Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Hi Chesh, what news are we expecting tomorrow afternoon?
I am looking to top up but am personally waiting until AGM approval of the share issue which will likely see the SP fall back a little, imo
Very true. Poland is one of those countries that isnt necessarily associated with warm weather, but it can be blisteringly warm as well as extremely cold.
34°c is very possible in poland. It's 30°c today
If he has flown out to China (looks likely) then i doubt he's done that unless he is signing off on the JV. Negotiations may still be ongoing, but if it was dead in the water then any ongoing communication could be done from the UK
We do have office(s) in China, so it is possible that this is a routine visit, but given the proximity to the supposed MOU finalisation date you would imagine the two are connected
There have been some rumbling by a few PI's in recent days over the effect of the poolbeg spin off on the SP. Many are stating that poolbeg, as well as most/all other spin offs, are not on the balance sheet and therefore should have no/little effect on the SP.
These people are not considering the fact that the SP of the company has little to do with the net asset value of a company. In its most basic sense a company is worth it's net assets, which is balanced by equity. A company is never sold on those metrics alone as it ignores many off balance sheet considerations such as work in pipeline, demand for services etc etc. Given ORPHs past as a loss making company its NA value is probably quite low (recent results confirm the group value to 31/12/2020 to be £22,297,000). It may well be true that this value does not incl poolbeg/DIM/prep/imutex.
However, the SP considers many many factors in addition to the net asset value. Shares can be seen as a commodity of sorts, the value of which rises and falls depending on demand. The prospect if spin off shares in poolbeg undoubtedly attracted short term traders/beneficiaries who fancied a slice of the poolbeg spin off. This would have resulted in pre spin off demand going up, and then, as those PI's sold the demand dropped off. This is in part why the SP has risen and fallen over the past few days. There is also sentiment, that seems low in some people's eyes, and likely not helped by the results.
So, the fall in SP isnt CF lieing/MM screwing the PI about whether poolbeg has any balance sheet value. It is lilely as a result of investors trading the share short term. We certainly cannot value poolbeg on the drop of SP in ORPH as the value of poolbeg is still not known, albeit we have been given some indications (pre funding/dilution).
I am relaxed as things stand, but the events of recent weeks seem to have rattled certain PI's on this board which has led to a bit of mud slinging. Hopefully things return to normal before long :-)
The new companies require two things, the IP/assets (our contribution) and cash (an investors contribution)
The cash is provided in exchange for shares in the spin off. If ORPH shareholders get, say, 200m shares in poolbeg, an investor providing cash will then get 50m, 100m, 200m (who knows) shares in exchange for cash (the amount of which is unknown at present)
So, if poolbeg is worth £20m at IPO, original ORPH shareholders will only own, say, 50% of that value
All will become clear in the next few weeks post the poolbeg roadshow to raise finance
£400m mcap for ORPH is 60p per share
If the spin offs are valued at £300m in a year then i would expect that to be at the expense of at least 50% dilution. So, probably an equivalent of £150m of mcap in ORPH. So, an extra 22.5p
So, as a very rough estimate, £400m ORPH + £300m spin offs (£700m combined ~ the golden $1bn) is probably an equivalent of about 82.5p in ORPH as of today
Spin offs are free shares, but as has rightly been mentioned, we will be diluted significantly so predicting the value of ones ORPH and associated investment in 12 months is difficult
I have a feeling the £50m will be exceeded. Under promise, over deliver
PE ratio is price per share over earnings per share
Earnings per share is PROFIT over shares
We are loss making at present (to FY 2020) Turnover doesnt = profit, so forward PE's etc are not the best metric for valueing the company at the moment, at least when trying to determine what we should be worth
One thing is for certain, free shares in a company cannot lose you money (unless ORPH tanks short term following spin off)
We are all in for additional gains across our ORPH + associated spin offs, but its very difficult to ascertain how much.
I would love an equivalent value of £1 ORPH share within 12 months, whatever the micro breakdown is per equivalent holding.
My overall % return on my original ORPH investment will always need to factor in the value of the subsequent free spin offs. I see a pretty decent return as of today. The potential is massive
Hi extrader, i think those ascertions are reasonable in terms of what SP could be.
However, if you own differing quanties of shares then the overall value relative to ORPH changes.
100k shares in ORPH at 55p would be worth £55k
But said 100k shares would only result in 33k shares in Poolbeg, so at 7p per share that is only £2,310, or an equivalent of 2.31p per ORPH share.
So a guestimation of 100p across all entities is certainly sensible, but if the shares held across all entities differ then the equivalent shareholder return certainly wont be ORPH shares held x 100p
I am sure this is understood, but it is difficult to forecast overall return for us shareholders until we know how many shares we will own in each entity and the respective share prices upon IPO.
I am excited for what is in store, but naturally have no idea what my ORPH and associated holdings will be worth in 12 months. I expect a lot more than today :-)
100 merchants already? Fanstastic. I would imagine that 30 or so of those are the individual THG brands/websites. But still, 100 is amazing with no advertising.
Exponential growth ahoy
Milk, i am not commenting on overall potential nor am i saying that we as shareholders wont benefit. The point i was making was the objective one that £200m ORPH to £700m combined (a 3.5 bag) wont be a return experienced by PI investors
Its still great. Undoubtedly. But if, say, ORPH became £500m and DIM, Poolbeg, imutex and prep were all valued at £200m in a year then that combined £700m is not a 3.5 bag for investors from today's approx £200m mcap.
The combined mcap rise undoubtedly is a 3.5 bag across the group, but current ORPH shareholders wont be getting a like for like growth in the spin offs due to the 50% or so dilution to raise funds per spin off.
Free shares is free shares. Not saying it is a bad thing at all. We will all do well if we hold our current ORPH shares for the next 12 months and beyond, the point i was making is that CF's £700m in 12 months does not equate to an equivalent uplift in PI value due to the dilution required per spin off.
Looking even further ahead i hope we can get a combined mcap of many billions. But for now i'll be happy with £700m within 12 months, which will hopefully see me approx 2-2.5 bag from my present investment
Milk, my comments concern the combined value within 12 months of approx. £700m. Orph could be approx £500m (1.5 bag from a £200m mcap ~ today's/recent mcap) and spins offs could have a mcap of £200 mcap, which is perhaps only an extra 0.5-1 bag equivalent to your orph investment, due to dilution.
CF would then have achieved the £700m combined mcap (great news) but that wont correspond to the % uplift in a PI's investment due to the dilution in the spin offs
Milkmonsta, if ORPH has a £200m mcap, the spin outs wont have a £500m mcap (to make the golden £700m).
To achieve £700m mcap, significant growth in ORPH is required/expected. Perhaps ORPH will grow to, say, £500m mcap. The spin offs may then add a further £200m mcap, but our current ratio of investment value to orph mcap will be significantly reduced for those spin off companies. £200m mcap in a spin off will probably equate to an equivalent value of a £50-100m increase in mcap for orph (due to dilution)
When this was first mentioned our mcap was about £200m and i naively had visions of a £700m/$1bn mcap within 12 months (3.5 bag). The reality is, a significant portion of this combined mcap will be spin out shares which will naturally suffer significant dilution. The reality of a combined £700m/$1bn mcap is probably "only" a 2 bag in terms of shareholder value of investments
Still a fantastic return if this can be achieved in a year. I didnt know if anyone else factored in the inevitable dilution and the effect on the return of shareholder value?
I am not deramping btw, and i am a long term holder, i just wanted to make the point that if the combined mcap is achieved, we wont be seeing that level of shareholder value growth. Still a potentially great return, but not £200-£700m (3.5 bag). My estimate is 2-2.5 bag once that combined mcap is achieved
I would suspect a takeover attempt it we are successful. We would provide a ready to go system that could be very attractive to would be buyers, but i would expect a very attractive asking price.
The potential is massive, but it will probably be realised by another owner once we have sold for £x per share when the foundations have been layed, imo
"The Hut Group is an ecommerce business that sells own-brand and third-party products covering health and beauty, fashion, accessories and sport across 160 websites in 35 languages. Over the years it has acquired a diverse array of notable brands, including Zavvi, Coggles and Illamasqua."
Looks promising. The hut group own lots of smaller businesses, so this should see MODE adopted by numerous websites from this one merchant.
More exciting announcements over the next few weeks per JR on twitter
GB has shared (on a couple of occasions) a slide showing the market size for PD. The bottom line states 2.1bn people would be worth $5.28bn for installation alone.
China has a population of 1.44bn, we will hopefully be signing a JV with China Resources in the next few weeks. China Resources is partially owned by the Chinese Gov.
If CR are involved, why wouldn't they aim to go nationwide within China? And if they do, total one off revenues of 1.44/2.1*5.28 = $3.62bn... x49% = $1.77bn...
Hmmmm. Would obviously take a while to prepare that many units, but China alone could be worth a lot, potentially $1.77bn for the 49%... and even is only 5% of just china is utilised, that is a turnover of $88m for the 49%... ignoring reoccuring revenue.
A lot of potential. And all speculation on my part at present, but if PD only makes a small wave in China with CR, it could be worth a heck of a lot of DVRG (£60m mcap)
Just beat me to it Trillsg!
In particular "things are now in place for an exciting H2" :-D
https://mobile.twitter.com/gjbrandon/status/1401487016664121352