Mycelx Technologies Share Discussion Threads

[stewy_18] 19/11/2014 08:27

Yes, not my best idea to buy at 500 pence. It looks a lot more attractive at these levels though. Long term it will probably do ok, but they are way off on their 2014 predictions ($25 million revenues). It looks like $16 million. Funding also an issue, but pipeline remains strong. Not great news, but not enough to make me sell. Will wait a couple of years to see how this plays out.

[stegrego] 19/11/2014 07:22

Funding needed.... Crash coming.

[lavalmy] 22/9/2014 18:04

Hi Stuart (and anyone else out there)

They did indeed do a presentation, available on their website. Overall nothing exciting, but page 9 I found interesting. It gives a timeline for large projects between signing the contract and recurring media sales (and a few other things). Of note is the variability and the fact that half of them have yet to produce recurring sales, including the Jack/St Malo at the bottom. We shouldn't forget also the time required before a contract is signed, which can be substantial.

Another thing about the graph is the difference between lease and sale timelines. They have also already spent $1.5mn more on leased equipment post period end. I am beginning to see the logic in it. I wonder though if it would not be better to have real finance leases as opposed to bank debt. They don't as yet pay US tax, so a lease company could benefit from the NPV of the tax benefit. OTOH, there could be cross-border complications. It has been a long time since I worked on lease deals, so am not up-to-date. Another question to ask Connie.

Cheers

David

[lavalmy] 14/9/2014 17:10

Stuart

I don't think it is high risk, but each has their own idea of what constitutes risk. My 4x sales approach is about right IMHO, though I would like to clarify a few issues on the tax front (the charge has been historically high due to Saudi withholding tax, which is treated as income tax, but is really a withholding on certain payments from Saudi to abroad. I can only assume that they sort this out and it looks like they have, but I think at the beginning they were bit naive about this sort of issue. To wit the sales tax in the US, where I remember they had a problem.)

Now Numis is sticking with about $37 mn for next year, which makes £6-7 per share by my valuation. So a reasonable margin for slippage. But it is odd that management is sticking to this year's numbers and the broker is shaving a bit off. I don't remember seeing that before. Who knows the business better? And would management risk being wrong again?

Connie is going to a large water convention in Texas in October. One of the themes, which MYX are not directly involved in, is fracking, where it appears that in 2013 US companies spent $11 bn getting water to where they are fracking (often in arid areas) and from where they are fracking to somewhere they they could clean it. I don't know the issues about cleaning water used in fracking, but at some point in the process there must be a need for separating oil and water. The numbers are huge.

So MYX is only really scratching at the surface at the minute. The repeat business that they are getting really is a testament to the quality of their technology. Others are getting interested, see the pipeline. The market is already enormous and standards are getting more and more stringent. Even a small share of the existing market would be gargantuan.

I have thought occasionally that someone might try to buy them, but I sense that they really do want to build a substantial business before possibly selling. So I don't reckon that there is a catylst to move the share price higher in that respect. It could indeed be dead money for a year or two. OTOH I suspect that there will be a couple of contracts announced to be recognised this half, given their current attitude.

Cheers

David

[stewy_18] 12/9/2014 21:21

Much appreciated David. This is a high risk investment. Lots of pitfalls, but it could multi-bag over a 3 year time frame. I have a smallish position and will keep it for now.

[lavalmy] 12/9/2014 16:40

Hi Stuart

A pal cut and pasted this from Numis

'Numis: MyCelx Company Update Trading update flags 2H14 revenue bias

MyCelx's trading update flags a 2H14 bias to revenues due to a customer related delays, however, management expect full year revenues to remain unchanged from previous expectations. We take a more conservative view given this bias and potential for some project slippage (we estimate 1H14 revenues of $7.4m and 2H14 $18.8m) taking full year revenues down from $27.4m to $26.3m. The company remains confident in growth of the business given the strength of the pipeline which has underpinned investment in recent new hires and infrastructure.

Order flow: MyCelx sold an offshore water treatment unit to a global IOC in 1H14, marking the fourth sale to the same customer and a testament to the company's technology. We understand that trial success is having a positive impact in attracting new clients and new trials are underway with significant oil producers in the North Sea and Oman as well as India.

Higher costs impact operating profit: Additional senior hires and costs associated with professional services have led us to raise our SG&A estimates leading to lower EBIT and EBITDA. New senior hires include General Managers in Houston and the Middle East and technical field services. A new warehouse has been added in Texas to accommodate lease equipment for the Americas, and the company's lease fleet benefited from the addition of 12 further skids. 2014 EBITDA moves from $5m to $2.1m, and 2015 from $8.7m to $5.2m. Our net earnings impact is somewhat offset by MyCelx continuing to benefit from the carry forward of tax losses. Net income falls from $2.1m in FY14 to $0.74 and $4.8m in FY15 to $2.9m. Importantly the business remains profitable and the topline continues to grow rapidly. We expect to see strong operational profit in 2016 and beyond as MyCelx takes advantage of the impact of operational gearing and new senior hires.

Funding: We forecast year end cash of $5.5m as receivables are collected and MyCelx draws down on available lines of credit. We see year end net debt of c.$0.5m and our forecasts suggest the company is funded for 2014/2015 based on current projections.

Valuation: Please find a full forecast break-down attached. MyCelx currently trades at a premium to the OFS sector at 21.4 times FY15 EBITDA. Our price target is DCF based at 450p/share (from 477p/share). We continue to believe MyCelx will attract a premium rating given forecast sales growth of 23% and 41% in FY14 and FY15 respectively.'

So jam in 2016, funded for 14/15, dependent on growth rates. My view is that the work done and being done since the IPO has yet to show up in revenues.

My pal has sold out, BTW, after the last results.

Cheers

David

[lavalmy] 12/9/2014 15:05

I see that Numis have upgraded to buy from hold, target 472p.

Cheers

David

[stewy_18] 12/9/2014 15:05

Thank you for the update David. Back to sleep for 6 months:)

Best

Stuart

[lavalmy] 12/9/2014 14:45

Hi Stuart

I was waiting until they put the presentation on the website - they haven't yet, and maybe are not going to do one, nor a roadshow, as the credit line (10mn not 100mn) gives them adequate funding. As you say, they will have to move smartly to hit their numbers ($27.36 mn per Numis in March), so more like $20 mn - something of a stretch, but they were non-commital in the results, so maybe they will, maybe they won't, doesn't look like they know yet. BUT they said 'We are well-positioned to execute further opportunities as we convert our growing new business pipeline which contains some substantial revenue prospects for the second half ...' I.e. non contracted business might well drop into this year, as well as the contracted and normal media sales.

WRT to media sales, I think you misread it slightly. She said that seven projects would become operational and those seven would generate an additional $3.5 mn, conservatively, of media sales p.a. I tend to use four times sales on the back of my envelope, so in the context of a £50mn Mcap, it is indeed material. More broadly though, it does not look to be long before the contribution from media sales will cover all the (increased and still increasing) cost base, maybe the end of next year? And you have to remember the long lag between incurring the costs and generating the sales (yet another reason not to think about p/e ratios at this stage). You reckon 2015, my money is on 2016 for serious lift off, but what the heck! The $114 mn pipeline, and its rate of increase, is indeed eye-popping. Media sales of say 1/3rd would be near enough $40 mn p.a. Of course, I would expect the pipeline to carry on increasing, though not at that % rate, and eventually the sales cycle to reduce, as well as increasing recurring media sales.

Even more broadly, they seem to be doing all the right things. 'We believe the path to long term success and building a global brand is achieved by engaging in large projects which build global recognition even though timelines can be long.' That is the right sort of thinking, though like you they probably would have wanted and expected quiker progress.

I, for one, am not even dreaming of getting out, indeed, if the share price stays dull and couple of other investments come to fruition, I would be tempted to add.

I don't think the brokers work that quickly. I will see if I can get the latest when it comes out. N+1 Singer also cover MYX, and allegedly have higher numbers than Numis.

Cheers

David

[stewy_18] 12/9/2014 13:39

So quiet here nobody even commented on the H1 results.

Revenue of $7.5 million. They are going to have to go some to hit the $25 million target in H2. They said it would be significantly H2 weighted but $18 million. We'll have to wait and see.

Total size of pipeline increased 159% to $114 million. I am struggling to reconcile the pipeling with the current sales. This should really be popping now.

Recurring media sales estimated at $3.5 million annually. OK. But it is a £50 million market cap.

I think 2015 will be the breakthrough year to be honest. They are making progress and the size of the contract wins are getting bigger. I will give it a couple more years, but I expected progress to be quicker here.

Cash an issue also. Interesting to see the have increased their credit line to $100 million. Rapid growth is costly.

Anyone have the latest broker noes?

Best

Stuart

[lavalmy] 28/8/2014 08:04

Stuart

The latest broker note I have is dated 20 March. I expect that they
will update after the 12th September.

WRT to competition, it all depends to what degree of purification
the project needs. There are other ways at the higher ppm rates. I
note that they don't make a song and dance about the purity but
stress 'this win demonstrates how the MYCELX systems are designed
to manage difficult and fluctuating influent conditions and volume,
and is therefore ideally suited for turnaround projects and
emergency response given the reliability, mobility and small
physical footprint'.

I guess the lack of a contract amount is due the fluctuating
conditions and volume, i.e. they don't know how much media will be
required.

I still suspect that they might need more capital, so am keeping an
eye out for any hint of roadshows etc. Last year they cancelled
one, mainly, IMHO, because the growth rate was slower than they had
thought. OTOH Numis said in March 'We see potential for MyCelx to
expand this credit facility as required to fund growth in 2015 and
beyond.' So who knows?

Cheers

David

[stewy_18] 28/8/2014 06:02

Yes, What worries my a little bit is the scentence above that:-

"We faced tough competition to secure this contract"

I thought MYX had a moat because their purification system removed
more oil particles from the water than other purification systems.
It may be the competition has caught up?

From the Mycelx website:-

MYCELX is doing things no one else can do, taking
oil-free water to new levels. MYCELX is helping to solve the
industry's toughest problems

If anyone has the latest broker notes I would love to see them.

Best

Stuart

[lavalmy] 27/8/2014 17:13

Stuart

I should have added "significant" is probably significant!

[lavalmy] 27/8/2014 16:56

Well spotted Stuart.

It looks like it is an emergency and/or short-term contract, but
what the hell. Against stiff competition too. She seems to suggest
that the additional personnel have had something to do with it -
maybe they have hired someone with the right connections.

Even if some other contracts slip a bit, this will buttress the
forecast numbers.

Overall though, more and repeat business can only help to enhance
MYX's reputation and profile.

Cheers

David

[stewy_18] 27/8/2014 08:20

Connie Mixon, CEO of MYCELX, commented:

The Middle East region remains an area of specific opportunity
for MYCELX and we are delighted to build upon our market entry into
Kuwait earlier this year with this new contract award. We faced
tough competition to secure this contract, which is further
evidence that our technology and treatment systems offer leading
edge performance in extremely challenging conditions.

The nature of this contract will generate significant revenue
most of which will be recognised in this year and is a
demonstration of how our investment in personnel and infrastructure
for new business development in the region continues to yield
significant dividends.

So this years results should be better than expected. Lets see.

[stewy_18] 27/8/2014 08:16

So quiet here, I missed the latest contract win:-
'http://www.investegate.co.uk/mycelx-tech--corp---myx-/rns/middle-east-contract-win/201408260700188994P/'

target=
'window'>http://www.investegate.co.uk/mycelx-tech--corp---myx-/rns/middle-east-contract-win/201408260700188994P/



No figures to furnish the RNS but they don't normally announce
these contracts so I'm guessing it is significant. New country
also.

Back to sleep for a few more months.

Best

Stuart

[stewy_18] 08/7/2014 10:10

anyone know why there is a difference between MYX and MYXR on google finance? I'm guessing MYX is the correct ticker because of the price drop.

[stewy_18] 07/7/2014 11:50

Yes, The good news was always priced in at this level. So any bumps in the road would be met with a drop. Will do well on a 3 year time frame me thinks.

[lavalmy] 07/7/2014 07:45

Trdaing update out today



Fairly lacklustre, but still expecting to hit the FY forecast. Lots of fingers being crossed, I suspect.

Given the new hires, new lease equipment, warehouse (bought or rented?), delayed sales etc, new capital might well be required at some stage. Although, historically they have lived within their means. The drive for growth is going to create a mismatch between upfront business development costs and eventual sales - largely difficult to forecast until they have more experience with their sales cycle.

Not excited and not bothered, really. Very much for the long term, IMHO.

Cheers

David

[lavalmy] 14/5/2014 15:14

Well under the radar, Skip. Not surprising if the AGM goes on without an RNS to update on progress. I wonder what was talked about at the meeting.

Long periods of silence punctuated by longer periods of silence, but I am not convinced their hearts are really at the small punter level. A pal went in my stead to a investor presentation at the interim stage and was told that they don't answer questions from individual investors. Most other companies regards that as the purpose of these events.

OTOH progress seems good.Only 4-5 medium possibles from the 12 in the advanced pipeline need to convert to actual contracts for this year's figures to be met. 45 in the less advanced pipeline, probably increased with the recent Offshore Technology thing which was last week.

A point of confusion wrt to announced contract wins etc is that, IMHO, they include a certain amount of consumables in the value. This explains major discrepancies bewteen the bar chart amounts for consumables versus equipment sales in the presentations as opposed to the statutory accounts. It also explains the following from Numis 'Installation of seven projects in the Middle East, Australia, India, Columbia, Albania and a US oil terminal should lead to further media sales from late 2014.' Add in the Jack/St Malo starting in 2015, and consumables could really start to take off.

I don't know where this is going to end up, but it will be much, much bigger. Numis are forecasting 27.4 and 37.6 revenues for 2014 and 2015. Given the more conservative approach after last year's miss and exceed, I expect more like 30 and 45.

Cheers

David

[skip10] 22/4/2014 11:57

Glossy Annual report out



Looks OK. We're under the radar here.. I wonder if anyone cleverer than me can convert this BB to encompass MYXR, or start a new one. Then there might be more than 3 people reading it.

[grahamhacker] 14/2/2014 13:56

LaValmyMany thanks for reply - sorry for delay

[lavalmy] 01/2/2014 09:20

Graham

It is to do with US securities law. One cannot be disposed of easily unless certain declarations are made, but they can be transferred from that class to the other after a period. The website has details, not entirely easy to understand.

Otherwise they are exactly the same.

The company has been haphazard itself about under which ticker they put annoucements.

Hope this helps

Cheers

David

[grahamhacker] 30/1/2014 13:01

I have shares in MYXR (no bb) & after 6 months have only just noticed this one (MYX)! Sorry to be a pain but does anybody know the difference between these 2 tickers? Many thanks Graham

[salpara111] 30/1/2014 10:24

Yes we do!
Hate the spread on this so have set a limit order and will see if I can get it filled in the next few days