TEK tock tek tock
More to come from TEK Capital?
Dear reader,
Having recently conceded a couple of temporary setbacks (purely from a price YTD perspective) from DEC, KZG, IX, DGI9 and SED, I was pleased to see one of the OB20 has now over double bagged since its inclusion in the OB20 is the 20 are now overall in profit YTD.
TEK:
Running my value model and plugging in the latest share prices for BELL, LUCY and SALT I see TEK’s NAV remains at a 46.4% discount to market cap - even after a 130% YTD rise.
Updated 19/02 - 2 working days later and it’s jumped from 28p to 32p NAV….. a 43.6% discount to today’s ask price of 18p a TEK share.
How on earth you might ask? Well, the recent IPO from SALT has a lot to do with that. But the newsflow hasn’t changed (much) from what I covered over the past months. SALT’s chair gave a great presentation and SALT’s CFO and CEO presented well with updates that several UK supermarkets are in discussions, but the fact and market potential of SALT is no different than pre-prospectus. It heartens me that TEK is making progress even when market sentiment is adverse. It proves that stock market eventually is a weighing machine, and if you have a conviction then do not panic and sell. Recurring 30 tonne orders of Microsalt from a global food business (cough Pepsi), and US supermarket stockists far larger than Sainsburys (CVS has 8,500 vs Sainsbury has 1,500) got weighed eventually.
But interesting to note, too, that you can STILL buy SALT by buying TEK (who own a large chunk of SALT) at a discount. A very decent 16.66% discount.
Not forgetting that it’s a 16.66% discount plus you get 91% of Guident, 7% of BELL, 40% LUCY and 100% of ReVive all for free.
Why free? Well 15p covers just 83% of the value of the Microsalt shares since TEK own 76% of SALT.
I see no reason other than it has not been IPO’d why Guident is worth any less than SALT. I set out the known newsflow for Guident in this article. There are millions of lives lost each year to excess of salt, but one day soon billions of robots and drones needing guiden(t)ce. Even before science fiction becomes fact, Autonomous Vehicles (AVs) are already emerging rapidly for mass transit.
Update 19th Feb - today TEK confirms the news I reported about Adastec Corp’s Autonomous Buses. It turns out in October 2023, Guident established a Strategic Partnership Agreement with Adastec, a renowned global supplier of autonomous driving systems who are based in Michigan, U.S.A. but have a strong R&D presence in Turkey, Netherlands and Sweden to collaborate with bus OEMs worldwide.
Also the new about Adastec's flowride.ai system enables SAE Level-4 operation for buses manufactured by Karsan and Vicinity Motor Corp. Guident's teleoperation solution, integrated with flowride.ai, represents a breakthrough in autonomous transportation, offering full-scope autonomous vehicle monitoring & control coupled with fleet management. We believe that this technology integration elevates the safety of self-driving technology. Guident's commitment to deploying the safest and most efficient automated public transportation aligns with Adastec's mission. Beginning this year, Guident's RMCC solution will be integrated into Adastec's automated buses being deployed in the U.S., solidifying its shared vision for the future of mobility.
Meanwhile for LUCY the addressable market size is $148bn and forecast to grow to $250bn by 2030. Deals with Nautica, Reebok and Eddie Bauer in 2024 make this an exciting pick despite the past poor performance while it got going. Their latest Q4 quarterly update is imminent and my last view on LUCY and my forecasts you can read in this article.
Lucyd “are easily the best” is the conclusion in this video.
ReVive meanwhile is a concept product which could further revolutionise transport range anxiety and particularly EVs, but PHEVs and HEVs too. Think about regenerative braking and how that has changed the world. It is now commonplace and in fact in 2024 you’d have to go really downmarket to find a car without regen braking or “start/stop” as it’s commonly called. So what about generating power over the bumps in the road? ReVive claims a 5-10 mile range extension to an EV and is the sort of business which could be licenced to OEMs to draw in a revenue stream.
On the 19th Feb TEK announced following collaboration with a leading tyre manufacturer, and successful proof-of-concept testing results ReVive is actively engaged in rigorous testing both in controlled laboratory environments and on vehicles in real traffic scenarios. Progress is underway with multiple car manufacturers, to assess the manufacturability, cost, and the best approach to rapidly bring the technology to the world market.
This groundbreaking technology aims to produce electromagnetic regenerative shock absorbers with exceptional energy densities, capable of capturing and utilising the vehicle's vertical movements that are part of everyday driving on public roads, which are currently dissipated as wasted heat energy. An additional patent application has been filed by Guident to enhance damping characteristics while generating energy based on road surface conditions.
Which leaves BELL, now funded, with an established market-leading pair of products for oxygen therapy which have been optimised to lower costs for higher margins, and an order book of 6,500 units and growing where they tick certain redemption codes which makes them attractive to equipment distributors to the point where BELL are the only game in town from some vendors.
And that still leaves TEK’s research business, and future forays as it perhaps looks to its 6th venture now three of its five businesses are listed.
I have maintained a potential upside of £1.56 per share is possible over the next two years. TEK’s share price, overall, would need to grow about 5.5 times to get there. That’s because I see 5 businesses with USPs serving 5 enormous addressable markets.
But another way to look at this is simply this.
If BELL can return to its prior highwater price (£1.46 a share), if LUCY the same $7.50 a share, if ReVive can achieve 60% of the estimated $125m target value, if Guident were valued in an IPO and beyond in 2 years at 5X its NAV today, and if SALT tripled from here in the next 2 years to £2.85 a share, then you arrive at £1.55 per TEK share.
Is it quite so impossible from that perspective? BELL has advanced far further than when it was at that previous high, and LUCY the same and is regularly being compared to - and in comparison videos beating global brands like Ray-Ban, Amazon and Bose. I guess for LUCY it depends whether you believe in the wisdom of crowds and the consumer, plus driving towards cash generation. ReVive is a unknown quantity but the increasing volumes of vehicles and tangibility of range anxiety isn’t. Guident at 5X is no more fanciful than SALT at 5X (hint: SALT is half way there already). 5X could be far too low for a technology that puts humans in the loop in a rapidly arriving AI/Robotics world.
What if it doesn’t? I am not saying it’s guaranteed - it’s an upside forecast. But at today’s 15p a share, the risk/reward of TEK remains such that if even 1 out of the 5 succeed in a meaningful way the pay off could be several times today’s share price. All five might succeed is my point.
This is not advice
Oak