Accsys Technologies Share Discussion Threads

[chestnuts] 05/5/2006 16:17

alan what does it say about axs

[alan russell] 05/5/2006 16:10

Tipped in IC

[alan russell] 01/5/2006 09:12

I fully accept that my numbers are little better than guesswork and may well bear no relation to how the business progresses, however I cannot accept that to do a few calculations is meaningless or a waste of time. How can you assess the investment potential without so doing? Without numbers an investor is buying "becuase it seems like a good idea". Of course events may prove the latter to be correct but it does not justify it as a starting point. Taking the best approach to assessing an investment and being right are two different things.

Some years ago as the dot-com boom was in full flow I considered buying shares in Vocalis (remember them? - speech recognition software). My back of envelope calculations told me that in order to justify the then share price its software would have to be installed in half of all PCs produced. As this seemed unachieveable I did not buy. Was I right? Well that depends. The company went bust a couple of years ago but between my decision and March 2000 the share price doubled. Someone ignoring my view could still have made good money - or lost it.

I acknowledge that the AXS story sounds very interesting (that's why I'm on this thread) but it still calls for some assessment of the numbers. Can it be wise to buy based only on the story and ignoring the numbers? If so then the present market cap is irrelevant, so you would buy if the share price was twice what it is. Or ten times, or a hundred times - this is plainly illogical. As difficult and vague as it is, so regard must be had to the potential revenue, costs, profits ate and this related to the present share price.

The company describe its present plant in Holland as a "large scale pilot plant". The new factory with 30,000 cmpa capacity is described as a "commercial scale production plant". What it is called is irrelevant; it's the capacity that counts. The company has stated that it is its intention to seek revenues from licensing so that may bring in large amounts quickly although that means a modest pe would have to be applied (as such per-geographical-region revenues would not be repeated) until royalties flow.

Although uneasy about the level of the share price I may yet buy a few. I am just trying to exercise a healthy scepticism about such an attractive story. I like the plan of applying new technology to an exisitng product. The raw material, distribution network, sales outlets etc. are all in place. If Accoya is accepted by the market place then ASX should do well. How the share price will behave over various time periods is another matter.

[lh2375] 25/4/2006 14:34

Alan Russell,

From my understanding plant in Holland is a test plant, therefore not sure how much volume a production plant would kick out. I also believe that its AXS goal to license technology rather than manufacture themselves.

[fusebox] 22/4/2006 19:21

alan russell

I think you are wasting your time doing any arithemetical analysis at this stage. You may as well just throw a few numbers into a hat.

Let me give you an example over 10 years ago TFC jumped into the telematics arena.

The share flew up then collapsed. The market for telematics was also in the billions.

However a decade or so further on and they have only just started to make money. Even now there is no real visibiity as technology changes all the time and other players have entered the same arena.

That said you could be waiting years for any news on profits.

[damanko] 22/4/2006 18:17

Fair post, and decently interpreted figures, by the look of it, Alan. Why buy the shares? Good question. I have a feeling that a lot of the above figures are fairly meaningless, in terms of factory numbers, production (even profit) etc. I say that as I wonder whetehr the tie in with BSW is to prove the technology works and is saleable/profitable, and then simply sit back and earn the "real" money through licensing the technology.

I have to admit I am biased here...... as a longish term holder of STG Holdings, I believe very little of what is put out on this outfit. What I will believe, if & when it happens, is real revenue, and real profit. Jury stays out. Have to admit that the market seems to like AXS though, so I shall look forward to being proved wrong.

[alan russell] 18/4/2006 20:52

I'm very tempted to buy a few AXS but am finding the cap of £113M somewhat off-putting. That's a hefty valuation for what is, let's be honest, a blue sky company. So I've been fiddling around with numbers to see how it stacks up. Nothing fancy (how can it be anything else?) just back-of-envelope guesswork.

Willy P-B reckons the relevant market is 40m cfpa at £540 pcf ie an annual market of £21.6bn. He says "if we just pick up one or two % of the market that would still see our market cap move by a significant multiple" (source Growth Investor article dated 22/3/06). OK, he is there to bang the drum and may justifiably exaggerate a tad, so let's say the relevant market is 20m cfpa at £500 pcf (anything for easy calculations!) a total of £10bn pa. 1% is £100m pa at a margin of say 10% to include all overheads (this is the world of building materials not pharma or software – 10% is good) is £10m pa. If market share is seen to be growing to 2% and beyond over a number of years the shares could attract a multiple of 20 times profits, a cap of £200m. Very commendable but not that wonderful – if a reasonable forecast is to increase by 70% that scarcely justifies the risk. Maybe the margins will be greater, maybe the market share won will grow rapidly to 2% by the end of next year, who knows? However the volume processed calls for the back of another envelope.

Let's assume a 1% share of 20m cfpa by end 2007. That's 200,000 cf. The factory under construction in Holland will treat 30,000 cfpa (source IPO announcement). So that volume requires nearly seven such factories operating for most of next year. Where are they coming from? Clearly AXS cannot build all these so presumably licensees will. The likes of BSW may build plant at one of its sawmills but it won't contemplate a second until the first is at near full capacity. If Willy P-B is right and the market is 40m cfpa and ASX win 2% quickly the manufacturing capacity shortfall is even more marked.

Collins Stewart forecasts full-year pretax profits of £10.5, £35.6 and £72.3 for 2007, 2008 and 2009. Gosh! Good if it happens but that's 50 factories operating in three year's time! Presumably some CS foresee some revenue in the manner of non-repeating licence fees but even so.

Maybe this is one of those shares you buy and wait for the first few deals (hopefully) and then sell as the price soars prior to falling most of the way back, in which case OK.

As I said at the top all of this is just guesswork but if you can't get the numbers to work at that level, why buy the shares? Any views?

[lh2375] 13/4/2006 08:34

I think the near 3% spread puts some people off buying, However just 1 licence will sort all that !!

[promethean] 12/4/2006 11:16

very interesting story, although speculative it seems that this one could fly...

[nockybalboa] 08/4/2006 08:40

Those boys over at www.fairshare.biz seem to be in the know as usual

[lh2375] 03/4/2006 11:42

Gets a mention in the Sunday Mail, as I buy by Carl Stick (Rathbone Special Situations manager), Extract below

".......A recent large buy has been in Accsys Technologies, a company that is developing a treatment to harden soft woods. The process, known as acetylation, will allow manufacturers and builders to reduce costs of buying hard wood and also reduce the environmental impact associated with current wood preservatives.


The company has a test plant in the Netherlands, which is being used to supply potential customers and licencees with test quantities. It is likely that the company will license out the product rather than manufacture it itself.


Stick says: 'The wood industry is huge and often overlooked by investors. The wood used in manufacturing has to be hard and weatherproof and it's becoming hard to use teak or mahogany.


'The company is on the road to commercialisation and just one licence deal will be huge. However, this is an 'if' stock at the moment - it's not a no-brainer.' Although the stock is listed on Aim, it is priced in euros and currently stands at €1.18................."

[damanko] 20/3/2006 18:19

Fryern, any news on the STG front? All gone quiet, last we knew was they were planning to offer "an exit" to shareholders? That was 6 months or so ago...

[fryern] 20/3/2006 10:48

Well they have been developing the technology for the best part of 10 years.

We are now into roll out.

One for your pension fund.........

[Abuse team] 19/3/2006 15:18

Post removed by ADVFN

[damanko] 19/3/2006 14:11

Oh dear, Sunday Telegraph tip.............. kiss of death, and it was looking so good.

[zombie_123] 19/3/2006 09:26

Hi New to this thread....looks very, very interesting....see todays Telegraph tip......Any broker notes/forecast? are we looking years/months before profitability?

Companies seeking to exploit new technologies are always a risk, but they can potentially be very exciting investments. Accsys Technologies is an environmental science company that owns a number of patents on industrial processes.

The main focus of the company is on a treatment for softwood, which gives cheap pine the durability of tropical hardwood. The process, called acetylation, is non-toxic, unlike current wood preserving techniques, and is thought to offer significant performance benefits over rival processes.

The process reduces swell and shrinkage in wood from 10 per cent to 1 per cent and Akzo Nobel, the chemicals giant, has said that it will guarantee its paints used on treated wood for 10 years. Accsys listed in October at €1 per share, and is now trading at €1.26 (87.5p). It raised €27m during the IPO, and will spend that money building treatment plants in the UK and the Netherlands.

However, the intention is to use these as pilot plants to demonstrate the potential of the technology, which will then be licensed to the big wood companies. Discussions are already under way and Accsys looks highly promising. Buy.

[damanko] 03/3/2006 06:42

No problems..... for a moment I thought I'd changed my name..............! Fact seems to remain that it has failed to disappoint in any manner since the IPO. My interest in AXS is by way of being a shareholder in STG, which for years was the ultimate holding company, though STG was itself acquired last year by Macniven & Cameron, another unlisted holding company. As logs as AXS continues in this vein, the holding co NAV will be ticking up.

[starbuck] 03/3/2006 01:42

Oops!
Well I started one board but obviously not this one !

[damanko] 02/3/2006 18:24

Steady as she goes..... no silly reaction to positive newsflow, just ticking up as the months go, anyone have any news about STG Holdings / Macniven & Cameron in relation to this?

[mdchand] 02/3/2006 10:41

kdwilson - CS seems to agree with you

Accsys Technologies – UK License/ Partnership agreement with BSW, the UK's largest sawmilling business.

Analysis

This is a significant step in the development of Accoya, and follows on from he Group's licensing agreement in the Middle-East signed in December.

The agreement gives BSW the rights to become the exclusive supplier and producer of Accoya in the UK & Ireland and follows on from extensive trials which have taken place over two years. Clearly this agreement is not only a major commercial opportunity for Accsys but also a significant validation of the Group's acetylation technology.

The presence of BSW as a partner is likely to accelerate the acceptance of the product by major wood users and as such we would not be surprised if this UK agreement acts as a catalyst to further major agreements in other territories.

Action

Accsys is an emerging technology company which is starting to deliver ahead of expectations. We were not expecting any major deals to be signed before the end of the 2006/7 financial year, instead we have seen the Group sign two in the current financial year. As the Arnhem plant opens this year (and we believe that this is currently on track) and further deals are announced we believe that the shares will continue to run up as the market anticipates the outstanding financial potential for the Group's licensing and royalty led business model.

[kdwilson] 02/3/2006 08:03

this is starting to build into a great story...all the pieces starting to fall into place for major revenue and profit growth. this can double from here over the next 12 months!

[fryern] 27/1/2006 15:41

Share price doing rather well (slowly) - star performer of 2006 probably......