We have bought Circa shares and Norske Skog (owns 32% of Circa) based on the below article from SeekingAlpha:

https://seekingalpha.com/article/4407578-gain-exposure-to-hot-scandinavian-ipo-circa-through-largest-shareholder-norske-skog

Today, Pareto Securities published a research report titled A Potential Giant in the Chemical Industry.

The price target is 30 NOK, 90% upside from today share price

Pareto research summary is below:

Founded in 2006, Circa is a biotech company that has developed the world’s first and only scalable production process for converting biowaste into several high-value biomolecules. While chemicals are essential for the modern society, most of them have hazardous properties, and arenow being driven out of global markets by regulation. This provides a once in a generation opportunity for companies like Circa, which holdsthe pole position in our view. A story the market not yet believes in, trading at a 50% discount to our risked SOTP valuation. As such, we initiate coverage with a Buy recommendation and TP NOK 30 – a potential upside of ~80%.World’s only scalable production process for high-value biochemicals Established in 2006, Circa has developed the world’s first commercial process for manufacture of the platform molecule, LGO, derived from cellulosic waste. With 15 years of R&D and five pilots, the company has gained strong global interest with its first commercial biochemical, Cyrene.Circa will now commence construction of a 1,000 tonne production facility in France, providing the foundation for several larger plants of up to50,000 tonnes. Once in a generation upheaval of the chemical market While chemicals are everywhere and fundamental in daily life and activities, the industry places a significant toll on human health and the environment. Traditional fossil-based chemicals are under increasingly regulatory pressure and will be banned once suitable alternatives becomeavailable at scale. Here Circa stands out with its main product, Cyrene, already widely acknowledged as one of very few biobased alternatives tocertain fossil and toxic chemicals. We initiate coverage with a Buy and TP NOK 30 In our view, Circa holds the pole position in R&D and process knowhow with a 10-year head start to any other competitor. This along with regulation driving once in a generation upheaval of the chemical industry, we think Circa potentially is positioned for a decade of superprofit. We estimate revenues of EUR 960m in 2030E with an EBITDA-margin about 50%. The share currently trades at a 50% discount to our risked SOTP. We thus initiate coverage of CIRCA with a Buy and TP NOK 30/sh, corresponding to 13.5x EV/EBITDA’25E.

Summary of SpareBank research published today:

We initiate coverage of Rana Gruber, a Norwegian iron ore producer with likely the world’s most environmentally friendly iron ore concentrate, with a Buy recommendation and target price NOK80/sh (~NOK3bn market cap).

The company is generating super profit in the current market, and we estimate that it trades at 2x EV/EBITDA and 3x P/E, which we find to be too steep discount vs peers at 4x and 7x. In our view, the iron ore market will stay strong through at least 2022, as low cost Brazilian supply is side lined, and based on the forward curve, RANA should be able to pay 36% of its market cap in dividend over this period.

» Rana Gruber is a Norwegian iron ore producer that has 60 years of operational track record. The asset has 100 years worth of
resources, and high quality ore that requires only simple processing. Hence, the company has a low cash cost of ~USD40/t, and will on
our estimates be in dividend position above USD65/t.

Being located in Norway, RANA has a very low carbon footprint and expects to be the first CO2 neutral iron ore miner by 2025 – which we expect will be an advantage against Canadian and Brazilian supply when
competing for European customers. A 100% offtake agreement is in place with Cargill, and the balance sheet is essentially debt free.
» Transition to 65% Fe underappreciated as it will ensure super profit for longer, and protect the downside.

We estimate that Rana Gruber will be in dividend position at above USD65/t benchmark 62% Fe iron ore price – current spot ~USD168/t, and forward curve indicating USD150/t for 2021. This compares well to an historical average iron ore price of USD90/t, but it is fair to note that iron ore moves in cycles, in which bear cycles typically tend to sit in the USD60-75/t range. Hence, it is in our view, important to the investment
case, that the company will be able to improve the quality of its main product to Fe65%, which historically has given a premium of
USD15/t (currently USD31/t premium), as this will add robustness to the cost base and improve its standing with customers as the steel
industry moves towards electrical furnaces with lower emissions that requires higher quality iron ore. The company expects to be a fully
65% Fe producer by 2024.
» The strongest iron ore market of a life time. Super profit is abound among the iron ore producers, with the current spot price sitting at
USD168/t. Our estimates for 2021-22 of USD150-113/t are based on the forward curve, while the USD80/t in long-term assumption is
based on a discount to the historical average of USD90/t. The current market is driven by reduced supply of low cost/high quality ore
from Brazil, at the same time as Chinese demand is sky rocketing following government infrastructure stimulus, which has caused a “Call
on Chinese production” that has high marginal costs and low quality ore. The perfect storm. The questions ahead are: 1) when will the
low cost Brazilian supply come back to the market, and 2) will demand have increased sufficiently to still cause a Call on China, or will the
equilibrium fall within the low cost producers? We believe Brazilian supply will be hampered at least through 2022, and that 2021-22 will
remain at elevated iron ore prices.
» Rana Gruber is generating super profit. At the current NOK62.5/sh, we estimate that Rana can pay 36% of the market cap in dividends
over the next two years. Moreover, we estimate 2021 EV/EBITDA of 2x, and P/E of 3x – substantially below peers at 4x and 7x. At our
NOK80/sh target price, the combined dividend yield for 2021-22 is 28%, and next year EV/EBITDA and P/E of 4x and 7x. Our target price
also implies 6% dividend yield and mid-cycle EV/EBITDA (5.4x) multiples at our long-term USD80/t price assumption.

The IPO bonanza in the Nordics stopped for a pause. The maket did not take well the ACH listing. The IPO was launched at 18 NOK and within two days traded down to 12.5 NOK. It hammered Aker Horisons (AKH). AKH is down 50% in last few days. There is detail analysis of AKH sum of the parts in this blog below. We bought AKH today.

The major themes for the next week for me will be re-rating of the IPOed companies placed during the last three weeks. There was just too many deals that pushed the companies prices down after lunch. As the blackout period for those expires, the brokers should start publishing research, that will introduce the opportunities to the public. The publications are often the trigger for the re-rating. We have bought the following stories during the last week sell off:

Scandia Energy (SKAND) – energy distributions start up by prominent Norwiegan businessman, who has sucessfully lunched similar company before. This is done at a time when Fjordkraft is alleged to be mistreating investors (see the articles in local press). The blackout for the company is over. SpareBank should publish the research soon. We bought shares three times last week.

HAV Group (HAV) – company listed at 18 NOK two weeks ago, now trading at 15 NOK. Very few people know it. Blackout ends this week. Research publication should happen before Easter. More on the company in a blog post from last week.

Huddly – very solid company. I devoted a full blog post to the company. The end of blackout happened last week. The research publication should be eminnent.

We bought a position in Rana Gruber yesterday and today. It went down in the US market sell off. The thesis is simple. Rana is now earning half of its market cap per year. If you believe that due to the reopening the current high Iron ore prices will prevail, than each year Rana will earn that much and pay it out as dividends.

For me this could be a short term play. Buy at 64 sell at 75, where it was trading last week.

DNB Bank today issued a 18 pages report on Rana. It has a buy rating with price target of 85 NOK. Front page summary of the research is below:

We initiate coverage of Rana Gruber with a BUY and NOK85 target price. As one of the marginal producers of iron ore, with a break-even price of USD70/t, we believe it is well positioned to benefit from a continued booming iron ore market. In combination with a best-in-class ESG profile, high cash returns, and an average estimated P/E of 6.3x over the next three years, we believe the stock offers positive risk/reward.Highly correlated to the iron ore price. The current iron ore futures curve is steeply backwardated (from USD165/t spot to USD70/t in the tail), meaning P/Es rise from just 3.4x in 2021e to 29x in 2024e. Historically, the futures curve has been a bad predictor of the spot iron ore price, and thus we believe the iron ore price is equally likely to either overshoot expectations by remaining at USD165/t (suggesting an equity value of NOK200/share), or drop below USD70/t (suggesting an equity value of close to zero). As ESG-friendly as a miner can be. Rana Gruber’s iron ore production stands out from the crowd, as it uses no chemicals in the extraction phase, has the lowest CO2 footprint of any comparable miner/extractor, and has a CO2 footprint from transportation substantially lower than peers since a primary end market is the European steel industry. We believe this could improve its relative position on the cost curve at a later stage.    Bull and bear case scenarios have fairly equal probabilities in our view. We see the bull case scenario warranting a 4x higher valuation over a relatively short period, while the bear case implies losing 1x the investment. Thus we believe the risk/reward is positive for investors that can tolerate high-beta market risk. We initiate coverage with a BUY and NOK85 target price, based on an average of P/E and EV/EBITDA for its peer group, and a wide range of price scenarios (USD59–170/t). With our earnings estimates based on the iron ore futures curve (industry practice), we believe Rana Gruber should trade at a discount to peers (on 2021e–2022e P/E and EV/EBITDA) due to its higher cash cost of production (USD70/t versus peer average of USD40/t). There is no consensus available at this point. With a best-in-class ESG profile, high cash returns, an average estimated P/E of 6.3x over the next three years (based on the futures curve), and the potential to earn half of its market cap each year if current iron ore prices prevail, we initiate coverage on Rana Gruber with a BUY.

NEXT Biometrics just made the below announcement. We went bullish on NEXT following the below SeekingAlpha article. We are long NEXT. As mentioned in the article, the share price could multiply from here.

The company is presenting today detail at 14:00. Longin details below

NEXT Biometrics Sales Wins Should Drive Revenues 400% Higher This Year (OTCMKTS:NXTBF) | Seeking Alpha

NEXT Biometrics signs 5-year partnership agreement with European Tech giant

Oslo, March 10, 2021 NEXT Biometrics (Oslo Bors: NEXT), has signed a 5-year partnership agreement with a world market leader in the biometric space. The agreement covers FAP20 sensors, a market segment with large potential for NEXT.

-This a major breakthrough for NEXT. Our partner is a dominant player in the global biometric market, with EUR 20 billion euro in sales. The revenue potential from this partnership is considerable, says NEXT Biometrics CEO Peter Heuman.

The 5-year global agreement is primary focused on NEXT high profile FAP20 sensor. There are already several ongoing market projects in dialog under this partnership. The partner aims at designing NEXT fingerprint sensors into biometric fingerprint readers and other fingerprint enabled devices. NEXT’s new customer is a market leader in several regions of the world, and it is the perfect partner to establish NEXT Active Thermal technology as the preferred choice in the large area sensor market.

Competitive advantage

The FAP20 sensor global market alone is currently estimated to be valued at around 1.5 billion USD 2020.*

The disruptive NEXT FAP20 sensor competes mainly with existing FAP10/20/30 size sensors provided via incumbent technologies. The NEXT sensor is highly competitive on both cost and form-factor, and will enable NEXT’s partner to integrate the sensor into slim and smart, modern devices, both fixed and portable. Existing large sensors in the market have a challenge delivering the same slim form-factor.

The NEXT FAP20 sensor provides a high level of security, as proven by the FBI certification.

A perfect match for NEXT

“-The combination of NEXT technology and the marketing, sales and distribution power of our partner will certainly create shareholder value. The FAP20 market is large and growing, and offers more attractive margins than any of our other segments. We have a strong competitive advantage in this market.

We are very proud that a dominant biometric player has chosen our technology as the basis for some of their most promising fingerprint devices. This is an important step in taking NEXT towards a new level from both a business and technology perspective”, says Peter Heuman.

A conference call on this important milestone will be held Wednesday March 10 at 14.00 CET.

Participant access information:

Please join the conference call 5 minutes prior to the start time using the access information below.

Start Time: 14:00 CET

Duration: 60 minutes

Dial-in numbers:

NO: +47 23 16 23 28 SE: +46 853 527 819 UK: +44 20 3713 5012 US: +1 (951) 384-3421

Access Code: 907 391 340

Fearneley Securities published their research on Energy Recovery titled Sunny Days Ahead. Below is the Fearnley summary of the research. We are very bullish ERII. It is by far our largest position. The company has a technology, with which it succeeded in one industry and now they are trying to implement it into other industries. The stock is worth your further research. We believe that this could be USD100 stock in few years.

SUNNY DAYS AHAEAD

What’s new: Raising our TP on an accelerated earnings story and solid outlook. Our take: Bright outlook is set to accelerate earnings drastically from both lower costs and higher revenues. Commercialization of new products could prove upside on valuation. Buy.

The outlook for the SWRO desalination market remains strong, despite the abrupt outbreak of COVID-19 and the subsequent impact on oil prices. This is apparent from ERII’s revenueguidance for 2021 and 2022, where the company expects a growth of 10%/20-25% respectively (FSest higher end). Further to this, ERII has rolled out product offerings for wastewater treatment/Zero Liquid Discharge (ZLD) which adds to long-term earnings potential in the Water segment. Also, since our last update a renewed bullish sentiment for US Onshore has amassed (frack fleets at ~150 YE’20 vs. c. 65 during the summer), adding support to the commercialization of VorTeq. We remain cautious on the VorTeq story but revert to our previous base case scenario valuation of USD 3/sh. Overall, we see sunny days ahead for ERII and raise our TP to USD 21/sh (USD 11/sh, 27.08.2020) on i) higher 2022 sales in the water segment, ii) increased valuation of Oil & Gas (previously negative valuation) and iii) aligning ourselves on cost guidance. Further value-upside from commercialization of new products could also be on the horizon. Buy reiterated. Upping estimates for ‘21/’22 and rolling out 2023We raise our EBIT estimates by USD 7m/21m for 2021/2022 on the back of lower OPEX guidance and higher revenue guidance in 2022, percolating favorably through the P&L. We also roll out our 2023 estimates, where we see EBIT of USD 57m and EPS of 74 cents (up 36%/35% vs. 2022) with continued growth in the Water segment (FSest 7.5% 2023 revenue growth) and the first year with positive EBIT contributions from the Oil & Gas segment (FSest USD 4m). Valuation – Upside without any value to new incubationsWe value ERII’s Water segment at USD 20/sh and the Oil & Gas segment at USD 3/sh. We deduct the NPV of corp. and R&D spend (USD 4/sh) and add back FSest USD 2/sh of net cash by YE’21 to derive at our SOTP valuation of USD 21/sh (28% upside from last close). As such, we continue to see upside in ERII without assuming commercialization of any of the company’s incubation projects. Buy.

Huddly, producer of conference room AI cameras and software has today road show presentations for Norway brokers. The company reported last week very good Q4 and FY numbers. See their www for the investor call and investor presentation. The company is out of the black out period – IPO syndicate members are now allowed to publish their research. I expect that this should happen this week. If that happens on a green day, the share price usually appreciates strongly. Huddly is a high growth company, we are bullish on Huddly and we bought more on todays selloff.

SUBSCRIBE TO THIS BLOG TO GET NOTIFICATIONS BY EMAIL

Huddly is IA conference call intelligent cameras and software. The company had its IPO to start trading two weeks ago. It is out of blackout period now, so the brokers in the IPO can publish reports. The company this morning reported their quarterly report. It reported its best quarter ever and provided strong guidance for 2021. I assume the analyst were waiting with publication of the research for the results. The syndicate included AGB and Pareto. The publication of the research is normally start of the rerating in the post IPO trading. It may be a good short term play (selling on the publication of the research) and long term play, as stocks generally starts to go up after the post IPO selling. I have bought the shares again yesterday.

Huddly Q4 presentation published this morning:

Click to access Huddly-Q4-2020-Presentation.pdf

I enclose Pareto’s summary of the Huddly results:

HDLY (Not rated): EBIT up ~120% y/y and 2021 guidance unchanged

Huddly reports Q4’20 figures with the pre-announced revenues of NOK 112.0m, up ~67% y/y. Gross margin came in at 55.1%, slightly higher than in Q4’19 and up 2 p.p. vs. Q3’20. EBITDA of NOK 45m and EBIT of NOK 32m also showed strong growth, up ~74% and ~120% y/y, respectively2021 guidance is kept unchanged with revenues of NOK 500-600m (corresponds to 37-64% y/y growth) and gross margins of ~50%. The company comments that the COVID-19 pandemic has impacted the sales opportunities into the enterprise office market in the start of 2021. However, Huddly sees signs of improvements in this vertical and believe sales opportunities will increase going forward, especially in second half of 2021. We highlight that the company has tendency to beat and revise up its own guidance – i.e. in the Q4’19 report it guided revenues of NOK 225-325m for 2020, which in the end came in at NOK 365m Please note that we have no rating on HDLY

SUBSCRIBE TO EMAIL NOTIFICATIONS TO GET IMMEDIATE TRADING IDEAS BY EMAIL. IT IS FREE

Circa IPO – After the first day positive trading CIRCA shares are loosing steam today. This is happening on many Skandi IPO. It did happen to Renewcell for example. It stagnated for a few days and than rebounded. The next catalyst will be in two weeks time – the end of blackout period (period during which IPO syndicate brokers can not publish research). The publication is often a catalyst for rebound, as general public would learn about the value proposition in detail. I am monitoring when to grab further stake.

IPO Blackout Trading Idea – this week there are two good companies that are out of blackout period and therefore broker research publication may be eminent. Companies trade up on publication of first research post IPO:

Huddly – AI conference calls cameras and software – see their website for the investor presentation. The company is reporting tomorrow. So you have double catalyst. Companies rearly report bad numbers on the first quarter after their IPO. I would expect that after tomorrow the IPO syndicate members will release their research. We bought Huddly yesterday.

Pryme Cleantech – company like Quantafuel. Only two years behind and at 1/10 valuation of QFUEL. If you want to get excited, look where QFUEL was trading two years ago and where it is trading today. Pryme is out of blackout from yesterday. Expect analyst research soon. We aer long PRYME. http://www.pryme-cleantech.com/

I communicated with Norske Skog Investor Relations today. The cost of Norske Skog’s stake of Circa is around 60 mil NOK. NSKOG owns 31.65m Circa shares. Circa IPO values that stake today at around 600 mil NOK. That is about 6.4 NOK per share, up from 0,64 NOK per share. I hope that the brokers will bring this news to the investors which should lead to revaluation of NSKOG share price. We are long NSKOG

Pareto reconfirmed their Price target for Xbrane at 157 NOK per share for this year and 316 NOK for next (if commercialization is successful). It is one of our favorite stocks. They are in biosimilar drug area. There are two advantages of Biosimilar drugs – simplified FDA approval (only two stages takes about 6 months) and high 95% FDA approval success rate. In substance the company must only demonstrate, that the composition is similar to the original drug and that it has a similar effects. The study should be completed by June 21. The company partnered with Bausch and Lomb and Stada to distribute their product. The main product is biosimilar to Lucentis (Roche) for eye diseases. We are long Xbrane.

Trading idea: look at companies, that went down in their recent IPO/SPOs. Examples of those could be 247 Office(247), Arctic Bioscience (ABS), Skandia GreenPower (SKAND) etc

SUBSCRIBE TO THE BLOG TO OBTAIN NOTIFICATIONS BY EMAIL

SUBSCRIBE TO THE BLOG TO GET NOTIFICATIONS BY EMAIL

Pareto Securities today included Norske Skog into their core Norway portfolio with 10% weighting. They state: “We think NSKOG offers an attractive combination of solid cash flows from existing businesses, supporting growth opportunities from converting capacity and non-paper initiatives.”

We like NSKOG for three reasons:

• It is trading at significant discount to peers – it is trading at 5,2 2021EV/EBITDA vs 7,5 average for the peer group, while having below average leverage and more than 10 times stronger cash flows
• Restructuring business – NSKOG is gradually exiting paper and converting the capacities to green packaging with 5 times higher margins
• NSKOG owns 32% stake in Circa. It is valued at symbolic amount on the balance sheet. At IPO price it represents 5 NOK of NSKOG share. If IPO performs as I expect, Circa could easily represent 50% of NSKOG current share price. This is not priced in NSKOG share price. See the below article for details
• https://seekingalpha.com/article/4407578-gain-exposure-to-hot-scandinavian-ipo-circa-through-largest-shareholder-norske-skog

We are long both NSKOG and Circa in the IPO. Bullish on both.

MPC Energy news-flow is starting to coming in. See previous posts for valuation details

MPC Energy Solutions secures exclusivity for two projects in Colombia and the Eastern Caribbean and continues to grow its pipeline

×03/01/2021

Amsterdam/Oslo – 1 March 2021 – MPC Energy Solutions NV has seen a strong start to its operations since its recent IPO. On 11 January 2021, it was announced that MPC Energy Solutions had successfully raised a total of USD 100 million in advance of its listing on Oslo Stock Exchange’s Euronext Growth segment on 22 January 2021.

Since then, MPC Energy Solutions made significant progress in the execution of its project pipeline and secured exclusivity for two projects in Colombia and in the Eastern Caribbean. The solar and energy efficiency projects have a total investment volume of USD 30 million with a potential expansion to USD 55 million reaching a total installed capacity of 50 MW in 2022. Due diligence is expected to be finalized shortly.

MPC Energy Solutions expects that it will secure further exclusivity agreements in the upcoming weeks. The steadily growing project pipeline includes wind, solar and energy efficiency projects. In line with the company’s strategy and initial geographical focus, all projects are located in Latin America and the Caribbean region, with a healthy mix of national and corporate off-takers.

Martin Vogt, CEO of MPC Energy Solutions, said: “We are excited to add two exclusive project opportunities to our project pipeline. We are working hard to provide strong returns for our investors while keeping our commitment to the energy transition in Latin America and the Caribbean. Our diversified portfolio of projects caters to the energy needs of South America and the Caribbean while helping to lower the carbon footprint of the region.”

MPC Energy Solutions recently announced the closing of an asset development agreement and strategic partnership with Enernet Global, a distributed energy service company that develops microgrid projects in Latin America, Africa, Australia and Asia. The partnership is set to open a number of further opportunities for MPC Energy Solutions moving forward.

their investor presentation:

https://www.mpc-energysolutions.com/