Bell special if you need to find the source of the recent price declines

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Looks good on preopen

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Bell Potter report downloaded from Factiva. Price target 5.75

Screen capture of one page

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Full text from behind the paywall of the Weekend Australian.

Interesting article that highlights the valuation gap of the CMI sale vs the book value of CMI from Excelsior but not getting any answers why this has happened.

Excelsior’s valuation perplexity - 16dec23

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IPD Group retail component completes slightly oversubscribed

Although 66% took up the rights, the ones who participated top-up facility had to get their application scaled back

The Retail Entitlement Offer closed at 5:00pm (Sydney time) on Thursday, 14 December 2023 and raised approximately $7.7 million at an issue price of $3.93 per New Share (“Offer Price”). Together with the Placement and Institutional Entitlement Offer (“Equity Raising”), to total an amount raised under the Equity Raising as approximately $65 million.

Funds raised under the Equity Raising will assist with the funding of IPD’s acquisition of CMI Operations Pty Ltd (“CMI”) from ASX listed Excelsior Capital Limited (ASX:ECL) (the “Acquisition”), which will further enhance IPD’s position as a leading distributor to the Australian electrical market.

The Company received valid applications under the Retail Entitlement Offer of approximately $5.1 million, representing a take up rate of approximately 66%. Eligible retail shareholders were also offered the opportunity to apply for additional New Shares in excess of their entitlement, up to a maximum amount of 100% of their entitlement, at the Offer Price (”Top Up Facility”). When combined with the Top Up Facility, valid applications from eligible retail shareholders were approximately $8.1 million, representing an overall take up rate of approximately 105%. Applications under the Top-up Facility have been scaled back accordingly

I didn't take the top-up facility as IPD Group is already a top holding and don't want to go too overboard.

Should be interesting day tomorrow when the new shares start trading this Friday 22 Dec

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IPD Group is undergoing a capital raising.

Funds raised: $65m

Extra shares: 16.5m

Synergies: Expected but not included

Because I don't have time, hopefully someone can do an exact valuation. If you are inclined go to fightfinance for the methodology after clicking the answers.

Roughly we should expect a market cap from 364m to 429m and SOI of 103m shares.

Some important slides that will help

But I'm sure the market will try and drag this below $4.

As I already topped up at the recent lows, I think I have enough shares already - not sure if I take up the rights issue.

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AGM is today.

Will be interesting how the share price performs given that guidance had been withdrawn from the last update in August and no updates since.

One to watch carefully.

https://www.drive.com.au/news/rollout-of-electric-vehicle-chargers-for-rural-australia-hits-a-snag/

Perhaps explains the recent weakness.

Think we might be seeing value again now the EV charger hype is going away.

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Good to see Mirabooka Investments still holding IPG amid the volatility

Even though the holding has risen, I noticed they did sell recently to rebalance the portfolio.

Aug 2023:

Sept 2023:

IPD group moves into the top 10 along with some heavy hitters such as James Hardie, Hub24, Breville and Carsales. Literally a minnow in the ocean. So I don't blame Mirabooka for selling a bit..

Mirabooka investments is an LIC under code ASX:MIR.

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In case no one noticed, IPD group got an upgrade from Bell Potter. Target price increase of 38% to $5.50.

Explains the share price going up 5% today to $4.80

See below for the estimates. Will definitely pin this to the wall and see if these estimates can be achieved

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IPD Group acquires EX engineering, a firm specialising in custom equipment used in hazard areas and achieving another prospectus objective.

Apart from leveraging/selling this expertise in the eastern states, there are not much details on synergies.

Not much detail on financials of EX engineering as they are private but after briefly going through their website it seems like a good fit.

10.2m with 9.2 in cash and 1m in shares so not much dilution. Plus an earnout provision based on normalised ebitda for a total of 11.4m if I am reading correctly but there is no details on trigger conditions for the earnout (I assume there would be - correct me if I'm wrong). So that is total earnout of 1.2m? Just great when announcements like this make us stretch our brain cells!

Normalised ebitda currently 2.5m.

More details to be revealed on 25h August.

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Upgraded FY23 Guidance

Seems solid with EBIT around 30-40% growth. Perhaps fairly priced on retrospective PE basis and why it sold off today.

IPD Group Limited (ASX: IPG, “IPD” or the “Company”) today provides guidance on the Group’s full year earnings for the financial year ending 30 June 2023 (FY23).

The Company expects earnings to exceed the FY22 Full Year results due to the continued strong operating performance as previously announced on the 24 February 2023.

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Article from livewire

https://www.livewiremarkets.com/wires/asx-small-and-micro-cap-industrials-takeover-offers-galore

Seems IPD group rallying on the story and why in some cases I don't pay much attention to livewire these days.

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Not many acquisitions as claimed by many from what I can see. Unless I have missed something.

As comparison, look at Swoop holdings - 13 acquisitions.

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Further adding to recent straws which NewbieHK has already summed up.

On the acquisition front, IPD had already rejected a few potential opportunities and are being selective.

Probably this is what the market may have also been nervous about judging by the price action in the last few weeks..

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Since my mention of IPD Group here, I've seen the following brokers/fund managers start coverage:

Bell Potter

Shaw and Partners

1851 Capital

and finally Tamim Asset Management (ie: Ron Shamgar aka rocket emoji fund manager)

Definitely no longer under the radar.

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Noticed a huge spike on the share price on Friday breaking above the usual uptrend channel. But not many votes on any straws for IPD Group (less than 20)

When I saw the lack of votes on Strawman for IPD Group versus others such as AHC and CGS (which I only have small watch positions after noticing a few concerns), I started doubting my reasons for investing despite the clear tailwinds on offer and the beat on prospectus forecasts and hence ignored it till I noticed it was performing consistently against the market return. Probably should have put more in IPD here and ignored the rest.

Firstly why the lack of votes:

National focus? IPD only focus is within Australia while perhaps AHC and CGS has a more global focus. However IPD Group I think makes up for this as preferred "picks and shovels" provider for anything solar/electrical/energy/EV. As I highlighted in the AHC straw, there seem to be many competitors in the patient care space while CGS seems to be highly dependent on trials being progressed.

Guidance? Like Codan, IPD Group wouldn't provide guidance after FY22 results until November this month, at the 28 Nov AGM or maybe earlier.

Backend Disruption? Not sure why their backend operations are in Sri Lanka which carries some risk. However they stated their backup operations in Manilla is progressing as planned

Quiet Accumulation? Maybe other investors were not voting here to try and keep IPD group off the radar of other investors here while they quietly tried to buy the shares for themselves and thus not sparking a buying frenzy - I know, a bit far fetched :)

Why the rally?

Budget speech? Labour budget speech mentioned the importance of decarbonisation with emphasis on Solar, EV and EV infrastructure, which is something that fits well with IPD Group.

Tight register? Not many shares on issue hence demand for shares greater than supply.

Less perceived risk? IPD is a "picks and shovels" provider similar to mining services companies but for all things electrical. Furthermore they seem to have their specialisation in the area bedded down firmly.

Adding fuel to the fire, here's a link from Livewire markets on 1851 Capital's (sorry it's not Capital H as mentioned in the lithium forum post) recommendations including IPD group. Maybe this can explain the rally also.

Can't wait for November AGM. Hopefully some positive guidance. Going to ignore the low votes on straws here for now!

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Financial FY22 results announced and generally a beat against prospectus forecasts. Including a dividend which I was predicting when I first bought about a few months ago as they were already making net profit after tax before.

The only concerns which probably contributed to the selloff today:

• Some disruptions in back office operations from the Sri Lanka economic crisis. IPD are mitigating this by bringing some functions over to Manila
• Guidance not provided until Nov 2022 due to supply chain uncertainty.

Adding as a straw since I can't additional valuations as myself on top of the one I added for Shaw and Partners

IPD Group Price Target Raised 19% to A$2.15/Share by Bell Potter

Bell potter also named this as one of their top picks for FY23

Maybe no longer under the radar :(

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Upgraded profit guidance and background.

IPD Group supplies products for the electrical and power industry. Lately they have been expanding into supplying components for charging stations of EVs.

And profitable after tax.

Only listed last year. Very much under the radar at 140m market cap.

Unfortunately hard to find any shares on sale due to the amount of shares available.

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