The £300m Question19 Apr 2024 21:50
According to our FD, the company is now covered by 3 brokers: Trinity Delta, Liberum and Stifel Nicolaus. Respectively, their current valuations for Futura are 121p, 131p, and 125p per share.
Closing market price tonight? 36p.
With c 301m shares in issue, the company is undervalued by the best part of £300m. That’s a whopping amount.
Part of this undervaluation is due to the company being valued on a marginal rather than an average basis. Marginal sellers are ‘happy’ to sell at 36p, because no buyers are currently offering prices in line with analysts’ estimates. But Lombard, which owns just under 30% of the shares will not be a marginal seller if the company is eventually sold. As well, Futura’s executives would point to analysts estimates and say they have a fiduciary duty to seek at least as much as £1.20 a share to agree a sale of the company.
Part of the undervaluation is also due to marginal buyers being unduly influenced by anonymous reviews rather than by solid science. As an example of dodgy reviews, look at https://www.yell.com/biz/pro-energy-ltd-romford-9879988/#:~:text=Pro%20Energy%20team%20was%20on,Pro%20Team%20for%20similar%20work. 145 reviews, 4.9/5 rating. Good eh?
Look again. Look at the names behind the reviews. Anything seem strange? How many are written by eg people called Muhammad? Or are simply Asian?
Unfortunately, too many private investors on this board agonise over information they have easy access to - eg product reviews for Eroxon - rather than seeing beyond the many manufactured reviews to the solid science underpinning Eroxon. Science approved by the EU and FDA, supported by in-house research by Cooper, and which global companies worth billions of dollars are prepared to back with their money. There are now many AI tools that will write bad product reviews. Amazon itself has lots of misleading reviews, attached to the wrong product or, as I have experienced, sellers offering financial inducements to buyers to give a 5 star review for a product that is in reality just plain poor.
These are not the only reasons for the undervaluation. Eroxon is a completely new product, so has imponderables about roll out, penetration, and repeat take-up, for example. Futura has always emphasised the key importance of the US market. Launch there will immediately transform the company into a profit-making one. I would like to see more institutions invested in Futura. Not because that would influence my decision to buy the shares, but rather to have more of the shares owned by professional investors, who see the true value of the science, rather than the private investors on here who agonise over bunkum, or try to get others to buy or sell according to their own trading strategies.
At the moment, the tail is wagging the dog. I hope the actual launch of Eroxon in the US will enable the dog to finally start to control its tail.