I just thought it prudent to revisit the last three months and the heavy reaction to CBR. From my perspective this is a severe overreaction and perhaps is being orchestrated by larger market participants to relieve retailers of their shares. Shake the tree so to speak. We should be able to see this via the multiple 'becoming' and 'ceasing' to be a substantial shareholder and the associated transactions. Mitsubishi has had a play in June and we should continue to see their participation.
Recent key dates: 26/4 - Capital raising for the mega line - down from $2.30 to $1.60. This was a surprise but most would agree it was a good (and expected) decision in light of the strategic roadmap and pipeline moving forward. 24/5 - Announcement indicating a miss on the FY2021 financial target due to less wheels being required in the near term due to semiconductor related supply-chain issues. The price immediately went from $1.60 to $1.30 primarily due to negative news coming so soon after a capital raising. This is unfortunate as the semiconductor impact was likely thought to be alleviated in the short term. We since clearly understand this issue was more serious than expected and has effected a number of industries. From 24/5 to now - negative momentum has remained presumably with tax selling and semiconductor supply chain stress being the drivers.
The market has certainly had a dummy-spit. I am not worried (although irritating to see paper losses of this magnitude over the past three months) as I see the inherent value in the company and increasing pipeline of future orders that will crystallise once this supply chain issue achieves balance. I am clearly framing these issues as providing an opportunity - as my timeline on this company is currently viewed in years and not days/months.
For perspective a few points: 1. Industry leading CF manufacturer with increasing pipeline of premium vehicle OEM's. Trust and credibility has been built. 2. Circa 90m cash, circa 9m debt and now prepared to capitalise and increase capacity (mega-line) in-line with increasing customer pipeline and growth roadmap. Annual capacity to be increased to 75k wheels per annum. 3. NTM EV/Revenues - 6 4. E/V $218M 5. NTA $0.53
Potential catalysts for share increase: 1. FY report this month 2. Ford and other OEM's taking deliveries 3. Additional OEM's coming onboard as partners 4. Mega-line construction beginning and being managed by Andrew Higginbotham - along with increased efficiencies.
Hang in there all. This is a great little company that will be a lot bigger years from now.
CBR Price at posting:
99.5¢ Sentiment: Buy Disclosure: Held
