Ben Richardson, CEO at SulNOx, confident they can cost-effectively decarbonise commercial shipping. Watch the video here.
UK Government backing NHS suppliers with ECO / Low carbon supplies now - must be a good cleaning account at some point :-)
"Established supplier looking to align with upcoming hashtag#NHS sustainability requirements in April 2024, the hashtag#DHLNetZero initiative is for you!
Join our FREE half-day in-person workshop led by NHS London Procurement Partnership on Tuesday 20 February or 12 March to benefit from:
🌱 Relevant resources to help you adopt hashtag#ecofriendly practices
🌱 Learning Net Zero concepts relevant to the sector
🌱 Bespoke support in developing your Carbon Reduction Plans
I have managed to get hold of the new Brokers Note entitled "FY results: strong cash flow".
Key points:
1. Valuation target retains at 325p with BUY rating (currently mkt price today is only 47% of Broker price target).
2. Broker valuation rationale :
“Our target continues to be based on two arguments:
a. the multiples applicable to a mid-cap chemicals company, and;
b. the value which we believe is applicable to Itaconix's differentiated market position and which would be relevant to an industrial third party." (so Broker is considering full opp. pipeline market value/+DCF going concern value to possible acquiror). "At our 325p target the stock would trade at 5.1x/3.7x 2025E/26E EV/revenue, which we believe would be highly attractive to an industrial buyer looking at markets with gross margins in the hundreds of millions of dollars annually.”
3. More discussion of underlying customer portfolio growth WITHOUT the 'low margin' customer - Observations:
Underlying revenue growth of post loss “core” business is v. large: “Excluding the major North American detergent merchandizing customer, we understand 2023 revenue was $3.6mn, and therefore growth from other customers in 2024E (largely derisked) is c.70% for 2024. We expect this growth to be across Itaconix's end markets, in cleaning, hygiene, beauty, and in various new industrial applications. We also expect growth to continue in 2025E at above 50% y/y."
4. Cash on Balance Sheet is sufficient until after FY 2026 when ITX business transitions to op. cashflow positive
5. Manufacturing building facility lease renewal for another 10 + years (confidence?): "In December 2023, Itaconix renewed the lease on its existing building to 2034, resulting in the recognition of a c.$2mn asset and c.$2mn liability under IFRS16."
6. Possible asymmetric Broker treatment (revenues v’s plant capacity) – the capex is still quite high during 24E/25E/26E => aggregate of $4.0m (about 2x a plants worth?) and ave recent depreciation is c$0.2m. So looks like we are replacing all the plant assets plus adding another one unless there is considerable re-tooling going on. Unless I have missed something there appears to be a mismatch since when we heard in the management call the other day – a denial for any new plant at this time for the foreseeable future. I’m scratching my head a little on this and can only assume the revenue line is light or the capex line is heavy. You can DYOR on this but makes sense not to over commit to possible upside revenue and be full on the cost/capacity area so perhaps that is the theme here - forecast prudence.
7. John said on the call that there should be some "news" in the short term (RNS) for diversification wins so I expect we will know more when that disclosure is made (leather/paints)
Looks like at least ITX senior team will be there:
3x Social media from team: Meet Itaconix at the American Oil Chemists' Society Annual Meeting
Schedule a meeting with CEO John Shaw. Learn how to increase performance, safety and sustainability without increasing cost using Itaconix’s plant-based technology platform.
Montreal Apr 28-May 1 #AOCS2024
https://lnkd.in/eJ5BhNDY
Ok Prof. I will take an option to buy at 20p for 8 months to take your upside as you await your exit price at 20p
ITX LinkedIn team now posting on average almost every day for last month.
John S has been recently recognized in Bioeconomy daily digest for his contribution which I was unaware of. Go see for yourself there is lots now going on in the ITX market awareness building strategy. Soon new eeb site to back up the strategy.
Pro - that's spineless....surely SNG001 is worth multiples more than that pathetic sum where you would throw in your chips????
In all seriousness. Its going to be really interesting how clever marketing and brand differentiation themes take hold of ITX ingredients and mould them into new product segments in sustainable paints and leather areas. Maybe SI is quietly waiting in the wings to see how that goes in H2 before he jumps back in Jan 2024 or may he miss the boat somewhat time will tell. However John's wide smile kind of tells a story that makes me want to be in this today not 2024 or 2025
I can only assume market formulation testing will be getting a bigger ticket area for ITX in coming months and quarters given all the spec chem ingredient exposure here with early adopters keen to re-segment their markets with new ECO minded customer products being target groups. Eg. New Delux 'ECO Sustain' TM branded wall paints for a greener better world. Marketers dream. I always wanted to be a marketer myst be great fun!
Itaconix Launches Biobased Functional Additives for Decorative Paints :
https://coatings.specialchem.com/news/product-news/itaconix-biobased-functional-additives-decorative-paints-000221458
SP. But forecast gross profits are looking above average for chem industry (premium) so all we need is enough volume at this profit level ( ie plant capacity utilisation needs to go up which looks highly probable given current trajectory of underlying growth). Funny thing is if tomorrow we re acquired this one marginal customer we lost; ITX investors would buy the stock back up to say 200p-250p; it doesn't make intuitive or logical sense that this marginal contract is worth that uplift in market cap. Its optical only at revenue comfort level.
IMO that's what's going on here and very much short term ism investment horizons for some of the investor base. The valuation defies logic of :
1. Prior professional fund raise around 250p over a year ago offset by worst case we are 1 year behind EBITDA delivery; net net zero change
2. Ability to fill plant more aggressively as price takers in H2 if we need or want to
3. A few diversification channels are now at cusp of conversion and probability of market access is lower than 1 year ago for sure
4. Management confidence on upside new client opps at higher profit potential
5. Free cash war chest that now seem in worst case tev projecton that will not be spent in capex duplicate plant in next 12 months
6. Capacity to expand quicker if we suddenly get demand.
7. Valuation Multiples now look odd after considering Free cash
Hi Paladin - there is likely to be something more important in the background that is needing some external comms management and SP excitement restraint but this is my best guess currently. Just imagine even a 100p target price reversion, what % relative value uplift is that and management clearly fear premature SP inflation that then has to be commented on in a formal RNS and early out of the bag pressure.
Chardude - its well oversold due to a few day trader sellers and will come back since its so cheap today. ITX is a solid business and never looked so good in the medium term as per John S CEO - it will rebound for sure in coming months with news on upside developments.