market value from university discoveries

Snapshot

  • Tekcapital PLC commercialises university intellectual property (IP), a process known as technology transfer
  • Its university IP network incorporates some 80% of university-developed IP
  • Portfolio companies include medical device company Belluscura, advanced eyewear specialist Lucyd, food tech company Salarius and autonomous vehicle IP specialist Guident
Tekcapital PLC -

Quick facts: Tekcapital PLC

Price: 5.75 GBX

LSE:TEK
Market: LSE
Market Cap: £4.53 m
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What Tekcapital does

IP development: Tekcapital PLC’s (LON:TEK) core business is to commercialise innovations developed in universities.

A related services business helps companies find, evaluate, and license university technologies.
 

Portfolio companies

Salarius (97.5%) produces a proprietary low sodium natural salt called MicroSalt, whose crystals deliver the same sensation of saltiness with 50% less sodium. Salarius has a fair value of $2.7mln. In December, it brought on board food ingredient broker, Accurate Ingredients to market it in US, and noted that 20 new potential customers are in the process of testing and evaluating the product.

Lucyd (100% owned by Tekcapital) is an online manufacturer and retailer of augmented reality eyewear. The fair value fell by $1.6m to $1.4m in the period just reported but Lucyd has just launched a  new product ‘Sherman Shades by Lucyd’ endorsed by the cornerback of the San Francisco 49ers Richard Sherman.

Guident (100%) is an owner of IP for technology used in apps to control autonomous vehicles (AVs). Fair value is US$12.7mlm, arie of US$4.1mln.  The autonomous vehicle market in the US alone is projected to reach $35bn by 2033 for autonomous vehicles and drones,

Belluscura (19.2%) has developed a patented portable oxygen concentrator. In September it month announced that it has raised £750,000 at a 50% premium book value and re-affirmed FDA approval is expected later this year with launch commercially in 2020.
 

How is it doing

Revenue in the half-year to May 2019 increased from US$1.3m to $5.4m largely from unrealised investment gains and Guident in particular.

NAV per share increased to US$0.38 from US$0.30.

FinnCap has a price target of 32p on the stock based on its valuation.

 

Inflexion points

  • Salarius has signed an agreement with iLevel Brands Inc as part of the launch of North American sales of its new SaltMe! full flavour-low sodium snack line
  • In mid-February, Belluscura and its research partner Separation Design Group filed a patent on an oxygen enrichment system which could be used to treat coronavirus patients
  • The company is looking to raise £740,000 via a placing to fund investment in key activities
  • In late-January, Salarius inked a partnership deal for its MicroSalt product with US ingredients supplier Hanks Brokerage
  • Lucyd launched the third edition of its Loud range of Bluetooth-enabled glasses on 27 January

 

Interview - CEO Clifford Gross

 

What the broker says

In a note in March initiating coverage of Tekcapital, analysts at house broker SP Angel said the company provided investors with “significant potential upside returns” and that the shares were trading at a discount to net asset value (NAV) of around 70%.

The broker also said the company’s portfolio was “well diversified” and “comprised of assets with near-term commercial potential to drive NAV higher”.

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