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Kooba - I’m not arguing with your calcs and very much appreciate your work here.
We all know how much sentiment can play a role in any SP and I’m just struggling to see who in their right mind would sell at 16p having just knocked back 24p or indeed just sold a portion of their stock at 24p. Especially knowing that the shares in issue have just been reduced by nearly 40%!!
A share is worth what someone is prepared to sell and buy at finding a price equilibrium.
All i am pointing out is what theoretically might happen if the shares are valued on the same basis by those buyers and sellers as has been the case for the past 6 months or so and have shown my workings. If you think that is wrong then fine show how the company suddenly becomes worth more by paying out over half the cash it holds which has been that basis of valuation.The only argument must be one of sentiment and that the enterprise value jumps up from zero-£6m as has been the case over that six months to multiples of that amount on no new commercial progress..I’m not sure how that happens.
But we will only know after the 9th if there is an adjustment to around the 17p level. So i can’t explain the workings more than i have.
Some interesting takes on what might happen when a company pays back £30m and cancels the shares after doing so.....
Surely if they buy back 30m pounds wort of shares then the price should increase to that amount.. No ??
I've decided not to sell any, The price doesn't reflect my long term valuation. I think this is just to shake the tree and give all the disgruntled speculators an ''OUT'' option at a small profit.
But a share is also only worth what a seller is prepared to sell it for Kooba. So my question is - which holders will be happy to sell at 16p having declined 24p or having just sold a tranche of their holdings for 24p??
Is a share worth more with an option to sell a minimum 38.5% at a significant premium to the cash held of 18p or without that option and with cash of 13p?
I’m struggling to get my head around how the post tender price would be this low. Why would any sellers be prepared to sell at 16-17p immediately after not taking the 24p offer? Even if they had taken the offer and maxed out on their 38.5% then I still can’t see how they’d then sell at a drop.
LordWM..have posted similar calculations and I factor in the recent EV against the reduced shares in issue and come up with 16.25p on a like for like basis..so do not disagree on there being a post entitlement adjustment. How much that ends up being we will see.
Depends on whether some short term money has bought in to tender and jumps out of the balance held ..quite a few variables around investor behaviour ! But not many will want to sell pre tender I guess as don’t want to miss the opportunity..things might be different after 9th and whilst investors in noms may not be able to sell ..larger holders and ii can.
TG2D yes fully aware of that just saying that the 10% retained in treasury rank differently to ordinary shares and whilst still in issue are not outstanding.
Doesn’t make that much difference. But either way I can’t see this not tanking post return.
People love to hate this company and it’s been mostly valued at cash, so what will make the price move? The market may start to price in more value for the business, but I can’t see it rising much until we have concrete order news?
So I see it as a good opportunity to take money off the table, and maybe buy back in for less.
What do people think?
Kooba
The RNS stated 90% of shares bought back would be cancelled only 10% held to support employee share incentive schemes.
Treasury shares remain issued but not outstanding as are owned by the company ..until they are either issued or cancelled. They do not rank alongside ordinary shares for voting rights or other entitlements and do not form part of the market capitalisation whilst in treasury.
So the shares outstanding post the tender will be about 200m ..which could reduce further if they effect the on market share buyback..unclear when that might start.
Couple beer mat calculations:
- Shares in issue is 324,418,728.
- 38.5% of shares in buyback = 124,901,201
- 90 of these will be cancelled, (10% held in treasury for employee options) = 112,411,089 shares cancelled
- Leaving 212,007,639 shares in issue
- Less £3m of buyback shares (Turner Pope assume at tender price of 24p, meaning 8,268,298 shares cancelled, but 15p probably more realistic/optimistic, which would be 20,000,000 shares cancelled.
- Therefore (assuming buyback price ave of 15p) final shares in issue = 192,007,639
- Nanoco will have £23m in cash, divided by 192,007,639 shares = 11.98 PPS.
- 12 pence per share if valued at cash.
- Turner Pope think they’ll make £30-40m rev in the medium terms (£35m in assume 3 years), with EBITDA 35-45% margin (assume 40%), so £35m Revenue £14m EBITDA.
- Products will be long-term embedded in supply chains and adoption in other products will likely grow significantly, so is a 10x valuation realistic?
- 192,007,639 shares in issue, £14m EBITDA (in 2027)
- 5x valuation is £0.34PPS
- 8x valuation is £0.55PPS
- 10x valuation is £0.69PPS
A good uplift but not too exciting, what do people think of the calcs?