Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Perhaps a possible explanation for the 30 per cent drop in SP, using the following timeline:
7 Sept - announcement of investor presentation set for 14 Sept - SP 4.8p
13 Sept - SP peaks @ 6.6p (in anticipation of the next day's presentation)
14 Sept - SP closes @ 5.35p
Today's SP @ 4.35p
I am a big investor here (never sold a share!)! So for personal reassurance, I have occasionally revisited the company presentation of 14 September to remind me as to what our Board has told us.
Firstly, I applaud all of the research on this BB - absolutely brilliant (thank you all, especially to Thordon) and yes, we have a fantastic opportunity to 'clean up' with our unique proprietary product range.
As JS continuously reassures us, record levels of revenues with new customers and new revenue streams being achieved through product performance. Then we have the additional (free) benefit of decarbonisation, as a highly-charged political by-product.
But whilst revenues are key here for future growth, surely the end game is all about profitability and how soon we can convert those future profits into hard cash, thereby eliminating the need for future cash calls. Warren Buffett says: Higher revenues for no profit make us busy fools!
So on the topic of profitability, please revisit the presentation (around 32 minutes in?)
JS 'slips in' a casual reference to breakeven being some 18 months to 24 months away (but possibly, sooner).
In other words, putting it another way, it suggests that we have a further 18 months to 24 months of additional losses.
Yet inexplicably, what the presentation failed to mention was how the 2022 (H1) losses of $940k were funded?
In essence, they were funded by a combination of extended credit from suppliers ($622k) and an equity fund raise in Apr 2022 ($380k).
So, going back to the anticipated losses projected by JS for the next 24 months - how are these losses going to be paid for and why did JS consider this point not important enough to mention?
Could this be a contributing factor to the market's negative conclusion to the presentation (financially speaking).
Perhaps this is partially the reason why we find the SP back to square one!
GLA
Oops! Bob HOLT of course - apologies Bob....
I think the recent decline in the SP, lay with Bob Holt's AGM Statement on the company's future outlook.
Of all the things he COULD have said looking forward, he specifically referred to "the challenging environment of escalating costs". This comment had already been referred to in the 2022 Annual Accounts, so one has to question the purpose of re-stating it at the AGM. Regrettably, some may have interpreted this as a veiled profits warning.
And let's face it, in this bear market, any sign of negativity will hammer the SP.
Considering that Bob Short is a Chairman of vast experience, for me this was an own goal and investors are paying a short-term penalty for his unexpected outburst.
Still a great business, though.....
GLA
AJP - be careful what you wish for tomorrow. It’s all about the JS presentation and we know he’s not the greatest speaker.
I’m hopeful that recent expectations will finally be converted into long-term groundbreaking developments.
Fingers crossed for tomorrow to all LTHs.
Wacca
These small sales aren't based on any RNSs
Far as I know, there's no information out there to attract, or discourage investors.
People sell for many different reasons and personal circumstances related to ITX.
Some could be cashing in simply to pay their energy bills - who knows?
There is nothing to suggest that the intrinsic value in ITX has changed.
So just chill out, please!
GLA
Last year's interim results were announced on 28 Sept 21 - so still over a month to go on that one...
An old press article (July 18), but a comforting one for ITX:
https://www.azocleantech.com/article.aspx?ArticleID=760
All have a good weekend
GLA
Luthrin - Interesting point you make about the deferred consideration.
It's a shame that the Directors are rewarded for increasing annual revenues in excess of $3m, but still no profits.
Presumably at that time of the amended deal (when revenues were $3m), it was expected that a revenue level of $6m (hoped for in 2022) would generate a positive EBITDA.
By my reckoning, at 30 June 2022, there was a cash balance of $900k (and taking out the $300k fundraising in April 2022), that would result in $6m of sales just about at profit breakeven.
So high reward for still no profit, methinks...!
Hope I'm wrong!
GLA
For ITX's post-consolidation SP to be $1, and with the current exchange rate of $1.21 to the £, then the ITX current PRE-consolidation SP would need to be around 8.25p.
So, some big news needed. Fingers x'd!
I have been critical in the past with JS's apparent ambivalence in not keeping shareholders appraised of current events.
It is now 6 weeks since shareholders approved the company's share consolidation plan - it was (supposedly) to attract potential US investors. Since then, there has been no progress.
I accept that once consolidation has occurred, there is an administrative issue to overcome - i.e all current share certificates would become invalid until new ones are issued. But surely this would have been foreseen well before consolidation was being contemplated.
In the meantime, shareholders will become frustrated once again, that the Board appears to be dragging its heels implementing an exciting positive plan to widen shareholder appeal.
My question is "is there a specific timeline for this to happen?"
If it is going to take longer than previously anticipated, at least keep shareholders informed.
GLA
Monte - as a devoted Warren Buffett fan myself, I too am a VLTH in ITX - with a significant holding.
Also, I am delighted with the new products already on stream with so many more in the pipeline.
I note that you haven't mentioned cash & profitability, which as you know, are two fundamentals critical in Buffett's investment strategy.
So, taking out the $300,000 fundraising in April 2022, the cash balance @ June 22 appears to be the same as disclosed at the start of this current H1.
With H1 revenue declared as $3m, it implies a new annual breakeven figure of $6m revenue for the current year. This higher breakeven level is probably the culmination of recently-announced lower profit margins.
I have every faith in ITX being a real winner in the years to come, but as I said to Wacca, the proof will be ITX's ability to convert sales into EBITDA.
Profitability does not necessarily result from the spread of small volumes of product to a vast numbers of customers.
Substantial revenues from fewer customers often generate larger profits through economies of scale - as a retired Finance Director, just my point of view, of course...
Also agree that there is little point in constantly checking the SP - it is what it is and there ain't anything we can do about it!
Prefer reading articles on how itaconic acid is gradually replacing unfriendly environmental chemicals in everyday use.
GLA
Wacca - LTHs don't give a hoot as to how many products contain ITX product, as interesting as it is to know.
You can't seriously believe that a ITX investor, who is contemplating selling shares, will be persuaded to hold on simply because research discloses yet another product with an ITX ingredient - really?
If it does not convert its obvious potential into significant increases in revenue AND improved profit margins, it all counts for nothing! I repeat, It's all in the RNSs.
It makes little difference if ITX formulae are found in thousands of products. If future RNSs fail to show bottom-line profitability, no amount of research will stop LTHs from moving on. Currently, I'm OK with were we are......
So here's to the next company update.
GLA
Share price UP - perhaps an RNS is imminent?
Share price DOWN - MMs possibly filling a large buying order?
Can we refrain from this ridiculous speculation, PLEASE!!!
And yes, my dear Thordon, great research on your part to tell us that the ITX product is used by 160 companies.
But seriously, this sort of revelation isn't going to persuade people to buy additional shares. Only by the Board giving us some new 'price-changing' facts will encourage further investment.
There is nothing sinister about a dramatic drop in the SP of shares in a tightly-controlled and limited market. People sell shares for all sorts of reasons, including the latest possibility of having to pay for increased energy bills.
I'll repeat one more time...."Price is what you pay, value is what you get."
ITX is great little company with a derisory (in my opinion) market cap of £24m.
All LTHs should just calm down, forget about what may happen to the SP in the short term and just wait for the next RNS, whenever that may be.
In the meantime, let's shut down our computers, get up, go out and enjoy the summer - and remember the sunblock...
GLA
wacca - there is no point looking at the SP ad nauseum. Just forget the the daily movement - you'll end up making yourself ill with worry.
The fluctuating SP is meaningless to most LTHs - with no RNSs in the offing, the value of the company remains the same, regardless of daily share movements.
Tricky - great post, spoken by a true left-winger!
LV - the current market size to deal in ITX shares is 20,000 shares MAXIMUM. So to sell 386,000 shares in one deal is a 20 times the norm ('a whopping chunk') to get rid of - hence the MM offering a price 10 per cent lower than the current spread. It has nothing to do with market cap, or the number of shares in issue...
An interesting scenario will be when someone wants to purchase 386,000 shares in one deal. At that point, the MM will either give the buyer an attractive price (if there are any shares around), or simply quote a prohibitive price making a purchase impossible....
I've been fascinated by the amount of conjecture on this BB as to why the SP has dropped today.
The one glaring omission is the one which is blindingly obvious. Someone sold a big chunk this morning (386,000 shares) @ 5.40p. The MM made that person an offer which was accepted.
Nothing to do with financial accounts, or absence of an upgrade, it's simply the price today at which a shareholders sold a largish number of shares.
Was that person correct in doing so? Who knows - personally, I think it a foolish short term decision, but then I have no idea what the personal circumstances were to entice this sale.
Only time will tell for the rest of us... so can we please get back to the positive stuff which has been written here over the past few weeks.
GLA
Following recent RNS, Simply Wall Street has increased TLY's Fair Value from £1.24 to £1.31.
GLA
Solid presentation this morning - no histrionics. Simply re-emphasising the impressive progress being made in all areas of the business.
Citizen - As you're new to this BB (welcome aboard), Company's USP is that it adds to its cash pile year-on-year from increasing profits. Now that you mention it, I would be interested to know who their competitors are in this so-called 'crowded' market...
And don't worry about a stagnant SP - "Price is what you pay, value is what you get" (Warren Buffett).
Investing is all about being patient - "You can't make a baby in one month, by getting nine women pregnant all at the same time" (again, Warren Buffett)
GLA
My largest investment @ 35 per cent....
Ticks all 'Warren Buffett' boxes (except for generation of cash, which must surely come). With secure IP patents and potential growth at a low capital cost, what's not to like? Latest interview gave insight into Company structure and a glowing endorsement from one satisfied client,
GLA