Author Archives: Fit Investment Ideas

• Cancer diagnostics is a strongly evolving field. Biovica’s novel cancer test can detect breast cancer progress cheaper and much faster than current methods. Biovica is the global leader in the field
• Biovica’s unprecedented 30 clinical trials in the prominent US and European hospitals minimize the risk of FDA failure. Biovica expects FDA approval and US launch by the Q3 end.
• Share prices of pharma companies tend to move strongly before a major catalyst. Biovica should be a perfect example of this.
• Biovica is up almost 40% in last two weeks. This trend is most likely going to continue for at least one more month prior to FDA. The recent price move may indicate, that the FDA may come sooner than currently expected August.
• My price target in six weeks (prior to FDA) is 100-140 SEK. The current share price is just below 60 SEK. Very good upside for one month and half.
• Biovica today announced that it is bringing very senior guy to head US sales. This is again very positive and indicates its readiness to launch the product in September in the US

Today announcement: Biovica strengthens management team

Warren Cresswell has been appointed President Americas and will be part of the management team.

Warren Cresswell has previously worked in senior management roles for 17 years at the Danish diagnostics company Dako and after that he spent five years, three of which as CEO, at Prometheus Laboratories, a diagnostics start-up that was acquired by Nestlé Health Science.

“Warren contributes with experience of developing and lead commercially successful organizations. With 25 years of experience from the diagnostics industry, he brings with him an extensive network and valuable knowledge about the American market within the field of oncology. Warren is an important piece of the puzzle in Biovica’s market introduction of DiviTum®TKa,” said Anders Rylander, CEO of Biovica.

“I am thrilled to join the team at Biovica. DiviTum®TKa promises great value for patients and payers, and a fantastic commercial potential. I look forward to contributing to this exciting journey,” said Warren Cresswell, President Americas of Biovica.

Full investment thesis

Below SeekingAlpha article provides a full investment thesis:

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

Pareto included Norske Skog (ticker NSKOG) into their top pick portfolio for August last week. See my blog post with the Pareto research summary on this below:

https://fitinvestmentideas.com/2021/08/03/pareto-august-portfolio-norway/

Sparebank issued very bullish research on Norkse Skog last week titled:

Increased utilization as capacity closures comes into effect -> material increase in newsprint prices

The research front page summary is below:

Conclusion

The closures of capacity have rebalanced supply demand and according to our knowledge, newsprint prices in Europe has had an material increase in July. Q2 was a disappointment due to higher costs for recovered paper (RCP), but RCP prices have been flat the last month. Cost increases are front-end loaded.

The effect of the closures and hence increased utilisation have according to our knowledge led to a material increase in prices for newsprint in Europe. Our take is that the share prices for peers to NSKOG have increased the last month due to this price increase with NSKOG lagging peers. The enterprise value of NSKOG is small compared to peers and NSKOG has a large investment programme starting in Q3 2021, but still we argue the disconnect to peers is unwarranted. Overall, we expect prices for NSKOG will increase 15% compared to Q2 2021 for Q4 2021 and around 8% in Q3 2021 as some contracts will have price increases later in Q3 2021. From Q4 2021, with 15% price increase, flat RCP prices and higher gas prices, we expect NSKOG to deliver an annualised EBITDA close to NOK1bn. If valued in line with peers, we argue that a fair share price is NOK closer to NOK100. The conversion to containerboard is in our mind a step towards being valued in line as a going-concern. As the majority of the current portfolio for NSKOG is exposed to a declining market, we value NSKOG based on a “5% decline in demand” scenario and view NOK50 as a fair target price.

We recommend buying NSKOG ahead of the Q3 numbers as we expect this quarter will show the effect of increased utilisation/prices and the path to a NOK1bn EBITDA scenario.

I am long and bullish on NSKOG.

OTHER IDEAS TO LOOK AT:

I am very bullish LInkfire. Investment thesis below:

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

Pareto – August portfolio Norway

Pareto – August portfolio Norway

Denmark based Linkfire yesterday after close announced new contract with Apple Music.

I consider Linkfire the most interesting IPO from Scandinavia this year. The investment thesis is below:

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

The press release on the extended contract stated:

Linkfire expands agreement with global tech company

“The agreement includes a new integration with Linkfire and the global Apple Music for Artists service. “

“Traffic partnerships are a key part of Linkfire’s business model, driving monetizable consumer traffic through Linkfire’s services. Partnerships are also a key driver in developing Linkfire’s technology and client offering, creating an even better platform for all our users and partners.”

https://investors.linkfire.com/press-release?id=linkfire-expands-agreement-with-global-tech-company

b

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.