Expanding Global Presence - Nanosonics Limited (ASX: NAN) is a medical technology company which is engaged in the manufacturing and distribution of the trophon electron paramagnetic resonance (EPR) ultrasound probe disinfector and its associated consumables and accessories. Recently, the Groupestablished conformity of the trophon2 to European Union Requirements after it received the regulatory approvals in the USA and Canada for its 2^nd generation trophon system, trophon2 and a comprehensive review will be undertaken of the trophon2 technical documentation by its European notified body. This was a significant step for NAN’s growth as it will enable Nanosonics to launch trophon2 for customers in both North America as well as Europe in the same time frame.


Significant Global Opportunity for the Company (Source: Company Reports)

On the financial front, the topline contracted by 4 per cent in 1HFY18 as compared to 2HFY17. PAT declined by 48 per cent and amounted to $2.2 million in 1HFY18 from $4.2 million in 2HFY17. The Company had US$66.5 million in cash balance at the end of 31 December 2017. The Company focuses on to increase its marketing and distribution team and expand its infrastructure across the globe. Moreover, the Group was lately granted a receipt of the Medical Device Licence from Health Canada and clearance from US FDA for the trophon2 system, which will be available in the market in Q1FY19.

There is a significant revenue opportunity per machine from consumables used in every high-level disinfection cycle, annual service contracts plus upgrades wherein each trophon generates an average of $3,000 per annum in consumable revenue under Direct Sale model and approximately 50 per cent of this under Full Service Distribution model. A new 3 year Capital Reseller agreement with GE Healthcare will come into the effect on 1 July 2019 and this agreement will be a part of Nanosonic’s global ultrasound OEM program. Further, it is expected that Nanosonics will gain material increase in both sales and margins on consumables that will be associated with GE installed base in North America from 1 July 2019. The stock witnessed a short-selling in the market. Currently, the stock is trading at very high PE level (149.77x) among its peer group. The stock slipped by 4.38 per cent as on 4 July 2018 with some pressure from global scenario and investors taking some profits. Hence, we put a “Hold’ recommendation on the stock at the current market price of $ 3.05.

 
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