Member Info for Agricore

Re-reading yesterday's RNS the sale translates as this a loss on disposal of $1,337,500 (WoWo was on the books at £1.3m plus accrued expenses of £170,000 less the $0.5m offset expenses). Equates to a loss of 0.08p per share. There are then unrealised gains of 0.14p 2 years in the future. No wonder the price dropped.

Because the $0.5m is offset against accrued expenses (presumably in relation to WoWo anyway) there's zero cash benefit today and only 0.14p/share in the future.

The rationale for its sale therefore feels odd to me. If we don't see the $2.3m in a few years then WoWo has been sold for 30.2p/tonne. And even if we do, it's a measly £1.69/tonne. ($2.8m & 1.325MT) on a resource where nickel is about $21,500 and Cobalt about $30,000 a tonne. It just makes no sense.

I'm at a loss for words, but it seems I'm not the only one.

In WH Ireland's note this note the update ends "A chapter of Corcel’s life ends today as it exists one of its nickel-cobalt projects in Papua New Guinea as it “ "

Either they've taken up doing a Blankety Blank or maybe they're at a loss for words too!!

Extrader, where are you getting Wilson Sons £700m NAV from? I'm looking at their last set of accounts and Wilson Son's have $742m net assets so 57% i.e. $429.8m or £343.8m is attributable to OCN. So your numbers are out by quite a bit.

(Refer to:

https://otp.tools.investis.com/clients/uk/ocean_wilsons2/rns/regulatory-story.aspx?cid=1632&newsid=1676852)

If WilsonSons is sold it won't be sold to break it up and strip its assets, so its NAV isn't wholly relevant. The reason I say this is two-fold. First of all, the market price is much higher than its assets. Looking at Wilsonsons.br share price today of R$11.99 (up 14%) this translates to a value of R$2.98bn to OCN i.e. £500.85m. So it's at a 50% premium to its £343.8m of assets. (i.e. market price translates to £14.16 per share).

The link you've shared is just to some random blogger in Brazil. Not sure there's any credibility to the R$5bn **GUESS** he has made! But if MSC do want to pay a 66% premium to today's share price (and it's not unreasonable that a hostile takeover would be at a 66% premium) then that equates to an offer worth £23.51 per share to each OCN holder. Today's "little" jump is nothing compared to the jump as the market catches up.

And beyond the £23.51 per share each OCN share holder also has investments and cash (using 31/12/22 numbers*) of £6.64/share. So a total value of £30.15 per share.

* I hold Hansa and the holdings are very similar to OCN's - the NAV has been fairly stable 31/12/22 to today so using £6.64 a share isn't unreasonable.

Or expressed in absolutes in the event of a sale to MSC OCN's NAV would be £1,066.3m vs OCN's market cap price today of £325.3m

What if it all goes Pete Tong? What if the sale doesn't go through???? -> Digging into WilsonSons web site what is impressive is the growth story, the profitability and the future opportunity - see the link below. For example that for Brazil to draw level with a peer like Chile then it's TEU would need to grow by 300%. That's a lot of growth for WilsonSons. Plus the opportunity to capitalise on growth in Uruguay and Argentina's trade due to the River Plate's shallowness.

https://api.mziq.com/mzfilemanager/v2/d/8284de4a-426a-465a-beab-92abeabafc97/3bed0373-fff3-9539-dd79-fab25a49abca?origin=1

Even if the offer doesn't go through, this 57% holding of Wilson is valuable to OCN and if nothing else the news of the rumour will draw new interest to the clear value on offer here.

GLA

Compared to the resource it's a measly £1.69/tonne. ($2.8m & 1.325MT) and equates to £0.00238 (1/4 of a p) per share.

Bearing in mind nickel is about $21,500 and Cobalt about $30,000 a tonne. Also it's a 1/3 of the "heavily discounted" valuation put on it by Align and "an independent valuation from 2009 of A$168m" (about £88m or 39x higher than what was realised)

Having said that, it equates to about 1/2 the current market cap so if by sacrificing WoWo this can help achieve objectives in Mambare or Mt Weld then it serves "the greater good". But it doesn't feel like a good deal it feels like a forced deal.

GLA

Picked these up at £8.40 which is about 20% below the last NAV value of Wilson Sons. Speculation on its possible sale. Free carry on £6.83/share worth of investments and about £0.15 a share cash plus a dividend. Already hold via Hansa where about 30.3p/share equates to Wilson Sons (via look through exposure), but glad to have some direct exposure here too.

"As at market close on 31 March 2023, the trading value of the Ocean Wilsons' investment in Wilson Sons totalled approximately US$470.9 million, which represents US$13.31 (£10.79) per Ocean Wilsons share. The investment portfolio was valued at approximately US$298.1 million which represents US$8.43 (£6.83) per Ocean Wilsons share. In aggregate, including US$8.4 million of cash at the holding company level, results in an implied net asset value per Ocean Wilsons share of US$21.98 (£17.81)."

GLA

Although leaving WasteFuel aside, it's fair to say that Enphys last NAV constituted 84% of the current market price ($10.4m NAV as at 31/12/22 vs the £9.88 IX. market cap).

This is an LLC and doing some digging this owns part of a SPAC listed on the NASDAQ. Interesting then to see the value of this has increased by 9.7% since IX's last update: So at *****TODAY'S PUBLICLY LISTED MARKET PRICE****** is worth around 92% of the current IX. market price!

https://www.nasdaq.com/market-activity/stocks/nfys/advanced-charting

https://enphyspac.com/home/default.aspx

So on that basis if you deduct the **publicly traded asset** from the IX. share price, the 85.88m shares would cost you about £0.8m to buy.... so less than 0.1p a share.

For that, you buy 51.7p worth of assets. ($65.94 last NAV - $10.4m for Enphys last NAV = $55.54m/85.88m shares @ $1.25/£1).

Or put another way, if 99.8% of the last NAV is garbage.... and just 0.2% is realisable you will have broken even at today's share price.

The public listing on the NASDAQ is the crucial fact that the market is overlooking and that makes all the difference here.

Perhaps, like me, people focus on the biggest component - WasteFuel - and overlook the smaller holdings.

And it gets even better IX tell us that "Enphys expects to announce a merger opportunity in the first half of 2023

creating a renewables juggernaut that will be a regional champion for sustainability in the Americas". There's 19 days left in "the first half" so if the $10.35 share price jumps on news of the $350m SPAC is being used in some clever and exciting way (remember Green Energy investments are generally bombed out in terms of their price so there are bargains to be had) then Enphys jumps from being 92% to greater than 100% of IX market price. If that happens, even if you wrote off 100% of all the other assets you'd still profit from investing in IX.

So yeah, reasons to be bullish.

Hedgehog, you're right it's the future which determines the future, so we must seek to assess to what degree the future differs from the past. In IX's case WasteFuel is the largest holding (by far). So let's examine that.

1. Interesting then that both the EU and US appear to plan shipping acts to reduce pollution (53% of shipping). WasteFuel is a clear winner when Maersk already have 19 methanol powered ships on order, and speak of retrofitting the other 700+. Stena are also backing methanol. Shipping generates 2.9% of world emissions around the same as Japan. But it growing so could be 5% by 2050. Regardless of legislation the pressure is coming from brands insisting their supply chain decarbonise.

https://www.padilla.senate.gov/newsroom/press-releases/padilla-whitehouse-introduce-bills-to-reduce-ocean-shipping-emissions/

https://www.euractiv.com/section/shipping/news/parliament-backs-eus-maritime-fuel-law-to-curtail-shipping-emissions/

https://www.youtube.com/watch?v=BLAi6mggIA4

https://www.offshore-energy.biz/methanol-momentum-25-ships-in-operation-81-more-on-the-way/

2. Interesting too that they have a partnership with Averda for green methanol in Dubai. At that COP28 arrives in, where?, oh Dubai in just over 5 months. Elsewhere a $5bn methanol plant in Dubai is being built.

https://www.wastefuel.com/averda-wastefuel-partnership-middle-east

https://www.offshore-energy.biz/uae-to-get-its-first-large-scale-methanol-production-plant/

To conclude it seems to me there's large grounds for optimism. The lack of information on progress by IX and its constituents is a frustration and could explain the bombed out price - although I do agree the wider re-rating downwards is a fact. I don't know whether I classify as an IX. bull, I suppose I do as I hold IX. and I only hold holdings that I believe can grow and succeed. The "lack of news" is often simply due to complexity and that building a plant can be a 8-10 year undertaking.

GLA

Demofarl, you're right 16.6% - I think the 17.7% was a trailing yield calculation on my broker's website.

I was thinking about "risk" and our previous conversation around understanding (or not) the finer workings of FAIR's fayre. I arrived at the rationale that it depended quite a lot on the talent of the key people running FAIR. Here's what I found, and the short version is they appear to be a very shrewd and talented group at the top.

https://www.linkedin.com/in/claudio-albanese-652b345/?originalSubdomain=uk

https://www.linkedin.com/in/jon-bridel-864ba235/

https://talent4boards.com/fair-oaks-income-welcomes-fionnuala-carvill-to-its-board-as-non-executive-director/

One of the best ways lay bare the opportunity of Amapa is to strip out KDNC's publicly listed holdings and cash from the market cap of KDNC is £15.2m (all valuations as at 9th June 2023)

EMH 7.2% holding worth £5.76m

EG1 8.7% holding worth £2.9m

HAS 1.9% holding worth £1.81m

Sonora worth £0m (let's suppose the worst)

Leaves £4.73m. Leaving aside the interesting topic of whether the above share prices are "fair" (for example EMH has a NPV10 of $1,217m which equates to a stake worth £70m not £5.76m) the NPV10 of Amapa is $949m* and a 33% share of that equates to £253m. (*this excludes the $28m savings identified moving the railway in the 28th May RNS)

£4m for £253m is why you can't just consider Amapa, when considering an Amapa valuation. Even following the broker note weighting of a "20% chance of success" suggests KDNC is undervalued by 3X (i.e. 25.5p is "fair"). Even at today's bombed out valuations, and even assuming 1/5 of Amapa, and assuming further savings therefore movements to the Amapa NPV can't happen (hint: they did a fortnight ago).

I was also interested to spot Amapa isn't Kiran Morzaria's first mine renovation project. He has a past track record as FD in renovating and bringing Vatukoula gold mine back to life - I found this weird narrated video from 2009 which describes the story: https://slideplayer.com/slide/5748591/

GLA

Also the yield is 17.7% and interestingly I put through a test buy and had a £0.4796 buy price. Time for a top up next week me thinks.

3 weeks until ching ching day Damofarl :)

Once again FAIR is listed in IC's top 25 investment trusts now with a Z-Score of -8.6. I don't think I've ever seen an IT on a -8.6 - well I have now. Yet once again not included in their 10 picks.

On a discount to NAV on -17.9%. That's due to the increase in NAV on the last update. Plus the buy backs are hoovering up shares and increasing the NAV per share. Are they blind?!

https://www.investorschronicle.co.uk/alpha/2023/06/09/investment-trusts-for-income-and-niche-exposure/

More ching chings for us :)

GLA

Should investors "unwillingly ro bite the bullet" as You_Willing believes....

Or should they consider the FY2022 actuals, the FY2023 and FY2024 forecasts, the recent VW win, the potential future Mercedes win - and crunch the numbers for all of these. What would the numbers tell them based on today's 65p share price?

VW's net positive payout of £7.7m was net of expenses. Accrued expenses relating to VW were £5.8m H1 FY2022 and £3.1m H2 FY2022. So I believe the move in debt is actually £16.6m. On a forecast net debt of £73m for 2023 that reduces forecast 2023 net debt to just £56.4m.

Meanwhile the forecast FY2023 earnings are £18.1m so adding net £7.7m brings PBT to circa £25.8m on a market cap of £75m the FY2023 adjusted PE is below 3x. VERY CHEAP!

EV/EBITDA is 2023 forecast EV is £75m+£56.3m = £131.3m. Then forecast PBT £25.8m adding back interest, depreciation, amortization adds back about £8m (based on prior accounts) to arrive at a forecast EBITDA of £33.8m. So this is on a FY2023 forecast EV/EBITDA of 3.9. CHEAP! CHEAP! CHEAP!

Free Cash Flow was forecast at £11.7m for FY2023 so that's now £28.3m for FY2023 - that's great!

Let's imagine something (it's easy if you try). Let's imagine for a moment that ANX wins the Mercedes case in FY2024. And otherwise everything pans out based on WH Ireland's FY2024 forecast. So let's assume the Mercedes win is only worth the same net of expenses as VW. PBT FY2024 grows from £25.8m to £31.5m, putting this on a P/E 2024 of less than 2.5x. So EBITDA is something like £39.5m, adding back £8m depn and amortisation. EV is today's share price of £75m.

FCF rises anyway but assuming a Mercedes £7.7m net plus accrued expenses of say £5m that leaves debt at £40.6m (i.e. in 18 months debt is nearly half of where it was a few weeks ago)

And EV/EBITDA drops to below 3X!

Given that housing disrepair achieved 87% growth year on year, is substantially more profitable than other legal services work 50.2% PBT margin vs about 17%-20% and a shorter case-to-cash cycle I actually think WH Ireland's growth numbers are a bit pessimistic. It's not hard to see upside to the numbers. The courts are back to normal and working through backlogs.

Also the potential to grow dividends is there too. The forecast FY2024 15p EPS (or ~20p assuming a Mercedes win) at some point can switch from reducing leverage to increasing dividends. If they began using just 30%-40% of profits for dividends in FY2025 that equates to a 10% yield at today's share price. That statistic probably illustrates how CHEAP ANX is.

Risks:

Buy out or taken private? yes, possible. £1 would be 50% premium today.

Economic cycle? No - this is not cycical/sensitive

Covid re-emerges? Would slow down case-to-cash cycle

Competitive forces? Nothing particular

GLA

Auctioned off to Dbay perhaps?!

Remember Dbay's £1.50/share bid was ultimately rejected in 2021. Back in 2021 - when housing disrepair was just beginning, no emissions cases had been won, competition in impercunious hire was stronger than now and prospects for ANX didn't look as rosy as they do now.

It's true the market was a tad more optimistic back then.

GLA

Shear, I think you've got it wrong. Or at least I'm reading it very differently. A net positive of £7.7m is net of expenses surely? Otherwise what it is "net" of?! (I admit it is a badly worded RNS).

Accrued expenses relating to VW were £5.8m H1 FY2022 and £3.1m H2 FY2022. So I believe the move in debt is actually £16.6m. On a forecast net debt of £73m for 2023 that reduces forecast 2023 net debt to just £56.4m.

Meanwhile the forecast FY2023 earnings are £18.1m so adding net £7.7m brings PBT to circa £25.8m on a market cap of £87.3m the adjusted PE is 3.4x ..... not 11.2x.

When speaking of PE I think you are getting rather confused with EV/EBITDA (which does include debt). So 2023 forecast EV is £87.3m+£56.3m = £143.6m. Then forecast PBT £25.8m adding back interest, depreciation, amortization adds back about £8m (based on prior accounts) to arrive at a forecast EBITDA of £33.8m. So this is on a FY2023 forecast EV/EBITDA of 4.2.

A forecast FY2023 EV/EBITDA of 4.2 is CHEAP! CHEAP! CHEAP!

FCF was forecast at £11.7m for FY2023 so that's now £19.4m for FY2023 - that's great!

Moreover the 1st emission case win is the hardest. The Mercedes case will be less risky (proven capability), and less expensive (because of the learning curve), so the very fact there's a win is a positive. For the share price to not move one iota on the simple fact of this is in itself reflective of a general pessimism hanging over ANX.

Why? Losing their CFO in April seems to have caused the drop in market price. I didn't really understand this. I appreciate there were lots of comment about "no smoke without fire" but the guy was in post for just 9 months! The new CFO has been with the business a longer time and has a much more relevant past track record so who knows what the truth of Fryer's departure was? Jumped? Or pushed! Anyway for me the real brains in the business is Alan Sellers and listening to him present on a number of occasions I think he's a very pragmatic, realistic leader who's got his head screwed on. So I find the change of CFO making this somehow 30% cheaper quite baffling.

I conclude by asking: Did a badly worded RNS cause a rerate not to happen today?

CM22,

You're being unrealistic. If their FY2025 numbers are half this value the impact would drop EPS from 29c to about 9c or 7p. For the share price to grow to £7.50 (30x current levels) that suggests a price/earnings (PE ratio) of about 107. BELL be valued like Tesla? I don't agree.

However, a PE of 15x would not be unreasonable, and by then as KoR_Wraith so elegantly points out, you could also assume their continuity by then. Your reward would be a share price of something like £1.05 (15x7p). So a 4 bagger from today.

Or if your pessimism in Dowgate's forecast is unfounded (you don't explain why half could happen) then 15X makes this a £2.10 share price and 8 bagger from today. (Or £2.00 target price according to Dowgate)

Given that they have award winning products, which we are assured knocks the socks off the competition, in terms of capacity/price/flexibility/functionality/weight and given that they have successfully accessed £3.1m more funding, as well as offshored production where there's no balance sheet hit (BELL don't have to hold stock in China) on a risk/reward BELL is looking pretty good in my analysis, so I certainly filled my boots in the recent 25p offer. Clearly not many others did.

Remember the YE cash was $6.4m the forecast cash flow for 2023 is -$2.9m and BELL are accelerating the X-Plor commercialisation (hence the need for cash). So $6.4m + $3.86m minus $2.9m leaves $7.35m headroom. Cash flow is forecast to turn positive in FY2024 which is 6 months away. If you disbelieve the acceleration story then cashflow isn't going quite as forecast (hence the raise) but we are not necessarily looking at a black hole. Many growth shares and suffering similar cash flow pains. The fact that this one got £3m of smart money (and £0.1m from PEs) is an encouraging fact.

GLA

Edgility's contract win here plays into a number of its strengths:

1. Security - Cybersafety is a huge priority for the 911 system

2. Speed - 213m calls a year, where speed can be of essence to the outcome (the whole basis for 911 being formed was speed of response)

3. There's no "central" 911 system, each state, and often each county has its own set up. This means investment in expensive central servers and call processing is limited. NB: There is a central academy based in Utah.

4. There's a recognition of the problem and a lot of work going on to achieve "Next Generation 911"

Sources:

https://www.911.gov/issues/

https://www.911.gov/assets/2021-911-Profile-Database-Report_FINAL.pdf

So, to have a contract win in 1 state, is the start of a journey where BVC is pushing on an open door, with a technology suited to the situation, where replacing the existing system with some central cloud platform is simply not going to happen so adapting existing call systems with the advantages of edge computing makes a whole lot of sense.

Many international systems (unsurprisingly) follow the US academy for emergency response. Including the UK. So the opportunity to grow this is not just limited to 50 states and 3,143 counties in the USA.

This foothold is a great win for BVC in my opinion.

GLA

The way to think of this is if you buy ATM via OTC then you are transacting on a security with a dealer, not transaction on an exchange (like the AIM exchange). The dealer holds the share and you hold the "beneficial interest". Just like if you buy shares via Hargreaves or the rest, they physically own the share and you have the "beneficial interest".

This is a helpful link: (https://www.investopedia.com/terms/o/otc.asp)

So no, no new shares would be issued because of the listing on the OTCB and the pool of shares remains the same.

GLA

Speaking of the Unicorn Bolt - they've just agreed a $126m framework to roll out car sharing further across Europe. So if you live in a city like Berlin or Tallinn you pay £7 an hour to use a car:

https://bolt.eu/en/blog/bolt-secures-126m-for-bolt-drive-expansion/

https://bolt.eu/en/blog/bolt-launches-car-sharing-service-bolt-drive/

And this major financial backing is a no brainer for the banks because of the ESG merits!

Eero Treumann, Head of Corporate Banking at Swedbank, says, “We are used to seeing Bolt Drive cars on the streets of Tallinn, but it’s still a novel business model on a wider scale. In the future, we can be a part of the solution to save cities from car dependency”.

GLA

Rhymes with PoxMarkets and it starts with a V

https://www.xxxmarkets.co.uk/articles/vox-sector-special-five-companies-bringing-next-generation-ev-technology-to-market-de3077a

"A separate yet complimentary technology that is often discussed in the same context as EVs is autonomous driving. Guident, a Tekcapital portfolio company, is a pioneer in the rapidly growing field, having developed a proprietary "remote monitoring and control" (RMCC) system to improve the safety of autonomous vehicles, including land-based delivery devices.

Separately, Guident continues to develop its patented Regenerative Shock Absorber (RSA) technology that converts more of an EV's motion into electrical energy, extending range. Regenerative braking is a well-known technology, however Guident's system harnesses energy from shock absorbers. "With precise force and displacement measurements, we aim to demonstrate the advantages of the modern energy-harvesting shock absorber over traditional oil-filled shock absorbers", the company has said.

Guident's RSA technology can make all types of vehicles more sustainable, including ICEs, hybrid, and EVs. It increases the energy harvesting efficiency by c. 70% over existing energy-harvesting shock absorbers, and can deliver extra EV range of 6-12 miles per charge."

AGRICORE>> It hadn't really twigged in my mind that the regenerative shock absorbers would also work with ICE and hybrid vehicles but actually it makes a great deal of sense. My own experience of using START-STOP is that is usually stops working i.e. the braking I do is insufficient to provide enough charge. Perhaps if I drove more erratically then I could make more use of START-STOP. Or I could get some Guident Springs :)

Interestingly, 95% of cars come with START STOP (Source: https://www.bannerbatterien.com/en-gb/Battery-knowledge/6-Start-stop-technology)

The concept of adding Guident Springs seems like a no brainer, and that got me thinking - will Guident Springs only be used in cars? It appears START STOP is increasingly common for ICE bikes or e-bikes (https://www.webbikeworld.com/will-stop-start-tech-come-bikes/)

Market size for cars is 67m units/year and motorbikes is 65m units/year. If 95% are equiped with Start/Stop (like now) AND Guident Springs there's just a $25 licence fee on each one that equates to an annual income of $3.13bn. Let's suppose only 1 in a 1000 new cars/bikes adopt Guident Springs. That's licence fees of $3,135,000 a year. Selling the licence for 15X that would yield $47m or £37.6m. More than twice TEK's current market cap.

Oh and that's just 1 in a 1000 new vehicles. What if you retrofitted Guident Springs as an aftermarket "range extender" technology too?

Oh and let's not get started on the new 24.1m vans, 1.7m new trucks and 0.5m new buses per annum too.

(https://www.statista.com/outlook/mmo/shared-mobility/shared-vehicles/buses/worldwide)

GLA

And a comparable "food technology" business to Microsalt which might give further food for thought would be Treat (LON:TET). If you look at their 10 year performance this is a 6X (6 bagger) or 10X at its zenith.

https://www.treatt.com/media/pages/investor-relations/financial-results-presentations/presentations-media/presentation-to-major-shareholder-may-2023/75cf33178d-1683302154/2023.05-fy23-h1-presentation-city-final.pdf

It's citrus essence for herbal teas, not endorsed by Chef Stein, and arguably nicer herbal tea is a less pressing need than the annual early 28,000-50,000 deaths caused by excess sodium in the US alone. It does provide something of a template for how Microsalt could progress from here.

GLA

BAF, you make a good point which should not be underestimated.

The wider application of the technology is that flavouring is big business. Flavour and fragrance is worth €18bn per annum. (Source: https://www.statista.com/topics/6300/flavor-and-fragrances-market-worldwide/#topicOverview)

A technology which halves the necessary addition of non-liquid flavouring is worth a great deal, well a proportion of €9bn per annum to be precise - in addition to the growing sodium reduction ingredients market worth $1.62 bn per annum and the salty snack market worth $26b per annum.

It's certainly (flavoured) food for thought.

GLA