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That's Carlsberg i think!
If it was Carling it would be more like:
Investor 1 "That strategic tie-up with BC was good, I bet David Budd drinks Carling Black Label"
Investor 2: "Nah, he hasnt got any sales"
Think this analysis is spot on PP. You've extracted the key clauses there. GHIF have a statement of investment principles - setting out the principles by which they will make investment decisions. They have to stick to these as a matter professional code of conduct. They are signaling, as you say, that GDR is no longer the small cash-strapped company that they seek to support and so have to manage this holding in GDR down - as per their investment principles - as GDR becomes more established. The conversion of the loan to equity a few weeks ago now gives them the chance to do this and demonstrate that they are doing this, but allows also for a gradual approach and gives them the exposure to equity upside as newsflow comes in.
The only slight downside is that as GDR further demonstrates progress and strong cashflow GHIF will keep selling - and we have another 11%+ of the issued shares to go, but with positive news there should be plenty of buyers!
Does seem to be a lot. quick sense check - Times reported that daily cost of lockdown in the UK is £2.4bn. So every 42 days costs £100bn. Maybe assume 90 days to ease lockdown restriction which would be close to £200bn, which might make the moonshot plan seem reasonable if it was effective and even possible to test efficiently and accurately on that scale. But this above is based on the cost of the first lockdown. a second lockdown would most likely plunge the economy into a depression and so the extended nature of the downturn after a 2nd lockdown would be huge. Maybe £100bn to get us through the winter is a reasonable price to pay. Key though is could the plan work.
Its a big if, but if the UK did go down this route it surely would be almost unbelievable that GDR would not be involved to some degree if the validation process with BC is signed off. Highly accurate, saliva sample and automated lab processing. Too many ifs right now for me to get excited though. Something to keep half an eye on possibly.
Good luck Ritchie and let us know if/when you get in. I suspect there is no rush but we could see i little rise on anticipation when GEEC start drilling through shale. The main london listing could also bring a few more investors in as the shares are ISA allowed with all brokers then.
I dont think its right to say 'Its Beckman or bust'. at the very least the £8m fund raise ensured that GDR have enough cash to get through 2021 without any covid revenues. By early 2022 DoD, AIHL and HCV revenues will be picking up and operating cashflow will increasingly be able to fund investment and growth. TB test will become available in 2022 as well providing a further boost. So i really dont think that this company is bust if there are no covid revenues.
Will the share price fall back in the short-term if there are no covid revenues, almost certainly.
I'm definitely feeling the shared frustration of this board of the time its taken so far to commercialise the covid tests. Whilst the cytiva and beckman partnerships are strong paper there is still obviously much to prove. These last few weeks have seen many new tests being developed and approved around the world so its doubly frustrating, but the recent Abbott EUA news is a blow. Abbott have huge influence and sway and being able to provide so many tests a week by October massively squeezes the market opportunity for GDR. As a long term holder of GDR i still really like the company and the prospects but i do increasingly feel that GDR, despite the great work they have done on covid test development to date, have missed the boat. doesnt worry me though that much as im prepared to wait for another couple of years. If covid is to yield any cashflow for GDR they really need to get their lab and POC tests commercial very very soon! IMO. :¦
which is why a Litigation Funding Agreement with a large U.S. litigation finance specialist would put this option for Tesla out of play. Wrong to say there is a risk of bleeding cap-xx dry if Cap-xx choose this option and it completely changes the dynamics of the process. Nanoco have chosen this route with Samsung and the patent infringement case looks even stronger for Cap-xx v Tesla so i suspect a litigation funding agreement could be put in place quite easily.
Thanks Grim and yes, still here and still hopeful....optimistic even!
Tesla will be a difficult case to bring and i dont see them rolling over easily. If i were AK and the Cap-xx board i'd go for a Litigation Funding Agreement with a very large U.S. litigation finance specialist with extensive experience in financing technology-based IP patent litigation matters. If they can signal that they have the funding and expertise to take Tesla on and that they have the existing patent infringement decision at their backs also then Tesla back down more quickly in my view. I'd be happy to pay away some of the settlement monies in return for making this kind of statement of intent and greater certainty of success as well as earlier out of court settlement.
Sadiq it very much depends on your level of conviction, risk tolerance and investment time horizon to my mind. Behavioural finance plays a big part in most investors decision making and loss aversion is a key behaviour to watch out for. No-one likes to lock in a loss and so can become irrational in their assessment that things will get better and the investment will move into profit in due course. One way to help overcome this is to re-appraise all your investments every week and assume you are starting with a blank piece of paper. If you can get into the mindset of "I dont hold Genedrive, would i buy it now" you will get a good sense of what you should do.
While doing that it is also important to try and get a good handle on what the current share price is discounting in terms of sales, profits and cashflow. I look at several possible scenarios in terms of sales across the different diagnostic target markets and the timing of those sales. Then i try different multiples on the sales to get a range of possible valuations to see where in that range Genedrive currently is. This helps me to assess what chances of success the market is currently giving Genedrive. If you conclude the chances of success discounted by the market are currently low then that helps to underpin the share price and indicate a reasonable risk/reward. Ultimately though no-one can tell you what to do i would just recommend removing emotion as far as possible , run the scenarios as above and then ask yourself if you had no holding would you buy it now.
Interesting update here: https://www.downtoearth.org.in/news/governance/little-chance-of-kolkata-getting-cng-soon-land-acquisition-hiccups-halt-supply-72618 .
Article indicates that land acquisition around Kolkata has not been completed to allow the planned gas pipeline to proceed. Article is dated Aug 3rd 2020 so nothing will have changed.
This is frustrating as GEEC will wait with further investment to develop the raniganj field and open the taps on existing wells fully again until they have a good market to sell in to in Kolkata. It seems that powerful landowners around the city want to extract maximum value for land access rights with the project tantalisingly close to completion and maybe also supported by oil companies supplying diesel into the city.
Huge market there for gas in kolkata and this could easily take every last mmbtu from both Essar and GEEC in Raniganj but seems we have to wait some more months until these issues get resolved. Who knows, being India it may even be years. You would have thought a compulsory land acquisition order could be slapped on landowners around Kolkata to stop this kind of profiteering happening.
Still, whilst we wait a main market listing in the UK and successful shale gas test should provide a bit of a boost to the share price. Real potential here wont be recognised though until the Kolkata issue resolved or the company can prove up significant demand outside of kolkata.
A £1bn resource trading at £15m tells us that the market thinks there is virtually no chance of ever selling gas in any quantity in this part of India. I still think this is a huge inefficiency in pricing this asset but that's the game....find assets that are fundmentally mispriced and buy them. Either your research is good and you make money or the market was right, your research is wrong and you lose the lot.
Even if the vaccines do work..... "The government says if the Janssen and Novavax vaccine trials go well, the first deliveries could take place in mid-2021." We will need testing until then i suspect!
UK not the focus though, albeit that maybe GDR should be focusing on the UK.
Link here from June has a few positives. Essar operating right next door to GEEC and development of CBM field is kind of parallel tracking with GEEC. Good to see comment that sales volumes expected to be back to normal in july, demand expected to pick up from here and possibly most significantly that the pipeline to Kolkata to be operational in September. I think im right in saying that Essar already have an agreement with GAIL to supply into the network. GEEC dont have this yet though.
https://www.business-standard.com/article/companies/essar-oil-gas-eyes-new-consumers-for-its-cng-business-in-unlock-1-0-120060700377_1.html
for what its worth, suspect that GDR will wait a few days from now to provide an update. RNS are a bit of distraction to put out so makes sense to wait a few days and provide a trading update and date announcement for prelims for FY to june 2020, and then also update the market regarding Covid tests. By waiting there is also the potential for the added bonus of FDA and/or WHO approval. makes perfect sense to wait until next week to announce to my mind!
Stock markets make an attempt to discount future financial performance of a company. Whilst report and accounts are an important part of assessing the current financial health of a company they are far from the only consideration when assessing the potential value. Every stock price reflects what the 'market' anticipates a company will report in the future. Exceed those expectations and the share price will rise, miss them and it will fall - general rule of thumb!
to be precise, enterprise value is market cap + all loans and debt - cash
for those interested in developments for testing market in India, ICMR have issued new recommendation today on POC testing which has implications for the number of PCR tests the will be needed. We'll obviously hear more from GDR in the coming weeks on orders and sales, which is key, so this is for back ground info. Interesting to see how a country like India is responding to this spiraling crisis. The frontline to save lives has gone POC already with support from lab testing.
https://www.thehindubusinessline.com/news/national/icmr-recommends-new-point-of-care-throat-nose-test-for-covid-19/article31831717.ece#
Hi both. agree very much with Hasiba there Steve, brokers price targets are worthless really. What i would say though is that on traditional valuation metrics either GEEC looks very cheap or the market is pricing in a significant deterioration in revenues and earnings. The Indian government is clearly committed to increasing the share of gas in the national energy mix to 15% by 2030 (from c6% now) so the macro picture is supportive. GEEC have significantly derisked their gas resource, as in there is gas and it flows well enough to be commercially extracted. Finally the new pipeline to Kolkata and new markets to sell the gas to is still on track to be commissioned in 6 months. GEEC will also be testing the shale prospects on their acreage in the coming months. Success here is not needed for upside to the share price so if commercially viable shale gas can be proved up then this could be a very exciting share to be invested in. BUT shale is highly uncertain at the moment.
Got to keep in mind whilst this looks to be setting up nicely at the moment for GEEC, it is India (anything can happen) and the management team in my view are not that strong and terrible communicators. The Modi family who own around 2/3rds of the shares have been buying in though as recently as Nov last year.
One thing to be aware of is the production rates of gas from the existing wells. I need to do more work on this but is has been reducing. They've definitely choked back production deliberately lately to keep the gas available for sale rather than flaring it so its difficult to assess whether there is some underlying reason for reduced flows or whether its just the deliberate actions of the management to slow production rates down. They currently cant sell all they produce as local markets never really opened up for them, despite years of promises that there were many customers desperate to get their gas!
so please DYOR, lots of it. The eventual value of the reserves is in the hundreds of millions if gas pricing stays where it is and they can keep costs under control and the market opens up. And you can get that opportunity for <£20m market cap and around £40m debt. Dont expect transformation over night but could be an excellent entry point for a longer-term play.
GL
Good to have some company on this board Hasiba. Not sure many investors know about GEEC.
I agree that it looks very undervalued.....but then i've been saying that for years
as it happens. Sales and profit down but cash stable. This is not a problem as its all about the sales growth opportunity from supplying gas into GAIL's pipeline to Kolkata and West Bengal. Pricing also looks to be holding up (somehow).
Company confirm that this pipeline with be operational by Dec 2020 so we should see sales increasing significantly in year to march 2022. Also shale environmental permit has been granted so we will have news on this in the coming months as well. Proof of commercial resource here will transform the value of the company especially with a ready market at the end of an operating pipeline.
strongly agree that India should buy GDRs superior test but whether they will or not is a different issue. Saying that i also dont know what standard of test Indian manufacturers can produce. For a country the size of India they also surely have to scale their lab capacity!
Hopefully some orders and sales news soon though.