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NAV at H1 was 126pps.
A significant buy back makes very good sense.
IPO wasted money on that waffle.
Just watching the excruciating ESG presentation live.
One reassurance is that Greg Smith is visibly appalled by the rambling virtue-waffle.
Https://www.thetimes.co.uk/article/jazz-global-licensing-deal-swings-ip-group-shares-rjnt0dmn8
This is good news….. it’s been so quiet recently that I was wondering if anything was lurking in the background.
Market is valuing the firm on the potential future cashflows of all the companies it's invested in. Currently most of them are burning capital and discounting their potential future cashflows at the current rates means relative value has shrunk drastically. Essentially IPO is a bet on innovation and science, markets prefer certainty :)
Most of the ventures seem private firms. If they wanted to sell ONT they would not get 200p. They would likely have to accept below that price. 180p or less? Unless ONT suddenly showed it was worth several billion. For a 1.7bn firm it's turning over less than 86m in H1 with a 70m loss. 10% of ONT is about 170m. Meaning the other investments worth about 300m here. Market is valuing firm at it's cash and cash equivalent, value.
Price is a function of liquidity, not value
ONT near 200p. Even IPO seem to be reducing at 200p or so.
Mirriad advertising 5 years ago was close to 63p. Now 1-2p.
Where is IPO's main star for the future now? 60p was supposed to be bargain level? Where is the floor here? 40-44p? Maybe the directors know something the market don't.
The SAYE price looks about right. They are normally set at a discount to SP on the determination date, which is normally about 3 months prior to first start date. If you take 20% off the SP around that time you get the 49p strike price
Getting there! Anyone have any thoughts if IPO is even possible as a takeover target? These levels seem pretty good...
Quite a difference in the SAYE price and the share price as per RNS.
Alot of great content to absorb but the summary position is:
1. On a constant currency basis, and considering ONT which post period has largely recovered its price point then H1 has stabilised the NAV. The "loss" of 10p/NAV share is more like 2p once you factor this in.
2. The discount to NAV remains substantial and based on what risk on unrealised loss exactly?
3. In fact a very interesting chart is the Portfolio funding position where 57% of the value of the market cap (33% of the portfolio) is already trading profitably
4. Another interesting fact is if you take the market cap (£622m) and deduct a/ cash b/ listed holdings c/ those who've had a fundraising event within 12 months then that's 82.3% of the portfolio. So of the remainder (that's £690.6m worth of investments) 86.3% could be WORTHLESS and the NAV would STILL cover today's market cap.
In other words IPO is cheap.
But is it a buy just because it's cheap?
Greg Smith explains why there's more to it than cheap: "The opportunity for value creation in our portfolio remains compelling. Double-digit revenue growth in our largest deeptech and healthcare companies is evidence of continued strong demand for their products and services. Our therapeutics portfolio includes twelve companies with products in clinical trials, seven of which are targeting key inflection points in the next 18 months. Breakthrough cleantech businesses, such as Hysata, have delivered technical milestones and commercial demand. The Group is well-positioned to support these businesses and deliver strong, impactful returns for all stakeholders over time."
GLA
Good to see Oxford Nanopore up 12 per cent today on solid trading figures. I rarely look in on IP. and had forgotten we still seem to own 10 per cent of ONT. A bit more jam today for them has to be good for us - that's the reason for being here.
As a holder of both IX and IPO, today's news of a £10m upround with BP participating caused IX to rise by 110% (settling at +90% at close). The announcement caused the NAV to more than double (so even at a +90% share price its discount to NAV this evening is greater than it was 24 hours away before its announcement. The types of holdings in IX are not dissimilar to the decarbonisation holdings here (e.g. Oxccu/Hysata). In fact I've just checked and there was an A series round 1 month ago for Sustainable Aviation Fuel with participation by ENI! See: https://www.ipgroupplc.com/news-and-events/portfolio-news/2023/2023-06-07
It's tangible proof of the hidden value due to the US's IRA (inflation reduction act) creating vast opportunities for decarbonisation opps like IPO's OXCCU or Hysata, where the EU and other countries are copying the US to drive up incentives.
This should be incredibly positive for IP Group!
Chart position, break, of sp, above previous day high. Positive divergence on macd() indicator and Relative strength indicator (RSI). Separating Bollinger bands, indicate a fast sp, movement. The medium term down trendline is at 60, so that could be viewed as a price target, although price is overdue to break the trendline upwards. Profit taking might be considered when the upper Bollinger band begins to stop rising.
True, this is not a quick one. But, the we'd love to see movement upwards (be it slow) rather than downwards.
Agricore; totally agree with your post. If you want a quick buck, this isn't it, but long term there is immense value here.
When RPS reduce their shareholding materially, then I'll take notice/concern. They don't invest to flip for a margin, they invest for the longer turn, for sustained growth, and their record in this regard is exemplary. I like them, am sitting on a chunky SP loss. Despite this, I like them, haven't sold a single share. Patience will out here.
Fish2, That's simply not true. This is an investment into Life Science and the future value of Life Science Research Tools. Covid diagnostics were a fairly simple application that ONT and other businesses diverted their efforts to help during the initial state of emergency. Surely you must know that?
ONT has a 5+ year horizon so along with most other jam tomorrow stocks it's been heavily sold off. The reality meanwhile, is that genomic sequencing opens up a myriad of health and industrial applications. Take the time to educate yourself at the links below.
I'm very happy that IP Group remain holders of ONT and that due to ignorance, short termism and lack of understanding, can be bought at 55p, earn a dividend of 2.5%, are cash rich, and whose book value are 2.5x and future potential are 25x.
If you strip out cash and listed each share costs a net of 15p to buy 111p worth of assets.... an 88% discount to NAV.
https://nanoporetech.com/sites/default/files/s3/investors/reports/ONT%20FY22%20Presentation%20-%2021%20March%202023.pdf
https://www.edisongroup.com/research/priority-companies-making-progress-in-2022/32172/
GLA
I’m not so sure that Oxford Nanopore is a good investment. Their sales growth was heavily Covid related. The loss and cash outflow are very high with the outlook having no Covid help.
In the end, HSBC and the UK government have done a decent job in rescuing the bank.
I'm guessing that the collapse of SV Bank could hit these shares quite hard on Monday. Lots of start ups had money invested there, quite possibly including companies in which IP Group had holdings.
I didn't see any negative surprises in the update. Effectively the entirety of the loss was driven by the fall in the value of Oxford Nanopore (ONT) shares. Maybe management could have sold some of those shares at £7.00, but then we'd all have been screaming if they'd hit £10.00! I think ONT remains a company with very exciting potential, so I'm happy that IPO remains a holder. It was also good to see that IPO still has £241.5M in cash to fund existing and new companies.
Below the surface, I think there were also some exciting updates on other holdings like First Light Fusion and Istesso.
Most importantly I see that the NAV is stated at 132.9 pence per share as at 31/12/22. So, this continues to trade at a huge discount. There are undoubtedly some gems within the portfolio and with such a wide margin between NAV and share price I'm certainly not going to be selling up any time soon - the only question is whether to top up whilst there is such a big gap!
I wonder what poor results look like? They made a whacking great loss.