Pareto portfolio for September

Pareto published their strategic portfolio for September for Norway and Sweden. Below is the summary.

Pareto´s Norway Portfolio

US indices ended close to new all-time highs in August. Our portfolio was
no different, returning 4.8% m/m – a 4.1 pp outperformance to OSEBX
returning 0.7% last month. We remain ahead of the index for the year
having returned 26.0% YTD vs. OSEBX at 17.2%. Our best performers in
August were BONHR (+14.9%), ELK (+13.2%) and KID (+11.1%) and seven stocks beat the index. For September, we make six changes, replacing AFG, AKER, ELK, KID, MPCC and OHT with ACH, HAFNI, KIT, MWTR, SOON and SUBC, keeping AUSS, BONHR, DNO and NSKOG

Pareto´s Sweden Portfolio

After a strong month in July the Swedish equity market lost some speed
and traded largely sideways in August with our benchmark (OMXSGI)
gaining a modest 0.5%. S&P 500 wrapped up its seventh straight month
of gains driven by post-pandemic reopening and further economic
recovery. Our portfolio lagged our benchmark and declined 2.6% in
August, resulting in an underperformance of 3.1 percentage points. Only
3 out of 10 stocks in our portfolio closed higher for the month with our
tech holdings Embracer (-12%) and Storytel (-12%) continuing to drag on
performance. On a more positive note, both Sedana Medical (+11%) and
Renewcell (+10%) continued to trade higher. We make two changes for
September: we add Vicore Pharma and Green Landscaping and remove
Millicom and Xbrane.

My positions from the September portfolio

I am long NSKOG and Vicore.

I have written here several times why I believe NSKOG is due for strong rebound this year. Pareto made the following comment (emphasis addedd):

We keep NSKOG in our monthly portfolio as the earnings trough is left behind. And with increasing publication paper prices the
stock is a late cyclical play with substantial earnings and value upside. Earnings delta into H2 and 2022 remains positive, along
with several non-paper initiatives that will diversify and secure earnings growth – not yet reflected in the share price. As such, we think NSKOG is an attractive exposure with vast upside potential. BUY / TP NOK 50

Vicore Pharma is a new position. For those who follow the blog, the pharma track record was not bad. I posted over 100% return on Xbrane, earlier this year. The position is closed for now. Biovica is an open position with 50% return over the last six weeks. I am very bullish Biovica and believe there is additional 50% potential by October due to the announced FDA approval due in late September. Vicore is a new position, I will be writing about it in next days.

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Quantafuel – minutes of my meeting with QFUEL management

I had a privilege to speak to Quantafuel management for one hour after the webcast yesterday. The information was quite reassuring. Below is my summary of the interactive meeting.

How certain are we that the modifications in Q4 would be sufficient

The company has been testing and resolving issues during the last months. Many issues have been already resolved. The company concentrated on testing the technology to assess what modifications are needed. They run certain parameters and assess the results. For example in the last five runs, they did not experience a single unexpected issue. They know the issues, and they know what causes them. My take – I must say that they were very confident and their confidence was very reassuring for me.

Proof of concept milestone – will Quantafuel reach the milestone before the modifications scheduled for Q4

It is quite possible that Quantafuel could reach proof of concept on current equipment settings. But they view it as less important. The priority will be to reach proof of concept after the modifications.

Could the modifications be delayed?

The modifications are scheduled to be completed and the plant should be restarted by mid Q4. That is just two and half months from now. They seemed quite confident that the timing should be achieved.

Finansavisen article titled QFUEL does not rule out postponements

The management was very unhappy about the title. The journalist asked the managment whether there could be further delays in commercialization. The reply basically was that one can never exclude any unforeseen situations but the management believes the stated deadlines should be met. The journalist run a title that QFUEL does not rule out further postponement. From what the managment told me the title might in my view not fully express what they told the journalist.

CEO search

The board has approached prominent figures outside of the factory. Certain insiders also submitted their CV to the board. The process is to be finalized by October. In my view it is surprising that the CEO would appointed only after the modifications are resolved.


My take on this was quite reassuring. The mgmt was quite confident and made strong statements on their understanding where the issues are and how to fix them. We should be just over two months from the modifications completion. Hopefully that will be the final step in the commercialization process. I expect that as mid Q4 would be coming closer, the QFUEL share price would start moving upwards.

My top picks portfolio

LInkfire – in my view top IPO from Scandinavia. Since I first wrote about it about six weeks ago the share price is up 20%. The company on Q2 call mentioned they are finalizing a takeover of a major competitor, which should be completed very soon. This would be the next major catalyst in coming weeks. I believe Linkfire could reach 20 SEK this year (now 12 SEK). Full thesis is below:

Energy Recovery – my largest position. Since I wrote here first about year and half ago, the share price is up 140%. The company has a unique Pressure Exchanger technology that transfer desalination industry, where it has 100% mkt share. Now they are implementing the technology into other industries. The next big industry is refrigeration and climatisation, which is due to regulation transferring all technology from greenhouse gasses into CO2. The technology can save 30-40% of costs. ERII expects first sales of its CO2 products this year. The company has ten time potential over next few years. Full thesis:

Biovica – is up 50% since I published first here. I believe it will breach 100 SEK from current 56 SEK by October. See my prior posts on this. Very bullish.Full thesis below:

Africa Energy – is about 20% below since I first wrote about this, despite the fact that all is progressing well for the company. This company could be up three times by the end of the year. Major points:

  • Africa Energy (Lundin Group) owns 10% stake in one of the largest gas discoveries in the world.
  • The block is majority owned and operated by French oil giant Total.
  • Total is expected to reach an off-take agreement with South African government by October.
  • The off-take agreement will be the trigger for Africa Energy to sell their stake and distribute the cash as dividends to shareholders, as they repeatedly declared.
  • The value of the stake is 3-5 times of Africa Energy capitalization. Good risk reward for 12 months investment horizon.

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MPCES and HAV – Norway Green stocks beating expectations

Last year brought too many IPOs. As a result many good companies underperformed and this created an attractive opportunity.

I like and I am long the below two IPOs from last year that are still trading below their IPO prices. Both reported today. I copy the summary of the Fearnley research on those. Both had their webacsts today. I recommend to listen.


HAV (Buy, TP NOK25/sh)

2q21 results in – yet another beat

 HAV group released its 2q21 results today, posting impressive revenues of NOK304m (vs. FSest NOK162m), driven in large by outperformance in all three major segments (NES, Greentech and most significantly Design), whilst EBITDA came in at NOK41m, EBIT NOK37m and net income NOK131m (vs. FSest NOK9m). At the end of the quarter, the company held an external order backlog of NOK468m, with NES and Greentech increasing their order books through the quarter however an overall slight decrease due to trading deliveries from HAV Design. Cash position remains healthy, coming in at NOK334m at the end of the quarter.

Once again, a strong report from HAV. All primary business lines are (out)performing (as evidenced by the numbers here), whilst we note continued progress in the hydrogen segment – with regards to this segment, the company notes official start-up in the fourth quarter of this year, with additional resources on board during this quarter to speed up the process.

As a reminder, HAV group is able to offer a suite of services to a maritime industry that will no doubt be evolving, driven in large by the increased scrutiny around sustainability – going forward, we continue to see HAV as best positioned to be the maritime cleantech play you must own. We strongly re-iterate our Buy recommendation on HAV, with a target price of NOK 25/sh. For a more in-depth breakdown of the company, please click here for our initiation of coverage report.


Attractive Entry Point
MPCES has provided an update for 2q21 with an EBITDA of USD -1.4m (EUR -0.4m in 1q21) related to a ramp-up of the organization, due diligence and advisory fees. Notably, the organization grew from 2 to 13 full-time employees in Amsterdam, Panama City and Bogotá. The cash position is USD 81.0m (vs. USD 82.7m in 1q21).   On the operational side, MPCES highlights that the Neol CHP in Puerto Rico (3.4 MWp) is currently under construction and is expected to begin operations in Oct-21. In addition, the Planeta Rica solar plant (27 MWp) started construction in Aug-21 with expected COD in 2022. We expect the plant to produce an annual c. USD 2.5-3m in revenue once operational – see our report here. Further, the Los Girasoles (Colombia) and Santa Rosa & Villa Sol (El Salvador) achieved ready-to-build(RTB) status during the quarter and is also preparing for construction start.  

MPCES reports that several projects are under construction or will commence construction shortly which will add more short-term triggers in the share going forward, we believe. The company expects to have 63 MW of operational assets by mid-22 though additional capacity might be added through acquiring operational assets. On the negative side, travel restrictions and delays caused by the C-19 pandemic has impacted some of the key markets (e.g. Bahamas) which has caused delays. In addition, the company highlights disruption of the supply chain which it expects to remain for the next 12 to 18 months. However, despite these challenges MPCES remains on track to achieve 63 MW of operational assets by mid-22.  

In our opinion, MPCES comes across as a highly appealing way of playing the Renewable space citing 1) an initial portfolio and priority backlog with funding secured for 115 MW 2) attractive projects with equity IRRs of 10-18% 3) a further backlog consisting of 687 MW of projects and 4) an attractive entry point (cash is c. 1.1x current market cap).  

In the report MPCES highlights that the 115 MW of project with secured funding will generate c. USD 25m in annual revenues once operational. Assuming a 75% EBITDA margins would leave an annualized EBITDA of c. USD 19m. Though pricing in the space has come down recently, we continue to see covered names trading around 9x 24-month fwd. EV/EBITDA multiples. In such a scenario, MPCES would be priced around USD 170m (c. 2.3x current m. Cap). In sum, we continue to believe that the current price offers an attractive entry point.   The company will hold a webcast at 09:00 CEST today. Link to registration here.  


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BIOVICA – CEO’s Video made it top Scandi pick – major catalyst in September

Biovica CEO announced on Friday the major catalyst should materialize by end of September. Biovica could easily double in the next six weeks, the same way as Xbrane did in similar situation earlier this year.

I am very bullish Biovica over the next two month.

Introduction to Biovica

  • 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
  • Its 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.
  • My price target in six weeks (prior to FDA) is 100-120 SEK. The current share price is 48 SEK. Very good upside for one month and half.

Full investment thesis

The major catalyst due in one month time

Shares move on catalysts. You do not get often a major catalyst in one month time. This is the situation. Biovica CEO posted a video for the shareholder meeting that should take place on Monday. The link is below. The CEO announced that the FDA approval for its novel breast cancer test should be coming in Septermber. This should be very bullish for the stock

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Kjetil Bøhn (Ex CEO of Quantafuel) next venture

When Kjetil Bøhn resigned as Quantafuel CEO, he announced that he wants to focus on his next ventures.

The share price is 27 NOK, Fearnley price target is 90 NOK. Significant upside. This is one of Kjetil’s most valuable investments. I spoke to the CFO and she confirmed they talk to Kjetil.

I spoke directly to Kjetil and he is quite bullish on the company. I think this is a good recommendation, that I did follow.

Kjetil is the sixth largest shareholder in Kyoto Group. I am long Kyoto.

Fearnley just published an update research on Kyoto, below is a summary:

Moving From Start-up to Scale-up
KYOTO reported its first update today recording 1H21 EBITDA of c. NOK -16.2m vs. FSest at c. NOK -15.0m. On the cash flow, KYOTO reports NOK -14.6m in CFO and NOK -5.4m from CFI (payment to buy intangible assets). Further, the cash position is currently NOK 158.9m. While the numbers are of limited interest for the time being, our focus is on the operations and outlook for the remainder of 2021/’22. The report included no new project specific updates, though we note that the company reiterates its 3,000 MWh aspiring target for 2023 (first mentioned during the listing process)

While no new project has been announced since the IPO, KYOTO announced in July that the company placed an order for their first Heatcube Thermal Battery where manufacturing of the key components have started. We expect the project to start storing electricity by early-22. Note that KYOTO will build, own and operate the battery under its Heat as a Service business model (HaaS)

Further, as KYOTO is currently moving from start-up to scale-up, the company is looking to add 14 more people to the organization in 2021, which will also increase the cash consumption going forward. Importantly, the company expects the current business to be funded through mid-22 (FSest 3q22). 

3,000 MWh aspiration by 2023 remains firm
While we have limited visibility into the upcoming projects, we note that the 3,000 MWh (+100 batteries) number by 2023 is still mentioned as an aspiring target in the report. KYOTO expects to own 50% of the projects in 2023 while the other 50% is expected to be sales from battery as a product (BaaP – EPC contracts or direct sales). If the target is reached, we believe KYOTO could generate c. NOK 700m in sales with c. NOK 100m in EBITDA by 2023.

I also include the summary of Fearnley initiation research on Kyoto

Kyoto Group AS

Thermal Battery Player – Ready to Decarbonize the Industry

What’s new: Initiation of Coverage with TP NOK 90/sh (c. 80% upside potential). Buy
Our take:  
Kyoto’s thermal battery solution position the company as a key player in the heat storage segment. This potential is far from priced in the share, we believe

We initiate coverage of Kyoto (ticker KYOTO) with a NOK 90/sh Target Price and a Buy recommendation. Kyoto is a unique player in the Heat Storage market for thermal batteries, a market that has been evaluated to c. EUR 300bn by 2030 in order to decarbonize industry as i) 75% of industrial energy comes from heat and ii) c. 90% of this heat comes from fossil fuels. Kyoto is uniquely positioned we believe, being an early mover in the market, aiming for a first commercial installation by 3q21.

On our numbers, the average Heatcube delivers attractive IRRs of c. 20-30% with a payback of FSest 4-5 years. This, coupled with owners with own demand and a strong team in place with extensive experience from renewables, makes for a very compelling growth story and adds support to the NOK 400m EBITDA target by 2024e, we believe. Buy.

Energy Storage – The Holy Grail to reaching Climate Targets

Energy storage is required in the energy transition as intermittency from wind and solar resources needs to be stored. This coupled with an industry sector that needs to decarbonize has made Kyoto’s Heatcube thermal batteries well suited for three different stakeholders with corresponding revenue streams (i.e. industry end users for heat/power, grid operators and third-party IPPs).

Funding secured through 2022e on our numbers

Kyoto recently completed a private placement, leaving the company funded through 2022e on our numbers. Further, the company will initially own and operate Heatcubes before transitioning towards product-based EPC or direct sales, enabling an asset light business model in the long-term.

Valuation – Buy, TP NOK 90/sh

We use a 13% cost of equity and arrive at a fully diluted TP of NOK 90/sh. We model cash flows through 2030 and assign no terminal value. On top comes the potential for dual cycle – reflected in our NOK 160/sh Bull scenario. Buy

LInk to Kyoto latest webcast and presentation

DO READ MY YESTERDAY BLOG POST ON LINKFIRE. I think LINFIRE is the most interesting IPO from this year

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Minutes of the call with Linkfire management

Linkfire reported strong results yesterday. I had a call with the management, that covered issues that were not clear from the Q2 report. I only discuss the issues not covered by Pareto research, that I also enclose below.

The call summary is below:

M&A transaction could happen very soon

During the IPO the management mentioned that they are in negotiations with one of their major competitor. On the call today they mentioned that the transaction is progressing and could be concluded “this year most certainly”. In the below article is speculated that they are about to acquire SmartURL. They should be able to buy it cheaply, because the SmartURL underinvested into its technology and are struggling to compete. Linkfire would be able to materially increase its reach through the acquisition. This transaction is the next major catalyst, that should increase the share price significantly.

More M&A opportunities than expected

Linkfire management mentioned, that they see more M&A opportunities than they expected during the IPO. These include both:

  • industry consolidation opportunities
  • new areas
  • revenue enhancing opportunities

New product pipeline

At the moment, Linkfire focuses on Music. They are already started to provide smart links for webcast. The major new area are smart links for Movies. The management mentioned that they already have all the technology build up and they are now signing contracts with studios and preparing the go to market strategy. This will be another major catalysts, that could easily double the share price.

Strong growth expected in H2

The company share price sold off today, because the company did grow 52%, while in the Q1 the growth was 56%. People view that as a sign of slowing growth. I discussed this with the management. The difference is not material.

Last year the company was growing at 43%. In H1 the growth has accelerated to 52%. The company estimates the growth will continue further in H2. They stressed that the best is the Q4, due to the holiday season, when people have more time to listen

New contract with Applemore important than reported

On 5 August Linkfire reported a new contract with Apple music. The market viewed it as a contract extension. That does not seem a right interpretation. The press release was very dry, probably due to some legal issues. The contract includes additional services that Linkfire will provide to Apple, they will provide to Apple additional data points and additional services. As a result Linkfire’s revenues from Apple should increase. This is not appreciated by the market.

New Publisher Toolkit – new service announced only on the Q2 call

This new feature was not captured by the market. Based on this smaller music publishers would get a faster access to the service. This should accelerate new client acquisition into revenues.

Higher focus on shareholder communication

The company was listed only one quarter ago. The management appreciates the importance of shareholder communications and is in process of hiring an Investment Relation representative. They said: “We have a lot of stories to tell” and they are working on bringing those to the market.

Linfire full investment thesis

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Linkfire Q2: strOng growth continues

Pareto summary on the results:

On the right track in its growth journey

Net sales and gross profit

  • Linkfire reported net sales of DKK 7.6m vs PAS at DKK 7.6m
  • Net sales figure corresponds to total y/y growth of 42% (52% y/y on a constant currency basis)
  • Main sales growth driver continues to be commission-based revenue, growing at 280% y/y (250% on a constant currency basis)
  • Subscription revenue growth was 11% y/y (23% on a constant currency basis)
  • Gross profit amounted to DKK 5.5m, compared with PAS at DKK 5.5m
  • Gross margin slightly weaker at 72% compared with PAS at 73%


  • EBITDA came in at DKK -11.5m vs PAS at DKK -9.0m – trailing our estimates by 28%
  • EBITDA was negatively affected by approx. DKK 5.6m from IPO-related costs. Adjusted for this, the EBITDA amounted to DKK -6.0m (PAS est. DKK -3.4m).
  • Difference between PAS estimates and reported EBITDA figures largpsely stemmed from total reported OPEX coming in above our expectations


  • Strong topline development, despite currency headwinds negatively impacting subscription revenue
  • Slightly higher OPEX than expected, causing larger than expected EBITDA loss
  • Overall a good quarter, with Linkfire showing that it is on the right track in its growth journey
  • We are not likely to make any major changes to the 2021 forecast, and where the share is currently priced, the results should not have a major impact on the valuation. We have a Buy rating with a target price of SEK 16.

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Pareto: HydrogenPro got a new order from Mitsubishi

HydrogenPro receives purchase order from Mitsubishi 
HydrogenPro announced today that it has received a purchase order from Mitsubishi for a single stack high-pressure alkaline electrolyser system. This single stack high-pressure alkaline electrolyser system will be the largest of is kind to ever be built, equaling anelectrolyser effect of >5MW. The companies have not disclosed the contract value, but we expect this to be in the region of USD ~3.5m. The system will be delivered in Q1’21 at Herøya, Norway. The project will serve as a validation program to optimize the electrolysers for market introduction in the US market. Reportedly the companies are working actively on the US market introduction, and we expect news on this later in this year. This announcement provides comfort to our estimated revenues from Mitsubishi contracts. Buy, TP NOK 50.                          Other commentsThis electrolyser will not have the high efficiency electrode coating technology, but the parties expect to implement this for later projects with MitsubishiThe electrolyser will operate close to HydrogenPro’s existing sites at Herøya, NorwayThe system will have a capacity of 1100 normal cubic meters per hour, approximately equal to 100kg/hour

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Pareto on Africa Energy: Strong cash position & More share price triggers ahead

I copy Pareto comment on AEC results in full below. The comment was released on Thursday after the Q2 results:

Strong cash position & More share price triggers ahead

Africa Energy reports Q2 results with low operating costs and farm-out proceeds leading to an unchanged cash position of USD 14m (slightly ahead of expectations).

The company is encouraged by operator TotalEnergies’ progress on the planed fast-track development at Block 11B/12B with no changes to previous comments (link). In our view, this is positive as it potentially implies news on gas offtake agreements and development economics later this year that would be significant share price triggers.

On Block 2B, Africa Energy expects to commence drilling of the >300 mill bbl potential Gazania- 1 prospect later this year. The costs are carried by incoming partners and we estimate a value potential of SEK 2.5-3.0/share net in case of success.

Despite higher commodity prices, the share price has suffered from lack of news flow. We think this will change ahead and recommend buying ahead of the herd. TP SEK 4.50 to remain unchanged

Full investment thesis:

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Be on the right side of innovation

  • 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:

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Making money is about great ideas.