It's all systems go at Belluscura (BELL), a challenger medical devices firm which is set to disrupt the global $1.7bn portable oxygen concentrator (POC) market, which is expected to grow at a compound annual growth rate of 14% between 2022 and 2026.

After recently securing $15m worth of pre-orders for its revolutionary new DISCOV-R POC, it announced a transformational 10 year agreement  worth a minimum of $55m in royalties with its world class manufacturing partner, lnnoMax Medical Technology, a JV between a Foxconn subsidiary and the Chinese gov’ernment, which begins on 1st October.

The company today released ‘foundational’ H1 23 results, with its adjusted EBITDA loss coming in at -£2.9m on $0.4m of sales. It said that the “initial response from [customers to its] products is hugely positive”, adding that “as the business scales, we expect substantial growth over the coming years, leaving the Board highly confident in the future.”

So what does this all mean?

Well, with FDA approval already in the bag, demand rising rapidly, blue chip distribution partners including McKesson, and supply chain infrastructure in place, then I'd argue the investment story has transitioned to one of execution. That is, delivering consistently high quality patented devices in sufficient quantities to end users, who desperately need the benefits of the group’s lightweight and mobile POCs.
 
Let’s not forget, too, this is an enormous untapped market. An estimated 100m people suffer from smoking-related COPD in China alone, or around 6x the number in the US - with the broader Asia Pacific region anticipated to become a $1bn market by 2027. It's easy to see how, ultimately, consensus forecasts might be materially exceeded.

CEO Bob Rauker commented: “The signing of new distribution agreements, the strong reception and orders for DISCOV-R, the continuing progression of X-PLOR and the signing of the significant licensing agreement with Innomax sets a strong foundation for great progress next year and beyond.”

I believe that at 50p a share - a market cap of £61m - the stock is attractively priced on a risk/reward basis, as does broker Dowgate Capital which has a target price of 125p a share. The latter assumes turnover of $3.0m, $22.5m and $47.5m, respectively, between 2023 and 2025. Cashflow is set to turn positive in 2025, after closing 2023 with net debt of $3m, including $5.5m of 10% 3-year convertible bonds.