After doing a mountain of research and patiently waiting for a lower entry, I finally bought in to Delorean at 21.5c on Friday last week. I doubt my few thousand shares would have helped much but I'm really wondering if I can get a partial refund now that it's dropped to 20c (
joke). This is by far the smallest cap company I've every invested in. I am genuinely excited about the prospect of following this company and its progress for, hopefully, the next few years.
I am surprised it's dropped to 20 cents as the buy/sell volume was 2:1 on Commsec most days. Although, going through the daily transactions, most purchases seemed to be only a couple of thousand dollars or so. In other words, if you had, say, twenty or thirty thousand dollars worth of DEL shares to sell, and didn't mind getting current market prices, you could probably push the price down a couple of cents in a single order without too much difficulty. As was written in a previous post, if the price dropped too much below the IPO price, the directors would likely start buying the shares themselves. I still can't believe it's at 20 cents after the recent positive announcements.
I read every post on this forum going back to the listing, Dabozza's excellent and highly-recommended Deep Dive on Twitter, the company ASX releases, their website, and consumed every video and podcast audio interview I could find on YouTube and through Google. I even asked a question (about what happens to the digestate after it's used to create energy
) at the latest investor meeting! Thanks
empty trolley and
drinking for your posts about DEL. I enjoyed reading them and learned a lot.
This would have to be one of the most fascinating companies I've researched. The business is easy-to-understand unlike most newly-listed tech and mining companies. I like how it uses established, decades-old technology -- yet the industry in Australia is almost completely untapped. The tail-winds are enormous. Diverting waste from landfill and creating green energy...given the current obsession (which will only grow) with global warming... Wow. There was an interesting article recently on Bar.rons on 3rd December "
Want Clean Energy Stocks? Here Are 3 That Turn Farm Products Into Fuel" which highlighed how big this company/industry could be in Australia.
From what I can ascertain, unlike, say, Santos or Woodside, we will have no problem getting finance. In fact, we'll probably qualify for Federal grants under the new bioenergy roadmap. To summarise the profit model: We get paid a gate fee for taking organic matter; we sell the electricity we produce to the grid; we can sell the digestate as organic fertiliser; and we can likely sell carbon credits to companies which are carbon-positive. If we build a plant for another company we can charge for the construction, and then sell an on-going maintenance contract. The number of (potential) revenue streams are incredible. And it's been profitable for the past five years too. I liked a recent question asked to management about having approaches from overseas and answered in the affirmative. It seems there are lots of opportunities in Australia, but having their head office in Perth could be a useful asset in the future for business with south-east Asia. Yes, if decarbonisation happens as quickly as some in politics and the media would like, green renewable energy sure is a great place to be.
The financial details really go way over my head when analysing a stock. I read the analysis from
empty trolley and
dabozza and must admit I struggled to understand the finer details. What I do understand is the Brickworks announcement the government's bioenergy roadmap, and the Yarra Valley Water announcement recently shared with the market. And the 200 million dollars of possible projects in the near future. The financial analysis on a previous thread is all well and good, but it is working with the numbers known
at the time the analysis done. This is not a criticism in any way. My point is that there seems to be so many opportunities for Delorean, and so many potential contract wins in the next six, twelve and twenty four months, that these hypothetical wins will change the numbers and projections of revenue and EBITDA. Delorean is only a 35-40 million dollar market cap stock. A couple more sizable contract wins will have a big (positive) impact on future growth projections and the numbers will have to be changed.
I guess my concerns with Delorean have been why they decided to list on the ASX? They didn't raise that much money in the IPO; not in companison with the amount needed to fund what is planned. I suppose it will add credibility to the company going forward and perhaps make it easier to obtain finance and win contracts. I have wondered how it will fund the projects. Lots of debt (Plannum partners) or share dilution. I imagine it will be unavoidable to borrow extensively to fund growth. I have wondered how profitable these sites are and how easy it will be to obtain organic matter to make electricity with. I was concerned that without gate fees they are unprofitable (if I understood that correctly?) Whether it will always be a niche, cottage-industry, type business. And whether a bigger, more cashed-up competitor will come along. Although, apparently the gate fees are pretty much guaranteed; and growing.
At the end of the day, you either believe there are good opportunities for the company in the market and like what you hear from the senior management or you don't. It's a bit like, say Magellan Financial Group (I am not a shareholder). I have no idea about the numbers and financial analysis. But you either buy what Hamish Douglass is selling or you reject it. I see Delorean a little like NextDC funnily enough (also not a shareholder) in that the company is in an industry with a strong, sector tail-wind theme, is investing heavily in infrastructure today which will provide predictable revenue tomorrow, and seeks to be almost a REIT/utility type company of the future many years from now.
Hamish Oliver and Joe Oliver impress me in the videos I've watched and podcasts I've listened to. I liked Joe's recent presentation and how he seemed to genuinely enjoy discussing his role in this industry. I am happy to have a very small (for now, at least) percentage of my portfolio with them and to keep an eye on this company through 2022.
Finally, DESAO (in the north of Adelaide) isn't too far from my current location. As the site develops, I plan to visit the location and see for myself what is going on there. I noticed on Google Maps that the NAWMA (Northern Adelaide Waste Management Authority) site is literally right next door to DESAO in the industrial park. They are the people who collect the red, yellow and green (garden waste -- prunings and lawn clippings) bins from the front of your house every fortnight. I wonder if the plan is to produce energy using diverted residential garden waste.
Good luck to all holders. It's great to be on board.
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