All Norwegian Shares part 3 – Nr. 31-45

And another 15 Norwegian stocks chosen from my Google Sheets random number function.This time only one “watch” candidate and not even a strong oe. C’mon Norway, you can do better !!!

31. KMC Properties

As the name indicates, this 212 mn EUR market cap company (IPO in 2021) is active in property. They specialize in industrial and logistics property that seems to grow quickly through purchases. The share price hasn’t done much since the IPO and seems to tarde close to NAV . “Pass”.

32. Argeo

Argeo is an 8 mn EUR market cap company that was IPOed in 2021. The company is active in fancy sounding seismic analysis activities. Unfortunately, the fancy technology does not translate in earnings but increasing losses. The stock lost more than -75% from the IPO and the company just had to issue new shares. “Pass”.

33. Hexagon Purus

Hexagon Purus ASA, a 520 mn EUR market cap stock sounds like an “Energy transation dream”: Accroding to the Euronext page, the company  “is specialized in the manufacture and marketing of Type 4 composite tanks for high pressure hydrogen storage. The group also manufactures battery packs, electric drive systems, components and battery systems for electric and hybrid vehicles.”

The company is growing rapidly, but loss making and increased its capital in 2022. The company is a Spin-off of Hexagon Composites and was listed in 2020.

Hexagon is clearly a Hydrogen play with a focus of containers. As the intitially hyped Hydrogen road transport looks more like a niche, the share prcie has suffered after the intitial exitment:

Hexagon Purus

On the other hand, the company has real products and a strong order book, but cash is clearly an issue. Despite the somehow shaky finances, I’ll put hem on “watch” as this is clearly one of the more interesting Hydrogen plays available.

34. Endur

Endur is an 84 mn EUR market cap company that describes itself as “a leading supplier of construction and maintenance projects and services for marine infrastructure, including facilities for land-based aquaculture, quays, harbours, dams, bridges and other specialised concrete and steel projects”.

As a construction company, margins are very low and the share price deosn’t look pretty. “Pass”.

35. Sparebanken Ost

Sparebanken Ost is one of several regional savings banks with a market cap of 93 mn EUR. ROE is super low, P/E at 12x and a 5% dividend yield. I have no idea if and how these Sparebanken belong together. “Pass”.

36. Photocure

Photocure is a 272 mn EUR market cap “specialty pharmaceutical” company that has developed some treatments for instance against bladder cancer. The treatment seems to be a combination of a drug and special light.

The company has actual sales and seems to be at least from a cashflow perspevtive break even. However, for me it is almost impossible to understand the potential and future development of this business model, therefore I’ll “pass”.

37. ECIT

ECIT is a 238 mn market cap company that is ” specialized in outsourced business process services. The company offers companies accounting management, IT outsourcing, data hosting and security, digital archiving of documents and automation of various tasks”.

ECIT is a 2021 vintage IPO and, other than many other 2021 IPO’s, trades close to the IPO price. At around 39x P/E, the company looks expensive compared to their relatively weak margins.

I am also not sure if AI (GPT-3) is a blessing for these kind of businesses or a real Threat. Therefore I’ll “pass”.

38. Kitron

Kitron “manufactures and assembles electronic systems and subsystems, from design, engineering, prototyping, testing to logistics management, maintenance, repair and redesign of products” and has a market cap of 514 mn EUR.

The stock doesn’t seem to be expensive at around 16x P/E, EBIT margins are only ~6%, but returns on capital are quite OK. The company has been growing nicely over the past years and they target 10% growth going forward with 8% EBIT margins for the next 5 years. However, it doesn’t look like something that I understand well and therefore I’ll “pass”.

39. poLlight

Polight is a 92 mn EUR market cap company that “develops optical lens for consumer devices and industrial applications. Its lens replicates the lens of the human eye enabling the implementation of autofocus functions for various applications. “

The company has been loss making for the past 7 years and frequently issues newshares. “Pass”.

40. Sage Pure

Saga Pure is a 78 mn EUR “investment company specialized in equity investments in companies operating in the production and transportation of crude oil, real estate and stock markets”.

Looking at the current portfolio, the focus seems to be on Hydrogen related investments, some of them listed. For some reasons, the CEO just stepped down in mid-December and the company called of a special shareholder meeting, which is mostly a bad sign. “Pass”.

41. Self Storage Group

Self Storage Group is a 216 mn EUR market cap company that offers self storage facilities in the nordics. As with almost all real estate companies, I find it super hard to evaluate. I also have very little insights into this subsection of the property business, therefore I’ll “pass”.

42. Jaren Sparebanken

Jaren is another, 110 mn EUR market cap local savings bank. The company trades at 11,5x P/E and 0,5x book value, but ROE is super low at 4,5%. “Pass”.

43. Scana

Scana is a 45 mn EUR market cap offshore services company. The stock has been hibernating for a long time before going up in mid 2020 and since then went back down again. Business seems to have picked up through an acquisition in 2022 and especially the reneabe energy business seems to grow. On the other hand, the company is loss making. “Pass”.

44. Kid AS

Kid is a 267 mn EUR market cap home textile retailer in the Nordics that operates around 200 stores. As other retailers, the valuation at 12x P/E is moderate. The company has been grwoing strongly over the last 10 years, with sales up ~3x and EPS almost 10x.

However, 2022 turned out to be quite challenging, with EBITDA down almost -50% in Q3. The stock had a great run during the pandemic:

KID chart

To me it is not clear how this “pandemiic lottery winner” will do in an environment like today. The recent drop in profit clearly indicates some larger troubls. As I like to stay out of trouble, I’ll “pass”.

45. Grieg Seafood

Grieg is an 810 mn EUR market cap fish farming company that farms Atlantic Salmon. They seem to be active in Norway and Canada.

At a first glance, Slamon farming looks like a volatile business. with margins oscillating between -10 and +30% over the past 10-15 years:

grieg margins

This results in a very volatile chart as we can see in this graph:

Grieg chart

From a low of ~4 NOk/share, Grieg increased by almost 40x until early 2022 before then dropping by -50% within a few weeks. Grieg seems to be hit by the surprise “Seafood Tax” from the Norwegian Government, which seems to explain the drop to a certain extent.

Salmon prices seemt o be quite high at the moment and management is optimistic. I have very limited expereince with these kind of businesses, but in my experience, caclical stocks should not be bought when things look good and the stocks look cheap, rather to the contrary. Therefore, I’ll “pass”.

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