Introduction

One of my favourite stocks is Africa Energy (ticker AEC, listed in Stockholm).

The thesis there is simple – AEC has a 10% stake in one of the largest gas discoveries in the world (major investor and operator is Total). The deposit size is established, and Total is now finalizing the off-take agreement with the South Africa government. When this is done, AEC already declared that they would sell its 10% stake. The value of the stake is 3-5 times higher than AEC market capitalization. The investment thesis is detailed in the article below:

Africa Energy – One Of Top Five Hydrocarbon Discoveries In The World Reinforces Strong Investment Case (OTCMKTS:HPMCF) | Seeking Alpha

Investment update

1. Bloomberg article from yesterday: Coal-Reliant South Africa Is Turning to Gas Power – the main points:
   • South Africa is the world´s 12th biggest source of greenhouse gasses
   • 80% of its electricity is produced from coal
   • The government aims to cut emissions to net zero by 2050.
   • SA plans to use natural gas to produce at least 25% of almost 12,000MW of additional power by 2030
   • SA already imports gas from Mozambique, but further gas development there is limited by an Islamist insurgency.
   • The primary source of gas for the SA´s is the 11B/12B that AEC owns 10%.

https://www.bloomberg.com/news/articles/2021-08-03/coal-reliant-south-africa-invests-in-gas-power-to-go-greener

2. Comments from Africa Energy management:

I communicated with the AEC management yesterday (the bold emphasis was added by me):

Q: Any update on the Energy Bill?

We do not know how long Parliament will take to approve the new Petroleum Bill.  Most estimate the process will take at least 12 months (i.e., mid-2022).  Keep in mind that Block 11B/12B is grandfathered for any changes, so the Petroleum Bill should not affect our development plans.

Q: Update on 11B/12B?

On Block 11B/12B, Total is working on the fast-track development concept, which will likely rely on nearby infrastructure and gas demand in Mossel Bay.  Total is also discussing gas marketing with the government, which owns both the Eskom diesel power plant and the PetroSA gas-to-liquids (GTL) plant in Mossel Bay. 

The diesel power plant is able to burn natural gas and would like to switch fuels as soon as possible.  Also, the GTL plant has been stopped with no feedstock since December 2020 because the Block 9 gas production has been depleted.  We expect Total to conclude this process and apply for the Production Right before the Exploration Right expires in September 2022.

Q: Update on 2B?

On Block 2B, Azinam has identified several rigs that can drill the Gazania well this year, and we expect them to contract the best option soon.

Comments on the above

All are very bullish for AEC. The share price has been underperforming, as the retail investors are losing patience. I think the stock should regain traction, as many catalysts are coming in H2:

1. News-flow on 2B drilling. Markets like news-flow, here we will have a flow of news coming in H2: retaining the rig, rig starts to move to Gazania, rig arrives in Gazania, drilling commences, awaiting results…. All these news should drive an interest in the stock.
2. Drilling results on 2B – the seismic indicates 300 million barrel potential, which is very material for AEC
3. SA off-take agreement – the Total negotiations with SA are ongoing. As the Bloomberg article describes, the SA needs gas for electricity. Pareto stated that they expect Total to reach the agreement by October 2021. That would be a major catalyst for AEC stock because with an off-take agreement in hand AEC should be able to sell the 10% stake.
4. Block 11B/12B disposal – I asked a Norwegian oil analyst from one of the top brokerages how difficult it would be for AEC to sell the block with an off-take agreement in hand. I was told it would be relatively easy. If that is right, we could see the disposal in 1H22.

Summary

AEC is a very attractive oil play. AEC ais due to sell the stake in one of the largest gas discoveries. The value of the stake should be three to five times higher than its capitalization.

AEC repeatedly stated they would distribute the proceeds as a dividend. My base case is, that this should happen in the next 12 months.

When this happens, investors multiply their investments. The only question is whether three times or five times.

I consider this a good risk-reward.

I have been very bullish on LInkfire. I think Linkfire is the most interesting IPO from Sweden this year. The whole investment case is summarized in the article below. There are several catalysts for the company in the next two months – see the article below.

Linkfire: A Unique Play On Music Streaming Through Market Leader Growing At 50%+ CAGR | Seeking Alpha

Today Pareto initiated its coverage for LInkfire with 59 pages report. Below is their front page summary of the report:

Pareto Securities

Linked for growth

Linkfire has established itself in a market-leading position, with a best-in-class product, unique partnerships and an unmatched customer base, leaving it a potentially long runway of revenue growth. We initiate coverage of Linkfire with a Buy rating and a target price of SEK 16. We see potential acquisitions, new partnerships and strong organic growth as near term stock price triggers. Estimating a 60% organic sales CAGR through to 2025 Linkfire has established itself in a leading position within digital music marketing, with all three major music labels using its platform and with it acting as a key traffic generator to some of the leading global digital service providers (DSPs). We believe Linkfire’s market position together with existing and new partnerships should allow it to scale significantly in the coming years, and we forecast a 60% CAGR through to 2025. Addressing the market for streaming entertainment content Linkfire addresses the broader market for streaming entertainment – a market that has evolved into a USD 150-175bn opportunity in less than a decade. We expect the market to double over the next decade. We initiate with a Buy rating and a price target of SEK 16 Our valuation is based on a combination of DCF and peer valuations, using sets of publicly traded global software peers and a DCF valuation that provides support for an enterprise value of DKK 730m (SEK 1.0bn).

Every month Pareto produces its strategic portfolio for the next month. Their portfolio for August includes the following 10 stocks. Each stock has 10% allocation.

New stocks: KID, MPCC, NSKOG, OHT,

Stocks retained from July portfolio: AFG, AKER, AUSS, BONHR, DNO, and EL

From the portfolio I am long only Norske Skog (NSKOG). I copy below their investment comment (emphasis addend):

NSKOG – BUY, TP NOK 50
We include NSKOG to our monthly portfolio as valuation support is substantial trading at modest 4x EV/EBITDA’22E (consensus).
With publication paper prices on an upward trend following capacity closures, earnings delta into H2 and 2022 is positive and
the trough is left behind. This along with several non-paper initiatives that are not yet reflected in the share price – we think
NSKOG is an attractive exposure with a hefty upside potential. BUY / TP NOK 50

I am very bullish on NSKOG. I wrote one month ago on NSKOG titled (click for the read): NorsKe Skog – cheap vs peers, renewables activities for free | Fit Investment Ideas

OTHER IDEAS TO LOOK AT:

I am very bullish LInkfire. It is out of IPO blackout from last week. Pareto can issue their initiation research any day now. This is normally a major catalyst for IPO stocks. More on other catalysts below. This stock in my view can multiply in two months.

https://seekingalpha.com/article/4439470-linkfire-music-streaming-play-market-leader-growing-above-50-percent

I am very Bullish Biovica. I believe the stock shoudl go up by at least 50% by the launch of US sales in late August/Septermber.

https://seekingalpha.com/article/4437698-biovica-international-should-double-on-novel-breast-cancer-test-launch-in-q3

Whilst browsing thru the BASF H2 presentation materials this morning, I came across what seems to be a new page on the BASF website, about mechanical recycling (found it via the BASF VALERAS page). And illustrated with a picture of Qfuel´s plant manager at Skive: https://www.basf.com/global/en/who-we-are/sustainability/we-drive-sustainable-solutions/circular-economy/mechanical-recycling.html

The page says that: “For plastic waste, mechanical recycling is the preferred recycling solution if ecologically most beneficial, technologically possible, and economically attractive. Chemical recycling will complement mechanical recycling.»

BASF mechanically recycled products: https://plastics-rubber.basf.com/global/en/performance_polymers/sustainability/mechanical-recycling.html

So the BASF’s long term strategy appears to be that mechanical + chemical recycling of plastic is something that has to be done hand-in-hand..the two technologies supplementing each other, with mechanical being the preferred one. Which is also what one of the top BASF guys on Chemical Recycling, Andreas Kircherer, explained in this excellent interview in April 2021: https://ctwatch.dk/nyheder/affald/article12811668.ece

So, whilst all eyes are on Skive and the PoC, what is going on in Kristiansund should also be very interesting.. where Qfuel and BASF are now jointly exploring optimal ways to combine mechanical + chemical recycling in the same plant, and what may come out of this: https://www.quantafuel.com/Kristiansund

OTHER IDEAS TO LOOK AT:

I am very bullish LInkfire. It is out of IPO blackout today. Pareto can issue their initiation research any day now. This is normally a major catalyst for IPO stocks. More on other catalysts below. This stock in my view can multiply in two months.

https://seekingalpha.com/article/4439470-linkfire-music-streaming-play-market-leader-growing-above-50-percent

I am very Bullish Biovica. I believe the stock shoudl go up by at least 50% by the launch of US production in late August/Septermber.

https://seekingalpha.com/article/4437698-biovica-international-should-double-on-novel-breast-cancer-test-launch-in-q3

Linkfire started to move this week. Yesterday it closed up 35.14%. The second best performing stock in Sweden. I think this should continue before next week catalyst.

Pareto should publish their initiation research on Linkfire in the next few days. The black out period (during which IPO syndicate brokers can not publish a research) ends on 28 July. This will be the first major catalyst. The publication of research by Pareto next week should introduce the investment story to investors and provide a guidance on valuation.

Other strong catalysts are due in August – see the below article for catalyst details:

https://seekingalpha.com/article/4439470-linkfire-music-streaming-play-market-leader-growing-above-50-percent

I am long and very bullish Linkfire. I believe the stock should reach 20 SEK by the end of August and possibly more, if the acquisition of the second largest company in the area is announced.

• Linkfire has a potential to be ten times higher over the next 3-5 years as they extend their product offering to other areas. Not many companies can achieve that.
• There are many music streaming companies, but only one company services all majors. Linkfire has 70% market share in the novel product.
• Linkfire has been growing revenues 50-70% CAGR. The growth is accelerating with penetration into new segments. Gross margin is stable at 76%.
• Linkfire is negotiating on purchasing the second largest company to strengthen its position.

I posted on Tusday a short video introducing Linkfire, it is worth the 90 seconds of your life. Recommended.

OTHER IDEAS THAT I AM FOCUSED ON NOW

I am very bullish Biovica. They have a novel breast cancer test and they are awaiting FDA approval this quarter. They have 30 studies from the most reputable US and European hospitals (Jo Hopkins, Cleveland clinics…) that the test works. It saves lives and money. The strength of the studies minimizes the risk. The company has build relationship with the hospitals, labs and opinion leaders, so they will start selling the test right after the approval – everything is ready for commercialization. As we will get closer to the end of the Q3, the share price performance should accelerate. It did for Xbrane and it does for many other pharma companies in similar situation. I am long Biovica. Full investment thesis is below:

https://seekingalpha.com/article/4437698-biovica-international-should-double-on-novel-breast-cancer-test-launch-in-q3

I am very bullish Quantafuel. I wrote several times here about the company. They have the partners, the vision and the first mover advantage to become a global leader in plastic recycling. Based on my talks with the management I believe they will announce the proof of concept with one or two months. I believe this should be a major catalyst for the stock. I also understand that after reaching the milestone they should apply for the main listing in Norway, which would significantly increase their investor universe. Once they do proof of concept there should be a string of material catalysts. I believe it is a good candidate for doubling this quarter after they reach the proof of concept. I think the major share price growth will happen in Q4 once they start operating the plant in full. Investment thesis below:

https://seekingalpha.com/article/4378135-quantafuel-global-leader-in-chemical-recycling-of-plastic-backed-basf-and-vitol-potential-to

Do follow Quantafuel discussion forum on FB:

https://www.facebook.com/groups/2937037759739346

Pareto should publish their initiation research on Linkfire in next few days. Their black out period ends on 28 July. This will be the first major catalyst

I am very bullish Linkfire. There are multiple catalysts in the next three months that should double the share price over that time horizon. The market is starting to appreciate. At one point the share price was up 30%, it is up 15% now. I believe it is only start. The publication of research by Pareto next week should introduce the investment story

• Linkfire has a potential to be ten times higher over the next 3-5 years. Not many companies can achieve that.
• There are many music streaming companies, but only one company services all majors. Linkfire has 70% market share in the novel product.
• Linkfire has been growing revenues 50-70% CAGR. The growth is accelerating with penetration into new segments. Gross margin is stable at 76%.
• Linkfire is negotiating on purchasing the second largest company to strenghten its position.
• Below is a link to an article with full investment story:

https://seekingalpha.com/article/4439470-linkfire-music-streaming-play-market-leader-growing-above-50-percent

I posted on Tusday a short video introducing Linkfire, it is worth the 90 seconds of your life. Recommended.

OTHER IDEAS THAT SHOULD DOUBLEIN NEXT THREE MONTHS

I am very bullish Biovica. They have a novel breast cancer test and they are awaiting FDA approval this quarter. They have 30 studies from the most reputable US and European hospitals (Jo Hopkins, Cleveland clinics…) that the test works. It saves lives and money. The strength of the studies minimizes the risk. The company has build relationship with the hospitals, labs and opinion leaders, so they will start selling the test right after the approval – everything is ready for commercialization. As we will get closer to the end of the Q3, the share price performance should accelerate. It did for Xbrane and it does for many other pharma companies in similar situation. I am long Biovica. Full investment thesis is below:

https://seekingalpha.com/article/4437698-biovica-international-should-double-on-novel-breast-cancer-test-launch-in-q3

I am very bullish Quantafuel. I wrote several times here about the company. They have the partners, the vision and the first mover advantage to become a global leader in plastic recycling. Based on my talks with the management I believe they will announce the proof of concept with one or two months. I believe this should be a major catalyst for the stock. I also understand that after reaching the milestone they should apply for the main listing in Norway, which would significantly increase their investor universe. Once they do proof of concept there should be a string of material catalysts. I believe it is a good candidate for doubling this quarter after they reach the proof of concept. I think the major share price growth will happen in Q4 once they start operating the plant in full. Investment thesis below:

https://seekingalpha.com/article/4378135-quantafuel-global-leader-in-chemical-recycling-of-plastic-backed-basf-and-vitol-potential-to

Disclosure: I/we have a beneficial position in the shares discussed above either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. The article does not represent investment advice.

Yesterday I got an email form a DNB broker:

“You’ve made some phenomenal calls – thank you very much keeping me posted, got a watchlist of your names! The only thing that seems to have made any money recently.”

Our Xbrane call more than doubled, Biovica is up almost 50% in less than a month and unless there is a global panic, it should double in this quarter too. I am very confident about my new idea Linkfire, that I wrote last two days about.

I am out of Xbrane now. I love the company, but there is not that much happening for the next few months – the stock should stagnate over the period so I will use the capital for other opportunities. If there is a sell off, I would definitely come in again. It was my best IRR stock this year and I believe it could be my best stock in 2022 again.

I am very bullish Biovica. They have a novel breast cancer test and they are awaiting FDA approval this quarter. They have 30 studies from the most reputable US and European hospitals (Jo Hopkins, Cleveland clinics…) that the test works. It saves lives and money. The strength of the studies minimizes the risk. The company has build relationship with the hospitals, labs and opinion leaders, so they will start selling the test right after the approval – everything is ready for commercialization. As we will get closer to the end of the Q3, the share price performance should accelerate. It did for Xbrane and it does for many other pharma companies in similar situation. I am long Biovica. Full investment thesis is below:

https://seekingalpha.com/article/4437698-biovica-international-should-double-on-novel-breast-cancer-test-launch-in-q3

I am very bullish Linkfire. There are multiple catalysts in the next three months that should double the share price over that time horizon. Linkfire has a potential to be ten times higher over the next 3-5 years. Not many companies can achieve that.

There are many music streaming companies, but only one company services all majors. Linkfire has 70% market share in the novel product.

Linkfire has been growing revenues 50-70% CAGR. The growth is accelerating with penetration into new segments. Gross margin is stable at 76%.

Linkfire is negotiating on purchasing the second largest company to strenghten its position. Below is a link to an article with full investment story:

https://seekingalpha.com/article/4439470-linkfire-music-streaming-play-market-leader-growing-above-50-percent

I posted yesterday a short video introducing Linkfire, it is worth the 90 seconds of your life. Recommended.

I am very bullish Quantafuel. I wrote several times here about the company. They have the partners, the vision and the first mover advantage to become a global leader in plastic recycling. Based on my talks with the management I believe they will announce the proof of concept with one or two months. I believe this should be a major catalyst for the stock. I also understand that after reaching the milestone they should apply for the main listing in Norway, which would significantly increase their investor universe. Once they do proof of concept there should be a string of material catalysts. I believe it is a good candidate for doubling this quarter after they reach the proof of concept. I think the major share price growth will happen in Q4 once they start operating the plant in full. Investment thesis below:

https://seekingalpha.com/article/4378135-quantafuel-global-leader-in-chemical-recycling-of-plastic-backed-basf-and-vitol-potential-to

Disclosure: I/we have a beneficial position in the shares discussed above either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. The article does not represent investment advice.

This year I have analysed around 30-40 IPOs from Scandinavia. For me Linkfire was the most interesting company I looked at and bought into this year. The reason is simple:

• Linkfire has a potential to be ten times higher over the next 3-5 years. Not many companies can achieve that.
• There are many music streaming companies, but only one company services all majors. Linkfire has 70% market share in the novel product.
• Linkfire has been growing revenues 50-70% CAGR. The growth is accelerating with penetration into new segments. Gross margin is stable at 76%.
• Linkfire is negotiating on purchasing the second largest company to strenghten its position.
• There are multiple catalysts in the next three months that should double the share price over that time horison.

I enclose below a short video introducing Linkfire and an article that summarises full investment thesis including the short term catalysts. Do recommend to go over both.

https://seekingalpha.com/article/4439470-linkfire-music-streaming-play-market-leader-growing-above-50-percent

The below 90 second video introduces the investment thesis. It was produced only yesterday.

Disclosure: I/we have a beneficial long position in the shares of LINKFIRE either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. The article does not represent investment advice.

• There are many streaming companies. But there is just one dominating service company that serves most of them with 70% market share. Its name is Linkfire.
• Linkfire connects consumers on social platforms who wanted to download a song to music streaming companies that provide the content. Linkfire collects revenues from both.
• Linkfire revenues have grown at 40%-60% CAGR with a stable 76% gross margin. The growth is accelerating further in 2021.
• Linkfire was a victim of a difficult IPO timing. If it was placed in January or February, its share price would’ve doubled on debut.
• Very strong catalysts in the next six months should cause the share price to double.

https://seekingalpha.com/article/4439470-linkfire-music-streaming-play-market-leader-growing-above-50-percent

_

OTHER OPPORTUNITIES TO LOOK AT:

Biovica – is one of the top picks for this quarter. The company is due to get FDA approval and start sales in the US. The company has 25 studies from leading US and EU hospitals that their breast cancer works, saves lives and costs of treatments. Biovica is to become a global leader in this novel way of testing for cancer. Xbrane, in a similar situation, doubled in two months prior to such an announcement. Biovica will most likely do as well. See the below article for the full investment case:

Biovica International Should Double On Novel Breast Cancer Test Launch In Q3 | Seeking Alpha

Two weeks ago Quantafuel sold off due to a delay of Skive continues production. Investors viewed this as increasing uncertainty over Quantafuel ability to chemically recycle plastic.

Today, Quantafuel announced that BASF converted their convertible loan into shares of Quantafuel. I view this as very positive. BASF knows more about Quantafuel more, than anybody else. They have been helping Quantafuel since the start and have they staff permanently at Quantafuel plant. The fact BASF decided to convert loan into equity is a strong vote of confidence. The press release provided the below quotes:

“After further equity injections by third parties and in the course of continuously optimizing BASF’s financial investments, BASF decided to convert the loan into new shares,” says Dr. Lars Kissau, Senior Vice President Global Strategic Business Development at BASF’s Petrochemicals division. “Quantafuel’s technology remains an important building block for BASF’s ChemCyclingTM project with the aim to use pyrolysis oil as feedstock in chemical production.”

“We are happy that BASF have decided to convert the loan into shares, making them our largest shareholder. We are very much looking forward to the continued cooperation,” says Ann-Christin Andersen, Chair of Quantafuel’s Board.

I believe the Quantafuel shares reached bottom today. The shares should start re-rating, as investors digest the importance of today’s announcement.

The main message BASF is send in us is: BASF is confident in Quantafuel ability to deliver. I believe investors should listen.

Wait for a string of good news from Quantafuel and proof of concept, that should be comming soon.

OTHER OPPORTUNITIES TO LOOK AT:

Biovica – is one of the top picks for this quarter. The company is due to get FDA approval and start sales in the US. The company has 25 studies from leading US and EU hospitals that their breast cancer works, saves lives and costs of treatments. Biovica is to become a global leader in this novel way of testing for cancer. Xbrane, in a similar situation, doubled in two months prior to such an announcement. Biovica will most likely do as well. See the below article for the full investment case:

Biovica International Should Double On Novel Breast Cancer Test Launch In Q3 | Seeking Alpha

Linkfire. It is a recent IPO listed in Stockholm. It was placed at 11.20 SEK, it is now around 10 SEK. It is a play on the growth of music streaming and, in the next phase, movie streaming. Pareto will be publishing research in two weeks time. I am long and very bullish, Linkfire. I will publish an article on Linkfire in the next two weeks.