Opcon – Ignored by the old-timers, embraced by China, but what about the land down under?

Posted: 10 September, 2014 in Published Investment Calls
Tags: , , , , , , , , , , , , , ,

I appreciate and celebrate the eco-friendly Opcon Powerbox technology. Recently, numerous press releases and multiple small orders have been announced. http://www.opcon.se/web/Press_releases.aspx

The fact that major capitalization on the Opcon technology has been “delayed” for a number of years is what made me particularly interested in this case.

Opcons 2014 technology is the result of decades of research and developent http://opcon.se/web/History_1.aspx

The company is listed on the Small Cap list of Nasdaq OMX Stockholm. No dividend has been paid.

Today, there are 379 millions of shares. In the 2010 annual report, the number of shares was 25 millions,

This equals a total net dilution factor of: 15 (end 2010 until today´s date)

Early 2010, the value of the share was ~15 SEK,

Recent week´s share price ~0.55 SEK (first week of september 2014, the last 2 day´s excluded…)

Today, September 10th 2014, this sums up to a net loss of approximately 96 % for the 2010 year´s shareholder.

Market cap early 2010 (15 x 25 million) = ~375 million SEK

Market cap 2014, recent days = ~220 million SEK (2014-09-09)

My initial conclusion, solely based on numbers:  It is not too hard to understand that many of the 2010 (or 2011 or 2012) Opcon investors, i. e. ”the old timers”, possesses a very negative view and and lack of trust for Opcon and the Opcon board members.

I do not have the time or the energy to describe what went wrong. It has already been discussed in other forums (e. g. in www.redeye.se, swedish language) but yes, I am aware of the historical events e.g. Tricorona).

Instead, let´s zoom in on the key messages of the January to June 2014 interim report (http://opcon.se/web/Reports_3.aspx)


China is the key as Opcon looks to the future

  • Efforts now initiated to develop the Chinese market and parts of South East Asia and create an industrialised manufacturing base for Opcon Powerbox together with Snowman
  • Hong Kong Snowman Technology Ltd. second largest owner of Opcon following directed placement of shares
  • Savings programme now being implemented that will cut annual costs by around SEK 30 million
  • Reduced loss despite lower sales, loss after tax of SEK –4.8 million (–15.1 m)
  • Underlying operating loss for Q2 of SEK –1.0 million (–7.4 m) before non-recurring costs

First half of 2014, January–June, remaining business

  • Net sales amounted to SEK 122.3 million (136.7 m)
  • Operating loss (EBIT) was SEK –10.5 million (–21.8 m)
  • Loss after tax of SEK –11.0 million (–29.3 m)
  • Earnings per share SEK –0.03 (–0.09)

Q2, April–June, remaining business

  • Net sales amounted to SEK 54.9 million (62.7 m)
  • Operating loss (EBIT) was SEK –4.6 million (–12.3 m)
  • Loss after tax of SEK –4.8 million (–15.1 m)
  • Underlying operating loss for Q2 of SEK –1.0 million (–7.4 m) before non-recurring costs
  • Earnings per share SEK –0.01 (–0.05)

Significant events after the end of the period

  • Swedish order for delivery of bioenergy plant worth around SEK 28 million
  • Declaration of Intent signed with Snowman concerning formation of joint company to develop the Chinese market and create an industrialised manufacturing base for Opcon Powerbox
  • Order for one Opcon Powerbox ORC and one Opcon Powerbox WST from Snowman as reference equipment for the Chinese market

In a relative comparison to the previous report(s) and in my opinion, the numbers are fantastic.


Because, I believe the numbers points towards a near future transition from a negative to a positive net result, independently of major near future triggers. This attracted me. During the last days of august, I made a statement and transferred / invested ~20% of my total portfolio in Opcon. A few weeks ago, my friends and colleagues were laughing. Today, I am laughing. Hopefully, the laughter will last until I exit Opcon. I did not make the move solely based on the numbers of the report. I defined the numbers in the latest report as the receipt, confirming earlier investigations and conclusions around the Opcon activities and the technology.

Let´s dive into the full version of the latest report:

I am not an old timer, so I could relatively easy gather enough of courage to put full trust in the the following statement by the board:

“With an expanding order book, the existing cost savings programme and the plans for the formation of a JV together with Snowman in China together with other activities in China, capacity utilisation is expected to increase, and the Board expects Opcon to report positive earnings for 2014.”


Now, the full paragraph:

In Fuzhou Snowman has built a completely new factory for production of compressors developed by Opcon. It is estimated that future licensing income from Snowman’s production for the period 2014-2024 could exceed SEK 100 million. In 2013 alone, sales of compressor development to Snowman almost tripled to exceed SEK 30 million. In 2014 Snowman has placed further major development assignments with Opcon. For Opcon, Snowman’s investment and the collaboration that has begun mean that Opcon looks forward to receiving further development assignments from Snowman over a long period within industrial refrigeration compressors, an area in which Opcon is strengthening its capabilities. Furthermore, the trust earned through collaboration means that the companies are now expanding collaboration to include Opcon Powerbox. The purpose is to create a joint venture to develop the Chinese market and create an industrialised manufacturing base for Opcon Powerbox that can also be used by Opcon on other markets. Opcon considers the extension of the collaboration to have great importance and considerable potential. It can have decisive significance for Opcon’s future profitability. Another important part of the current restructuring of Opcon is the extensive changes being made within the bioenergy operation that in recent years has suffered significant losses. In recent years strong measures have been implemented, including cutting the workforce, closing development projects and achieving a new, outsourced production structure. Some of the technology has been licensed with good results.

For some time now a large programme of measures has been implemented in Sweden and abroad with the main emphasis on the bioenergy sector. As a result, Opti Energi AB, Opti Energy Group AB and Opcon Bioenergy AB are being decommissioned and wound up in Sweden. Bioenergy activities are being focused on Saxlund and an increased international focus. The parent company’s operations in Åmål are being closed down completely. The savings programme, which includes reduced personnel costs, reduced cost of external consultants, IT and administration and reduced financing costs, is expected after enlargement to yield annual savings in excess of SEK 30 million compared to 2013, with effects in 2014 expected to exceed SEK 20 million. Over the past one and a half years, major interest-bearing debts have been paid off. The Board notes that although major challenges remain, significant steps have already been taken to reduce costs, and these efforts have begun to show in financial results. In Q2 costs for remuneration to employees were around SEK 3 million lower than last year, while financing costs for the first six months of 2014 were around SEK 7 million lower than the previous year. With an expanding order book, the existing cost savings programme and the plans for the formation of a JV together with Snowman in China together with other activities in China, capacity utilisation is expected to increase, and the Board expects Opcon to report positive earnings for 2014.

My conclusions:

Positive: International focus. This is what should attract new investors (like me). Electricity is cheap in sweden. Creating value from a joint venture with Snowman should be an excellent strategy!

Negative: In the report, I sense that one final and last dilution manouver i.e. (directed) emission might take place in the near futre. If so, I estimate that the dilution factor can be ignored (based on nothing, but gut-feeling).

Update February 21: CESI no longer expects an emission based on the positive numbers in the new 


Very interesting: What strikes me most while reading the full version of the (now old) INTERIM REPORT JANUARY–JUNE 2014 report is the fact that I cannot find any info around the activities in Australia (please correct me if I am wrong). The activities I refer to are potential activities by the Australian partner Enerji.


This is what makes me really interested. Carnarvon have started to produce waste energy with exceeding expectations and this was announced in the end of 2013.

“On 14 November consent was received to take the system to full operating temperature of 130 degrees Celsius, and heat recovery temperature has been increased with maximum available heat being recovered from the host power station. The limited heat available from the host plant is sufficient for electricity output of around 300 kilowatts. Notably, this output has exceeded expectations in that it was achieved without fine tuning and optimisation of control settings”


In my opinion, another 6 months without news from Australia is not too long period of time. The Opcon powerbox is not a 5 dollar gadget, perfectly suited for instant capitalization. My understanding of the Opcon Powerbox technology is that it simply delivers. In the near future, it should also be an attractive cost saver in the global context and – in the land down under!

And even more interestingly, why has the Enerji share price recently and suddenly climbed ~100 % ?


Enerji is defining in total 5 ongoing projects in Australia : 

  • Pilbara “the Carnarvon pilot plant improvements are taken into consideration, i. e. this should be a very recent project!
  • 3 complex projects involving large industrial facilities in different regions of Australia
  • A larger scale power station project

Enerji also states that the highest priority is to establish commercial growth.

 http://www.asx.com.au/asx/research/companyInfo.do?by=asxCode&asxCode=erj (see attached pdf)

Back to the Snowman Joint venture ambitions:

“Opcon’s contribution to equity will be by a system technology license of its proprietary Opcon Powerbox ORC and WST (West Steam Turbine) technology in the Territory with certain exclusivities in China and parts of Southeast Asia. The JV will be granted exclusive manufacturing and sales rights of the Opcon Powerbox in China and exclusive manufacturing and non-exclusive sales rights for Taiwan, Thailand, Vietnam, Indonesia, Malaysia and North Korea.”

It appears like the long awaited larger orders from Asia soon might be announced. How much will a large order trigger the share price? I have no clue, but my estimate is that the old-timers (the 2010 investor´s) 96% loss will be substantially reduced. The market is global. The potential is huge. I believe the down-side is limited, primarily due to the last years historical plot of the share price combined with the recently improved financial result. I also believe a market cap around 200 mSEK is very low for this company with a mature eco-friendly Powerbox, embraced by China and ready for launch! 

Finally, the last days, insider share purchases have been reported (Mats Gabrielsson 2 million shares and Niklas Johansson 175 million shares)

Best regards, Cutting Edge Science Invest

The author, Cutting Edge Science Invest, is an Opcon share holder. 

Cutting Edge Science Invest can not guarantee, or take into  accountability, the content of truth and accuracy of the information in this article/post.Thus, Cutting Edge Science Invest requires that a possible reader gather complimentary information if any type of investment in the company described above is considered.

Cutting Edge Science Invest´s provides personally biased information and at best also “general information and opinions”.

The article/post does not contain professional investment advices. 




  1. Don’t forget OPCON,s cooperation with The German company MAN and The shipping company Wallenius. They have already Powerbox installation onboard shipps and soon it Will be PM about The resultat.

  2. AktiespelarenLasse, I believe you are correct!

    At the time, I prioritized only the report and Australia due to the recent “sparks” from the Enerji share price. As you most likely have noticed, Italy is also a potential trigger. If time allows, i will update the original post or write a more comprehensive post. This time I felt a great urge to get “something” published prior to the “second up-winds of my predicted great Opcon storm”.

    Today, I am very happy I chose this strategy. I. e. prioritized speed before quality and quantity (due to the last weeks extremely positive share price development). Anybody can write about Opcon in retrospect, it is harder to forecast the future. I think you might agree ;). Still, this is no excuse – I could have worked harder 😉

    In my profession, I am a very hard working (senior) scientist, so despite my great blogging ambitions, my time is limited (i. e. it will be very difficult to post stuff of decent quality more than twice per month).

    Currently, I prioritize my next post (Nexam, manuscript is in preparation).

    Cheers, CESI

    • Lasse Davidsson says:

      This is really fun.
      Nexam is my second largest shareholding by Opcon. Looking forward to your analysis of Nexam. / Lasse

      • Cool Lasse! Unfortunately, I had to prioritize a quick and dirty CybAero manuscript, because I “sense” something might happen already tomorrow. Just a feeling! Give me a few more days, then Nexam will follow! Best regards C.E.S.I.

  3. Hi!
    Thanks for a great post about Opcon.

    I bought Opcon shares due to the long history of the company and potential of the technology,
    but the fact that convinced me and triggered a buy where the interest from Snowman.
    ” Opcon: Completes directed share issue of 30 m shares at 0,57 SEK/share to Chinese Snowman (Cision) 2014-04-09 15:17″

    Looking forward to read about the Nexam case.

    Claes Kilgren

  4. Philip says:

    Hi there.
    What is your view of the case after we now know that Opcon is selling parts of the company to the Chinies?
    As the math goes, one could argue that the 400 mio SEK. would value each share 1,06 SEK, and there efter you should add the value of Saxlund. The valuation of Saxlund im not sure of, do you have a fair value for Saxlund?

    Best regards


    • Dear Philip, I am relatively confident that Saxlund will deliver within 12-18 months and earn a market cap in the range of 70-200 MSEK. Today, my opinion is that Saxlund should be valued to minimum 50 MSEK. If added to the incoming near future liquid assets (400 MSEK) one definitely expects a near future Opcon share price in the 1.25-1.5 SEK range. I am stunned that the market not yet has realized or accepted reality. I am long in Opcon and I hope that the board will propose a substantial dividend.

      Cheers, a happy CESI enjoying yet another fantastic Anoto day. Soon, the time is due to also celebrate Opcon and my beloved Nexam 😉

  5. I’m still learning from you, but I’m making my way to the top as
    well. I definitely liked reading everything that is written on your site.Keep the posts coming.
    I loved it!

    • Thanks! Despite a brutal lack of time, I do my best. The frequency of full posts announcements are primarily dependent on groundbraking new fundamenta findings (e. g. a series of major company related news, interim reports, science or new patent applications) or alternatively: New CESI holdings (which normally equals a natural investment call opportunity). Good luck with your investments! Cheers, CESI

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