Ups and downs

Time for the yearend report – Ups and downs in February

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The past two weeks have had its ups and downs. These weeks are really the high season for companies announcing their yearend report, but also other news have had their impact. From an investors perspective some has been good and some has been bad – but among the bad, hides a one that is really bad, almost catastrophic. I will come back to that later.

Up – Nexam

If I were to rank the reports from best to worst, on top, I probably would place Nexams yearend report. Nexam bought a master batch producer in December, so in terms revenues the acquisition had little impact – only three weeks including Christmas. The aim of the acquisition is securing production capacity, so the revenues that comes along are not main reason, but investors can see that as an extra.

After the report the share have moved above 10 SEK, and seems to hold ground. Before the report, the share price was app. 9 SEK.

Down – Hexatronic

The report from Hexatronic showed a weaker than expected fourth quarter. As the main part of the sales are at the Swedish market, the company depends on the weather and how when winter sets in. When the ground is frozen, one cannot dig and lay out fibre cables.

After the report, the share fell from 8.5 SEK to 63.1 SEK (- 8%). Personally if find that punishment too severe. Despite a weak quarter, the YoY sales are up 26 %, margin is up from 10.6 to 11.6, and earning per share is up 59 %. Even dividends go up from 0.30 SEK to 0.40 SEK.

The share recovered some on Friday as Hexatronic announced order on submarine cables totalling 33 MSEK.

Up – Heliospectra

Heliospectra’s yearend report showed high growth both for the full year and for Q4. The company have been cutting costs during 2017 and along rising sales; it makes the operating loss less. There is still a significant cash outflow -32 MSEK. The cash reserves are app. 41 MSEK, which gives Heliospectra a bit more than one year on the 2017 burn rate. The Q4 burn rate was 6.4 MSEK from operating activities, which points to a much lower burn rate in 2018 if sales are at the same level. In other word, I am not worried about issues. The share exploded in January and went from 4.5 to 10.5 SEK. Since then it fell to the present level of 6 SEK. There was no reaction on the report.

Down – BrainCool

The yearend report from BrainCool showed net sales of 1 MSEK. Personally, I had no expectations on sales from BrainCool. The marked had, it seems, as the share is down 7 % after the report. During autumn, the company reorganized itself with more focus on sales. Therefore, in next year’s report, sales could be crucial, as BrainCool have entered commercialization phase. From now on, I will look very careful in the quarterly reports for sales. Probably it will start to show during the first months of 2018.

Up – Dignitana

After the issue in December the Dignitana share have recovered significantly. The issue price of 2.1 SEK are far away, as the current share price is around 5 SEK. Dignitana has moved to Dallas, and today it is more or less an American company listed in Sweden.

Sales continue one way, and that is upwards. The American Q4 sales went up 21 % compared to Q3.

Dignitana projects a positive cash flow by the end of 2018, but they announced that at the end of 2017 as well, so I am a bit cautious.

The report did not move the share price, but I mark is an ‘up’ since it removed some of the question marks as to ongoing business in the US. Despite the setback in the autumn Dignitana can still make new contracts and steadily raise the turnover quarter by quarter.

Catastrophic down – a crash landing?

CybAero has been suspended from trading on Nasdaq since February 15th. A new CEO began his work on January 23th, almost half the employees were let of shortly after (announced February 9th). Then a few days later the Nasdaq suspended trading and the company announced that Brackenor, with whom the company had a finance agreement, has backed out. In other words, three weeks after his arrival the CEO faces a possible bankruptcy.

The prime customer segment for CybAero is governmental organisations (military, customs etc.) and CybAero cannot sell anything to these type of customers with a bankruptcy hanging over the company. In other words, there will be no last minute order to save the company.

Personally, I find it unlikely to find a solution that will enable CybAero to continue in its present form. I see my invested money as lost and if there still is a CybAero with me as investor in six months, I will see that a (very) late Christmas present.

I became an investor in CybAero in 2014. The drone market has since exploded but unfortunately, CybAero never got their unmanned helicopter off the ground.

Up – Recyctec

Another company with tough cash-problems is Recyctec. The latest issue secured enough cash for the next six months, and the company is on Aktietorget’s observation list.

Despite the financial problems, there is a little light in the dark for the company as sales are finally on track. Sales alone cannot secure the necessary funding, and during the next months, Recyctec must find additional funds to finance the journey to a positive cash flow. Despite the situation, it is ‘up’ since Recyctec seems to be on track.

With only reports from Cantargia and CybAero left, the yearend report season comes to an end. The report from Cantargia will show no sales and it is doubtful if CybAero will report on the announced date – given the problems, In all I think that most companies are on track.

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

2 thoughts on “Time for the yearend report – Ups and downs in February

  1. Pingback: CybAero: Skeletons falling out | Swedish growth shares

  2. Pingback: Heliospectra moving fast | Swedish growth shares

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