HRouge Profile picture
Nov 26, 2018 10 tweets 5 min read Read on X
This is a little bit of a stretch but bear with me. One for fans of #BVXP, #HZD, #ABCAM and perhaps even Phil Fisher.

First, keep in mind these words from the #BVXP Bioventix FY18 report: Image
Set them against this from #FAB Fusion Antibodies' HY18 report today: Image
With FY17 results, Fusion was cut in half by guiding the disappearance of a fair whack of revenue. HY18 today shows it. They today guide to "modest" 18-19 growth.

Along with that revenue warning, news that a key customer collaboration agreement may not be renewed. Image
Results today have a new agreement with the customer as signed.

Further, this seems to have come out separately as well :…
They floated to do a big physical expansion of their labs and ramp up business. The former at least, has recently been achieved under budget.

It's Phil Fisher's kind of entry point: expansion happening during a period of turbulence.
Remember Abcam's failed bid for #HZD (CRISPR, rather than humanised antibodies)

Valueact continue to increase their stake. Sooner rather than later, that gets sold.

The failed bid validates #HZD's IP, their revenue further validates it and guides towards a much higher price.
None of this is present at #FAB (apart from turbulence) but bearing in mind the point from Bioventix at the start - you wouldn't necessarily expect it to be. This is what IP based long-term royalty businesses usually look like at this stage.

It's also what failures look like.
It's £13M. Their IP has produced decent, growing revenues very recently. They've got sunk costs in R&D, labs. They've got rare and specialised staff. They're picking themselves up.

I did say this was a stretch.

But for £13M, as a lottery ticket. I'll buy.
I've long since exited Fusion Antibodies #FAB - this just isn't going to work.

..that is, except however, if you're a director or key senior management of the company. In return for -53% HY1/19 revs & -19% FY19 FY revs: your pay increases by 22%.

Pat on the back lads. Image
Fusion Antibodies #FAB - possibly.. Image

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More from @hareng_rouge

Dec 22, 2021
$RADA makes small tactical military radars. The recent sell off hasn't made it cheap but it has begun to bring it closer to GARP territory

It's a rare pure-play on a theme that's perhaps not yet widely appreciated and is hard to access directly but you can see it in the numbers
Here's where it trades on a forward sales multiple against some of the big diversified defence majors - has lost much of the premium and now sits a little off the top end. Brits bottom of the pile.
Same group of majors but here on forward EBITDA multiples and towards the bottom end excluding the UK companies.
Read 19 tweets
Nov 12, 2021
Naive view but I think Hunting #HTG may be on its way back to Covid lows because it's orphaned on the wrong market and there's an information disconnect - if so, my guess is that it's pretty oversold here. Image
The company isn't a pure play but it's good enough to say it's very shale exposed, towards the completion side vs the drilling side of things.

Three year chart to around May 2021: HTG in green vs several US oil services ETFs - as you can see, they trade in lockstep. Image
Same chart but on a 2021 YTD basis and it starts diverging somewhere around mid summer. Image
Read 15 tweets
Nov 9, 2021
IG Design #IGR was a ten bagger in the 5 years leading up to Covid. An update a fortnight ago dropped the shares by half and erased all the gains in the most recent five years. Knife catching and broken growth this soon is almost always a mistake but IG may be an exception here. ImageImageImage
My basic premise with it is that the accounts are a complicated nightmare (CTRL+f for "adjust" is 232 hits in the last FY report) but most immediately, that this is right now a gross margin story - I think there are grounds to at least consider whether IG can be given a pass here
Unfortunately, it does mean walking through it so grab a.. (just no) so anyway, here's the rough idea: Pre-covid in white, M&A growth darling, 20% gross margins. Forget the op margin for now - I'm stripping out the adjustments that made adjusted whatever go up and to the right Image
Read 20 tweets
Oct 5, 2021
Saw a one-line tweet the other day mentioning McColls #MCLS as one of 2 highest conviction names.

I think I see why: there's a metamorphosis happening underneath and reasonable path to PE and FCF multiples between 2-3 plus a growth narrative, all under that lovely grim exterior
Story is that they're shrinking. 1500+ stores 2 years back, to 1050 by the end of FY21

Also changing: culling small newsagent shops to focus towards larger, more profitable grocery-heavy stores. So far, so worthy - but the real interest is the transformation into Morrisons Daily
Company raised recently to accelerate a programme converting 350 stores into these Mini Morrisons. They're at 56 today, will be 350 by end FY22

Cost is £90K per shop, what they call "cash payback" is 2-3 years and so far they're providing pretty immediate LFL sales growth of 25%
Read 12 tweets
Sep 23, 2021
What does Sneller see to get such sudden FOMO for the old zombie that is Iofina #IOF? If you recall the name, it should produce revulsion but a few things have changed and there's a chance it may be about to make some money. ImageImage
IOF produces Iodine in the US via O&G brine. Iodine is a beneficiary of industrial recovery generally and covid specifically - the largest use is used as x-ray contrast which may benefit demand from catch up on delayed hospital treatment.

And because it's 2021, inevitably: Image
Production is trapped on the wrong side of the Pacific: the two major production centres are Japan and Chile - so you have the obvious logistics issues for both and potentially politics for the latter.
Read 12 tweets
Aug 20, 2021
I think it's worth revisiting Aquis #AQX here in light of a couple of data points that have since come out.

There are three main parts to the co: a stock exchange (AQSE); a tech licencing biz and their multilateral trading facility (AQXE) - it's this last one I want to look at.
First is the RNS from earlier this month announcing their MTF (…) had achieved 6.2% market share. Across the €53.6B traded on AQXE in July, this came out to €1.7B a day.

Those 6.2% and €1.7B are quite significant numbers and I'll come back to them later Image
In the period since the beginning of 2018 market share has risen from 1.72% to that 6.2% above. Here's how that value traded looks. Image
Read 15 tweets

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