Member Info for ShearClass

Uncrossing trade for 998k is very unusual for RENX, interesting…

No worries @andypa! Lots of cross trades going through today plus a big trade for 100k shares at mid price earlier suggests shorts closing to me - it's certainly a good day for it given that the rise in the US Friday. Market makers being very accommodating whatever is going on...

There were two 13g filings - the first for 10.95m included 204k options as per note 1, which is the difference that you are looking for to match to the 10.75m they had previously disclosed. The second filing showed the increase to 11.85m. I think US investors that bought on Friday were previously unaware of the Sinai connection hence the rise.

Will likely open 20%+ above close today, I'd bet that 80% of Angle shareholders haven't even seen the news yet, nevermind the wider investment community...

Not being played with?!

King Street Capital & Morgan Stanley have both reported several million shares a day traded in four groups

- increasing a long position
- decreasing a long position
- increasing a short position
- decreasing a short position

I’d guess it goes something like;

price gets above a certain level - increase short position or decrease long
Price falls too far - decrease short of increase long

Things are only going to change if a major new buyer enters the market. It’s dropped since Friday because Richard Griffiths has sold ~4m shares.

RENX (along with MXCT) show the current perils of a US listing for any pre revenue / loss making small cap biotech. Pre Covid they were ticking along on AIM at £3.50 in a steady upward trajectory. Sure, there would be frustration about the lack of FDA approval or significant revenues, but they wouldn't be at the current level.

AGL are in a similar situation with an FDA wait approaching 24 months but their share price has held nicely, and they haven't made any clear moves that show they are ready for a commercial roll out. Same goes for POLX & the more recently IPO'd BELL. They are all within 50% of their 12 month high, whilst RENX is off by 90%.

That being said, there's no doubt it's very difficult to have conviction when the share price seems to be in constant decline and the company are completely silent. There doesn't seem to be any institutional support even at these prices which is baffling considering we are just a few pennies above their original IPO back in 2018. The market cap of £102m compares to £65m at IPO, quite incredible considering that in the last 3.5 years they've invested over £100m on regulatory / product / company development...

I'm taking the view that I'd rather miss the bottom and top up significantly on positive news & an improving technical picture than try and fish around down here. I suspect the next quarterly results for Q121 will be quite poor as they were impacted by Omicron, so realistically we are looking at the Q2 results in October for significant revenue growth and a clearly improving set of fundamentals. Yes, FDA approval or a big pharma partnership may land at any time (I hope they do), however if they don't then it could get very ugly over the summer.

"Whilst we are facing inflationary pressures along with all other global projects, to date we have been able to award approximately 50% of our pre-contingency project direct capex on budget, which is a very positive result."

This is the reason for the selloff IMO. 50% on budget is fine, what about the other 50%? It's a huge project for a minnow like HZM to be orchestrating, especially in the current environment. I'm sure Glencore would be devastated if something went wrong...

https://seekingalpha.com/article/4485597-darktrace-is-now-smothered-by-political-risk

The above article sums things up perfectly in my opinion, still too expensive at £3.30 given the baggage.

"There's a price at which this doesn't matter but I think it's lower than the current one. At £2 (the London stock is currently £3.80 -ish) then I'd buy the story whatever the issues over Lynch or accounting. Above that, just not sure enough."

Richard Griffiths is the problem here in the very short term re. a sustained share price rise. He still had 22m shares at 11th May having disposed of around 5m in the previous month. I'll keep an eye out for a slow drift down over the quiet summer months and look to pick this up when it fills the gap back to the 27p it closed at last night.

Do you mean the 2015 share price or valuation? I have the July 2015 round valuation at ~£970m, equivalent to a modern day share price of £2, which at the time was £40. Don't see this getting as far back as £1b cap considering it has £600m+ in cash...

It's certainly becoming more interesting - still think sub £2 is feasible based on historic valuations + the increasing interest rate environment that will impact the NPV of future cash flows. That would put the business on ~5x EV / 2023 Sales which is much more justifiable than where this IPO'd.

As with the comparative deals for GGP and ALL, it'll take drilling results & more positive news to get the share price markedly higher here. Stale bulls will use today's liquidity to dump, especially in the current environment.

My initial impression is that ARCM should have retained 50% and been an equal rights partner until the $24m has been spent + AAL should have made an equity investment into ARCM today for the $8.5m they might pay in 3 years time. They can effectively do what they want now & we've seen how ruthless they were with Sirius Minerals..

Watchlist for me.

Incessant selling makes it a dangerous time to buy, L2 order book getting pummelled.

But they aren't recognising revenue so it has nothing to do with any revenue recognition policy... as below bookings are a non IFRS measure;

"2. Bookings are a non-IFRS measure representing legally binding and largely non-cancellable commitments by customers to license our technology. Bookings comprise licence fees, non-recurring engineering, support and, in some instances, our estimate of potential future royalties. Our FY 2021 bookings include estimates of potential future royalties of US$24.0m."

IMO this is a NOMAD / broker issue as the auditors wouldn't be involved in signing off a trading statement.

The part that really throws me is the quote from the Q3 trading statement;

"The Company achieved an acceleration of end customer wins in China through its reseller agreement with VeriSilicon. In Q3 two end customers in China licensed Alphawave IP technology through this agreement, with a total transaction value of US$3.9m, excluding potential future royalties. The revenues from these China customer wins are not included within the total bookings figure of US$219.3m as they are part of the Company's previously announced US$54m VeriSilicon subscription multi-year reseller transaction."

vs

"Of the US$30.7m in bookings, US$5.7m was through VeriSilicon, previously booked as part of the US$54m multi-year reseller transaction signed in Q1 2021"

So they excluded the $3.9m in Q3 21 because they were part of the previously announced reseller transaction but included $5.7m in Q1 22... WHAT?!

What numbers wouldn't add up? It's just a booking? It wouldn't even be in the accounts as there has been no revenue recognised, nevermind cash received!

They even say it was 'previously booked' why would you include something that had been booked already?

It's bizarre, but then the whole AWE saga has been bizarre from day 1.

I made a comment about the apparent duplication of the Chinese revenue but it seems to have been removed... it very much appeared that bookings had been reported in H1 21 and then re-reported in the current quarter.

Quote;

"Of the US$30.7m in bookings, US$5.7m was through VeriSilicon, previously booked as part of the US$54m multi-year reseller transaction signed in Q1 2021"

As far as I was aware the entire $54m of Verisilicon bookings were recognised H1 2021 alongside CPP;

"Alphawave IP generated bookings of US$196.1m in H1 2021, an increase of 492% from H1 2020, including US$147.8m of bookings from recurring revenue subscription licences from CPP and Verisilicon."

The fact the 29th April RNS said 'previously booked' appears to confirm this!

I've never seen a booking recognised twice...

Using Covid lockdowns as an excuse for a £3.7m revenue miss is a bit bizarre given it wasn't mentioned in their March interims... that + the CFO leaving is why I think the market has hammered it down 28%.

Glad it's of some use guys. I agree that the progress of LSRT revenue vs market cap is certainly worth noting - it's arguably a better buy today than at any time in it's history...

2016 - £4.5m revenue, £2.32 share price, £1.2b cap, £130m cash
2017 - £13.7m revenue, £2.32 share price, £1.2b cap, £70m cash
2018 - £32m revenue, £2.58 share price, £1.5b cap, £90m cash
2019 - £52m revenue, £2.58 share price, £1.5b cap, £5m cash
2020 - £65m revenue, £2.65 share price, £1.7b cap, £80m cash
2021 - £127m revenue, £4.25 IPO Price, £3.3b cap, £618m cash
*2022 - £152m revenue, £2.75 share price, £2.3b cap, £540m cash* - estimates based on info provided in March.
*2023 - £205m revenue...

So we can say it's trading at around 8x next years EV/Revenue vs around 25-30x when it raised cash in 2020 and 17x at last years IPO.

Posted before I'd finished, so I've added the approximate market caps based on what IP group disclosed their stake was worth at each point in time (all available via their RNS's)

May 2021 : £3.50 - £2.4b cap
Oct 2020 : £2.65 - £1.7b cap
May 2020 : £2.65 - £1.6b cap
Jan 2020 : £2.90 - £1.6b cap
Mar 2018 : £2.58 - £1.5b cap
Dec 2016 : £2.32 - £1.2b cap
Jul 2015 : £2 - £1b cap
Apr 2014 : £1.43 - £640m cap
Sep 2013 £1.23 - £530m cap
May 2012 :£ 0.82 - £300m cap

So there are plenty still either in profit or around breakeven - the share price has basically returned to 2016-2020 levels. What is also of note is how little the share price changed between 2016 and 2020 - just 30p or so. Lots of dilution with little value added.

Then there are also ~180-200m shares that were issued pre 2012 at share prices ranging from 17-73p.

I suspect it'll hit some support soon, but who knows. I certainly wasn't aware of the bonus issue which is quite outrageous when you think about it - 355m shares were issued and the IPO opened for trading at £5... wow.

I've just spent an hour on companies house working through the pre IPO funding rounds + share price at the given time.

Firstly, the following statement from page 236 of the admission doc is key;

"On 23 August 2021, the Company issued its Ordinary Shareholders, on a pro rata basis, one bonus Ordinary Share for each Ordinary Share then in issue (the "Bonus Issue"). Immediately following the Bonus Issue, on 23 August 2021, the Company effected a subdivision of its Ordinary Shares then in issue on a 10-for-one basis (the "Share Subdivision")."

So everyone that had bought shares prior to 23rd Aug 2021 got a free share, effectively halving the price paid per share...

Knowing that, it's possible to work out the share price of the prior funding rounds

May 2021 : £3.50
Oct 2020 : £2.65
May 2020 : £2.65
Jan 2020 : £2.90
Mar 2018 : £2.58
Dec 2016 : £2.32
Jul 2015 : £2
Apr 2014 : £1.43
Sep 2013