Summary of the Scandinavian opportunities we saw in the market last week.
Short Rec Silicon – Capital Raise this week?
All analysts indicate that Rec Silicon needs to raise capital.
Usually, companies do investor roadshows before they raise capital. Rec Silicon did their roadshow from 11/5 till 15/5. Last week was a short holiday week in Norway. Capital raise may come this week.
In good markets, I would expect a capital raise at a discount of at least 10% to current share price. In these markets, discount might be much bigger – could easily be 20%. We are short Rec Silicon – hope to buy it back after the capital raise at a much cheaper price.
The short-term trading idea is supported by the oversupply in the silicon market predicted for this year by both analysts and as well as the company (see their Q1 webcast)
Pyrum Q1 Update
In our view this is most promising company that is involved in chemical recycling of tires. They are most advanced, I am not aware of other tire recycling company that would be running a continues recycling operation for three years without interruption. For example Scandinavian Enviro systems (Ticker SES), has a batch process – you do one batch, cool the system, clean it and reheat. They cannot be efficient nor competitive vs Pyrum
Pyrum´s new line 2 and 3 should start operating in July 2023. The company plans to invite local politicians and TV crews on the occasion. Last time they did that the share price doubled.
The company has announced they will start construction of their third plant in Homburg this year. The company announced the funding for the plant is secured and they will provide details in the next weeks.
Pareto has a price target of 780 NOK, almost double from the current share price.
I recommend to watch the recording of their Q1 presentation: https://www.youtube.com/watch?v=xGCuse2L0Bo
Calliditas reported last week sales below consensus. As a result share price was down by 30%. We have increased our position by 50% on the weakness.
Slow Q1 sales but positive signs lead to a stronger Q2 – According to the company, the weak Q1 sales were a result of low enrollments in January, partly due to many patients changing their insurance plans. However, March reported a record number of 408 newly enrolled patients (+30% from Q4), indicating the further growth of sales. On average it takes one month to convert enrollment into sales. Q2 sales should be very strong.
The company has no real competitor in the market. The sales are expected to accelerate every quarter.
The approval in China is expected in H2 2023 with a milestone payment. In China IgA Nephropathy is much more common disease than in western world where Calliditas is starting to sell now. China approval could be a material game changer.
Pareto has a fair value target of SEK 463 per share – 450% upside from current share price of SEK 100.
Redeye Research has Calliditas as one of its 14 Top Picks. Their Bull price target is SEK 485, and base case is SEK 310.
See their free research below:
The goal of the blog is to provide investment ideas for further research. 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. Please do your own research before making any investment action.