2 ASX Small Cap Companies to buy in FY23.

OncoSil Medical Ltd (ASX: OSL)

OncoSil provides positive regulatory updates for OncoSil™ device for both EU and the USA

OncoSil Medical Ltd (ASX: OSL) (OncoSil or the Company), a medical device company focused on localised treatments for patients with pancreatic and liver cancer, on 11 October 2019, provided an update on its CE Mark review and positive regulatory developments for the US market.

(Chart source: TradingView)

CE Mark update

OncoSil reported that the company had completed its follow up meeting with British

Standards Institute (BSI) Management and the Clinical Oversight Committee (COC) on October 3rd in London. In the meeting the Company made a comprehensive and detailed presentation addressing all concerns and issues raised in the previous assessment by BSI and the COC.

Providing support to the Company presentation were pre-eminent international experts in medical oncology, radiation oncology, and hepato-pancreato-biliary surgery. Also in attendance were leading regulatory specialists providing guidance on process and regulations.

At the conclusion of the meeting, BSI requested that the Company submit an updated

Clinical Evaluation Report (CER) which includes the clinical data and analysis of the

PanCO study results as presented to the COC. OncoSil is now focused on submitting

an updated CER for the OncoSil™ device for CE Mark approval. (Data Source – Company Reports)

Veye’s Take

There is a significant unmet patient need in the treatment of pancreatic cancer. Consider the following pancreatic cancer facts. It is the fourth highest cause of cancer death and is projected to be the second leading cause of cancer-related deaths by 2030 in Western countries. The meeting with the Clinical Oversight Committee was positive and has provided a clear path forward for OncoSil. The Company has been exploring various US regulatory pathways for its device while awaiting the outcome of its CE Mark application and commercialisation in Europe. The Company has been exploring a new indication for the OncoSil device and identified an opportunity in the US market for the treatment of cholangiocarcinoma (bile duct cancer). OncoSil believes its brachytherapy device provides a new treatment option for this difficult disease, similar in nature to how it currently targets pancreatic cancer. The stock price of the company has grown 42% since Veye’s Buy recommendation at $0.054 on 1st Apr’19. We reckon that the stock price will shoot up once it is granted the CE marking. The stock is getting ready for a breakout in the chart also. Veye recommends a “Buy” on “OncoSil Medical Ltd” at the current price of $0.094

Quickstep Holdings Limited (ASX: QHL)

Quickstep Holdings Limited (ASX: QHL), Australia’s leading independent manufacturer of advanced carbon fibre composite components, on 26 August 2019 announced a maiden full-year net profit of $2.7 million for FY19 on total sales of $73.3 million, up 24% from $59.0 million in FY18. NPAT of $2.7 million represents a $5.6 million improvement in FY18 including a $4.4 million lift in EBITDA and $1.0m tax benefit reflecting future taxable income. The company has also delivered its first full year of positive operating cash flow.

(Chart source: Company Report)

Quickstep delivers $2.7m profit on 24% sales growth

  • NPAT $2.7 million and EPS of 0.44c
  • Sales $73.3 million
  • $5.8 million EBITDA
  • Revenue and profit to grow in FY20

(Chart Source: TradingView)

In FY2019 they delivered across all key metrics and shifted the business to sustainable profitability amid continuing growth. This marks a significant turning point for Quickstep. (Data Source – Company Reports).

Veye’s Take

Quickstep Holdings is expected to have its earnings expanding by a significant 82% next year. This strong growth in earnings is expected to continue, bringing the bottom line up to $8.8m by 2022. Quickstep Holdings is expected to grow its earnings by 35% every year for the next few years. Quickstep has delivered a $0.4 million operating cash flow for FY19, its first full year positive result, and on 30 June 2019 reported the net debt of $0.3m, a reduction of $11.2 million from 31 December 2018. Operating cash flow improved year on year by $1.0 million despite a $3.1 million increase in working capital, principally inventory to support growth. The stock has virtually come out of a range. It is expected to have sustainable profitability and continuing growth. Veye recommends a “Speculative Buy” on “Quickstep Holdings Limited” at the current price of $0.135

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