Itaconix Share Discussion Threads

[lefrene] 04/4/2024 11:54

You need to do a bit of homework.

[jpuff] 04/4/2024 10:10

I think it would make sense to delist from the London market and list on the Nasdaq to be honest with you. The London market is dead

[lefrene] 04/4/2024 08:58

About time JS brought out some good news!

Strip out the cash and the market says it's worth £14 million? Seems silly to me given the attributes and prospects of the enterprise.

[purchaseatthetop] 03/4/2024 15:47

“and it has a moat of patents needed as the world goes 'green'.”

Actually if they had oil instead the share price would soar! The world has rather relapsed.

[geraldus] 03/4/2024 08:57

Doesn't take many trades to move this either way and with Cavendish gone it is not so easy to get broker information.The question for me now is do all those million dollars worth of established products on the market reformulate with another competing plant based compound or go back to acrylic.What would the cost of that be in dollars and customer satisfaction?

[lefrene] 03/4/2024 08:57

Those with confidence and spare dosh will likely be seeing this as an opportunity to load up. It ain't going bust, it has new lucrative markets opening up, and it has a moat of patents needed as the world goes 'green'.

[dexdringle] 03/4/2024 08:38

The market doesn't believe it. The market doesn't like it. It's all about confidence which has now been severely dented. Jam tomorrow businesses like this exist based on optimism.

What they hell did they think was going to happen to the share price when they announce the loss of a major client ?

Just as we were gaining some momentum too 🙄

[lefrene] 03/4/2024 08:03

Losing $2 mil turnover at 9% net means losing $180k of profit, however by not doing that work we release capacity to do higher margin work.

From the Pro-Active video it would seem that there has been a long and friendly relationship with this end user, so perhaps after a bit of reflection they come together again? Perhaps the party involved feels he is 'owed' by JS for the long standing support from the early days, and understandably is digging his heels in. But the world moves on, 'green' is here to stay, he knows ITX has a reliable product, hopefully they can come to a deal further down the road.

JS would not have taken this stance without the blessing of IP Group. I guess moving ITX products into being seen as valuable, rather than as a cheap commodity supplier, is seen as the way to position ITX as adding much extra value to the end products, and thus worth a premium.

Perhaps the end user if he too is in the 'green' game, can raise his prices to his customers. If this is a fairly simple bulk process, JS may find 15% net as a workable margin? In the meantime as our new products expand there will be available capacity to swiftly respond to any new business.

To replace that lost $180k profit on $2 mil at 9% one needs circa $600k of business at a sensible 30%.

imo the price reaction is way overdone. One might hope that JS brings out some good news with the results, although on past track record, perhaps best not to.

[elsol] 02/4/2024 18:15

PTT,
The new Fcst 24 is an optical financial worst case scenario (low case) assuming the worst outcome and total loss of revenues going forwards for this client (a client that appears to have v low profitability overall and hence low contribution to the value of the firm in totality irrespective to its total revenue - in all probability we will not see the worst case evolve into the actual revenue outturn since the party may order more than the worst case for the rest of FY 24 and may return in FY25. In any case much of the value of ITX is not currently generating revenue but has value nevertheless. Its subsumed in the share price so my take is yes we may have lost a chunk of revenue - its not really profitable so times by, say, 75% then consider R&D projects overlay value so you cannot say we lost x% revenue and that translates to x% share price fall as we are dealing with apples (profitable revenue) and oranges (non-profitable revenue and grapefruit (future much bigger very profitable revenues) that can occupy the plant capacity. See my note on LSE chat re: plant capacity and value maximisation of total ITX portfolio (existing and new customers) which may mean the decision today is actually value accretive as a portfolio rather than destroying value. Its a strange concept but one you have to get your head around with this stock if you are serious medium term invetor.

[purchaseatthetop] 02/4/2024 16:57

Lefrene. That is a big assumption though. That it is only formulation revenue with very low margin that is being lost. That does not add up. If revenues are dropping by nearly $2m to $6m in 2024 from $7.9m that means $1.9m walking. That is all the formulation revenue going. JS should clarify because questions remain.

[parob] 02/4/2024 16:16

But for now the relationship is over and they had to inform the market.

[parob] 02/4/2024 16:13

Having listened to today's interview I get the impression the relationship with this client is far from over and they will be back on more favourable terms (for ITX) at some point.

[lefrene] 02/4/2024 15:52

Kindly posted by someone in the other place.

[lefrene] 02/4/2024 15:03

I believe the 9% is a net margin, a 9% gross margin would be even more pointless.

My point being that even a net 9% is likely not a real profit margin as there are always hidden costs that over time grind a thin margin, even thinner to the point of a possible loss. ITX has reached the point where it doesn't need to 'buy' business, it doesn't have to go cap in hand begging for business.

The market is simply machine driven, reduced turnover entered into the algo, and the non thinking ignorant machine sells.

[tictac] 02/4/2024 14:55

There's a degree to which I think this may be good news. Perhaps a solid business emerging which can afford to push, a little, on margins.

Anyway, the TicTac £68 pound long term target is unchanged!

[purchaseatthetop] 02/4/2024 14:17

I really hope you are right there. With the costs and extra risks of revenue for a 9% gross margin it cannot be worth the effort. Better to have a better reference price with higher value added customers. Good luck.

[lefrene] 02/4/2024 13:23

PTT I believe the net margin on the unwanted business was 9%. As it was bulk I presume the supplied product was mixed with other ingredients to create products to sell into the same end markets as ITX?

9% net margin if one considers cost of capital, and the depreciation of plant and machinery, staff pension plans and all the rest of under lying long term costs, very likely means in real terms that an enterprise would lose money? It's easy to get into a situation where you're working for nothing, the turnover looks good, but there are always a lot of unseen passengers to carry.

JS, has decided that the company will only do business at a reasonable price, plainly he has confidence that other income streams with sensible margins are picking up, and we don't need a department running fast to stand still.

I have had the experience of selling a high turnover business to someone who simply didn't understand that although the turnover was high, the margins were slim (industrial staff employment agency) . I later learned that it took them just 4 months to destroy a business turning over £100k per week.

[purchaseatthetop] 02/4/2024 12:47

Lefrene. But let’s assume the gross margin on the lost business is 32%. That it is product. If the gross margin was 80% then I can see why a customer might feel gouged but to lose business (snd operational gearing) with such a low gross margin seems like the story does not add up.

[cordwainer] 02/4/2024 12:37

I fear ITX having to make legal claims over their IP eventually, but I hope not.
Having lost some custom over pricing, there remains hope that new significant customers may come forth.

[dexdringle] 02/4/2024 11:24

How many other clients will see this and think "maybe I can get my ingredients cheaper somewhere else too then"

It's all very disappointing. Our expectations were for extraordinary. Ordinary simply won't cut it.

You can't just demand premium margins simply because you want them.

[lefrene] 02/4/2024 09:41

It seems the Board have decided that they won't be hustled into being a cheap supplier to some other part of the industry, and will let that end user get basic ingredients from a producer perhaps with less of a moat that needs thin margin high turnover to survive.

The capacity that has been making the thin margin stuff will now be available to produce higher value product. The good news would be that the super absorbents are opening up, and that ITX will have the capacity to satisfy that market without just yet having to build new capacity.

They are demonstrating that they won't be 'owned' by their clients, and sending that message out to the industry. ITX has the patents, their product improves the clients end product at no extra cost above previous ingredients.

I believe they are doing the right thing, even if today the market doesn't like it.

[dexdringle] 02/4/2024 09:17

After a short period of optimism, we are now back in limbo again re whether this thing has significant commercial viability.

The board need to come up with something quickly otherwise we'll be back down at £1.50 before you know it.

[geraldus] 02/4/2024 09:12

Well at least he didn't mention the roof or AI for that matter.