Thread by @Tobias222225

1) $Nekkar is my second biggest holding. Ticker: NKR on OSE. The company was called TTS Group 1995-2019 before divesting their TTS business. Nekkar’s business is divided into four units A) Syncrolift B) Intellilift C) Aquaculture D) Offshore energy & renewables

2) A) Syncrolift is Nekkar’s core business (syncrolift.com) They are a market leader (75% market share) in shipyard solutions such as shiplift and transfer systems. The systems are designed for maintenance and repair work on ships and submarines-> bit.ly/3meLAel

4) Syncrolift offers also upgrades and spareparts to their system in addition to operator training. These are post-installation products. Currently, service and after-market support only accounts for less than 10% of Syncrolift’s revenues

5) Syncrolift serves only ~15% of its total combined installed base, leaving lots of room for growth in service and after-market support. In 2019 they established their second subsidiary in Singapore to serve the South East Asian market, there is already one in the US

6) Excerpt from their 2019 report on the service and upgrade market: “… the service and upgrade market is viewed as promising. […] the large installed base provides an excellent position to expand the company’s footprint and offerings within service, upgrades, and aftermarket

7) Syncrolift generated 250.1 MNOK in 2019, up 13.6% from 220 MNOK in 2018. EBITDA 51 MNOK, up 27.5% up from 40 MNOK in 2018. The EBITDA margin improved to 20.3% from 18.9% in 2018. The order backlog was at the end of 2019 at all-time high 778 MNOK up 23.7%

8) Syncrolift delivered stellar results in H1. Revenue up 23.7% and EBITDA up 50% y/y, operational EBITDA up 108%. Please note operational EBITDA excludes a 17 MNOK hedging instrument loss in the period that will be reversed upon project completion in the future. Backlog up 79%

9) The order intake consisted of 62.7% newbuilding contracts and 37.3% long-term service contracts, supporting Nekkar’s long term strategy of increasing their service and after-market. Please note how this is significantly more than their traditional 10% service contract share

10) B) Intellilift is a SaaS provider driving digital performance improvement. Nekkar acquired 51% of Intellilift in April 2019. They develop open software platforms for collection, monitoring, and control of data for the offshore industry, and soon to be aquaculture too

11) The acquisition has given Nekkar access to knowledge and competence. Positive synergies have been realized by integrating Intellilift’s products and solutions with Syncrolift. It is expected that further synergies will be realized with the acquaculture business

12) Intellilift has developed a monitoring system that combines different data sources and real time camera streams, it enables remote operation of machinery and processes and has been sold to players in oil-gas and the wind industry. They are constantly developing new products

13) Intellilift has been showcasing 3-digit growth per annum since its inception in 2016. for the 2017-2018 figures goes to @Bullx33 , Intellilift’s 2019 numbers can be found in the 2019 annual report

14) H1 2020: Intellilift reported revenues of 9 MNOK, up 50% from 6 MNOK in H1 2019. The EBITDA landed at 2 MNOK, up 1000% from EBITDA 0.2 MNOK in H1 2019. Solid numbers in my eyes and will be exciting to see them release further synergies with the acquaculture branch

15) Aquaculture: Starfish. #Nekkar is developing a closed salmon cage in collaboration with Lerøy. Starfish aims to improve fish welfare and cut costs. It got a 10 MNOK environmental tech. grant from Innovation Norway. Previously COO at MOWI M. Solberg joined the board in 2019

16) Starfish is progressing according to plan. A small model has been tested in a wave pool where it “performed very well […] better than expected” – VP Nekkar (interview: bit.ly/2HRBHnS). A downsized model (40% of original size) is to be deployed by January 21

17) The new cage has several advantages, 1) you avoid sea lice (big issue) as clean and cold water is pumped into the closed cage from the bottom of the sea, and 2) you fully control the waste handling, avoiding damage to the surrounding eco-system often prone to open cages (ESG)

18) 4)Offshore energy & renewables. Nekkar has developed products leveraging next gen PM winches, electrification, and battery energy storage. They have a single-winch hoisting system that improves energy eff. and power regeneration. Signed LOI for a newbuild with industry player

19) Downside risk: Nekkar has received a downward purchase price adjustment claim of 240 MNOK following the sale of their marine and offshore business to Cargotec in 2019. The final settlement is still pending as the arbitration proceedings are ongoing.

20) Nekkar has fully challenged the claim, a decision is expected in H1 21. The outcome is not binary as I understand and difficult to predict, but I find Nekkar’s wording on the matter strong and seeing it as unlikely any compensation will be in full, although there is risk

21) That said, Nekkar has a 595 MNOK MCap with no debt and 260 MNOK cash. I think that's low for a company that is on track to finish the year with revenues between 300- 360 MNOK. The operational EBITDA was 51 MNOK in 2019 (same problem with FX contract, loss reverts in later yrs

22) H1 2020: revenues up 25% y/y. Backlog is up 77.4% y/y. On Sept. 1st the company won a $30m contract (bit.ly/37qhcr4), which means they have almost doubled their order intake and backlog y/y. Pretty solid and cementing their market leader position further

23) Even if Nekkar pays the full 240 MNOK, they have 20 MNOK left on a debt-free basis. Then valued at 1.85 EV/sales, low for a market leader growing 25% y/y, doubling both backlog and order intake in 2020, Intellilift fuelling additional growth. Starfish is the icing on the cake

24) Nekkar is an exciting company with a solid moat around its main business. 240+ installations in 66 countries. They own the brand name Syncrolift alone since 2015, acquiring it from Rolls-Royce (designs & drawings always owned by Nekkar)

25) There are vast opportunities to improve onservice and after-market with over 240 installations. The management has communicated focus on this, leading to 37% maintenance share in H1 order intake. Shifting costs are huge too if you have a Syncrolift lift that needs maintenance

26) Intellilift is growing fast. SaaS providers have great scalability, the EBITDA margin improves as the business expands, and it is above cash breakeven on a running basis. Nekkar has also realized positive synergies by integrating Intellilift with the existing business

27) Lastly, Starfish will be interesting to follow. It offers several advantages, and maybe it's destiny that a company specializing in shipyard solutions and offshore tech. will solve some of the issues in the seafood industry. I’m hopeful given its grants and VP's comments

28) Shareholders: Chair Trym Skeie owns through his family entities 30.4%, and 1.3% himself. Intellilift was developed by his dad Bjarne Skeie, who also owns through the family entities, and 1.43% himself. Big investor Ketil Skorstad owns 5.4% through Tigerstaden

Edit: 21% of the shares in Intellilift was acquired from
Skeie Consultants AS which is Bjarne Skeie's fully owned entity, who was one of the big owners (not developer necessarily). He has still 20% ownership in Intellilift directly

29) This analysis has been written over the last week. The numbers have been updated following today’s price reaction. Although the share has appreciated, I believe the underlying information is just as valuable and the thesis remains unchanged