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I guess the same people that was buying 45-55p is now selling very angry...
"...would have been a sustained rise"
Not sure at all. Look Silicom again. They have $125M in net cash + inventories, or close to $20 per share, and no debt at all. Still, the stock is -20% in a few days on components shortages + gross margins/OPEX pressure concerns.
Imagine what would have happened to an AIM-listed, thinly traded stock, w. difficult to understand tech, $4M net cash + inventories, and loss-making. They just had the cash for 2022 but if the outlook was 1mm deviated from projections, they would have needed cash for operations...
The stock would have been like a jelly. Real strength is not by share price, is by business position. As you said the stock is not the company.
Right now business position is much stronger
from your mouth to god's ears.
And just received my 35p shares + warrants. :))
yes gross margins are 50-60%, not 99% as per licensing. That means working capital is needed in advance to buy chips and those things. Each dollar of inventories can generate $2+ in revenues.
Degiro works to trade immediately at the official bid or ask. Didn't allow me to subscribe to shares
Interactive Brokers Europe is a nightmare for trading. Depends on the day works, but sometimes you need to wait 2/3 days to get the order filed. Allowed me to subscribe to shares (I haven't received them yet tho)...
If you want big monsters for growth look CTT.AX, CHL.AX or PBX.V. That business models are like crazy
CTT.AX is a monster I bought sub $1 in March I think
mmhh... not sure if that's good or bad.
I like to compare Enet with Silicom by 2002 (probably only my biases). I think SILC was doing $2M sales and in 4-5 years did like $27M sales. Then came the 2008 turmoil and lost like 35% of sales to $19M or so. From that level sales went up again to $70M by 2013, and from that time, dead. Overall they had two strong cycles of growth. But they are only HW and still mantained 40% GM or 22% NPM maximum.
Hopefully enet will do something similar (but remember we have shortages...). I think enet can do 50-60% GM at scale. If they get that level of $70M sales I still get US$ 5 per share at 20xE. Add back dividends paid
Silicom sometimes traded 25-30x E but when that happened the crash was very close... Remember this is a cyclical industry and also I think they will want and need strong net cash for WC as well. This shouldn't be added at valuation because they cannot pay it as a dividend. But very early days... Let them show us what they are building!
Tracy
Can you provide us your rationale behind the 5-10 GBP per share?
I see that events have changed but still your price is the same. Just to see what I could be missing.
Obviously if I skyrocket my revenue projections to $100M I would also get there, but do you think that this is a valid model?
skid
Can you develop that...?
I was impressed with Enet because every time I had questions or needed help Mark or Brian helped (even David). They helped me to understand the tech and company.
They checked my first document, David gave some explanations, also Mark or Brian are always ready to reply. To be honest, I haven't seen that in any other company, most timed you won't get sny answer if you are not a professional. I mean, that level of feedback from mgmt to PIs. For a fund is completely a different history the situation (and now that I am partnering with the one I can see both sides of the coin).
I really don't know what else they could do at this level. And we asked for an IR presentation and we have one... Obviously, the calls or investor meetings will come when is the right time, I'm sure.
Tracy
Look at the chart they posted at the presentation, which shows their expectations in term of units to be delivered. Tarana is the project that's expected to grow the less in the short term.
I was surprised as well but that's what they are projecting, If I am not wrong
sorry 140M is wrong. 51/0.67 is the number
Caravan you mean? Check out camplify in the UK. very promising model and business
Anyone that has a good knowledge abut this issue?
I am very concerned right now about shortages, it seems it is getting worse... And will be here for a while
Silicom had $140M already in invetory as potential sales about they are very f*d still...
Skid
thanks, no worries. I think you are a valuable asset as well.
I completely understand, but a nano cap, undiscovered, out of the radar with difficult tech and 20%+ cost of equity can never say in advance that they are going to issue stock. If that happens, the stock plummets very fast, and I think that 35p would have been impossible. Don't you remember July 2020 placing?
:-)
Skid
Nice to have you back. For these kind of business, it is impossible to grow without working capital in advance. Plus the shortages. It is important to understand that. Working capital is not opex.
Cheers
Well done Mark and David.
Looking forward to the coming months.
Dallo
Fully agree. To be honest, if I were at the management, I would have also raised funds. But at 40-45p. They are not stupid, I am not the clever guy on the room, so if the placing is at 35p there is a reason.
The problem on this chat was too optimistic and non-sense expectations by some participants.
I think the biggest mistake was before the July 2020 placing. Not well managed. IMHO. You do not remember what happens to the share price when the company says "we are going to need money"?......
Dallo
Well said but they also had significant mistakes during the last 24months. I don't think this placing is a mistake, the opposite. But I would have liked it at 40-45p per share.
And something to note here. They had $3.5M in net cash which was enough for paying the opex expenses for 2021 and well into 2022. I do agree.
The ~$5.5M raised then support a potential $10-11M of sales during the next 12-18m at a 50% GM (they probably need to buy the inventory 6-12m in advance due to shortages). They also sell licensing at a 100% GM with no inventory in advance, so potential sales supported by this level of cash are ~$14M sales during the coming 12-18 months. And maybe, other deals put some cash in advance (I think Indian OEM), and the true level of potential sales supported by current WC is $15M+.
I expect $8-12M of sales into 2022, which now makes sense by level of WC, orders and projects.
Let's begin the growth.
Ethernity is a nano-cap completely out of the radar, with a misunderstood and difficult technology, with a past of 0 execution (look the chart), and from israel (israeli equities trade at a discount). And was running short of cash.
I see no reason why the cost of equity shouldn't be 20-25%, as it is (look what happened each time they issued shares). An I said many times that the company should try to decrease it. If they had issued 12M shares at 45p, that's an extra 1.2M GBP of funding "free". Clearly they feel the impact of this high cost of equity.
At least now we have an IR presentation.
"If you’ve got a strong story to tell you don’t let the institutions dictate to you"
Uhlf, sorry, but where do you live?
Agreed Bid.
Skid, I also I think that the markets are in turmoil due to the China situation. Nanocap with low level of cash is perfect for a stock hit. That maybe also made them to do take placing and being in a better position.
Tracy, as per management comments, I had many questions from many investors about that. I asked myself about that. I plan to put down more money, so you can guess my answer. I don't know who has invested more money here than david levi here. He invested another 100k$+ yesterday, and you can check his salary. I don't think he is stupid.
Certainly, confidence in them is in a risky position now, and they know that. But no one will remember that placing if they execute and deliver the next 18 months, and the stock hits 100p+. If execution does not come during these months, ENET will be back at 10p and will be completely dead. They know that. They are the guys that want the success more than anyone else. They deserve it as well. But, execution needs to come. I'm sure it will come.
Now the only focus is to take the stock at 80p+ through a strong inflow of news, as we had in 2020. If stock hits 80p and warrants are exercised, they should have $10M+ in net cash, and also be cash flow neutral, at least. That would be enough I think for their deployments plans.