Another contract and partnership with a startup from people at UCL at the very forefront of Computer Technology . Could pay dividends in the future with the building of Data centres and Super computers all constructed with Ensilica ASICS at the core , Could transmute to 10s of millions of ASIC Chips .Good Business |
Another partnership monetized.Another step in the journey. |
 The going concern comment in latest account explains the share price fall and certainly had me rattled until I thought it through. I didn't pick this up in the broker note or presentation. IL was understandably bullish about orders but did mention they are soft pedalling healthcare because of longer lead times. It's becoming clear that whilst orders generate cash initially the design work phase doesn't generate EBITDA and orders are cash flow neutral for longer than is comfortable.Anthony Miller quote below is spot on but don't agree with conclusion. The ongoing need for cash injections made this a classic PE play in 2022 but we are where we are and equity fund raising looks the best approach for shareholders should it prove necessary. I struggled to find institutions on board here in a significant way (11%) so scope for new ones would be a positive.I think the going concern comment could apply to the majority of companies on AIM and it's a new finance director getting a grip on the companies other disciplines. Lloyd's loan rate is far from punitive |
Silly thing is it will put off any serious investor from going near these ramper’s promotions that pop up repeatedly. |
That quote was pre-float, maybe an indication of some shareholders wanting an exit. I haven’t looked back to see what holdings changed after float.
Perhaps the float timimg didn’t give the opportunity they wanted, so they’re looking outside the depressed UK market for new large investors. |
From the article I posted above this is quite revealing - indicates they have an eye on valuation, after moving to production as well as design:
“Because there are long revenue streams that you can see out into the future, these type of businesses get valued on a multiple of revenues, rather than profits, adding value for shareholders,” explains Mark.”
Hence the PR in the US perhaps. |
What odds ?? (if everything goes to plan) How often have we seen brokers top guestimates ever be achieved? |
Most notable in the Allenby note was the observation that if everything goes to plan an aspirational valuation based on its global peers would indicate a 600p a share price
Current price 40p IPO price 50p
Bottom drawer |
When asked about the US consultants they hired to onboard US investprs they said it was early days but that there was significant interest.I think the share price has been manipulated down so they can get a decent entry point |
Uk investor magazine
the long-term outlook is positive. Chip supply revenues should start to build up from this year and that will sharply boost profitability. It can take two years or more for chip supply to begin and then production is built up to its peak, so there is built in growth for many years.
Singer forecasts a 2024-25 pre-tax profit of £2.7m, doubling to £5.5m next year
Singer
A string of material contract wins has started to show this potential.
We initiate with a 100p TP.
nb aAt conference cal,they said the expect another 3 deals to be signed by yr end and that would give further confidence they will not need additional funding.I guess as a result of the upfront payments
When asked about putting themselves up for sale they said the Bod believed the business has great potential on its own. |
Found this filled in a few gaps in my knowledge: |
hpcg
"VC should fund and they know the value of up rounds, whereas for small listed companies it is the fear of the placing that drives the price."
I'd agree with VCs for start-ups, but Ensilica was started in 2001 and had a good track record when it listed. VCs have their problems and the worst (from a new investor perspective) sort of new issue is usually where the VCs unload all their shares with minimal new funds being raised.
"Companies should be growing much larger before listing and then use listing to be able to offer share-based payments and incentives well down the org chart."
Getting a listing just to gain the ability to offer share based payments and incentives is a rather expensive way to sort out a staff remuneration package!
You are right when you say the UK stock market is dying - the decline in new issues demonstrates that as well - and it will continue to be like that until we get back to its purpose of raising capital. |
Valhamos - I disagree. The UK stock market, which to all intents looks like in its dying days, is about the worst place for a small company to look for funds. Companies should be growing much larger before listing and then use listing to be able to offer share based payments and incentives well down the org chart. This is how many US companies grow. VC should fund and they know the value of up rounds, whereas for small listed companies it is the fear of the placing that drives the price.
Margins - these dramatically increase for the production element. The design phase is done at a lower margin in order to win the business. Allenby make the point by labelling the NRE as a lead indicator for supply.
What the company needs to be doing, if it can, is to raise the cost of the design phase element so that each project covers its own cost and share of SG&A and interest. I don't know what the competitive situation is like for them to be able to do that. |
Hallelujah |
It would be interesting to be a fly on the wall during float conversations, to find out if other funding routes are unlikely or not possible or not sufficient, or just too hard work.
Unfortunately the area is badly tainted by financial “operatorsR21; who have the contacts and the BS to get away with floating unproven and uninspiring business models, dressed up in kings new clothes to convince new investors that their amazing opportunity is a once in a lifetime chance.
The story will always be that the opportunity will go missing unless they move fast. |
Cheers, multibagger.
Actually there were other comments by Anthony Miller that were either mischievous or indicated he doesn't really understand the business. So much unwarranted negativity! |
In the good old days, companies used to prove their business models, become profitable and then float for big expansion.
Although I may have old rose tinted pre-AIM glasses on.
Actually they still do and often take a dive as the float price was 50% too high - probably because profit projections were.
Actually in the good old days you had 5 years to get your business going, without instant global competition, so I guess a prompt float is often necessary now if the opportunity is good. Although opportunity is in the eye of the beholder! |
A very well made point Valhamos ! |
I'm going to have to disagree with the idea that Ensilica IPO'd too early. The company wanted funding for its planned growth in its design and supply business. If it waited until it didn't need the funding what would then be the point of an IPO? And where would it have got the funding to grow if not from the stock market? Surely that's the primary purpose of the stock market? I guess too many private investors think the stock market is there just so they can watch share prices moving up and down. |
looks like there's an overhang to clear. |
Yump,
You'll find him on LinkedIn: |
SG
Slightly worrying changes on those figures. Just have to wait to see if their capturing of contracts in what is a growing market will give them a higher rating in one way or another. Shame they went to market too early (for the UK anyway). Net debt wouldn’t matter in the US if a business was rapidly getting market share. |
Who is Anthony Miller ? Seems quite a balanced article. |
Tic toc Pug. |
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