Tradin pattern changes. January and February was interesting to buy into IPOs. In late February this changed. There were so many transactions, that the Scandi market was not able to absorb it. Even great companies were failing. The trade changed. What is now the trade? Buy the failed IPO and wait till the publication of research. That is the catalyst that should drive the companies up.

Great example was Circa. We were very bullish on Circa based on the below article. But Circa failed – there were too many deals at that time. IPO was launched at 16.75, the share price stayed around 15. Yesterday, Sparebank issued bullish report on Circa, with price target of 30 NOK. Circa jumped 50% in two days. As I predicted in my previous blogs and as was predicted in the article. I believe that Circa will continue going up. The secondary thesis still remains. Norske Skog owns 32% of Circa. Circa is now valued at 7.5 NOK of NSKOG shares. This has not been reflected in the share and should lead to rerating of NSKOG. Do read the article, it is well summarized there.

Similar opportunities:

Huddly – Provider of premium tools for video conferencing. Another failed IPO – trading below IPO price. AGB issued research today. They believe it is 50% undervalued. See below. Pareto should issue their research any day. I bought Huddly few days ago. My target is 20 NOK.

BUY, HDLY.OL: SP, NOK 14.20; TP, NOK 24.00 (0.00)
Growth in focus
Provider of premium tools for video collaborationCamera market to accelerate: 47% ’20-’22e sales CAGR~50% discount to peers: Initiate with BUY, TP of NOK 24
High-end VC cam provider with strong profitable growth 
Huddly develops high-end video conferencing cameras for meeting rooms and home offices. The company differentiates itself by offering software-based cameras, which enables advanced features such as zooming in on meeting participants, as well as allowing for upgradeable features, leading to an improved product lifetime. Huddly has a strong distribution platform from partnerships with leading meeting room systems providers (Crestron, Google and Shure), as well as a range of distributors. Huddly has a proven record of profitable growth with a revenue CAGR of 118% since ‘18 and an EBIT margin of 29% in ‘20.Sales and EBIT CAGRs of 32.5% and 28% in ’20-’24e 
We expect an investment boom in new video conferencing equipment for offices when the global workforce returns to offices from H2’21e (i.e. post-pandemic). We therefore estimate the VC camera market for meeting rooms (Huddly’s core market) to grow by 41% p.a. from ‘20 to ‘23e. Additionally, Huddly has recently launched several new products, which more than doubles its addressable market. We expect these new products to both drive significant volume and ASP growth in ’20-‘24e. The combination of these two factors is likely to lead to strong growth in both ‘21e and ‘22e, in our view, and we therefore forecast a 47% sales CAGR from ’20-‘22e. From ’20 to ‘24e, we forecast a total sales CAGR of 32.5%. We have conservatively not assumed any margin expansion in the forecast period and assume adj. EBIT margins of 25-27% (vs. 29% in 2020), but this will still drive a 28% EBIT CAGR from ’20 to ‘24e.Initiate coverage with BUY and TP of NOK 24, ~70% upside 
Huddly is trading at ‘21e and ‘22e EV/EBIT of 22x and 13.5x, respectively, which is ~50% below Nordic high-growth tech peers. This is despite having significantly higher growth. This discount is unjustified, in our view. Hence, we initiate coverage with a BUY recommendation and TP of NOK 24 per share, corresponding to a ‘22e EV/EBIT of 23x and a ~70% upside to the current share price.

Kyoto – IPO that failed this week. Launched at 62.5 NOK, trading at 40 NOK. Very solid company. I have been buying every day. This is the most creasy week of the IPO. Too many deals and almost all failed – they went down after launch. I wrote a detail post on this over the last few days. Kjetil Bohn from Quantafuel has 6% in this. I heard he was buying too. Do read my previou blog on this that describes where is the valuation. This is my top pick in this area.

Scandia Energi – Another failed IPO. It is now trading 2 NOKs below IPO price. Was placed by Sparebank, that has large retail following. Look at what their research did with Circa. I spoke to the Sparebank analyst, he indicated that he would be publishing soon. This could move heavily and quickly. I am buying today more.

Pryme – IPO placed three weeks ago. It is like a Quantafuel two years ago trading at a fraction vs Quantafuel. Pareto published today a research – summary below:

Pryme is a chemical recycler of plastic waste. The company specialises in scaling the pyrolysis process with a reactor capacity of 5-10x current industry standard. This makes it well positioned to capitalize on the growing plastic waste problem, where increased regulatory actions also will benefit the industry. With likely news flow on construction progress, industry partnerships, off-take agreements, recycling certificates and permitting of further plants, we expect the share price to move well ahead of production start at the first plant in Rotterdam next year. Upon success, this will position Pryme with a highly profitable and scalable business model. We also see significant share price upside based on pricing of peers and initiate coverage with BUY/TP NOK 150.

HAV Group – failed IPO placed by Fearnley. Very solid company. See below summary of Fearnley research published today. See below their summary:

What’s new: Initiation of coverage with a NOK 25/sh TP. Buy
Our take: Through the pure-play Maritime Cleantech setup, we see HAV positioned for positive FCF generation, margin expansion and market recognition of its positive ESG impact
We initiate Equity Coverage of HAV Group (ticker: HAV) with a Buy recommendation and NOPK 25/sh Target Price. On the back of spinning off the HAV Group companies into a pure-play Maritime Cleantech machine, we see the stage set for positive FCF generation right off the bat (FSest FCF yield 2021/’22/’23 3/7/10%) on conservative estimates, higher margins (FSest EBIT margins 2.5-12.5%)all supported by a maritime industry that is screaming out for a greener future. Combine this with favorable trading vs. peers (EV/EBITDA’22 of 6x vs. 19x) and a healthy backlog of c. NOK 850m (FSest 70% execution in 2021), we see HAV bound to attract investor interest. Buy


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