Member Info for RN1MLT

Looks like JD were sniffing at it for few months now, and timing of the Elliot bid and news release could be to extract more value from JD:

"The BBC understands that conversations with JD.com on a possible transaction started towards the end of last year as the Chinese firm looked at options to expand internationally because of weaker demand in its home market. "

https://www.bbc.co.uk/news/business-68335829

Interesting analysis on JD's positino and need to buy Currys:

https://www.telegraph.co.uk/business/2024/02/20/currys-fate-shows-future-shopping-is-chinese/

Doesn't really answer my question, even when all this transpires, the company is still reasonably priced. Cash generated now and next year funding M&A in Nutrition to recover some of the lost revenue should be in place by 2024, if this doesn't happen then, yes I will start feeling down beat about this business but until then, it has huge potential as a strong recovery play.

Btw, 16M investment every year for Elf bar is based on the scale of the opportunity, when that shrinks, the investment will also be scaled back. It's not good business not to scale back and I don't think Sandy is too naive.

Bangrak, I understand your logic for loss of earnings from the vaping division, but I am not understanding your reasoning for this down bead narrative.

Going by your assumptions on vaping, which I broadly agree with, there will be around 85% loss of earnings for FY2025 in vaping division, which based on HY2023 figures (I am taking these as this figure will be closer to the median as FY2023 figures will be boosted by the elf bar deal which I consider as a blip, more on this below) will mean gross profit coming down from 34.4M to 5.4M. Assuming all other divisions to remain the same and pull in the same revenue, we are looking at 26.3M gross profit, 12M net profit, and 9M net profit after tax for FY2025. On current valuation, this will give SUP a forward PE multiple of 16.7x for 2025, which is comparable to industry average of 15.5x – Current PE is 6x.

I don’t think it will be hard for people to understand why Elf bar were so keen to increase their distribution in UK and what was the logic of SUP to bid for it. They just want to sell as much of it as possible before the ban hits, as we can already see, this will result in surge in cash generation, which will continue for the next year as well. So, by the time the above scenario materialises the company will be cash rich, which as we can already see it wants to deploy in M&A for the nutrition division and drive growth.

This will be one of the better times to be in the nutrition business, the next in line to be standardised is the ultra-processed food industry and all the sweets and fat selling guys, which is leading to high obesity in children/adults. A brand with high protein food will do well and retail space is available for SUP to capture. With cash and operational leverage (they already have retail clients and all the infrastructure) the probability of success is high, hence for me the future is good for SUP.

Just going by fundamentals, under current market conditions, a cash generating profitable business should be valued more than the market average multiples. Only thing that was stopping big money to invest was the uncertainty around the legislation, with that cleared and all the factors and timelines clear, that money is moving in, SUP has only bought 75,000 shares, rest is being purchased by someone else!

Keen to hear your thoughts.

I don't think it can be taken out by a hostile bid... ~60% of the stock is with IIs.. unless they decide to take this private this will not happen. Even then, the BOD has a duty to get a fair valuation for all the share holders, so for them to recommend an offer, it has to be at least 90-100% premium to current price. I feel, even that will be a steal as 3x revenue multiples (at which we should be trading currently) will be over £1 and companies like this will go for 5x multiples, that will be £1.7/ share. What we will not get is the exponential growth of value from there, all the hard work is done with us taking 40% risk, but rest of the 5x -10x value growth will be creamed off by the IIs.

This share has never been a share for quick trading... you have to go back to 2020 when the major placing happened to understand who owns and controls this company. Big IIs had a 5 year view and I can see it is shaping up to that target. I don't know what IIs targets are but the company is on track to achieve 4-5 years of 20% YoY growth with $4-5 M/year cash generation by end of 2025. I am expecting capacity expansion by end of this year or H1 2025 when it will be projected to exceed 40M revenue. All of this should translate in to shareholder value at some stage, either by a TO deal or by moving on to Nasdaq when the time is right.

For me the most important thing from this RNS is that they have made $400k in H2, that is $66k/month CASH... which is the most relavent thing for me when measuring the sucuss of a company and potential of its products. One more year of growth and cash generation will prove the company is ready for next stage of ramping up.. very happy holder

I would not give any credit to my own speculations. On facts though, we are under valued by a factor of 70%, and should be trading in the 90p to 110p range. So this move is long overdue. Maybe this update will remove any remaining doubts about valuations, and it will naturally go this range.

I am invested here from 2020, waiting patiently, happy to wait another 18 months or so, when we should be 3 to 4 times of current price, not that keen to just take 100% of profit. Having said that if majority of the holders are happy with this there is nothing one can do. Also, growth needs funding, which leads to dilutions, so if an offer at the right level comes, why not!

I have been cracking my head from last night... expected an RNS this morning which didn't come... even the wording is not clear.. if I get it right, they were already vested these shares last year and we are not been told until now, which is bad, but I think it is more than that...may be a TO deal is in workings, and they are getting their ducks in the row.. I don't know.... all speculations

Sales as expected (which is very good progress), I like the use of 'core' revenue, gives me hope that my expectations of first revenue from OrthopureXT this year will be realised.

Share price wise, now trading at 1.5x P/S, which is very very cheap compared to peers and industry medain of 9x P/S. It is now at a 25% discount to TRX average of 2x P/S, wow!

For me it is one of two things:

1) A seller in the background - We did see Inthello take up 1% of the shares without any uptick in volume, where did they get the shares from?

2) We will see a 100-120% rasie with an RNS saying a buy out is agreed. You do see these kind of SP movements just before take outs.

I don't know which is the case but as I belive the company is signicantly undervalued (going below 60p is criminal without some very bad news or a seller), I have added 700 more to my kitty with the spare cash I had. Either it will correct back to above 60p or it will double, if it goes further down, I will ponder on adding more.

Class 2 shares are the legacy from the 2020 equity raise. New 'owners' were keen to remove the drag from the early blunders. Just Ignore them

I have been working on my investments and going back to notes I left myself when I first invested here back in 2020, I started feeling something is off with TRX. The company is delivering on all what I had expected from them (normally I see that the hyperbola is exposed after a year or 2), so why is the SP not taking care of itself? I first thought they are keeping it down to sell it off or take it private by offering 100%, so need to keep it under 0.7p. But, looking through my notes I remembered that TRX received what I called as 'Crisis funding' in 2020. Some of the investors didn't fund the company to stay the course but to make their 2x/3x as and when they can. First it was Spreadx, now looks like it is Lombard. LOAM was at 16% in 2020, now they are at 9.3%. All these months they have been selling slowly which I think is keeping a lid on the SP.

I am not worried as such; the company is growing (taking market share) and now profitable. We are seeing new IIs jumping on board, who could be seeing this a good return in next 2 to 3 years. A good return for them should be at-least a SP of 1p or more, which is OK for me. This will be a slow burner though out 2023 unless we see some corporate action.

It's my ideal case scenario bobsson, nothing that I dreamt of but based on the IIs expressed vision for this company back in 2020/21. They see it to mature in 2025 for them. So, yes with current infrastructure they can pull in 50M revenue (with 10M from allograft product sales), if they grow at mid %20s for next 3 years they will be there and there abouts.

I do also think this current setup of management is for stabilising the business and achieving full potential of it organically, so will have to see new directors come in before and big moves.

On big pharma, my understanding is that they don't want to deal with the complexities of human tissue management side of things. The technology itself could be attractive and if TRX can prove it's potential for the pig allografts, then it will appeal to the big pharma as this business is scalable exponentially.

Hi Ginandmilk, minimun bid price is not at all an issue. The company will issue ADRs, each ADR could be 100 ordinary shares. So at 1p/share, 1ADR will be $1.2, but the more likely senario will be, we will have 1:10 consolidation and ADRs could be issued at $12 with 1:100.

This kind of thing is bread and butter stuff the more important thing for us is 'WHY we should list at Nasdaq?' - I think TRX should now accelerate its growth to reach 100M revenue by 2026. Organic growth at 20% is difficult as they start hitting 50M revenue, so they have to buy growth for which the cheap capital could come from Nasdaq listing (US values this more than AIM, provided TRX can prove that they can grow for next 3-5 years). The other alternative is PE buy out, as this will be perfect for them to buy now and IPO again 2024/2025.

First reaction to it - All in line with expectations, bonus is that all the sectors are growing at 20% and now allograft division can also pull in revenue from this year.

Interesting to see change of advisor also pairing with the fact that we were Q4 EBDTA positive, so by Q3 2023 we will be 1 FY EBDTA positive, is this the indication of where we will be heading, a Nasdaq listing? It makes perfect sense to me - Its healthcare (defensive sector- flavour for next 18 months), EBDTA positive (only place IIs want to invest now) and bonus is its growing (so it will come out well from this slow growth phase in US)!! To me, nothing more perfect for NASDAQ listing later this year. Raise serious cash to fuel serious growth.

I expected it be on 26th so a bit surprised but thinking it will be more because of positive reasons to delay than anything. We should be approaching fcf nutral position so may be that is the reason or there is a deal in the making, not wise for me to speculate, so willl wait patiently.

Very interesting research @L3Trader.. My calculations put cash burn at 50k/month for 2022-H1, and FCF nutral by Q1-2023, if not by H2-2022. A re-rate to 3x sales will be due in the Q1-2023.
what do you recon is the monthly cash burn for 2022-H1 and 2021-H2? Do you think it is not sustainable till the company becomes FCF nutral?

Firstly.. The results are as expected.. good progress and on track to breakeven by 2022.

On the potential TO offer - Richard, that was my logic all along, as I have written previously, the IIs will not sell it cheap, they will extract the true value from the buyer but I have recently understood that they can make complex deals like rolling in with the buyer and taking private shares and all that so I am no longer trusting them to ask the true value.

I hope, for once, the city is fair and let this gem of a company to thrive in the public setting as it is.

Thanks Richard... I share your assessment of the current position of TRX but I fear that the prospect of this company reaching many multiples of current value is too lucrative for IIs to take this private rather than leave it on AIM. My pondering was more on how much we will be offered if it happens before September 2022.