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Wilson Sons Q2 results out next Wednesday on 9th August. Perhaps we'll see some update then?
https://ri.wilsonsons.com.br/en/publications/quartely-results/
Krusty, if this were a majority unlisted equity portfolio, yes that could be a factor. But since it's majority debt and because the net inflows of that debt are on a relatively rapid timescale I expect there will be some bulk offload towards the end - hence the 40%-100% range of outcomes based on that. I held Urban Exposure a few years back (a ST tip) and that was quite similar. About 9 months prior to the final payout they took it unlisted and 1 day my account was credited with my share of the proceeds. It was an easy 23% gain based on the realisable price of assets vs market price.
Faramog, "Clear Strategic Action". That was exactly my reading and reaction too.
This was Fortune's final quarter as CEO, and of course disappointing news from further extraneous factors.
Comparing the Q1 report and the Q2 report I don't get the sense of shrugged shoulders in Q2. I sense strategy, accountability - that tough resilient South African way to "let's get this job done lads".
The cost control and higher sales are the positives and, yes, the Orion restructure and "getting the job done" is what we wait to see.
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
Yes, 20 years production at a historic $1058 C1/oz and $1,260 AISC and circa 240koz/year production is highly attractive.
The news also unlocks the attractive $200m debt facility with BBVA and Scotiabank. The loan has a maturity of five years and two year of grace period, at a cost SOFR + 2.05%.
This also unlocks funding for Royropata too.
Meanwhile Mara Rosa is now about 9 months away from 1st pour.
When you compare HOC against global peers on either an EV/EBITDA or 2024e PE basis is about 1/3 of that of its peers. Suggesting a target price of around 3x75p = 225p.
Today's news will help balance HOC up against people's perception vs its rivals.
Damofarl,
Mr T. (of IC not the A team) has published a recommendation on AA4 yesterday. (https://www.investorschronicle.co.uk/ideas/2023/07/31/a-hidden-stock-about-to-secure-its-dividend-for-a-decade/)
The gist being that Emirates may extend the leases for 10 years more - which would substantially cover the debt, avoid a secondary sale of the aircraft (at a discount) and therefore narrow the discount on NAV. It's a different dynamic to FAIR but the yield is about the same. The questions are whether Emirates will extend, and related to this whether global travel will continue to do well (enough) for Thai and Emirates to keep paying, and finally the pace that Boeing/Airbus can (successfully) churn out new aircraft.
Another one to highlight to you for consideration is LINV. I've topped up on this today. The yield is 10% and growing. It's a fintech play on mortgages. If you visit the LINV board I've put quite a bit of content there. The "technical deep dive" video is particularly illustative of the disruptive value of their platform. Think it's baby and the bath water right now where pessimism about the housing market means it's fallen despite a stream of good news.
I'd also like to share a cool dividend calculator/tools site I discovered: https://dividenddata.co.uk/
And to keep this post relevant to FAIR (!), here's an easy way to feel very happy to be a Fair Oaks holder. Plug in your number of shares and it displays the value of your past divis!
https://dividenddata.co.uk/dividend-calculator.py?epic=FAIR
Based on 181,500,000 boe in Athabasca a sale @ US$1.242bn equates to US$6.84/barrel, which seems a reasonable number. And presumably you're talking USD not CAD here???
WH Ireland value of i3e's Canadian assets at 5X cash flow = $344.2m or 22.6p/share.
So why is the house broker undervaluing this by a factor of 4x?
My numbers don't include the $20m which would also come from the first $800m of sales of Conmet's subsystem to electric truck sales. Conmet's annual turnover is $1.5bn, currently, so assuming development would take until 2025 and sales begin late 2025 then assuming a growing mix of EV platforms sold then SED should see a $5m per annum boost to the bottom line FY2026 - FY2029. By its final year $5m should be small beer for SED, but it all helps!
Today's announcement pushes back results until Mid Sep.
My view on today's announcement:
On balance a necessary outcome is my initial view. Losing access to the IP of the IWG (in wheel generator) particularly is a great pity, but it's good that Tony has the humility to pick his battles rather than clinging on to IP as a vanity when from a practical, business point of view it monetises an outcome with 3.3m euros cash now and 20m euros more in time, plus 2m euro annual cost saving from the start of FY2025.
It models through to a revised FY2024 outcome of £14.4m (prev £12.1m) revenue and EBITDA loss of £3.6m* (prev £5.9m), and gives a y/e cash balance around £4.8m** (prev £2m) - giving cash for a more rapid ramp up.
Importantly there's a re-iteration of targetting EBITDA positive by early CY2024 is made today too.
* sale of interest in JDCA = £2.3m, loss of grant -£0.9m, cost savings +£0.9m
** £2.3m JDCA + £0.5m assets, previous guidance was a y/e £2m cash.
Derisks and provides wriggle room. Shows a practical approach to make tough choices and to focus. Necessary, but positive.
GLA
Https://www.wsj.com/articles/biotech-stocks-join-ai-fueled-rally-86c0b838?siteid=yhoof2&yptr=yahoo
Kind of makes sense that Exai should be a beneficiary in the attention that AI is getting. I’ve maintained for a while the value is in the use of ai not in its design and supply so have stayed well clear of the magnificent seven, perhaps to my cost. Time will tell on that decision. Meanwhile FIPP at less than 50% of NAV where NAV is book value and understates its value, seems the better investment to me
Bit of an odd update today where Field has had major funding (£200m), supplementing TENT's funding (£45m). I considered it a positive in that the debtor is well funded (reduced risk to TENT). Yet, it's well funded, so won't need further funds from TENT? I struggle to understand the Chair's comment therefore: "We are looking forward to continuing to work closely with Field on this critical asset class that plays such a key role in enabling renewable generation."
Surely we won't be "continuing" as they now have money from elsewhere? If the plan is to lend further money beyond the £246m surely that is unwise? I'd be interested in other perspectives on this.
Laconic,
>>It's very much guesses.
I disagree it has to be very much guesses. There are some reasonable forecasts which can be applied by piecing together what is known. We know a £5m contract with Ayro for 3000 units so equates to a per unit price of £1,666.00. This is where SED produce the motor in Sunderland. We know £2m is being delivered in FY2024. This leaves £10m in the sales forecast.
We know of the order book for 140,000 units via the Indian OEM, over the next 5 years equates to 28,000 units a year, where assuming a Q3 start then 14,000 units fall into FY2024. This equates to revenue of about £714/unit (£10m/14000). Remember these are being manufactured under licence by the JV, so will have a lower agreed price, and may even be based solely on key components supply notably the stator industrialisation, the inverter, VCU hardware and software designs. Depends on what's been negotiated. To get a foot in the door they could well have waived any licencing revenue on initial orders for example.
On a run rate of 28,000 in FY2025 this equates to £20m, so the CG forecast of £36m therefore comprises some £16m supplemental units coming from Sunderland combined with Propel sales, which are being focused on by Vic. Assuming a 50% split between AFT and Propel assumes around 2,000 units of Propel at a £4k wholesale price (£3k margin will go to the dealer) and some 5000 units of AFT.
Longer term the 28,000 is forecast (by SED) to grow to 400k units. Unit growth will be achieved both by follow on orders via the Saietta VMA and the other 8 OEMs they are speaking with (almost all in India). 28k from each of these 8 and VMA growth gets you to 400k units pretty quickly. If the SED model is to enable OEMs and licence and supply key components then the enablement process probably caps at 1-2 OEMs/year suggesting 400k could take a few years.
Applying a blend of £4000/£1667/£714 but including a licence element this is is something like a £1500/unit average so equates to a £600m per annum revenue business. At 15%-20% net margins and using a conservative 10X earnings that puts the share price at 20X today's price (£9/share).
At this point you might well counter with "it's very much just your guesses Agricore". And,yes, I'm taking SED's and the broker CG's numbers as the basis of making forecasts. Well, there has been until now restriction on knowing about units and pricing while commercial negotiations have been ongoing. But this is a PLC. What does a PLC have to do? The answer is report on its year end (and interims). So in a few days time, on Thursday I believe, we will know the FY2023 results. We still won't know the terms of the Indian OEM (that's post period) but we will have a much better grip on the "real business" since FY2022 was largely grants and set up, we will see the financials around "real production". Exciting!
GLA
Just to be clear:
"6. Roughly, on a cash burn of £0.2m a month, EI now has 6-9 months runway taking it to Q2 2024."
This is based just on tranche 1. Tranche 2 extends the runway by a further 6 months. My reading is that the 2nd tranche occurs in October and rereading the terms there doesn't appear to be a mechanism to opt for tranche 2 - i.e. it just happens. Therefore the dilutive effects based on both tranches plus 24 months interest (£2.64m) @ 1.8p would be 30.1% or say @5p would be just 13.5%.
There's no trading update yet, so whether my 2023 forecast is on track is impossible to conclusively say right now. But I previously said "maybe the night is not really so black nor so full or terrors when you actually chew over the numbers." So how do I feel about that comment ahead of any trading update?
1. Right now we have a supportive investor who can open doors in Asia. That's a positive from the get go. The dilutive effect today would be £1.46m @ 1.8p/share = 19.4% - the maximum dilutive effect (of 43%) diminishes as the SP rises. If the share price goes to 3.6p then the dilution is below 10%. The 2nd tranche of the convertible may not be needed although kicks in in 3 months.
2. We also know from the last numbers they have "invested in growth" so we are definitely seeing growth based on the Twitter updates aren't we?
3. Hidden in the 2022 numbers was growth of ~70% in the USA which **far** exceeded WHI's 2022 forecast (of 12%). The lacklustre performance in China/Singapore was to be expected - although the WHI deal will be a key support for that strategy/expansion in 2023. I'm reading about tourism numbers exploding in SE Asia. EI is well placed to serve those markets bouncing back.
4. Stock of £1.7m. US bottling and run down of stock levels will mean a reduction of circa £0.6m working capital is possible in 2023.
5. I said that funding req'ts would be circa £2.5m so was quite close on that. The lower funding suggests my estimates on sales & margin were too low. An increase in Margin due to US Bottling said (by WHIreland) to be worth 12% improvement to margin (although strangely they foresaw only a 5% increase to margin in 2023). Using 30% margin and extrapolating growth I forecast at the start of 2023 a 2023 Revenue of £6m and GP of £1.8m. Net of Costs a 2023 loss of £2.2m.
6. Roughly, on a cash burn of £0.2m a month, EI now has 6-9 months runway taking it to Q2 2024.
7. But if EI can get Asia growth of 70% (like they achieved in the USA) now supported by WHI, as well as continued US growth supported by its local bottling partner, along with margin increases to 32% through bottling, logistic savings, price rises, while volume increases more quickly through that extra investment in "admin" (aka sales&mkg) reaching £9m sales and a GP of £3.4m seems feasible. Combined with streamlining inventory and invoice finance and you can see operational cashflow and EBITDA breakeven in H1 2024 and much improved for 2023 as a whole.
My original 2023 Forecast for EISB:
Revenue £6.4m
COS £4m
GP £2.4m
Admin £3.7m
EBITDA -£1.3m
My new 2023 Forecast for EISB:
Revenue £9m
COS £5.6m
GP £3.4m
Admin £3.9m* (I've added £0.2k for interest accruing)
EBITDA -£0.5m
If we see WHI convert some or all of their loan later this year, this will be an extremely strong buy signal. Equally, the pressure is on the BOD to perform. If they fail, WHI takes Anthony Burt's 18.8% holding.
GLA
Roger65, yes, still of the same mind. Those who had **BELIEF** on EISB and averaged down at or under 1p have big smiles on their faces today. If your stream of negativity was because you were shorting, well, you might be a short of money now! I'd give you a quick hug but you've probably had enough of a short squeeze already.
Yet another positive read across from RLE - and this one is probably the closest to RGL in the sense that it's a/ predominantly commercial office b/ regional (albeit just the Midlands) c/ High dividend (albeit lower than RGL and they cut theirs)
Highlights:
i/ Sale of assets 11.7% ahead of their Dec 22 valuation (further indicating the 2022 cut to NAV was probably overdone and that there are not further falls occuring in 2023)
ii/ Rent collection 99.9%
RGL enjoys a far longer fixed debt period 5 years vs 1.5 years so RLE has had to take steps to bring down leverage, initiate disposals and preserve cash, but potentially gives a blue print for RGL's position in a few years time should interest rates remain as high as they are today.
GLA
Just a quick add - because of supply chain disruption over the past few years an "order book" doesn't equate to speculative or "it might happen". Customers are forward planning and committing to orders months and months ahead (to ensure they get the stock, and don't suffer stock outs as they did during the supply chain crisis.
So we can take that 30% growth as pretty much nailed on sales numbers - by the nature and history of this business area.