AnteoTech Shares Holds Up on Details of Share Placement (ASX:ADO)

After talking about it yesterday, AnteoTech Ltd [ASX:ADO] was a stock to watch this morning. You can check out that commentary right here.

Because today the share price has been very volatile.

Initially, the ADO share price opened with a sharp fall as investors digested the details of the capital raising. But it wasn’t long before AnteoTech shares quickly reversed into the green. Peaking at 49 cents per share shortly after 11:00am.

A rather unusual turn of events for a company that has just committed to diluting investor holdings.

But perhaps that just goes to show how committed current shareholders are…

$12 million for COVID-19 test kit launch

First and foremost, let’s get the details out of the way.

AnteoTech has raised $12 million from the issue of 46,153,851 new shares at an issue price of 26 cents each. All of which has come from sophisticated and institutional investors — some of whom are new shareholders of the stock.

That is obviously a good look for the company and management.

More importantly though, as I mentioned yesterday, the real question was whether or not retail investors would be involved as well. And fortunately, they will be.

AnteoTech has noted that a further $4 million worth of shares will be up for grabs. With existing investors given the option to buy up to $30,000 worth of additional stock at the same issue price.

That’s good news for shareholders looking to minimise the effects of dilution. And given the current trading share price (42 cents at time of writing), is quite the bargain.

However, what’s far more fascinating (from our point of view) is what AnteoTech plans to do with this cash.

Given the recent update on Friday, it seemed likely that developmental costs for the ‘Super Anode’ project may have been front of mind. That is not the case though.

As CEO, Derek Thomson notes:

The support for this placement is a strong endorsement of AnteoTech’s growth strategy across both its Life Sciences and Energy divisions. Both business units have technology solutions that are applicable to large and deep global markets. Investors clearly recognise the opportunity at hand here.

AnteoTech now has the necessary financial flexibility to scale up operations and accelerate the roll-out of its EuGeni reader platform and COVID-19 ART test, as well as our growing pipeline of other assay tests which will provide us with a considerable competitive advantage in the current market.

So while the battery developments are still at work, it’s clear that the immediate focus is on the COVID-19 testing. With the rollout of their reader and related tests hopefully set for a launch in the near future.

That will certainly be music to investors ears because the sooner AnteoTech can enter the market, the sooner it can start making some revenue…

What’s next for the AnteoTech Share Price?

Again, just as I said yesterday, the long-term outlook is all about key details. For both the energy and life science solutions.

Until we see the market response and take-up of these COVID-19 testing solutions, it’s hard to truly gauge its sales potential. After all, it could be a massive breakthrough, or it could just be another solution in a market that has been flooded with new products lately.

All of which only serves to reinforce the speculative classification of this stock. Which should be evident from the share price movements today alone.

For that reason, it is a company that should only be looked further into if you can stomach the risk.

Don’t expect to find any strong value thesis for investing in AnteoTech.

Instead, any investors hunting for solid foundations should try elsewhere. After all, there are a plethora of overlooked and relatively undervalued small-cap opportunities to be found on the ASX.

In fact, we’ve put together a list of four our favourites. All of which you can find in our latest report, right here.


Ryan Clarkson-Ledward,
For Money Morning

Ryan Clarkson-Ledward is an Editor at Money Morning.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

Ryan is also the Editor of Australian Small-Cap Investigator, a stock tipping newsletter that hunts down promising small-cap stocks by dissecting the latest events affecting the world.

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