Q1 report

Mixed start of the Q1-season

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The quarterly reports gives an update on ones investments. Between the reports market and share price reflects what investors assume or guesses. Sometimes the market has been too optimistic and sometimes too conservative. Then we can see smaller or bigger corrections of the share price. For start-up companies the reports become of interest when the company enters market. The reports from Cantargia and A1M Pharma will show no turnover, so the reports will be a ritualistic note to the market and will have no effect on share price. On the other hand, the reports from companies with products on market investors will study in depth. In my portfolio, these are Recyctec, Fortnox, Heliospectra, Dignitana, and Nexam Chemical. This week there were Q1-reports from Fortnox, Recyctec and Heliospectra – with a mixed picture.

Q1 Fortnox

Fortnox is the most mature and only company paying a dividend in the portfolio. The past years the turnover and number of users have grown steadily. Judged by the Q1 report 2017 will be a fantastic year for the company. Turnover in Q1 rose 56 % compared to Q1 2016. Profits rose to 15.6 MSEK from 6.1 MSEK last year, which is the best result ever. The number of new customers are 15,000 (compared to 40,000 in the whole of 2016). This high number of new customers indicates that despite the high growth previous years, 2017 may lift the company significantly.

According to Fortnox, 60-70 % of small businesses have not yet digitalized their bookkeeping, invoicing, salary payment etc. which leaves a huge potential market for the services Fortnox provides.

The share price went up 6 % after the report but then fell back a bit.

Find the report here (in Swedish).

Q1 Heliospectra

In my latest post on Heliospectra I argued that based on the incoming orders in Q1 Heliospectra were back on the growth track. Unfortunately, the report showed that is not entirely true as turnover fell to 3.9 MSEK from 4.8 MSEK (Q1-16). On the other hand, the order value rose 40 % so presumably we will see rising turnover during the next months.

The burn rate is 9.8 MSEK in Q1. There are still 63.2 MSEK on the book after the issue in December 2016.

I noticed in the comment from the CEO that the company during Q1 have made a new strategy focusing on the food production sector. Hitherto focus have been on the rising cannabis market. Commercial greenhouses for food production is a market with a much higher potential than cannabis. On the other hand, the cannabis market is up coming and more companies will need to invest in production facilities to enter this market. The food production market however, is mature and lead times are probably much longer since greenhouses, lighting systems etc. are already in place and production ongoing. What make sense in the shift in strategy is the size of the food market – it is huge compared to the cannabis market.

The share fell 5.6 % after the report. Investors seems to have anticipated the low turnover as share price have been falling in the days prior to the report as well. In total, the share is down 11 % during the report week.

Find the report here (in English)

Q1 Recyctec

After the issue in February the Recyctec share have been under substantial pressure. The issue were 70 % subscribed and shortly after the issue, the share price went below the 3 SEK subscription price – and have stayed there since. The report did not change that.

Turnover in Q1 were 1.1 MSEK, which is approximately at the same level as Q1 2016. The burn rate were 4.2 MSEK and there are 18.7 MSEK in cash on the book.

The financial target for 2017 is a turnover of 18 MSEK and a positive result – so with a turnover of 1 million in first quarter there are 17 MSEK to go for the next 9 months…

Two days before the report a press release went out announcing the formation of a sales department in Lund. I know from experience that press releases shortly before reports equals disappointing reports. Nevertheless, the sales department is good news, as it is a step forward in achieving a steep growth in turnover.

The company still plans to move to Nasdaq First North during Q2.

The report caused no effect on the share price. During the report day, there were some movement up and down but it all ended just 1.5 % higher than in the morning.

Find the report here (in Swedish)

Check out my growth share portfolio, the share price trigger list or my EGS (Evaluation of Growth Shares) Model.

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