Tradin pattern changes. January and February was interesting to buy into IPOs. In late February this changed. There were so many transactions, that the Scandi market was not able to absorb it. Even great companies were failing. The trade changed. What is now the trade? Buy the failed IPO and wait till the publication of research. That is the catalyst that should drive the companies up.

Great example was Circa. We were very bullish on Circa based on the below article. But Circa failed – there were too many deals at that time. IPO was launched at 16.75, the share price stayed around 15. Yesterday, Sparebank issued bullish report on Circa, with price target of 30 NOK. Circa jumped 50% in two days. As I predicted in my previous blogs and as was predicted in the article. I believe that Circa will continue going up. The secondary thesis still remains. Norske Skog owns 32% of Circa. Circa is now valued at 7.5 NOK of NSKOG shares. This has not been reflected in the share and should lead to rerating of NSKOG. Do read the article, it is well summarized there.

Similar opportunities:

Huddly – Provider of premium tools for video conferencing. Another failed IPO – trading below IPO price. AGB issued research today. They believe it is 50% undervalued. See below. Pareto should issue their research any day. I bought Huddly few days ago. My target is 20 NOK.

BUY, HDLY.OL: SP, NOK 14.20; TP, NOK 24.00 (0.00)
Growth in focus
Provider of premium tools for video collaborationCamera market to accelerate: 47% ’20-’22e sales CAGR~50% discount to peers: Initiate with BUY, TP of NOK 24
High-end VC cam provider with strong profitable growth 
Huddly develops high-end video conferencing cameras for meeting rooms and home offices. The company differentiates itself by offering software-based cameras, which enables advanced features such as zooming in on meeting participants, as well as allowing for upgradeable features, leading to an improved product lifetime. Huddly has a strong distribution platform from partnerships with leading meeting room systems providers (Crestron, Google and Shure), as well as a range of distributors. Huddly has a proven record of profitable growth with a revenue CAGR of 118% since ‘18 and an EBIT margin of 29% in ‘20.Sales and EBIT CAGRs of 32.5% and 28% in ’20-’24e 
We expect an investment boom in new video conferencing equipment for offices when the global workforce returns to offices from H2’21e (i.e. post-pandemic). We therefore estimate the VC camera market for meeting rooms (Huddly’s core market) to grow by 41% p.a. from ‘20 to ‘23e. Additionally, Huddly has recently launched several new products, which more than doubles its addressable market. We expect these new products to both drive significant volume and ASP growth in ’20-‘24e. The combination of these two factors is likely to lead to strong growth in both ‘21e and ‘22e, in our view, and we therefore forecast a 47% sales CAGR from ’20-‘22e. From ’20 to ‘24e, we forecast a total sales CAGR of 32.5%. We have conservatively not assumed any margin expansion in the forecast period and assume adj. EBIT margins of 25-27% (vs. 29% in 2020), but this will still drive a 28% EBIT CAGR from ’20 to ‘24e.Initiate coverage with BUY and TP of NOK 24, ~70% upside 
Huddly is trading at ‘21e and ‘22e EV/EBIT of 22x and 13.5x, respectively, which is ~50% below Nordic high-growth tech peers. This is despite having significantly higher growth. This discount is unjustified, in our view. Hence, we initiate coverage with a BUY recommendation and TP of NOK 24 per share, corresponding to a ‘22e EV/EBIT of 23x and a ~70% upside to the current share price.

Kyoto – IPO that failed this week. Launched at 62.5 NOK, trading at 40 NOK. Very solid company. I have been buying every day. This is the most creasy week of the IPO. Too many deals and almost all failed – they went down after launch. I wrote a detail post on this over the last few days. Kjetil Bohn from Quantafuel has 6% in this. I heard he was buying too. Do read my previou blog on this that describes where is the valuation. This is my top pick in this area.

Scandia Energi – Another failed IPO. It is now trading 2 NOKs below IPO price. Was placed by Sparebank, that has large retail following. Look at what their research did with Circa. I spoke to the Sparebank analyst, he indicated that he would be publishing soon. This could move heavily and quickly. I am buying today more.

Pryme – IPO placed three weeks ago. It is like a Quantafuel two years ago trading at a fraction vs Quantafuel. Pareto published today a research – summary below:

Pryme is a chemical recycler of plastic waste. The company specialises in scaling the pyrolysis process with a reactor capacity of 5-10x current industry standard. This makes it well positioned to capitalize on the growing plastic waste problem, where increased regulatory actions also will benefit the industry. With likely news flow on construction progress, industry partnerships, off-take agreements, recycling certificates and permitting of further plants, we expect the share price to move well ahead of production start at the first plant in Rotterdam next year. Upon success, this will position Pryme with a highly profitable and scalable business model. We also see significant share price upside based on pricing of peers and initiate coverage with BUY/TP NOK 150.

HAV Group – failed IPO placed by Fearnley. Very solid company. See below summary of Fearnley research published today. See below their summary:

What’s new: Initiation of coverage with a NOK 25/sh TP. Buy
Our take: Through the pure-play Maritime Cleantech setup, we see HAV positioned for positive FCF generation, margin expansion and market recognition of its positive ESG impact
We initiate Equity Coverage of HAV Group (ticker: HAV) with a Buy recommendation and NOPK 25/sh Target Price. On the back of spinning off the HAV Group companies into a pure-play Maritime Cleantech machine, we see the stage set for positive FCF generation right off the bat (FSest FCF yield 2021/’22/’23 3/7/10%) on conservative estimates, higher margins (FSest EBIT margins 2.5-12.5%)all supported by a maritime industry that is screaming out for a greener future. Combine this with favorable trading vs. peers (EV/EBITDA’22 of 6x vs. 19x) and a healthy backlog of c. NOK 850m (FSest 70% execution in 2021), we see HAV bound to attract investor interest. Buy


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Energy Recovery – our largest position

Energy Recovery is meeting investors this week. It has just released its new presenation. It provides a good update on the company activities. For this first time it talks about its gas product IsoBoost, that was sold to Saudi Aramco and is in very successful operation there since January, 2020.

It also provides details on its new Waste Water Product ZLD and on Vorteq

Please note, that the company and consensus sales forecasts do not include any revenues from ZLD, Vorteq and IsoBoost. This is all valued at zero. Under our analysis both Vorteq and ZLD has a much higher revenue potential than current water business. That is the reason, why we belive in significant share price growth over the next years.

The presentation does not talk about new refrigeration/climatisation product announced on Q4 call. The product has the highest potential from all products from the portfolio. The growth will be facilitated be regulatory elimination of the greenhouse gasses replacement with CO2 that comes into effect in five years. This will be a new milestone in ERII history.

Africa Energy update from Pareto conference

I just listened to Garrett Soden, Africa Energy CEO at Pareto conference. He brought a few new information:

  • he said that the 11B/12B Deposit should be valued “at least at 5USD per barrel”. That is substantially more than the 3-4 USD mentioned in the below article, that lead us to invest in AEC. That means that the value of the deposit is substantially higher. Look at the article below that will guide to make your ow assumptions and valuation. If AEC would sell 11B/12B this year as the CEO repeatedly indicated, the value should be multiple time higher than its current market capitalization. We are long AEC.
  • He also mentioned that the SA Government negotiations should be concluded this year. This is what was the major drag on the share price lately.
  • He also stated, that we should expect positive news flow in the near future on the Block 2B drilling.


Kyoto Group, an energy storage company started trading in Oslo. The IPO was launched at 62.5 NOK, but the share price went 25% down quickly to around 48 NOK. I called the brokers enquiring what happened. The explanation was: the company did previous funding round only in December 2020. At that time people were able to buy the shares at 25 NOK. So the December buyers sold now into the IPO crashing it. It is surprising conduct by the bankers. It should have been clear to them that this could happen. It is one of the worst performing IPO this year. I would be surprised if someone would not get fired over this.I am still trying to find out, what lock ups they did for the December buyers.

The IPO is down 25% this morning, I believe it is very attractive. I bought in the IPO and I bought a bit more today.

As I wrote in my blog yesterday, Kyoto has a similar product to Azelio. They are in the same stage of development – they are both scheduled to deliver their first products this year. Kyoto has strong partners and strong backing shareholders (CEO of Quantafuel for example). Azelio was a darling of last year. The share price multiplied. Azelio now has a 15 times higher market capitalisation compare to Kyoto. I am sure there are differences, but the valuation gap seems to be quite attractive.

KYOTO Group IPO trading on Wednesday

Kyoto Group ( launched its IPO through Fearnleys and Sparebank. The shares should start trading this Wednesday. Link to the investor presentation is below:

Why is Kyoto interesting?

Kyoto is very similar to Azelio. See below the share price of Azelio ( BOth companies offer a similar product. They are in similar stage. Both are due to deliver its first product to customers this year. Both are ramping up their production capacities. There is one big difference. Kyoto at the IPO price is valued at 550 mil NOK. Azelio has a market capitalization of 5.8 billion SEK. So the market capitalization of Azelio is 10x bigger than Kyoto. That does not seem right for two companies, who have a similar product and are at similar stages of launching it. Based on this back of the envelope calculation we entered into Kyoto.

Do look at Azelio share price movement. Since its IPO. The share price has multiplied. Kyoto should act similarly.

MPC ENERGY – Priced at cash despite significant value potential in firm backlog

SpareBank just issued analyst report on one of our larger positions. This seems to be no brainer investment. You are buying a company for cash it has. We have devoted one of earliers blog post on this when Fearnley issued their reseach on MPCES, which was equally bullish. The company is down due to overall sell off of the renewables sector. We have been increasing our position this week.


Following the recent private placement in MPCES, the company holds a cash position of ~USD90m or a cash value per share of ~NOK34.5/share. This stands in contrast to a current share price of NOK35.5/share and, hence, MPCES is priced at a minimal premium to its cash position. In our view, the company is heavly undervalued, and we will try to explain why in the following bullets.  

  • The company holds a firm “execution pipeline” (firm backlog in usual terms) of 77MW, with a combination of operational assets and assets under development. The capital investment in these projects amounts to USD72m. Equity funds are available after the latest capital raise and the final investment decisions on all of the execution pipeline projects are expected to be reached within Q2 2021. The operational assets in the execution pipeline, “Honduras” and “Puerto Rico” (75% of total capacity), will thus generate revenue to MPCES already within the next couple of months. The company has guided equity IRR’s in the range of 12-16% on its execution pipeline. Further below, we provide a sensitivity to the share price value at different discount rates, assuming MPCES is able to achieve only a mid-range on its guided equity returns. Bear in mind, 75% of the projects are already operational, and it should thus not be all that difficult for MPCES to give a comfortable guidance.
  • In addition to its execution pipeline, MPCES hols a backlog pipeline (backlog in usual terms) of 207MW. 84% of these projects are under exclusivity or have the right of first refusal. The backlog pipeline is also a combination of assets in operation and under development. The company guides equity IRRs in the range of 11-16% on these projects and the company expects to reach a final investment decision on all of the projects within Q2/Q3 this year, dependent on additional funding.    
  • Also, MPCES holds 333MW of assets (early stage development projects) under ownership, which it received as a payment from the sponsor during the recent private placement. Santa Rosa, a 20MWp Solar PV project, is expected to start construction already by Q3 2021 and the project is fully funded.  The remaining 6 projects, 5 in Colombia and 1 in Jamaica, are expected to reach construction in parallel or after the backlog pipeline is developed. The Colombia projects and Jamaica project are both dependent on additional funding.
  • Finally, in its admission document in relation to the listing, MPCES stated that it has a 92% exposure to corporates and privately held utilities and only 8% exposure towards state-owned utilities. This is  an exposure which in our view is preferable as we believe it easier to claim payments from customers that have a direct benefit from your offering (more expensive to pay for grid electricity) than from governments who’s rationale has been to accelerate the growth of renewables rather than focusing on profitability.   


Aker Horison (AKH) sold off together with the Scandinavian renewables sell off. The stock is down from 50 NOK to 30 NOK in four weeks. The company was hammered by the miss-priced IPO of Aker Clean Hydrogen (ACH). Pareto and ABG Sundal came with bullish reports on AKH today which drove the share price 8% up. Price targets are still 100% higher. If we would not have a large position in AKH, we would be buying at these levels.

One of our favorite stocks Biovica presented its quarterly numbers. The company has development an early diagnostics for cancer detection. The company has done multiple studies with the most prominent US hospitals (do look at the presentation for the list). The biomarker is now in the FDA approval process which should be completed in Q2/Q3. The number of successful studies from Mayo clinic and similar increase confidence in the case. The stock has sold off recently without any reason. We have doubled our stake during the last two weeks. It is a medium size position for us. If FDA approved the share price should reach triple digits. Expected this year.

The sell off in renewables might be stabilizing. Our favorite stocks worth your look are Norske Skog (transforming from paper into green packaging), MPC Energy Solutions and Circa. There are more information in older posts in this blog.

Next Biometrics – after the major client announcement last week the stock catapulted from 7 NOK to 10 NOK. We sold 25% of the postion above 10. We have bought the stake back below 9 NOK. Our target is 40 NOK. See the article on SeekingAlpha for the investment story based on Pareto analysis. More info on NEXT is in previous blog posts here.

Africa Energy Corp. announces that the Company’s President and CEO, Garrett Soden, will be presenting at the Pareto Securities Virtual E&P Independents Conference on Thursday, 25/3, at 11:10am CET.

The presentation will be available on Africa Energy’s website

CIRCA – A potential giant in the chemical industry

We have bought Circa shares and Norske Skog (owns 32% of Circa) based on the below article from SeekingAlpha:

Today, Pareto Securities published a research report titled A Potential Giant in the Chemical Industry.

The price target is 30 NOK, 90% upside from today share price

Pareto research summary is below:

Founded in 2006, Circa is a biotech company that has developed the world’s first and only scalable production process for converting biowaste into several high-value biomolecules. While chemicals are essential for the modern society, most of them have hazardous properties, and arenow being driven out of global markets by regulation. This provides a once in a generation opportunity for companies like Circa, which holdsthe pole position in our view. A story the market not yet believes in, trading at a 50% discount to our risked SOTP valuation. As such, we initiate coverage with a Buy recommendation and TP NOK 30 – a potential upside of ~80%.World’s only scalable production process for high-value biochemicals

Established in 2006, Circa has developed the world’s first commercial process for manufacture of the platform molecule, LGO, derived from cellulosic waste. With 15 years of R&D and five pilots, the company has gained strong global interest with its first commercial biochemical, Cyrene.Circa will now commence construction of a 1,000 tonne production facility in France, providing the foundation for several larger plants of up to50,000 tonnes.

Once in a generation upheaval of the chemical market
While chemicals are everywhere and fundamental in daily life and activities, the industry places a significant toll on human health and the environment. Traditional fossil-based chemicals are under increasingly regulatory pressure and will be banned once suitable alternatives becomeavailable at scale. Here Circa stands out with its main product, Cyrene, already widely acknowledged as one of very few biobased alternatives tocertain fossil and toxic chemicals.
We initiate coverage with a Buy and TP NOK 30
In our view, Circa holds the pole position in R&D and process knowhow with a 10-year head start to any other competitor. This along with regulation driving once in a generation upheaval of the chemical industry, we think Circa potentially is positioned for a decade of superprofit. We estimate revenues of EUR 960m in 2030E with an EBITDA-margin about 50%. The share currently trades at a 50% discount to our risked SOTP.
We thus initiate coverage of CIRCA with a Buy and TP NOK 30/sh, corresponding to 13.5x EV/EBITDA’25E.

Rana Gruber is selling at PE of 3.

Summary of SpareBank research published today:

We initiate coverage of Rana Gruber, a Norwegian iron ore producer with likely the world’s most environmentally friendly iron ore concentrate, with a Buy recommendation and target price NOK80/sh (~NOK3bn market cap).

The company is generating super profit in the current market, and we estimate that it trades at 2x EV/EBITDA and 3x P/E, which we find to be too steep discount vs peers at 4x and 7x. In our view, the iron ore market will stay strong through at least 2022, as low cost Brazilian supply is side lined, and based on the forward curve, RANA should be able to pay 36% of its market cap in dividend over this period.

» Rana Gruber is a Norwegian iron ore producer that has 60 years of operational track record. The asset has 100 years worth of
resources, and high quality ore that requires only simple processing. Hence, the company has a low cash cost of ~USD40/t, and will on
our estimates be in dividend position above USD65/t.

Being located in Norway, RANA has a very low carbon footprint and expects to be the first CO2 neutral iron ore miner by 2025 – which we expect will be an advantage against Canadian and Brazilian supply when
competing for European customers. A 100% offtake agreement is in place with Cargill, and the balance sheet is essentially debt free.
» Transition to 65% Fe underappreciated as it will ensure super profit for longer, and protect the downside.

We estimate that Rana Gruber will be in dividend position at above USD65/t benchmark 62% Fe iron ore price – current spot ~USD168/t, and forward curve indicating USD150/t for 2021. This compares well to an historical average iron ore price of USD90/t, but it is fair to note that iron ore moves in cycles, in which bear cycles typically tend to sit in the USD60-75/t range. Hence, it is in our view, important to the investment
case, that the company will be able to improve the quality of its main product to Fe65%, which historically has given a premium of
USD15/t (currently USD31/t premium), as this will add robustness to the cost base and improve its standing with customers as the steel
industry moves towards electrical furnaces with lower emissions that requires higher quality iron ore. The company expects to be a fully
65% Fe producer by 2024.
» The strongest iron ore market of a life time. Super profit is abound among the iron ore producers, with the current spot price sitting at
USD168/t. Our estimates for 2021-22 of USD150-113/t are based on the forward curve, while the USD80/t in long-term assumption is
based on a discount to the historical average of USD90/t. The current market is driven by reduced supply of low cost/high quality ore
from Brazil, at the same time as Chinese demand is sky rocketing following government infrastructure stimulus, which has caused a “Call
on Chinese production” that has high marginal costs and low quality ore. The perfect storm. The questions ahead are: 1) when will the
low cost Brazilian supply come back to the market, and 2) will demand have increased sufficiently to still cause a Call on China, or will the
equilibrium fall within the low cost producers? We believe Brazilian supply will be hampered at least through 2022, and that 2021-22 will
remain at elevated iron ore prices.
» Rana Gruber is generating super profit. At the current NOK62.5/sh, we estimate that Rana can pay 36% of the market cap in dividends
over the next two years.
Moreover, we estimate 2021 EV/EBITDA of 2x, and P/E of 3x – substantially below peers at 4x and 7x. At our
NOK80/sh target price, the combined dividend yield for 2021-22 is 28%, and next year EV/EBITDA and P/E of 4x and 7x. Our target price
also implies 6% dividend yield and mid-cycle EV/EBITDA (5.4x) multiples at our long-term USD80/t price assumption.


The IPO bonanza in the Nordics stopped for a pause. The maket did not take well the ACH listing. The IPO was launched at 18 NOK and within two days traded down to 12.5 NOK. It hammered Aker Horisons (AKH). AKH is down 50% in last few days. There is detail analysis of AKH sum of the parts in this blog below. We bought AKH today.

The major themes for the next week for me will be re-rating of the IPOed companies placed during the last three weeks. There was just too many deals that pushed the companies prices down after lunch. As the blackout period for those expires, the brokers should start publishing research, that will introduce the opportunities to the public. The publications are often the trigger for the re-rating. We have bought the following stories during the last week sell off:

Scandia Energy (SKAND) – energy distributions start up by prominent Norwiegan businessman, who has sucessfully lunched similar company before. This is done at a time when Fjordkraft is alleged to be mistreating investors (see the articles in local press). The blackout for the company is over. SpareBank should publish the research soon. We bought shares three times last week.

HAV Group (HAV) – company listed at 18 NOK two weeks ago, now trading at 15 NOK. Very few people know it. Blackout ends this week. Research publication should happen before Easter. More on the company in a blog post from last week.

Huddly – very solid company. I devoted a full blog post to the company. The end of blackout happened last week. The research publication should be eminnent.

Making money is about great ideas.