Member Info for Agricore

I typed in Portable Oxygen Concentrator into McKesson.com. What could I get? (Best of the Rest versus X-Plor)

Let's play POC Top Trumps!

> All were Mains powered vs X-Plor Battery powered

> No App vs App

> Lightest one weighs 31lbs!!!!!!!!!! (when do I stop typing exclamations?) vs X-Plor is 3.75lbs.

> Noise 48Db vs X-Plor's 39Db

Can you see McKesson selling many POCs which AREN'T X-Plor going forwards?

https://mms.mckesson.com/product-compare?utm_campaign=mck+search+results&utm_medium=referral&id=%5B1128888%2C+699609%2C+1083512%2C+951242%2C+783370%5D&_back=MTIqR3AzX3p4Tl84M1UqN2tlMVYzd2ZoejZHRGMxMEFLaDRHSFo5ZkJaT0UyZnlPNkd3UHMxcngteHJRQnZ4c2l0MWhGRnpQU0ZCbzZKRkdnVHVOUmpMZVk3dU91TG91RGVEQTNLdmJpMkoxNkVkdkpEUi1HX0pwWGsxaVRFTUoyMHZlbnJDRm12V21Dc3NEZzBJTE04UmRwUm5yTE1zWi1aaV9Wc1VvUHVuSllnMmx2bFY3UE5TSGVUTTliZHB6YXM4WFMzb1QwWGJmZ1Fp&utm_source=mckesson.com

And back by popular demand is Saietta, covered in today's "Hot Stocks" with Paul Hill, Investor Extraordinaire:

https://www.youtube.com/watch?v=zU4wR2LG250

-> Paul tells us they do Radio Flux, Radial Flux, Axial Flux -> (AFT is just Axial Flux Technology readers)

-> Light duty is the focus - they might licence out Propel.

-> EBITDA positive in 6 months

-> Really small company playing with large companies - great endorsement that large companies are working with them - punching way above their weight.

-> You don't see charging points for electric trucks but you do see them for electric light vehicles.

-> Vehicles are typically 5-10 year platforms - so sales could in time be in the millions of units

I'd also add IPO and CHRY to my list of "VC" suggestions. Both have given positive updates to the market and like GROW their NAVs have largely stopped shrinking. Both trade on 50%+ NAV discounts like GROW.

Watching Bloomberg and CNBC today the Americans are bemoaning the fact they can only buy things on 35-40 multiples. It made my chuckle - at least we don't have THAT problem :) At some point the pundits over there are going to be saying Gee Whiz we can buy Brit stocks on single multiples, some of them are on PEs on less than 1.

Also the huge wall of money on the sidelines is going to come back into the market once interest rate rises come off the boil. Yesterday's 0.25% rise is potentially the last rise.

Don't think you can compare Tern with Grow. Tern is highly speculative and today's news is "exploring possibilities" not one cent of actual revenue or profit.... yet.

Molten by contrast, largely covers its costs with fee income, and its portfolio mostly have long runways, so the idea of reaching out (somewhat desperately) for funds to keep going is not part of its DNA. Tern had to borrow money at 14% PA only 6 weeks ago. If I have a foot in at Molten I'd hardly put toe in at Tern. I'd certainly advise anyone who's in profit today at Tern to grab the profit from there because Molten is the better bet. Based on the 3 year performance there aren't many in profit at Tern.

As for Steph and her house. Remortgaging doesn't mean you're going to lose your house. Depends on circumstances, her income, costs, and safety on that income. Doubling down may be exactly the right thing to do.

I would ask two questions. First what timescale can you cope with GROW not doing well? If you're gambling that by 2025 XYZ will have happened then think hard about that.

Second I would ask where is the diversification? 1 share with multiple holdings isn't diversification. In the long run VC will do well - it has done historically. I have around 25% of my portfolio in VC (including in GROW) and averaged down at £2.51 today here. But I also have a large proportion not in VC. But even you said no I'm convinced that VC will recover, well diversify within VC then. There are numerous bombed out plays. I would advise if you want to back VC 100% I would consider diversifying into other ones who are also on equally bombed out valuations like AUGM, TMT, NSCI, FWD - there are others. As W13 says if an accounting error etc comes up not all your eggs are in the 1 basket.

I have doubled down in the past and won, and doubled down and lost. Both were very instructive experiences for me. If you imagine an angel and devil on each shoulder. Take your time. Let one tell you about the upside, but equally let the other tell you about the risk/downside. Listen to the downside angel doubly hard. Like Buffett says rule 1 never make a loss. Rule 2 remember to check rule 1.

GLA

His guests are always trying not to laugh at the beginning. It's rare Paul has a po faced interviewee in the first 20 seconds.

https://www.youtube.com/watch?v=kPwFvNMdhlk

Highlights from the interview:

1. Volume 80k/5 years to 140k/5 years - minimum - great endorsement of the technology.

2. Indian Factory being finalised "a few weeks" (before end August?)- single shift 20k-50k production/year. Capable of expansion.

3. USPs - modular to market - first movers, ability to react quickly

4. Speaks of ATVs in America, Snowmobiles in Scandanavia - other opps than India.

5. Formal purchase orders "quite near future"

6. "I'll be amazed if we don't RNS other OEM deals" says Tony Gott.

7. Propel probably to be licenced, or possibly another Conmet-type deal in the making? "We've got too much near term opportunity in light vehicles", so Propel not a focus.

GLA

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.

Next dividend arriving this Friday :)

Krusty, they are net inflows so I’d taken that to be net of costs, but I’ve not validated that. Have you been able to validate those flows?

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!

Diageo CEO on Bloomberg: “consumers remain resilient”

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