Member Info for tennents

I expect a UK/USA carve out for aerospace and defence equipment that will include RR.

Digitalis.

Not caring what shorts are doing ok. The Ceres Qube short change I mentioned is now 18% up from its low this morning on circa double the average volume.

Disagree on Black Swan.

Currencies might adjust, but geopolitics will not. Trump has driven/is driving a fundamental re-set of the global order. USA is now seen as unreliable , untrustworthy and openly hostile to most of the rest of the world ( except Russia). Anyone thinking this will ‘correct’ back to normal is deluding themselves.

The USA is driving hard towards a fortress of isolationist nationalism. Its days of ‘leader of the free world’ are over. Other nations will form trade blocks/ economic/defence treaties that do not include the USA.

That is absolutely a Black Swan event that rates with the Second World War from which chaos the current/already recent world order emerged. No going back to eggs from Trumps new omelet.

Happily Ceres are remote from the USA and strong in Asian industrial powerhouses.

I added 20,000 at 9 this morning and glad I did.

Qube have cleared their short in Ceres but still holding here. Perhaps they will take today’s drop to exit.

One Trump equals one Truss squared.

Underpinning theory . . . . Observations of children playing with matches.

A new record of the danger of letting children play with matches.

Vamosbien

Excellent post. Thanks and glad to hear such enthusiasm from the company.

Shobbit

Bosch made a significant and expensive strategic mistake. Their market due diligence, conducted over 4 years ago, led them to conclusions that have not proven to be correct. They have recognised that and decided to stop losing any more money. It happens all the time; 9 out of 10 new product ideas (including consumer products) fail for a whole range of reasons.

Since then, another group of partners have each conducted their market and technical due diligence, all of which are for markets in Asia. They have all come to a similar conclusion and, as they are looking at markets 4 years later and four years more mature than Bosch, they can be four years more confident.

Your hypothesis would suggest that all 5/6 of them - including Shell and Linde - are incompetent in their ability to do market and technical due diligence work before committing to multiple millions to pay Ceres AND multiple millions more to build their production facilities.

What is your estimate of the probability of that being right and them all being wrong??

Lucky

Something wrong with that site data on short positions. 1. They seem to be reporting the Ennismore position twice. 2) Ennismore reported dropping to ..47%. You are correct on there being a very large number of shares to be purchased to close these out.

That is about as much as a Guiness costs these days !

Dartron

It is not in the Bosch interest to ‘dump’ these shares at the current low price. This share will re-rate and they will get 1.5/2 times the current money. Bosch need the cash because this venture has cost them a fortune. SOFC has been a very expensive strategic mistake for them. Why compound that by throwing more money away needlessly.

A good analysis in the report. Very short version is…..

Bosch made a big and very expensive strategic mistake in going after SOFC.

They have now started a new direction in PEM based electrolysers for mobile applications.

They spent a lot of time and money developing intellectual property jointly with Ceres on volume manufacture, they they no longer want and Ceres can/ will use with other partners.

As Bosch had not started manufacture, Ceres had no royalty stream

The other partners are essentially unaffected

The share price drop was hugely overdone.

It is worth reading.

MrProfit

They have been doing that for many weeks now. Today's small increase in their short takes about 5p off their current average price.

Lightnotheat On the overhang. . .

In the RNS Bosch has committed to:

"Bosch has informed Ceres that it intends to divest its minority holding of 17.44 per cent in an orderly manner".

This means they will engage professional brokers to make direct-to-client sales of large blocks of shares. They will do this at a time when they can get a much better price than they would on the market today. Creating an overhang acts against Bosch's interests as they will want to get as much from the sales as possible to help with the costs of shutting down the existing business and paying off a stack of people.

There is also a reputational risk that Bosch has to manage. They have deals with lots of current, and many future, companies. Acting in a way that would damage the interests of a partner being 'abandoned' will discourage other potential partners from wanting to do business with them.

Bosch no longer want SOFCs, but neither do they want to do themselves both financial and reputational harm for no good purpose.

I have done some detailed numbers on the short.

44 Transactions (exclude before 0.5%)

21 Increase short

23 Decrease - include the most recent two

This short has not been a huge success for our shorter. They have banked £651k, of which £236K were the last two, i.e. 36% of all profits from the last two moves. (excludes all their expenses - which are not small !!) They have also made some mistakes. In early October 24, when CWR spiked, they made two reductions, which lost them £248k.

Their current average cost per share shorted is £1.87, and 1,530,225 shares are shorted. At a current price of, say, £0.72, they have an unrealised profit of £1,759,916.

Considering the possibility/probability of a bounce from the excessive drop, we might ask, what has Ceres lost other than a future royalty stream from Bosch. Was that royalty value going to be more or less than the £ of the drop in Ceres value? Over how many years would that royalty flow be, and what discount rate would have to be applied to those future £ royalties to equate them to the current £ value drop in Ceres value? One of those numbers is bigger than the other, and that will tell you whether the coming bounce is up or down.

Qube has £23bn of assets under management. One assumes they have smart people who can do discounted cash flow spreadsheets and come to a decision. We may already be seeing that decision in action.

Interesting, isn't it?

CN

Bosch did not have an SOEC license.

Delta, Denso and Thermax are the only Electrolyser licences at this time.

Rene

It will indeed. Particularly recognising that we do not yet have an SOEC partner in either Europe or North America, both of which have huge oil refinery and petrochemical industries. Also. Noting we are ready doing the engineering design on a scaled up plant. You don't do that if your early trials had crap results.

I recall Phil mentioning a glass making customer enquiry at the last presentation., so another application based on the same benefits Shell believe they will be getting.

Taking a step back, we might consider the root cause of yesterday's cancellation event.

Bosch has made a significant new product development mistake. This is a strategic error that has/will cost Bosch a great deal of money, but new products fail every day for a whole range of reasons. In this case, Bosch, like a great many other companies in emerging green technologies, probably planned for a much faster rate of customer adoption of their Ceres-powered remote power generator units.

Customer adoption rates of new green products have been massively slower than 'everyone' thought they would be - ask any electrolyser manufacturer. This includes the German one that announced last week that it is laying off 120 people and halting the building of its new factory. Or NEL, which has cancelled plans for new PEM production capacity; PLUG, which is now drowning in an ocean of debt; or Fortesque, which has cancelled a new plant in Australia.

The massive hype about multi-billion projects worldwide has not happened, and only recently are real projects starting to get FIDs. Later, smaller and much more slowly than markets imagined would be the case when CWR was £13 and ITM was £5.

Bosch has spent a lot of money and will sack a lot of people costing much more money, and that will be the end of it for them. A new product development mistake was made, they recognise it as a sunk cost, write it off and move on.

CWR will not get a royalty stream in future years, but they have been paid for everything already supplied and have developed intellectual property with Bosch on larger-scale manufacturing processes that they can use with other partners. They do not have an empty factory to fill, employees to sack, or a big pile of stock/WIP for their Bosch customer to write off.

As an ITM shareholder I do not wish Bosch well in their PEM electrolyser venture. However I can say from ITM's experience - it is a lot harder than it looks - and they had 20 years experience to build on.

Lightnotheat

Bosch will want to maximise what they can get for the Ceres shares. On that basis, they will be disposed via specialist brokers. They will certainly not be dripped into the open market.

The obvious starting point for such brokers is the other Ceres partners (excluding Weichi) who have a financial interest in Ceres success and might be pleased to pick up 2-3% of the business at a considerable discount at Bosch's cost.

This episode is a setback for Ceres but is a long way from an existential threat. Bosch has paid us a lot of money for IP and technical services. We will not get future royalties, but we will retain the IP developed in working with them and will use that in our other partner relationships.

I also note that Bosch did not have a SOEC licence, so the termination of this deal opens an opportunity to get a new European player who would service the considerable European market in high-temperature waste businesses including refineries, petrochem plants, cement-making, glass-making and ceramics, all of which will get real operational benefits from SOEC.

I agree with your view of this as a long-term hold, and I am looking forward to the next presentation when some difficult questions will be asked about Bosch.

That is how I read it. They may be paying a lower rate of course, but even so it adds up fast.

The irony of their position amuses me. They have circa £17m unrealised profit sitting there, but as soon as they start to reduce, traders will be on this like a pack of wolves, and the price will rise fast.

It is as if the £17m was radioactive. Warm and glowing, but it has a very short half-life.